FFA FISHERIES TRADE NEWS Volume 3: Issue 12 December 2010

Volume 3: Issue 12 December 2010 

By Amanda Hamilton, Elizabeth Havice and Liam Campling[1]


Fisheries Subsidies and Trade

Fisheries Subsidies Proposals Discussed at the World Trade Organisation

Update on PACP-EU EPA Negotiation

Fisheries Management

Meeting Outcomes from WCPFC - Seventh Annual Session 

Corruption in Mediterranean Bluefin industry; 2011 Catch Quotas Reduced Slightly 

Fisheries Development

 Te Vaka Moana Group Holds Cooperation Talks 

Recent PNA Developments 

Fisheries Governance 

The Future of Pacific Fisheries – 25 Year Projection 

Tuna Markets

Bumble Bee Foods acquired by Lion Capital LLP


Fisheries Subsidies and Trade

Fisheries Subsidies Proposals Discussed at the World Trade Organisation

On 9-10 December 2010, the WTO Negotiating Group on Rules for Fisheries Subsidies was convened again to continue closed (‘plurilateral’) discussions around submissions by Members. The last issue of Fisheries Trade News (October-November) detailed the main components of proposals by Australia and South Korea respectively.[2] The December session continued discussion of these two proposals, as well as an important joint proposal by Brazil, India, China & Mexico on special and differential (S&DT) treatment for developing country Members.[3]

Discussions on the proposal by Brazil et al. focused on Article’s IV and V of the draft Chair text from 2007,[4] covering general disciplines on the use of subsidies and fisheries management conditionalities for special and differential treatment for developing countries. 

On their revisions to Article IV the proponents stated they are trying to address subsidies that were not prohibited under Article I, but which still generate ‘fisheries adverse effects’, identified in the proposal as including subsidising capacity to a level beyond that necessary to harvest a sustainable allowable catch.[5] One response to this formulation was that, because the majority of the world's fish stocks already are fully exploited or over exploited, there is little if any room for non-subsidised expansion of fishing effort. In addition, the proponents indicated that they consider it unnecessary for a Member to have either an ‘identifiable’ fishing or a trade interest in a particular fish stock in order to have ‘standing’ to raise a claim.  Some Members raised concerns that defining ‘standing’ (the legal right to submit a complaint) so broadly would be undesirable, and that the complaining Member should have an identifiable interest in the stock.  Conversely, other Members stressed that ‘standing’ under Article 5 of the existing Agreement on Subsidies and Countervailing Measures is relatively broad. For example, a Member could bring a claim in respect of a product that is related to but not the same as the subsidised product and that standing for fisheries adverse effects should be similarly broad.[6] 

On Article V, which lays down fisheries management conditionalities for the use of S&DT provisions, Brazil et al. explained that due to the diversity of capture fisheries and the complexity of fisheries management, the conditions should not be overly prescriptive.  Instead they should lay down broad principles of fisheries management (such as science-based stock assessments), and contain some illustrative elements.  In this regard, they questioned the feasibility of the 2007 Chair draft text of conducting assessments of all species and assigning species-specific quotas, particularly in tropical waters. The proponents also deleted reference to the FAO as acting as a ‘peer review’ mechanism for compliance with Article V, and suggested that this requirement be addressed by a Committee at the WTO. Some Members questioned the ability of a WTO committee to fulfil this function. Most Members concurred that the question of fisheries management be the subject of a future dedicated plurilateral session.  

Finally, Chair Ambassador Dennis Francis noted the push for the intensification of the Doha Round negotiations in 2011. For example, WTO Director-General Pascal Lamy stated in late December 2010 that: ‘The time has arrived to move into real negotiating mode’.[7] One component of this political push is the objective of Members to work together to produce revised ‘convergence’ texts by the end of March 2011. To this end Ambassador Francis has scheduled a week-long fisheries subsidies cluster from 7 February. There is, however, a limited degree of convergence between Members on proposed fisheries subsidies disciplines. This raises the spectre that – if the Doha Round is finally pushed to completion (which is open to question) – fisheries subsidies might be traded-off against more important political gains for the world’s most powerful countries, such as around agriculture and industrial goods. Those countries that depend upon fisheries for their basic social and economic survival, such as the Pacific islands, must be vigilant to avoid such an outcome. 

