Jul 17, 1998

US SURCHARGE ON CHILEAN SALMON DRAWS FIRE

Santiago, Jul 15 (IPS/Gustavo Gonzalez) -- A new U.S. surcharge on Chilean salmon was seen in Santiago as a "bad precedent," which runs counter to President Bill Clinton's pitch on free trade.  

The government of Eduardo Frei and the Association of Salmon and Trout Producers will decide next week whether to lodge an appeal in U.S. courts or take their case to the World Trade Organisation (WTO).

The ruling issued by the International Trade Commission in Washington Tuesday by two votes against one establishes a 4.54% surcharge on imports of Chilean salmon.  

The commission upheld a 2 June Department of Commerce verdict in favour of eight salmon companies from the U.S. state of Maine who accused six Chilean competitors of dumping, an unfair trade practice which consists of undercutting market prices.  

Nevertheless, the 4.54% surcharge decided on in the trial that opened Jun. 12, 1997 was a far cry from the 42% surcharge that the claimants were demanding.  

But although government officials and business representatives in Chile said the measure would not keep local salmon from continuing to make headway in the U.S. market, they criticised its political and economic implications.

The harshest reaction came from Chilean Ambassador to the United States, John Biehl, who said the Department of Commerce had resorted to "sly subterfuges and tricks" to demonstrate that dumping had taken place. 

Biehl stressed that against the backdrop of the Asian crisis whose fallout has hit Chile hard, the decision would mean "a transfer of millions of dollars in resources from a developing country that is doing things right and progressing to a developed country that happens to be the richest in the world."  

The ambassador berated the salmon companies in Maine, who brought the legal action due to their inability to compete with Chilean salmon, but who focused the charges on a product that they do not even offer - the fillet - because they only sell whole fish.  

"This resolution confirms a unilateral process in which the United States sets the rules of the game," said Biehl, who added that Chile's arguments fell on deaf ears.  

The legal charges brought by the U.S. companies targeted tax incentives in Chile designed to boost the development of the local salmon industry. But those exemptions are gradually being dismantled, in accordance with WTO norms. 

In recent years, Chile has become one of the world's top salmon producers, second only to Norway. More than half, 56.6 percent, of Chile's salmon exports go to Japan, 30.9% to the US, 3.4% to Brazil and 1.7% to France.  

Shipments of Chilean salmon to the US, which stood at around 800 tonnes a week in the first quarter of the year, rose 33% with respect to the same period last year.  

Foreign Minister Jose Miguel Insulza said the surcharge "is not very damaging in economic terms," but is "complicated" in legal terms, because it "sets a precedent that is not good."  

Insulza and the president of the Association of Salmon and Trout Producers agree that the steps to be taken must be carefully considered, before turning either to the WTO or U.S. courts.  

The latter option does not look very attractive, after the U.S. Supreme Court turned down a request for indemnification for Chilean grape producers, in a conflict that stretched from 1989 to 1996.  

Insulza pointed out that Chile could also face problems in the Department of Commerce with an upcoming ruling on a mushroom company, also accused of unfair trade practices.  

Insulza, Biehl and Economy Minister Alvaro Garcia agree that the decision is a negative signal for free trade between Latin America and the United States.  

The ruling came only three months after the formal launch of negotiations for a Free Trade Area of the Americas (FTAA) - which Clinton has pushed for since 1994 - at the second Summit of the Americas in Santiago. 

The rulings of the U.S. International Trade Commission, 50 percent of which come down in favour of U.S. companies, are criticised as an indirect protectionist formula which discriminates against overseas competitors.