August 31, 2018

Mr. Arthur Tsao

Assistant General Counsel
Office of the U.S. Trade Representative
600—17th Street, NW
Washington, DC 20508

RE: Comment on Docket No. USTR-2018-0026 Concerning Proposed Modification of

Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to
Technology Transfer, Intellectual Property, and Innovation

Dear Mr. Tsao:

On behalf of the At-sea Processors Association (APA), I submit the following comments on both
recent actions and possible future actions by the U.S. government regarding the bilateral
imposition of tariffs—whether at a 10% or 25% level—on Chinese exports. The tariffs instituted
earlier this summer and being contemplated on another $200 billion worth of Chinese exports
have led to retaliation against U.S. seafood exports by China, which poses a substantial threat
to the 70,000 women and men employed in fishing and fish processing in Alaska and the Pacific
Northwest.

APA represents six seafood companies that, among other seafood harvesting and processing
interests, operate 16 U.S.-flag, high-tech trawl catcher/processor vessels in the Alaska pollock
fishery. While unfamiliar to many, Alaska pollock harvests account for approximately one-third
of all U.S. seafood landings annually. Throughout more than 40 years of precautionary U.S.
fishery management, the fishery has yielded, on average, annual landings of 3.0 billion pounds.
While Alaska pollock is one of the top five fish products consumed in the U.S., American pollock
producers rely on foreign markets for 70% of our revenues.
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There are four principal Alaska pollock product types. Alaska pollock is processed into fillet-
type products used to produce fish sandwiches for quick-service restaurants and frozen fish
sticks and portions. Alaska pollock is also produced into surimi, which forms the base
ingredient in imitation crab products. Non-flesh parts of the fish are made into fishmeal and
fish oil. Fishmeal is a highly sought after feed product used, largely, in Chinese aquaculture
operations, while the latter is sold for use in the fish oil supplement market.

Taken as a whole, the Administration’s trade policies are creating stiff headwinds for export-
dependent Alaska pollock companies. While the EU and Japan remain significant markets for
Alaska pollock fillet and surimi products, respectively, our $1.0 billion industry has been until
recently making great strides marketing Wild Alaska Pollock in China. Chinese buyers have
been increasingly seeking out our products over Asian-sourced, farm-raised whitefish
alternatives. In its initial response to U.S.-imposed tariffs on Chinese exports in July, China
imposed an additional tariff of 25% on Alaska pollock fillet and surimi products. The time and
expense invested by U.S. Alaska pollock producers to diversify our fillet market and get a
foothold in the world’s largest consumer market is now threatened. If Chinese consumers
continue to seek pollock but aren’t willing to pay an additional 25% for U.S.-sourced product,
the winner will likely be our principal global competitor, the Russian pollock industry, which
produces inferior products, but has well-established connections with Chinese seafood
processors.

As the U.S. government has escalated the tariff war with China, China has again responded, this
time including Alaska pollock fishmeal among the list of products subject to an additional 25%
tariff. Currently, virtually all Alaska pollock fishmeal is sold to Chinese aquaculture producers.
Alaska pollock fishmeal fills a premium niche market due to requirements by Chinese eel and
turtle farmers for high protein, white color fishmeal. If Alaska pollock premium white fishmeal
is priced out of China due to high tariffs, U.S. producers would likely be relegated to the
commodity brown fishmeal market, which among other drawbacks, would subject our products
to more volatile price swings based on global supply of anchovetta and sardine populations. A
Chinese tariff on Alaska pollock fishmeal creates new uncertainties for U.S. producers.

Our member companies’ frustration with U.S.-China tariff actions undermining our
international competitiveness is exacerbated by overall U.S. trade policy. Just two years ago,
we were anticipating U.S. ratification of the Trans-Pacific Partnership (TPP). TPP would have
reduced Japanese tariffs on Alaska pollock surimi and fish roe products, enhancing our ability to
compete with lower-cost, Thai-sourced threadfin bream surimi and Russian pollock roe. The
hoped for, follow-on Transatlantic Trade and Investment Partnership (T-TIP) was also expected
to improve export conditions for Alaska pollock (and Pacific hake) fillet and surimi products in
our important EU market.
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Since the summer 2016, Alaska pollock producers have seen trade prospects threatened in all
of our major markets. In part, threats to our competitiveness are the result of a U.S. trade
policy focused on bilateral actions when commercial activity is multi-lateral in nature. U.S.
trade actions that rebound to adversely affect Alaska pollock producers, often strengthen our
principal competition, the Russian pollock fishery, which is Russia’s largest fishery. Chinese
tariffs on U.S. seafood products enhances opportunities in China for Russia pollock products
and other seafood products, as well. In the meantime, Russia maintains an import ban on all
U.S. seafood products (a response to U.S. sanctions regarding Russia’s Ukraine aggression),
while Russian pollock products can be marketed in the U.S., although we acknowledge that
much Russian-origin pollock currently enters the U.S. through China and will be subject to any
tariffs aimed at Chinese seafood exports.

With regard to Russian pollock exports to the U.S., we note also that the U.S. government does
not even properly enforce Buy American requirements of the National School Lunch Act (NSLA).
U.S. taxpayer dollars are being used to purchase inferior Russian pollock products for school
lunches, further harming America’s Alaska pollock producers. U.S. policy isn’t just hurting us
abroad, but domestically, as well.

Our plea is for U.S. trade officials to engage their Chinese counterparts in negotiations to
resolve outstanding trade disagreements between the two nations and not to continue to
pursue and escalate a tariff war that is harming U.S. exporters. Thank you for considering these
views.

Sincerely,

Stephanie Madsen
Executive Director, APA

cc: Alaska and Washington Congressional delegations