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Meet The Commerce Department’s "Frankenshrimp"
(The DOC calls these other countries the "selected comparison" market.)
In the Shrimp case, this task is complicated by the fact that shrimp that are exported to the U.S. and other countries (“comparison markets”) come in many forms: head-on, headless shell-on, peeled "undeveined", peeled and deveined, butterflied, tail-on, cooked, seasoned, etc. Each form has a different cost and price.
The fair and rational way to compare prices in the shrimp case would be for the DOC to compare the price of one form of shrimp actually sold in the United States to the price of the same or most similar form of shrimp actually sold in the comparison market. Comparing identical or similar forms of a product to each other, which is the normal DOC approach, will provide accurate cost and price differences.
Unfortunately, the DOC is considering a different, unprecedented approach that is inconsistent with the law and with DOC's practice in other cases. On March 8, 2004, the DOC required that shrimp exporters convert all of the shrimp that they sold in the U.S. and the “comparison market” into a fictional “headless, shell-on” (HLSO) shrimp. After having converted all of their products to this fictional shrimp, exporters must then convert the prices and costs of the shrimp they actually sold to these fictional HLSO shrimp prices. However, the DOC has not provided any guidance to exporters as to how to do this, nor has it explained why it has apparently chosen to disregard the actual products and prices that exporters charged.
What is required to comply with the DOC's instructions
and create a so-called “Frankenshrimp?” |
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1. Take the head off every shrimp that was sold with its head on.
2. Put the vein back in every shrimp that was de-veined.
3. Put the shell back on every shrimp that was peeled.
4. Put the tail back on every shrimp that had its tail removed.
5. Un-cook every shrimp that the processor cooked.
6. Squeeze all spices, seasonings and preservatives out of every shrimp that the processor added value to.
7. Un-stretch every previously stretched shrimp.
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No company keeps its records in a form that would allow it to “reverse engineer” all of its shrimp production. There are no industry standards for “building” fictional shrimp or for calculating prices or costs for fictional shrimp that foreign shrimp processors never produced or sold. If the exporters fail to provide the required price and cost information for these fictional shrimp products, the DOC will penalize them by imposing punitively high antidumping margins.
Lawyers for the U.S. shrimp industry created this “Frankenshrimp” approach for the DOC to bias the antidumping case in their favor, and the DOC adopted it. By pretending that all shrimp sold to all markets can be made theoretically identical, the DOC is trying to compare apples to oranges. This artificial calculation masks important cost and price distinctions.
Since the “Frankenshrimp” takes out processing costs that are part of the per pound price of most shrimp exports to the U.S., the “Frankenshrimp” price becomes artificially low as compared to other markets.
The only purpose of requiring reports on costs and sales of such fictional shrimp is to create antidumping margins where they would otherwise not exist.
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