| Brazil's Shrimp Caught Up in a Trade War
By LARRY ROHTER March 10, 2004 The shrimp farms that have sprung up all along the coast here are one of Brazil's great success stories, cited by government officials as an example of the country's ability to compete on world markets. From 1998 to 2003, Brazil's shrimp exports jumped from a mere 400 tons to more than 58,000, with a third of that going to the United States. During the boom, few companies have prospered more than Netuno S.A., which grows shrimp in 64 ponds at an 1,850-acre farm here and also buys from scores of other producers throughout the region. Founded 15 years ago as a modest market selling fish and lobster to local customers and hotels, Netuno is now Brazil's largest single exporter of shrimp to the United States. "Like everyone else in Brazil, we started off late in this business, without a formula for exporting," said Hugo Campos, the industrial production director. "The idea was to grow as much as we could, and the boom in world demand for shrimp has been our path to success." Now, though, producers here are facing a serious new challenge in their biggest market. On Dec. 31, the Southern Shrimp Alliance filed a dumping complaint against Brazil and five other countries, seeking to impose tariffs of up to 300 percent, and last month the Commerce Department ruled that there were grounds to proceed because there were indications of a "danger of injury" to American producers. "We're really getting killed over here," Eddie Gordon, president of the Southern Shrimp Alliance, said in a telephone interview from Mount Pleasant, S.C. "Prices are so low that our boat owners can't even afford to go out shrimping, and that's because the product is being sold against what all our trade agreements are." Brazilian shrimp growers deny that they have engaged in unfair trade practices, arguing that they are merely benefiting from a natural competitive advantage. They point to significantly lower labor costs, the availability of cheap land and, above all, a benevolent tropical climate that allows them not only higher productivity per acre, but three harvests a year. Politically, the dispute could hardly be more inconveniently timed. Though Brazil and the United States are the leaders of the talks aimed at establishing a Free Trade Area of the Americas by the end of this year, the government of Luiz Inácio Lula da Silva has expressed doubts about the desirability of such an accord, sometimes in piquant terms. Specifically, Brazil fears that the United States is trying to impose a free trade accord that will not remove the subsidies and other barriers that have limited Latin America's exports of agricultural products to the United States. Until the Bush administration yields on that point, the Brazilians and their allies argue, there is no point talking about fully opening markets here to more American goods and services. In that atmosphere of suspicion, the shrimp case is seen here as politically motivated and abusive. As Brazilian government officials and news reports have repeatedly pointed out, the Southern Shrimp Alliance represents shrimpers in eight states, including Florida and Texas, and this is an election year. Producers here and in the other five mostly Asian countries named in the complaint are supported by the American Seafood Distributors Association. That group, which represents supermarkets, processors, restaurants and hotels, says it is American shrimpers who are engaging in unfair trade practices. "A continued supply of imported shrimp is critical to consumers and seafood companies because it cannot be replaced by increased domestic production," the group argues in a recent document. "Current efforts to restrict trade in these circumstances constitute pure protectionism." The dumping complaint does not contend that Brazil is selling shrimp on the American market below the cost of production, the most common definition of dumping. Rather, it contends that Brazil is price gouging by selling its product below "fair market value," an assertion that shrimp farmers here dismiss as not reflecting market realities. "The producer in Brazil doesn't dictate the price of the product, which is set by a company in the United States," said Itamar Rocha, president of the Brazilian Association of Shrimp Growers. "We're completely at the mercy of the middleman, who is already forcing us to sacrifice on prices, and yet they still concoct this case against us." An even more fundamental difference, however, has to do with the economic differences between farmed and sea-caught shrimp. Most shrimp produced in the United States comes from trawlers plying the Gulf of Mexico or the Atlantic Ocean, while almost all production here, as in Asia, is done on farms. "It's like trying to compare vinyl discs and CD's," said Luiz Claudio Duarte, a lawyer with the firm of Cameron & Hornbostel who is representing Brazilian shrimp farmers in the dispute. "Raising shrimp in captivity is not the same as going out to sea to capture them, and so this complaint is totally absurd." Shrimp producers here argue that there is simply no way for American shrimpers operating from trawlers to compete against more efficient farms. Production in the United States has stalled over the last decade, they maintain, because of the vagaries of weather, overfishing, high costs and a reluctance to embrace aquaculture. "We saw the writing on the wall," said Mark Kleinberg, an American who formerly had a shrimp fleet in Brownsville, Tex., and has shifted operations to northeast Brazil. "Shrimp boats cannot compete because insurance premiums and the cost of diesel fuel, repairs and maintenance are so high, and if you try to keep that around, you're just dragging out the misery." But American shrimpers dispute that claim. "All we are doing is harvesting, which is cheaper than trying to raise shrimp yourself," Mr. Gordon said. "It's much harder and requires a lot more effort and cost to raise shrimp larvae and build a pond for them than to just go out to harvest them at sea." |