Shrimp Tariff

Policy Analysis: Shrimp Tariff (a mini case-study)

When we consider effects of free trade, we must specify what, precisely, is the alternative. Here is a real-world example: The Shrimp Tariff. In May of 2018, the Southern Shrimp Alliance (SSA) petitioned for increased tariffs on imports of shrimp from China based on health concerns linked to imported shrimp (see SSA 2018); it sent a letter of support for increased tariffs on shrimp imports from China in September 2019.  In September of 2020, USDA announced $500+ in compensation for members of the fishing industry hurt by retaliatory tariffs (tariffs levied in retaliation for our tariffs); see USDA0920. Finally, the SSA noted (SSA1020) a massive reduction in FDA’smonitoring of imported shrimp for public health threats “reflects policy choices severely weakening the agency’s oversight of imported seafood.”

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Before you comment on these recent items, it is wise to consider the history of tariffs in this industry over the past 15 years. Please read the shortnews articles Brazilshrimp2004, Bigshrimp2005,LAShrimp2018. To review tariffs, see Class12, mod 2, slide 9) or corresponding section of Mankiw,ch 9.

Instructions:  please answer in about 2 typed pages using this file as a template so you don’t skip any parts.Refer to the articles as appropriate. Please write clear, succinct answers.

Part 1. Goals. Answer each part in 2 or 3 sentences.

  1. What are the main underlying social goals of imposing the tariff on imported shrimp? (I am asking only about goals, a completely separate issuefrom the policy instruments or impacts of policy.)
  2. In your view, are these reasonable goals? (Again,onlyanswer about goals) Briefly explain.

Part 2. Costs. According to the New York Times Brazil article, a representative of US shrimpers claims that US shrimpers have lower costs of producing shrimp than overseas competitors who farm shrimp.

  1. Why would US shrimpers want to claim that they have lower production costs than overseas competitors?
  2. Based on your reading, is the US shrimpers’ claim to having lower costs than overseas competitors credible? Explain.

Part 3. Assessment.

  1. Disposition of tariff revenue. Under US law in 2005, the tariff revenues were awarded to the US shrimp industry. Do you think this is a good use of tariff revenues in general (i.e., not just for shrimp)? What incentives does the practice of awarding tariff revenues to industry create? Are these good incentives? Is it better for tariff revenues to flow to the US Treasury (as they now do)? Explain.
  2. Who have been the major winners and the major losers from the US tariff on shrimp imports?
  3. Overall assessment: do you think the shrimp tariff was “good policy” (as distinct from “good politics”)? Answer yes or no and explain.

Part 4. Public Health. What do you make of the May 2018 request by the SSA for additional tariffs on shrimp? Does public health concerns seem to motivate the Trump Administration, judging by the commitment to import anti-biotic monitoring described in SSA1020, circled for you in blue on page 4.

Extra credit (up to 3 points): Do you think Rodrik’s approach would improve this process?  Explain

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