Feds to pay Maine lobstermen $50 million to offset trade war losses - Press Herald

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Maine lobster fishermen are about to get a $50 million federal bailout to offset the crippling impact of the U.S.-China trade war.

The U.S. Department of Agriculture announced the creation of a $527 million seafood trade relief program on Wednesday that will pay licensed fishermen a certain species-specific amount for every pound of fish landed in 2019 to absorb sales declines and increased marketing costs caused by China’s retaliatory tariffs. The maximum individual payout is capped at $250,000.

The rate of payout per species varies, depending on how much regulators calculated the market was hurt by the Chinese tariffs, ranging from as little as a penny a pound for the massive national pollock fishery to as much as 76 cents per pound for the small geoduck fishery, a large saltwater clam harvested in the U.S. Northwest that had been very popular in the Chinese market.

In Maine, where lobster is king, fishermen can net 50 cents for every pound of Maine’s signature crustacean brought to market last year, the second-highest payout rate of the 19 eligible species. Maine landed nearly 101 million pounds of lobster in 2019, valued at $485.4 million. If every pound qualified, Maine lobstermen could land more than $50 million in seafood trade relief.

“Many nations have not played by the rules for a long time, and President Trump is the first President to stand up to them and send a clear message that the United States will no longer tolerate unfair trade practices,” said U.S. Agriculture Secretary Sonny Perdue in a prepared statement Wednesday.

“The Seafood Trade Relief Program ensures fishermen and other U.S. producers will not stand alone in facing unjustified retaliatory tariffs while President Trump continues working to solidify better and stronger trade deals around the globe,” added Perdue, who was tasked with finding a way to help lobstermen after Trump’s visit to Maine in June.

The rest of Maine’s seafood supply chain, such as lobster dealers and processors, isn’t eligible for a bailout under the new program, even though that was the part of Maine’s industry that suffered most from the trade war. Fishermen did well in 2019, earning a whopping $4.82 per pound, the highest since Maine began tracking lobster hauls in 1880.

The Maine Lobster Dealers Association is “extremely disappointed” in the new program, according to its director, Annie Tselikis. The act of exporting isn’t done by fishermen, but by the 6,000 people in the lobster supply chain that grade, market, process, sell, pack and ship Maine lobster around the world. The supply side of the industry alone is valued at $1 billion a year, she said.

“This pain has been felt by live lobster wholesalers and lobster processors, not by commercial lobster fishermen,” Tselikis said. “While we do appreciate recognition of the seafood industry at a time when we are facing many challenges domestically and internationally, we believe the USDA has failed the U.S. lobster industry by not allocating funds to the supply chain.”

But dealers and processors stood to gain the most from last month’s announcement of a proposed U.S.-EU trade deal that would eliminate the 8 percent to 20 percent tariff on U.S. lobster sold into Europe, which had traditionally been one of Maine’s largest lobster export markets, and eliminate the trade advantage that Canada had enjoyed since signing a free trade deal with Europe in 2017.

In June, during a meeting with fishermen in Bangor, Trump highlighted the high-profile role that U.S. lobster is playing in the U.S.-China trade war, as well as the U.S. political landscape, by promising his administration would force China to honor its commitment to buy U.S. seafood, especially Maine lobster. He also promised trade relief to the industry.

He directed Perdue to include lobster in any future federal bailouts intended for farmers hurt by the trade war, much like America has done for cotton, corn and soybean farmers, and ordered U.S. Trade Representative Robert Lighthizer to draft monthly reports on China’s efforts, and its progress, in meeting its phase-one promises to buy more U.S. lobster.

Before the tariff, China was the biggest overseas buyer of U.S. lobster, with its growing middle class consuming $128.5 million of the lucky-red status symbol in 2017. The U.S. was on pace to triple its exports to China before lobster was added to that nation’s tariff hit list in July 2018.

The retaliatory tariffs of 25 percent and then 30 percent that China levied on U.S. lobster imports sent Chinese buyers to Canada, which sells the same species of lobster without the same price-busting tariffs. As a result, the lobster trade from the U.S. to China collapsed, from $86.9 million in the first six months of 2018 to $26.1 million in the same stretch of 2020.

The impact of the pandemic on global seafood markets is partly to blame. International sales of U.S. lobster are down 47 percent through June, from $114.3 million in 2019 to $60.6 million in 2020. But no other country is obligated to buy U.S. lobster like China. In January, as part of a mini trade deal, China vowed to buy $36 billion in U.S. agricultural goods over the next two years.

Lobster was the only seafood that specifically made it onto China’s mandatory agricultural shopping list.

China can’t make its huge, fast-growing middle class rekindle its love affair with U.S. lobster. Instead, it has offered a retaliatory tariff exemption to those importers who want to buy U.S. lobster again, making it no more costly to bring into the country than Canadian lobster. But the trade data show the exemption isn’t working, at least not yet.

That is where the Seafood Trade Relief Program comes into play. Licensed commercial fishermen can apply through their local Farm Service Agency service center starting on Sept. 14. They don’t have to prove a personal loss, but must have proof of their 2019 landings of an impacted species, proof of adjusted gross income, tax ID number and direct deposit information.

The deadline for applications is Dec. 14.

The only other Maine fishery of any size included in the trade relief species list is herring. In 2019, Maine landed about 13 million pounds of herring, most of which was sold domestically for lobster bait. With a payout rate of 4 cents per pound, Maine’s herring fishermen could net a combined $525,000 through the program.

Maine commercial fishermen landed 3.3 million pounds of groundfish in 2019, including but not limited to pollock and flounder, both of which are eligible for the federal trade relief payments. But the state doesn’t make the landings for individual ground fish species public, so it is difficult to say how much the program could help Maine’s struggling groundfishing fleet.

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