The EPA: A return to colonisation of the Pacific
By Online Editor
4:48 pm GMT+12, 14/12/2012, Fiji
By Dr. Transform Aqorau
& Maurice Brownjohn, www.islandsbusiness.com
One issue with negotiating multilateral agreements is that whilst negotiating
as a bloc has its advantages because it achieves economies of scale which would
otherwise not be there for Smaller Islands States, it also has the disadvantage
of having to compromise often at the lowest common denominator. This is because
of the need to accommodate the diverse interests of everyone.
This has been the case with the Fisheries Chapter of the EPA (Economic
Partnership with the Europeans). It is agreed that fisheries products if not
being the only goods that can be traded, are at least, the only one of any
value that is shared amongst PACPs (Pacific group of the ACP).
The question PACPs should be asking is what are the benefits to the region of
an EPA and what is the cost to the region of such a deal?
If there are no tangible benefits, then there is no obligation nor shame in
abandoning the EPA negotiations. It is better not to have a trade agreement,
than one that provides partial or even negative benefits to the region.
One might consider this is the case with the Fisheries Chapter of the EPA which
is still being negotiated after a decade. If we are not careful, PACPs might
have a trade agreement that provides global sourcing for fisheries products,
but end up losing sovereign rights, control of our resource, and bearing
disproportionate costs of compliance with a raft of tariff and non tariff trade
barriers. In the end, we have market access that has no real value.
As small nations, most PACPs are just unable to meet the EU market access
requirements. With costs of compliance typically exceeding individual country’s
GDPs, the commercial returns of dealing with the EU are just not there.
The Fisheries Chapter discussions are hovering dangerously over this
possibility. PACPs must look at the bottom line; what are the true benefits and
what concessions have been or are being offered to the EU? Otherwise, PACPs
might be given market access, having surrendered their resource and rights,
only to find they cannot access the market anyway!
The IEPA offers duty free access (24%) and global sourcing for exports under
Chapter 16. The global sourcing allows the supply from any flag of raw frozen
fish (Chapter 3), to be processed in-situ and exported under Chapter 16.
However, whilst many foreign fleets are EU compliant, most Pacific Islands
fleets are deemed IUU by the EU, have no Competent Authority (CA), and
therefore not eligible to supply PIC processors and avail themselves of the
concessions. Only Fiji and PNG have CA and are signatory to the IEPA and thus
their processors are recognised by the EU. Solomon Islands has a CA and trades
under “Everything But Arms” (EBA) provisions.
The IEPA itself offers the region 24% tariff concession and a base on which to
expand to a fuller EPA. It is instructive to note that no fishing concessions
to the EU were involved in what is a trade deal.
In the haste to get global sourcing for HS0304/0305 products in the list of
products eligible for duty concessions in the EPA, some PACPs are ready to
grant fishing concessions to the EU and allow to limit, if not to reopen the
IEPA concessions, for a significantly lower tariff concession.
Meanwhile, it is the same EU that refuses to apply PACP fisheries management arrangements and national laws to EU vessels fishing in PACP waters! EU agrees to just “consider” commission measures, discredit our science and block every conservation measure proposed in Western and Central Pacific Fisheries Commission (WCPFC) meetings. Is this a deliberate patronising attitude, cultural differences or just a misunderstanding as the result of translations?
It is intriguing that some PACPs are prepared to sacrifice fishing
opportunities in exchange for global access for HS 0304/0305, for clearly
overstated benefits. Even the EU has questioned the PACP position when a study
commissioned by PIFS shows that trade in HS0304/0205 is marginal at best.
Fundamentally, it is the EU’s approach to tuna fisheries in the WCPO (Western
and Central Pacific Ocean) that is of concern. In their approach to the
Fisheries Chapter, the EU openly challenges PACP-inspired regional fishery
partnership agreements. The two that have a direct influence on the tuna
fishery are the Palau Arrangement and the Nauru Agreement.
The EU challenges the sovereign rights of PACPs to manage their own EEZs and
tuna resources in favour of a wider accord “where any fisheries agreement
between the EU and PACP State(s) shall be concluded taking into account the
conservation and management measures of the WCPFC)”.
This is an indirect way of saying EU knows best and shall decide for the
region. Yet looking at other RFMOs (Regional Fisheries Management
Organisations) where they are active, it does not generate confidence.
