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

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
processors were offering higher prices than the main canning-grade tuna market of Bangkok, then
there would be no incentive to do so.
Most vessels operating in the WCPO have long standing-supply arrangements (including long-term
supply contracts and ‘gentlemen’-type arrangements) or, due to vertical integration, commitments
to supply ‘home’ plants (i.e. Japanese, Korean, Philippine and Spanish-owned boats). The
commercial reality of industrial organisation and/or financial and legal interconnections in the tuna
trade in the WCPO (and elsewhere) places a significant constraint on the availability of fish to PNGbased
processors. This reality into taken into consideration in the following estimates of possible raw
material diversion generated by increased tuna processing in PNG in 2016.
In short, the trade diversion of an additional 120,000 mt of whole round tuna caught in the WCPO is
contingent upon three main factors:
1. Purse seine vessel licensing policy strategies deployed by the PNG government (and
potentially other PACP states) to divert raw material to onshore processors (as noted earlier
in this section, catch currently taken by the PNG fleet and foreign vessels in PNG waters
under bilateral access is surplus to the projected requirements for additional raw material);
2. Vessel vertical integration or supply contracts with foreign processors and/or trading
companies; and
3. Vessel compliance with EU SPS measures and the EU IUU Regulation.
If PNG and other PACP governments take the political decision to adopt new vessel licensing
strategies designed to divert tuna catch to domestically-based processors, the following seven fleets
have been identified as potential sources of raw material diversion 327 (see Table 6.16 for information
on the full range of purse seine fleets and the processing destination of their catches in 2010):
1. WCPO catch by the PNG fleet
328 of purse seiners totalled 205,837 mt in 2010. This includes
103,000 mt taken by Vanuatu-flag vessels in the fleet (13), 11,000 mt by Taiwan-flag vessels
and 7,500 mt by Chinese vessels. Aside from the 60,000 mt that was processed domestically,
around 75,000 mt was sold to the Philippines and possibly around 75,000 mt to Thailand. 329
Each of these is a clear possibility for diversion of a large amount of raw material to PNG
processors.
2. South Korean catch in the WCPO totalled 277,312 mt in 2010. The 120,000 mt processed in
South Korea is highly unlikely to be diverted because the largest fishing firms – Dongwon
330
Industry and Sajo/Oyang – are vertically integrated into processing in Korea. However, of
the estimated 90,000 mt sold to processors in Thailand, a proportion could be diverted to
PNG.
327 Other fleets have been excluded as realistic possibilities for raw material diversion for a wide diversity of
reasons, including: ongoing lack of vessel compliance with EU SPS measures; vertically-integrated vessels that
are locked into supplying ‘home’ processors (e.g. Korea or Philippine catch sent ‘home’ to Korea and the
Philippines); and specific licensing arrangements with other PACP states, such as joint-venture agreements.
328 The PNG fleet includes PNG flag vessels and locally-based foreign/chartered vessels.
329 Note that Thailand does not have boats operating in the WCPO and canneries based there are largely
reliant on frozen tuna imported from non-Thailand fleets active in the WCPO and other oceans (mainly the
Western Indian Ocean). In 2010, the Thai purse seine fleet consisted of four vessels operating in the Indian
Ocean, but these have since been re-flagged and fish in the Atlantic Ocean to supply catch to a Ghana-based
plant. Hamilton et al. 2011; pers. comm., industry representative, October 2011.
330 Hamilton et al. 2011.
Linpico s.a.r.l. Page 162