Congressman Faleomavaega announced today that in a letter dated September 23 he has informed the Governor of his serious concerns regarding ASG’s decision to purchase the Chicken of the Sea lease and the negative impact it could have on ASPIRE. A full copy of the Congressman’s letter to Governor Togiola, which was copied to the Lieutenant Governor, the President of the Senate and Senators, and the Speaker of the House and Representatives, is included below:
Dear Governor Togiola:
I am writing in response to your letter of September 17, 2009 and also to express my grave concerns about recent reports about ASG’s intent to buy the Chicken of the Sea/Samoa Packing lease.
In your letter of September 17, you state that “you fully support the general proposition in the ASPIRE legislation for subsidizing the fishing boats that offload their fish in American Samoa, as well as the fish processors who will process such fish.” However, you immediately state thereafter that you want me “to remove the [minimum wage] subsidy” unless “minimum wage escalators are abated.” You also state that you believe there is a “potential issue with the funding of the’ trust fund’ if the targeted boats effect a change in their flagging, registration and fish delivery.”
In other words, your letter of September 17 is the same as your letter of August 26 in which you stated that “the Territorial Government cannot support this legislative proposal as proposed.” Frankly speaking, until ASG has a plan of action of its own, I need ASG’s full support of ASPIRE if we are to be successful.
In my letter of September 16, I explained at great length and in complete detail the reasons why minimum wage must be addressed in ASPIRE given that American Samoa and its workers cannot compete in a global marketplace that pays tuna cannery workers in competing countries 0.60 cents and less per hour. It is impossible for American Samoa to sustain a tuna industry with this kind of wage disparity and this is why I am calling upon Congress to subsidize our tuna industry, including our tunaboats, processors, and workers, just as Congress has subsidized other industries like corn, wheat, sugar and rum.
I also want to reemphasize that Congress is not going to allow American Samoa to be the only State or Territory under the U.S. flag that does not pay its workers decent or fair wages, and the sooner our Territorial Government comes to terms with this, the sooner we can begin to address the real challenges confronting us. While Congress may slow-down the increases based on the GAO findings, Congress most likely will not stop minimum wage increases.
Once more, it is critical for our people and our Territorial Government to understand that Congress raised the federal minimum wage for all of America, not just American Samoa. In so doing, Congress took into consideration the unique needs of American Samoa and CNMI and gave us twice as much time to come up to federal standards. Employers in the 50 States were required to pay workers $1.00 per hour every year until they reached $7.25 per hour. On the other hand, employers in American Samoa and CNMI were only required to pay workers 0.50 cents per hour every year until they reached $7.25 per hour.
Also considering our unique needs, Congress is delaying American Samoa’s next increase until the GAO releases its report in 2010, but in no way does this mean Congress will stop further increases once the report is completed. More likely, Congress will simply slow the increases especially since Congress has already given American Samoa’s employers more than 50-years to do right by our workers.
In my letter of September 16, I also addressed your concerns regarding the trust fund and the flagging and registration of the tuna boats, and I would refer you again to my letter of September 16 if you have further questions or concerns. If you have no new concerns, I would very much appreciate your unequivocal support of ASPIRE so that we can speak with one voice in Congress as ASPIRE is our best chance at saving the jobs of more than 2,000 of our workers and protecting our economy for future generations.
It is with these thoughts in mind that I write to express my very serious concerns regarding ASG’s proposal to buy the cannery owned by Chicken of the Sea International (“COSI”). While I have not heard directly from you, according to media reports I understand that you have submitted a request to the Fono seeking approximately $5 million to finance the purchase, which funds would be taken from the account set up to finance repayment of a loan from the Retirement Fund. Radio New Zealand reported today that you are now requesting an additional $20 million in public funds.
Before the Fono even begins to consider approving such a request, there are a multitude of questions that should be answered before proceeding with a plan for ASG to buy the COSI cannery. A failure to fully vet this plan could result in ASG – and ultimately our people – being left holding the bill for another costly and poorly executed economic development effort.
When COSI first announced it was leaving, I suggested that ASG buy back the lease so that ASG could be in a position to make the lease available to a tuna cannery more committed to establishing or expanding operations in American Samoa. In my mind, this meant that ASG would enter into negotiations with the major brands of canned tuna that include StarKist, which is our current largest private-sector employer, or Bumble Bee, which is the number one brand of albacore and the largest branded seafood company in North America. I also thought you might enter into negotiations with Tri-Marine, one of the major suppliers of tuna to the major brands. Each of these companies has expressed interest in buying the COSI lease and put our people back to work but it is my understanding that you have not seriously consulted with any of them about the future of the plant.
