AD Penalty on Ecuadorian Shrimp Scrapped: Impact on Thai Shrimp in US (Business Brief No.2034)

The US Commerce Department recently announced revocation of anti-dumping (AD) duties imposed on Ecuadorian shrimp imports at 4.42 percent, effective August 15, 2007. The move was based on a WTO appellate ruling in favor of Ecuador's request against the US imposition of AD penalties. This seems to bode well for Thai shrimp exporters, as Thailand had also filed a complaint with the WTO about US AD tariffs on Thai shrimp. However, the verdict from the WTO has yet to be announced. If Thailand is spared, the Thai shrimp industry may see brighter exports ahead, as the US market accounts for half of Thailand's shrimp exports.

Even so, a caution to be noted is that Ecuador now has an advantage over Thailand pending the WTO ruling on the Thai shrimp case. Meanwhile, we should closely monitor the judgment of that world trade body about an Indian complaint. It is likely that the WTO ruling on Indian shrimp will be announced sooner than that of Thailand. Both India and Ecuador have filed complaints with the WTO on unfair practices used by the US to calculate shrimp anti-dumping duties. Thailand cried foul over unfair US trade practices in calculating these duties as well as the C-bond requirement – a practice regarded as double taxation. It is expected that the WTO dispute proceedings on the Thai case may take longer than the Indian and Ecuadorian requests, though.

The problem of shrimp and prawns exported to the US market has resulted in exporters of Thai shrimp products shifting their focus to the EU and Japanese markets instead. Export opportunities to these two markets are rising thanks to reinstated GSP privileges on Thai shrimp products granted by the EU, while the Japanese are offering tariff reductions as a result of the JTEPA. However, exporters of Thai shrimp products will have to adjust rather substantially to fight for market share in both these markets. In the EU market, black tiger prawns and fresh water prawns are still in demand due to their lower prices than white shrimp and lesser competition. For the Japanese market, Thailand must expand black tiger prawn cultivation and increase the production volume of jumbo-size prawns, as well as place more emphasis on exports of processed shrimp to meet Japanese market demand to meet the trend in Japan to cook at home.