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                                                                                                                           Asean Affairs November 25, 2013  

The Senate Should Abandon Protectionist Inspections Aimed at Catfish from Vietnam

Murray Hiebert and Phoebe De Padua

November 21, 2013

If the United States hopes to get its 11 partner countries in the Trans-Pacific Partnership (TPP) to complete the trade agreement by the end of the year, it is critical that Congress abandon one of the most blatant protectionist measures in the 2013 Farm Bill. It is tough for U.S. negotiators to press Vietnam, one of the most vibrant emerging economies in Southeast Asia, to open its markets under the high standard TPP when Congress has imposed non-tariff barriers blocking Vietnamese exports of catfish to U.S. consumers.

Vietnam is also one of the Southeast Asian countries with which U.S. ties have improved most in recent years under the U.S. policy of rebalancing toward the Asia Pacific. If Congress maintains protectionist measures against one of Vietnam’s major exports, it could sour efforts to establish the comprehensive partnership between the two countries that Presidents Barack Obama and Truong Tan San announced in July.

The future of catfish trade between Vietnam and the United States is currently in the hands of the 2013 farm bill conference committee, a group of 29 members of the House of Representatives and 12 members of the Senate who have been tasked with resolving differences in the versions of the farm bill passed by the House and Senate. The House on July 10 voted to repeal the Department of Agriculture’s (USDA) controversial catfish inspection program, which effectively creates a non-tariff trade barrier against Vietnamese catfish exports to the United States. The Senate’s version of the bill remains silent on the issue. The conference committee must reach agreement on key provisions of the farm bill before it can be sent to the president for signing.

Historically, seafood imports into the United States have been inspected by the Food and Drug Administration (FDA). However, the 2008 farm bill moved inspection of catfish imports from the FDA to the USDA. This provision was slipped into the 2008 farm bill conference without the House or Senate actually considering the provision. This program was considered by many to be extraneous and inefficient.

For starters, the USDA has no institutional knowledge of catfish regulation, because these inspections have long been done by the FDA. The USDA program is expected to cost about $14 million a year, much higher than the FDA’s inspections which cost only $700,000 a year. In fact, the USDA program has already cost U.S. tax payers $20 million in set up costs and it has not even started yet.

The effort to block Vietnamese catfish from entering the United States was launched by a group of U.S. catfish farmers, who are concerned about competition from Vietnam. The group, represented by the Catfish Farmers of America, began lobbying Congress in 2002 to declare that U.S.-born catfish are the only officially recognized catfish out of some 2,000 types worldwide. Congress passed a measure to this effect in its farm bill in 2002. This measure not only hurt Vietnamese producers and U.S. consumers, but it established a non-tariff barrier against Vietnam’s exports and probably violated international trade practices set by the World Trade Organization. Catfish exports to the United States are critical to Vietnam’s economy. They reached $340 million last year out of $1.3 billion in total Vietnamese seafood exports to the U.S. market.

The Vietnamese government on October 30 sent letters to congressional leaders and members of the farm bill conference committee urging them to repeal the USDA catfish inspection program. Signed by Foreign Minister Pham Binh Minh and Trade Minister Vu Huy Hoang, the letters argued that the special inspection program has created an unfair trade barrier for Vietnamese catfish exports to the United States.

The ministers said that the special inspection program “falls short of the spirit of the newly-formed Vietnam-U.S. comprehensive partnership” and warned about possible retaliation if the program is not abandoned, suggesting that U.S. exports of soybeans, beef, and other products could be affected.

Senators John McCain from Arizona and Jeanne Shaheen from New Hampshire have been active in pushing the Senate to scrap the USDA catfish inspection office. A group of 76 members of the House of Representatives signed an October 21 letter calling for repeal of the USDA program. The National Fisheries Institute, a broad-based seafood industry group, also has expressed support for nixing the newly-devised inspection program.

The provision to have the USDA inspect catfish in the 2008 farm bill was pushed by southern lawmakers, particularly Senator Thad Cochran of Mississippi, the top-ranking catfish producing state. Sen. Cochran, the ranking Republican on the Senate Agriculture Committee, strongly supported the domestic catfish industry call for imported catfish to be strictly inspected by the USDA. The U.S. catfish industry is a $4-billion-a-year industry that relies on farmers in Alabama, Arkansas, Mississippi, and Louisiana for more than 90 percent of domestic production.

A May 2012 Government Accountability Office report on the inspection brouhaha argued that the USDA program is duplicative of the FDA’s program and a waste of taxpayer money. The report found that the USDA uses “outdated and limited information” and the “the cost-effectiveness of the catfish inspection program is unclear” because USDA would oversee a small fraction of seafood imports.

Proponents of banning Vietnamese catfish imports to the United States say that foreign fish lower health and quality standards for American consumers. However, the FDA, the Centers for Disease Control, and even the USDA admit that this line of argument lacks a basis in fact. An average of only 2 catfish-related illnesses are reported out of the 1.8 billion catfish consumed by U.S. citizens each year, according to Senator McCain’s July 7 Politico op-ed

The United States cannot afford to continue its unfair trade barrier against Vietnamese catfish. It is a blow against a trading partner that the United States is pressing in the TPP negotiations to open up its economy and end its own non-tariff barriers. The United States is Vietnam’s second largest export market for catfish, with a turnover of more than $358 million and accounting for about 20 percent of the country’s total export market for catfish.

And Vietnam is not the only Southeast Asian nation concerned about this program. Thai ambassador Vijavat Isarabhakdi wrote to congressional leaders on November 6, pointing out that “The United States frequently and rightfully challenges trading partners to ensure that [sanitary and phytosanitary] measures rest on sound science and do not discriminate against...American agricultural exports. In this regard, the USDA catfish inspection program should be subjected to similar scrutiny.” Chinese business leaders have also urged their government to retaliate if Congress fails to remedy this situation.

If the United States wants to ensure successful completion of the TPP in the near future, it will have to find ways to address domestic protectionist voices within its own government. The persistent lobbying of a small interest group should not stand in the way of a potentially landmark trade agreement. The United States will have to adhere to the same trade rules its negotiators are busy calling on countries like Vietnam, Thailand, China, and Indonesia to implement if it wants its voice on trade and investment to be heard in the most vibrant region of the global economy.

Murray Hiebert is senior fellow and deputy director of the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies in Washington, D.C. Phoebe De Padua is a researcher with the Sumitro Chair.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

2013 by the Center for Strategic and International Studies. All rights reserved.

Courtesy: This post originally appeared on the Center for Strategic and International Studies, Washington D.C. cogitASIA blog

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