In parallel to these discussions, the United Nations Environment Programme (UNEP) launched a new book called Fisheries Subsidies, Sustainable Development and the WTO.[8] This volume compiles detailed research on several relevant issues to Pacific island government officials and would serve as an important reference tool.

Update on PACP-EU EPA Negotiations

Three years on from the former end-2007 deadline, the EU and Pacific Island Countries (PACPs) are yet to conclude negotiations for a comprehensive Economic Partnership Agreement (EPA).  PACPs have been growing increasingly frustrated by the slowness of negotiations, given there has not been a meeting held between PACPs and EU officials since September 2009. However, negotiations look set to resume soon, with an EU-PACP consultation scheduled for the end of January 2011 in Samoa.  

Several unresolved issues extending beyond fisheries-related aspects of negotiations have likely influenced the stall in progress.  In September 2009, four PACPs (Cook Islands, FSM, Niue and Samoa) presented market access offers to the EU to reduce tariffs on 70-75% of all tariff lines and value over 25 years.  However, the EU rejected these offers and insisted market access offers must cover tariff reductions for 80% of tariff lines over a 15 year timeframe.  The EU delegation also stressed that until such time that market access offers are received from all PACPs, they were not interested in pursuing EPA negotiations.  Nauru, Solomon Islands and Tonga have since indicated that they will make market access offers, but until the remaining PACPs bring offers to the negotiating table, the EU may continue their stance to delay negotiations.[9]  On the PACPs side, concerns exist that less than favourable outcomes conceded to in EPA negotiations (particularly in terms of aid for trade and labour mobility) could set a dangerous precedent for PACER negotiations with Australia and New Zealand. 

In future EPA negotiations, a major issue of concern will be the extension of global sourcing rules of origin to fresh-chilled and frozen fisheries products (HS 0303/0304).  For those PACPs without canned tuna processing interests, willingness to sign onto the EPA will hinge largely on favourable outcomes in this respect.  EU officials have received strong political backlash from the EU tuna fishing industry (particularly Spain) regarding global sourcing RoO offered to PACPs for processed tuna (HS 1604/1605).  While it is politically difficult for the EU to retract the global sourcing offer for canned tuna and loins (which is currently extended to PNG and Fiji under their interim-EPAs), this issue is highly likely to further complicate negotiations concerning future reform of RoO, particularly the extension of global sourcing RoO provisions to fresh-chilled and frozen tuna fillets and steaks.  PACPs will also continue to address outstanding issues in drafting the legal text of the fisheries chapter in future negotiations. 

Solomon Islands final decision to sign onto the comprehensive EPA will be influenced by the results of a detailed economic analysis to be conducted for the Solomon Islands Government which compares the net benefits of preferential trade arrangements under the EPA with the current trade preferences utilised under the ‘Everything But Arms’ Agreement (EBA).[10]  To date, Solomon Island has remained cautious about signing onto the EPA due to concerns about potential PACER trigger mechanisms, as well as eventual tariff preference erosion due to multilateral tariff liberalization through the WTO and the rise in free trade agreements.  



