Lawyer in Vietnam Oliver Massmann WTO Dispute Shrimp Case Agreement reached

1. Lawyer in Vietnam Oliver Massmann WTO Dispute Shrimp Case Agreement reached
On 18th
July 2016, the United States (US) and Vietnam reached an Agreement on the Imposition of
Anti-dumping Duty on Certain Frozen Warm-water Shrimp from Vietnam to resolve two long
standing WTO disputes brought by Vietnam: United States – Anti-dumping Measures on Certain
Shrimp from Vietnam (DS404) and United States – Anti-dumping Measures on Certain Shrimp from
Vietnam (DS429).
The history of these disputes could be traced back to 31st
December 2003, after the very first anti-
dumping case against Vietnam carried out by the U.S. in June, 2002 when the Vietnamese fishing
industry had to confront another anti-dumping petition against certain frozen and canned warm-water
shrimp imported into the U.S. by the U.S Shrimp Trade Action Committee, an ad hoc representative
of the U.S. Southern Shrimp Alliance.
In this case, Vietnam was not the only respondent but there were five other countries including Brazil,
Ecuador, India, Thailand and China. The case was investigated by the US Department of Commerce
(DOC) and the US International Trade Commission (ITC). According to the ITC, shrimp imports
account for eighty-seven percent of the one billion pounds of shrimp consumed in the U.S. annually.1
Of that, shrimp imports from the six countries in the petition make up seventy-five percent of the total
shrimp imports into the U.S. market. According to the petitioner, the alleged dumped products from
these countries caused the price of the U.S. shrimp harvest to decrease by fifty percent from 2000 to
2002, falling from $1.25 billion to $560 million;2
thus the U.S. shrimpers could not compete, leading
to nearly 70,000 job losses in the shrimp industry within the eight states.3
The DOC then initiated its
dumping investigation on 8 January, 2004.
The DOC again upheld its conclusion from the Catfish case that Vietnam is a non-market economy
(“NME”) after examining six criteria prescribed in the Tariff Act of 1930 in determining whether a
country operates on market economy principles. Upon determining that Vietnam is a NME, in order to
determine the normal values and export values of Vietnamese fish, the DOC had to find “an
economically comparable ME that is a significant producer of comparable merchandise”4
that could
substitute for Vietnam‟s costs of production. In this case, Bangladesh was chosen as a surrogate
country.
The US utilized zeroing method to determine dumping margin in the case at hand. As a matter of
general understanding, zeroing referred to the practice of some WTO Members in calculating
dumping margin by comparing weighted-average normal value to individual export prices. Under this
methodology, the difference between normal value and export price was calculated per transaction.
Positive margins, i.e., the export price is lower than the normal value, were taken as is. However,
negative margins, i.e., the export price is higher than the normal value, were counted as zero. Zeroing
drops transactions that have negative margins, thus resulting in higher overall dumping margins and
as a matter of fact, higher applied anti-dumping duty.
In contrast with the E.U.‟s prospective zeroing system, under the U.S. retrospective system, the anti-
dumping duty imposed at the end of the original investigation following the calculation of the
dumping margin only serves as a temporary estimation for future liability.5
The actual payment of
anti-dumping duties will be determined during the annual administrative or duty assessment reviews.
As mentioned above, zeroing increases the level of dumping margin. When used in the retrospective
system, the impact of zeroing is amplified as it adds an element of uncertainty. The importer of goods

