Saving Seafood

NOAA Says Seafood for Reprocessing Exempt from Chinese Tariffs, but Rebate System May Impose Costs

June 28, 2018 — SEAFOOD NEWS — NOAA has confirmed via email to people in the Alaska seafood industry that the 25% Chinese retaliatory tariff will not apply to re-processed products for export.

John Henderschedt, NMFS director of the Office of International Affairs and Seafood Inspection, wrote  “In consultation with Embassy Beijing, NOAA Fisheries has confirmed that the following products are not subject to the additional 25% tariff recently announced by the Chinese government:

-Imports of U.S. seafood that is processed in China for re-export and some fishmeal products.”

“Affected U.S. seafood exports arriving at Chinese ports on July 6 or later will be subject to the new tariff rate,” he said in an email dated Tuesday, June 26th.

There was some uncertainty following China’s June 15 announcement at the beginning of a long holiday weekend for the Dragon Boat Festival that prevented clarification until government offices re-opened last Tuesday, June 19th, according to Jim Gilmore, Director of Public Affairs for the At-Sea Processors Association.

“Really, no one knew at that time, so the news coverage was of an issue with a lot of confusion and not much time for the U.S. government to get clarification.  The holiday didn’t help matters, but it might also have been that the Chinese government language wasn’t clear.  Not sure what factors were all at play,” Gilmore said.

One unresolved issue is that China has two types of import exemptions for re-processing for export.  One involves no tariff, for products that are exempt, and the other collects the tariff, but then rebates the value back to the company when the product is exported.

One sentence in the Chinese announcement suggests that the 25% tariff will be applied to everything, but then rebated for products that are exported.  When asked about this, Henderschedt had no comment.

If this is the final interpretation, the tariffs will add significant costs for exporters, even though they will ultimately get the 25% tariff refunded.  For example, a Chinese plant that purchases 1000 tons of cod for re-processing and pays $3.6 million, would have to pay an additional $900,000 to bring the product into the country, but then get this money back when the product was exported.  This adds costs to the process, even if the tariffs are ultimately not applied.

Ultimately, the answer will come after July 6th, when importers of record have to deal with Chinese customs officers.

Jim Gilmore says not much of offshore Alaska’s pollock is re-processed.  His group, the At-Sea Processors Association,  represents the Bering Sea pollock factory trawlers. He said that’s more common with salmon and cod.

But shore plants, especially in the Gulf of Alaska, export a lot of H&G pollock for reprocessing.  In fact, Trident recently spent millions of dollars in the last several years to upgrade its plant in Kodiak to efficiently produce a frozen H&G product.

Also the Bering Sea Amendment 80 factory trawler flatfish fleet’s catch goes to China for reprocessing, especially yellowfin sole, according to Chris Woodley, executive director of the group’s trade association, the Groundfish Forum.

The vast majority of the U.S. exports of frozen seafood to China are reprocessed in China and then re-exported, Woodley said.  Such U.S. exports to China that are then re-exported from China are not subject to Chinese duties or the Value Added Tax (VAT).  However, U.S. seafood exports that are imported for consumption in China face high tariff rates.  For example, frozen flatfish species, and other Alaska seafood exports to China that are consumed in China currently face a duty of 10 percent and are also subject to a 13 percent  VAT.

The Dragon Boat Festival is held annually in honor of poet Qu Yuan, who drowned himself in a river in 278 BC, as a political protest. Villagers tried to save the beloved figure in their little boats, but when they couldn’t find him, they threw rice in the water in the hopes that the fish would eat the rice, and not the poet and activist, during the Warring States period of Chinese history.

This story originally appeared on SeafoodNews.com, a subscription site. It is reprinted with permission.

Tariffs ding commercial fishing industry

June 27, 2018 — Fishermen and seafood harvesters may take a major trade hit with the announcement of new tariffs from China, though the details still aren’t clear.

