|COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
WASHINGTON, D.C. 20515
Madam Chair, Ranking Member:
I thank you for holding this hearing on ASPIRE, the American Samoa Protection of Industry, Resources, and Employment Act, or H.R. 3583, a bill I introduced to put American Samoa back to work and to put the U.S. tuna industry back in America.
Before I begin, I would like to ask that the following letters of support be included for the record.
For more than 55 years, American Samoa has been the backbone of the U.S. tuna fishing and processing industries, just like for years Puerto Rico and the Virgin Islands were the backbone of the rum industry.
Today, the U.S. tuna processing industry includes three major brands of canned tuna – StarKist, Chicken of the Sea and Bumble Bee.
StarKist is headquartered in Pittsburgh, Pennsylvania and has 1,800 employees in the U.S. Territory of American Samoa. StarKist is a U.S. corporation and pays U.S. taxes. StarKist is also a subsidiary of the Dongwon Group, a leader in the food, beverage and fisheries industries in South Korea.
Chicken of the Sea is a subsidiary of Thai Union, the world’s largest producer of canned tuna. Chicken of the Sea has about 200 tuna cannery workers in Lyons, Georgia.
In 2004, Bumble Bee was sold off to Connors, a Canadian company, and only recently was Bumble Bee purchased by a group of U.S. investors. Mr. Lischewski, who will be testifying as the President and CEO of Bumble Bee, now personally owns a significant share of Bumble Bee. Bumble Bee employs about 1,000 workers in the U.S. but how many of its U.S. workers are tuna cannery workers is undetermined, though I intend to ask during the course of this hearing. The bulk of Bumble Bee’s employees are not U.S., but foreign employees.
As many members of this subcommittee know, more than 80% of American Samoa’s private sector economy is dependent, either directly or indirectly, on two of the three major brands -- StarKist and Chicken of the Sea -- which until recently employed more than 74 percent of our private sector workforce.
What you may not know is that one day after American Samoa was struck by the world’s most powerful earthquake of 2009 that set off a tsunami that left untold damage and loss, Chicken of the Sea closed down its operations in American Samoa, leaving more than 2,000 workers without jobs.
Chicken of the Sea left without the courtesy of discussing its departure either with myself or the Governor of American Samoa, although Samoan workers made Chicken of the Sea one of the most profitable brands of canned tuna in the U.S.
Chicken of the Sea left for Lyons, Georgia where it now employs a skeletal crew of about 200 workers. Chicken of the Sea pays its workers in Georgia some $7.25 per hour.
Yet from 1954 forward, when Chicken of the Sea’s then parent company, Van Camp, first arrived on American Samoa’s shores, the company set about to suppress the wages of Samoan workers by demeaning their worth and work. In 1956, the company testified before the U.S. Senate Committee on Labor and Public Welfare, urging consideration of legislation for the exemption of American Samoa from the wage and hour provisions of the Fair Labor Standards Act of 1938.
So while you will hear much about minimum wage from those who oppose ASPIRE including a think-tank witness whose naive testimony is anything but expert, let me share with you our history regarding equal pay for equal work so that every Member of Congress may know the truth about minimum wage in American Samoa which has now barely reached $4.76 per hour for our tuna cannery workers.
Let’s begin with this statement from Chicken of the Sea’s then parent company, Van Camp. Commenting on his company’s desire to pay Samoan workers 27 cents per hour as opposed to the prevailing minimum wage rate of the time at $1 per hour, the company said:
“The Samoans are Polynesians. They are not American citizens.”
About the women of American Samoa, the company said:
“[We] now employ 300 Samoans, mostly women…. [W]ages range from 27 cents per hour for the women who clean the fish to $1 per hour for 1 employee, who is a technician ….
The difference in labor costs is attributed to the lower production output in Pago Pago, where we have found that it takes from 3 to 5 Samoans to produce what 1 stateside employee can produce.”
Mr. Collins, legal counsel for Van Camp, put it this way:
“The company has found that it takes from 3 to 5 Samoan workers to perform what 1 continental worker in the United States will do. It is therefore felt that this justifies a lower rate for Samoans.”
Forgive me for pausing here but what company, in good conscience, would suppress wages in a U.S. Territory on the claim that the more than 300 Samoan women cleaning fish in American Samoa for 27 cents an hour were somehow inferior to the stateside employees being paid $1 per hour?
