FFA FISHERIES TRADE NEWS Volume 5: Issue 6 November-December 2012

FFA FISHERIES TRADE NEWS  

Volume 5: Issue 6   November-December 2012

By Liam Campling and Elizabeth Havice[1]

CONTENTS

Preferential Trade Agreements

EU Loin Quota set for 2013-2015

Fisheries Management

FFA members disappointed with WCPFC9 outcomes for tropical tunas

Fisheries Development

Fiji longline albacore fishery receives MSC certification

Western Indian Ocean piracy in decline 

Tuna Markets

Trouble in Thailand? 

Pacifical struggles to get MSC-certified skipjack on retailers’ shelves

Tuna Price Trends

Preferential Trade Agreements

EU Loin Quota set for 2013-2015

On 3 December 2012, the European Commission released its new regulation on tariff quotas for imports of selected fishery products, including pre-cooked tuna loins (Council Regulation (EU) No 1220/2012).[2]  For 2013-2015, 22,000 mt of tuna loins (HS 1604 1416) will be permitted to enter EU markets duty free annually.  Previously, the annual quota was set at 15,000 mt at 6% duty.   

In the past 15 years, the EU has become increasingly dependent on imports to meet its consumption of fishery products; the self-sufficiency rate has decreased from 57% to 38%.  The new autonomous tariff quotas have been set at a volume considered sufficient to ensure an adequate supply of raw fishery materials to EU processors and to guarantee the predictability and continuity of imports.  Reforms to the system are also intended to streamline procedures.

In general, the reformed quota system includes a new trigger mechanism for selected fishery products, whereby tariff quotas will automatically increase by 20%, if 80% of the annual tariff quota has been utilized by 30 September in a particular calendar year (Article 3).  However, this automatic increase does not apply to cooked tuna loins. 

In previous years, the quota for tuna loins, which is offered on a ‘first-come, first-served’ basis to any third country, has been fully utilized each year, usually by the end of the first quarter. Thailand has been the major beneficiary. In some years, the quota was even fully filled in the first few days of January as exporters geared fourth quarter production for the opening of the loin quota on 1 January. It is expected that the loin quota will continue to be fully utilised annually. Since 2004, on average, the loin quota has accounted for around 10% of total EU loin imports.[3]  Southeast Asian loin processors will likely continue to be the major beneficiaries of the EU loin quota, as they are otherwise subject to 20.5-24% import duty.  

Fisheries Management

FFA members disappointed with WCPFC9 outcomes for tropical tunas[4] 

The Ninth Annual Session of the Western and Central Pacific Fisheries Commission (WCPFC9) was held in Manila from 2-6 December 2012, with a record attendance of over 600 participants representing coastal states, flag states, industry, regional organisations and NGOs.  Over 80 agenda items were discussed during the intense five-day meeting. 

The development of a new conservation and management measure (CMM) for bigeye and yellowfin was one of the most critical items on the agenda.  In March 2012 at the previous annual session (WCPFC8), members failed to reach consensus on an enhanced management measure to replace the existing measure (CMM 2008-01).  Instead, Commission Members agreed to a temporary extension of CMM 2008-01 until February 28, 2013.  At WCPFC9, members deliberated the Chair’s Draft text for a replacement CMM to manage tropical tunas in the WCPFC Convention Area.  Following the first reading, a small working group (SWG) chaired by Japan was established to continue discussion and provide a revised draft measure.  Following a review in plenary of the SWG’s revised draft, members reached consensus on a new measure on the final afternoon of the meeting. Key features of the new CMM (2012-01) include: 

* CMM 2012-01 now extends to skipjack, as well as bigeye and yellowfin. While skipjack stocks are currently considered to be healthy, these stocks also require careful management to ensure they are maintained at levels that support both sustainability and economic objectives.  

