Thai Shrimp Exempted from US Countervailing Duties; Limited Benefits Expected (Current Issue No. 2393 Full Ed.)

On August 13, 2013, the US Department of Commerce announced a ruling from their investigation into countervailing duties (CVD) on seven major shrimp exporters. They ruled that Thailand and Indonesia would be exempted from the CVD because each country's exports receive only small subsidies from their governments. Another five countries would be obligated to pay the CVD, with Malaysia facing the highest charge, followed by China, Ecuador, Vietnam and India. These five shrimp exporters, however, will have to wait for the findings from another investigation by the US International Trade Commission, expected in mid-September. If that investigation rules out the suggestion that these countries have had an adverse effect on US operators, they also will not have to pay the CVD.

Amid numerous troublesome factors facing the Thai shrimp industry, KResearch holds the view that the US ruling is a positive sign. However, the benefits of the ruling will be limited toward our shrimp exports over the remainder of 2013. Due to falling cultivation yields, it is predicted that the export value of Thai chilled and frozen shrimp will likely drop 30 percent YoY in 2013 after contracting sharply by (-)37 percent YoY in 1H13. Meanwhile, if production shortfalls and workforce issues are mitigated, coupled with recoveries in major trade partner economies – the US, EU and Japan in particular – our shrimp industry may see a more promising revival early in 2014.