While some of you may think this does not matter, it does, especially when 55 years later, Chicken of the Sea shut its doors in American Samoa and immediately paid stateside workers in Lyons, Georgia twice as much as they were currently paying our women and men in American Samoa. Different year, same Chicken of the Sea.
This is the kind of prejudice and racism and gender inequality we have been dealing with for 55 years in American Samoa and, frankly, we are tired of being treated like second class citizens and we are fed up with the attitude that is now permeating the U.S tuna and fishing processing industries.
Loins: The Outsourcing Business Model
Testifying before this Subcommittee are two tuna canneries, Chicken of the Sea and Bumble Bee, both of which oppose ASPIRE because ASPIRE opposes their current business model of having their tuna cleaned in low wage countries where they pay workers $0.75 cents and less per hour and then employ skeletal crews in the United States -- Georgia, California and Puerto Rico, to be exact – to pack the cleaned tuna, or loin, in order to take advantage of duty-free treatment.
I call this the outsourcing business model. This business model is based on loins. A loin is a cleaned fish. Because 90% of labor costs and employment come in the cleaning of the fish, the outsourcing business model maximizes profits and decreases employment in America, while increasing employment in low-wage rate countries. This is why both Chicken of the Sea and Bumble Bee employ more workers outside of the U.S. than in the U.S.
In my opinion, the outsourcing business model is an un-American way of doing business, and I believe if the American public knew what is really going on in the U.S. tuna industry it would not support these kinds of practices. Nike and the GAP are already under fire for adopting a similar business model in the garment industry, and there is not a Member in this room that supports off-shoring American jobs to low-wage countries.
So that there is no misunderstanding about this issue, I will be asking Chicken of the Sea to state for the record how many tuna workers it employs in Lyons, Georgia versus how many tuna workers its parent company, Thai Union, employs to clean the bulk of the tuna Chicken of the Sea puts in its cans. The answer will be something to the effect of 200 workers in Lyons, Georgia versus thousands in Thailand.
I will also ask Chicken of the Sea to tell us how much it pays its workers in Lyons, Georgia, how much it paid its workers in American Samoa, and how much its parent company, Thai Union, pays its workers in Thailand. The answer to this question will be $7.25 per hour for Georgia workers, barely reaching $4.76 for workers in American Samoa, and about $0.75 cents per hour for Thai workers.
While Bumble Bee touts before this subcommittee that it employs 1,000 U.S. workers, I will ask Bumble Bee to make it plain for the record how many of these workers work in the tuna industry. Bumble Bee and I both know that it does not employ 1,000 tuna workers in the U.S., and its testimony is misleading on this point.
As a matter of record, I will ask Bumble Bee to inform the Subcommittee how many tuna workers it employs in Puerto Rico and California versus the number of workers in Fiji that clean the bulk of the tuna Bumble Bee puts in its cans. Members of this Subcommittee will learn that Bumble Bee only employs about 325 workers in Puerto Rico, less in California, and thousands in foreign countries.
I will also ask Bumble Bee how much it pays it workers in Puerto Rico and California versus how much workers in Fiji and/or Thailand are paid by contractual agreement. When Members of this Committee receive this information, they will understand more clearly the outsourcing business model.
Because neither Chicken of the Sea nor Bumble Bee is proud of the outsourcing model they have adopted, neither company makes mention of their low-wage contractual agreements with Fiji and Thailand on their company websites.
Instead, before this Subcommittee, Bumble Bee whitewashes its way of doing business by stating that “it works continuously to drive higher production efficiencies and lower operating costs in an effort to remain profitable.” That’s just another way of saying that Bumble Bee’s idea of efficiency is to off-shore American jobs to low-wage countries just to increase its profits. One only has to look at the thousands of workers Bumble Bee laid off in Puerto Rico and California in the past decade, and its way of doing business speaks for itself. The same can be said of Chicken of the Sea.
However, as much as I oppose the outsourcing business model, I do not blame Bumble Bee or Chicken of the Sea for their business practices because the fact is none of our U.S. tuna companies can compete against low-wage countries which clean fish cheaper than American workers.
That is why we are here today. Today, we are here to bring the U.S. tuna industry back to America by offering grants to any company that wants to clean its fish in the U.S. Territory of American Samoa. The idea behind this bill is not much different than the rum tax we provide for Puerto Rico and the U.S. Virgin Islands, which brings us to the issue of our U.S. tuna fishing fleet.
