Fishy Issues: The U.S. Shrimp Antidumping Case

Abstract

This case features a prominent antidumping case in the United States against six of its major foreign shrimp suppliers. The case fits well in a discussion and analysis of the (welfare) consequences of protectionism, the basic case for free trade, and the political economy of protectionism. Excerpt UVA-G-0600 Rev. July 14, 2009 Fishy Issues: The U.S. Shrimp Antidumping Case In the fall of 2002, the Southern Shrimp Alliance (SSA), a coalition of shrimp vessel owners and processors, was formed to fight what it called unfair competition from developing countries. The SSA represented eight southern states: Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Texas. In December 2003, the alliance called for punitive tariffs against the main importers of shrimp to the United States: Thailand, Vietnam, India, Brazil, Ecuador, and China (Exhibit 1). The tariffs it requested ranged from 30% to 349%. The actions by the SSA constituted the broadest trade complaint since the Bush administration had imposed tariffs on imports of foreign steel in 2002. SSA members argued that they were driven out of business by the artificially low prices that these exporters charged in U.S. markets. The SSA's petition led to a showdown with U.S. seafood distributors, retailers, restaurateurs, and other businesses involved in shrimp processing and marketing, as well as with the targeted countries. Those parties opposed higher tariffs and accused the United States of blatant protectionism. They argued that the lower shrimp prices offered by developing countries' exporters were evidence of their comparative advantage in producing shrimp. In the words of Wally Stevens, president of the American Seafood Distributors Association: “These duties will do nothing to make the domestic shrimpers more competitive.” Trends in the Shrimp Market The global shrimp market had changed dramatically since the 1950s. Exhibit 2 presents estimates by the Food and Agriculture Organization of the United Nations (FAO) that illustrate the worldwide expansion of shrimp production and consumption. Worldwide production of shrimp increased from 0.31 million to 3.8 million tons between 1950 and 2002. Of particular interest was the changing distribution of production during that period as shown in Exhibit 3. Developing countries' share of shrimp production increased consistently, and that of the main consumers of shrimp—in particular Japan, the United States, and Europe—steadily decreased. One study estimated that Japan, Europe, and the United States consumed some 60% of world production in 2000. . . .