Fisheries Management

Meeting Outcomes from WCPFC - Seventh Annual Session 

The Western and Central Pacific Fisheries Commission held its annual meeting in December 2010 in Hawaii. The Chair identified reducing mortality of juvenile bigeye and yellowfin tuna and development of management issues as two of four top priorities for the meeting.[11] Bigeye has garnered significant attention as scientific reports have documented that overfishing of the species occurring and that additional measures will be required for the stock to recover.[12]

Despite international focus on declining bigeye stocks, WCPFC members did not reach an agreement on how to enhance conservation and management of this species or yellowfin, the other species of concern in the region. The deadlock emerged in part from conflict between the rights of distant water fleets and Pacific Island countries. Some conservation proposals would freeze the number of boats at current levels, cementing distant water fishing nations’ rights to fish in Pacific Island waters. Pacific Island countries proposed measures that would cut the level of fishing for bigeye and preserve Pacific island countries’ potential to develop their own fisheries. 

Pacific Island efforts to close additional high seas areas were thwarted at the Commission level, though the island states will enforce closures through national licensing procedures. A Pacific island proposal to ban purse seine setting on whale sharks, whales and dolphins was also rejected by other WCPFC members.13 The Parties to the Nauru Agreement released a statement expressing their disappointment with the outcomes of the meeting and reaffirming their commitment to take PNA measures to conserve tuna.[14]

WCPFC members did agree to cut bluefin catch to 2002-4 levels in 2011 and 2012. Japan agreed to cut its catch of bluefin that are less than three years old by 25 percent from the current level of 6,100 tonnes. South Korea refused to sign the agreement, but officials said the country will also curb its catch.

Corruption in Mediterranean Bluefin industry; 2011 Catch Quotas Reduced Slightly 
The debate over the health of Mediterranean bluefin stocks and appropriate management choices continues tumultuously. In November 2010, the International Consortium of Investigative Journalists released a study documenting a decade of illegal fishing of eastern Atlantic bluefin stocks and International Convention on the Conservation of Atlantic Tuna’s (ICCAT) management shortcomings. The study, Looting the Seas, estimates that between 1998 and 2007, more than one third of all Eastern Atlantic bluefin catch was taken illegally; alleged offences include catching undersized fish, under-reporting catch size and violating ICCAT quotas. The study also revealed a black market for illegally caught tuna worth an estimated US$4 billion.[15]

The release of Looting the Seas in advance of the 27 November ICCAT meeting in Paris served to increase pressure on ICCAT regulators to slash bluefin quotas; some eNGOs lobbied for complete closure of the fishery. However, ICCAT members ultimately voted for 2011 catch quotas in the Mediterranean to be set at 12,900 tonnes, just slightly lower than the 13,500 tonne 2010 quota. 

In addition, ICCAT reported on newly introduced compliance measures. For Parties not in compliance with ICCAT management regulations, the Compliance Committee first issued a letter of concern, and then a stronger warning in the form of a ‘Letter of Identification’ after which, sanctions may be applied. In 2010, the Committee issued 23 ‘Letters of Concern’ and 23 ‘Letters of Identification’; recipients (which are not publicly listed) are required to report on actions they will take in the coming year to rectify deficiencies and to submit management plans that address the problems. Potential sanctions under consideration include: reduction and withdrawal of fishing allocations, financial penalties or suspension of voting privileges.[16]

Following the failed attempt to list Atlantic bluefin as an endangered species under the Convention on International Trade in Endangered Species (CITES) in March 2010, all eyes were on the November ICCAT meeting, in part, because some Parties suggested that they felt it would be more effective to protect bluefin by strengthening ICCAT management than through a CITES-imposed bluefin trade ban.[17] Following the ICCAT meeting, environmental NGOs criticised ICCAT for not implementing a lower quota, especially after the Looting the Seas report highlighted ICCAT’s failure to stem illegal fishing. The United States indicated it was disappointed with the new quota.



Fisheries Development

Te Vaka Moana Group Holds Cooperation Talks 

In January 2010, FFA’s Polynesian member countries (Cook Islands, New Zealand, Niue, Samoa, Tokelau and Tonga) established the Te Vaka Moana Arrangement (TVMA) in a collective effort to enhance sustainability and derive greater economic benefits from the South Pacific tuna longline fishery. 

