1. CENTRE FOR POLICY DIALOGUE (CPD)
Impact of Market Access Barrieres and Subsidies: The Case of Shrimp in Bangladesh Presented at the Hong Kong Trade and Development Symposium Session on Fisheries and Trade – Exploring Opportunities for Advancing Sustainable Development Hong Kong: 15 December 2005 by
Dr Fahmida Khatun
Senior Research Fellow, CPD
CENTRE FOR POLICY DIALOGUE (CPD)
a c i v i l s o c i e t y t h i n k - t a n k
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2. I. Introduction 1.1 Objective This presentation seeks to discuss:
Trend of shrimp exports and major markets of shrimp
The issue of market access, in the context of emerging trade barriers
The impact of market access barriers and subsidies on shrimp sector in Bangladesh
Challenges and opportunities of shrimp culture
Recommendations

3. I. Introduction 1.2 Trade in Shrimp products
Global shrimp production is dominated by less developed countries
Trade flows from less developed to developed countries
Largest exporters of farmed shrimp are Thailand, Ecuador, Indonesia, India, Mexico, Bangladesh and Vietnam
EU is the major export market for shrimp, amounting to 52.1% of the total market. Exports to USA and Japan are 38.6% and 4.5% respectively

4. I. Introduction (Contd.)
1.3 Importance of the Shrimp Sector in Export Basket of Bangladesh
* Exports of shrimp account for about 5% of total exports from Bangladesh. Shrimp constitutes of more than 70% of the export of primary products from Bangladesh. In 2004 the exports brought in US$ mln
* Shrimp production by aquaculture is a 100% export oriented industry in Bangladesh. Production takes place in an area covering about 1410,000 ha. There are 128 shrimp processing factories
* Directly or indirectly about 22 million people are engaged in upstream and downstream activities related to the country's shrimp production and export

5. II. Emerging Trade Issues
Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT)
Anti-dumping
Subsidies and Countervailing Measures (SCM)
Social and Environmental Standards

6. III. The Issue of Market Access
On the face of it, SPS and TBT provide WTO members on opportunity to safeguard their interests in crucial areas such as health and hygiene
However, there is a growing apprehension that certain provisions of the SPS agreement can act as protection instruments
It is apprehended that if special safeguard clauses are not exercised, access of LDC products to developed country markets may be seriously constrained. Export potentials including that of fisheries can be undermined.
Anti-dumping cases are also concerns for developing countries. It has been a companion of salmon trade since Particularly for exports to the US: Chilean and Norwegian Salmon, Vietnamese catfish faced dumping complaints
Subsidies to the fisheries sector have been identified to be the cause of revenue loss, over capacity, over fishing and stock depletion. ‘Friends of Fish’ estimated $14-$20 billion annually as the subsidy which is percent of revenue from the sector.
Social and environmental standards added new dimensions in the analysis of sustainable fisheries and international trade. Apprehended to be trade restrictive.

7. IV. Impact of Trade Measures
SPS Measures - EU Ban on Shrimp Exports from Bangladesh in 1997
A. On Stakeholders
(1) PRODUCERS/FARMERS – low price, loss of income
(2) TRANSPORTERS – new investment, financial loss
(3) PROCESSING FIRMS – big investment
(4) PROCESSING WORKERS – loss of employment,
diversification of employment
(5) WOMEN PROCESSING WORKERS - unemployment, loss of income, changed power balance in the family, dislocation of family, increased expenditure, social vulnerability

8. IV. Impact of Trade Measures (Contd.)
B. On Export Earnings
The provision of the Agreement on SPS measures worked against Bangladesh—the provision states, “countries are allowed to maintain higher standards than international relevant standards”.
The EU maintains higher standards than the USA and Japan who did not ban the export of shrimp
 Ban put the country’s shrimp export industry under severe strain and led to serious market disruption during which export of shrimp to the EU from Bangladesh was zero. This led to a loss of about $ 65 mln in foregone exports (Cato and Santos, 2000)
 Shrimp export to the USA and Japan increased to cover up for the loss of export to the EU, but still Bangladesh suffered a loss about $14.7 mln

9. V. Impact of Subsidies
V.1 Types of Incentives
Fisheries sector receives general incentives given to the export sector in general
Special support includes a value added tax (VAT) refund on fuel at the rate of 15 percent per litre, subsequent to the export of fish
V.2 Study of Marine Fisheries
General incentive package has no detrimental effect on fishing practice
Scope for applying more efforts
Implies that in the absence of market distorting subsidies the country may increase its foreign earnings from exports and still maintain a sustainable stock

10. VI. Challenges and Opportunities
Challenges: Domestic
Environmental Degradation: Negative environmental impacts:
Salinisation of the soil
Decline in soil fertility
Reduction in agricultural production due to reduction in agricultural land and soil fertility
Decrease in cattle production as a result of decline in grazing land
Health hazards from water pollution
Destruction of ecosystem (e.g. mangrove forest in Bangladesh due to shrimp aquaculture)

11. VI. Challenges and Opportunities (Contd.)
Challenges: International
“MARKET ACCESS”
Removal of trade barriers
Better understanding of WTO obligations
Technical Assistance and Capacity Building

12. VI. Challenges and Opportunities (Contd.)
The demand for fishing products is growing
Increase in production efficiency is required for large-scale industrial farms as it is not fully exploited
Technological improvement will increase the supply of shrimp.
Removal of market access barriers and higher demand will increase the production of shrimp aquaculture
Shrimp culture is expected to continue to play an important role in ensuring food security and poverty alleviation, particularly for the rural poor. The urban population will benefit from the improvement in processing, value adding, marketing and the fish industry as a whole

13. VII. Recommendations Assessment of the Sector to Determine the Needs
Monitoring of Shrimp Farms and Close Supervision of Quality Control
Access to Information on technological improvement and change in global policies
Market Diversification to Avoid Sudden Shocks
Financial Support to Small Farmers
Infrastructural Development for Better Processing, Handling and Storing Facilities
Ensuring Security and Reducing Tensions
Capacity Building in Trade Issues

14. © CENTRE FOR POLICY DIALOGUE (CPD), 2004
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© CENTRE FOR POLICY DIALOGUE (CPD), 2004