TUNA FREE TRADE: WHO WILL SURVIVE ?

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TUNA FREE TRADE: WHO WILL SURVIVE ?
(By Henk Brus, November 01, 2002)

Recently we read a lot about politicians, mostly Philippine, who argue about the negative effect the EU's 24% duty on Asian canned tuna has on their local tuna canning sector, and on the people who's livelihood is connected to catching and processing tuna. The idea behind all this is that a lower duty, or even duty free for entry the Philippines, Thailand, and possible all Asian nations would benefit their local economies. Philippines and Thailand are calling for a global free trade on tuna, but will they win from that ?

Definitely there will be a positive effect of such measures for these two countries on the short term. On the longer term the implications of tuna duty reductions or even free trade towards Europe and the USA, might be less favorable to currently active tuna processing nations. Why?

Consider this: Even though the canneries in Ecuador, Ivory Coast, Ghana, Senegal, Maldives and other ACP countries have duty free access into the E.U, their companies are not making any significant profit. Many of these operations are financially struggling. If these companies are unable to make a profit now with a 24% advantage over Thailand, you can be sure the majority of them will go bankrupt should the maximum EU tuna duty be reduced to per example 18%. Also, the Spanish canning sector will then hardly be able to compete anymore.

Any significant duty reduction in Europe for the Asian nations would immediately mean devastation for the local economies of poor nations like Ecuador, Ivory Coast, Ghana, Senegal, Madagascar, Maldives and others; but even in economic weak regions within the EU such as Galicia, where most of Europe's tuna is canned. Duty reduction in the EU would bring a very large scale of unemployment and loss livelihood to these nations that have an entire local tuna economy and which can be very badly hurt. The tuna economies, which have developed during the last decade thanks to the support of duty free access to the EU, could very well collapse. This would also mean disaster for the European purse seine fleet that owns fishing rights in all these nations waters. Where would they have to go with their fish? All the way to Bangkok?

More and more I start to believe that if Asian nations would get duty free access to the EU and USA, the success for especially Thailand could be short-lived. First of all, towards the EU the Spanish and French boatowners would be sure to demand that any canned tuna coming in duty free should be packed according to the rules of origin of the raw tuna. This means that the tuna would have to be caught by either the local or the EU fleet, in order to benefit from reduced duty rates. Since Thailand does not have a local tuna fleet yet, nor any fishing rights, it is likely they could become more dependent on EU caught fish from the Indian Ocean in such a scenario.

Reduced duties to the E.U. could benefit Asian Pacific nations, but especially China. If the EU rules on the origin of the raw material would be applied to China, then we could begin seeing a totally different picture. I would not be surprised if the large Taiwanese purse seine fleet, which has the major share of global skipjack catch, would then switch to Chinese mainland flag and ownership. Should these Chinese boatowners then build there own new canneries in China, they would be even closer to the catching ground than the canneries in Bangkok. China can produce cartons, labels and steel plate extremely cheap, and nearby. China also has an enormous pool of cheap labor. If the Chinese government would also support a new tuna industry with their 14% export rebates, as they do with other export products, even Bangkok and Philippines would no longer be able to follow on price. There are already signs that China is working hard on getting more tuna fishing rights within Central Western Pacific Ocean.

So it remains to be seen how many poor developing tuna canning regions and nations like the Philippines will benefit from this call for reduced duties and free trade. Many tend to forget that free trade eventually means: "Survival of the Fittest"

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