VZCZCXRO7805
RR RUEHBI RUEHCI
DE RUEHCG #1497/01 1941148
ZNR UUUUU ZZH
R 131148Z JUL 06
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 8998
INFO RUEHNE/AMEMBASSY NEW DELHI 1804
RUEHBI/AMCONSUL MUMBAI 4806
RUEHCI/AMCONSUL CALCUTTA 0553
RUEHLM/AMEMBASSY COLOMBO 1235
RUEHBR/AMEMBASSY BRASILIA 0023
RUEHQT/AMEMBASSY QUITO 0025
RUEHHI/AMEMBASSY HANOI 0041
RUEHBJ/AMEMBASSY BEIJING 0182
RUEHBK/AMEMBASSY BANGKOK 2285

UNCLAS SECTION 01 OF 02 CHENNAI 001497 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
USDOC FOR MAC/ANESA/OSA/LDROKER/ASTERN 
USTR FOR SOUTH ASIA - AWILLIS/BSTILLMAN/JROSENBAUM 
 
E.O. 12958: N/A 
TAGS: ETRD PGOV EFIS EIND IN CE BR EC TH CH VM
SUBJECT: SMALL INDIAN SHRIMP EXPORTERS SETTLE WITH 
SOUTHERN SHRIMP ALLIANCE 
 
REF: (A)05 CHENNAI 0121, (B)O4 CHENNAI 0944 
 
¶1. (SBU) SUMMARY: 24 Indian shrimp exporters have reached 
agreement with the Southern Shrimp Alliance (SSA) to 
remove their names from the Department of Commerce's 
review list for imposition of dumping duties.  This 
continues the trend that began in May when exporters from 
Thailand, Vietnam and Ecuador began making agreements 
with SSA.  Fears about the sampling method to be used for 
selection of companies to be part of the review process 
and the possibility of the imposition of penalty duties 
for non-response by relatively anonymous trader-exporters 
forced manufacture exporters to settle.  Four large 
manufacture exporters who account for 64 percent of 
Indian exports refused to settle with SSA, however.  With 
the withdrawal of the 24 exporters from the review, 
Indian industry sources believe the Department of 
Commerce will be forced to continue to use the 
traditional "largest by volume" methodology in its review 
rather than the "sampling" approach which they fear.  END 
SUMMARY 
 
--------------------------------------------- -- 
24 INDIAN COMPANIES OPT FOR SETTLEMENT 
--------------------------------------------- -- 
 
¶2. (SBU) 24 Indian shrimp exporters effectively removed 
themselves from the Department of Commerce review list 
for imposition of dumping duties by entering into 
settlements with the Southern Shrimp Alliance (SSA) (Refs 
A and B).  These companies form part of a list of 60 
companies identified by the Department of Commerce for 
review.  According to Elias Sait, Secretary General, 
Seafood Exporters Association of India (SEAI), about 20 
companies on that list were trader-exporters, i.e. 
companies that do not have their own processing 
facilities as contrasted with manufacture exporters who 
perform their own processing.  Sait said that these 
companies do not have permanent addresses and have not 
responded to Department of Commerce queries. 
Accordingly, they were assessed penalty duties of over 
100%.  SEAI fears that should one of these companies be 
selected in the sample used by the Department of 
Commerce, the duty level might rise further above the 
currently high levels.  Sait told Post that in a DVC with 
Department of Commerce officials held on June 10, 2006 
verbal assurances were given that the companies which are 
assigned penalty duties would be kept out of the sample. 
No written guarantee was provided, however, and Sait told 
Post that lack of confidence on that issue forced the 24 
to settle. 
 
-------------------------------- 
LARGE EXPORTERS REFUSE TO SETTLE 
-------------------------------- 
 
¶3. (SBU) Four of the largest Indian shrimp manufacturers, 
Hindustan Lever Limited, Liberty Group, Falcon Marine 
Exports and ITC Limited, decided against settling with 
SSA.  These companies account for 64 percent of the 
shrimp exported to the U.S. from India.  According to the 
trade advisor to SEAI, these companies declined to settle 
because they feel that a sampling approach by the 
Department of Commerce is a near certainty in the next 
review which will take place in 2008.  They believe that 
the current review must now be completed using a "largest 
by volume" approach because so few companies remain to be 
reviewed.  The largest by volume method offers them the 
best chance of achieving a reduction in their duty rates 
from the current 15.36 percent in the case of HLL and 
10.17 percent in the case of the other three companies. 
 
----------------------------------------- 
SETTLEMENT HELPS SSA MEET ITS LEGAL COSTS 
----------------------------------------- 
 
¶4. (SBU) The inability of the SSA to pay expensive legal 
costs associated with the case was another reason that 
 
CHENNAI 00001497  002 OF 002 
 
 
they encouraged settlements, according to SEAI.  SEAI's 
Elias Sait told Post that Hurricane Katrina decimated the 
shrimp fleets in the Gulf of Mexico, diminishing SSA's 
ability to collect fees from member companies.  Sait says 
that Dewey Ballantine, legal counsel for SSA, drafted an 
agreement for each of the companies listed in the review 
document.  According to Sait, Ballantine demanded a 
$10,000 payment from each exporting company merely to 
enter into negotiations on removal from the list. 
Ballantine explained that the $10,000 fee was to meet 
legal costs. 
 
--------------------------------------------- ---- 
SETTLEMENTS MAY MAKE DEVI SEAFOODS A MAJOR PLAYER 
--------------------------------------------- ---- 
 
¶5. (SBU) COMMENT: The recent round of settlements might 
well turn Devi Seafoods, formerly an also-ran among 
Indian exporters, into a major player.  Devi has a 4.94 
percent duty compared with the 10.17 percent rate that 
many other exporters face.  The SEAI trade advisor told 
Post that exporters might now route their exports through 
Devi to derive the benefits of the company's lower duty. 
This approach, he believes, could hurt U.S. importers in 
the long run.  END COMMENT 
 
¶6. (U) This message was coordinated with Embassy New 
Delhi. 
 
HOPPER