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