Geographic Indications and International Trade (GIANT)

TED Case Studies: Cajun Crawfish

I. Identification

1. The Issue

Louisiana is the country's leading purveyor of crawfish. In 1991 less expensive imports of crawfish from China entered the market. By 1993 they posed a real threat to Louisiana producers. Since then the Louisiana crawfish industry has petitioned the federal government to impose a tariff on the imported crawfish. But this battle is as much about cost as it is about tradition! Native Louisisanians claim their heritage and their people are being dumped on. Crawfish farming is a way of life, a tradition embedded in Cajun culture, which arrived with the first settlers in the late seventeen hundreds. The import of cheaper crawfish from china is a clear danger to this tradition.

After months of investigation, the US Department of Commerce concluded that Chinese growers have been illegally "dumping" crawfish in the US market, selling at bellow fair-market prices to push out competition. On August 29, 1997 the International Trade Commission determined that the crawfish industry in Louisiana and the United States had been materially injured by the import of crawfish tail meat from China. As a result, the US Department of Commerce will direct the US customs service to impose antidumping duties on Chinese crawfish, which will range between 91.50 to 201.63 percent.

This will mean that processed crawfish prices will rise, but also that competition and marketing should keep prices acceptable to producer and consumer alike. The industry calculates that Chinese crawfish imports increased by 350% from 1993 to1995 and by 1996 accounted for 80% of the market. Imported crawfish from China costs approximately $3 a pound against about $6 to$7 for Louisiana crawfish, and the competition has been devastating. The producers say the difference in price can be attributed to the Chinese communist society and the extremely low pay Chinese workers receive to peel crawfish.

Because crawfish processing is labor intensive, there is every reason to expect that low-wage China can process crawfish at a lower cost than high wage America. It is true that Chinese producers enjoy the comparative advantage and many consider it to be transparently predatory. In less than 2 years Louisiana's crawfish farmers, processors and wholesalers saw their share of the American market plunge from virtually 100% to 30% as the Chinese imports grew. The value of American crawfish shipments fell from $13.5 million to $4.9 million and processing revenues fell from $21.8 million to $4.9 million. State officials estimate that, as many as 2,000 to 3,000 part-time seasonal jobs in the industry were lost.

Chinese crawfish provide local consumers with a cheap product but it had devastating effects on the local men and women trying to make a living selling crawfish. (Times-Picayune) On the other hand many pure free-marketers argue that dumping is consumer friendly and that free trade is free trade! That is, that the introductions of China's cheaper crawfish will obligate Louisiana producers to become more competitive and crawfish prices to go down. The introduction of the tariff will put an end to cheap readily available crawfish and consumers will have to pay 110% more for this product.

Even some local restaurant owners have little sympathy. They say that the crawfish industry hasn't been that hurt and that the imports have been good for consumers who save money and for Louisiana cuisine because more people can afford to cook and serve it. Many also complain that producers export the best and biggest crawfish to Sweden, which has been a rising market for Louisiana crawfish.

Chinese crawfish is largely served throughout Louisiana, especially during the crawfish boils. Some locals argue the tourists don't know the difference and it permits for larger profits. Chinese sales increased from $3.2 million in 1993 to $35.7 million in 1995 (International Trade Commission). Other locals are very proud to only serve Louisiana crawfish and even though many chefs would like to remain loyal, they just don't have the means and resources.

The two products look nearly identical, but Chinese crawfish is a bit tougher and rubbery. But it is good enough for crawfish pies, etouffees and other typical dishes. In Louisiana over 100,000 acres of water are devoted to crawfish production. The $50 million industry is split between 40% cultured crops and 60% wild crops. The golden era of crawfish began in the late 1960's when the commercial market expanded and farmers began raising them in ponds. It was an ideal rotation crop for those growing rice. As the market expanded so did the cuisine.

For those of you that are not familiar with the little crustaceans, from head to tail, a crawfish is crowded with a large assortment of appendages with special uses for each. In front are a pair of big saw-toothed pincers for defense and capturing food; then four pairs of walking legs, two with small slender nippers and two without, also used for clinging, digging, handling food, and grooming the body. About the head are three pairs of "feelers" for exploring and warning of danger; a pair of beady black eyes on the ends of moveable stalks; three pairs of "jaw-feet" and three sets of jaws that chew sidewise. The flexible 6-jointed abdomen ends in a flaring tail made up of five hinged scoops used for catapulting the animal, when alarmed, backwards in a smokescreen of mud.

