Source:
Washington University
1. The
Issue
In the fall of 1996, U.S. domestic crawfish
producers filed a petition with the U.S. Department of Commerce (DOC) and the
U.S. International Trade Commission (ITC) under the U.S. antidumping law with
respect to imports of crawfish from China. On August 29, 1997, the ITC ruled
that the Chinese were in fact dumping crawfish in the U.S. by selling below the
fair market value in the host country. This opened the way for the imposition of
tariffs ranging from 91% to 200%. However, was only the beginning of the case as
Louisiana Agriculture officials accused China of mislabeling crawfish imports as
"Product of Singapore" to avoid the tariff. This action took place in January of
1998, and further complicated things. These actions were then followed by a
series of lawsuits on the part Louisiana Department of Agriculture and the
importers of Chinese crawfish. Therefore, this case study will examine not only
the events leading up to the initial ruling, but the complex series of legal
maneuvers that each side as employed since that time. 2. DescriptionIn order to
make sense of this case, the description will be divided into two sub-sections.
The first will attempt to put this case in context by describing the events
surrounding the initial petition, the temporary tariff imposed by the ITC,
several counter-arguments, and the final decision by the ITC and the DOC. The
second will examine the accusations of product mislabeling and disease problems
that have kept this case in the news. While cultural items are mentioned, they
are dealt with in greater detail in section 25. Background When Chinese
crawfish first arrived on Louisiana shores in noticeable quantities in 1991,
"people laughed." (1) Most thought that cultural influences and
lower quality would prevent the imports from growing in popularity and for a
time this was the case. However, "over time people tried it... [and] it was good
enough, for $2 a pound."(2) So much so that by 1996 the Chinese crawfish
were making up somewhere between 70%-80% of the market and the domestic product
was increasingly threatened. This eventually led to a preliminary investigation
by the ITC at the request of the U.S. House of Representatives, Committee on
Ways and Means. This investigation was barely two months old when domestic
crawfish producers (Crawfish Processors' Alliance) filed a petition with the ITC
and DOC, thus terminating the preliminary investigation.(3) The petition to the ITC and DOC was submitted
in September, 1996 and accused the Chinese of dumping (selling below fair market
value) crawfish on the U.S. market. In such an investigation there are
essentially two issues that must be decided. First, is dumping actually taking
place, and second, if it is, to what extent is it injuring the domestic product.
Approximately six months after the filing of the petition the U.S. decided that
dumping was in fact taking place and causing harm to the domestic producers. At
that time a temporary tariff was imposed that basically doubled the price of
crawfish tails until the extent of the damage could determined more precisely.(4) While this was clearly a victory for domestic
producers, it is less clear whether or not this is
also a victory for the domestic consumer. While the
majority of public sentiment (as found in print media) is supportive of domestic
producers, a number of writers have pointed out the other side of this issue.
One particular writer, Donald J. Boudreaux, makes a strong statement when he
says, "Many domestic crawfish suppliers are ... trying to suck the wealth from
consumers."(5) He disputes the Crawfish Processors'
Alliance's (CPA) claims of an attempted monopoly and future price increases by
pointing out that a number of countries are currently engaged in exporting
crawfish while still others posses the capacity to. In his opinion this insures
that U.S. crawfish consumers "would continue dining on competitively supplied
crawfish," if left alone.(6) Another subject that is broached by Mr.
Boudreaux is that of the differences in economies. This is significant because
in order to prove dumping, the U.S. must prove the Chinese are selling crawfish
below fair market value at home. However, the Chinese don't generally eat
crawfish and as one expert puts it, "If there is no fair market value at home,
then you're into a kind of little Never Never Land."(7) To overcome this the attorneys for the CPA
had to embark on a complicated economic analysis which substituted hypothetical
crawfish production in what they deemed to be comparable countries. Mr.
Boudreaux argues that this inflates the production costs of the Chinese and thus
contributes to the "illusion" that the Chinese sell their product at well below
cost. "Relief is finally on the way for our Louisiana crawfish
farmers,...
