Trump’s First Year: Has He Affected Tuna?

After taking office in January 2017, President Donald Trump has had people around the globe questioning what his presidency means for the United States and the rest of the world. Pre-election campaigns included Trump describing free trade as “terrible”, a heavy emphasis on the Trump Doctrine to put “America First” and a pro-business agenda. These ideas have been shown to correlate with many of his actions since becoming US President.

With plans to reorganize international trade deals and introduce new tariff structures, the uncertainty surrounding the impact this would have on the tuna sector resulted in mounting speculation across the industry. Now, a year into his presidency, Trump has made important decisions, including withdrawing the US from the Trans-Pacific Partnership (TPP).

US Leaves TPP For “One-On-One” Trade Deals

Just days after his inauguration, Trump signed an executive order to withdraw America from the TPP. Removing the US from the free trade deal between the 12 different nations was a key part of the President’s election campaign as he believed the TPP “was not the right way”. Instead, Trump plans to pursue one-on-one trade deals which would mean the US can supposedly exit if “somebody misbehaves” after 30 days of notice, he claimed during a meeting with union leaders.

In February 2016, the TPP was signed by 12 countries, including Japan and Vietnam, and it represented roughly 40 percent of the world’s economic output. The pact aimed to deepen economic ties and slash tariffs, and the agreement was designed to eventually create a single market. However, these hopes were dashed as the US exit has left the Trans-Pacific trade deal up in the air. This departure was particularly disappointing for Vietnamese tuna exporters who were expecting their nation to eventually enjoy a zero percent trade deal on a number of important tuna products.

The exit affected Asian stock prices with short term declines across Asia. Thailand’s leading tuna canner, Thai Union experienced a seven percent fall in its share value at the time and Philippine canned tuna producer, Century Pacific also saw a three percent drop.

However, Peter Navarro, the Director of the White House National Trade Council, did name Thailand as one of the countries that the Trump administration will look to agree a ‘one-on-one’ trade deal with. Other nations in the TPP setup, including Vietnam, could benefit from similar bilateral trade deals with the world’s second biggest tuna import market, consequently giving a boost to their own tuna industries.

Aumua Amata, American Samoa’s US Congresswoman, was pleased with the withdrawal as she stated the US staying in the TPP would put the US domestic tuna canning industry at great risk. She expressed her support for the US exit, stating the TPP would have allowed low-wage countries to have the same access to markets in the US without incurring any fees. American Samoa is currently home to a StarKist tuna cannery – StarKist is a significant player in the tuna industry with a 40 percent share in the US tuna market.

Despite many describing the TPP deal as unworkable without the US, the Australian Prime Minister, Malcolm Turnbull, refuses to give up hope. Turnbull suggested China as a possible addition, which could see this major nation eliminate import duties on several products including tuna.

The popularity of canned tuna in China is growing and while the Chinese canned tuna market is still small compared to the EU, Japan and the US – the market has been described as one of the few expanding tuna markets globally. Therefore, slashed import tariffs will undoubtedly aid this growth.

US And Mexico Relations Grow Increasingly Tense

Early on into his presidency, Trump suggested the infamous 20 percent Border Adjustment Tax imposed on all produce imported from Mexico to pay for the construction of the proposed wall between the two nations. This would have meant tuna imported into the US from Mexico would be substantially more expensive and therefore, increased costs would be passed onto consumers. The import tax would also adversely impact Mexican canners as their products would experience a significant loss of competitiveness in the US market, where trade already faces obstacles.

Although the proposal has since been scrapped, the US’ relationship with Mexico is unlikely to improve after the tax debacle, as experts have warned that Trump’s threat to withdraw from the North American Free Trade Agreement (NAFTA) is becoming more likely. The current agreement allows duty free trade on thousands of product lines between the US, Mexico and Canada. A withdrawal would put future tuna trade between the US and Mexico under considerable pressure, and tariffs could revert to levels under the World Trade Organization – an average of 3.5 percent for Mexican products to enter the US market.

