Global Policy Forum

By Margot Cohen and Murray Hiebert

Worry and disbelief lace the waters of the Hau Giang River in Vietnam's Mekong Delta. A flood of bad news from the United States threatens to capsize the livelihood of catfish breeders along this river. They sank their life savings into the hefty floating cages needed for the job. But in mid-November, U.S. lawmakers moved to restrict Vietnamese exports of catfish--even though the ink has barely dried on a bilateral agreement aimed at fostering free trade.

"It's unfair," mourns 60-year-old Truong Huu Duc, who sold his rice fields eight years ago to jump into the seemingly lucrative catfish trade. "The U.S. is a friend, so I feel sad that my friend does not support me. I feel a little abandoned." Critics in both Vietnam and the U.S. say that the catfish clampdown is a stunning example of protectionism and hypocrisy, undermining the free-trade policies most recently espoused by the U.S. at the World Trade Organization talks in Doha.

The bad odour from the controversy has been hovering over Vietnam's National Assembly as it debates the final ratification of the U.S.-Vietnam bilateral trade agreement, signed by U.S. President George W. Bush on October 16. Washington observers say that the fish-fight could also set a precedent for limiting Vietnam's textile exports, vital to the future of the Vietnamese economy.

But American catfish producers hail the new restrictions as a victory for American consumers, who gobbled down 283 million kilograms of catfish last year. Based in the southern states of Mississippi, Alabama, Arkansas and Louisiana, these producers characterize the Vietnamese fish as imposters--in spite of a ruling by the U.S. Food and Drug Administration last year that there is scientific justification for the catfish label. "They're from a different species and a different family," insists Hugh Warren, vice-president of the Catfish Farmers of America. "It's like trying to equate kangaroo meat with hamburger meat."

Like most trade disputes, the catfish brawl broke out over declining prices, which have hurt producers in both countries. U.S. producers now earn some $1.20 per kilogram of catfish, around 38 cents less than they got last year. They say that their break-even price equates to $1.43 per kilogram. While some Vietnamese breeders say they are also forced to sell their fish at a loss, others are still eking out a profit by cutting down on feed costs. The Americans blame the decline on the influx of inexpensive Vietnamese fish.

Aquaculture is a rising star in Vietnam's economy and 90% of the catfish imported by the U.S. comes from Vietnam, with the remainder sourced from Guyana, Brazil, Thailand and Canada. The U.S. is the leading market for Vietnamese catfish, followed by Hong Kong, the EU, and Australia.

The Vietnamese catfish exporters blame U.S. producers for dragging down prices. Last year Vietnam provided just 3.7 million kilograms of the total 283-million-kilogram U.S. catfish market, although in the frozen fillet category they've won an estimated 20%, according to U.S. catfish farmers. It's true that one variety of Vietnamese catfish, known locally as ca tra, undercut prices for another variety known as basa. But the Vietnamese say that the Americans are mainly at fault for expanding inventories up to 30%, a figure they get from the National Agricultural Statistical Service in the U.S.

The outlook remains gloomy, according to an October report by Consulting Trends International, a California-based consulting firm. The report says that the price drop is "primarily the result of higher domestic catfish inventories in the U.S., which will depress prices through the end of 2001 and 2002." The report adds that the higher inventories are due to increased U.S. pond acreage and lower feed prices, while catfish prices have also suffered pressure, strangely enough, from declining chicken prices in the United States.

For a bunch of profit-starved fisherfolk, the U.S. catfish lobby had deep enough pockets to wage a highly xenophobic advertising campaign against their Vietnamese competitors. One advertisement characterized Vietnamese catfish as dirty, compared with their U.S. counterparts. "They've grown up flapping around in Third World rivers and dining on whatever they can get their fins on. Genuine U.S. farm-raised catfish, on the other hand, are raised in pure, fresh waters and fed a diet of natural grains and proteins . . ." The ad--which ran in the national trade weekly Supermarket News--concluded that "those other guys probably couldn't spell U.S. even if they tried."

The U.S. producers' tactics have revolved around the campaign to have only the North American species of catfish--known as Ictaluridae--recognized as "real" catfish. The Vietnamese have been exporting two other varieties which belong to different species, but still qualify, according to the FDA. There are thought to be 2,500 species of catfish.

The dodgy tactics employed by the U.S. producers appear to have worked. In mid-November, the Senate approved a last-minute amendment tacked on by southern senators to the agricultural appropriations bill, effectively prohibiting the FDA from facilitating the admission into the U.S. of fish labelled catfish unless it comes from the Ictaluridae family. The bill was sent to the White House on November 16 for President Bush to sign.

The amendment drew withering comment from Senator John McCain, a former prisoner of war in Hanoi. "With a clever trick of Latin phraseology and without any mention of Vietnam, these southern senators single-handedly undercut American trade policy in a troubling example of the very parochialism we have urged the Vietnamese to abandon," McCain said, vowing to attempt to overturn the amendment in a farm bill that's unlikely to come up until later this year or early next.

Talk about loss of credibility. "After spending years encouraging the Vietnamese that open trade is a win-win situation, it would be a shame if immediately after the [trade agreement] is signed the U.S. shifts to a protectionist 'we win, you lose' approach on catfish," says Virginia Foote, president of the U.S.-Vietnam Trade Council in Washington.

With an estimated 30% of U.S. seafood restaurants serving up Vietnamese catfish--slightly milder and softer than the American variety--the amendment has come as a shock. "Nobody in the U.S. owns the word 'catfish'," protests Sal Piazza, owner of Piazza's Seafood World, a New Orleans-based importer that works with distributors to supply Vietnamese catfish to restaurants nationwide. "We will be affected tremendously."

BY ANY OTHER NAME

However, Vietnam will still be free to export catfish to the U.S., as long as it's called something other than catfish. Back in the Mekong Delta's An Giang province, the source of 70% of Vietnam's catfish, producers shudder at the prospect of building up consumer recognition for a new name. They predict an initial fall-off in sales, although they're confident that Asian restaurateurs in California will stick with them. After all, the Vietnamese catfish was successfully marketed there as "China sole" back before the U.S. lifted its trade embargo and has also sold in Australia under the name "Pacific Dory."

Ironically, Vietnam's catfish industry seems a prime example of how global cooperation can enhance production. An Australian importer, for example, taught the Vietnamese how to slice a catfish fillet cleanly. French researchers worked closely with a local university on low-cost breeding techniques. And Vietnam's leading catfish exporter, Agifish--which raked in $25 million in revenues last year--depends on industrial equipment from the U.S., including one machine that spews fine chips of ice and another that swiftly slices off fish skin.

Among the 15,000 Vietnamese families who breed catfish, more than a few have opted to buy high-protein feed from an American company, Cargill, which has run local workshops on proper feeding techniques. While the fish sector remains a small portion of Cargill's business in Vietnam, executives say that they believe it has the potential to equal the importance of the poultry sector. "Cargill is for free trade," says Malcolm Sayer, general director of Cargill Animal Nutrition in Vietnam.

A Cargill cap is perched on the head of Nguyen Ngoc Duyen as she surveys her squirming stock in a floating cage in the Hau Giang River. Duyen believes that anyone who can produce good quality at a cheaper price deserves customer loyalty--that's why she uses American-brand Head and Shoulders shampoo to wash her hair. But now that the U.S. won't be returning the favour, she may drown in debts of 820 million dong ($54,373). She used the loan to build and stock her seven floating cages--once the symbol of a more buoyant future.

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