REVA UNIVERSITY

SCHOOL OF LEGAL STUDIES

Subject: International Trade Law

SHRIMP TRADE IN INTERNATIONAL LAW

Shreya Sharma
R18BL055| BBA.LLB

 Introduction
Shrimp is considered the most valued fish and is traded internationally in the USA, EU, and Japan
and are considered the major countries importing shrimp from Asian countries and Ecuador.
Shrimp is the most important commodity, by value, in the international seafood trade.1 The shrimp
industry has grown exponentially in the last decades, and growth is expected to continue for years
to come. However, Import rejections due to quality issues lead to substantial economic loss.

India, Ecuador, and Vietnam are the major exporter to the USA, EU, and Japan. Transitional
probability revealed India, China, and Thailand retained major part of their share in the USA and
Japan markets.

In EU market, India gained entire share of Indonesia and 93% of Bangladesh share and Vietnam
retained major portion (97%) of its share. Number of consignments rejected was variable but
declined of late.
Indian shrimp exports were stable at US and EU markets with index of 6.90% and 7.48% for
exports and 11.89% and 12.14% for rejections, respectively. Box-Jenkins analysis revealed Indian
shrimp rejections at the USA was higher than EU and Japan. Microbiological causes dominated the
rejections by USA. Chemical was the major cause for rejections at EU and Japan. Results suggest
significant improvement in the quality compliance of Indian shrimp exports.

Export of fish and fishery products have led to the development and economic growth of
developing countries like India, earning precious foreign exchange and generating employment is a
major advantage. The technological advancements and improvements in refrigeration, improved
transportation and communication, and liberalization have led to the estimated 45% world fish
getting traded worth USD 152 billion in 2017, internationally under General Agreement on Tariffs
and Trade and World Trade Organization. Among the fish and fishery items vigorously exchanged ,
salmon, shrimp, and bivalves constitute one-fourth by the quantity and one-third value in the
international market. Among the fish and fishery products heavily traded, shrimp/prawn constitute
17.8% by value with just 6.2%volume against salmon, which constitute 18.1% by value with 7.4%
volume.

1 According to the FAO Global Study of Shrimp Fisheries (2008).

 Global shrimp aquaculture production has increased significantly over the last two decades. Nearly
53% of supply came from the aquaculture sector dominated mostly by the white-leg or Pacific
white shrimp (Penaeus vannamei) that represented 77% of global farmed shrimp production.

Intensification of shrimp industry has become synonym to the introduction of P. Vannamaei in

significant shrimp-producing countries such as China , Thailand, Vietnam, Indonesia, and India.

Sanitation is the essential concern influencing the global exchange and Food and Drug
Administration (FDA), Rapid Alert System for Food and Feed (RASFF), and Ministry of
Health, Labour and Welfare (MHLW) in the USA, EU member states, and Japan monitor
the imports in their respective countries. Severe sterile measures carried out and implemented in the
interest of food safety and consumer protection play an important role in international trade of fish
and fishery products.

Trade barriers like tariffs and sanitary and phytosanitary (SPS) measures like food safety issues
including veterinary drug residues have a major influence leading to restricted market access,
especially for developing countries including India. Some of the food safety concerns leading to
import rejections are pathogens, parasites, marine toxins, decomposition, environmental
contaminations, food and colour additives, foreign objects, and residues of veterinary drugs like
antibiotics.

Rejections due to the presence of antibiotic residues have raised serious public health concern due
to their possible role in toxicity and development of antimicrobial resistance. Non-compliance to
standards leads to import refusals, detention, or destruction at the entry points of the importing
country.

THE SHRIMP CASE : THAT CREATED A NEW WORLD ORDER

US—Shrimp2 was the first case to come before the newly created WTO Dispute Settlement Body
(DSB)3 in which the appellate body was required to consider the compatibility with GATT 1994 of
unilateral trade measures for the protection of global environmental concerns.

India, Malaysia, Pakistan, and Thailand initiated their complaint against the US in consequence of
unilateral measures pursuant to the US Endangered Species Act of 1973 which prohibited the

2 WT/DS58/23
3 1994 WTO Agreement and Dispute Settlement Understanding (DSU), in force 1 January 1995.






import of shrimp harvested outside US waters and in a manner incompatible with US standards for
endangered sea turtle protection.