This leads me to ask the following the questions, although by no means I am writing to tell you what to do. As a matter of record, I have always respected the differences of our roles--that our people elected you to represent their local needs and that they elected me to represent their interests in the U.S. Congress. However, at times when issues become both local and federal in nature, I believe our people expect us to work together for their good, and this is why I am putting these questions forward—because, in this instance, I believe our people need and deserve to understand the details of your proposal.
1. If ASG buys back the COSI cannery, who will be operating the government-owned cannery since you have shown little interest in StarKist and Bumble Bee’s inquiries and since your proposal may place Tri-Marine’s negotiations in jeopardy?
2. What expertise does your off-island company have to operate and manage the COSI lease given that your off-island company is not a major brand of canned tuna or a major supplier of tuna to the major brands? As I am sure you know, to be successful in this venture, you must not only clean and can the tuna but you must be able to get the product onto grocery shelves across America. Since your third-party company has no label or brand, to whom will they sell their product? After some 50-years, there are only 3 major brands of canned tuna in the U.S.—StarKist, Bumble Bee, and Chicken of the Sea, and they sell more than 80% of all canned tuna that is consumed in the U.S. Given that they know the industry inside and out, I have little confidence that a third party company can establish a more profitable or successful venture in American Samoa than the major brands and suppliers who have expressed an interest in doing business with you. If your intent is to sell the canned tuna to foreign nations, then I would encourage your third party to rethink its plan since tariff rates and labor costs will make it next to impossible for ASG to compete in any market other than the U.S., and there is also little hope that ASG will even be able to profitably compete in the U.S. market.
3. Given that you are asking for $25 million in public funds to buy back the lease from COSI, will your third party company be putting up its own funds to invest in the cannery, or does your third party expect ASG to put up the entire investment? The latter, of course, would be unacceptable. The taxpayers cannot be expected to bear all the risks of this enterprise while a private, third party takes home all of the profits. If your third party has its own funds to put into the project, details must be provided on the source of its funding so that these claims can be verified. Will you make these details public?
4. The fact that the Fono is being asked to approve taking money from the Retirement Fund repayment account is very troubling. When and how would this money be repaid to the Retirement Fund, and what would happen to the Fund in the interim? ASG has already borrowed money from our Territory’s retirees. Extreme caution should be taken in considering what essentially is another loan from the Retirement Fund to finance a risky government foray into private enterprise.
5. Questions also need to be asked about how an ASG-owned cannery would pay for public services like water and sewer services, and electricity. Would ASG give the cannery public services for free? If so, is it fair, or financially prudent, to have the rest of the Territory’s citizens subsidize these services? And, if you are providing these services for free to a third party company, do you also intend to provide free-services to StarKist which has made a $363 million investment in American Samoa?
6. What equipment will COSI leave, and what condition is it in?
7. How will your third party company maximize our employment and tax base?
8. How does your decision benefit our tunaboat owners?
9. Has ASG considered the trade implications of its decision, and possible WTO violations should ASG’s government-owned cannery undercut the price of canned tuna?
10. Have you responded to StarKist, Bumble Bee, or Tri-Marine regarding their interests in securing the COSI lease? If so, when? If not, why not? If you have not considered their offers and/or interest, on what basis have you rejected their proposals?
11. Since ASG is working to buy the COSI cannery in order to go into the tuna business, will ASG also offer to buy the StarKist facility?
12. Will your transaction with your third party force StarKist to relocate?
13. Will your transaction cause ASPIRE to fail?
14. What plan of action do you have in place should your proposal fail and cost us our only chance of passing ASPIRE and saving our tuna industry?
As you can see, there are many critical questions that are unanswered about this plan, yet the Fono is being asked to take $5 million from our retirees to fund it. And, according to Radio New Zealand, you are now requesting an additional $20 million in public funds. While I am in favor of any effort to help save jobs in the Territory, such efforts have to be ones that are well thought out, are financially responsible, and do not put our economic future at undue risk.
For these reasons, I hope you will reconsider your decision until a public forum takes place where StarKist, Bumble Bee, and Tri-Marine can also put forward their plans so that it can be made publicly known that they, too, have an interest in doing business in American Samoa and would like their proposals to be thoroughly considered by your office and our local leaders. It is my understanding that StarKist and Bumble Bee have already made their interest known to you, but I do not believe our Fono members are aware of their interest.
It is also my understanding that COS has stipulated that any lease agreement with its competitors would have to be negotiated directly with COS, and that ASG can only negotiate with third parties. If this is the case, this is unacceptable. ASG should be empowered to negotiate with any and all interested parties.
However, if ASG is only interested in a government-owned cannery, and if ASG has the $25 million to spend for it, then perhaps I should withdraw H.R. 3583 and not interfere with your local efforts to rebuild the tuna industry.
Faleomavaega concluded his letter by stating, “I am inclined to move in this direction since you have now weakened our position in Congress with your new proposal which I only learned of last night in the local press and today from Radio New Zealand.”