* The objectives of the new measure are to ensure fishing mortality rates do not exceed maximum sustainable yield (MSY) for bigeye, yellowfin and skipjack.  In the case of bigeye, this requires a continued reduction of fishing effort by the purse seine and longline fisheries, which is to be achieved through a ‘step-by-step’ approach staged over the next five years to 2017.   

* The operational aspects of the measure are interim and will only apply for 2013: 

* Purse seine fishing effort in PNA waters will continue to be managed under the Vessel Day Scheme, with effort capped at 2010 levels.  Other coastal states with purse seine fishing effort in excess of 1,000 days annually for 2006-2010 are required to limit effort in their EEZs to 2001-04 average or 2010 levels.  

* A three month FAD ban will continue to apply for purse seine fishing in EEZs and high seas from July-September.  In addition, flags states are required to either extend the FAD ban to a fourth month (October) or place an annual limit of FAD sets to 8/12 of average annual FAD sets for 2001-2011 (8/9 of three-year average from 2009-2011 for small-island developing states (SIDS)).  Commission Members fishing on the high seas are required to submit FAD Management Plans. 

* At WCPFC8, two high seas pockets closed to purse seine fishing from 1 January 2010 were re-opened.  Under CMM 2012-01, the pockets remain open, with Commission members required to take measures to not increase fishing days on the high seas.  The Philippines high seas fishing activity continues to be restricted to 36 traditional/ice-chilled group seine vessels operating only in High Seas Pocket 1. (Note: Under the Third Implementing Arrangement, vessels licenced to fish in PNA waters are not permitted to fish in high seas areas.)

* Purse seine vessels are required to retain all tuna catches on board.

* All purse seine vessels must carry an observer.  Purse seine vessels shall not operate under manual VMS reporting during the FAD closure period and VMS polling frequency shall increase to every 30 minutes. 

* The longline fishery will continue to be subject to catch limits for bigeye allocated by flag, with monthly bigeye catch reporting requirements.  Commission members are also encouraged to take measures not to increase yellowfin catches. 

* A working group will be established to develop a draft multi-year management framework (2014 to 2017) to be considered at TCC9 and WCPFC10.  The multi-year framework will consider management measures to reduce bigeye fishing mortality, zone-based management for the longline fishery in PNA waters, alternative measures to reduce juvenile tuna catches (including a limit on FAD set numbers), special requirements that will address the disproportionate burden of conservation on SIDS, improved MCS measures for monitoring and compliance, bigeye catch attribution in the overlapping area of WCPFC and IATTC, two 2 month FAD closures versus one concurrent four month FAD closure,  options for addressing non-compliance issues, and other issues identified that may contribute to achieving conservation objectives for skipjack, yellowfin and bigeye.

In moving forward, Japan will host the working group to develop a draft of the multi-annual management programme for tropical tuna.

FFA members expressed concern that CMM 2012-01 continues to place a disproportionate burden on SIDS relative to developed-country fleets and that the measure has not demonstrated a positive way forward.  PNA criticised developing fishing nations, who have been the historical fishing players in the region, for failing to make any significant commitments to cut their overfishing of bigeye tuna.[5] NGOs (Pew, WWF and Greenpeace) also expressed disappointment that the Commission was unable to set limits to manage stocks sustainably and warned that they will continue to transform the WCPO tuna fishery through markets and consumers, if the Commission continues to avoid addressing core sustainable fisheries management issues.   

There were however, some substantial successes at the meetings.  Commission Members agreed to ‘flick the switch’, whereby coastal states may choose to have the Commission provide in-zone VMS data for vessels transiting through EEZs from high seas areas.  This is intended to minimise the risk that vessels not licenced to fish in coastal states’ waters may engage in illegal fishing while claiming to only be transiting through the EEZ.  FFA members have been pursuing this arrangement for several years now and expressed strong appreciation to other Commission members for accepting it.

