Abstract:
The United State officially imposed anti-dumping measures on Vietnamese catfish from 2003 and such measures still remain in effect. This paper firstly analyses key factors of the dispute and the arguments of both parties on issues which regarding the determination of normal value and calculation of dumping margin for certain frozen fish fillets from Vietnam. The outcome of this paper is to point out the U.S anti-dumping duty on certain frozen fish fillets from Vietnam are inconsistent with the WTO Anti-Dumping Agreement.
Keywords: Anti-dumping measure, dumping margin, catfish fillets, WTO laws.
Farming of catfish is a vital activity in Vietnam, reared in ponds and floating cases. Tra and Basa fish farming [1] is a traditional career and a means of livelihood for farmers in the Mekong Delta River in Vietnam. Thanks to the Governments trade liberalization reforms catfish production increased substantially in recent years to catering to increased international demand and market opportunities. Vietnamese catfish have become a popular product in the U.S market by its quality, taste and competitive price [2]. Additionally, there are many American who emigrated from Asian countries and although they are living in the U.S, they still keep their traditional favourite food and taste. Therefore, there are not only Vietnamese catfish, but also other catfish from Asian countries such as Thailand, Bangladesh, and Indonesia etc. are not hard to be popular in the U.S. As a consequence, the volume of Vietnamese frozen catfish fillets exported to the U.S. market increased from 54.5 tons in 1997 to 7,765 tons in 2001, reached the peak at 101,726 tons in 2013 and 87,753 tons in 2015 (90% of which was the Tra species) [3]. However, farming of catfish is also an important industry in the Southern United States i.e, Mississippi, Arkansas, Alabama, and Louisiana. The Association of Catfish Farmers of America (CFA) faced with an increasing competition from cheaper Vietnamese catfish, and deemed such competition was unfair and caused material injury to their business and of course, they acted to halt catfish imports.
The sharp increase in quantity of Vietnamese catfish in the U.S. market took attention of the U.S. catfish industry, therefore, the CFA acted to protect their market as well as interests [4]. Firstly, the CFA conducted an advertisement campaign against Vietnamese catfish on environmental and sanitary ground [5]. In 2001, the CFA lobbied for a ban on imports of catfish from Vietnam and alleged that Vietnamese catfish was raised in unhygienic conditions in the Mekong River with the water containing poisons, wastes, dirty feeds and so on. In order to gathering evidence for their arguments, a delegation of U.S. catfish farmers and processors went to Vietnam on a “fact-finding mission” [6]. Yet, the trips outcome was not as expected, the U.S. delegation who could not find any evidence that Vietnamese catfish were growing in polluted water and processing them in crude plants [6].
The CFA moved into the second campaign was so-called “catfish trade name” [1]. The CFA alleged that Tra and Basa fish were not “catfish”, thus, these fish could not be sold with the labelling as “catfish”, and the term “catfish” should solely be permitted to use for fish of the family Ictaluridae which is mainly raised in the Southern States of the U.S (Section 755 and 10806 of the U.S. 2002 Farm Bill). In response, in 2001, the U.S. Congress passed a law which regulated that Vietnamese catfish was not catfish and had to label under the name of “Tra”, “Basa” [7]. The passing of the 2002 Farm Bill, however, did not lead to a significant recovery in prices, but lead to increase public awareness on the Vietnamese catfish in the U.S. and other markets [8].
Because the sanitary and phyto-sanitary measures and catfish trade name campaign did not have anticipated outcome, the CFA launched dumping allegations, and the U.S. Department of Commerce (DOC) ruled in favour of the dumping claim of the CFA and established tariffs ranging from 37 to 64 percent on imports of frozen catfish fillets from Vietnam in 2003 [9]. Next, the U.S. International Trade Commission (ITC) ratified the DOC ruling, in July 2003. As a result, Vietnamese exports of catfish to the U.S. fail to the point of being almost completely shut down [10]. It should be noted that, there was an unexpected outcome was that the winner in the economic concept was not the U.S. catfish industry. Indeed, Vietnamese catfish was get free advertisement by the CFAs campaign and when the Vietnamese catfish shifted its products away from the U.S., Thailand, China and also some other catfish exporting countries derived the largest advantages [9].
To date, the antidumping duty on certain frozen Tra and Basa fillets from Vietnam has passed thirteen Administration reviews, and the latest Administration review held that such antidumping duty still remains in effect until further notice [11].
