Modeling the Structural Change in American Frozen Catfish Fillet Demand: An Analysis of Country of Origin Labeling and the Implementation of an Import Tariff

This paper uses the Almost Ideal Demand System (AIDS) model to analyze two issues 1) The effect of the implementation of mandatory country of origin labeling and 2) the effect of the tariff on Vietnamese basa. The data would suggest that the first effort (COOL), in 2002, of the CFA to help protect domestic production may have actually had adverse effects. That is, by mandating that Vietnamese catfish be labeled as basa, a new market was created. This new market seems to have favorably differentiated the Vietnamese product from the American product. The second attempt to protect the domestic industry was to implement a tariff on all imports in February 2003. Since the market had been segmented by the mandatory COOL (2002) before the tariff implementation (2003) it would seem as if the structural change in demand for Vietnamese and American products was dominated by the labeling effect not the tariff effect. That is, the relative magnitude of the COOL increased the demand for Vietnamese basa more than the relative magnitude of the tariff decreased the demand for basa. So, by segmenting the market through COOL and favorably differentiating the market towards the Vietnamese basa the relative magnitude of the tariff was mitigated.