Catfish wars: Vietnam versus US
WASHINGTON - Call it the catfish wars. A royal battle continues to rage between the United States and Vietnam over a recent US ruling that Vietnamese catfish producers are "dumping" their products in the US market at below-market costs, undercutting catfish farmers in Mississippi and Arkansas.
The decision, announced on January 27 by the US Commerce Department, was worsened in Vietnamese eyes by that department's ruling in November that Vietnam is running a non- market economy.
As a result, the country's fish exports have been hit by higher duties imposed on countries where the state plays a guiding role in the economy. Ten companies that export frozen fish to the United States are now subject to duties ranging from 38-62 percent.
The twin rulings have angered Vietnam's government and upset Vietnamese in the United States who are trying to support their country's move toward capitalism and its plunge into the world market.
"The direct victims of this will be the poor Vietnamese farmers," said Chi D Pham, the chief executive officer of Potomac Investments and Research Associates, a Virginia company that consults with US companies doing business in Vietnam. "It's the poor guy against the rich guy."
The US decisions "might set a very bad precedent for Vietnam's export earnings", argued Pham, a former consultant to the International Monetary Fund, at a mid-February seminar on Vietnam sponsored by the Sasakawa Peace Foundation in Washington.
"The [Department of Commerce] ruling is basically attacking small farmers working privately," said Viet Vu, a United Nations economist who has advised the UN Development Program on projects in Vietnam and other countries in Southeast Asia. "They're attacking the private sector the United States wants to develop in Vietnam," he said at the same meeting.
Their comments echo earlier statements from the Vietnamese government in Hanoi.
On January 28, shortly after the preliminary decision on fish exports was announced by the Commerce Department and the International Trade Commission, Phan Thuy Thanh, a spokeswoman for Vietnam's Foreign Ministry, called the US moves "totally inharmonious" with the spirit of the US-Vietnamese trade agreement signed two years ago.
The ruling "demonstrates the increasingly high protectionism of domestic production in the United States, running counter to its policy of encouraging trade liberalization and international economic integration", said Thanh.
In recent years, the United States has become Vietnam's largest export market for its catfish. US shipments rose from 575,000 pounds (about 261,000 kilograms) in 1998 to more than 20 million pounds (9 million kilos) in 2001, and now account for about one- third of the country's fish exports.
In 2002, US importers purchased about US$55 million worth of Vietnamese catfish, primarily two types of fish called basa and tra. They are prized by seafood and Asian restaurants for their mild, pleasant flavor. Nearly all of the fish enters the United States through the ports of San Francisco and Los Angeles.
The rising imports from Vietnam have been a disaster for the $590- million-a-year catfish industry in the United States, which is concentrated in Arkansas, Mississippi and a few other southern states.
According to the Catfish Farmers of America (CFA), the industry group that filed the complaint that led to the Commerce Department decision, US catfish prices decreased from 69 cents a pound ($1.52 a kilo) in January 2001 to about 55 cents a pound in 2002.
The association claims that catfish farmers cannot make a profit unless the price is above 60 cents.
The Catfish Farmers of America sought tariffs as high as 190 percent of Vietnamese imports, but the Commerce Department, charging that Vietnamese producers "have made sales to US customers at less than fair value," settled on 38-62 percent.
US buyers of Vietnam's fish exports must now post a bond equal to the tariffs on the specific product. Commerce Department officials will visit Vietnam over the next month and will then make a final determination that will determine the final tariffs to be paid.
In any case, the CFA said the Commerce ruling will bring "much needed relief to catfish farmers, processors and thousands of workers who have felt the impact of this unfairly traded product".
About 13,000 people work in the US industry, in contrast to 300,000-400,000 in Vietnam, the Arkansas Democrat-Gazette recently reported.
The newspaper also said that overproduction in US catfish farms has affected prices. Citing US Department of Agriculture statistics, the Democrat-Gazette said catfish-pond acreage increased by 28 percent, more than 42,000 acres (17,000 hectares), between 1994 and 2002.
In Washington, Pham and Vu argued that the basis for the US judgment against Vietnam was flawed.
Pham disagreed with the Commerce Department's contention that the Vietnamese government intervenes in the country's price system and artificially forces down prices.
Since Vietnam began its economic reform program called doi moi, he said, prices have been liberalized both in the domestic markets and in foreign trade. "Supply and demand do work in Vietnam," he said. "I do think there is a price system there."
Pham also noted that Vietnam has a "vibrant private sector". Privately owned companies, he said, increased in number by 190 percent between 1995 and 2002 while state enterprises dropped by 26 percent in the same period. Last year, privately owned companies invested $3.4 billion in the country, he added.
Vu said Vietnam had adopted a "market economy with a socialist orientation" where "prices and wages are set by the market".
"Having state-owned enterprises doesn't make an economy non- market," he said. "Some state enterprises are necessary foundations for some countries to grow quickly, as in South Korea."
But while there are few restraints on trade, Vu noted that Vietnam does not allow freedom of association or the formation of non- governmental groups.
Naranhkiri Tith, a Cambodian consultant to the IMF and a former financial advisor to the prime minister of Cambodia, disagreed with some of those arguments. He argued that China has developed a more solid market economy, while Vietnam's leaders want to preserve the framework of socialism.
"China saw communism as a means to an end, while in Vietnam, communism is the end," he said. "The practical consequences are very different."
By Tim Shorrock - The Asia Times - February 20, 2003.
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