THE U.S.

-VIETNAMESE CATFISH DISPUTE

Catfish, long a part of the U S. Deep South diet, are the ninth most consumed seafood or fish
product in the United States. The U S. industry is centered (accounting for 86 percent of its 2015
production) in poor areas of two states—Alabama and Mississippi. At its height, it employed
about 10,000 people. However, U S. per capita consumption of fish and seafood has been
decreasing (by 11 percent between 2003 and 2013). Further, as catfish imports (mainly from
Vietnam) have taken a larger share of the U.S. market (20 percent in 2005 versus 75 percent in
2013), U.S production has fallen. Meanwhile, Vietnam's industry is also centered in one of its
poorer areas, the Mekong Delta. (The opening photo shows a fish farm in southern Vietnam.)
The Vietnamese industry employs about 1 million people and accounts for about 2 percent of
Vietnam's economy. The changing competitive situation has spurred the U.S. catfish industry to
seek means to limit the importation of Vietnamese catfish. (Map 7.1 shows the production areas
in the two countries.)

MAP 7.1 Areas of Major U.S. and Vietnam Catfish Production

The catfish production for both the United States and Vietnam are near deltas of major rivers, the Mississippi and
the Mekong respectively. Both areas have a great deal of poverty.

RISE OF AQUACULTURE

During most of history, marine life grew faster than humans could consume it. However, during
the last half century, overfishing has led to many species not being fully replenished, a situation
caused by population growth and technology that enables locating and landing fish like never
before. One factor countering the overfishing has been the rise in aquaculture, or "fish farming,"
of which the U.S. and Vietnam industries have been a part. In other words, rather than being
caught in the wild in nets or hooked on fish line, most catfish are grown in ponds and harvested
when they grow to a certain size. In turn, catfish have ceased to be traditional scavengers;
instead, they are fed corn and soybean feed, a change publicized by U.S. catfish growers as they
promote sales to consumers who do not want to eat scavenger fish.

THE VIETNAMESE ADVANTAGE

The U.S. catfish industry has developed largely by converting lands that will no longer grow
much cotton, but are high in clay content and hold pumped-in water very well. Meanwhile
Vietnam has some competitive advantages that enable it to export to the United States. Its
winterless climate permits the fish to grow faster. One of its species, the tra, can surface to
breathe air; thus enabling the fish to grow in greater density. Vietnam's lack of restrictions
(unlike the United States) on the discharge of fishpond waters into rivers also allows for a greater
production density. Finally, its lower labor rates are an important factor for filleting and freezing
the fish.

THE U.S. INDUSTRY FIGHTS BACK

Changing Names Alarmed by market losses, U.S. catfish growers' first defense was to convince
Congress to disallow Vietnamese imports to be called “catfish." Because Vietnamese fish were
of a different variety (from about 3,000 catfish varieties found all over the world) than those
farmed in the United States, the Vietnamese varieties had to be imported as tra, basa, or
pangasius. The U.S. producers reasoned that consumers were not likely to buy some strange-
sounding and unknown fish in lieu of catfish. However, the name change did not prevent
Vietnamese inroads. One of the problems was that few U.S. locales have truth-in-menu laws.
Thus, the names for tra, basa, and pangasius were changed on menus and grocery labels to be
"catfish," a more expensive grouper, or just plain “fish." Clearly, the U.S. catfish producers
needed a different means to stifle the imports.
In the meantime, the U.S. industry's profits diminished because of increased costs for corn and
soybean feed. In order to raise prices and increase demand, an association representing catfish
growers, the Catfish Institute, is now promoting a premium catfish with a different name—
delacata. Basically, the name “catfish" has had a negative connotation for many people, and the
Institute noted how name changing had recently helped sales of other previously unpopular fish
(e.g., the slimehead became the “orange roughy" and the Patagonian toothfish became ‘Chilean
sea bass"). At this writing, it is too early to tell if the change-of-name strategy will work.

Unfair Competition: Dumping Because the U.S. industry was losing jobs and sales, it petitioned
for increased taxes on the imported Vietnamese fish, claiming that they were being sold below
the cost of production (dumping). Given that Vietnam is a command economy, it was difficult to
establish what the true production costs were; however, these were estimated on the basis of
Bangladesh production costs, and antidumping taxes (tariffs) of 64 percent were placed on the
importation of the fish. Later, the industry succeeded in having estimates based on higher
Indonesian costs.

