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

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
coupled with global sourcing, makes onshore investment in PNG a more attractive prospect, given
PNG’s competitive constraints relative to other lower cost sites of production also supplying the EU
market (i.e. Thailand, Philippines). Attracting more investment in onshore processing facilities will
enable PNG to achieve greater economies of scale and improve its position relative to other
competitors, particularly in the event that PNG’s margin of preference erodes in future. In doing so,
development benefits will be accrued in terms of additional employment and income generation.
However, rapid large-scale expansion of PNG’s processing sector of the magnitude which has been
widely cited in various public fora, by both PNG Government and EU industry alike, needs to be
tempered with reality. Given PNG’s highly difficult operating environment and the overcapacity
which already exists globally in the canned tuna processing sector, the likelihood of achieving this
level of development (e.g. in excess of 350,000 mt throughput annually) is negligible.
Fishing vessel and processing plant compliance with EU SPS and IUU Fishing Regulations should not
be a major constraint to PNG’s processing facilities sourcing adequate raw material supplies. Rather,
the fact that many vessels operating in the region have long standing supply arrangements with
trading companies, domestic plants and other non-PNG based processors could prove to be the
most serious impediment to sourcing raw materials, irrespective of global sourcing. To combat this
issue, PNG will need to consider implementing arrangements which guarantee supply to proposed
future plants, such as compulsory offloading being incorporated into vessel licencing conditions.
Should tuna stocks in the WCPO remain in their current unexploited state through effective
conservation and management at the regional, sub-regional and national levels, the RoO derogation
should not negatively impact on the health of region’s tuna resources. However, at present, there is
considerable room for improvement, particularly on the part of PNG, to ensure fishing effort level
restrictions are fully respected under current fisheries management systems.
The impacts of global sourcing on the EU fishing and processing industries are likely to be minimal -
the most major threat being if PNG’s RoO derogation serves as a precedent and is afforded to other
competing countries with tuna processing interests through EU preferential trade agreements
(particularly ASEAN countries). Instead, assuming catches with the WCPO remain stable, the main
impacts will be felt by processors who also rely on raw materials from WCPO waters and will
compete with PNG for supply (i.e. Thailand, Philippines, and, to a lesser extent Vietnam and China).
Even if export volumes from PNG to the EU increase to projected levels, PNG will remain a minor
market player, with little likelihood of destabilising the EU canned tuna market.
While not directly attributable to global sourcing, negative social and environmental issues
associated with tuna processing developments need to be more accurately quantified and in turn,
carefully managed to ensure they do not magnify as new processing plants come onstream.
Widespread global public attention (both positive and negative) concerning global sourcing and the
development of PNG’s tuna processing sector has already served to draw attention to associated
social and environmental risks, which both processing companies and PNG Government will need to
address.
Linpico s.a.r.l. Page 172