Vietnam's Catfish War; Sharp U.S. Response Shows Hanoi's Lack of Trade Savvy

Article excerpt

Byline: Nicholas Kralev, THE WASHINGTON TIMES

VINH THANH TRUNG, Vietnam - Vo Van Tuong patiently feeds the fish on his floating farm. The 53-year-old father of six has no trouble keeping a smile on his face, even as he voices deep worries about the future of his business and family.

"The last year or two haven't been good," says Mr. Vo, who moved his farm to this tiny village in the Mekong Delta in southwest Vietnam nearly six years ago. "The government buys our fish at a very low price, while the price of fish food has increased. The farmers haven't been able to turn almost any profit."

Mr. Vo is one of hundreds of catfish farmers who became victims of one of Vietnam's first big attempts to trade with the United States.

The communist government, which owns the fishing industry, stumbled badly by flooding the U.S. market with catfish. In return it was hit with punitive duties and new labeling rules for having violated U.S. trade and trademark laws.

Until a year ago, Vietnam's catfish industry - a key part of the country's small but rapidly growing economy - enjoyed prosperity previously unknown to this poor, war-ravaged nation.

Following the end of the U.S. trade embargo in 1994 and the signing of a bilateral trade agreement in 2000, Vietnamese catfish in the American market became a big moneymaker.

In 2002, exports of frozen fish fillets to the United States reached nearly $66 million - a modest amount in a world where global trade is measured in billions, not millions.

Nevertheless, it was a promising start for Vietnam, which is beginning to eye with envy the prosperity promised by globalization and achieved by neighboring China.

The honeymoon didn't last long. U.S. farmers and producers, represented by the Catfish Farmers of America, filed a complaint with the U.S. government.

They charged that the imports from Vietnam broke U.S. laws against dumping - selling at below cost - and that the low prices hurt the American catfish industry.

Moreover, they argued that the Vietnamese fish were not really catfish and should not be allowed to use that name.

The Vietnamese lost on both counts: Hefty import tariffs were imposed on their frozen fillets - the product in dispute - and they were banned from using the name "catfish." Now they call them "basa fish."

To no one's surprise, the new name and higher prices resulting from the tariffs hit Vietnam's fish industry hard.

In January 2003, fish exports to the United States peaked at $10 million, only to fall to $2 million the following month as the new duties and labeling rules took effect, according to the U.S.-Vietnam Trade Council.

Despite a modest recovery, exports are not expected to reach 2002 levels anytime soon.

Keeping a lid on

The failure illustrates a key obstacle in Vietnam's cautious approach to the outside world nearly three decades after the Communist Party took control of the entire country following years of war, first with France and then the United States.

"The Communist Party still wants to control everything in this country and at the same time wants to join the international community and have good relationships," said a senior Western diplomat in Hanoi, the capital.

"They really feel the country will explode the way the Soviet Union did, with mass disorder and dislocation, so they want to open up but step-by-step," the diplomat said. "The thing they are most cautious about is allowing a free discussion in a democratic way."

No one predicts multiparty democracy to spring up in Vietnam, a single-party state in which political dissent is severely punished.

What is not clear, however, is how far Vietnam is willing to follow the path chosen by China - opening its economy while keeping tight control of political life.

Vietnamese officials appear reluctant to go too far in adopting market-friendly fixes - such as allowing private companies to replace government bureaucrats as brokers in a global economy. …