2. subject to anti-dumping order only has an estimate of its extra duty. He will be unwilling to import
goods from the subject exporter because of the possibility of a higher duty when the U.S. authority
conducts the administrative review.6
During the process, several companies were investigated. The mandatory defendants were Minh Phu
Seafood Corporation, Kim Anh Limited Company, Minh Hai Joint Stock Seafoods Processing
Company and Camau Frozen Seafood Processing Import - Export Corporation (Camimex). Some
voluntary defendants that could be mentioned are Cai Doi Vam Seafood Import Export Company,
Can Tho Agriculture and Animal, Products Import Export Company; Can Tho Animal Fisheries
Product Processing Export Enterprise, Cuu Long Seaproducts Company, Danang Seaproducts Import
Export Company. However, Kim Anh Limited Company, one of the compulsory defendants, refused
to cooperate due to abundant amount of data that needs to be collected, resulting it being subject to the
very high country-wide rate.
Eventually, after over a year of investigation, ITC announced that Vietnamese shrimp are sold at
dumping prices and the import of this shrimp is detrimental to the shrimp industry of the US. As a
result, Vietnamese shrimp were subjected to anti-dumping duties at varying rates depending on the
results of the investigation. In the second and third administrative reviews, the DOC decided to
impose an insignificant duty rate of 0-0.01 percent on mandatory respondents, but not on voluntary
respondents. These voluntary respondents were subject to the initial rate of 4.57 percent. The country-
wide rate was the same as in the initial determination, i.e., 25.76 percent.
These results have raised a lot of controversial responses. Beside Vietnamese companies whose rights
and benefits were directly affected by this decision, some US parties have also shown disagreements
towards this announcement. Mr. Adam Sitkoff, Executive Director of Amcham Vietnam in Hanoi,
stated during his interview with VnExpress that the duties applied on Vietnamese shrimp were
unreasonable as Vietnam, similar to other shrimp exporters, utilized the most advanced shrimp
production methods, something that American shrimp providers did not have. As a result, the
Vietnamese shrimp prices became lower, which is not a sign of dumping.
For fear that the DOC would continue using the same calculation methodology used in the second and
third administrative reviews, resulting in unfair treatment for Vietnamese enterprises in the fourth
administrative review, the Vietnam Association of Seafood Exporters and Producers (“VASEP”) and
the Vietnam Chamber of Commerce and Industry (“VCCI”) recommended the Government to initiate
the WTO dispute settlement mechanism by first holding consultation with the U.S. on this matter on
01 February 2010. The consultation failed and the Government of Vietnam requested the
establishment of a panel on 07 April 2010. Vietnam challenged, inter alia, “(i) the application of
zeroing to individually-investigated respondents in the second and third administrative reviews, and
its continued application in the subsequent reviews; (ii) the U.S zeroing methodology „as such‟; and
(iii) the use of the zeroing methodology to calculate the “all others” rate in the second and third
administrative reviews.”7
On 11 July 2011, the Panel issued its report of the case.
The Panel ruled in favor of Vietnam that the DOC‟s zeroing methodology in determining dumping
margin for mandatory respondents in the second and third administrative reviews was inconsistent
with Article 2.4 of the Anti-Dumping Agreement (“ADA”). Moreover, the Panel also ruled that the
using of zeroing in any administrative review constituted a violation under Article 9.3 of the ADA and
Article VI:2 of the GATT 1994.8

3. This ruling of the Panel is considered to be consistent with the decisions of other WTO panels and
Appellate Body in previous cases regarding the U.S. zeroing methodology. Although the US never
opposed to this decision, they did continue applying zeroing methodology for subsequent
administrative reviews and the first sunset review.
The case would not have been a success without the active participation of several associations,
including VASEP and the VCCI. From the very beginning, these associations did evaluate the case
from Vietnam‟s viewpoint and in accordance with international practice. Then, they recommended the
government to start the proceedings based on convincing arguments, as well as propaganda to gain
support from the public. VASEP and VCCI also contributed a lot to the success of the case by
proposing experienced international trade lawyers.
Although the case is among more than 480 WTO disputes since 1995, US – Shrimp marks a
significant and critical change in Vietnam‟s use of WTO dispute settlement mechanism, leaving a lot
of lessons learned by Vietnamese enterprises and associations.
On 20th
May 2016, upon Vietnam‟s request, the DOC has implemented procedures to comply with the
WTO Panel‟s decision. Eventually, on July 18th
, 2016 Vietnam and the US finally signed an
agreement, according to which a Vietnamese exporter of frozen warm-water shrimp – Minh Phu
Group – will no longer be subject to the antidumping duty order. In addition, certain domestic
litigation will be resolved and duty deposits will be refunded to the Minh Phu Group. The
antidumping duty order will remain in place for all other exporters of warm-water shrimp from
Vietnam.
This move shows negotiation efforts of Vietnam and the US‟ goodwill to respect its WTO obligations.
It also reflects the US‟s goodwill to strengthen its multi-faceted cooperation with Vietnam, especially
in the context that the two countries participate in the Trans-Pacific Partnership (TPP) agreement.
Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have
any questions or want to know more details on the above. Oliver Massmann is the General Director of
Duane Morris Vietnam LLC.
THANK YOU !
1
U.S. Slaps Tariffs on Shrimp from China, „Vietnam: Commerce Department Acts after Complaints from
American Harvesters‟, Chicago Sun Times, 2004, p. 62.
2
Burnett, Richard, „Struggling U.S. Shrimpers File Anti-dumping Petition: An Industry Group Says Six
Countries Sold Shrimp at Artificially Low Prices‟, 2004, http://articles.orlandosentinel.com/2004-01-
01/news/0401010416_1_shrimp-petition-industry).
3
Southern Shrimp Alliance, Press Release: Shrimpers Hail Finding of Dumped Shrimp from China and
Vietnam, 30 November 2004, http://www.shrimpalliance.com/Press%20Releases/ 11-30-
04%20DOC%20Final.pdf.
4
Section 773(c)(4), Tariff Act of 1930.
5
Chad P. Bown and Thomas J. Prusa, US Anti-dumping – Much Do about Zeroing, 2010, p.30.
6
Ibid., p.33.
7
http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds404_e.htm.
8
Panel Report, US – Shrimp, para. 8.1.