Is the Latest Antidumping Case a Sign That the U.S. Has Fallen Behind?
Antidumping investigations appear to be a well used tool in U.S. trade relationships these days. Though the concept has been around since the early 1900s, and evolved in its methodology over the years, the recent prevalence of investigations has sparked discussions on U.S. diplomacy and raised questions about our agricultural efficiency. Are antidumping investigations and their subsequent duties what we must rely on in order to fight global monopolies or, are there more variables at work here?
As of October, The Department of Commerce voted in favor of imposing duties on frozen shrimp imports from Ecuador, Indonesia, India, and Vietnam. The ruling is yet another in a long line of antidumping cases that have led to price increases for American consumers and have been an economic blow to nations counting on the large U.S. demand for their seafood. Not surprisingly, shrimp companies in these emerging nations have appealed the decision.
How Valuable is an Antidumping Investigation?
From a legal standpoint the duties are fair. It’s true that all four countries are home to shrimp companies that were built on government subsidies. The result is that Ecuador, India, Indonesia and Vietnam have predictable yields of shrimp and can raise them cheaper. American shrimp boat operators are selling a pound of shrimp for the same price they are paying for a gallon of fuel. The fleets still standing are sending fewer ships and having trouble hiring laborers. Cheap imports have made it impossible for them to turn a profit. Thus, the pressure to look at the competition.
The antidumping investigations and subsequent duties are interesting because Americans consume more shrimp than is produced domestically. The added duties will raise the price consumers pay. Americans eat over five pounds of shrimp per person per year and American shrimping companies can’t meet that demand. Low cost imports of farm raised shrimp from Asia, India, and South America have also played a part in keeping the price of the popular protein option affordable. Imposing duties could protect U.S. businesses and could help the Gulf reclaim its status as a shrimp capital of the world. Or, they could make it increasingly difficult for Americans to access affordable food.
The Congressional Research Service maintains that antidumping investigations act as a first line of defense for the American economy. But, they also point to instances where antidumping duties only hurt consumers. For example, when the U.S. suspended imports of fresh tomatoes. Mexico used the tomatoes they would have shipped to the U.S. as tomato paste and sold them to us anyway. Fresh tomato prices increased and consumers slowed their spending. In the end the consumer suffered, and the benefit to local tomato producers was limited because higher prices lowered demand.
The need for an investigation can point out where countries have room for improvement and make sure they are meeting their WTO commitments. Government funding in India, Ecuador, Vietnam, and Indonesia built efficient shrimp farming industries. The price gap could have more to do with a reliance on traditional shrimping methods in the U.S. than a malicious intent on the part of other nations to destroy American business. American shrimpers are not relying on automated technology to boost production.
How Do Antidumping Duties Impact Consumers?
Perhaps the biggest variable is how consumers respond. American consumers are increasingly interested in where their food comes from and how it’s handled. The initial petition to investigate brought into question the safety standards other nations have for shrimp production. Perhaps consumers will be happy to pay increased prices and enjoy shrimp less often as long as they know it came from nearby and it was harvested in the wild. On the other hand, it could be tomatoes all over again and consumers could opt to buy less shrimp while Indonesia, Vietnam, Ecuador and India find ways to sell us the same shrimp in a different form while traditional shrimping methods are propped up by the duties.
Defining less than fair value for market prices is increasingly complicated. If the shrimp industry in the U.S. hasn’t invested in keeping up with global industry efficiency, is it fair to penalize foreign shrimp companies who have? On the other hand, will there be a shrimp industry left in America if we don’t defend by imposing duties on cheaper goods?
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