In mid-November 2010, senior fisheries officials from the Te Vaka Moana group held cooperation talks in Auckland to further progress TVM’s future strategic plans.   Key outcomes from the meeting included:[18]

* Agreement on a comprehensive work programme and governance structure; consideration of a draft programme design presented by the New Zealand Aid Program. * Consideration of zone-based limits for the four key tuna species and swordfish.

* Consideration of options for enhancing returns from fisheries to TVM economics.

* Progression on draft text of a sub-regional Niue Treaty Arrangement for dealing with IUU fishing vessels (aiming for finalisation and Ministerial endorsement by July 2011).

* Discussion of WCPFC-related issues for consideration at the WCPFC seventh annual session (held in December 2010). 

* Agreement to establish a Te Vaka Moana website to serve as a communication platform between TVM members and third parties. 


Recent PNA Developments 

Introduction of a vessel day scheme for the longline fishery

In mid-2008, PNA members agreed in principle to develop a vessel day scheme (VDS) system to manage the tropical longline fishery in the Pacific.  In late October 2010, the PNA Technical Working Group finalised the text and functional specifications of a longline vessel day scheme (LL VDS) to be implemented in PNA waters.  The LL VDS will be trialed from 1 January 2011.[19]  Along similar lines to the existing VDS system in place for the purse seine fishery, the LL VDS is intended to enhance PNA’s control over the tropical longline fishery, as a means of improving management of this fishery, as well as deriving greater economic returns.  Implementation of an in-zone longline fishing effort restriction will also place pressure on WCPFC to adopt a compatible measure for bigeye and yellowfin conservation.  This would replace current flag-based limits which have been in place since 2005 and according to PNA members, have resulted in a disproportionate burden of bigeye conservation falling on PNA members and purse seine fleets operating in their waters, who have been forced to cut back fishing effort.[20] 


Outcomes from PNA Ministerial Meeting

In late November 2010, PNA leaders met at a ministerial meeting held in the Marshall Islands and made several key decisions to support the advancement of tuna-fisheries driven economic development of PNA countries, including: [21]

* Pacific Islander crewing of fishing vessels – implementation of a mandatory crewing requirement that 10 % of crew members onboard purse seine vessels licenced in PNA waters are Pacific Islanders, effective 1 January 2010, that will then be gradually increased to 20% over 5 years.

* Additional high seas pockets closures – reiteration of plans in 2011 to introduce additional high seas closures to purse seine fishing, covering an area of 4.5 million km.   

* Advance strategy to manage fishing – reaffirmation of support for PNA’s current management strategy of the tropical tuna fishery, as well support for potential additional FAD closures and restriction of fishing effort of vessels licenced under the US Treaty. 

* Prosecute fishing vessels without observers – support for FSM’s decision to prosecute a Taiwanese purse seine vessel fishing within its EEZ without an observer; commitment to pursue further regional action if necessary to ensure all purse seine vessels carry observers on onboard. 

PNA awarded Island’s Business ‘Organisation of the Year’ 

Islands Business International, a Fiji-based multimedia publishing company responsible for reporting on current affairs in the Pacific Islands region has dubbed PNA its ‘Organisation of the Year’ for 2010.  Some of PNA’s major achievements applauded by Islands Business include closure of high seas fishing areas, implementation of 100% observer coverage on purse seine vessels, advancements in VDS implementation and entry of the PNA skipjack purse seine fishery into Marine Stewardship Council (MSC) certification. 


PNA launches website

In November, 2010 PNA launched its official website:  www.pnatuna.com.  The website is intended to raise PNA’s global profile and inform PNA members, industry and the general public on PNA’s strategies for managing and developing the WCPO tropical tuna fishery.[22] 
The website features background information and documents about the PNA, a news archive and market intelligence (from Atuna).  Another major feature, demonstrating PNA’s commitment to more effective implementation of the VDS, is an online system for PNA members to trade fishing days.    



