Muddying the waters
Lawmakers in the United States have passed a bill
which significantly undermines Vietnam's exports as
much as its commitment to free trade
AN GIANG PROVINCE & WASHINGTON - Worry and disbelief lace the waters of the
Hau Giang River in Vietnam's Mekong Delta. A flood
of bad news from the United States threatens to capsize
the livelihood of catfish breeders along this river. They
sank their life savings into the hefty floating cages
needed for the job. But in mid-November, U.S.
lawmakers moved to restrict Vietnamese exports of
catfish--even though the ink has barely dried on a
bilateral agreement aimed at fostering free trade.
"It's unfair," mourns 60-year-old Truong Huu Duc, who
sold his rice fields eight years ago to jump into the
seemingly lucrative catfish trade. "The U.S. is a friend,
so I feel sad that my friend does not support me. I feel
a little abandoned." Critics in both Vietnam and the
U.S. say that the catfish clampdown is a stunning
example of protectionism and hypocrisy, undermining
the free-trade policies most recently espoused by the
U.S. at the World Trade Organization talks in Doha.
The bad odour from the controversy has been hovering
over Vietnam's National Assembly as it debates the
final ratification of the U.S.-Vietnam bilateral trade
agreement, signed by U.S. President George W. Bush
on October 16. Washington observers say that the
fish-fight could also set a precedent for limiting
Vietnam's textile exports, vital to the future of the
Vietnamese economy.
But American catfish producers hail the new restrictions
as a victory for American consumers, who gobbled
down 283 million kilograms of catfish last year. Based
in the southern states of Mississippi, Alabama,
Arkansas and Louisiana, these producers characterize
the Vietnamese fish as imposters--in spite of a ruling by
the U.S. Food and Drug Administration last year that
there is scientific justification for the catfish label.
"They're from a different species and a different family,"
insists Hugh Warren, vice-president of the Catfish
Farmers of America. "It's like trying to equate kangaroo
meat with hamburger meat."
Like most trade disputes, the catfish brawl broke out
over declining prices, which have hurt producers in both
countries. U.S. producers now earn some $1.20 per
kilogram of catfish, around 38 cents less than they got
last year. They say that their break-even price equates
to $1.43 per kilogram. While some Vietnamese
breeders say they are also forced to sell their fish at a
loss, others are still eking out a profit by cutting down
on feed costs. The Americans blame the decline on the
influx of inexpensive Vietnamese fish.
Aquaculture is a rising star in Vietnam's economy and
90% of the catfish imported by the U.S. comes from
Vietnam, with the remainder sourced from Guyana,
Brazil, Thailand and Canada. The U.S. is the leading
market for Vietnamese catfish, followed by Hong
Kong, the EU, and Australia.
The Vietnamese catfish exporters blame U.S.
producers for dragging down prices. Last year Vietnam
provided just 3.7 million kilograms of the total
283-million-kilogram U.S. catfish market, although in
the frozen fillet category they've won an estimated 20%,
according to U.S. catfish farmers. It's true that one
variety of Vietnamese catfish, known locally as ca tra,
undercut prices for another variety known as basa. But
the Vietnamese say that the Americans are mainly at
fault for expanding inventories up to 30%, a figure they
get from the National Agricultural Statistical Service in
the U.S.
The outlook remains gloomy, according to an October
report by Consulting Trends International, a
California-based consulting firm. The report says that
the price drop is "primarily the result of higher domestic
catfish inventories in the U.S., which will depress prices
through the end of 2001 and 2002." The report adds
that the higher inventories are due to increased U.S.
pond acreage and lower feed prices, while catfish
prices have also suffered pressure, strangely enough,
from declining chicken prices in the United States.
For a bunch of profit-starved fisherfolk, the U.S. catfish
lobby had deep enough pockets to wage a highly
xenophobic advertising campaign against their
Vietnamese competitors. One advertisement
characterized Vietnamese catfish as dirty, compared
with their U.S. counterparts. "They've grown up
flapping around in Third World rivers and dining on
whatever they can get their fins on. Genuine U.S.
farm-raised catfish, on the other hand, are raised in
pure, fresh waters and fed a diet of natural grains and
proteins . . ." The ad--which ran in the national trade
weekly Supermarket News--concluded that "those
other guys probably couldn't spell U.S. even if they
tried."
