Reprocessed state seafood exports exempted from Chinese tariffs
It appears the blowback from President Donald Trump’s trade dispute with China will fall on some, but not all of Alaska’s seafood exports to the country.
The Trump administration’s 25 percent tariff on an estimated $34 billion of goods imported to the U.S. that took effect July 6 prompted Chinese leaders to respond with their own 25 percent tariff on U.S. goods headed for their country, including seafood, Alaska’s primary export.
National Oceanic and Atmospheric Administration Fisheries Director of International Affairs John Henderschedt said June 28 that seafood products destined to be reprocessed and re-exported from China will be exempt from the tariffs after agency officials discussed the issue with the U.S. Embassy there.
While a positive development for Alaska fishermen and processors, the cumulative impact the tariffs could have on the commercial fishing industry in the state is still unknown, Alaska Seafood Marketing Institute Technical Program Director Michael Kohan said in an interview.
Overall, Alaska exported more than $4.9 billion of goods in 2017, of which more than $2.4 billion was seafood, according to the state Office of International Trade.
China bought $1.3 billion worth of Alaska’s exports last year, including $796 million — nearly a third — of the state’s total seafood exports.
Kohan said leaders at ASMI, the state’s flagship seafood advocacy group, have been wondering what role the tariffs would play in their industry since they were officially announced June 15.
She noted that the ever-shifting dynamics of the volatile industry make it difficult to pin down exactly how much Alaska seafood stays in China and how much is sent back out after value-added processomg.
Part of the challenge of tracking the Chinese market is that it has grown rapidly, according to Kohan, which of course is a good thing.
Prior to about 2003, China bought minimal amounts of Alaska seafood — less than $100 million per year — mirroring demand growth in the country for other Alaska products as well.
“We do know that higher end species are consumed domestically, so those are geoducks, sea cucumber, crab, sablefish; and most of the species that are going to be reprocessed and re-exported are pollock and pink and keta (chum) salmon,” Kohan said.
Adding to the challenge of trying to quantify and track what goes where is the fact that each processing company sends different volumes of various products to different countries every year, Kohan said further.
“With a billion dollars of seafood exports to China it’s a very serious issue for Alaska and could have potential effects on harvesters,” she said. “However, it’s too soon to know the full impact on Alaska seafood harvesters or the state’s overall economy.”
Chris Woodley, executive director of The Groundfish Forum, a trade association the for Bering Sea Amendment 80 factory trawler fleet, said the vast majority of U.S. exports of frozen seafood to China are reprocessed to be shipped out of the country later.
Such U.S. exports to China that are then re-exported are not subject to Chinese duties or the countries value-added tax because imposing them would just raise the cost of the products when they are resold.
Kohan said the true impact of the tariffs should be better known in the coming weeks as more geoducks and other seafood is shipped to China and processors begin making decisions on where to send their products now that the tariffs are in place.
If those impacts prove to be unworkable, the seafood could be sent elsewhere in the future, but that move would be gradual as well, she said.
“Alaska seafood has a strong and growing demand worldwide. The products that are being exported to China now could fill markets for Alaska seafood such as South Korea, Japan, Brazil, the U.K., northern and southern eastern Europe are all large markets for us so there’s a great network for Alaska seafood internationally,” Kohan said. “However, as with the (2014) Russian embargo, these shifts in markets take time to develop and so we will see possibly some changes but obviously we’ll be searching to develop our other strong markets with these seafood products in the future.”
Elwood Brehmer can be reached at [email protected]. Correspondent Jim Paulin in Unalaska contributed to this report.