The EU’s Fishery Partnership Agreements (FPAs) in the region evidently
undermine regional management measures advocated by PACPs. The EU has pursued a
negative conservation agenda of anti-selective fishing (i.e. against mesh size
increases, pro-FAD despite the associated high mortality of bigeye and
juveniles and against closed areas) and it has constantly questioned the PACPs’
Implementation Arrangements, in particular those developed by the PNA. PNA’s
focus lies in strengthening incomes generated from domestication and fishing
Hard limits under the VDS have seen higher and steady prices, resulting in huge
financial dividends for the eight PNA parties and Tokelau.
Regional income generated from annual access now stands at over US$200 million
in a US$3 billion fishery and expected to rise 10% in 2013. This income
provides substantial financing to national treasuries. Paradoxically, the
returns to the region pale in comparison to the growth in industry profits.
This represents a threat to EU/Fisheries Partnership Agreement (FPA) process;
returns offered by the EU fall short of the region’s benchmark for access.
Support for the PNA Vessel Days Scheme (VDS) has meant that the EU has been put
on the back foot. It is clearly resorting to other tactics to enforce global
domination through their FPAs.
The EU now seeks a 5% share of fishing opportunities in the PACP EEZs, thereby
spreading its negative conservation agenda, and potentially using its clout
within the EPA to gain access to more Pacific Islands resources, and undermine
This is after it has successfully contributed to the demise of stocks in other
oceans including its more recent unregulated longline growth in our southern
oceans. What are the opportunities and core issues? A study done for the PIFS
(Pacific Islands Forum Secretariat) by Gillet & Preston identified the size
of the European market for 60,000 tonnes, but a parallel FFA study done by
Amanda Hamilton in 2011 identified stronger markets closer to the region for
the HS 0304/0305 categories. These are Japan (300,000 mt), USA (60,000 mt) and
other East Asian markets such as Korea, Taiwan China as well as Australia.
There are markets much closer to the region with nations that are keen to
develop genuine partnerships for the Pacific, without hidden barriers.
The benefits of accessing these markets provide considerably better financial
returns. For example, the net value, ex Fiji, of sashimi yellowfin to Japan and
Australia after accounting for labour, packaging and freight costs is
US$11.10/kg and US$7.30/kg and compared with a mere US$5.40/kg to the UK after
Air freight cost to Europe is 60% higher than the cost of selling to Japan, and
this is for a regional market which has access to good connections. If it is
already high from a country that has good connections, how much more would it
cost for those with poor connections?
The Gillet & Preston study state that there could be potential benefits
generated to islands employment from additional sales to Europe. The
assessment, however, was based on an FFA study done in 2006 by Peter Philipson
when market conditions were quite different. The numbers are overstated and
insignificant when compared to the US$200 million generated today through
access rights for purse seine alone.
Moreover, it is easy to calculate that opportunity benefits for longline tunas
of selling to Japan, USA and other markets closer to home, will generate
significantly higher numbers of employment and income to the islands economies.
The economic benefits could at least be doubled by selling HS0304/0305 to Japan
or USA markets which are already available today with no concessions on the
table. At the end of the day, it is the net returns that matter to exporters.
For the EU market, these margins are negated by the high cost of meeting EU
SPS, and non-trade barriers, including establishing EU competent authorities
and having fishing vessels that meet specific EU requirements.
Even, if global sourcing were to be given to HS0304/0305, most PACPs would
struggle to maintain competency to trade with the EU. Not because of the lack
of market access, but because of the cost of accessing the EU market. Those
non-trade barriers are not lowered just because of global sourcing. Indeed,
they are more likely to increase. Nothing could be traded without a full CA in
The costs of setting up a CA in some cases would exceed the national GDP.
Further, the technical competencies don’t exist and even if the large domestic
longline fleets were fully domesticated, they could get market access already
giving enough fish without global sourcing.
The benefits generated for HS0304/0305 products from access to the European
Market are insignificant compared to other markets, and will probably fail to
materialise because of the SPS and non-trade barriers that have to be
addressed. It will be just like PICTA. The true costs for the region, however,
are higher because the trade-off for global sourcing for HS0304/0305 is EU fishing
access into the Pacific which will be detrimental to the sustainability of the
resource and loss of higher rentals which can be achieved through bilateral
agreements with friendlier fishing and trading partners.