The Snowden Effect?

The US has decided to impose tariffs on imports of shrimp from Ecuador. When I first saw the reports about it, my first assumption was that this was retaliation for Ecuador’s offer of asylum to Edward Snowden, similar to the recent withdrawal of trade preferences on certain products, as I mentioned here.

Then I read a bit about it, and decided I was wrong, since this is a result of a complaint filed late last year by shrimpers in the Gulf against several countries that they claim are subsidizing exports to the US. The US has a law requiring the Commerce Department to impose tariffs on imports that are subsidized by foreign governments, with the amount of the tariff calculated to offset the amount of the subsidy.

The Department of Commerce of the United States (DOC) decided to impose an anti-subsidy tariff of 13.5 per cent for Ecuadorian shrimp exports, which so far have been imported free from tariffs to that market. 

Tariffs were also set for Malaysia (54.5 per cent), China (18.2 per cent), India (11.1 per cent) and Vietnam (7.9 per cent), but decisions were taken to exempt Thailand and Indonesia. 

This decision came following a complaint from the US organization Coalition of Gulf Shrimp Industries (COGSI) in December 2012 that accused the seven countries of using subsidies that contribute to make their production cheap and generate alleged unfair competition.

So Ecuador got hit, but so did several others, and Ecuador was by no means hit the hardest. Therefore, retaliation seems to not be involved.

But then I read on, and switched back (maybe) to my original opinion, that this may be retaliation, at least in part. Because the next paragraph says that the original findings were that Ecuador would get a pass, same as Thailand and Indonesia.

Last May, a preliminary report of the DOC determined that no tariffs would be imposed on Ecuador. But now the DOC changed its mind because in its research it was found out that only Indonesia and Thailand were not granted substantial subsidies …

It’s quite possible, I admit, that Commerce simply got some more info about subsidies in the meantime. My cynical guess, though, is that the change has more to do with Snowden than with shrimp.