Indian Shrimp Export Industry Get Great Relief in US Countervailing Duty

US Rules in Favour of India in Countervailing Duty Investigation on Frozen Shrimp exports from India

The United States International Trade Commission (USITC) determined that the US industry is neither materially injured nor threatened with material injury by reason of imports of frozen warm water shrimp from India, China, Ecuador, Malaysia, and Vietnam. USITC voted 4-2 against imposition of countervailing duty (CVD) against India and other six countries. As a result of the USITC's negative determinations, US Commerce will not issue countervailing duty orders on imports of these products from India, China, Ecuador, Malaysia, and Vietnam. The final decision of USITC brings great relief to Indian shrimp industry and its exports.

It may be recalled that Commerce Secretary S R Rao had expressed optimism about the favourable final outcome in the CVD investigation, at the time of inauguration of 2nd phase of Aquatic Quarantine Facility (AQF) at Chennai on 9th January 2013. He has also said that The Marine Product Export Development Authority (MPEDA), the nodal agency for promotion of seafood exports from India will be handling the case.

It all started with, when the Coalition of Gulf Shrimp Industries filed a petition on behalf of its 28 member companies on 28th December 2012. COGSI claims that subsidies provided by Government of India to the Indian shrimp Industry provide an unfair advantage for Indian shrimp exports to the US, resulting in Indian exporters to sell their products at lower prices. On behalf of Government of India, Ms. Leena Nair, Chairman, MPEDA had consultations with the USDOC on the subject matter and had meeting with USITC on January 14, 2013. Chairman, MPEDA also attended the conference /USITC hearing in connection with the investigation.

US Department of Commerce (USDOC) had issued a questionnaire for the Government of India on 14 February, 2013, and selected two major shrimp exporters from India as mandatory respondents. Based on the replies received from all relevant organizations, the response of Government of India to the questionnaires was filed by MPEDA. Two more supplementary questionnaires were also replied.

On 28th May 2013, the US Department of Commerce preliminarily determined that countervailable subsidies are being provided to producers and exporters of certain frozen Warm water shrimp (frozen shrimp) from India. USDOC has preliminarily determined a cash deposit rate of 5.91% for exports made from India. The preliminary determinations were favourable for exports from countries like Ecuador, Indonesia. In order to verify the records submitted by the mandatory respondents, USDOC officials have visited India for verification of subsidy details submitted by Government of India and mandatory respondents.

On 13th August 2013, US Department of Commerce announced its affirmative final determinations in Countervailing Duty investigations of imports of certain frozen warm water shrimp from Ecuador, India, Malaysia, China, Vietnam and negative final determination for Indonesia & Thailand. Exporters from India have been assigned a subsidy rate of 10.84%. In preliminary determination, Ecuador was excluded from CVD, however in final determination higher CVD rate was assigned.

As some of the alleged schemes in India were terminated during the period of investigation, USDOC has finally determined a cash deposit rate of 5.85% for exports made from India. Final results on CVD for Vietnam (4.52%), China (18.16%) & Malaysia (54.5%), Ecuador (11.68%) were also announced. Indonesia and Thailand got de minimis (0%) subsidy rate in final CVD determinations. The final determinations were favourable for exports from countries like Thailand and Indonesia and these countries escaped from countervailing duties.

Due to the CVD cash deposit rate (5.85%) and present level of antidumping duty (3.49%), Indian Shrimp exports to USA would have been costlier than any of its closest competitors. More over if countervailing duty was imposed, it would have helped Thailand and Indonesia to monopolise the US shrimp market and market access of Indian shrimp would have been affected. Due to positive final CVD determinations, USDOC instructed to US Customs and border protection to order cash deposits equal to the final subsidy rates if the USITC issues final positive injury determinations. Thailand and Indonesia was excluded from CVD in final determination.

But the ruling by USITC, which is the last step in this investigation came in favour of India and six other countries which negates the USDOC’s decision. USITC today determined that the US industry is neither materially injured nor threatened with material injury by reason of imports of frozen warm water shrimp from India and four other countries. Due to this none of the seven countries including India need not pay duties for their shrimp exports to US. Chairman MPEDA said that USITC’s ruling will bring a great relief to Indian shrimp industry and shrimp exporters in India. She also stressed importance of the efforts taken in the process of investigation by Govt of India, specifically commerce Secretary S R Rao, MPEDA and Seafood Exporters Association of India (SEAI) for getting a favourable ruling from USITC.