HONORABLE ENI F. H. FALEOMAVAEGA

Introduction

As a member of the U.S. House International Relations Subcommittee on the Western Hemisphere, I fully support Andean efforts to curb drug production. However, as the Ranking Member of the House International Relations Subcommittee on East Asia and the Pacific, I believe any trade policy we enact must be fair and non-discriminatory. Whether or not canned tuna is included in the Andean Trade Preference Expansion Act (ATPEA) is a matter of global concern. Thailand, Indonesia, the Philippines, Vietnam, Cambodia, Brunei, Malaysia, Singapore, Lao, and Myanmar recognize that preferential trade treatment for the Andean countries will adversely affect the ASEAN tuna industry. ASEAN member countries also contend that granting duty-free trade benefits to one region at the expense of another could be seen as a discriminatory practice to developing countries, including ASEAN member countries which do not receive any trade preferences regarding canned tuna.

For the U.S. Territory of American Samoa, the issue is also complex. More than 85% of American Samoa's economy is either directly, or indirectly, dependent on the U.S. tuna fishing and processing industries. Two canneries, Chicken of the Sea and StarKist, employ more than 5,150 people or 74% of the workforce. If canned tuna from Ecuador and other Andean countries is given the same preferential trade status as canned tuna from the U.S. Territory of American Samoa, more than 5,000 workers in American Samoa will be at risk.

Although H.J. Heinz, parent company of StarKist, has tried to dismiss our concerns and pretend that the ATPEA will not affect American Samoa, it is important for members of Congress to understand that the ATPEA will affect our local economy. As StarKist has repeatedly stated, the only market for tuna from American Samoa is the U.S. Therefore, duty-free treatment for canned tuna from Ecuador and other Andean countries equals financial problems for American Samoa. The CEO of Chicken of the Sea has already stated that if canned tuna from Andean countries is given the same preferential trade status as canned tuna from American Samoa, production in American Samoa will be at immediate risk. As StarKist has repeatedly testified, "a decrease in production or departure of one or both of the existing processors in American Samoa could devastate the local economy resulting in massive unemployment and insurmountable financial problems."

Growth of the Andean Tuna Industry

To understand the serious implications this legislation holds for American Samoa, we must first take a look at the growth of the tuna industry in Ecuador and other Andean countries. According to industry analysts, since the enactment of the ATPA in 1992 --

Tuna factories in the Andean countries have increased from 7 to 23, up 229%.

Production capacity has increased from 450 to 2,250 tons per day, up 400%.

Direct employment has increased from about 3,500 to 12,500 new employees, up 257%.

Exports to the U.S. have grown from about $15 million to over $100 million annually, up 567%.

In the past ten years, the Andean tuna fishing fleet has also grown from about 20 to 90 fishing vessels. Today, the Andean Pact countries control more than 35% of the catch in the Eastern Pacific Tropic (EPT).

In terms of production, Ecuador and Colombia have the capacity to jointly process 2,250 tons of tuna per day.

2,250 tons per day x 5 days (or 240 days per year) = 540,000 tons of tuna or 48.6 million           cases per year.

American Samoa processes about 950 tons of tuna per day.

950 tons x 5 days per week (or 240 days per year) = 22,800 tons of tuna or 20.5 million cases           per year.

48.6 Andean cases + 20.5 million Samoan cases = 69.1 cases per year.

Given the fact that the U.S. only consumes 48 million cases per year, the Andean countries have the production capacity to supply the entire U.S. market and wipe out the economy of American Samoa. Add to this the fact that labor rates in the Andean countries are $0.69 per hour and less. In American Samoa, the labor rate for cannery workers is $3.66 per hour. If Ecuador and other Andean countries are given limitless access to the U.S. tuna market, American Samoa will be priced out of the market place.

What Congress Needs to Know

The U.S. has NEVER extended duty-free treatment to canned tuna from a country that has the capacity to supply the entire U.S. market place. I think it is also worth noting that the Southeast Asian nations and Mexico are so concerned about Ecuador ruling the U.S. market that they have hired independent lobbying firms in Washington to protect their interests and represent their views before the U.S. Congress.

Ecuador is also continuing its lobbying effort. Ecuador's Minister of Foreign Affairs, the Honorable Heinz Moeller, has visited with the White House Administration, the Secretary of Commerce, the U.S. State Department, and with key members of Congress to gain support for the inclusion of canned tuna in the ATPEA.

Minister Moeller also contacted my office and requested a meeting to discuss the matter in further detail. On January 22, 2002, Minister Moeller and I met in my Washington office. Accompanying the Minister was the Ambassador of Ecuador, the Honorable Ivonne A-baki, and other Chief Ministers. The Ecuadorian Delegation shared its concerns about the on-going drug problem in Latin America and made a compelling argument that expanded trade benefits would assist the Andean countries in curbing drug production. Although I want to be helpful to Ecuador in its efforts to curb drug production, I continue to believe that the issue of preferential treatment for canned tuna should be debated on its own merits. I do not believe a discussion about tuna should be couched in the rhetoric of an anti-drug campaign.