This could put a dent in trade at a time when Mexico’s canning industry has seen increased business with the US. The first seven months of 2017 saw Mexican processors export nearly 4,000 tons of canned tuna to the American market – up 12 percent from 2016. Unless a new deal is signed by the end of 2017, Mexico’s tuna sector will be affected by a US exit.

A long-running dispute between the two countries in regards to ‘dolphin-safe’ tuna labelling recently saw a win for Trump’s administration at the World Trade Organization (WTO). Mexico lost its challenge against US tuna marketing rules but the nation has appealed the decision. In the latest round of proceedings, the WTO found the US had improved its 2016 labelling policies. However, before these changes were made, the policies were deemed discriminatory to Mexico’s tuna sector.

Despite changes to the dolphin-safe labelling that supposedly puts Mexico on a ‘level playing field’, Mexico still believes it is being unfairly discriminated against. Mexican tuna processors say it has affected their exports to the US, which could easily be double if the country was not “inconsistently and unfairly” applying its dolphin safe and environmental standards.

Trump’s Anti-Regulatory Stance

Trump has made it known from the beginning of his presidential campaign that he is very anti-regulation. He put this view into action when he signed an executive order directing federal agencies to scrap two existing regulations for each new one they wish to implement.

The National Marine Fisheries Service (NMFS), an agency that falls under the National Oceanic and Atmospheric Administration (NOAA), has a regulatory program that is one of the most active in the federal government, annually publishing hundreds of regulations in the Federal Register. These regulations affect the management and conservation of US recreational and commercial fisheries. With American fishermen depending on active management to ensure the industry remains economically and environmentally sustainable, cuts in regulations are unlikely to aid this.

Price Fixing Saga Continues

Despite skepticism regarding the Trump administration’s handling of the infamous price fixing case involving the US Big 3 tuna brands, the government has made vital progress with the case. The Department of Justice (DOJ) led criminal proceedings since the activity came to light in 2015. Since then, there have been guilty pleas from a StarKist executive, two Bumble Bee executives and also Bumble Bee as a corporation.

While the DOJ continues to build its criminal case, civil lawsuits from retailers and consumers have been put on hold to prevent the two proceedings from interfering with each other. Once the state presents the case to the grand jury, retailers such as Walmart and Target will be able to move forward with their civil cases against the Big 3.

The treatment of the case has shown Trump’s pro-business standpoint has not hindered progression with the government taking the matter seriously. Both Bumble Bee executives are expected to face a court hearing in March 2018. The penalties they were expecting to face were up to 10 years in jail and a USD 1 million fine, however, due to their assistance in the investigation, their offences are likely to carry 10 to 16 months of jail time and a USD 25,000 fine.

“Fake” Tuna Problem Not Addressed

The imports of tuna-like species Euthynnus Affinis and Auxis Thazard have increased since Trump took office from January to August 2017 to over 10,350 tons – a 41 percent rise compared to the previous year. The competition these “fake tuna” species have created, has worried the US industry as they are being imported at lower CFR prices and duties than traditional skipjack, and then sold as Chunk Light. These “tuna-like” species are levied with four percent duty as opposed to 12.5 percent – the import tax on tuna species including skipjack, yellowfin and tongol.

Despite calls for help from several US importers to the US government department, NOAA in regards to this issue, little has been done. Requests were made to increase the import duty to the same rate at which tuna species are taxed. There were also concerns over the origin of Euthynnus Affinis and Auxis Thazard with worries that a significant volume could be IUU.

The Obama administration did introduce the Seafood Import Monitoring Program (SIMP) to ensure traceability of fisheries products entering the US market to prevent IUU fishing. However, the tuna-like species are not on the list of products that will be affected by the new regulations, despite the illegal fishing concerns.

SIMP has been under scrutiny with the National Fisheries Institute, which represents the US Big 3 canned tuna brands, claiming the initiative was only in place after the Obama administration “cut corners” to ensure the implementation before the change in Presidency. It has also been claimed that the regulations would cost the seafood sector USD 520 million. Trump’s proposed budget for the fiscal year 2018 was released earlier in 2017 with no specific funding for the implementation of the SIMP program. In order for the program to go ahead, Congress would need to ensure that it is fully funded.

