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

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
b) Trade diversion
Given the dynamics of competition for the extra-EU import market, the complexity and flux of world
economic conditions, and the range of commercial and political struggles over resource and market
access, it is deemed unrealistic to project trade diversion scenarios for particular exporting
countries. 332 It is possible though to combine historical trends of market share by EU market with a
qualitative understanding of the position of third countries in the EU-centred value chain to arrive at
some considered possibilities of which will be most likely to be effected by medium term projections
for PNG exports.
Two growth scenarios are assumed for total extra-EU import volumes of canned tuna, and one
growth scenario for tuna loins. For each growth scenario PNG market share is calculated according
to the projected export volumes to the EU detailed in Table 6.11. These projections form the basis
for assessing the impacts of global sourcing on the three main categories of third countries identified
earlier (i.e. African IEPA, Latin American GSP+ and Southeast Asian GSP). No attempt has been made
to predict future tuna prices, so no account is provided of changing values or value shares of canned
tuna or loin markets.
Growth scenario for extra-EU import volumes of canned tuna I: relative market stagnation
Given the unexpected decline in extra-EU27 canned tuna imports in 2009-10, a scenario of relative
stagnation in this market has been assumed. To do so a five-year average has been taken for extra-
EU imports (2006-2010), which includes the highest ever volume in recorded imports (i.e. 2007) and
333
the lowest since 2002 (i.e. 2010). Based on these assumptions the projected extra-EU import
volume in 2016 is around 404,400 mt. Based upon projected PNG exports to the EU in 2016 of
around 56,705 mt, PNG could capture up to 14.0% share of a relatively stagnant extra-EU import
market for canned tuna (from 4.3% in 2010).
Growth scenario for extra-EU import volumes of canned tuna II: mild market growth
Alternatively, it might be assumed that the extra-EU canned tuna import market returns to growth
(perhaps spurred on by austerity-driven consumption of cheap, healthy animal protein, by market
promotions and/ or by newly emerging canned tuna markets such as Poland). In this scenario we
take the growth rate for the last seven years before the 2009-2010 drop off in imports (i.e. a market
expansion of 1.21 times between 2002 and 2008). When applied to extra-EU import volumes in 2010
we arrive at a higher estimate for 2016 of around 448,527 mt. Based upon projected PNG exports to
the EU in 2016 of around 56,705 mt, PNG could capture up to 12.6% share of a mildly expanding
extra-EU import market for canned tuna.
334
Under both of these scenarios, potential PNG share of the extra-EU canned tuna import market is
significantly less than that of the two largest third country suppliers in recent years (i.e. Thailand and
Ecuador (see Table 6.14)). In light of this finding, the consultants concur with Oceanic
Développement (2010) that the notion that the EU market would be ‘flooded by imports from PNG
332 These variables are slightly more stable in the intra-EU market due to its domination by one location of
production (i.e. Spain).
333 See Table 6.6 for the data used here.
334 Of course, the extra-EU import market may grow far more rapidly than expected. For example, production
by Spain-based processors might contract after its recent increases and/or Spanish processors may offshore
more production to Latin America. Alternatively, austerity-driven consumption and/ or newly emerging canned
tuna markets may drive absolute market expansion. We are using two conservative growth scenarios because
projecting more optimistic scenarios entails a complex interplay of variables that is beyond the scope of this
report.
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