The seafood trade deficit is a diversionary tactic

Lately, politicians, bureaucrats and journalists have begun lamenting the fact that the United States runs a seafood trade deficit. Secretary of Commerce Wilbur Ross has called the deficit “silly” given the ample U.S. coastline. In June, Timothy Gallaudet, Acting Administrator of National Oceanic and Atmospheric Administration, suggested reducing the seafood trade deficit by allowing commercial fishing in marine protected areas. Now the agency has launched a series of public listening sessions on the topic that began Aug. 31 and continue through November.

Actually, the U.S. should run a seafood trade deficit. Fretting over it defies economic logic and the foundations of our market economy. The U.S. does have a wealth of fishery resources, but we are not a resource-based economy. Instead, we are a wealthy nation with a large population of seafood consumers and an economy built on high-tech industries and information services. The UK, France, Germany, Italy, Spain and Japan — wealthy countries with similar economies and substantial domestic seafood production — also run seafood trade deficits. 

{mosads}The seafood trade balance is the dollar value of seafood exports minus imports. A positive trade balance is a surplus and a negative balance is a deficit. The U.S. has a seafood trade deficit for two reasons: we import more seafood than we export and our imports are more than twice as expensive as our exports. 

The U.S. produces a large, steady flow of fish and shellfish for both domestic and export markets. Extensive coastlines, productive coastal waters and world-leading fisheries management all contribute to domestic supplies. But U.S. demand is high and there is little room to expand our fisheries sustainably. Weakening fishing regulations would cause overfishing, deplete stocks of fish and ultimately decrease U.S. seafood production. 

And importing seafood isn’t bad; in fact, imports allow Americans to get more protein from seafood than ever before. Between 1910 and 2016, imports helped U.S. seafood consumption to increase by over 350 percent. 

Imports have also increased the number of seafood products consumers can choose. A generation ago, fresh salmon was a luxury item available mostly in white-tablecloth restaurants. Now an American family in a land-locked state can serve fresh farmed salmon any night of the year thanks to imports from Chile and Norway. That’s good news for public health: eating just one serving of salmon per week reduces the risk of coronary death by 36 percent.  

U.S. seafood imports cost more per pound than exports because wealthy nations demand high-value seafood. Americans eat a range of seafood products, from costly fresh Maine lobster tail to inexpensive McDonald’s Filet-O-Fish sandwiches made from Alaskan pollock. What we eat most, though, are high-value seafoods such as shrimp and salmon, which means high-priced domestic products such as that Maine lobster are less available for export.

Consequently, the U.S. tends to export low-priced products. Last year, Japan bought over 50 million pounds of Alaskan Atka mackerel, an oily, fishy fish of little appeal to U.S. consumers. Low-price exports also go to countries like Mexico and Nigeria where most consumers can’t afford expensive seafood. 

The seafood trade deficit also reflects the seemingly counterintuitive ways the modern global economy functions. My Arkansas mother-in-law once asked me why the only wild-caught salmon in Walmart comes from China. In fact, the salmon in her store was healthy, wild-caught salmon from Alaska that had been exported to China, processed and exported back to the U.S. It is simply cheaper to do it that way. 

This arrangement benefits American consumers because wild salmon can be priced more competitively with farmed salmon and it benefits Alaskan fishermen who can sell more salmon into the lucrative U.S. market. Suppose all of that Alaskan salmon exported to China stayed in China. The seafood trade deficit would decrease, Arkansans would eat less Alaskan salmon and Alaskans would earn less for their catch. Should that be a goal? 

Not all wealthy countries run seafood trade deficits. Iceland, an island nation with just over 300,000 people and Norway, with its long coastline and fewer than 6 million people, could never consume all of the seafood they produce. For similar reasons, Alaska runs a seafood trade surplus with the rest of the United States and with the rest of the world. Imagine every Alaskan having to eat 7 pounds of pollock every single day.

However, most countries that run seafood trade surpluses are developing countries. Thailand and Indonesia, which farm and export large volumes of shrimp to the U.S., have low labor costs and inexpensive coastal real estate. In contrast, the U.S. has high labor and coastal real estate costs that make farming fish less competitive.

The U.S. could increase seafood production by investing more resources in its domestic aquaculture industry. But most coastal communities have prioritized commercial fishing, tourism and preserving ocean views over expanded fish farming.

The international seafood trade is not beyond reproach. In some cases, low labor costs in seafood-exporting countries reflect slave labor or other human rights violations that should be stopped. In other cases, a trading partner’s poor management of the local environment affects the global environment by threatening endangered species or unique ecosystems.

Those are real issues worth addressing. The naïve belief that the seafood trade deficit should be a national concern could lead to a host of perverse policy prescriptions. By pursuing a lower seafood trade deficit, we could make healthy, tasty seafood less affordable and harm U.S. industries and the oceans in the process. 

Martin D. Smith is the George M. Woodwell Distinguished Professor of Environmental Economics at Duke University and is president-elect of the International Institute of Fisheries Economics and Trade.