The U.S. Department of Commerce announced today that it was formally initiating investigations of most of the subsidies on shrimp exports alleged by the Coalition of Gulf Shrimp Industries (COGSI).  Commerce found that there was insufficient evidence to initiate investigations on sixteen of the subsidy programs alleged by COGSI, but determined to look further into 117 other subsidy programs alleged in the petitions.

Following the decision to formally initiate investigations, Commerce now must determine whether subsidies are, in fact, granted to foreign producers and exporters that may be countervailed with the assessment of additional duties under U.S. law.  In another part of Washington, the Commission will determine whether there is a reasonable indication that the domestic shrimp industry has been materially injured by reason of unfairly traded imports.  The Commission is scheduled to vote on February 7th and transmit its decision to Commerce on February 11th.  Following a hiatus while Commerce completes preliminary investigations of the alleged subsidies, the Commission will begin the final phase of its investigation into the state of the domestic industry.

In the antidumping duty cases, the Commission announced its preliminary injury determination on February 17, 2004.  Commerce thereafter announced its preliminary antidumping determinations in July and August of 2004.  The Commission announced the scheduling of the final phase of its investigations on August 19, 2004.  Commerce completed the final antidumping investigations in November and December of 2004, while the Commission made its final injury vote on January 6, 2005.

Also today, the U.S. International Trade Commission held a conference led by Commission staff regarding COGSI’s request for trade relief.  At the conference, COGSI again requested that the Commission exclude shrimpers from the domestic shrimp industry for the purposes of the agency’s injury analysis.  In their formal presentation, COGSI protested that including shrimpers would “impose a unique, unnecessary, and unwarranted burden” of showing injury to both suppliers (shrimpers) and producers (processors).

The industry witnesses testifying for COGSI were Carson Kimbrough (Carson & Co.), Jonathan McLendon (Biloxi Freezing/M&M Processing), Alan Gibson (Tidelands Seafood), Daniel Babin (Gulf Fish), and Ernest Anderson (Graham Shrimp Co.).   Despite specifically and repeatedly requesting that shrimpers be excluded from the domestic shrimp industry, COGSI’s witnesses emphasized the negative impact of imports on shrimp fishing businesses.

Alan Gibson testified that fishermen were suffering from low import prices:

“It isn’t only the processors who are suffering due to import price competition.  Shrimp fishermen are also feeling the effects of subsidized imports in the lower dockside prices they are receiving.  Those that haven’t left the industry can’t afford critical maintenance for their boats.  Without such maintenance, most of the boats will not be able to operate in 5 to 10 years.”

Ernest Anderson underscored the close relationship between boats and his business:

“As a result of the pricing pressure from imports, Graham Shrimp has often found that it cannot sell product at a reasonable margin while still meeting the shrimp boat prices that fishermen need to cover their own costs.  The boats I buy from are my bread and butter.  My pricing has to keep them operating while also being competitive in the market.  If current boat prices get any lower, they will not be able to afford to go out and fish.  In some instances, import prices don’t even meet the dock prices.”

And Daniel Babin testified that the further loss of boats would lead to the collapse of the entire domestic shrimp industry:

“We as shrimp processors have to base our prices on the costs to produce shrimp.  Our most significant costs are the prices we pay for shrimp from fishermen.  Fishermen, in turn, need to be able to cover their own costs of production, the most significant of which is fuel.  Fuel prices have been rising each year, which means the processors have to pay more to keep the fleet in operation.  When we can’t pay enough to cover fishermen’s costs, they either have to tie up their boats or leave the fishing life altogether – if this trend continues, it will mean the death of our domestic shrimp industry.”

Conversely, the panel of foreign exporters and U.S. importers opposed to trade relief argued that shrimpers should be included in the Commission’s definition of the domestic shrimp industry.  The panel in opposition to trade relief included a representative from Tampa Bay Fisheries, one of the 238 members of the Ad Hoc Shrimp Industry Committee.

Throughout their presentation to Commission staff, COGSI’s representatives declined to provide any specific reason for their request to exclude fishermen from the agency’s injury analysis.  COGSI asserted only that the burden of demonstrating injury to shrimpers would be unfair.  COGSI simultaneously also declared that “[w]e have no doubt that fishermen are injured.”

Written comments to the Commission are due on Thursday, January 24th.  Although the individual members of the Ad Hoc Shrimp Industry Committee have different views on the merits of trade relief, the Committee as a whole has taken no position either in support or opposition to COGSI’s request for countervailing duties.  The Committee will advocate for a domestic industry definition that accurately reflects the broad diversity of the U.S. shrimp industry.  In the meantime, the Southern Shrimp Alliance encourages all within the shrimp industry to become involved in the trade case.

Download the U.S. Department of Commerce’s pre-publication Notice of Initiation of the Countervailing Duty Investigations: