Ads by Google Ads by Google

US Congress informed of challenges faced by Am Samoa’s canneries

The US Government Accountability Office has informed the US Congress regarding the challenges faced by the canneries in American Samoa, which includes high labor costs, decreased fishing access and erosion of preferential trade status.

The GAO report released Dec. 2 to US congressional members covers two alternatives for raising minimum wages in American Samoa to keep pace with the cost of living and reach the federal level of $7.25 per hour. (See Samoa News edition Dec. 6 for details.)

In the spring of 2016, the GAO report says representatives from the two local tuna canneries — StarKist Co., and Tri Marine International — expressed concerns about challenges related to the scheduled minimum wage increases, decreased access to fishing grounds in the Pacific, and potential erosion of the territory’s preferential trade status.

According to Tri Marine representatives, every $0.10 increase in the minimum wage will result in about $150,000 to $200,000 in additional annual costs, the GAO said. 

For StarKist, company representatives told GAO that they had begun to explore using other manufacturing locations to lower labor costs, including shifting some production to an affiliate plant in Senegal.

StarKist also reported exploring options for moving fish-cleaning processes to a foreign country and establishing packaging facilities in the mainland United States, similar to the approach used by competitors, said GAO.

StarKist and Tri Marine representatives cited access to fisheries as a benefit of operating in American Samoa, but both companies have raised concerns with the U.S. government regarding the impact of regulations of Pacific tuna fisheries on the companies’ access to fishing grounds, GAO told the US Congress.

In 2014, the National Oceanic and Atmospheric Administration (NOAA) issued a rule reducing the number of fishing days for the US purse seine tuna fleet in the U.S. exclusive economic zone and the high seas, to comply with a Western and Central Pacific Fisheries Commission’s Conservation and Management Measure.

Under the most recent South Pacific Tuna Treaty, the US fleet retained access to fishing grounds in the Western and Central Pacific region, although the Pacific island nation of Kiribati limited the U.S. fleet’s fishing in its waters to 300 days, according to Tri Marine.

Tri Marine indicated that these two factors — NOAA’s rule reducing fishing days and the limited access to Kiribati fishing grounds — dramatically reduced access to fishing grounds for US purse seine boats operating out of American Samoa.

StarKist and Tri Marine representatives also cited tariff-free access to the US market as an advantage of operating in American Samoa, but expressed concern that changes in the trade status of other tuna-exporting countries may erode American Samoa’s preferential trade status, said GAO.

For example, they cited the possibility that the proposed Trans-Pacific Partnership (TPP) agreement, which includes one tuna-producing country, Vietnam, would result in additional competition to the American Samoa tuna industry if Vietnam is granted tariff-free access to the US market.

(Samoa News should point out that US news organizations have reported that President-elect Donald Trump opposes the TPP.)

According to the US Trade Representative, the TPP is a proposed free trade agreement that aims to liberalize trade in goods and services and remove barriers to foreign investment among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States.

The agreement, in its current form, would reduce US tariffs on tuna in airtight containers from Vietnam to zero over a 4-year period, said GAO, adding that while the participating countries have signed the agreement, it has not yet been ratified. US ratification requires congressional approval.

According to the U.S. Trade Representative, free trade agreement negotiations with Thailand, the largest Asian tuna producer, were suspended in 2006, and negotiations aimed at arriving at a free trade agreement with Ecuador, the largest tuna producer in the Americas, have also been suspended.

(Samoa News notes that StarKist has a plant in Ecuador.)

The GAO report also informed Congress that because of the challenges faced by the local canneries, StarKist suspended production for one-week in October — its second short-term closure this year — owing to fish-supply shortages associated with fisheries regulations and limited freezer capacity.

Additionally, Tri Marine announced it would indefinitely suspend canning operations at its American Samoa facility on December 11, 2016, stating that the challenging economics of canning tuna in American Samoa, combined with external factors, made operating its plant in the territory economically unsustainable.

The indefinite closure has been delayed to Dec. 16. (See Samoa News edition yesterday.)