An antidumping case against Vietnamese catfish has a big catch
At issue is a seven-year-old antidumping case alleging that Vietnamese producers sell frozen pangasius fillets in the U.S. at a price less than their cost of production. The Commerce Department last week filed notice that it wants to change how it calculates the difference between Vietnam's production cost and the selling price. The result of this esoteric adjustment could be dramatically higher duties, reports www.megafishnet.com with reference to VASEP.
Washington has been busy building bridges with Hanoi as part of a strategy to counter Beijing's growing assertiveness in the South China Sea, and that's all to the good. What isn't so productive is the Obama Administration's simultaneous spearing of one of Vietnam's most important export industries.
At issue is a seven-year-old antidumping case alleging that Vietnamese producers sell frozen pangasius fillets in the U.S. at a price less than their cost of production. The Commerce Department last week filed notice that it wants to change how it calculates the difference between Vietnam's production cost and the selling price. The result of this esoteric adjustment could be dramatically higher duties.
For that, Vietnamese exporters-and the U.S. consumers who would have to pay higher fish prices-can thank America's domestic catfish lobby. Since Commerce designates Vietnam a nonmarket economy, it uses the price level of another country to estimate how much it costs to make a fish fillet in Vietnam. Until now, Bangladesh was used as that proxy. At the Catfish Farmers of America's request, trade bureaucrats now propose switching to the Philippines. Plugging those numbers into the Commerce Department's calculators yields dumping margins of around 130%, up from zero last year.
Prime Minister Nguyen Tan Dung expressed his dissatisfaction with Commerce's proposal Monday in a meeting with Washington state Governor Christine Gregoire, according to state media, and little wonder: The U.S. is Vietnam's second-largest market for the fish behind the European Union. Total exports are set to hit $1.5 billion year-about 2% of total projected exports-of which nearly 10% goes to America.
Zapping these exports is just what the Catfish Farmers of America want. Vietnamese pangasius has a taste and texture similar to an American catfish, although it's a different species. It's also cheaper. So domestic producers and their congressional friends, mostly in the Mississippi River delta region, have been trying to keep the imports out for years.
If they succeed, the pangasius will become the latest example of how a relatively small domestic lobby can exploit a technical provision of U.S. trade law to goad Commerce into making a decision that will hurt a significant industry of a country with which America has bigger fish to fry. Consider the antidumping and countervailing duties Commerce has slapped on billions of dollars of imports from China, including ribbons and steel pipes.
Some political leadership here might help. Nearly two years after taking office. Mr. Obama still hasn't filled the two politically appointed jobs at the head of the office within Commerce that makes these calls. Other measures, such as his recently announced 14-point plan to stiffen antidumping and countervailing-duty enforcement against countries like China and Vietnam, signal to bureaucrats that they can't go wrong by being too strict.
Part of this problem is structural: Trade laws that give domestic interest groups plenty of opportunities to drive an Administration's trade policies. Indeed, had Commerce not sided with the catfish farmers in this instance the law would have allowed them to sue to see if they could convince a judge instead. It would be far better to give Presidents greater discretion to pursue-or not-trade cases like this one as part of a broader economic and foreign policy.
Until Congress gets around to fixing the trade laws, however, Presidential trade rhetoric matters. Mr. Obama has hurt his cause with two years' worth of "enforcement" talk to the exclusion of a real trade policy. As the Vietnam example shows, both trading partners and American consumers will pay the price.