Lower tariff gives TUF 2B sales goal
Written by Admin on Tuesday, September 2nd, 2008
Lower tariff gives TUF 2B sales goal
US revision opens door for more exports
CHAROEN KITTIKANYA
Thai Union Frozen Products Plc (TUF) is increasingly confident it can break $2 billion in sales this year now that the US government has reduced the anti-dumping (AD) tariff on its shrimp imports to 2.85%.
The rate is much lower than the preliminary penalty rates the US Department of Commerce (USDC) announced to TUF in February, which were as high as 15.3% depending on the company.
Currently, TUF is paying the 5.95% rate imposed on most Thai shrimp exporters.
According to TUF president Thiraphong Chansiri, the final ruling would make the company eligible to receive a tax refund worth a total of US$2.6 million against excessive duties on shrimp products collected between February 2006 and January 2007.
As well, the rate will serve as a new reference rate for TUF’s shrimp exports to the United States until the announcement of another AD rate in the next annual review (likely due in September 2009), he said.
Shrimp constitute 18-20% of TUF’s sales. For the first six months of this year, the company reported shrimp sales growth of 31% to $183 million.
The US assessed penalties against shrimp from Thailand following complaints by American shrimpers that foreign imported shrimp were being sold in the United States below cost.
Thailand and other countries have argued that most imported shrimp are farmed and cost less to produce than ocean-caught shrimp, mainly from the Gulf of Mexico, sold by US processors.
Over the past six months since the preliminary AD tariff was announced, TUF has been working with its US legal adviser, Akin Gump, an anti-dumping specialist, the Thai Department of Foreign Trade and the Thai embassy in Washington to get the rate corrected, said Mr Thiraphong.
”The outcome is favourable to TUF, but also to the Thai shrimp industry as a whole because the applicable rate for most Thai packers is now reduced to 3.18% (from the preliminary rate of 6.09% in late February 2008).”
The industry rate is calculated by averaging the individual rates applicable to the four Thai companies involved.
According to Mr Thiraphong, the new final rate would also help reduce the burden of the so-called continuous bond on shrimp exports to the US.
The World Trade Organisation (WTO) recently ruled against the US appeal on its anti-dumping duty practices, outlawing ”zeroing” calculation and the continuous bond requirement.
Washington required exporters facing AD tariffs to place a bond equal to the expected amount of penalties to be collected, and the money is not refundable until the penalties expire.
Overall Thai shrimp exports are also expected to benefit from the ruling, raising shipments to 400,000 tonnes this year from 350,000 tonnes last year.
The country’s shrimp export value is expected to grow by at least 15% this year to 80 billion baht.
Thailand is the world’s top shrimp producer. The US is Thailand’s biggest market for shrimp, comprising 42-43% of exports, followed by Japan at 20%, the European Union at 15%, and Australia and Canada making up the rest.
TUF shares closed yesterday on the Stock Exchange of Thailand at 18.50 baht, down 10 satang, in trade worth two million baht.