2. The arguments of the both sides on anti-dumping measures on frozen fish fillets from Vietnam
It is necessary to summarize the key facts of the case as follows:
(i) The “domestic like product” was defined as the U.S frozen catfish fillets, whether or not breaded or marinated [9]. The U.S catfish industry was determined as the affected domestic industry, excluding the U.S catfish farmers [9]. It should be underscored that although the domestic like product was only determined as the domestic frozen catfish fillets, the DOC stated that the scope of its investigation included not only “Frozen catfish fillets”, but also three other products i.e., “Frozen fish fillets, NESOI”, “Frozen freshwater fish fillets”, and “Frozen sole fillets” [12].
(ii) In the notice of final anti-dumping duty determination of sales at less than fair value and affirmative critical circumstances, the DOC concluded that the imports of Tra and Basa fish from Vietnam were being sold at less than fair value in the U.S market [12].
(iii) In the final phase of the ITCs investigation, it determined that the U.S catfish industry was material injured by reason of the Tra/Basa products from Vietnam as the subject products found to be sold in the U.S at less than fair value [9].
(iv) The ITC stated that the imports of Tra and Basa products from Vietnam was the main reason which caused a significant decrease in prices and production of the domestic like product (Channel catfish) [9].
(v) Regarding “non-market economy status” of Vietnam, the DOC determined that “Vietnam should be treated as a non-market economy country under the U.S anti-dumping law” [13], and then, Bangladesh was chosen by the DOC as the appropriate primary surrogate country for Vietnam [13].
2.1. Whether the subject Vietnamese products were sold at prices less than fair value
As noted earlier, in the final phase of the ITCs investigation, it indicated that Tra and Basa products from Vietnam were being dumped at the U.S because the Vietnamese government subsidized the Vietnamese catfish industry. However, the fact is that production costs of a unite catfish product in Vietnam at that time and now are much cheaper than those in the U.S. It should be noted that wage for a Vietnamese worker at the period 1999 – 2003 was around $1.5 – $2 per day (included food, no insurance and other welfare) and this authors survey in October 2016 revealed that the wage is around $5 – $7 per day (included food, no insurance and other welfare), such wage is applied for male workers, female workers may get lower. Additionally, in the period 1997 – 2003, the volume of floating cages in Vietnam were very high and the catfish farmers did not have to pay high amount of environmental taxes and fees like their competitors in the U.S. Therefore, the production costs and other expenses were very low and of course, the prices of Tra and Basa fish were normally lower than the U.S like product. Accordingly, Tra production costs calculated by Thanh (2003) were around 10,398 VND per unit [14]. Additionally, calculations made by ActionAid Vietnam, a UK-based non-profit organization, based on the data obtained from the Department of Agriculture and Rural Development of An Giang province in 2002, showed that the unit cost of Tra farming was only 8,600 VND per kilogram of fish. Compared to Tra, Basa has higher production costs due to higher costs of fingerlings, longer growing time and higher level of feed consumption. On average, the unit cost of Basa was 1,000 VND to 2,000 VND higher than that of Tra. Before 1998, farmers mainly raised Basa, but are now switching more and more to Tra. It is worth noting that the above calculation was based on cage-fish farming, thus, the unit cost and market price of cage-fish were 1,000 VND higher than those of pond-fish [14].
According to Thanh X. Nguyen (2003), the net price of Tra fillets per kilogram was 43,000 VND (at factory gate, excluding selling costs), and the export price of such product in the U.S market was around 52,500 VND – 57,000 VND/kg of fillets ($3.5-$3.8/kg of fillets) [9]. While, the average price of the U.S frozen fish fillets sold by the domestic processors were $2.88 per pound (# $6.3/kg) in 2000. Although Vietnamese processors and exporters submitted their evidence to prove that their products which were not sold at prices less than fair value in the U.S market, because Vietnam is designed by the DOC as a non-market economy country, thus, the DOC obtained data of production in India and Bangladesh for calculating of normal value and dumping margin for Vietnamese frozen fish fillet. Consequently, the DOC concluded that Vietnamese frozen fish fillets were sold at less than its normal value and being dumped in the U.S.
2.2. Whether the Vietnamese products caused material injury to the U.S. catfish industry
In the final phase of the ITC investigation, it concluded that because Tra and Basa products and the U.S catfish are used interchangeable [9]. Therefore, the imports of Vietnamese catfish caused material injury to the U.S catfish industry. However, this argument is completely contradicted with the early statements made by members of Congress and the CFA when they lobbying to pass the 2002 Farm Bill with the regulations in favour of the CFA on using the term “catfish”. It is important to noted that under the U.S antidumping law, if the Basa and Tra fish were not considered similar to catfish, not directly compete with the domestic product concerned, then it becomes more difficult to prove that increased imports of the subject fish are harming the US catfish industry [15].