A CMM was passed to prohibit purse seine vessels deliberately setting nets on whale sharks, which means whale sharks are now protected through the entire WCPFC Convention Area (CMM 2012-03). In 2010 the PNA, through the Third Implementing Arrangement which applies to purse seine vessels fishing in PNA waters, introduced a ban on deliberately setting nets on whale sharks and a requirement that whale sharks are to be released alive if accidently circled in nets.  As the new CMM does not include handling and safe release guidelines for whale sharks accidently captured, WCPFC9 noted the need to continue to develop science-based guidelines.  

Once again, revision of the conservation and management measure for South Pacific Albacore (CMM 2010-05) was deferred.  While several FFA members urged the Commission to move toward stronger control of the South Pacific Albacore fishery, a specific proposal was not tabled at WCPFC9.  FFA members undertook to work towards strengthening the existing measure through discussions at TCC9 and to draft a new proposal for WCPFC10.  Consideration will be given to a combination of measures including zone based vessel/effort limits, catch limits (based firstly on biological reference points, then later economic reference points), national allocations to enable rights-based management, and compatible management measures for EEZs and the high seas.  

Fisheries Development

Fiji longline albacore fishery receives MSC certification

On 12 December 2013, Fiji’s domestic albacore longline fishery was awarded Marine Stewardship Council (MSC) certification, following an 18-month long assessment against the MSC’s standard for sustainable and well-managed fisheries. Fiji Tuna Boat Owners Association (FTBOA) member vessels will now be able to market albacore under the MSC’s eco-label.[6]  

The Fiji albacore tuna fishery is the world’s first surface longline albacore fishery to receive MSC certification.  It also marks the third tuna fishery in the Western and Central Pacific Ocean region to be certified. Currently the fishery catches around 4,000 mt of albacore annually which is sold in the Japanese and US fresh sashimi markets and is also canned for the US market.  

The certification is valid for five years, with audits to be conducted annually to ensure the fishery continues to comply with the MSC standard, as well as assessing whether conditions set as part of the certification to improve the management of the fishery have been met.  Eight conditions have been set which need to be achieved by the third annual audit (2015).  These relate to the establishment of target and limit reference points, a harvest strategy and harvest control rules for albacore, management of retained non-target species (sharks), monitoring of turtle and seabird interactions, and the application of sanctions for non-compliance.[7]   

In a continued effort to strengthen the management of the domestic fishery and economic viability of domestic fishing operations, Fiji industry representatives have recently appealed to Fiji’s Ministry of Fisheries to reduce the number of vessels currently licenced from 70 to around 50.  FFA and SPC continue to provide scientific and management advice to the government to assist in decision making.  Currently, domestic vessels are reportedly operating at below break-even point due to the number of vessels licenced being well in excess of Maximum Economic Yield (MEY); the optimum level of effort whereby a fishery is both environmentally and economically sustainable.  Industry has warned the Fiji government that, if licence numbers are not reduced, the fishery will struggle to survive beyond 2013.[8]    

Western Indian Ocean piracy in decline

After several years of piracy affecting shipping and fisheries in the Western Indian Ocean the incidence of attacks on vessels is in decline. The total number of reported attacks increased from 219 in 2010 to 237 in 2011, but those that resulted in successful hijackings decreased from 49 to 28. In 2012, these dropped to only 75 incidents and 14 successful hijackings.[9] It is argued that this rapid decline is a result of ‘increased use of private security guards on ships and better co-ordination between naval patrols in the area’.[10]  As an indication that piracy is less profitable and more risky, a Somali pirate leader announced that he and his associates are quitting the trade after eight lucrative years.[11] This shift opens up the possibility of increased fishing effort in and around the Somali EEZ,[12] which may have the effect of increasing the supply of canning and sashimi grade tuna on the world market.

