Indian seafood exporters to benefit as US lifts CVD on shrimp

India's seafood exports to the US was hit badly after the US imposed a 11.17 per cent antidumping duty in 2005

The US International Trade Commission (USITC)’s decision not to impose countervailing duty (CVD) on shrimp imports from India and six nations — Indonesia, Thailand, China, Ecuador, Malaysia and Vietnam — has come as a great relief to the seafood export sector, under pressure from economic slowdown in the European Union (EU) market.

The US is the largest importer of Indian seafood in value terms because a major chunk of imports by the US is high-value items such as shrimp. However, India’s seafood export there was hit badly after the US imposed a 11.17 per cent antidumping duty in 2005. The number of Indian exporters to the US declined drastically from 280 in 2005 to 68 in 2009.

Since 2010, though, exports to the US have been picking up after Washington slashed the duty to 3.49 per cent. The US imported 92,447 tonnes of marine products, valued at Rs 4,027 crore, from India during 2012-13 against 68,354 tonnes (Rs 2,978 crore) in 2011-12. There has been a 35 per cent rise in both volume and value of exports in FY13.

Exporters have always held CVD as a serious threat. The USITC’s latest decision to withdraw CVD is a welcome step, said leading Kochi-based exporters.

A J Tharakan, president, Seafood Exporters Association of India (SEAI), told Business Standard this was a major victory. If CVD continues, India cannot compete with other south-east Asian countries such as Thailand in the US market and India is now in an advantageous position to compete with leading shrimp exporting countries, he added.

Already, the US imposes 3-4.5 per cent duties under various heads. “A high rate of CVD will seriously affect our exports to the US. Also, if they (US government) decide to execute bonds for exports, it will further weaken our position,” said an exporter.

Indonesia and Thailand were expected to benefit because there was zero duty for them in the final duty determination of the US department of commerce (DOC). However, there was large-scale loss in production due to early mortality syndrome (EMS) in Thailand and Indonesia. Therefore, these countries had to import from India to meet their commitments in the US market, said Anwar Hashim, former president of SEAI.

With the CVD vanishing, India can compete with other major producing countries on price, said a leading exporter. “Fortunately, EMS is not present in aquaculture farms in India and production is in full swing . So, the USITC decision will be advantageous to India,” he added.

Due to CVD (5.85 per cent) and the present level of antidumping duty (3.49 per cent), India’s shrimp exports to the US would have been costlier than any of its closest competitors. Moreover, if CVD was imposed, it would have helped Thailand and Indonesia to dominate the US shrimp market and market access for Indian shrimp would have been affected.

While ruling out CVD for import from seven countries, including India, USITC determined the US industry was neither materially injured nor threatened by the imports. USITC’s panel of judges voted 4-2 against imposition of CVD against India and other six countries.

Leena Nair, chairman of Marine Products Export Development Authority, said the USITC’s ruling would bring great relief to the shrimp industry and shrimp exporters.

In May, DOC had determined a CVD of 5.91 per cent for exports from India. Later, on August 13, DOC announced its final determinations and reduced the duty to 5.85 per cent for India.

In August, Washington raised the duty for Ecuador to 11.68 per cent from zero duty (de-minimis). DOC granted Thailand and Indonesia, the No 1 and No 3 suppliers of shrimp to the US, de-minimis duty. China got 18.61 per cent, Malaysia 54.5 per cent and Vietnam 4.52 per cent duty in the final determination. China’s was 5.76 per cent. Thailand, though, had a sigh of relief as it had 2.09 per cent duty in the preliminary determination. For Vietnam, it was 6.07 per cent in May. Malaysia’s duty had been reduced from the earlier 62.74 per cent.

All the seven countries together export 70 per cent of the total shrimp imports to the US. But with Thailand and Indonesia excluded, the countervailing duties practically applied only to 40 per cent of the US imports, leaving 60 per cent of imports untouched. According exporters, this takes away the rationale of providing protection from injury for the domestic producers.

DOC had started CVD investigation against India and six other countries last December based on a petition filed by the Coalition of Gulf Shrimp Industries, a local shrimp producers organisation.

The investigation was based on a finding that 21 subsidy programmes extended to seafood exporters in India helped them export at a much-cheaper rate, affecting the US shrimp industry in bad shape. Twenty-five such subsidy schemes of China, seven of Ecuador, 14 of Indonesia, 16 of Malaysia, 12 of Thailand and 20 programmes of Vietnam also attracted investigation.

In 2011, the US imported shrimp products worth $4.3 billion from these countries.