Furthermore, the ITC stated that there was a huge volume of the subject products imported to the U.S from 12.5 million pounds in 2000 to 26 million pounds in 2001 and 36 million pound in 2002. Besides, the ITC indicated that the market shares of the subject imports grew from 8.4 percent in 2000 to 19.6 percent in 2002, while the domestic like products market share dropped from 90.7 percent in 2000 to 80.1 percent in 2002 [9]. Yet, as earlier noted, the DOC and ITC determined the subject products under their investigation not only frozen catfish fillets, but also other frozen fish fillets, thus, if only the frozen catfish fillets were to be investigated. By this reason, if the ITC counted the volume of only frozen catfish fillets, its conclusion was to be different, and thus, the actual volume and value of Vietnamese frozen catfish fillets exported to the U.S market were as follows:
It is worth underlining that, the decision of DOC did not distinguish the injury caused by the dumped imports from Vietnam and the injury was originated from the U.S. catfish industry itself. To support this argument, Josupeit (2007) [17] illustrated that the main reason to cause the U.S. catfish industry to be weak was the decline of its enterprises profits and the decision of farmers to grow agricultural crops rather than catfish. The decreased income was mainly because of decreasing real price and the increase of production costs. The U.S. Embassy in Vietnam also concluded “the Embassy does not believe there is evidence to support claims that Vietnamese catfish exporters to the U.S are subsidized, unhealthy, undermining or having an injurious impact on the catfish market in the U.S” [17].2.3. Whether the determination of the DOC on Vietnams economy status based on reasonable grounds
After examined the economy and policy at Vietnam, the DOC concluded that they would treat Vietnam as a non-market economy country based on these grounds:
“The Vietnamese currency, the dong, is not fully convertible, with significant restrictions on its use, transfer, and exchange rate. Foreign direct investment is encouraged, but the government still seeks to direct and control it through regulation. Likewise, although prices have been liberalized for the most part, the Government Pricing Committee continues to maintain discretionary control over prices in sectors that extend beyond those typically viewed as natural monopolies. Privatization of SOEs and the state dominated banking sector has been slow, thereby excluding the private sector from access to resources and insulating the state sector from competition. Finally, private land ownership is not allowed and the government is not initiating a land privatization program” [18].
However, in the letter that the U.S Embassy at Vietnam sent to the ITC, dated July 16 and July 26, 2002, stated that “a majority of exporters of the subject product from Vietnam are private enterprises, and are free to set prices and market production and trade decisions” [9].
Moreover, on the side of Vietnams supporters, they argued that [19] (i) the dong is freely to convert to other currencies like Kazakhstans status which is recognized by the DOC as a market economy; (ii) Vietnams labour code set out the principle of free bargaining between employees and employers at or above the minimum wage and guarantees labour mobility; (iii) the Foreign Investment Law had been amended to continue to attract foreign investment and ensure that foreign investors shall be treated in the same ways with Vietnamese investors, and the government has reduced license requirements, sped up approvals and taken incremental steps to reduce land costs and leases, 100-percent foreign-owned operations are allowed in most industries; (iv) Vietnam guarantees and protects private property rights, has recognized the equality of the private and state sectors, and has removed the leading role of State-Owned Enterprises (“SOEs”); (v) Land use rights are tradable commodity, the land-use rights holders are permitted to use, transfer, convey, inherit, and lease the land, and may use the land as collateral for loans. The prices of land-use rights are controlled by the market rules.
It is worth emphasizing that the Vietnamese government fixes prices only in natural monopolies and regulates prices in other products i.e., gasoline, metals, cements, and paper, but these regulated prices are often adjusted to reflect costs. Besides, energy, water, and other factors of production are available at rates largely determined by supply and demand [18].
To support Vietnam, Adam McCarty (2003) [19] argued that there is not the non-market economy country, except the South of Korea; he also indicated that the present DOCs definition lacks precision, measurable criteria, and explicit weighting of variables. His study also proved that Vietnam fulfils qualify for a market economy status when comparing with other recognized market economies countries such as Bangladesh, India, Russian Federation, France and so on [19]. Furthermore, U.S and other international companies operating in Vietnam also provided written comments in support of Vietnams market economy status such as Citibank, Unilever, Cargill, American Standard, New York Life International, Vedan, to name but a few.