However, the socio-economic and political drivers of piracy in Somalia remain. The ongoing crisis of the state and extreme poverty are of fundamental importance to understanding piracy’s emergence. In addition, the main initial self-justification for their activities among pirates themselves was to combat brazen illegal foreign fishing in Somali waters. It has been estimated that illegal fishing in Somali waters is worth over $300 million. However, according to one report, the navies policing the pirate infested waters ‘have done nothing whatsoever about the other “pirates” – the illegal fishing operators and the toxic dumpers’.[13] Foreign vessels are reported to be still fishing illegally there, harassing and even murdering local fishers, including off the coast of the relatively stable territory of Puntland. These activities continue to generate sentiments of resentment and anger among local fishers and political leaders.[14]

Tuna Markets

Trouble in Thailand?

The Thai canned tuna industry is currently experiencing a wave of challenges. US consumption of canned tuna declined by 12 percent in 2012, due to a combination of higher retail prices, reduced promotional offers by retail and branded firms, and ongoing concerns among some consumers around mercury content.[15] This appears to have had a disproportionately negative on Thailand – the largest supplier of canned tuna to the US – with total exports dropping by 23 percent.[16] For tuna vessels, sales of whole frozen tuna to the Bangkok market dropped by around 90,000mt. But this shift has not yet translated into substantially reduced raw material prices (see the last Tuna Price Trends figure below). 

As in the US, Thai firms both own major European canned tuna brands and pack product for branded firms and retailers. In November, the Spanish canning industry association, Anfaco, cited the relatively high incidence of rejections of Thai tuna imports by EU customs authorities due to poor heat treatment during processing.[17] The Thai Food Processors’ Association responded by saying that its members were engaged in a ‘thorough review of all food safety [standards] associated with canned tuna sterilization’.[18]  However, in January Anfaco demanded that the EU block the import of Thai canned tuna on health grounds. The European Commissioner for Health and Consumer Policy responded by reaffirming the strict controls that canned tuna imports have to go through before hitting European supermarket shelves.[19]

On the domestic front, the Thai tuna canning industry is facing a potentially very serious problem around the recruitment of labour. Migrant Burmese and other workers are estimated at between 50 and 60 percent of all tuna cannery employees in Thailand.[20] However, with a semblance of peace and partial democratisation emerging in Burma (Myanmar) combined with a tightening of policies on migrant workers by the Thai government, there are concerns that one of the secret’s to Thailand’s competitive advantage – cheap, highly productive migrant labour – may be eroded. Some commentators argue that limited employment opportunities in Burma and relatively higher wages in Thailand mean that workers will stay.[21] Presumably anticipating the potential departure of Burmese workers, the National Fisheries Association of Thailand is lobbying its government to allow entry for 50,000 migrant workers from Bangladesh.[22]

Continuing on the question of labour in the Thai canning industry, a report by an NGO from Finland (Finnwatch) published in January 2013 alleges worker abuses, especially against migrants.[23] In interviews with migrant and other workers at Thai Union and Unicord, Finnwatch found that migrants had to pay very high recruitment fees, that recruitment agencies or employers kept the original copies of work permits limiting worker mobility, employment contracts were not always provided, and that wages were largely kept to the legal minimum. Importantly in terms of measures like the UK Ethical Trading Initiative that sets minimum labour standards for suppliers to UK supermarkets, Finnwatch found one worker at a Thai Union factory alleging that ‘his employer did not accept forming [trade unions]. ... a worker planning to organize the workers would be fired immediately.’ In formal responses to the Finnwatch report, both Thai Union and Unicord vigorously deny most of the allegations and state that they will investigate issues such as the allegation that factory managers block trade union organising.[24]

Despite this wave of challenges, Thai Union was upgraded by TRIS – the Thai rating agency – from A+ to AA- in January, indicating that it is perceived as an ever safer bet for investors. TRIS stated that Thai Union ‘will continue to maintain its competitive advantages through economies of scale and production efficiency. ... [Its] portfolio of highly recognizable brands will help ... maintain its profitability despite the fluctuations in raw material costs.’[25]  Currently processing almost one-fifth of the world’s canned tuna at its factories across eight countries,[26] Thai Union’s ascendency to become the world’s largest canned tuna firm in 2010 looks unassailable, despite the troubles it might face in its home country. 

