THAIS TO TAKE U.S. TO WTO OVER CONTINUOUS BOND

UNCLAS BANGKOK 007523

SIPDIS

DEPARTMENT PASS USTR
GENEVA FOR USTR
COMMERCE FOR ITA/MAC/AP/OKSA/JBENDER AND JKELLY

E.O. 12958: N/A
TAGS: ECON ETRD TH
SUBJECT: THAIS TO TAKE U.S. TO WTO OVER CONTINUOUS BOND
REQUIREMENT FOR SHRIMP IMPORTS

REF: BANGKOK 4311


1. RTG trade officials decided December 6 to file a
complaint against the U.S. in the WTO over a U.S. requirement
that shrimp importers file a continuous bond to cover
expected anti-dumping duties. Nadhawan Tanyongmas, Trade
Officer in the Department of Foreign Trade, said RTG
representatives in Geneva would be prepared to file the
complaint with the WTO as early as January 2006.


2. The RTG action is related to an affirmative anti-dumping
determination by the International Trade Commission (ITC) in
January 2005 against Thai shrimp exports. The ITC ruling
placed a 5.95 percent duty on shrimp exports from Thailand.


3. The RTG had considered taking the case to the WTO earlier
but decided to await the outcome of an ITC review of the
original anti-dumping determination to consider the impact of
the December 2004 tsunami which devastated a significant part
of the Thai shrimp industry. The ITC review concluded in
November that anti-dumping duties would remain at the same
level.


4. The RTG will be challenging U.S. Customs and Border
Protection (CBP) rules which require importers of aquaculture
products subject to affirmative anti-dumping findings to not
only pay a cash deposit for the amount of the duties on each
shipment, but also to annually post a secured, continuous
bond for expected future duties. The amount of the bond is
based on calculated duties on the value of an importer's
shipments over the previous twelve months. The rules were
instituted to ensure collection of final anti-dumping duties
(see reftel).


5. RTG officials called the continuous bond a "double
burden" and said it had been a hardship for Thai shrimp
exporters. U.S. importers have insisted that Thai exporters
serve as the importer of record and bear the burden of the
bond requirement. Poj Wattananon, president of the Thai
Frozen Foods Association, expected Thai exporters would need
to place guarantees of USD 100 million for 2006. Many
smaller shrimp exporters have been unable to arrange
financing for the new bond requirements and have ceased
exporting to the U.S. Larger exporters have successfully
continued exporting but complain that the financial outlay
for the continuous bond is not only an added expense but also
causes cash flow difficulties.


6. Ms. Nadhawan of the Dept. of Foreign Trade said the RTG
would take the case to the WTO as a violation of Article 18.1
of the WTO Anti-Dumping Agreement. Article 18.1 states that
no specific actions against dumping may be taken except in
accordance with the Agreement, which sets out tightly defined
allowable actions. The RTG will try to make the case that
the continuous bond is an anti-dumping measure not explicitly
allowed in the Agreement and therefore in violation of WTO
rules.
BOYCE