Skip to comments.Big Shrimp: A Protectionist Mess
Posted on 01/03/2005 6:39:41 AM PST by 1rudeboy
Critics often accuse free trade proponents of carrying water for big business. But maybe unrestricted trade isn't always in the best interest of all business. Manufacturers who use steel (car and appliance makers, for example) oppose tariffs on imported steel. However, steel producers of course support them, as they keep competitive foreign steel off the market. While the car maker might opposed steel tariffs, they might support tariffs on foreign-made cars - to protect their share of the domestic market. And steel manufacturers would likely oppose them, as they make it more difficult to sell U.S. steel overseas. Protectionist policies often become quite convoluted.
Recent shenanigans from the U.S. shrimp industry present an excellent opportunity to examine how big business' support for free trade isn't as firm as conventional wisdom might suggest.
American shrimpers recently petitioned the U.S. government to expand its H-2B visa program. These visas allow foreign laborers and their families to enter the U.S. for temporary work. The job must last less than a year, and be a one-time occurrence. Southern shrimping outfits have used the program to bring in foreign workers during the peak of the shrimp harvest.
The problem is that the government limits the program to 66,000 visas per year, a quota already full by March of this year. That meant a significant increase in employment costs, who can pay migrant workers less than what they pay American workers, and who can employ them without benefits.
Given that free traders believe national borders shouldn't prevent employment opportunities, the free trade position might side with the shrimpers here. The government should raise the H-2B cap, or better yet, get rid of it altogether. Here at least, Big Shrimp's interests lie with free trade. But go back to summer of 2004 and the shrimping industry loses its free trade bona-fides.
Last July, the industry won an anti-dumping petition with the U.S. Commerce Department. The U.S. government slapped a 93% tariff on imported shrimp from Vietnam, and a 113% tariff on shrimp from China (though both were later slightly lowered). The shrimping industry claims that those countries produce shrimp from subsidized farms, enabling them to sell shrimp at deflated prices. Opponents counter that tropical climates and "aquaculture" shrimp farms enable foreign producers to harvest more shrimp more efficiently, enabling them to sell at a lower price. Whatever the case, the import taxes are expected to raise shrimp prices for U.S consumers by as much as 44%. The Commerce Department later added India, Thailand, Ecuador and Brazil to the list of shrimp-producers covered by the tariff.
Even that wasn't enough for the shrimping industry. Though they praised the tariffs, they also said these were merely "a step in the right direction," and asked for additional tariffs of up to 200%.
What's worse, the anti-dumping suit the shrimp industry filed against Vietnam and China was financed by U.S. taxpayers - it was part of a $1.2 million federal disaster relief grant to Louisiana shrimpers. In short, the shrimping industry was given U.S. tax dollars to file a petition that resulted in U.S. consumers paying higher prices for shrimp. Consumers got mugged twice. And the domestic shrimping industry benefited both times.
There's more. Normally, proceeds from tariffs on imported goods go to the U.S. treasury. Not this time. A law passed in 2000 allows U.S. industries that win anti-dumping suits to keep the profits from tariffs imposed on foreign competitors. It's a called "double compensation," and it has been prohibited by the World Trade Organization. No matter, Congress has decided to ignore the WTO and reward domestic producers, anyway. Which means that the domestic shrimping industry (a) was permitted to pay for an anti-dumping lawsuit with U.S. tax dollars, (b) won a huge tariff on foreign shrimp which will result in higher shrimp prices for U.S. consumers, and (c) will get all of the revenue generated by those tariffs.
As if this weren't enough, as it turns out, many of those shrimp farms in China and Vietnam primarily feed their shrimp soybean meal. And almost all of that soybean meal is imported from U.S. soybean farmers. Both China and Vietnam are now threatening retaliatory measures against the U.S. soybean industry. The other countries hit by the US tariffs may follow suit. China alone imported about $2.2 billion in soybeans from the U.S. last year, twice what it imported the year before. And a group representing nine trade groups in Thailand has threatened to ban all U.S. soybean imports in retaliation for the shrimp tariffs. Just this month, the American Soybean Association wrote a letter to Commerce Secretary Don Evans outlining the disastrous impact the shrimp tariffs could have on soybean farmers.
The Southern Shrimp Alliance boasts on its website that U.S. shrimp employs some 70,000 workers whose jobs would have fallen into jeopardy had the Commerce Department not forced U.S. consumers to subsidize the industry. But when that same industry asks the federal government to expand the immigrant visa program so that it can hire cheaper foreign labor, it becomes clear that the US shrimping industry's commitment to the American worker is about as reliable as its commitment to free trade - more opportunistic, really, than principled.
The shrimping industry is a great example of how the fight for free trade isn't about protecting big business at all. Rather, it's about protecting free markets, promoting commerce and generating prosperity. It's about consumers having access to the best goods at the best prices, and employees and employers finding one another where they may - and doing both without deference to or interference from artificial borders, protective special interests or messy, overarching governing bodies.
Free the shrimp!
More farmed foreign shrimp means less US shrimping and more shrimp eating game fish on our shores.
Well, you can have steel tariffs, auto tariffs, shrimp tariffs, lumber tariffs, OJ tariffs ...
There are some here who argue that more tariffs equal more prosperity.
this is a myth. I have enough experience with migrant workers to know that they're not stupid enough to work for less than they are worth, and are always on the lookout for higher paying work, and work with benefits.
It's a good thing that the H-B2 thing is one-time, because no migrant that I know would work for less pay than American workers and, though they might go without "benefits," -- useless regulatory overhead, in other words -- they often don't stick around for long in such a place.
This argument is spurious and is actually employing a familiar leftwing device: the premise that poor souls are being taken advantage of (not true); and that premise is being used to push an agenda that really has no concern whatsoever for the well being of migrant workers (protecting American laborers -- a sort of tariff on foreign workers, if you will).
Have any pix of the Bubba Gump Shrimp Company?
Since no one else bothered, I will point out that "Big Shrimp" is an oxymoron.
Which one? Are you from Chicago? I tried the Navy Pier location once. Stopped eating shrimp for a while afterward from sheer horror.
Log the time. I finally got the joke!
If one wishes to take a position in the debate, let him not rely on flimsy "urban legends" for premises.
The best tasting shrimp comes from the Gulf of Mexico. You can keep your made in China shrimp.
There are bigger forces at work that are only hinted at in the article. The 'foreign imported shrimp' is largely farmed. The domestic shrimp is almost exclusively wild caught. This is the 10,000 year old conflict between hunter gatherers (in this case shrimp boats) and farmers (in this case in ponds rather than fields). It is simply more efficient to deliberately grow things than hunt around looking for them in the wild. Our soybean farmers aren't wandering around meadows looking for wild soybean plants for a reason. But our shrimpers still are. Farmer beats hunter-gatherer hands down, every time.
Strangely enough, nobody ever argues from the point of view of quality. US Gulf shrimp and Atlantic shrimp (such as Mayport shrimp from North Florida) are much tastier than the farm raised Chinese stuff, and I think a market for quality could be built. Let the Chinese stuff go into frozen foods, fast food "shrimp," etc. Sell the good stuff for eating here by people who know what shrimp should taste like.
But that would require marketing and a little creativity, which no industry likes to engage in, especially if they can get the federal government to go out and do things for them instead.
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