U.S. Customs and Border Protection (CBP) has commenced a formal investigation to determine whether Vietnam’s leading shrimp company, Minh Phu Seafood, and its subsidiaries have evaded the antidumping duty order on certain frozen warmwater shrimp from India through its imports of shrimp into the U.S.

CBP said the Trade Remedy Law Enforcement Directorate (TRLED) under its Office of Trade on 9 October, 2019, initiated the investigation under the Enforce and Protect Act (EAPA), following an allegation submitted by the Ad Hoc Shrimp Trade Enforcement Committee (AHSTEC), a coalition of U.S. shrimp industry members and commercial fishing industry organizations, according to a letter sent to MSeafood, a California-based seafood importer owned by Minh Phu, dated 14 January. The letter was posted on the website of the Southern Shrimp Alliance on 15 January.

AHSTEC argued that Minh Phu, along with its affiliates, Minh Qui Seafood, Minh Phat Seafood, and Minh Phu Hau Giang, were importing shrimp from India into Vietnam for the purposes of transshipping it to the U.S.

Minh Phu did not immediately respond to queries for comment on Thursday, 16 January.

According to data provided by AHSTEC, Minh Phu imported 16,800 metric tons (MT) and 23,800 MT of frozen shrimp from India in 2017 and 2018, respectively. The AHSTEC also submitted data stating that since the beginning of 2018, there have been 1,512 shipments of Indian shrimp products directed to either Minh Phu or Minh Phu Hau Giang.

By assessing the claims, TRLED found the allegations “reasonably suggest that MSeafood attempted to evade the Order through the transshipment of Indian-origin frozen shrimp through Vietnam and failed to report merchandise as subject to the Indian order,” the CBP letter said.

CBP also conducted its own preliminary investigation for additional evidence.

Based on the allegations and evidence, CBP is imposing interim measures through which unliquidated import entries of frozen shrimp made by MSeafood after September 18, 2018, “will be rate-adjusted to reflect that they are subject to the anti-dumping order on frozen shrimp from India and cash deposits will be owed.”

CBP announced it was suspending liquidation for any import entry of shrimp made by MSeafood on or after 9 October, 2019, the day the investigation began. The U.S. agency would require “live entry” for all future imports made by MSeafood, “meaning that all entry documents and cash deposits must be provided before cargo is released by CBP into U.S. commerce.”

Southern Shrimp Alliance Executive Director John Williams said he was pleased with the action.

“U.S. Customs and Border Protection has once again shown that they take seriously any potential efforts to evade the payment of antidumping duties,” Williams said in a statement.

The allegations against Minh Phu began when U.S. Representative Darin LaHood (R-IL) in a letter on 17 May last year requested CBP launch an investigation into allegations that Minh Phu was possibly evading U.S. anti-dumping duties on shrimp from India. The letter alleged that Minh Phu purchased a large amount of frozen shrimp from India, processed it at a “minimum" level in Vietnam, and then went on to sell them through a subsidiary to the U.S., MSeafood, as a Vietnamese product.

The Vietnamese shrimp company held a press conference on 7 June where its chairman and CEO, Le Van Quang, said his company was not involved in any evasion of anti-dumping duties in the U.S. market.

Quang said Minh Phu is importing shrimp from India to meet demand for processed shrimp in markets other than the U.S, and to maintain the stability of employment during periods of supply shortage in Vietnam. 

The U.S. remained the biggest market for shrimp from Minh Phu last year. The company exported shrimp worth USD 245.87 million (EUR 220.7 million) to the U.S. in 2019, down 19.6 percent from 2018.

In total, Minh Phu exported 57,709 MT of shrimp to all markets in 2019, down 14.7 percent year-on-year, which was worth USD 643.71 million (EUR 577.7 million), falling 14.3 percent from 2018, with Japan, the European Union, and South Korea being major destinations, beside the U.S.

In its December update released on 15 January, Minh Phu said it sharply reduced imports of material in 2019 which worsened the shortage of material its processing plants were facing. The company said unfavorable weather conditions and diseases last year badly affected shrimp farming in the country, resulting in a lack of material supply, thus causing prices to increase.

Its business performance was hit hard as prices continued to rise, especially between August and October, while export prices remained low.

Additionally, the company’s self-supply capacity remained modest last year because rainy conditions and delays in disbursement of funding have slowed construction of new ponds at its own farms. Minh Phu put into operation 57 ponds in the Minh Phu Loc An and 80 ponds in Minh Phu Kien Giang in 2019.

Source: Seafood Source