The U.S. Tuna Fishing Fleet
The U.S. tuna fishing fleet is currently made up of 39 vessels, with one license still available. About 14 of these vessels are 100% U.S. owned. The other 25 tuna boats are newer vessels, built in foreign countries, with 51% U.S. ownership, and 49% foreign-ownership. Most of the foreign-built boats are part of a company known as the South Pacific Tuna Corporation (SPTC).
Mr. Lischewski, CEO and President of Bumble Bee, is a part-owner of South Pacific Tuna Corporation, and owns a significant share of Bumble Bee. Chicken of the Sea and/or its parent company, Thai Union, is also a part-owner of the foreign-built tuna boats.
The American Tunaboat Association (ATA), which represents all 39 tuna boats, both U.S. and foreign-built, was invited to testify today, but declined.
Given that the South Pacific Tuna Corporation only represents the foreign-built boats and also because Chicken of the Sea and/or Thai Union and Mr. Lischewski of Bumble Bee own financial interest in the foreign-built boats, I asked that SPTC be removed from the witness list so that there would be no conflict of interest, especially since Mr. Lischewski did not disclose his ownership in the SPTC, but only noted that he “owns a minority position in a U.S. tuna fishing company.”
However, because SPTC has been allowed to testify, I asked that Mr. Renato Curto now be allowed to testify on behalf of the U.S.-built tuna boats, of which he owns most, as President of Cape Fisheries.
I have also asked that Mr. Joe Hamby be invited to testify on behalf of Tri-Marine. Regarding Tri-Marine, Tri-Marine is one of the largest tuna supply companies in the world, and has a contractual arrangement with StarKist. Neither StarKist nor Tri-Marine has financial ownership in each other.
On the point of our U.S. tuna fishing fleet, whether U.S. or foreign-built, all 39 tuna boats, or the entire U.S. tuna fishing fleet, fishes under the auspices of the South Pacific Tuna Treaty, a treaty between the United States and 16 Pacific Island nations. Under the terms of the Treaty, the U.S. government pays out $18 million annually to the Pacific Island parties in return for the right of our U.S. tuna boats to fish in the exclusive economic zones (EEZ) of the Pacific Island parties to the Treaty. The U.S. tuna boats also pay the Pacific Island parties about $3 million or more per year, depending on the amount of tuna they catch.
According to the U.S. Department of State, the landed value of the catch in 2008 was in excess of $200 million but the value of the tuna as it moves through the processing and distribution chain may be as much as $400 to $500 million.
Of the approximate 300,000 metric tons of tuna that is caught, which is referred to as whole fish, about 120,000 metric tons is direct-delivered to American Samoa per year. Direct delivery means the tuna boats actually pull into American Samoa’s port and offload their catch. Given Chicken of the Sea’s closure, the amount of tonnage direct-delivered to American Samoa is now less.
Nonetheless, for purposes of this hearing, let us go ahead and consider that on average, 120,000 metric tons of tuna is direct-delivered to American Samoa. What happens to the other 180,000 metric tons, given that American Samoa has the capacity to process up to 280,000 metric tons with room for growth?
Let me tell you. Remember the foreign-built tuna boats I spoke of earlier, the tuna boats owned by the South Pacific Tuna Corporation which Bumble Bee and Chicken of the Sea and/or Thai Union have part ownership in? These tuna boats are the last puzzle piece to the outsourcing business model because these are the very tuna boats that transship their catch to foreign nations where the tuna is cleaned, or loined, for $0.75 cents and less per hour.
In other words, 25 members of our very own U.S. tuna fishing fleet sell off their catch to foreign nations and then send the cleaned tuna loin back to Bumble Bee and Chicken of the Sea so that these two tuna canneries can maximize their corporate profits while off-shoring American jobs. These 25 members of the U.S. tuna fishing fleet do this despite the fact that they fly the U.S. flag and are subsidized by the American taxpayer to the tune of $18 million per year to fish in the South Pacific Tuna Treaty Area. And what does the American taxpayer get in return? A depleted tuna stock, that’s what we get.
In the time it takes to make 3 direct-deliveries, the new foreign-built tuna boats can make 5 transshipment deliveries by off-loading their catch to a big mother ship meaning that they can return more quickly to the South Pacific Tuna Treaty fishing grounds where they can catch more and more tuna at a more maddening pace.
For conservation reasons, too, we must change the way our tuna boats behave by rewarding tuna boats that direct-deliver their fish to the U.S. Territory of American Samoa or by taxing the value of the tuna which is transshipped to foreign nations, and by requiring a license fee for tuna boats that don’t direct-deliver at least 3 times per year.
