Anti-Dumping and Countervailing Duties for Frozen Warm Water Shrimp Products: An Update

Last month, I had the opportunity to attend the Seafood Expo North America in Boston.

This event takes place every year. This is a leading trade event for all sectors of the Seafood Industry. Within our company MTS Customs Brokerage, we have customers that import frozen warm water shrimp into the U.S. from multiple countries. One of the most important topics being asked in the industry right now is “Where are we with the Department of Commerce implementing Anti-Dumping and Countervailing Duty from Ecuador, Indonesia, India, and Vietnam?”.

Before I dive into this hot topic, I would like to provide a general reference on “What is AD and CVD?”.

What does AD and CVD stand for?

• AD: Antidumping Duty
• CVD = Countervailing Duty

What is Dumping?

Dumping occurs when a foreign manufacturer/producer is selling a product in the U.S. below the producer’s sales price in the country of origin (also known as a “home market” per the U.S. government) or is selling at a price that is lower than the manufacturer’s production costs. The dumping margin is the difference between the price in the foreign market and U.S. market. And, just selling products at lower prices in the U.S. doesn’t automatically mean dumping – the selling has to occur within a very specific legal definition.

What is a Countervailable Subsidy?

Simply, a countervailable subsidy is when foreign governments subsidize certain industries by providing financing to produce, export, or manufacture certain goods. Financing doesn’t necessary need to be cash money. It could be a tax credit, a loan, or other financial instrument, per the U.S. government’s definition. The U.S. government’s regulations define when certain subsidizing is “unfair” – an “unfair subsidy”. The U.S. government then “countervails” the subsidy as an offset, using higher import duties.

Under Frozen Warm Water Shrimp – AD & CVD Investigation:

Last year, on November 21, 2023, the U.S. Department of Commerce issued a Federal Register published in initiation on this investigation. Under this notice “Frozen Warmwater Shrimp From Ecuador and Indonesia: Initiation of Less-Than-Fair-Value Investigations” was addressed. Below is general Scope for importation from “Ecuador”.

This scope of investigations includes the below per the Commerce Department:

• “Certain frozen warmwater shrimp and prawns whether wild-caught (ocean harvested) or farm-raised (produced by aquaculture), head-on or head-off, shell-on or peeled, tail-on or tail-off, deveined or not deveined, cooked or raw, or otherwise processed in frozen form.”
• “‘Tails’ in this context means the tail fan, which includes the telson and the uropods.”
• “The frozen warmwater shrimp and prawn products included in the scope, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTSUS), are products which are processed from warmwater shrimp and prawns through freezing and which are sold in any count size.”
• “The products described above may be processed from any species of warmwater shrimp and prawns.”
• “Warmwater shrimp and prawns are generally classified in, but are not limited to, the Penaeidae family. Some examples of the farmed and wild-caught warmwater species include, but are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn (Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), redspotted shrimp (Penaeus brasiliensis), southern brown shrimp (Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern rough shrimp (Trachypenaeus curvirostris), southern white shrimp (Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus indicus).”
• “Frozen shrimp and prawns that are packed with marinade, spices or sauce are included in the scope.”
• “In addition, food preparations, which are not ‘prepared meals’, that contain more than 20 percent by weight of shrimp or prawn are also included in the scope.”

Excluded from the scope are:

• “Breaded shrimp and prawns (HTSUS subheading 1605.21.1020)”
• “Shrimp and prawns generally classified in the Pandalidae family and commonly referred to as coldwater shrimp, in any state of processing”
• “Fresh shrimp and prawns whether shell-on or peeled (HTSUS subheadings 0306.36.0020 and 0306.36.0040)”
• “Shrimp and prawns in prepared meals (HTSUS subheadings 1605.21.0500 and 1605.29.0500)”
• “Dried shrimp and prawns”
• “Canned warmwater shrimp and prawns (HTSUS subheading 1605.29.1040)”
• “Certain battered shrimp” (see the below note)

The U.S. Department of Commerce notes that battered shrimp is:

• “A shrimp-based product that is produced from fresh (or thawed-from-frozen) and peeled shrimp”
• ” To which a ‘dusting’ layer of rice or wheat flour of at least 95 percent purity has been applied”
• “With the entire surface of the shrimp flesh thoroughly and evenly coated with the flour”
• “With the non-shrimp content of the end product constituting between four and ten percent of the product’s total weight after being dusted, but prior to being frozen”
• “And, that is subjected to individually quick frozen (IQF) freezing immediately after application of the dusting layer. When dusted in accordance with the definition of dusting above, the battered shrimp product is also coated with a wet viscous layer containing egg and/or milk, and par-fried.”

The latest updates on Antidumping Duties (AD) Countervailing Duties (CVD) from Ecuador

In April 2nd, 2024, the U.S. Department Of Commerce issued an update on the AD/CVD investigation for Ecuador. The period of investigation is from January 1, 2022, through December 31, 2022. The product covered by this investigation is shrimp from Ecuador.

Per the Federal Register, under the Preliminary Decision Memorandum, in accordance with section 705(a)(1) of the Act and 19 CFR 351.210(b)(4), the U.S. Department of Commerce is “aligning the final countervailing duty (CVD) determination in this investigation with the final determinations in the companion antidumping duty (AD) investigations of shrimp from Ecuador and Indonesia. Consequently, the final CVD determination will be issued on the same date as the final AD determinations, which are currently scheduled to be issued no later than August 5, 2024, unless postponed.”

At MTS Customs Brokerage, we will continue to monitor the changes and updates with the U.S. Department of Commerce initiating AD and CVD duty Investigations of Frozen Warmwater Shrimp. As this will have a big impact in the seafood industry, we want to make sure our customers are prepared for the upcoming changes in the next few months.