However, if Congress chooses to make the debate about drugs, then I want the record to reflect that American Samoa does not grow drug crops. American Samoa does not export drug crops. Our economy, whether up or down, is in no way associated with drug production. American Samoa does not need and has not asked for preferential treatment to rid itself of illegal trade. Instead, American Samoa has built on the principles of fair trade. More than 100 years ago, we established political relations with the United States and freely pledged our allegiance to uphold the principles of democracy. More than 40 years ago, we welcomed the tuna fishing and processing industry to our remote islands. We worked, we toiled, we built. Today, our economy is more than 85% dependent on the U.S. tuna industry.

I do not believe American Samoa should now be placed at a trade disadvantage because it has no past or present affiliation with drug production. I do not believe American Samoa should be penalized for practicing the principles of fair trade. The fact of the matter is whether or not canned tuna from Ecuador is given preferential trade treatment has little to do with whether or not drug production in Latin America will be curbed.

Beyond this, Ecuador is not lacking for products or commodities to export. In fact, Ecuador has substantial oil resources and a GDP purchasing power parity of $37 billion. Ecuador exports $5.6 billion in products and commodities, including petroleum, bananas, shrimp and coffee. According to some analysts, two-way trade between the United States and the Andean region has more than doubled to $28.5 billion a year since enactment of the Andean trade agreement in 1992. With this kind of growth, are we really supposed to believe that Ecuador has to corner the tuna market in order to fight the drug war?

I believe it is important for the U.S. Congress to know that Ecuador is rapidly becoming the 3rd largest supplier of albacore to the U.S. If Ecuador is allowed duty-free access, it will become the largest supplier of light meat tuna to the U.S. No matter what others may contend, this will affect the local economy of American Samoa. With labor rates of $0.69 and less per hour in the Andean countries, American Samoa will not be able to remain cost competitive.

Although the U.S. Territory of American Samoa cannot protect its market-share indefinitely, the concerns of the Territory must not be marginalized. Parameters of fairness and equity must be established. Compromise must be supported. If Congress fails to defend U.S. interests, American workers will be displaced. For every million cases that enter the U.S. duty-free, American Samoa will lose -

• 270 jobs
• $18 million in processing revenue
• $5 million in utilities, overhead, local economy
• $1.5 million in wages
• Thousands of dollars in lost tax revenue

The U.S. tuna fishing fleet will also be forced out of business. The U.S. tuna fishing fleet currently supplies about 90% of the catch used by the canneries in American Samoa. This catch is caught in the Western Pacific Tropic (WPT). If operations in American Samoa are forced to close or downsize, the U.S. fishing fleet will lose the WPT market. Furthermore, the U.S. tuna fishing fleet will NOT be allowed to fish in the Eastern Pacific Tropic (EPT) because all available fishing licenses in the EPT have already been claimed by Mexico, Ecuador, and other Andean countries.

Compromise

In an effort to expand canned tuna trade benefits to the Andean Pact countries and ensure the continued viability of the U.S. tuna fishing and processing industries, I have worked to build a bi-partisan base of support for compromise. In October of last year, the U.S. House took up H.R. 3009 without a hearing and passed the ATPEA with the understanding that a compromise would be reached on the issue of canned tuna. Congressman Bill Thomas, Chairman of the House Ways and Means Committee, gave me his personal assurances that he would work with me to protect American Samoa.

In December, the Senate Finance Committee considered S.525. Prior to the mark-up, Senator Daniel Inouye (D-HI), Senator Daniel Akaka (D-HI), Senator Frank Murkowski (R-AK), Senator Ted Stevens (R-AK) and Congressman Randy "Duke" Cunningham (R-CA) joined me in sending a letter to Senator Max Baucus, Chairman of the Senate Finance Committee. In this letter, we expressed our opposition to the inclusion of canned tuna in S.525.

We also worked with Chicken of the Sea, Bumble Bee, and the U.S. tuna boat owners to craft a compromise amendment that would help the Andean countries and protect American Samoa. Although Star Kist objected to our compromise, we gathered enough votes to secure its passage. Senator John Breaux (D-LA) was kind enough to offer the amendment. Senator Majority Leader Tom Daschle (D-SD), Senator Max Baucus (D-MT) -- Chairman of the Senate Finance Committee, Senator Orrin Hatch (R-UT) -- Ranking Member on the Senate Finance Subcommittee on International Trade, Senator John Rockefeller (D-WV), Senator Frank Murkowski (R-AK), Senator Kent Conrad (D-ND), Senator Blanche Lincoln (D-AR), Senator Robert Torricelli (D-NJ), Senator Olympia Snowe (R-ME), and Senator Craig Thomas (R-WY) supported our compromise in a 11-9 vote.