Health Arguments Despite the higher prices, the Vietnamese fish have taken an increasing share
of the U.S. market. However, in 2007, the U.S. catfish industry seemed to have found salvation
when about 39.000 U.S. dogs and cats were sickened or killed after consuming imported Chinese
pet food. This led to a negative attitude toward imported food products in general, especially
seafood originating anywhere in Asia. The U.S. catfish farmers responded quickly First, they
publicly implied that imported fish may be contaminated, such as through publicity saying, “U.S.
farm-raised catfish; Safety you can trust." The Catfish Institute convinced several states to
require country-of-origin labeling on food and menus by advocating that consumers have the
right to know whether the fish and seafood they buy could be contaminated. The Institute has
followed up with videos showing unsanitary areas where Vietnamese catfish are cultivated.
However, studies on changes in consumer purchases indicate that these measures have had no
effect on demand.
Second, catfish farmers lobbied to increase inspections of fish from Vietnam Their
congressional representatives pointed out that U.S. seafood inspection is of only 2 percent of the
imports, whereas the European Union inspection is of about 20 percent They were successful at
burying a provision deep in the 2008 farm bill, which called for the Department of Agriculture—
rather than the Food and Drug Administration (FDA)—to be in charge of catfish safety. Basi-
cally, the provision required 100 percent inspection at the production source, which is
particularly difficult in Vietnam because its highly dispersed fisheries would require an army of
inspectors. Further, since Vietnamese imports were no longer called catfish, enforcement had to
await amendments in the bill to refer to “catfish-like" products. The catfish inspections were
never enforced because of budget and other concerns, and the provision was formally revoked in
2012. However, passage of the 2014 farm bill required quarterly inspection of both U.S. and
foreign catfish. This inspection was set to begin in March 2016 and be phased in over an 18-
month period. Still, by the start date, there was no agreed upon criteria for what the inspection
would be. Vietnamese producers speculated that the criteria would be arbitrary to exclude them
from the U.S. market.

THE OPPOSITION

As with most regulatory changes, there has been opposition to the protection of the U.S. catfish
industry, mainly along four lines:
1. Although the farm bill's inspection requirement was ostensibly to protect the health of
American consumers, it singled out only catfish-like species without any evidence that
these posed more danger than other types of imported fish.
2. The cost of an effective catfish inspection program will be high (e.g., Vietnam exports
about 500 tons of catfish to the United States per month). Given budget deficit worries,
there is considerable opposition.
3. Vietnam is a fast-growing economy with a large population. U.S. exports to Vietnam
have been rising steeply. For instance, U.S. farm exports to Vietnam went from $215
million in 2006 to $2.3 billion in 2015. Additional U.S. catfish import restrictions could
jeopardize U S export sales to Vietnam. Vietnam has threatened to take retaliatory action
by buying less U.S. beef, for example.
4. Finally, economic conflicts between the United States and Vietnam could deteriorate
political relations between the two. Further, Vietnam might bring charges against the
United States in the World Trade Organization (WTO). (Chapter B discusses the WTO's
dispute mechanisms.) If Vietnam were to win, the win would likely not only negate the
protective catfish measures, but also weaken U.S. efforts to persuade other countries to
 reduce their trade barriers.
An adage says that if you give a man a fish, he will have food for a day. If you teach him to
fish, he will have food for a lifetime. However, the U.S.-Vietnamese catfish controversy
illustrates that knowing how to fish is insufficient in international competition. One also needs
to know how to influence and maneuver through a maze of government regulations that affect
competition. ■

QUESTIONS
1. List the advantages and disadvantages for the U.S. protection of its cattish industry.
2. As you read through the chapter, list the protective measures (instruments) the United
States has not used to protect its catfish industry. Briefly explain why each would or
would not be successful.

Other readings for your reference:

http://www.thesaigontimes.vn/30124/Ca-tra-khong-phai-la-catfish.html
https://vietnambiz.vn/ca-tra-doi-mat-voi-cuoc-chien-ten-goi-catfish-18742.html
http://vietnamembassy-usa.org/vi/tin-tuc/2001/11/chien-dich-catfish-chong-ca-tra-va-basa-viet-
nam
https://www.fistenet.gov.vn/portals/0/tu-dien-thuat-ngu-ntts-fao-edit_1.pdf