Report on the Implementation of the derogation to ... - Trade Websites

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
Provided MSC activities continue to be well resourced, and well coordinated across the region, both
within EEZs and on the high seas, according to agreed strategies, any impacts of derogation on IUU
fishing should be limited.
5.7.3 SPS compliance
The advent of derogation from RoO has so far had little or no direct impact on PNG processors, with
adequate supplies of originating fish to meet prior and current needs (i.e. catches in archipelagic
waters have been close to 100,000 mt in recent years). To date, the requirement for SPS compliance
of this supply has not been a constraint, with PNG as CA for PNG-flag vessels, and with an MoU
existing with Philippines to certify chartered Philippine vessels which catch originating fish
(archipelagic waters). Despite this, processors have chosen to source a very limited amount of fish
under global sourcing since the derogation came into effect for reasons of convenience and
company sourcing policy. In the short to medium term (next five years), as additional processing
plants come on stream as expected (see Section 3.2.2), global sourcing will need to be exercised to a
much greater degree, for new plants to acquire sufficient SPS-compliant raw material for processing
and export to the EU.
In terms of sourcing SPS-compliant raw material, the issue may not be that the number of vessels
with SPS certification is inadequate, given that in 2010, over 750,000 mt of WCPO fish was likely
caught by vessels with SPS certificates (Table 5.7). Rather, the issue may be the availability of SPS
compliant fish to PNG processors. Global sourcing notwithstanding, there is no incentive for fleets
to offload to PNG plants (existing or potential plants) if those vessels/fleets have no links to PNG
onshore investments (e.g. most vessels fishing under bilateral access agreement or unless better
prices are offered for raw material). Even where vessels do have links to onshore plants, significant
quantities of fish are transhipped and exported, rather than offloaded, which is consistent with the
conditions of existing agreements. 235
PNG plants are unlikely to offer higher prices than BKK, even with proximity-related reduced freight
costs, given the tight margins pertaining to PNG-based processing, as a result of high operational
costs. It is also likely that most vessels have long standing supply arrangements with traders,
processors and domestic plants (e.g. Japan, Korea, Philippines, Taiwan) and it seems certain that
PNG will need to consider arrangements to guarantee supply to proposed future plants (e.g.
compulsory offloading a portion of catch by licensed vessels, in combination with preference given
to licensing SPS-compliant vessels to fish in PNG waters). The present requirements for vessels
fishing under existing arrangements to supply fish to onshore plants may need to be tightened up or
enforced. These options are further discussed in Section 6.3.2.
A second SPS-related issue for PNG relates to the status of its own Competent Authority. Issues with
the CA itself, as well as certification of vessels and the plants, were identified by the FVO in 2007 and
2008, which was further examined in 2009. While best efforts have been made to rectify the
deficiencies identified, it is still not certain if full compliance has been achieved. There has been a
recent increase in rapid alerts for EU tuna imports from PNG which will raise renewed questions
about the compliance of vessels/plants and the CA itself. PNG cannot afford to be de-listed, with the
EU the primary market for PNG canned tuna, and increasingly cooked loin exports.
In future, the work load and expectations of the CA associated with increasing number of plants and
unloading vessels could increase substantially, as these new investments will primarily focus on the
235 The majority in the case of one plant.
Linpico s.a.r.l. Page 121