Vietnamese Tra Fish Exporters Faced with New US Ruling

Since the beginning of this year, Vietnam has earned US$33.764 million from exporting tra catfish (pangasius) to the US market, making it the second largest importer of Vietnamese tra fish, with 17.14 per cent of the country’s total export value.

 

Since many Vietnamese firms are enjoying nearly 0 per cent anti-dumping tax rate given the DOC's preliminary decision announced six months ago, the recent DOC official decision came as a big surprise, and was even considered a shock to the Vietnamese catfish industry. As it is the final result, Vietnamese companies will have little opportunity to reverse the situation, as it did with POR7.

 

According to the latest results, Vinh Hoan Corporation is subject to a tax rate of 19 cents per kilogramme. Another 13 Vietnamese companies, including Binh An Seafood Joint Stock Company, Hung Vuong Corporation, Cadovimex II and Nam Viet Corporation, are levied 77 cents per kg. The tax rate applied to other fish companies was US$2.11 per kg. New exporters to the US are also imposed high tariff rates. An Phu Seafood Joint Stock Company is charged at US$1.37 per kg, Docifish Joint Stock Company is put at US$3.87 per kg, and An Phat Seafood Export and Import Joint Stock Company, affiliated to Godaco Seafood Joint Stock Company, is levied US$1.81 per kg.

 

The new tax rates will send Vietnamese enterprises into extreme difficulty, even to giving up this market because they can hardly compete with suppliers from other countries. As a long-time catfish exporter to the US market, Mr Nguyen Van Ky, General Director of Angiang Fisheries Import & Export Joint Stock Company (Agifish), said as his company did not belong to the group of inspected companies for antidumping, it had to pay tax of 2 cents on a kg. But now, the US levies the tax rate of 77 cents per kg. This is a huge obstacle for his company and other Vietnamese pangasius companies as a whole. Agifish will ask the US to lower the rate and in the worst case, the Vietnam Association of Seafood Exporters and Producers (VASEP) will take legal action against irrelevant and unreasonable tax for the sake of Vietnam's pangasius industry.

 

Mr Le Truong Son, General Director of Dongthap Trading Corporation (Docimexco), said the excessively high antidumping duty not only affects tra fish exporters to the US, but also causes negative impact on Vietnam’s exports to other markets, as well as the Vietnamese catfish industry, because if they cannot sell to the US, they will have to sell to the EU and the Middle East. Partners in other markets will have the opportunity to force Vietnamese companies to reduce prices, said Mr Son.

 

Specialist Vo Tong Xuan said Vietnamese seafood exporters underwent a war on the shrimp anti-subsidy lawsuit with DOC and they now face an excessively high obstacle of tax rate against pangasius. They are always placed in passive situations by "unexpected" verdicts from US authorities. This repetition may not stop if Vietnamese authorities do not fight aggressively enough to reduce anti-dumping duties on tra fish and explicitly express the stance of a major exporter.

 

Lawyer Tran Huu Huynh, former head of Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI), said the US legally has the right to choose the third country for its investigation process, and Vietnam can only struggle to choose the country it deems most similar and most beneficial. Importantly, defence lawyers need to show principles and detailed input cost calculations as evidence that the US choice of Indonesia is irrelevant. Besides, some companies may have to stop exporting tra fish to the US on high tax rates, while others levied at the rate as low as 0 - 3 cents per kg did not export to the US during the inspection period. According to the laws, they will not be subject to the new POR8 tax rates, but their old duties.

 

The new tax tariffs that the DOC announces will put huge pressures on enterprises relying heavily on the US market, and force them to turn to other markets. In fact, tra fish production reached only 800,000 - 900,000 tonnes in 2013, down from 1.2 million tonnes in 2012. Hence, in general, tra fish companies will face input shortage and their export markets will not change much this year. For that reason, in case the shipment to the US declines as a result of tax rates, fast-growing South American and Chinese markets will soon take its place.

 

In addition to legal solutions, companies also have to react very flexibly to the new situation. Eight companies with low tax rates imposed are capable of offsetting the drop of tra fish supply to the US market by 20 other companies. Thus, although POR8 is a hard blow to the 20 exporters in the investigation phase, it is an opportunity for eight other firms. This is also a chance for them rearrange their markets and raise prices. But, these eight companies need to sit together to calculate export prices. The US is running out of stocks, thus they can consider a price hike, said Duong Ngoc Minh, Vice Chairman of VASEP.

 

Five days after DOC issued the ruling on the Federal Register, the verdict takes effect. Currently the Directorate of Fisheries is talking with lawyers on a potential suit against the DOC ruling. The litigation may take several years to reach the final verdict and companies do not have to pay those high rates before the final verdict.