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News
December 16, 2002
Case of the ghostly catfish
Threat to a lucrative trade
(Economist) - In essence, the dispute is simple: cheap imports of Vietnamese
catfish threaten to put United States' producers with higher costs out of
business. Americans bought 17m lb (7.7m kilos) of Vietnamese catfish last year,
up from 0.6m lb in 1998. Over the same period, the price of catfish has almost
halved. A trade agreement between the two countries, which eliminated tariffs on
catfish a year ago, will presumably exacerbate the trend. But instead of
submitting to the free-market principles aired while pushing the trade pact,
America's lobbyists and lawmakers are seeking to crush the Vietnamese producers.
Last year, the Catfish Farmers of America (CFA) helped to persuade Congress to
pass a law restricting the use of the word "catfish" to American varieties. The
Vietnamese sort, claimed the CFA, was raised in third-world rivers, eating
anything it could get its fins on, and was as different from well-bred,
pond-raised American catfish as a camel is from a cow.
The culprit
And yet not that different, apparently. When the new law failed to dent sales of
the import formerly known as catfish, American farmers decided to launch an
anti-dumping suit, despite their claim that imported fish were not even
comparable to home-grown ones. Their petition contends that companies in
Vietnam, where the average income per person is about a fiftieth of America's,
are subsidising rich Americans' taste for catfish.
The Vietnamese government meddles in its economy so much, they claim, that it is
impossible to make a true assessment of the local producers' costs. So they
asked the Department of Commerce to work out how much it would cost to raise
hypothetical catfish in India, fillet and freeze them in imaginary factories,
and ship them in phantom boats to America. If these spectral confections turn
out to cost more than the fleshier Vietnamese sort, it will be proof, the
Americans say, that Vietnamese producers are unfairly subsidised and should pay
a tariff of up to 190%.
The argument is not entirely ludicrous. The Vietnamese government does have a
stake in several of the main catfish exporters, and its influence must help them
secure financing from state-owned banks, for example. Vietnam does not have
competitive markets for land, electricity, transport or other costs of
processing catfish. But that, it is argued, makes production more expensive than
it need be, not less. Even the ghostly catfish farmers of India doubtless
benefit from a fair number of non-existent subsidies. Anyway, quibbles about
distortions of the market are beside the point: abundant cheap labour would make
Vietnamese catfish competitive under almost any conditions.
Nevertheless, the commerce department will rule in January, based on concocted
costs of production in some surrogate third country. The Vietnamese government
is indignant. It points out that its booming catfish industry benefits America,
by cutting costs for consumers and boosting demand for American exports such as
grain for catfish feed. It is threatening to launch a suit of its own, against
subsidised imports of American soya beans. Vietnam may be picking up
protectionist tricks from the capitalists.
U.S. Department of State's news clips are prepared to alert officers to issues
related to their official responsibilities. Further reproduction for private use
or gain is subject to original copyright restrictions.
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