Vietnam faces shutdown in US pangasius sales after effort to repeal catfish regulation fails

Vietnam faces shutdown in US pangasius sales after effort to repeal catfish regulation fails

SAN FRANCISCO, US -- Vietnamese pangasius sellers and US importers face a possible shutdown in trade on Sept. 2, after the failure of efforts to repeal a controversial change to the US farm bill that shifted the regulator of catfish producers to the US Department of Agriculture (USDA).

SAN FRANCISCO, US -- Vietnamese pangasius sellers and US importers face a possible shutdown in trade on Sept. 2, after the failure of efforts to repeal a controversial change to the US farm bill that shifted the regulator of catfish producers to the US Department of Agriculture (USDA).

The US Congress considered repealing the program -- which has shifted the responsibly for regulating imported and domestic catfish operations from the Food and Drug Administration (FDA) to the USDA -- through the Congressional Review Act (CRA). The FDA has traditionally regulated seafood and while the USDA regulates meat.

In May 2016, the Senate had voted to eliminate the change. However, “in December 2016, although 230 House [of Representatives] members stated they wanted it repealed, the Republican House leadership declared they would not allow a vote”, John Connolly, president of the US National Fisheries Institute (NFI), during the value whitefish panel at the Global Seafood Market Conference (GSMC).

When Congress adjourned in December 2016, this killed any chance of eliminating the program through the CRA, said Connolly.

“In the new Congress, options to eliminate the program are limited and unlikely to lead to repeal. There is no legislative solution to eliminating the catfish program. The catfish program is here for a while,” he said.

Critics of the change, including NFI, have previously said it is “wasteful”, “protectionist” and designed to help a handful of Mississippi catfish producers. Mississippi senator Thad Cochran, who has said the USDA can better review catfish for food safety, spearheaded the change.

In December last year, Kim Gorton, CEO of the Boston, Massachusetts-based processor Slade Gorton, called the USDA catfish regulation a "blatant trade barrier". 

"It was not based on a risk assessment, the USDA admits its catfish inspection program will not improve food safety, it is not the least trade restrictive means to achieve its goals and it is a disguised, if not very well disguised, trade barrier," she said. 

End to transition

The USDA transition period for the change ends on Sept. 1, 2017. Vietnam and other exporting countries of Siluriformes -- the scientific name for pangasius and other catfish, including those produced in the US -- would need to put an application of a grant of equivalence to the USDA by Aug. 31, 2017.   

“USDA equivalence means that the US government deems another country’s – not company’s --- food safety system equivalent to the USDA’s food safety system,” said Connolly.

“At any time after that point, the USDA can either say they will work with those countries to suggest changes to their system that would make them equivalent, if they are taking steps to equivalence, or they can shut them off,” he said.

“So, theoretically, as of the Sept. 2, the USDA could say to the government of Vietnam that we don’t deem you equivalent. As soon as that is done, pangasius exports to the United States stop,” said Connolly.

“That is a theoretical risk,” he emphasized.

But, “there is no political incentive for USDA to grant equivalence”, said Connolly.

Also, the FDA system and USDA system are “fundamentally different”, he said. “It is not to say that Vietnam's standards are insufficient, but achieving equivalence requires changing laws and regulations that met FDA standards to now meet USDA standards.”

Getting equivalence to the USDA “is a long process and it takes a lot of political will”, said Sang Phan, president of the US arm of Vinh Hoan, one of Vietnam’s largest pangasius producers.

“With the time frame given to us, it is an extremely tough challenge for us to get equivalency,” he said, on the GSMC value whitefish panel.

“The country [Vietnam] has been taking actions, such as working with our USDA representatives on the self-reporting tools, which is a major piece in the equivalency review,” said Phan.

“There has been a lot learned, but a lot more needed to be done. We expect a timely filing for equivalency review by Sept. 1,” he said.

The risk for both sides of an end to trade is considerable. In 2016, the US imported 322,000 metric tons of pangasius, in whole fish equivalent, according to data presented at the GSMC.Screen Shot 2017-01-19 at 08.01.30That is around 26% of Vietnam’s total production, which was 1.22 million metric tons through October, according to the data. Screen Shot 2017-01-19 at 08.01.38“We will feel the impact just as much as the US [if imports are closed off]. The US market is worth $400m of our export value of swai,” said Phan.

“This fish was introduced to this market close to 20 years ago. It has been and still is a very important market for us, not only in term of export value, but also in term of its focus in product quality, sustainability and many more issues that help improve our industry. So, we will give all we have to keep trade continue with this market,” he said.

Even if Vietnamese firms are shut off on Sept. 2, Phan said processors can div