After a long fought battle our farmers will finally be put back
on
a level playing field. No longer will we have to ask the question,
'Are
they real Louisiana crawfish'? And more importantly, our
Louisiana crawfish
farmers won't have to ask the question,
'Can I stay in business'?"--Senator
John Breaux Despite the assertions of Senator Breaux in August of 1997, the
U.S.-China trade dispute involving crawfish has remained in the news. While this
case may at first glance appear to be relatively simple and unimportant, deeper
investigation yields a much different conclusion. This case is in reality a
complicated story full of twists and turns with implications ranging from fair
trade standards to traditional ways of l at low prices because Chinese crawfish
producers have low costs."(8) Another aspect to this that is seldom
discussed is the impact this case may eventually have on U.S. domestic seafood
exporters. During the same period of dramatic growth in Chinese crawfish
imports, U.S. seafood exporters have quadrupled their sales in China. These
sales increased from $19 million in 1992, to $79 million in 1996, in part due to
the support given them by the Chinese Ministry Agriculture and the China Council
for the Promotion of International Trade, Agricultural Sub-Council.(9) Similarly, part of the problem that domestic
crawfish producers have is their export practices. According to Elton Bernard
(an importer of Chinese crawfish) Louisianians export many of their biggest
crawfish to Sweden and other countries where they can get a better price. He
goes on to say that, "They should not complain, then, when they are on the other
side of the trade table."(10) Despite these potential impacts, the ITC
found in favor of the domestic producers in August of 1997and imposed tariffs
from 91% to 200%, depending on the importer. This was hailed by Louisianan
politicians as a great victory and a leveling of the playing field. While this
ruling did in fact end the formal phase of the process, it in no way ended the
controversy. Some, such as Karl Turner (of the Louisiana Seafood Promotion and
Marketing Board), have cautioned against undue optimism while at the same time
applauding the decision. According to Mr. Karl, the decision may ultimately harm
the domestic producers it was designed to protect. This is because, "We live now
in a world market, and we're not going to be able to keep these walls up very
long ... That product (Chinese crawfish) isn't going away, and we're going to
meet it in other markets."(11) Additional Developments Subsequent
to the ITC's August ruling, a number of events have served to keep this issue in
the news. The first of these occurred the month after the ruling when a
"shipment of Chinese crawfish tails was kept out of Sweden because it was
contaminated with the bacterium that causes cholera."(12) Since it was not cleared how this happened,
Louisiana Agricultural Commissioner Bob Odom reacted by sending samples of
Chinese crawfish that had been shipped to the U.S. to labs in Louisiana for
testing. While it was eventually determined that none of the shipments to the
U.S. were contaminated, it did keep the issue in the headlines and set the stage
for the later labeling controversy. In January of 1998 Mr. Odom once again made
headlines by seizing crawfish that were labeled "Product of Singapore." Mr. Odom
apparently became suspicious when the new product started showing up and sent
one of his deputies to Singapore to investigate. When the deputy was unable to
find signs of crawfish being grown or processed in Singapore, they concluded the
product had been mislabeled. Approximately 1.3 million pounds of "Singapore
crawfish" had been imported into the U.S. since July of 1997 (the same time the
temporary tariff was imposed) and state officials estimated that about 60% of
it, or 790,000 pounds, went to Louisiana. (13) However, U.S. importers contested this move
by suing Louisiana's Department of Agriculture and Forestry as well as Mr. Odom.
In February of 1998 First Coast Meat and Seafood (a importer of Chinese
crawfish) filed suit against the department and Mr. Odom and asked for a
temporary restraining order that would halt all department actions. However, the
restraining order was denied by a District Judge and Mr. Odom's office allowed
to proceed with the seizures. Attorneys for First Coast argued that the seizures
were unconstitutional because the product was taken without a hearing.
"Louisiana officials countered that the crawfish wasn't 'seized,' but merely was
barred from being sold until the facts could be established about the product's
origins."(14) Attorneys for the state of Louisiana also
argued that First Coast has no right to sue because they don't own the crawfish.
This action was still being decided as of the writing of this paper.