There is a great Creole tradition that accompanies the whole trade issue. Few people actually know this, but Crawfish have only been around since 1775. It all started when the French living in Acadie, Nova Scotia were expelled from their land by the British. By land and sea they traveled across North America to arrive in South Louisiana. They were then welcomed by the French who already lived there. These "Acadians" really liked lobster and when they moved to South Louisiana, they brought their Lobster with them. The lobsters that were produced in this new area turned out to be much smaller. Since this smaller lobster didn't really look like a lobster any more, the Acadians, now known as Cajuns, called this small crustacean a Crawfish.

In spring Louisianians come out for their yearly crawfish boil. Tables are covered with newspaper and are accompanied by bare hands, beer music and stories. But how do you eat Crawfish? Well, after all the crawfish are boiled and ready to eat, pour them out onto a table covered by old newspaper. Grab one that's not too hot and hold it in your left hand. Place the head between your thumb and forefinger. Next, grab the tail with your right hand. Place your thumb under the "belly" of the tail and wrap your forefinger over the top of the tail. Twist and pull. The tail should pop off. What should you do with the head? You have three options. If you want, just throw it away, but try to ignore the real Cajuns who will laugh at you. Cajuns will suck the spicy water (juice) straight from the head. For the truly daring, suck the head, then remove the fat from the head by scooping it out with your finger and eat that as well... definitely a Cajun secret.

Christine Carrillo, March 1998

II. Legal Clusters

Antidumping tariffs were imposed on imported Chinese crawfish tail meat.

DISagree and COMplete

Under the Tariff Act of 1930, U.S. industries may petition the government for relief from imports that are sold in the United States at less than fair value ("dumped") or which benefits from subsidies provided through foreign government programs. Under the law, the U.S Department of Commerce determines whether the dumping or subsidizing exists and, if so, the margin of dumping or amount of the subsidy. The International Trade Commission determines whether the dumped or subsidized imports materially injure or threaten to materially injure the U.S. industry.

U.S.A. and China

The US Department of Commerce concluded that Chinese growers have been illegally "dumping" crawfish in the US market, selling at bellow fair-market prices to push out competition. On August 29, 1997 the International Trade Commission determined that the crawfish industry in Louisiana and the United States had been materially injured by the import of crawfish tail meat from China. As a result, the US Department of Commerce will direct the US customs service to impose antidumping duties on Chinese crawfish, which will range between 91.50 to 201.63 percent.

This decision directly affected China. Trade restrictions were applied.

Treaty

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: North America

b. Geographic Site: East North American

c. Geographic Impact: U.S.A.

No

Temperate: Lakes, Rivers, Ponds, Swamps and Mud Ponds

IV. Trade Clusters

12. Type of Measure:

Antidumping Tariff

In an effort to protect Louisiana Crawfish producers the United States placed an antidumping tariff on imported Chinese crawfish.

Direct

The tariff will affect the Chinese crawfish market in the United States. It will also affect American consumers. The price of crawfish will increase approximately 110%. But in the long run competition will allow for acceptable prices, both for consumers and producers.

a. Directly Related to Product: Yes Crawfish

b. Indirectly Related to Product: No

c. Not Related to Product: No

d. Related to Process: Yes

Crawfish

High

Food

China and The United States

V. Environment Clusters

20. Environmental Problem Type:

Species Loss

Name: Crawfish

Type: Crustacean

Diversity:

Crawfish play an important role in nature. Feeding on a wide variety of plants and animals, either dead or alive, they are the most efficient scavengers in fresh water. They make a superior food for about half of our fish especially for members of the bass family. The raccoon and the mink like them as much as anything else and all sorts of water birds prey on them.

Low

3-4 years

None

VI. Other Factors

25. Culture:

Yes

There is a very strong cultural issue at stake. There is also a matter of pride in producing and consuming Louisiana crawfish.

Cajuns have a very strong cultural and culinary tradition. The cuisine of the Cajuns is a mirror image of their unique history. It is a cooking style which reflects their ingenuity, creativity, adaptability and survival. Cajun cuisine is characterized by the use of wild game, seafoods, wild vegetation and herbs. From their association with the Indians, the Cajuns learned techniques to best utilize the local products from the swamps, bayous, lakes, rivers and woods.

Cajun food is the earthy, robust creation of fishermen and farmers in the bayou country of southwest Louisiana, which remains the only place you'll find Cajun food that has not been refined and urbanized to within an inch of its life for restaurant customers. The lifestyle and livelihood of these farmers and fisherman were gravely affected by the imports of cheaper crawfish from China. Crawfish is among the most important ingredients of Cajun cooking. Jambalaya, grillades, stews, fricassees, soups, gumbos, sauce piquantes and a host of stuffed vegetable dishes are all characteristic of these new Cajun "one pot meals". Cajun cuisine is a "table in the wilderness", a creative adaptation of indigenous Louisiana foods. It is a cuisine forged out of a land that opened its arms to a weary traveler, the Acadian. These are the names of some of the most famous Creole dishes.