Domestically, US research programmes had concluded that the incidental capture and drowning of
sea turtles in shrimp trawl nets was a significant source of sea turtle mortality. In response, the US
National Marine Fisheries Service (NMFS) developed a turtle excluder device (TED) for shrimp
trawler nets which provided a ‘trapdoor’ for turtles to escape from the net. When a programme
encouraging voluntary use of TEDs proved ineffective, legislative steps were taken requiring all US
shrimp trawl vessels to use approved TEDs in specified areas where there was significant turtle
mortality in shrimp trawls.

This was followed in 1989 by Section 609 of Public Law 101–102,16 implemented through
Guidelines, and which ultimately led to the WTO proceedings.4

Section 609 provided for an import ban on shrimp harvested with commercial fishing technology
which may adversely affect sea turtles protected under US law.

The ban had serious impacts on the complainant States where fishing for domestic consumption and
for export contributes significantly to their economies.5

India, Malaysia, Pakistan, and Thailand27 complained that the US measures pursuant to the
Endangered Species Act of 1973 were contrary to Article XI GATT 1994 which prohibits
quantitative restrictions on trade.28 The Panel found that the US did not dispute that ‘with respect
to countries not certified under Section 609, [the ban] amounted to a restriction on the importation
of shrimp within the meaning of Article XI:1’.29 The US sought to justify the inconsistent measures
under the general exceptions contained in Article XX GATT 1994, specifically paragraph (b)
‘necessary to protect human, animal or plant life or health’ and paragraph (g) ‘relating to the
conservation of exhaustible natural resources if such measures are made effective in conjunction
with restrictions on domestic production or consumption’.

The US lost the case, not because it sought to protect the environment but because it discriminated
between WTO members. It provided countries in the western hemisphere — mainly in the

4 leading inter alia to the ‘ rst successful blockade of US harbors since the War of 1812
5 http://www.fao.org (for statistics) last visited on 19.04.22

fi

Caribbean — technical and financial assistance and longer transition periods for their fishermen to
start using turtle-excluder devices

It did not give the same advantages, however, to the four Asian countries (India, Malaysia, Pakistan
and Thailand) that filed the complaint with the WTO.

The Case of United States- Measures Relating to Shrimp from Thailand.6

On 31 December 2003, the Ad Hoc Shrimp Trade Action Committee (ASTAC), an association of
shrimp farmers in eight southern states of the United States, filed an anti-dumping petition against
six countries — Brazil, China, Ecuador, India, Thailand and Vietnam. The petition alleged that these
countries had dumped their shrimps in the US market.

The petition met the statutory requirements, on 21 January 2004 the US Department of Commerce
(DOC) announced the initiation of anti-dumping investigations against the six countries. Products
covered include warm water shrimp, whether frozen or canned, wild caught (ocean harvested) or
farm-raised (produced by aqua-culture), 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 or canned form.

On 17 February 2004 the International Trade Commission announced its decision that there was a
reasonable indication that the US shrimp industry is materially injured or threatened with material
injury by imports, allegedly at less than fair value, from the six identified countries. As a result, the
Department of Commerce continued with its investigations and gave its preliminary determination
on 28 July 2004.

The Indian shrimp industry and its response:

Most of the accused countries including India responded that their shrimp is almost exclusively
farm rest and has lower production cost compared to the US: a more advanced country with higher
labour costs.

Some of the explanations pointed to the fact that farm raised shrimp is generally cheaper compared
to shrimp from the wild, the latter being expensive as well as finite. Obviously offering insights as
to why they could export more and also at cheaper price.

Brazil, for instance claimed it has a natural competitive advantage over the US shrimp industry,
given the fact that it can produce more using cheap factors of production and the tropical climate
favourable to aquaculture. Hence aquaculture enables these accused countries to export in larger
quantities at lower prices compare to the higher production cost of shrimp from the wild which is.

Thus, the US shrimp industries in ability to respond to the increasing shrimp demand was partly due
to expansion problems in the US precipitated by environmental concerns, the increasingly high cost
of coastal property, and unfavourable growing seasons.

India in particular also proved that they were more efficient due to opportunities nature endowed
them as compared to unfavourable conditions of their counterparts- US.

6 WT/DS343/16

This case in particular demonstrated how US shrimp industry was teetering on the brink of collapse.
However, resorting to anti-dumping measures was inappropriate as the six identified countries were
not engaged in unfair trade practises. They were only responding to the US consumers’ increasing
taste for shrimp. This case illustrates how anti-dumping measures is purely protectionist weapon
rather than an instrument to prevent trade distortions.