And this is why I have introduced ASPIRE. ASPIRE brings the U.S. tuna industry back to America and, above all, puts America Samoa back to work.
Whole Fish: The American Model
ASPIRE is the American model of doing business. It is based on whole fish. For now, StarKist is the only major brand of canned tuna that follows the whole fish business model and is the last remaining tuna cannery in American Samoa.
In American Samoa, StarKist is about jobs, jobs, jobs. Jobs are created when a cannery chooses to clean whole fish rather than pack tuna loins that have been cleaned elsewhere. As I stated previously, 90% of the labor associated with any tuna cannery is in the cleaning of the whole fish. While Chicken of the Sea and Bumble Bee have opted to outsource their fish cleaning jobs to low-wage countries, StarKist has chosen to clean whole fish in American Samoa and thereby create jobs for our workers.
And this has put StarKist at a competitive disadvantage. StarKist cannot hold out much longer in American Samoa, given the unfair trade advantages of Chicken of the Sea and Bumble Bee, which are using cheap labor to get ahead and when our U.S. boats are selling off U.S. tuna to foreign countries rather than making direct deliveries to American Samoa.
If these unfair trade practices force StarKist to leave American Samoa and adopt the Chicken of the Sea and Bumble Bee model of cleaning fish in low-wage countries, American Samoa’s economy collapses. It’s as plain and simple as that.
To prevent a complete economic meltdown that will lead to nearly full unemployment, Congress must act quickly if we are to save American Samoa’s jobs and economy and, if more broadly, we are to bring the U.S. tuna industry back to America.
StarKist employs more than 1,800 workers in American Samoa, and while some at this hearing will try to discredit our workforce, let’s be straight about this. While many of our workers are from the neighboring island of Samoa, they are legal permanent residents, married to our U.S. nationals and citizens, and their children are also U.S. nationals, which make them a part of us.
StarKist also abides by U.S. labor and environmental laws, unlike tuna canneries in Thailand and Fiji, which are supplying Bumble Bee and Chicken of the Sea.
While StarKist has an operation in Ecuador, which are opponents will also try and use against us, let’s be clear about this, too. StarKist does not can any tuna in Ecuador. In Ecuador, StarKist produces pouch tuna under the provisions of the Andean Trade Agreement. And pouch tuna has nothing to do with ASPIRE. ASPIRE is about canned tuna, not pouched tuna, and Chicken of the Sea and Bumble Bee know this full well.
What may not be so readily known is that American Samoa is a single-industry economy, entirely dependent on the tuna fishing and processing industries just as Puerto Rico and the Virgin Islands were once solely dependent on the rum industry. Because of the fragile state of our economy, especially in the aftermath of a devastating tsunami, if we lose our one remaining private-sector employer, it will be next to impossible for us to rebuild.
If StarKist leaves, American Samoa will be left with no private sector base. And, while some of my colleagues and our so-called experts trivialize the situation by suggesting we just need to adjust the minimum wage rates, I am hopeful that my testimony has made clear the complexities of this matter. Whether or not minimum wage rates are $3.00 per hour or $7.25 per hour in American Samoa, the entire U.S. tuna industry, including Chicken of the Sea, Bumble Bee and StarKist, can no longer compete against low-wage rate nations that pay their fish cleaners $0.75 cents and less per hour which means the increase of minimum wage rates in American Samoa only accelerated a process that was already underway the day Bumble Bee and Chicken of the Sea decided to outsource American jobs to foreign countries.
While Bumble Bee will testify that we just need to be like Guam and develop tourism, I would suggest that Mr. Lischewski take a hard look at American Samoa’s location in relation to Asia and also take a look around at our lack of land. American Samoa is not Guam. We are not benefiting from troop realignment or proximity to Asia.
American Samoa is situated in the middle of the worlds’ best tuna grounds. Tuna is our oil. Tuna is our past and our future. And while Bumble Bee will try and convince you today that if ASPIRE is enacted, we will have to worry about U.S. trade violations, nothing could be further from the truth.
America subsidizes almost every agricultural product made in the U.S.A. including sugar, corn, dairy, etc., because the rule is, as long as American products are home-grown and headed for the U.S. market, which is where American Samoa’s canned tuna goes, there is no trade violation.
So despite the hype you will hear today, I am asking Congress to consider the facts, and support ASPIRE. ASPIRE is good for America and right for American Samoa.