The country announced new tariffs on a broad cross-section of American seafood products on June 15 in response to a U.S tariff hike on imported Chinese products. If the tariffs are approved, China will apply a 25 percent tax to items like Pacific salmon, cod, Alaska pollock, flatfish, crab, shellfish and other commonly exported seafoods.

China is a major trade partner for the Alaskan seafood industry. Processors regularly ship salmon that have been headed and gutted to China to finish the processing and packaging before being re-exported to the rest of the world. China is also a major consumer of seafood products within its borders, and a 25 percent tariff could push down imports.

It’s possible the tariffs won’t be implemented at all, or there may be exceptions, said Garrett Evridge, an economist with the McDowell Group.

“At this point, there’s a lot of outstanding information that we’re still trying to get our fingers on,” he said. “It’s actually unclear as to whether re-exported seafood is going to be excluded.”

According to an announcement from the Alaska Seafood Marketing Institute, multiple contacts in China have indicated that customs officials would exclude products intended for reprocessing and export.

“It is not yet clear how product entering China will be differentiated between export and domestic consumption upon entry or at what point a tariff and/or credit will be applied,” the June 22 announcement states. “This is a developing situation and ASMI will continue to provide updates as information becomes available.”

The Alaska Seafood Marketing Institute has maintained a Chinese office in Hong Kong since 1997. On a recent trade mission to China, Gov. Bill Walker took several representatives of the seafood industry with him specifically to build relationships between Chinese and American companies for seafood trade.

Read the full story at the Peninsula Clarion

US imported more seafood in 2017 than any prior year

June 25, 2018 — The United States imported more seafood last year than at any point in its history, and the nation’s trade deficit in the sector is growing, federal data show.

The U.S. imported more than 6 billion pounds of seafood valued at more than $21.5 billion in 2017, according to data from the National Oceanic and Atmospheric Administration, which oversees American fisheries. The country exported more than 3.6 billion pounds valued at about $6 billion.

The widening gap comes at a time when Commerce Secretary Wilbur Ross, who heads the federal agency that includes NOAA, has identified reducing the deficit as a priority for the government.

The U.S. is home to major commercial fisheries for species such as Pacific salmon, New England lobster and Alaska pollock, but it imports more than 90 percent of the seafood the public consumes.

Ross and others in U.S. fisheries are looking at new strategies to cut the deficit, including increasing the amount of aquaculture-based farming, said Jennie Lyons, a NOAA spokeswoman.

The U.S. trades in seafood with countries all over the world, and the countries it buys the most from include Canada, China and Chile. Major buyers of U.S. seafood include China, Japan and South Korea.

While U.S. fishermen would love to grow commercial fisheries, it’s important to note that domestic and imported seafood are both important parts of the supply chain and support thousands of American jobs, said Gavin Gibbons, spokesman for the National Fisheries Institute.

Read the full story at the Associated Press

Rep. Rob Bishop Statement on President Trump’s Executive Order on Ocean Policy

June 20, 2018 — The following was released by the House Committee on Natural Resources:

House Natural Resources Committee Chairman Rob Bishop (R-Utah), today issued the following statement in reaction to President Trump’s executive order promoting a healthy ocean economy and engagement with marine, science, and technology industries. The action reverses the previous administration’s overreach of the nation’s ocean policy.

“Today’s announcement of President Trump repealing and replacing the bureaucratic, overreaching policy created under the previous administration puts our country’s ocean policy back on the right track. Over the past 10 years, the Committee has held dozens of hearings on heavy-handed Obama-era policies and the negative impacts they have caused on both the nation’s oceans and agricultural industries. Earlier this month, the Committee heard from Americans whose livelihoods depend on a healthy ocean economy and the prior administration’s ocean policy was one of their main challenges. President Trump’s action will help the health of our oceans and ensure local communities impacted by ocean policy have a seat at the table.”

Visit the House Committee on Natural Resources’ website here