The Breaux amendment offers a duty-free window for canned tuna exports of up to 20% of U.S. domestic production. The compromise amendment also includes a source of origin provision, patterned after the European Union's agreement with the Andean Pact countries, to ensure that all tuna entering the U.S. duty-free is caught by Andean or U.S. flag ships. Chicken of the Sea, Bumble Bee, and the U.S. tuna boat owners support this amendment. Star Kist does not. To date, Star Kist has offered no compromise of its own. Ecuadorian boat owners, however, have agreed to support our source of origin provision.

We have included this source of origin provision because more than 56% of the flag ships in the Eastern Pacific Tropic (EPT) are non-Andean. We have also included it because Ecuador is rapidly becoming the third largest exporter of canned/pouch albacore to the U.S. yet harvests very little of the raw tonnage. In fact, nearly 39% of all albacore is harvested by Japan. Taiwan harvests 27%. The EU harvests 15%. The U.S. harvests 7%. Much of this albacore is caught in the Western Pacific Tropic (WPT) and is off-loaded in American Samoa. However, if Ecuador gets unlimited, duty-free access, albacore will be unloaded in Ecuador and the ATPEA will become an avenue for Japan and Taiwan to gain duty-free access to the U.S. market.

As a case in point, StarKist recently purchased 1,000 tons of albacore in Taiwan at a retail value of approximately $7 million and shipped it on the Longshoon to Ecuador. Needless to say, StarKist is the only U.S. tuna processor that opposes our source of origin provision.

About StarKist

In August of 2001, when the U.S. Senate Finance Committee held a hearing on the matter of the ATPEA, Star Kist testified. Although StarKist is the largest employer in American Samoa, Star Kist at no time informed our local Legislature, the Governor's office, or my office that it intended to support an international trade measure that would wreak havoc in the global tuna industry and cause insurmountable financial problems for our Territory.

Star Kist, of course, is under no obligation to inform any of us of its intent. However, after a 40-year relationship together, common courtesy dictates that Star Kist would have considered our views and asked for our input before arbitrarily supporting a trade agreement that seriously threatens our way of life. Star Kist maintains that it did not inform any of us because the ATPEA will not affect us.

My friends, the U.S. Congress knows that the ATPEA will affect American Samoa. Ecuador knows. Mexico knows. The Southeast Asian nations know. The U.S. State Department knows. The Office of the U.S. Trade Representative knows. Chicken of the Sea knows. Bumble Bee knows. The U.S. boat owners know. The ATPEA will affect American Samoa.

Since August of 2001, I have taken American Samoa's case to the House, to the Senate, to the public, to the people. In October of last year, more than 10,000 residents of American Samoa joined me in this effort. In November, the Governor of American Samoa pledged his support. In February 2002, the American Samoa Legislature also decided to support our position of compromise.

Conclusion

As with any trade agreement, I believe it is incumbent upon the beneficiary countries to ensure that they are complying with the requirements associated with preferential trade. Although some have suggested that the source of origin provision in the compromise amendment may not be enforceable or administrable, current law requires all importers of canned/pouch finished goods to provide documentation listing origin of the raw material. All vessels fishing in the EPT are required to register with the Inter-American Tropical Tuna Commission (IATTC) and are identified by flag, vessel, capacity and name. When the vessels off-load their catch at the canneries, the canneries are able to determine whether or not the tuna was caught by Andean or U.S. flag ship. For enforcement purposes, the U.S. Customs would only have to do an occasional audit to ensure that the canneries are in compliance.

I am hopeful that the U.S. Customs Service will support occasional audits of the Andean canneries. For the information of the Committee, recent reports confirm that more than five containers loaded with tuna cans were found to contain approximately 1,600 lbs. of cocaine. The cocaine shipments originated from Ecuadorian canneries and were shipped from Manta, Ecuador to the Port of Vigo. At the cannery site, authorities also found machinery used to process tuna loaded with cocaine.

While it is in the interest of the United States to support Andean efforts to curb drug production, we must not turn a blind eye to reality. Our desire to be helpful must be tempered by common sense and compromise. The compromise supported by the Senate Finance Committee is fair and reasonable. It is a constructive solution to a complex issue. It is a good-faith effort that deserves the support of both the House and Senate.

I thank Chairman Thomas for his willingness to consider the needs of American Samoa. I also thank Congressman Rangel for his tireless support. In this time of national crisis, I am hopeful that the Committee will continue its effort to move this legislation forward in a way that expands opportunities for the Andean countries and ensures the continued viability of the U.S. tuna fishing and processing industries.