Tran Vu Long, a Vietnamese catfish farmer on the Mekong River, recently sold his twice-yearly harvest at a loss of $2,000. There was a time the fish would have fetched a good price in the United States, which originally planted the catfish industry in Vietnam. No more.
The misfortune of Long and others like him stand as a warning to poorer nations: beware of the big boys if you actually succeed at playing by their rules. It is yet another tale of how wealthy countries preach the gospel of free trade for their goods, but become crudely protectionist when their own farmers face competition.
After embracing decidedly non-Marxist reforms, Vietnam became one of globalization’s brightest stars in the 1990’s. Once a rice importer, the country transformed itself into the world’s second largest rice exporter and a player in the global coffee trade. The rural poverty rate was slashed from 70 percent to 30 percent.
Normalization of ties with the United States, the one-time enemy, brought American trade missions now bent on expanding Vietnamese free enterprise. One of these delegations recognized the Mekong Delta’s catfish as a golden opportunity for export, with the competitive advantage of the region’s natural conditions and cheap labor.
Sure enough, within a few years, an estimated half-million Vietnamese were living off the catfish trade. Vietnam captured 20 percent of the frozen catfish-fillet market in the United States, driving down prices. To the dismay of the Mississippi Farm Bureau, even some restaurants in that state – the center of the American catfish industry – were serving Vietnamese fish.
So the Americans, represented by the Catfish Farmers of America, declared war. Mississippi catfish farming is generally not big agribusinesses, and many farmers struggle to make ends meet. But that does not explain how the United States, the apostle of free trade, could so brazenly rig the catfish game to cut out the very Vietnamese whose enterprise America had originally encouraged.
Last year, with the aid of Trent Lott, then the Senate majority leader, the American catfish farmers managed to persuade Congress to overturn science. An amendment, improbably attached to an appropriations bill, declared that out of 2,000 catfish types, only the native American species – Ictaluridae – qualified as “catfish.” The Vietnamese could market their fish in America, but only under the Vietnamese terms “basa” and “tra.”
That was only the first step in a bipartisan assault. Representative Marion Berry, Democrat of Arkansas, joined in an extraordinarily devious disinformation campaign against the Vietnamese, suggesting that their fish were not good enough for American diners because they came were contaminated with Agent Orange – the defoliant used by American forces during the Vietnam War. Catfish Farmers of America, for its part, ran advertisements depicting the Vietnamese fish as a “slippery catfish wannabe,” which “floats around in Third World rivers nibbling on who knows what.” Not satisfied with these old trade-war tricks, the American group initiated an anti-dumping case against Vietnamese catfish. For the purposes of this proceeding, the American farmers’ group chose to recognize the Vietnamese fish once again recognized as bona fide catfish – not basa or tra.
Dumping, or exporting goods at artificially low prices, is rightly banned by trade laws. But too often, the charge is used by industries to shield themselves from legitimate competition. The Commerce Department had no evidence that the imported fish were being sold in America more cheaply than in Vietnam, or below their cost of production.
But rather than abandoning the Mississippi catfish farmers to the forces of open competition, the department simply declared Vietnam a “nonmarket” economy. That designation allowed the United States simply to stipulate that there must be something suspect going on somewhere – that Vietnamese farmers must not be covering all the costs they would in a functioning market economy. Tariffs ranging from 37 percent to 64 percent were slapped on Vietnamese catfish.
So Tran Vu Long lost. Prices along the Mekong crashed as exporters who buy his fish moved to protect their margins. Faced with the prospect of losing his investment, Long might be shocked to learn that the U.S. Commerce Department says he does not operate in a free market.
The other shoe is expected to drop as early as this week, when the U.S. International Trade Commission, an administrative agency in Washington, decides whether the American catfish industry was indeed hurt by unfair competition. Such a finding would make the tariffs permanent.
There is usually a home-field advantage in these proceedings. But Vietnam’s cause has been taken up by a half-dozen senators from both parties, led by Senator John McCain, a former prisoner-of-war in Vietnam. He regards this case not only as naked protectionism, but also as a betrayal of America’s commitment to use trade to encourage change in a Communist society.
McCain is right. The catfish war is front-page news in Vietnam. Washington’s solicitousness on behalf of a few thousand domestic catfish farmers has stirred a great deal of anti-American resentment in Vietnam, a country of 80 million, raising images of an imperial bully.
All this saddens Nguyen Huu Dung, the general secretary of the Vietnam Association of Seafood Exporters. “We are made to wonder whether you wish us ill, as much in the present as you did in the past,” he said in a recent interview. We urge the International Trade Commission to listen to McCain and his colleagues and decide this case on its merits. Vietnam should not become yet another tragic case study in the way the United States, Europe and Japan are rigging global trade rules so they remain the only winners.