The United States is a leader in the Vietnamese catfish industry and, in 2001, produced 597 million pounds of catfish. Catfish is a particularly popular dish in the southern states of the United States and produced domestically in Mississippi, Arkansas, and Louisiana in man-made freshwater ponds. Although the U.S. is clearly one of the top producers in the market, Vietnamese catfish importers have been causing problems for the United States’ domestic catfish industry.
Vietnamese catfish importers saw an opportunity to capture market share and took it. The U.S. domestic catfish industry had worked to expand the market with significant effort and investment and believed the Vietnamese importers actions unfair. At the end of 2001, the U.S. was importing seven million pounds of catfish from Vietnam which caused the price of catfish to fall to 50 cents per pound in the U.S., 15 cents lower than the cost of production. This led to U.S. producers blaming Vietnamese importers for the fall in prices and for threatening more than 15,000 jobs in the poorer parts of Mississippi, Arkansas, and Louisiana.
Although it seems unfair to the United States catfish producers, Vietnamese catfish importers are not completely at fault. The U.S. producers expanded their inventories and limited the supply of catfish to only a few states, thus, driving down prices themselves. Vietnamese catfish importers saw the market share opportunity and took it. Their share in the market could lead to increased trade between the U.S. and Vietnam, a stalling of potential trade wars, and improved relations between the two countries as well.
One of the other issues surrounding the Vietnamese catfish importers is the quality of the product. U.S. catfish producers attempted to convince the public that Vietnamese catfish are of low quality and raised in dirty waters that possibly contain toxins. Catfish imported from Vietnam have to only meet FDA approval. U.S. raised catfish, in comparison, are raised in man-made, purified ponds meeting the Catfish Institute standards and must be inspected by 17 different federal agencies, including, the Food and Drug Administration, Environment Protection Agency and the Department of Commerce. If quality differences do exist, it is important that both domestic and foreign catfish be identically tested and full disclosure of results be required.
In an attempt to thwart Vietnamese importers, U.S. catfish producers pushed for assistance from Congress. In 2002, the FDA published “Guidance for Industry” regulations on the labeling of catfish. This led to importers, grocery stores, and restaurants calling Vietnamese catfish “basa” or “tra.” The new labeling regulations did the opposite of their intent and increased sales of Vietnamese catfish due to the intrigue in the market.
U.S. producers reported 30 percent in their earnings per one kilogram of catfish. The labeling regulations could possibly have led to consumers paying a higher price than they would have originally have paid, which is not right. Due to U.S. producers’ reluctance to share the market with the Vietnamese catfish importers and to lose money, consumers would have suffered and paid more than they would have had to otherwise.
The U.S. catfish industry influenced lawmakers to make decisions in their favor against Vietnamese catfish importers. Other industries in the United States can attempt to sway lawmakers in their favor if they are asking for support against the import of products that could hurt the domestic industry, or if they believe the products would be harmful to the country (social and health). Agriculture and aquaculture are industries sensitive to rising imports and try to influence lawmakers against free market forces. Lawmakers can be swayed to make decisions in the favor of domestic industries if they pertain to protectionism.
The United States catfish producers were threatened by Vietnamese catfish importers and attempted to protect their domestic catfish industry by influencing lawmakers to decide in their favor. This catfish dispute led to extremely high import tariffs, an unstable trade relationship between Vietnam and the United States and critiques of protectionism and hypocrisy.