In the countervailing duty expedited review of frozen warmwater shrimp from Ecuador, the U.S. Department of Commerce announced it will investigate two new subsidy allegations advanced by the Southern Shrimp Alliance (SSA), through the Ad Hoc Shrimp Trade Action Committee (AHSTAC).
Commerce will determine whether the Government of Ecuador has provided countervailable subsidies to Ecuador’s shrimp industry by:
- Failing to enforce penalties for illegal mangrove deforestation as required by its laws; and,
- Failing to enforce Ecuadorian laws prohibiting forced labor, human trafficking, debt bondage, and child labor within the shrimp supply chain.
“If U.S. companies were to clear-cut mangrove forests, utilize forced labor, or retain child labor to reduce costs of production, there would be severe penalties,” states Blake Price, director of the Southern Shrimp Alliance. “Yet, Ecuadorian shrimp producers have been given a pass by their government. Allowing an export industry to flout rules that apply to everyone else is a subsidy and an unfair trade practice, and we welcome the Department of Commerce’s investigation.”
Ecuador’s Mangrove Deforestation
The Ecuadorian exporters under review either operate shrimp farms or are supplied by shrimp farms in the regions where mangrove deforestation tied to shrimp aquaculture has been extensively documented.
Between 1985 and 2022, Ecuador lost an estimated 16.4% of its valuable coastal mangroves, due in large part to the rapid expansion of shrimp farming. Ecuador’s shrimp aquaculture industry grew by nearly 90% during this time in areas of massive mangrove deforestation.
Under Ecuadorian law, mangrove destruction carries a restoration-based penalty of $89,273.01 per hectare, and violations of environmental and land-use requirements can result in fines ranging from $425 to $42,500. However, shrimp aquaculture operations have continued to destroy mangrove ecosystems without penalty due to weak government control, surveillance, and monitoring.
The failure of the Ecuadorian Government to collect these fines and penalties amounts to a countervailable financial contribution to its shrimp industry under U.S. trade law.
Ecuador’s Forced Labor and Unfair Labor Practices
Ecuadorian laws prohibit forced labor, human trafficking, debt bondage, and child labor within the shrimp supply chain. The U.S. Department of State’s Trafficking in Persons Report observes that: “Traffickers exploit Ecuadorian adults and children in . . . forced labor within the country, including in . . . shrimp farming.” The State Department has further noted that the Government of Ecuador has undertaken “insufficient efforts to prosecute or convict labor traffickers.”
Under Ecuador’s Comprehensive Organic Criminal Code, violations by legal entities should incur fines of 100 to 1,000 times the basic unified worker salary. Yet, the Ecuadorian government does not enforce these laws in certain industries, including shrimp farms. As with the mangrove deforestation, the Government of Ecuador’s failure to assess and collect otherwise-due penalties constitutes a financial contribution that benefits Ecuadorian shrimp producers.
Significance for the U.S. Industry
An “expedited review” is a proceeding created by Commerce that allows exporting companies, which were not specifically and individually investigated in the initial investigation, to seek permanent exclusion from trade relief if they can establish that they did not receive countervailable subsidies. Historically, foreign exporters have used this legal process as a low-risk opportunity to avoid trade relief. With fewer resources available after the expensive and lengthy initial investigation, these reviews often become check-the-box exercises in which foreign exporter statements received little further investigation, especially if there is little engagement from the domestic industry.
However, in this review, the domestic shrimp industry has expended significant resources pushing back against the Ecuadorian industry’s efforts to exploit this loophole. Prior efforts to address unfair trade with Ecuadorian shrimp have been frustrated by political decisions resulting in the removal of trade relief, like when the antidumping duty order on Ecuadorian shrimp was revoked over the objection of American shrimpers in August 2007.
Here, the domestic industry’s forceful intervention in the reviews has complicated the Ecuadorian shrimp industry’s efforts to poke holes in the countervailing duty order and continue the flow of cheap, unfairly-traded shrimp into the U.S. market:
- When Commerce agreed to the requests of the American Shrimp Processors Association (ASPA) and AHSTAC to collect the same depth of information as the original investigation, 40% (2 of 5) of the Ecuadorian companies seeking a review withdrew from the proceeding, no longer seeking revocation of the countervailing duty order imposed on their shrimp exports.
- The preliminary countervailing duty rate of 13.73% for Edpacif demonstrates that some Ecuadorian shrimp exporters are receiving high levels of subsidization from their government, as the preliminary rate far exceeds the rates assessed in the original investigation (3.57%-4.41%).
- NIRSA failed to demonstrate a lack of subsidies and received a preliminary countervailing duty rate of 2.18%.
- Commerce indicated that additional information regarding unaffiliated shrimp farm subsidies for exporter Propemar is still outstanding and will be evaluated in a post-preliminary analysis memorandum, meaning the current preliminary de minimis rate for that company may yet be revised prior to the agency’s issuance of the final results of the review.
The expedited review remains ongoing. Therefore, SSA remains engaged, advancing offsets for additional subsidies, including the benefits of weak environmental and human rights enforcement.
Additional Resources
Read the narrative portion of the Ad Hoc Shrimp Trade Action Committee’s May 1, 2025 subsidy allegations submitted to the U.S. Department of Commerce here: https://shrimpalliance.com/wp-content/uploads/2025/05/AHSTAC-May-1-2025-NSA-Filing.pdf