The U.S. cannot afford to sit idly by while American Samoa’s economy collapses and while members of the U.S. tuna fishing fleet sell off hundreds of millions of dollars worth of tuna to foreign nations while the American taxpayer gets nothing in return.
Nor can we turn a blind eye to the depletion of our tuna stock in the Western Pacific Tropic.
It is time for Congress to act, and to act quickly.
For those Members of Congress from Hawaii, Alaska and California, or others
who may have concerns about their fishing fleet, ASPIRE does not impact any other fishing fleet except the 39 tuna boats that fish in the South Pacific Tuna Treaty Area. Because there was a technical error on page 7, line 11, of H.R. 3583, with use of the word “or” which should have been “and”, I have asked that we strike the reference to the Western Pacific Regional Fishery Management Council so as to avoid any further confusion about the Hawaii fishing fleet which will not be impacted at all once this correction is made before final passage.
Finally, for an Administration and a Congress that want to know how ASPIRE will pay for itself, and to address the false claims made by Republicans that this bill is a bailout that puts the American taxpayer on the hook, it estimated that the program would cost about $23 million per year, and would increase by $2 million per year depending on federal minimum wage rates.
About $11.25 million per year would be offset by the 6.25% tax on the value of the 180,000 metric tons of tuna now being transshipped to foreign nations. If, however, the tuna boats offload more often in American Samoa, the offset would decrease.
About $4.25 million would be made available by the $250,000 licensing fees for tuna boats that do not make 3 direct-deliveries to American Samoa per year. This figure is based on the current number of tuna boats that transship their fish to foreign nations. However, if more tuna boats direct-deliver, then this offset would also decrease.
However, it is expected that if more tuna boats direct-deliver their whole fish to American Samoa rather than transship U.S. tuna to foreign nations, then the presence of these tuna boats in American Samoa would create a multiplier effect in the economy as the boat owners would have need to purchase fuel, food, and lodging while in port.
While the American Samoa Government (ASG) would need to provide input, I would be supportive of a cost-share arrangement between the federal government and the local government if ASG began to see revenues from the multiplier effect. In discussions with the U.S. Department of the Interior, we are also reviewing the possibility of restructuring the $10 million Congress already provides the Territory for Capital Improvement Projects as a means to encourage and support private sector development.
Long-term, it would be my hope that Congress would establish a PAYGO plan modeled after the Caribbean Basin Economic Recovery Act which provides a special rule for excise taxes collected on rum imported into the United States from any country. Such excise taxes are covered over to the Treasuries of Puerto Rico and the U.S. Virgin Islands, and there is no reason why a similar program should not be established for tuna imported into the United States from any country. Tuna excise taxes, including those on any and all loins, would be covered over to the Treasury of American Samoa, making ASPIRE a fully pay-as-you-go program.
While ASPIRE may not be perfect, in the aftermath of a tsunami that has left American Samoa teetering on the brink of economic collapse, we need action and we need it now. Still, I continue to be open to making the necessary adjustments that would make this a win-win for the entire U.S. tuna processing and fishing industries, but I am not open to doing nothing. Nothing is not an option for the more than 65,000 residents of American Samoa who need and deserve the support of our nation.
We need help rebuilding our economy in a way that is as fair for American Samoa as the rum tax is for Puerto Rico and the Virgin Islands, or sugar subsidies are for Louisiana, or beef and dairy subsidies are for the heartland.
As fellow Americans, we deserve equal treatment under the law. This is why I ask you to stand with American Samoa the same way we have stood with you. As has already been reported to Congress, the sacrifice of American Samoa in the Iraq war was disproportionate to the territory’s small size, as residents of the territory were 15 times more likely to be killed in action in Iraq than residents of the United States as a whole.
For my Republican friends who have cheapened our sacrifice and this hearing by issuing a press release -- which I would like to include for the record -- calling this bill “a tuna bailout” before listening to both sides of the debate, I say, “Shame on You.” Shame on you for trivializing our sacrifice and shame on you for making a mockery of our call for help. While the color of our skin may be dark, our blood still runs red, white and blue.
And finally, in response to the Republican’s misinformation about minimum wage in American Samoa, it was the Republicans who introduced an amendment to The U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007 which required the minimum wage in American Samoa to be increased in a phased manner until it reached the same level as the rest of the United States. So, if the policy is a failure, it is a Republican failure, and the Republicans should make it right, not by asking Samoans to ride in the back of the bus, but by supporting legislation which puts American Samoa back to work and ends the outsourcing of American jobs to foreign countries.
Enough is enough. Support H.R. 3583.