Isolationism Causing PNA To Open Waters To Chinese Fleet?

The US tuna purse seine fleet saw a decline in its 2016 catches, which in total were 21 percent lower in volume than the previous year. This slump was primarily because the US was locked out of PNA waters as the government defaulted on payments to the South Pacific Tuna Treaty. Now under Trump, the US’ relationship with PNA nations has not shown signs of improvement. The Trump administration failed to meet its payment deadline again this year.

Expensive VDS days and restrictions on high seas operations in the WCPFC are some reasons the US has given behind the weakened ties between the US and the Pacific region. With little effort on Trump’s behalf to improve relations, the US fleet’s influence in the PNA EEZs could be on the decline and replaced by the Chinese fleet. Reports have suggested that the PNA has been offered higher prices for fishing days from Chinese firms and thus, reduced daily permits to the US. Filipino firms are also looking to increase their share of the tuna resources in the PNA, as one company signed a USD 766,000 deal with Nauru in order to have fisheries access.

Chance To Help Foreign Fishermen

A bill has been introduced to allow hundreds of foreign fishermen that are confined to US flagged vessels in Honolulu to be allowed to come ashore when they dock. The Sustainable Fishing Workforce Protection Act offers workplace protections and the fishermen would get visas in their home countries, just like other immigrants. This would allow them to fly into Honolulu for the fishing jobs as opposed to travelling on boats.

A previous Associated Press investigation showed that migrant workers, mainly from Southeast Asia and the Pacific, are not allowed off their boats even to unload catch. The working conditions were also reported to violate basic labor rights due to what has been described as a federal loophole. Now with the new legislation that has been proposed, these alleged human rights violations could be eliminated if the US Senate decides to implement the bill.

Environment Not At The Top Of Trump’s Agenda

Trump’s position on environmental protection has been clear from the offset with his disbelief in climate change often used an example for his stance on issues affecting the environment. His suspicion surrounding global warming is likely to concern Pacific islanders who fear rising sea levels will engulf the island nations. This could result in the PNA nations’ waters eventually becoming high seas and the PNA nation, Kiribati, believes it will be “the first to go”.

With environment not being on the top of the President’s agenda, reports on Trump planning to significantly reduce the NOAA’s budget comes as no surprise. As the NMFS operates under the federal agency, NOAA, drastic budget cuts would adversely impact the support the US tuna fleet receives. The proposed cut would involve a 16 percent reduction to NOAA’s finances and could be another setback in effectively managing the nation’s fisheries industry. Presently, the NMFS looks to see a five percent reduction to its financing and if implemented, this will go in the fiscal 2018 budget.

Conservationists have shown concern about Trump’s plans to shrink marine protected areas in order to expand offshore oil and gas drilling, as well as expand the areas for commercial fishing. The marine sanctuaries and monuments total 425 million acres of coral reefs and habitat for whales, dolphins, turtles and fish.

However, the US longline fleet is likely to welcome this proposal because they have pushed for an expansion of fishing grounds. Fewer fishing grounds were a result of the enlargement of protected ocean areas. This had also reportedly put pressure on the American Samoa based canneries including the StarKist plant, which has faced several short-term closures due to supply shortages.

More recently, the US President has rejected a petition from conservation groups requesting for Pacific bluefin tuna to be protected under the Endangered Species Act. While scientists have reported stocks of the fish to have fallen by more than 97 percent from pre-fished levels, NOAA has suggested the stocks can recover, as they have done so before. If Trump had approved the petition, Pacific bluefin would be banned from being fished in US waters and restaurants would no longer be able to serve the fish.

Although Trump’s year as President has not had major implications for the global tuna industry, the importance of the US government on the global tuna sector has become increasingly evident. His isolationist “America First” approach could have damaging effects on Mexico’s tuna trade with the nation already feeling it is being discriminated against, and severed ties with the PNA could progressively benefit the Chinese fleet. With at least three years still in office, the industry will remain watchful of the decisions Trump makes.