Pacifical struggles to get MSC-certified skipjack on retailers’ shelves

Twelve months on from receiving MSC certification, free school skipjack from PNA’s purse seine fishery is yet to hit retailers’ shelves.  In a recent push to secure MSC-compliant skipjack, Pacifical (a partnership established between the Parties to the Nauru Agreement and Sustunable (Denmark) to handle the marketing of PNA’s MSC skipjack), have lobbied leading retailers to place pressure on purse seiners operating in PNA waters to supply MSC-compliant skipjack.  Letters and public media releases aimed at boatowners have been released by Spar (Austria), Anova Seafoods (Netherlands), Coop (Switzerland), Dansk (Denmark), Coles (Australia) and Pick n’ Pay (South Africa) expressing disappointment at the lack of motivation of boat owners to fish sustainably and cooperate in the Chain of Custody certification process to supply MSC skipjack (as well as processors).[27]  

In 2011, the total skipjack catch of non-associated FAD sets (free-swimming) in PNA waters was over 400,000 mt.[28]  This indicates that availability of supply is not the issue; rather a reluctance on the part of industry to participate in PNA’s MSC programme. This reluctance may stem from vessel owners’ scepticism regarding the availability of price premiums for MSC-certified skipjack, considering the likely additional costs in complying with the MSC protocols.[29] PNA is continuing to conduct trials, as it works its way towards obtaining Chain of Custody certification, with the hope that MSC-labelled PNA skipjack will be available on retailers’ shelves in 2013. 

1 Prepared for the FFA Fisheries Development Division by Liam Campling, Consultant Fisheries Trade Analyst, FFA and School of Business and Management, Queen Mary, University of London and Elizabeth Havice, University of North Carolina at Chapel Hill. 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 European Union 2012, Council Regulation (EU) on trade related measures to guarantee the supply of certain fishery products to Union processors from 2013 to 2015, amending Regulations (EC) No 104/2000 and (EU) No 1344/2011 (No 1220/2012), Official Journal of the European Union, 3 December 2012.  Available at: http://www.eur_lex.europa.eu

3 Pers. comm., industry representative, January 2013. 

4 At the time of writing, the final WCPFC9 summary report and final CMM texts were not available; based on reports from various Commission Member delegation representatives. 

5 PNA 2012, ‘Big Fishing Nations Fail to Cut Their Overfishing, Says PNA’, PNA News, 6 December 2012.  Available at:  http://www.pnatuna.com

6 MSC 2012, ‘Fiji Albacore Gains MSC Certification’, 12 December 2012.  MSC press release. Available at: http://www.msc.org

7 Intertek Moody Marine 2012, MSC Assessment Report for Fiji Albacore Tuna Longline Fishery, November 2012.  Available at: http://www.msc.org

8 Fiji Sun 2012, ‘Plea to look into cutting fishing licences’, 30 December 2012.  Available at: http://www.fijisun.com.fj

9 International Maritime Bureau 2012, ‘Piracy attacks in East and West Africa dominate world report’, 19 January, IMB Piracy Reporting Centre. Available at: http://www.icc-ccs.org.uk/news/711-piracy-attacks-in-east-and-west-afric... IMB 2013, ‘Piracy & Armed Robbery News & Figures’ (updated on 16 Jan 2013), IMB Piracy Reporting Centre. Available at: http://www.icc-ccs.org/piracy-reporting-centre/piracynewsafigures/275-pi...

10 BBC News, ‘Somali pirate 'Big Mouth' quits’, 10 January 2013. Available at: http://www.bbc.co.uk/news/world-africa-20973886

11 BBC News, ‘Somali pirate 'Big Mouth' quits’, 10 January 2013. Available at: http://www.bbc.co.uk/news/world-africa-20973886

12 IRIN 2012, ‘Somalia: Potential goldmine for fishermen as piracy declines’, IRIN humanitarian news and analysis, 14 December. Available at: http://www.irinnews.org/report/97049/SOMALIA-Potential-goldmine-for-fish...

