Gloucester lobsters caught in trade war

Chinese tariffs send exports down 62% so far this year


WHEN CANADA NEGOTIATED a new trade agreement with Europe several years ago, Vince Mortillaro, the owner of Mortillaro Lobster in Gloucester, made a business decision.

No longer able to compete on price in Europe with the non-taxed Canadian lobster, he turned to the Asian market — specifically China.

“We went in hard and we grew our business drastically, but then they implemented the tariffs. It’s a pretty hard pill to swallow,” he told legislators Tuesday.

Mortillaro now expects to lose 30 percent of his lobster sales this year, turning a $40 million wholesale lobster company, which he said has been responsible for buying one-third of all lobster landed in the port of Gloucester, into a significantly smaller operation.

Retaliatory tariffs placed by China on US seafood exports as part of an ongoing trade war between the two countries is taking a hard toll on the Massachusetts lobster industry, experts and practitioners explained on Tuesday. The impact is not only being felt by lobstermen and women, but by wholesalers, processing plants and even steel companies that make lobster traps.,

Their testimony was heard by the Joint Committee on Export Development, which is exploring whether there’s anything the state can do to help an industry sinking under the weight of Chinese tariffs.

Rep. Lori Ehrlich of Marbleheard and Sen. Nick Collins of South Boston, co-chairs of the committee, said their goal Tuesday was to elevate the plight of the lobster industry while looking for ways to help.

“We’ll be trying to figure out how we can get the ear of the federal government for them and also see what we can do here in Massachusetts,” Ehrlich said.

Collins said that the more time that goes by, the more dire the situation will become.

“As this develops, we’re hoping to get this repositioned with the federal government on their priority list but depending on how long this lasts we’re going to have to take a look. We can’t have the lobstering and the seafood industry in Massachusetts fail,” Collins said.

U.S. Sen. Elizabeth Warren, who sent a representative from her office to the hearing to testify, did her part this week to get the ear of the federal government by writing a second letter, along with other members of the state’s Congressional delegation, to US Trade Representative Robert Lighthizer.

The members of Congress blamed Chinese tariffs for the closure to two Massachusetts businesses and the loss of 250 jobs, and implored the Trump administration to open new markets for North Atlantic lobster in Africa and Southeast Asia.

“While Massachusetts state legislators are exploring solutions for economic relief at the state level, it is imperative that there be federal resolve to assist the Massachusetts lobstermen whose livelihoods heavily relied on exports to China,” Warren and others wrote.

Lighthizer responded to Warren’s first letter in June by blaming China for “unfair policies and practices” related to the transfer of technology and intellectual property. He said the administration was committed to “use all available tools to pressure China to reject mercantilism and to embrace open, market-oriented trade and investment policies,” but was in “an ambitious process” to begin trade talks with countries in Africa and Asia to find alternative markets for American lobster.

Rep. Ann-Margaret Ferrante, a Gloucester Democrat, said many fishermen in her community turned to lobstering when restrictions were placed on fishing for species like cod, whose populations were in decline.

Then came the 25 percent tariff on exports of lobster to China.

“It’s killed our price. It’s killed our market. It’s killed our fishermen,” Ferrante said. “And if this continues the Canadians will have highjacked the market and it will be theirs. We will never get those trading patterns back.”

Ferrante and Rep. Sarah Peake of Provincetown urged the committee to write a letter to the federal government and Gov. Charlie Baker to encourage that lobsters be put high on the priority list for trade talks with other countries.

Ehrlich noted that shrimp were included on a small list of products that China announced last week would become exempt from tariffs as trade talks with the US continue.

“They’re harvested in a red state,” Peake replied.

Mark Sullivan, the executive director of the state’s Office of International Trade and Investment, told the committee that from 2016 to 2018 the trade relationship between Massachusetts and China grew from $6.5 billion to $7.8 billion as China passed Mexico to become the state’s second largest trading partner.

Semi-conductors, pharmaceuticals, chemicals, furniture and toys remain the state’s largest exports to China, which fell by $600 million over the first six months of 2019.  Sales of lobsters to China between January and July fell from $26.3 million in 2018 to $9.9 million this year, a 62 percent decline.

In response to questions about how the state could attract buyers from other countries, Sullivan said global interest in trading with Massachusetts remains strong.

He told Rep. Donald Wong, of Saugus, that MOITI doesn’t have the budget to rent spaces at many of the major international trade shows, but suggested products like lobster could be marketed to foreign delegations when they travel here for other opportunities.

For instance, Sullivan said, he was addressing a delegation from the Netherlands and Sweden interested in clean energy on Tuesday night.

“There’s no one market that will compete with China,” he said.

Mortillaro questioned whether trying to sell lobsters to other parts of the world was a viable solution. “Everywhere a lobster can go, lobsters already go. We need the help in other areas,” he said. “Countries that are not getting it, it’s for a reason. They don’t want it.”

Monte Rome, who owns Gloucester seafood processing company Intershell, also suggested the government could be doing more to help, similar to how it provides subsidies to soybean farmers and processors who have also been hurt by tariffs.

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“From my point of view I really believe we have an entitlement to assistance from our government. We don’t want to see this business get any worse,” Rome said.