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

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
The primary motivation behind PNG Government trying to establish an ‘economic cluster’ or special
economic zone in Madang (PMIA) is to achieve greater economies of scale. Similarly, as new
processing developments are constructed and commence operations in Malahang, Lae, they will also
benefit from the same. The tuna processing industry may derive positive externalities from
improvements in areas such as freight, telecommunications etc. through developments realised in
other export-orientated industries in PNG (e.g. new liquid natural gas (LNG) project).
However, the chances of PNG becoming a ‘tuna processing hub’ of comparable magnitude to
Thailand remains very unlikely in the short-medium term. Currently, Thailand processes over
700,000 mt/year and has a daily maximum processing capacity of 3,000 mt/day (current production
~ 2,500 mt/day). 54 In comparison, PNG currently processes around 70,000 mt (280 mt/day). If PNG
were to realise its goal of processing over 1,000 mt/day, the canned tuna processing industry would
grow to be comparable in size with the Philippines’ industry. 55
A number of factors (some of which PNG lacks) underpinned Thailand’s development as the world’s
leading producer of canned tuna – a large export orientated-economy; an already well-established
food processing industry with supporting industries (e.g. can making, packaging) to help build
economies of scale; excellent shipping logistics; a highly productive labour force; strategically
located to source raw materials from the Pacific and Indian Oceans to ensure continuing of supply;
financing available for raw material purchases/processing activities; strategic ‘co-packing’
relationships with key US and EU firms; a ‘pro-business’ Government; and diversified production
bases (i.e. other seafood processing lines in addition to tuna). 56
3.3 PNG Tuna Trade
3.3.1 Exports 57
Total Exports
Total PNG tuna exports (for all gear types) fluctuated between 65,000-74,000 mt annually from
2006-2010 (Table 3.9). Exports of frozen tuna, the majority of which is whole round frozen tuna, is
the largest export category, and accounted for around 50% of total exports in 2010 (~32,000 mt). 58
This fish is destined for processing in plants elsewhere, notably Thailand and the Philippines.
Canned tuna and cooked loins (HS 1604 products) have collectively accounted for around 30-43% of
total exports. Over the past five years, cooked loin exports have consistently ranged between
10,000-12,000 mt. Canned tuna exports have ranged between 12,000-17,000 mt, with no firm
trends.
The EU and the US are PNG’s largest export markets for canned tuna and cooked loins (HS 1604),
together accounting for 80% of total exports.
54 Hamilton et al. 2011.
55 Pokajam 2011.
56 Hamilton et al. 2011.
57 Market sales volumes reflect finished product weights.
58 This does not include fish transhipped in PNG ports by large chartered and foreign vessels, with the former amounting to
around 50,000 mt in most recent years.
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