Washington University
1. The
Issue
In the fall of 1996, U.S. domestic crawfish
producers filed a petition with the U.S. Department of Commerce (DOC) and the
U.S. International Trade Commission (ITC) under the U.S. antidumping law with
respect to imports of crawfish from China. On August 29, 1997, the ITC ruled
that the Chinese were in fact dumping crawfish in the U.S. by selling below the
fair market value in the host country. This opened the way for the imposition of
tariffs ranging from 91% to 200%. However, was only the beginning of the case as
Louisiana Agriculture officials accused China of mislabeling crawfish imports as
"Product of Singapore" to avoid the tariff. This action took place in January of
1998, and further complicated things. These actions were then followed by a
series of lawsuits on the part Louisiana Department of Agriculture and the
importers of Chinese crawfish. Therefore, this case study will examine not only
the events leading up to the initial ruling, but the complex series of legal
maneuvers that each side as employed since that time. 2. DescriptionIn order to
make sense of this case, the description will be divided into two sub-sections.
The first will attempt to put this case in context by describing the events
surrounding the initial petition, the temporary tariff imposed by the ITC,
several counter-arguments, and the final decision by the ITC and the DOC. The
second will examine the accusations of product mislabeling and disease problems
that have kept this case in the news. While cultural items are mentioned, they
are dealt with in greater detail in section 25. Background When Chinese
crawfish first arrived on Louisiana shores in noticeable quantities in 1991,
"people laughed." (1) Most thought that cultural influences and
lower quality would prevent the imports from growing in popularity and for a
time this was the case. However, "over time people tried it... [and] it was good
enough, for $2 a pound."(2) So much so that by 1996 the Chinese crawfish
were making up somewhere between 70%-80% of the market and the domestic product
was increasingly threatened. This eventually led to a preliminary investigation
by the ITC at the request of the U.S. House of Representatives, Committee on
Ways and Means. This investigation was barely two months old when domestic
crawfish producers (Crawfish Processors' Alliance) filed a petition with the ITC
and DOC, thus terminating the preliminary investigation.(3) The petition to the ITC and DOC was submitted
in September, 1996 and accused the Chinese of dumping (selling below fair market
value) crawfish on the U.S. market. In such an investigation there are
essentially two issues that must be decided. First, is dumping actually taking
place, and second, if it is, to what extent is it injuring the domestic product.
Approximately six months after the filing of the petition the U.S. decided that
dumping was in fact taking place and causing harm to the domestic producers. At
that time a temporary tariff was imposed that basically doubled the price of
crawfish tails until the extent of the damage could determined more precisely.(4) While this was clearly a victory for domestic
producers, it is less clear whether or not this is
also a victory for the domestic consumer. While the
majority of public sentiment (as found in print media) is supportive of domestic
producers, a number of writers have pointed out the other side of this issue.
One particular writer, Donald J. Boudreaux, makes a strong statement when he
says, "Many domestic crawfish suppliers are ... trying to suck the wealth from
consumers."(5) He disputes the Crawfish Processors'
Alliance's (CPA) claims of an attempted monopoly and future price increases by
pointing out that a number of countries are currently engaged in exporting
crawfish while still others posses the capacity to. In his opinion this insures
that U.S. crawfish consumers "would continue dining on competitively supplied
crawfish," if left alone.(6) Another subject that is broached by Mr.
Boudreaux is that of the differences in economies. This is significant because
in order to prove dumping, the U.S. must prove the Chinese are selling crawfish
below fair market value at home. However, the Chinese don't generally eat
crawfish and as one expert puts it, "If there is no fair market value at home,
then you're into a kind of little Never Never Land."(7) To overcome this the attorneys for the CPA
had to embark on a complicated economic analysis which substituted hypothetical
crawfish production in what they deemed to be comparable countries. Mr.
Boudreaux argues that this inflates the production costs of the Chinese and thus
contributes to the "illusion" that the Chinese sell their product at well below
cost. "Relief is finally on the way for our Louisiana crawfish
farmers,...