Fisheries Governance

The Future of Pacific Fisheries – 25 Year Projection 

A major study commissioned by SPC & FFA has recently been released entitled ‘The Future of Pacific Island Fisheries’ and is intended to motivate Pacific Forum Leaders to enhance fisheries management and development efforts in the region, given fisheries represents one of the region’s major prospects for sustainable livelihoods and economic development.  This study considers the future of Pacific Island oceanic, coastal, aquaculture and freshwater fisheries over a 25-year timeframe (2010-2035) and provides a basis for long-term strategic approaches for consideration by Pacific leaders to developing and managing fisheries at the national and regional levels.[23] 

The study highlights that the key drivers of change in the fisheries sector over the next 25 years are likely to be population growth and urbanisation, global and regional patterns of economic development; the status of fisheries resources and developments in other oceans, governance and political stability, climate change, limits to domestic fishery production, markets and trade and other factors such as fuel costs, foreign aid and technology/innovation.  
In the case of the Pacific’s tuna fisheries, one of the major challenges identified is overfishing, with two of the four commercially significant tuna species in the region already approaching biological limits (i.e. bigeye, yellow).  Ineffective fisheries processes at the regional level, as well as deficiencies in national fisheries governance stand to further exacerbate stock sustainability issues.  

After considering current trends, factors for driving future change and challenges and likely opportunities, the authors’ developed three potential scenarios for the Pacific Islands’ fisheries sector over the next 25 years – the best case, worst case and most likely scenario.  Under the best case scenario, tuna stocks will be managed at sustainable levels that maximise economic benefits to PICs.  Under the worst case scenario, inadequate fisheries management at the regional and national levels will result in collapse of tuna stocks and PICs will fail to realise adequate tuna-fisheries development-related benefits.  The most likely scenario indicates mixed results with only some improvement in the effectiveness of fisheries management and growing investment in region. 
The study indicates that to achieve favourable outcomes in the future, one of the critical ingredients required is regional cooperation among Pacific Islands countries to gain effective control over tuna resources, as well as developing stronger levels of cooperation with the private sector.  
The study is available to download at:  http://www.spc.int/fame/doc/corporate_docs/Future_of_PI_fisheries_Report...



Tuna Markets

Bumble Bee Foods acquired by Lion Capital LLP

Bumble Bee Foods, the US leader in canned albacore has been acquired by Lion Capital, a private equity firm. The deal was completed in December 2010 when all assets and operations of the company were acquired from Centre Partners management LLC. The acquisition, valued at US$980 million, was made in partnership with members of Bumble Bee’s senior management team.
Reportedly, Bumble Bee marketed approximately US$605 million of senior secured notes to finance the deal.  Financing was arranged by J.P. Morgan, Wells Fargo Capital Finance, Wells Fargo Securities, Barclays Capital and Jeffries.[24]

Under new ownership, Bumble Bee will continue to pursue market expansion in North American and global seafood markets by capitalising on its low-cost operations, procurement strength and household brand recognition. Bumble Bee’s global headquarters will remain in San Diego, California. Bumble Bee employs 1,700 employees across eight facilities in the US, Canada and Puerto Rico.

1 Prepared for the FFA Fisheries Development Division by Liam Campling, Consultant Fisheries Trade Analyst, FFA, Elizabeth Havice, Post-doctoral scholar, Centre for Latin American Studies, University of California-Berkeley, and Amanda Hamilton, independent consultant. Desktop publishing by Antony Price. The authors would like to thank Hugh Walton for his input on an earlier draft of this briefing. The contents of this briefing (including all analysis and opinions) are the responsibility of the authors and do not necessarily reflect the positions or thinking of the FFA Secretariat or its Members.

