Living Economics

Byrding for Profit
U. S. shrimpers use anti-dumping protection to resist competitive pressure from more efficient Asian shrimp farmers and to gain de facto subsidy.

Development of efficient shrimp farming in Asia, particularly Thailand, China and Vietnam, has caused large decreases in the price of shrimp and a global surplus of shrimp. Wholesale prices have dropped almost fifty percent in recent years, delighting shrimp lovers in the United States (Sackton 2002).

American shrimp producers, however, are far from delighted. Falling prices have hurt their bottom lines as they struggle to compete with the more efficient shrimp farmers. Higher costs and regulations prevent the development of a shrimp farming industry in the United States, leaving U.S. producers to trawl the seas for wild shrimp (King 2004).

Unable or unwilling to improve efficiency, U.S. producers have cried out to the government for help. Some creative math (Mallaby) has allowed the Commerce Department to determine that foreign producers are dumping shrimp, and the U.S. producers have asked for tariffs of 30% to 349% (King 2004).

As if the tariff is not by itself enough of an incentive to file anti-dumping claims, U.S. shrimpers are receiving help to make their legal action less expensive. Congress appropriated $17.5 million in disaster relief funds to assist the ailing shrimp industry (Coons), from which Louisiana has distributed hundreds of thousands of dollars to cover shrimpers' legal fees (King 2004). Mexican shrimp producers, fearing accusations of dumping, decided to provide financial assistance to their U.S. competitors in the action against the Asians (Sackton 2002).

Behind this suit, U.S. producers are eyeing the lucrative Byrd amendment, or Continued Dumping and Subsidy Offset Act of 2000, which distributes tariff revenues to the domestic firms that filed the anti-dumping claims. With little to lose and much to gain, shrimpers across the nation are joining the case.

Opponents to the controversial Byrd amendment have calculated that a fifteen percent tariff would generate $180 million in revenue, which would then be distributed to some 200 U.S. shrimp producers (King 2002). Altogether in 2002 the trade law resulted in payouts of nearly $330 million to about 1200 domestic firms. Some of the biggest winners have been ball-bearing firms, which received over $80 million in 2001 ("Continued…"), and candle makers claiming $65 million from heavily taxed Chinese candles. Other recipients include pasta firms, crawfish producers and steel makers (King 2002).

A duty on imported shrimp would drive up prices, hurting consumers and businesses that buy shrimp. That increase would go directly to government accounts and then into the pockets of U.S. producers. In effect part of each purchase of imported shrimp would be a more or less direct subsidy to domestic shrimpers.

In a freely competitive market, the proper response to low prices and overproduction is to weed out the least competitive companies. Predictably the Asian shrimp producers are either increasing efficiency or switching industries (Sackton 2003). The Americans, however, with powerful legal arms and helpful legislators are attempting to resist changes through what amounts to legal extortion.

References:
  • "Continued Dumping and Subsidy Offset Act of 2000" eBearing.com
  • Coons, Ken. "Mississippi Seeks Shrimpers' Advice on How to Spend Disaster Funds."
  • King, Neil Jr. "Host of Companies Pocket Windfalls from Tariff Law." Wall Street Journal. 5 December 2002.
  • King, Neil Jr. "While U.S. Operators Troll for Protection, Critics Cite the Industry's Inefficiencies." Wall Street Journal. 11 June 2004.
  • Mallaby, Sebastian. "A Fishy Approach to Fair Trade." Washington Post. 29 March 2004.
  • Sackton, John, ed. "Mexican Shrimp industry fears US anti-dumping move." South American Business Information. 1 November 2002.
  • Sackton, John. "Worldwide shrimp surplus threatens industry." International Herald Tribune. 9 May 2003.
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