It should be noted that when Vietnam accessed the WTO in 2006 [20], Vietnam committed that it will be treated as a nonmarket economy country until December 31, 2018, if it could not establish as a market economy country before that due. In addition, regarding anti-dumping and countervailing issue, in the Accession of Vietnam - Report of the Working Party on the Accession of Viet Nam regulates as follows:
“… In determining price comparability under Article VI of the GATT 1994 and the Anti-dumping Agreement, the importing WTO Member shall use either Vietnamese prices or costs for the industry under investigation or a methodology that is not based on a strict comparison with domestic prices or costs in Viet Nam based on the following rules: (i) If the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product, the importing WTO Member shall use Vietnamese prices or costs for the industry under investigation in determining price comparability; (ii) The importing WTO Member may use a methodology that is not based on a strict comparison with domestic prices or costs in Viet Nam if the producers under investigation cannot clearly show that market economy conditions prevail in the industry producing the like product with regard to manufacture, production and sale of that product.”
Although the Vietnamese government and its supporters have proved a lot of evidence to argue that Vietnam should be treated as a market economy country, the U.S government is still designed Vietnam as a non-market economy country. To date, after the DOC issued the final results of the second sunset review and the tenth Administrative review on certain frozen fish fillets from Vietnam, the DOC concluded that such antidumping duty shall remain in effect until further notice.
3. Is the U.S. anti-dumping measure on Vietnamese catfish consistent with the AD Agreement?
First of all, because Vietnam is treated as a non-market economy country by the DOC; thus, the DOC does not use the prices of factors of production in Vietnam when it calculating the normal value of Vietnamese catfish, and as a result, the DOC conclude that Tra and Basa fish are sold at prices less than fair value. In other words, the first requirement is met. Secondly, the ITC stated that frozen fish fillets from Vietnam are being caused material injury to the U.S catfish industry. Although both the DOC and ITC indicated that the subject products are Tra and Basa frozen fillets, they determine that the scope of their investigation includes not only “frozen catfish fillet” but also three other frozen fish fillets. By doing that, the ITC added the volume of import of all three-subject products above together with Tra and Basa products and concluded that the volume of the subject imports increased significantly and caused material to the U.S catfish industry. This determination of the ITC is inconsistent with the Article 3.1 and 3.2 of the AD Agreement. It is worth noting that the Appellate Body in EC – Bed Linen (2003) emphasized that “there must be an exclusion of the volume and effect of imports that are not dumped in investigation”. Additionally, when determined the injury of the affected domestic industry, the ITC was not examined all other disadvantaged factors of the domestic industry and distinguished which adverse effect come from the domestic industry itself, which come from the subject imports. Lack of objective evaluation of the injury, the ITC investigation violates the Article 3.4 and 3.7 of the AD Agreement. Last but not least, based on earlier analysed, the determination of the subject imports and the “material injury” were not objectively conducted, thus, the conclusion that frozen catfish fillets from Vietnam are being sold at price less that its normal value and caused material injury to the U.S catfish industry which is not based on convincible grounds, and the antidumping measures imposed on Vietnamese catfish are actually protectionist policy of the U.S.
In short, this case has passed the 13th Administrative Review, and the DOC held that such antidumping duties are still in effect until further notice. This case occurred when Vietnam was not a WTO member, and it is an invaluable lesson for Vietnam when it participates in international market.
4. Acknowledgement
This study was supported by Graduate School of Chulalongkorn University, Thailand.
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BIỆN PHÁP CHỐNG BÁN PHÁ GIÁ CỦA HOA KỲ ĐỐI VỚI CÁ DA TRƠN VIỆT NAM - LIỆU CÓ PHÙ HỢP VỚI HIỆP ĐỊNH CHỐNG BÁN PHÁ GIÁ CỦA WTO KHÔNG?
ThS. Trần Vang Phủ
Khoa Luật, Trường Đại học Cần Thơ
Tóm tắt:
Từ năm 2003, Chính phủ Hoa Kỳ đã chính thức áp đặt thuế chống bán phá giá cho mặt hàng cá da trơn đông lạnh của Việt Nam và quy định này vẫn còn hiệu lực đến thời điểm hiện tại. Bài viết này phân tích những điểm chính trong lập luận của các bên liên quan đến biện pháp chống bán phá giá của Hoa Kỳ đối với cá da trơn Việt Nam và chứng minh rằng quy định này trái với Hiệp định chống bán phá giá của Tổ chức Thương mại thế giới (WTO).
Từ khóa: Biện pháp chống bán phá giá, biên độ phá giá, cá da trơn phi-lê, quy định của WTO.
