THAI SHRIMPERS PROTEST CONTINUOUS BOND

UNCLAS BANGKOK 001428 SIPDIS SIPDIS DEPARTMENT PASS USTR FOR BWEISEL, MROHDE, JWEISS DHS FOR CUSTOMS AND BORDER PROTECTION E.O. 12958: N/A TAGS: ETRD WTO TH SUBJECT: THAI SHRIMPERS PROTEST CONTINUOUS BOND REF: A. 05 BANGKOK 4311 ¶B. 05 BANGKOK 7523 ¶1. On March 8, approximately 100 shrimp farmers and hatchery operators representing eight Thai shrimp farming associations converged on the U.S. Embassy to protest ongoing anti-dumping duties that were placed on shrimp imports from Thailand in ¶2005. The protestors expressed their opposition to the duties, but were particularly dismayed over a continuous bond measure instituted by U.S. Customs which requires shrimp importers to not only cover duties on shipments, but to post a bond for a year's worth of future imports. In practice the bond has been a cost borne by exporters (reftel A). The protestors submitted an open letter addressed to President Bush, relevant portions of which are reproduced in paragraph ¶4. ¶2. Despite the hardships claimed by the industry from the anti-dumping measures and a long recovery from the December 2004 tsunami which devastated many shrimp farms in southern Thailand, Thai shrimp exports to the U.S. climbed 30 percent in value in 2005. Statistics from Thai Customs show overall shrimp exports up fifteen percent for the year, with the U.S. accounting for more than half of all Thailand's shrimp exports. Nevertheless, shrimp exporters noted that the continuous bond measure has hit small- and medium-sized exporters particularly hard, forcing them to tie up cash flow for a long period in order to post the bond. ¶3. Ms. Nadhawan Tanyongmas, Trade Officer in the Department of Foreign Trade, told Econoff that plans to file a case in the WTO against the continuous bond were temporarily on hold (reftel B). Nadhawan said that during FTA negotiations in Chiang Mai in January, USTR and Customs officials told the RTG negotiating team that they were reviewing the continuous bond policy and would try to resolve the issue within 60 days. The RTG postponed filing the WTO case until the end of March, but Nadhawan said the RTG was prepared to move ahead with the case in the absence of any positive action by that date. ¶4. Relevant text of open letter follows: "Besides the injustice and double taxation which is against WTO regulations, Continuous Bond is a trade barrier and is discriminatory against shrimp products. This new Continuous Bond implemented by the Customs Border Protection Agency subject importers to post bond to cover 100 percent of duty amount based on previous year's total shrimp imports, whereas other products are required to post only 10 percent. In theory, bond is supposed to be posted by importers, but in reality that burden has been pushed to and shouldered by exporters. This huge financial burden ties up shrimp processors' credit line; they do not have sufficient fund for shrimp purchase, causing crisis in domestic shrimp price. The Continuous Bond has rocked the whole shrimp industry of Thailand and will also impact other businesses in the Shrimp Cluster. As representatives from various shrimp organizations in Thailand, we humbly point out to Mr. President the crisis we have been through including the devastating tsunami, falling shrimp prices and the U.S. anti-dumping issued against Thailand. Please have mercy and do not impose more trade barriers against us." BOYCE