The Southern Shrimp Alliance (SSA), a U.S. shrimp industry representative body, has requested that the U.S. Department of Commerce (DOC) initiate an investigation on whether the Ecuadorian shrimp industry’s alleged use of forced and child labor, illegal deforestation of mangroves, and use of World Bank funding amount to subsidies that countervailing duties should balance out.
The spark of the SSA’s request for investigation came after former U.S. President Joe Biden introduced countervailing duties on the Ecuadorian shrimp industry.
In response, six Ecuadorian companies filed formal requests for expedited reviews from the DOC.
The DOC’s expedited review policy allows foreign exporters to obtain permanent exemptions from countervailing duties if they were not examined during the department’s initial investigation and can show that they did not benefit from countervailable subsidies during that period.
According to the SSA, the expedited review process is a loophole in U.S. law that has long allowed foreign exporters “to escape trade relief.”
The SSA said it believed that the six Ecuadorian companies, two of which have since withdrawn their requests, were hoping to exploit this loophole and that the DOC needed to investigate in response.
“For too long, our trade laws have treated companies engaged in unfair trade with kid gloves,” Southern Shrimp Alliance Executive Director John Williams said. “An America first trade policy requires that our unfair trade laws create a level playing field. Although it is not what the Ecuadorian shrimp exporters intended, the U.S. shrimp industry hopes that [the DOC] will accept their invitation to conduct an even more in-depth investigation of their unfair trade.”
The SSA filing specifically asks the DOC to scrutinize three specific practices from which it alleges the Ecuadorian shrimp industry has unfairly profited.
The first, according to the SSA, is that the Ecuadorian shrimp industry has disregarded constitutional laws protecting Ecuador’s mangrove forests.
According to the SSA, the nation has lost more than 16 percent of its coastal mangroves in the period in which it developed a robust shrimp aquaculture sector in the mid-1980s. The SSA alleges that the Ecuadorian government’s failure to enforce laws prohibiting the destruction of mangroves amounts to a significant countervailable subsidy.
Additionally, though Ecuador’s laws also prohibit both forced and child labor in shrimp supply chains, the SSA pointed out that the U.S. Department of State’s Trafficking in Persons Report has alleged that the country’s shrimp industry is implicated in the exploitation of Ecuadorian adults and children in forced labor and that the Ecuadorian government has, according to the U.S. Department of State, undertaken “insufficient efforts to prosecute or convict labor traffickers.”
This practice, the SSA alleges, also amounts to a countervailable subsidy for the industry.
The last practice that the SSA has asked the Department of State to investigate is USD 700 million (EUR 617 million) which the Ecuadorian government received from the World Bank, as well as other similar funds the country received, under the “Green and Resilient Recovery Development Policy Loan Program” from which the shrimp industry would allegedly benefit.
The SSA requested that the DOC also investigate whether this amounted to a countervailing subsidy.