Trade

The Catfish Wars Could Derail U.S.-Asia Trade


The Catfish Wars Could Derail U.S.-Asia Trade

Photograph by Jan Kornstaedt/Gallery Stock

(Corrects James Bacchus's title in the third paragraph.)

Vietnam is finally getting some allies in its long war with the U.S. over catfish. For years it has been able to do little more than complain as farmers from Mississippi, Alabama, and other Southern states pressured lawmakers to tighten regulation of low-priced imported fish. Dissatisfied with the way the Food and Drug Administration was regulating foreign catfish, Congress in 2008 required the Department of Agriculture to set up a new office specifically for catfish imports.

Not much happened after that, though, so in a rare example of actual lawmaking this year, Congress set deadlines for the Agriculture Department to implement inspection rules for catfish from overseas. Among the leaders in the fight: Senator Thad Cochran, the Mississippi Republican who just survived a Tea Party primary challenge. Imports from Southeast Asia “have been found to contain dangerous chemicals and substances banned for use in the United States,” his office said in a statement, and it called on the Obama administration to take action against “underpriced frozen fish fillets from Vietnam.”

Until now, Vietnam hasn’t had much leverage. But with President Obama eager to finalize a new trans-Pacific free-trade bloc, suddenly the Vietnamese have some bargaining power and they’re ready to use it. The Vietnam Association of Seafood Exporters and Producers has hired a high-profile U.S. attorney, James Bacchus, a former Democratic congressman from Florida and ex-chairman of the appellate body of the World Trade Organization, the association says. Nine other countries have also joined Vietnam pointing to the catfish regime as an example of the sort of U.S. protectionism that could scupper any agreement for the Trans-Pacific Partnership, the New York Times reported.

In addition to enlisting other countries to protest moves against foreign fish, Vietnam’s government is fighting back in other ways. In a change that could help defang complaints about safety, on June 20 it put into effect a rule to raise quality and safety standards for locally raised catfish, also known as pangasius. Exporters now have to register their contracts with the Vietnam Pangasius Association, and according to the state-run Vietnamese media, many are not happy with the idea of telling regulators about their business. The new requirement, known as Decree 36, is “absurd,” according to an exporter quoted in VietnamNet. “We don’t want to report our business contracts to any individual or institution because this is a business secret,” griped another.

Some farmers worry registering their export contract will open the door to the catfish association regulating prices, VietnamNet reported:

Since all businesses have to register their export contracts with the association, it will know the export prices of every enterprise, which allows it to calculate the input material price. If so, it will put pressure on enterprises if it finds that they buy materials from farmers at prices deemed too low, and force them to raise the prices. In other words, businesses understand that VN Pangasius will have the power to set up the input material floor prices.

Still, not everybody’s angry at the government in Hanoi for trying to exercise more control over the catfish exporters. Lam Van Ho, a fish farmer in the Mekong Delta, Vietnam’s major catfish region, says the new decree creates much-needed standards for quality and food safety in catfish production. Vietnam’s aquaculture has “struggled a lot due to bad practices of several farmers,” Ho says. The low-quality fish from those farmers tarnishes the reputation of the whole industry, risking bans in overseas markets. Decree 36, he argues, “helps stabilize the industry’s brand and in turn will protect the Vietnam catfish exports.”

The bottom line: To win more access to the U.S. for its catfish, Vietnam says it’s improving aquaculture standards.

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.
Mai is a Bloomberg News reporter in Ho Chi Minh City, Vietnam.

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