2 Manleen Dugal, ‘New fisheries subsidies proposals by Korea and Australia at the WTO’, FFA Fisheries Trade News, 3 (10&11), October-November 2010. Available at: http://www.ffa.int/trade_news

3 TN/RL/GEN/163. Available at: http://ictsd.org/downloads/2010/05/tn-rl-gen-163.pdf

4 The full Chair Text is available at the following link (including Annex VIII on Fisheries Subsidies, which is located at the end of the document): http://tinyurl.com/2lnp75

5 The following text draws heavily on the excellent Transparency Session document written by Chair Ambassador Dennis Francis, ‘Negotiating Group On Rules: Fisheries Subsidies –Transparency Session’, Friday, 10 December 2010

6 For a note on jurisprudence on ‘standing’ at the WTO see: http://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c10s1p...

7 As cited by ICTSD, ‘General Council: Lamy Calls on Members to Abandon ‘red Lines’ in Pursuit of Doha Deal’, Bridges Weekly Trade News Digest, 14(44), 22 December 2010. See also, ICTSD ‘WTO DG Lamy on Doha: It’s the Final Countdown’, Bridges Weekly Trade News Digest, 14(42), 1 December 2010. Available at: http://ictsd.org/news/bridgesweekly/

8 Anja von Moltke (ed.) 2011, Fisheries Subsidies, Sustainable Development and the WTO, London and Washington DC: Earthscan. Details available here: http://www.earthscan.co.uk/?tabid=102371

9 Samasoni Pareti (2010)’ Island countries unhappy about inaction over EU talks’.  Islands Business, October 2010.  Available at: http://www.islandsbusiness.com

10 Hugh Walton (2010), pers. comm.  

11 ‘Action items from WCPFC6 and TCC5 actions taken’ WCPFC7-2010/07, Seventh Regulatr Session of the Western and Central Pacific Fisheries Commission. Honolulu, Hawaii 6-10 December 2010. Available at: http://www.wcpfc.int 

12 Natalia Reel (2010), ‘Bigeye tuna focus at this year’s WCPFC conference’ FIS.com, 8 December. Available at: http://www.fis.com 

13 Natalia Reel (2010), ‘WCPFC meeting leads to cuts in bluefin fishing for 2011-12’, FIS.com, 14 December. Available at: http://www.fis.com; Anouk Ride (2010), ‘NEWS: Unfinished business remains as WCPFC meeting ends’, FFA Media Release, 10 December. Available at: http://www.ffa.int  

14 Anouk Ride (2010), ‘NEWS: PNA Comment on WCPFC’, FFA MediaRelease, 10 December. Available at: http://www.ffa.int 

15 ‘Looting the Seas: A Global Investigation’, International Consortium of Investigative Journalists, 2010. Available at: http://www.publicintegrity.org   

16 ‘International Commission for the Conservation of Atlantic Tunas: 17th extraordinary meeting of ICCAT’ ICCAT Press Release, 27 November 2010. Available at: http://www.iccat.int 

17 ‘Atlantic bluefin tuna quota reduced at ICCAT, CITES listing proposed’, FFA Fisheries Trade News, 2 (12) 2009, December. Available at: http://www.ffa.int 

18 Anouk Ride (2010) Polynesian Countries Seek to Protect and Maximise Benefits from Fisheries Through Close Cooperation, FFA Media Release, 17 November 2010. 

19 Atuna (2010) PNA Imposes Tough Measures After tuna Longliners Sham, 1 November 2010.  Available at:  http://www.atuna.com

20 Atuna 2010

21 Anouk Ride (2010) PNA Ministers Decide:  Increase Pacific Islander Crew, Continue High Seas Closures, Prosecute Fishing Vessels Without Observers, FFA Media Release, 26 November 2010.  

22 Anouk Ride (2010) PNA Launches Website – Number One Source on Sustainable Tuna in Pacific Islands.  FFA Media Release, 26 November 2010.  

23 Robert Gillett & Ian Cartwright (2010) The Future of Pacific Island Fisheries, SPC & FFA.  

24 ‘Lion Capital completes acquisition of Bumble Bee Foods’ San Diego Source, 15 December 2010. Available at: http://www.sddt.com