The U.S. producers' tactics have revolved around the
campaign to have only the North American species of
catfish--known as Ictaluridae--recognized as "real"
catfish. The Vietnamese have been exporting two other
varieties which belong to different species, but still
qualify, according to the FDA. There are thought to be
2,500 species of catfish.
The dodgy tactics employed by the U.S. producers
appear to have worked. In mid-November, the Senate
approved a last-minute amendment tacked on by
southern senators to the agricultural appropriations bill,
effectively prohibiting the FDA from facilitating the
admission into the U.S. of fish labelled catfish unless it
comes from the Ictaluridae family. The bill was sent to
the White House on November 16 for President Bush
to sign.
The amendment drew withering comment from Senator
John McCain, a former prisoner of war in Hanoi. "With
a clever trick of Latin phraseology and without any
mention of Vietnam, these southern senators
single-handedly undercut American trade policy in a
troubling example of the very parochialism we have
urged the Vietnamese to abandon," McCain said,
vowing to attempt to overturn the amendment in a farm
bill that's unlikely to come up until later this year or early
next.
Talk about loss of credibility. "After spending years
encouraging the Vietnamese that open trade is a
win-win situation, it would be a shame if immediately
after the [trade agreement] is signed the U.S. shifts to a
protectionist 'we win, you lose' approach on catfish,"
says Virginia Foote, president of the U.S.-Vietnam
Trade Council in Washington.
With an estimated 30% of U.S. seafood restaurants
serving up Vietnamese catfish--slightly milder and softer
than the American variety--the amendment has come as
a shock. "Nobody in the U.S. owns the word 'catfish',"
protests Sal Piazza, owner of Piazza's Seafood World,
a New Orleans-based importer that works with
distributors to supply Vietnamese catfish to restaurants
nationwide. "We will be affected tremendously."
By any other name
However, Vietnam will still be free to export catfish to
the U.S., as long as it's called something other than
catfish. Back in the Mekong Delta's An Giang province,
the source of 70% of Vietnam's catfish, producers
shudder at the prospect of building up consumer
recognition for a new name. They predict an initial
fall-off in sales, although they're confident that Asian
restaurateurs in California will stick with them. After all,
the Vietnamese catfish was successfully marketed there
as "China sole" back before the U.S. lifted its trade
embargo and has also sold in Australia under the name
"Pacific Dory."
Ironically, Vietnam's catfish industry seems a prime
example of how global cooperation can enhance
production. An Australian importer, for example, taught
the Vietnamese how to slice a catfish fillet cleanly.
French researchers worked closely with a local
university on low-cost breeding techniques. And
Vietnam's leading catfish exporter, Agifish--which
raked in $25 million in revenues last year--depends on
industrial equipment from the U.S., including one
machine that spews fine chips of ice and another that
swiftly slices off fish skin.
Among the 15,000 Vietnamese families who breed
catfish, more than a few have opted to buy high-protein
feed from an American company, Cargill, which has run
local workshops on proper feeding techniques. While
the fish sector remains a small portion of Cargill's
business in Vietnam, executives say that they believe it
has the potential to equal the importance of the poultry
sector. "Cargill is for free trade," says Malcolm Sayer,
general director of Cargill Animal Nutrition in Vietnam.
A Cargill cap is perched on the head of Nguyen Ngoc
Duyen as she surveys her squirming stock in a floating
cage in the Hau Giang River. Duyen believes that
anyone who can produce good quality at a cheaper
price deserves customer loyalty--that's why she uses
American-brand Head and Shoulders shampoo to
wash her hair. But now that the U.S. won't be returning
the favour, she may drown in debts of 820 million dong
($54,373). She used the loan to build and stock her
seven floating cages--once the symbol of a more
buoyant future.
By Margot Cohen & Murray Hiebert - The Far Eastern Economic Review - November 29, 2001.
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