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US 'catfish
war' defeat stings Vietnam
By Tran
Dinh Thanh Lam
HO CHI MINH CITY -
Vietnamese exporters and officials are still smarting
from an unfavorable ruling on the country's huge catfish
exports to the United States - and the painful lessons
it teaches when it comes to the perils of freer trade
and a market economy.
A week after Vietnam lost
what has been called the "catfish war" between the
country and the United States, strong protests continue
to spread across Vietnam, not just among business people
and officials but also in local media.
"It's
totally unfair and does not reflect the objective fact,"
said Phan Thuy Thanh, spokeswoman for Vietnam's foreign
minister. "The application of unfair protective barriers
to Vietnam's tra and basa catfish exports
to the US over the protest of public opinion - including
American opinion - shows the increasing tendency to
protect domestic production in the United States."
She was reacting to the July 23 ruling by the US
International Trade Committee (ITC), which found that
the importation of Vietnamese catfish had caused losses
to the US market, and subsequently imposed higher
tariffs on imports from Vietnam.
In recent
years, the United States has become the biggest importer
of Vietnamese catfish, importing 13,000 tonnes valued at
US$38.3 million in 2001. The figure increased to 18,300
tonnes, worth $55.1 million, between January and
November 2002.
The ITC's ruling, made after a
40-second vote, clears the way for the slapping of stiff
duties - 37-64 percent and retroactively - proposed
earlier by the US Department of Commerce. Before the
lawsuit, catfish import duties were just 5 percent.
Last month, the US Commerce Department itself
ruled that Vietnamese fillets have been "dumped" or sold
in the US market at unfairly low prices. The new tariffs
will come into force by July 30, 2003.
"It's not
us but them that are unfair," the chairman of Vietnam's
Association of Seafood Exporters and Processors (VASEP),
Nguyen Huu Dung, said of the US catfish farmers and the
government.
Since the start of the "catfish
wars" in 2002, VASEP has maintained that Vietnam's
catfish exports are cheaper than US products because of
cheaper labor and feed costs.
At the core of the
issue is resentment by US catfish farmers and
processors, represented by the Catfish Farmers of
America, who complained that Vietnam had captured 20
percent of the $590 million market for foreign catfish
fillet by selling at prices below the cost of
production.
TCFA lobbied the US Congress to
declare that out of 2,000 catfish types, only the
US-born family named Ictaluridae could be called
catfish. Vietnamese producers had to market their fish
in the United States by using the Vietnamese terms of
basa and tra.
Later, US commerce
officials initiated an anti-dumping case against
Vietnamese catfish and declared Vietnam a "non-market"
economy, one where the government seeks to determine
economic activity largely through central planning,
instead of market forces.
The ITC last week
followed suit, voting that the US catfish industry was
hurt by Vietnam's unfair competition.
For
Vietnamese officials, the catfish issue shows how tough
the going can get in the area of the free market, more
than a decade after the country went down the road of
doi moi or economic renovation.
The ITC's
ruling proves that "a small group of US catfish farmers
could create pressure, forcing US public servants to
distort truth and present falsified evidence, to apply
trade protectionism, despite the so-called 'trade
liberalization and fair competition' that US politicians
often preach", Dung said in a VASEP statement.
The statement quoted market analysts and
economists from the US Precision Economics LLP and HM
Johnson and Associates as affirming that imports of
Vietnamese frozen catfish did not cause material harm to
the US catfish industry.
Andrew Forman,
president of Infinity Seafoods Inc of Franklin,
Massachusetts, and an importer of Vietnamese catfish,
said the new tariffs are unfair and will not solve the
problems US catfish farmers have been facing. "It is
basic supply and demand," he said.
For Vietnam,
the new tariffs will cause lots of hardship, officials
say. "The unfair ruling will create difficulties for
thousands of catfish farmers and workers, as well as the
catfish industry," Dung said.
Some half-million
Vietnamese live off the catfish trade in the Mekong
Delta. Already, the catfish dispute has pushed down
prices at An Giang province - the biggest producer of
catfish in the delta - and threaten the livelihoods of
thousands of farmers.
Already, Prime Minister
Phan Van Khai has called on traders to buy Mekong
catfish at higher prices to help farmers. Vice Minister
Nguyen Thi Hong Minh proposed that traders seal
contracts with producers and assure them that they will
buy their products at a minimum price of VND9,000 (56 US
cents) a kilogram.
Already, the Ministry of
Fisheries has forecast that the dispute on Vietnamese
catfish would affect the country's exports this year. It
forecast that Vietnam's catfish exports to the United
States would reach just $20 million this year, compared
with $55 million in 2002.
"Our error in the past
few years was to focus too much on the US market. The
Bilateral Trade Agreement makes us look through rose
spectacles and forget the ill-fated side of that giant
market," Dung said. "We should have studied the market
thoroughly and known the rules of the game better."
Indeed, "the fate of Vietnam's catfish offers a
warning to poorer nations short on leverage in the world
trading system: beware of what may happen if you
actually succeed at playing by the big boys' rules",
said a New York Times editorial on July 22.
Nevertheless, an optimistic Dung says there is a
bright side: the "catfish wars" helped promote
basa and tra catfish on the world market.
VASEP vice chairman Ngo Phuoc Hau supported
Dung's assertion. He said Vietnamese catfish exporters
and producers either have to raise US catfish or develop
processing plants inside the United States, just as
Japanese auto makers did successfully in the 1960s and
1970s.
Seafood exporters have also been scouting
new markets such as France, Russia, Canada, Sweden,
Britain, Australia, China and Hong Kong.
At the
same time, Fisheries Ministry officials are busy
reminding seafood exporters to watch out for another
pending lawsuit in the United States - this time,
against shrimp exports from Vietnam and other countries.
(Inter Press Service)
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