The Southern Shrimp Alliance marked the beginning of May by requesting, in a filing exceeding 1,600 pages, that the U.S. Department of Commerce (“Commerce”) initiate formal investigations into the illegal destruction of protected mangroves by the Ecuadorian shrimp industry, the documented use of forced and child labor in Ecuador’s shrimp supply chain, and the Ecuadorian shrimp aquaculture sector’s receipt of funding administered by the Ecuadorian government that was initially provided by the World Bank, the Inter-American Development Bank, and the Development Bank of Latin America.
On March 6, 2025, in response to requests from six Ecuadorian shrimp exporters, Commerce formally initiated “expedited reviews” of the recently imposed countervailing duty order on Ecuadorian shrimp. An “expedited review” is a loophole in U.S. law that allows foreign exporters to obtain company-specific permanent exemptions from a countervailing duty order if the exporter was not individually examined during Commerce’s initial investigation and can show that it did not benefit from countervailable subsidies during the period of investigation (“POI”). Foreign exporters have treated “expedited reviews” as an opportunity to escape trade relief, believing that Commerce will not commit significant resources to these proceedings.
However, to date, Commerce has shown little interest in gifting exemptions to the Ecuadorian industry. Commerce’s requirements have already resulted in two companies withdrawing their requests, with both complaining that they were made with the anticipation “that the Department would adopt more streamlined procedures.” “Since [Commerce] is requiring full questionnaire responses and on-site verifications that are typical of [countervailing duty] investigations or administrative reviews,” both companies determined that they “are not in a position to undertake all the required steps to complete the expedited CVD review.”
Although exporters may view “expedited reviews,” as a get-out-of-jail free opportunity, these administrative proceedings also provide an opportunity for Commerce to conduct more in-depth investigations of countervailable subsidy programs. Accordingly, the U.S. shrimp industry has now formally asked Commerce to look into government benefits provided to the Ecuadorian shrimp industry that were not evaluated in the original investigation.
Ecuador enacted a number of laws to protect and preserve mangrove forests. Ecuador’s Constitution of 2008 recognizes mangroves as “fragile and threatened eco-systems” that warrant special status in the country’s legal system. Nevertheless, due in large part to the expansion of shrimp aquaculture, Ecuador’s mangroves have experienced substantial deforestation over the last three decades, with an estimated loss of 16.4 percent in coastal mangroves between 1985 and 2022 as aquaculture grew in those same areas by nearly 90 percent over the same timeframe.
Academic studies have tied the deforestation to illegal activities of the shrimp farming industry, with one study observing that: “Despite the efforts made to implement sustainable policies for mangrove management, the development of shrimp farming has led to illegal land concessions [and] authorizations for mangrove clearing without meeting the legally-established requirements.” Another study reported: “Even through [Ecuador’s] laws forbid deforestation and degradation of protected areas, the mangrove coverage reduced even in the most recent year (2010 to 2018) by 150.34 hectares due to conversion to shrimp farms, which shows a weakness in the control, surveillance and monitoring of these areas and an illegality on the part of shrimp farms.” Accordingly, the failure of the Ecuadorian government to enforce laws prohibiting the destruction of mangroves appears to constitute a significant countervailable subsidy to the country’s shrimp industry. The Southern Shrimp Alliance believes that this unfair trade practice merits further investigation by Commerce.
Separately, Ecuador’s laws prohibit both forced labor and child labor in shrimp supply chains. Nevertheless, 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.” As with illegal mangrove deforestation, the utilization of forced and child labor in the Ecuadorian shrimp supply chain exists due to the Ecuadorian government’s failure to meaningfully enforce the law and appears to constitute a countervailable subsidy. This practice, too, merits further investigation by Commerce.
Finally, Ecuador’s government sought and received $700 million in funding from the World Bank under the “Green and Resilient Recovery Development Policy Loan Program.” In program documents, the Ecuadorian government identified the shrimp industry as a sector that would benefit. Although funds came from the World Bank, the Ecuador’s government is responsible for administering the program. Recent changes in Commerce practice that prevented the agency from countervailing “transnational” subsidies have been eliminated and the Southern Shrimp Alliance believes that this program warrants further investigation by the federal agency.
Similarly, during the initial investigation, the American Shrimp Processors Association (“ASPA”) requested that Commerce investigate a program funded by the Inter-American Development Bank and the Development Bank of Latin America providing for the electrification of the shrimp sector. In declining ASPA’s request, Commerce relied upon a regulation – 19 C.F.R. § 351.527(b) – prohibiting the agency from finding a countervailable subsidy if “the funding for the alleged subsidy is supplied by an international lending or development institution.” However, this regulation has now been repealed and the “expedited reviews” afford Commerce the opportunity to now investigate this subsidy scheme.
“For too long, our trade laws have treated companies engaged in unfair trade with kid gloves,” said John Williams, the executive director of the Southern Shrimp Alliance. “An America First Trade Policy requires that our unfair trade laws create a level playing field. Although it is not what the Ecuadorian shrimp exporters intended, the U.S. shrimp industry hopes that Commerce will accept their invitation to conduct an even more in-depth investigation of their unfair trade.”
Read the narrative portion of the Ad Hoc Shrimp Trade Action Committee’s May 1, 2025 new 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