After a long fought battle our farmers will finally be put back
on
a level playing field. No longer will we have to ask the question,
'Are
they real Louisiana crawfish'? And more importantly, our
Louisiana crawfish
farmers won't have to ask the question,
'Can I stay in business'?"--Senator
John Breaux Despite the assertions of Senator Breaux in August of 1997, the
U.S.-China trade dispute involving crawfish has remained in the news. While this
case may at first glance appear to be relatively simple and unimportant, deeper
investigation yields a much different conclusion. This case is in reality a
complicated story full of twists and turns with implications ranging from fair
trade standards to traditional ways of l at low prices because Chinese crawfish
producers have low costs."(8) Another aspect to this that is seldom
discussed is the impact this case may eventually have on U.S. domestic seafood
exporters. During the same period of dramatic growth in Chinese crawfish
imports, U.S. seafood exporters have quadrupled their sales in China. These
sales increased from $19 million in 1992, to $79 million in 1996, in part due to
the support given them by the Chinese Ministry Agriculture and the China Council
for the Promotion of International Trade, Agricultural Sub-Council.(9) Similarly, part of the problem that domestic
crawfish producers have is their export practices. According to Elton Bernard
(an importer of Chinese crawfish) Louisianians export many of their biggest
crawfish to Sweden and other countries where they can get a better price. He
goes on to say that, "They should not complain, then, when they are on the other
side of the trade table."(10) Despite these potential impacts, the ITC
found in favor of the domestic producers in August of 1997and imposed tariffs
from 91% to 200%, depending on the importer. This was hailed by Louisianan
politicians as a great victory and a leveling of the playing field. While this
ruling did in fact end the formal phase of the process, it in no way ended the
controversy. Some, such as Karl Turner (of the Louisiana Seafood Promotion and
Marketing Board), have cautioned against undue optimism while at the same time
applauding the decision. According to Mr. Karl, the decision may ultimately harm
the domestic producers it was designed to protect. This is because, "We live now
in a world market, and we're not going to be able to keep these walls up very
long ... That product (Chinese crawfish) isn't going away, and we're going to
meet it in other markets."(11) Additional Developments Subsequent
to the ITC's August ruling, a number of events have served to keep this issue in
the news. The first of these occurred the month after the ruling when a
"shipment of Chinese crawfish tails was kept out of Sweden because it was
contaminated with the bacterium that causes cholera."(12) Since it was not cleared how this happened,
Louisiana Agricultural Commissioner Bob Odom reacted by sending samples of
Chinese crawfish that had been shipped to the U.S. to labs in Louisiana for
testing. While it was eventually determined that none of the shipments to the
U.S. were contaminated, it did keep the issue in the headlines and set the stage
for the later labeling controversy. In January of 1998 Mr. Odom once again made
headlines by seizing crawfish that were labeled "Product of Singapore." Mr. Odom
apparently became suspicious when the new product started showing up and sent
one of his deputies to Singapore to investigate. When the deputy was unable to
find signs of crawfish being grown or processed in Singapore, they concluded the
product had been mislabeled. Approximately 1.3 million pounds of "Singapore
crawfish" had been imported into the U.S. since July of 1997 (the same time the
temporary tariff was imposed) and state officials estimated that about 60% of
it, or 790,000 pounds, went to Louisiana. (13) However, U.S. importers contested this move
by suing Louisiana's Department of Agriculture and Forestry as well as Mr. Odom.
In February of 1998 First Coast Meat and Seafood (a importer of Chinese
crawfish) filed suit against the department and Mr. Odom and asked for a
temporary restraining order that would halt all department actions. However, the
restraining order was denied by a District Judge and Mr. Odom's office allowed
to proceed with the seizures. Attorneys for First Coast argued that the seizures
were unconstitutional because the product was taken without a hearing.
"Louisiana officials countered that the crawfish wasn't 'seized,' but merely was
barred from being sold until the facts could be established about the product's
origins."(14) Attorneys for the state of Louisiana also
argued that First Coast has no right to sue because they don't own the crawfish.
This action was still being decided as of the writing of this paper.
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