13 Thalif Deen 2012, ‘Somalia’s Rich Maritime Resources Being Plundered, Report Says’, IPS, 21 February. Available at: http://www.ipsnews.net/2012/02/somalias-rich-maritime-resources-being-pl...

14 Suzanne Dershowitz and James Paul 2012, ‘Fishermen, Pirates and Naval Squadrons: The Security Council and the Battle over Somalia’s Coastal Seas’, Global Policy Forum. Available at: http://www.globalpolicy.org/images/pdfs/Security_Council/GPF_Somalia_ill... Garowe Online 2012, ‘Somalia: “Illegal foreign fishing trawlers in Puntland waters” says Mayor of Bayla’, 21 May. Available at: http://www.garoweonline.com/artman2/publish/Somalia_27/Somalia_Illegal_f...

15 ‘CEO: Lack Of Tuna Promotions Contributed To Drop In US Sales’, Atuna, 16 January 2013. Available at: http://www.atuna.com

16 ‘Thailand Suffers From US Tuna Crisis, Exports Drop Dramatically’, Atuna, 14 January 2013. Available at: http://www.atuna.com

17 ‘Canned tuna: health and labour irregularities reported in Thailand and the Philippines’, FIS, 5 November 2012. Available at: http://www.fis.com/fis/worldnews/worldnews.asp?l=e&country=0&special=&mo...

18 ‘Anfaco Wants EU Market Shut For Thai Canned Tuna’, Atuna, 14 January 2013. Available at: http://www.atuna.com

19 ‘EU Health Commissioner Comments On Canned Tuna From Thailand’, Atuna, 7 January 2013. Available at: http://www.atuna.com

20 Amanda Hamilton, Antony Lewis, Mike McCoy, Elizabeth Havice and Liam Campling 2011.  Market and Industry Dynamics in the Global Tuna Supply Chain, Honiara: Pacific Islands Forum Fisheries Agency.  Available at: http://www.ffa.int/node/567

21 ‘Higher wages will keep Burmese migrants in Thailand, say researchers’, Bangkok Post, 30 January 2013. Available at: http://www.mizzima.com/news/regional/8841-higher-wages-will-keep-burmese...

22 ‘Thailand Wants To Attract 50,000 Foreign Workers For Seafood Sector’, Atuna, 28 January 2013. Available at: http://www.atuna.com

23 Sonja Vartiala, Henri Purje, Andy Hall, Katariina Vihersalo and Anu Aukeala 2013, Cheap Has a High Price: Responsibility problems relating to international private label products and food production in Thailand (Executive summary), Helsinki: Finnwatch. Available at: http://www.finnwatch.org/uutiset/80-serious-human-rights-violations-behi...

24 See Vartiala et al. 2013; Unicord Statement 29 January 2013. Available at: http://www.finnwatch.org/images/Unicord_Plc.pdf ‘Thai Union Refutes Finnwatch Accusation In Reaction To Customers’, Atuna, 5 February 2013. Available at: http://www.atuna.com

25 TRIS Press Release No. 5/ 2013, ‘TRIS Rating Upgrades Company & Issue Ratings of "TUF" to "AA-" from "A+", with "Stable" Outlook’, 8 January. Available at: http://www.trisrating.com/index.php?option=com_content&view=article&id=2... TUF Press Release 2013, ‘TUF celebrates new Tris Rating Company upgrade from A+ to AA-’, 9 January 2013. Available at: http://www.thaiuniongroup.com/en/newsroom.ashx

26 TRIS 2013

27 Atuna 2012, Multiple press releases, October-December 2012.  Available at: http://www.atuna.com

28 Antony Lewis & Ian Scott 2012, Surveillance Report – PNA Western & Central Pacific Skipjack Tuna Unassociated Purse Seine Fishery, Intertek Moody Marine, December 2012.  Available at: http://www.msc.org 

29 Author’s own analysis