"If
Vietnam ever got around to declaring a national fish, the
catfish would be it," Vietnamese-American writer Andrew X. Pham has
observed. From the ubiquitous clay-pot catfish to sophisticated cuisine
like "catfish in black bean sauce," the humble bottom dweller
from the Mekong Delta is embedded in Vietnam's rich culture.
But
halfway around the world, folks from the Mississippi Delta who have
their own catfish culture -- either fried or deep fried -- are outraged
that Americans have bought $36 million worth of Vietnam's
cheaper catfish in the last three years. "Never trust a catfish
with a foreign accent," sneered an advertisement placed last year
by the American catfish industry in Supermarket News, an industry trade
publication. "They've grown up flapping around in Third World
rivers and dining on whatever they can get their fins on." The
Catfish Farmers of America have declared war on the untrustworthy
foreign flapping fish.
It
is safe to say that in 2,000 years of often turbulent history, Vietnam
has never faced an enemy quite like the Catfish Farmers of America. Nor
have the Vietnamese ever before been targeted by the U.S. antidumping
laws -- the economic equivalent of napalm. Lawyers for the American
industry are asking for a prohibitive tariff on Vietnamese catfish as
high as 190%.
The
U.S.-Vietnam catfish row is more than a fight between fishmongers for
appropriate share of a $500 million American market, of which the
Vietnamese now hold perhaps 20%. (The Americans, who held 95% as
recently as 1999, believe that it is unfair that they now only hold
about 80%.) Catfish has become an irritant to U.S.-Vietnamese relations,
as Deputy Prime Minister Vu Khoan and other officials in Hanoi
have made strong protests over what they (rightly) view as an
unjustified, xenophobic assault on their catfish industry.
Moreover,
the fight will be watched closely by the poorer members of the World
Trade Organization. In the WTO's ongoing Doha Round of trade
liberalizing talks, developing countries are sensitive to any cases that
illustrate rich-country protectionism aimed in their direction. The
catfish fight is shaping up as a classic example of American hypocrisy
on trade.
The
Americans fired the first shots last year, after softening their
political target with the negative publicity campaign against catfish
with foreign accents. Last December, Mississippi Delta lawmakers
including Republican senate leader Trent Lott and John Breaux, a
Louisiana Democrat, slipped a proviso into U.S. law saying
that the Vietnamese can't call the catfish that they sell to Americans
catfish. It has to be called basa, or tra.
Problem
was, the Vietnamese soon discovered that basa sounded exotic to diners
in fancy New York restaurants, where the bewhiskered
mudcat has been known to fetch $20 a plate. Seeing that its labeling
gambit wasn't working, the U.S. catfish industry decided to turn to
antidumping laws to escalate their war.
Last
month, the Washington-based International Trade Commission issued a
preliminary determination that the American catfish industry is
"threatened with material injury" by Vietnamese imports of
frozen fillets. The ITC cited a combination of sharply rising imports
and falling prices as the cause of the domestic industry's woes. Imports
of frozen catfish fillets from Vietnam have shot up to
over 24 million pounds last year from four million pounds in 1999.
Meanwhile, catfish prices have gone south, falling to $1.38 last year
from $2.16 per pound in 1999.
Across
Washington at the Commerce Department, officials are
preparing to fry the allegedly "unfairly dumped" Vietnamese
catfish with 100%-plus tariffs designed to give the U.S. catfish
industry the ability to raise prices. But are the Vietnamese really
doing anything that is properly regarded as unfair?
What
about the assertion that Vietnamese entrepreneurs have been exporting
their catfish at far below their cost of production? Does it make sense
that it has cost the Vietnamese nearly $70 million to sell Americans $36
million worth of catfish? Do the Vietnamese like Americans so much that
they are happy to give away their fish? Common sense suggests not.
But
officials at the Commerce Department don't have to worry about basic
principles of economic competition. This is because the antidumping laws
give them ways to cook the books to make it appear as if the Vietnamese
have been losing huge sums of money to sell us their catfish. One of
those ways is called the non-market methodology.
Lawyers
for the U.S. catfish industry are asking the Commerce
Department to declare Vietnam a "non-market economy." This is
a wonderful way to jigger the numbers. Instead of looking at the true
costs of production in Vietnam, a surrogate country of comparable
economic development is picked. American catfish lawyers argue that this
should be India.
To
calculate the costs of water in the Mekong Delta, the Commerce
Department would consult pricing statistics for India as
listed in the Second Water Utilities Data Book, which is published by
the Asian Development Bank. To calculate the price of electricity in
Vietnam, the bureaucrats would check electricity prices in India as
published by the Paris-based Organization for Economic Cooperation and
Development. And to figure overhead and profit ratios for Vietnam, the
Commerce Department would look at the financial statements of three
Indian producers of processed seafood.
India, it turns out, doesn't export catfish to the
United States, but it does export seafood like shrimp. To believe that
the Vietnamese have been unfairly dumping catfish in America at far
below their costs, you have to believe that Vietnam is India, and that
catfish are shrimp.
Actually,
there is dumping going on. But it's not the Vietnamese who are doing it.
"Now
many farmers are selling their fish at or below cost, and they cannot
continue to do so for much longer," Randy Rhodes, the vice
president of sales and marketing for the Alabama-based Southern Pride
Catfish Co., has testified. Because catfish prices have fallen, it makes
business sense for Americans to get whatever they can when the
competition gets stiff. But the antidumping laws penalize foreigners who
would do the same thing.
The
antidumping laws also do not permit officials to consider the broader
public interest in competitive markets. Consumers benefit from falling
prices due to vigorous competition, but officials aren't allowed to take
that into account. Nguyen Hun Dung, the general secretary of the Vietnam
seafood association, has pointed out to U.S. officials that Mekong Delta
farmers import "a lot of corn and soybeans from the U.S." to
feed their catfish. But the fact that slapping high tariffs on
Vietnamese catfish might hurt American farmers and exporters is
irrelevant to the American antidumping regime.
Officials
in Hanoi are irate. Vietnam has ratified the U.S.-Vietnam
Bilateral Trade Agreement after years of pressure from Washington to
trust free markets, they say, and the first thing that the Americans do
is play protectionist games over catfish. But by itself a small country
like Vietnam that isn't a WTO member can't do much to make the world's
only superpower behave. The only hope -- and it is slim, given political
realities in today's Washington -- is that WTO members from developing
countries will insist on genuine reform of the abusive American
antidumping laws in the Doha negotiations.
How
ironic that fisherfolk along the Mekong Delta seem to understand more
about what markets are about than do their counterparts from the
Mississippi Delta.
Mr.
Rushford is editor of the Rushford Report, a Washington
newsletter on trade politics.
