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

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
Italy), largely since the types of canned tuna products currently processed in PNG (i.e. basic skipjack
in vegetable oil or brine in 180 g packs) do not interact substantially with the types produced within
Italy and Spain for their major markets of Italy and Spain (i.e. high quality yellowfin in olive oil in
small packs). Given that Philippines-based processors are the principal source of investment in PNG,
and that these companies have not penetrated the Italian or Spanish markets in their three decades
of operations in the Philippines either, it is highly unlikely that this will change in the far more
challenging business environment of PNG.
It seems that the most important immediate strategic concern of EU-based processors is that global
sourcing will be treated as a precedent rather than as an exemption and be offered to other trading
partners, such as in free trade agreement negotiations with major canned tuna processors in ASEAN.
In the medium-term, without the purchase of a major brand, PNG’s lack of direct penetration of
Italian and Spanish markets is very unlikely to change. If there are plans for intra-EU growth by
Spanish non-branded exporters, they may deepen interactions with PNG exports, possibly in the
French market. However, Italy- and Spain-based processors may develop a symbiosis with PNG
through the increased import of loins.
Third countries and their EU canned tuna markets
Thailand, Philippines, Ecuador, Mauritius and Seychelles have consistently been leading third country
suppliers of canned tuna and cooked loins to the EU market throughout the last decade. To date,
PNG’s RoO derogation has not had any direct impact on third country exports to the extra-EU
market, given the derogation has barely been utilised. Similarly, the derogation cannot explain shifts
in PNG’s share of EU markets for canned tuna and tuna loins. Neither the data for relative PNG
share of the EU canned tuna market, nor that for the loin market show any discernable trends in the
‘post-derogation’ period (March 2008-2011).
For extra-EU imports of canned tuna, the top-5 third countries have dominated the market for the 7
year period running up to the derogation (2001-06) and afterwards. PNG has remained a relatively
insignificant player throughout. In fact, PNG’s largest recorded volume share of the extra-EU canned
tuna import market was before the derogation (i.e. 4.5%. in 2005). The market share of the leading
third country supplier in that year (Ecuador) was 3.4 times higher than PNG’s. For PNG volume share
of the extra-EU import market for tuna loins there was a minor increase in the post-derogation
period when it hit a new height of 2.4% in 2010, but there is no discernable trend in the data. This
share is, however, insignificant compared to that of the top-3 leading third country suppliers in 2010
(i.e. Ecuador with 35.6%, Mauritius with 12.0%, and Thailand with 11.6%).
Raw material diversion of tuna catch in the WCPO from third country processors relying on this
supply to PNG-based processors is one potential impact on third country suppliers identified for the
medium term. By 2016, PNG processors may require an additional 120,000 mt of raw material. The
main third countries that will likely be impacted will be processors in Thailand, Philippines, Vietnam
and China. There are no likely raw material diversion impacts on EU-based processors, or other IEPA
(i.e. Indian Ocean based processors) and GSP+ (i.e. Latin American) third countries.
Trade diversion of finished product, where increased PNG exports of duty free canned tuna and tuna
loins to the EU market will displace market share of existing exporters, has been identified as
another potential impact on third country tuna processors.
If the EU market remains relatively stagnant, by 2016 PNG could capture up to 14.0% share of the
extra-EU import market for canned tuna (from 4.3% in 2010), potentially exporting around 56,700
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