Mr. Chairman: I want to take this opportunity to thank you, Mr. Chairman, Speaker Matagi, and members of the Ways and Means Committee, for allowing me to testify on Senate Bill 27-8, a bill to impose a 20 percent import duty on the purchase price for each ton of light tuna off-loaded in the territory which entered the harbor aboard or was initially caught by a purse seiner vessel which is not registered in the United States.
It is my understanding that representatives of both StarKist and COS Samoa Packing have already testified against the proposed bill, including Mr. Dave Burney, Executive Director of the U.S. Tuna Foundation.
However, we also have the representatives of the U.S. purse seiners based in American Samoa who testified in support of the proposed legislation; and they also presented statistical data justifying the imposition of the 20 percent import duty on foreign vessels.
Mr. Chairman, I submit that what we have here is a “royal battle” between the two canneries and the U.S. purse seiners based in the territory. For the record, I would like to state that I am not here to argue the legalities of the canneries’ tax exemptions and the proposed import duty on tuna brought into the territory by foreign vessels. Quite frankly I do not believe this matter should be so narrowly defined. This is an issue that holds serious implications for our territory, and as such, deserves much broader attention and careful examination.
I believe our Senate President Lutu was correct when he introduced this legislation within the context of improving and developing American Samoa’s economy. Economic development is really what this legislation is about. That is why it is so important for us to come together and consider this matter in terms of both policy and partnership.
Mr. Chairman, H.J. Heinz Corporation purchased Star-Kist Samoa in 1963. Since 1973, Heinz Corporation moved from a $700 million operation to approximately a $15 billion corporate enterprise today. Let us not forget that since 1963, our blue-chip corporate partner has consistently enjoyed special tax exemptions and territorial benefits.
Let’s talk about exemptions. There is a federal law known as the Nicholson Act which prohibits foreign vessels from landing or delivering fish on U.S. ports. American Samoa is exempted from this restriction because of its territorial status, and as such, foreign ships can land their catch directly on the cannery docks in American Samoa. It is for this reason that our canneries purchase approximately 30 percent of their light meat tuna from foreign vessels. But our U.S. purse seniers representatives have testified that it is not necessary for the canneries to do this since they have the capacity to provide all the tuna the canneries need.
Another major exemption is that under the Headnote 3 (a) program, canned tuna processed in the territory can be exported duty-free to the U.S., if the processing meets the criterion of not more than 50 percent foreign component value. Canned tuna regardless of origin meets the requirements of this exemption.
For more than 38 years, our corporate partnership with Heinz Corporation and COS Samoa Packing (formerly with Ralston-Purina/Van Camp) have also benefited from low wage rates; and I repeat – low wages and salaries for Samoan workers, significantly below the U.S. minimum wage standard, with minimum benefits.
As I have said in years past, why is it that in our 38-year corporate partnership with Heinz Food Corporation it was all right for Puerto Rican fish cleaners to be paid $6.00 - $7.00 per hour, but Samoan fish cleaners have had to struggle with a pay scale that started at about $2.20 to today’s wage scale now at approximately $3.20 per hour?
Mr. Chairman, it is my understanding that the minimum wage rate for fish cleaners at the canneries have now been increased to 3 cents an hour. If my math serves me correctly, this means an increase of 24 cents per day, or $1.20 on a 5 day work period, or $4.80 per month. With all due respect, Mr. Chairman, this wage increase as reviewed and implemented through the Wage and Hour Division of the U.S. Department of Labor is a farce and a sham, and quite frankly, an insult to the Samoan fish cleaners in the Territory.
After some 38 years of corporate partnership with Heinz Food Corporation and COS Samoa Packing/Chicken of the Sea, I honestly believe our people deserve more than what we are getting now.
Heinz Food Corporations/Star-Kist Samoa, and COS Samoa Packing/Chicken of the Sea have stressed structural and operating costs in their recent testimonies and I respect that as this is the same with any company that does business in the territory. But nowhere do I see our corporate partners talk about profits. For example, for FY 2000, Heinz corporation announced that its annual sales exceeded $9.4 billion. Star Kist, a subsidiary company of Heinz Corporation, continues to maintain its status as the number one brand canned tuna company in the U.S. In fact, Star Kist sales of tuna was approximately $1 billion for FY 2000.
In FY 1999, Star Kist Samoa and COS Samoa Packing exported a total of more than $446.5 million worth of canned tuna from American Samoa to the U.S. Since 1975, nearly $6 billion worth of tuna has been exported to the U.S. by our local canneries.
Mr. Chairman, there have been so many corporate takeovers on what was originally Van Camp Tuna Company. It is currently called COS Samoa Packing with the marketing and distribution label of Chicken of the Sea – now owned by Thai Union Frozen Food Company, a corporation from Thailand. Samoa Packing is now the second largest tuna company in the world, i.e., second only to Heinz/Star-Kist. Thai Union now processes 1,100 tons of fish daily, with Star Kist production at 1,200 tons daily. It is difficult to assess right now what Thai Union future plans are. We will wait and see.
Mr. Chairman, it is with interest that I note a statement from the representative of Heinz Corporation – a gentleman I respect very much, who I believe is very sincere in what he does and believes in. He said that, “a tax exemption certificate incentifies a company to invest capital and protect that investment from unknown future costs.”
Mr. Chairman, isn’t $6 billion worth of canned tuna exported from American Samoa in the U.S. a sufficient incentive by our corporate partners? Must Heinz Corporation continue to protect its investments and increase its profits at the expense of our local economy?
I invite the members of this committee, or all the members of this institution to visit the villages of Amanave, Vatia, Tula, Aunu’u and Onenoa. Visit these villages at about two or three in the morning and see our Samoan women dressed in their white uniforms waiting to catch their one-hour long bus ride to the canneries. Then visit the canneries and again observe these same women cleaning fish and standing for some eight hours each day. After twenty years of service these women are rewarded for their efforts with a pension check of about $40.00 per month, compliments of Heinz Corporation/Star-Kist or Samoa Packing/Chicken of the Sea.
Three years ago, Heinz Corporation/Star-Kist systematically paid Samoan workers lower salaries than non-Samoans doing similar work. To remedy the pervasive pay discrimination, Heinz Corporation/Star-Kist agreed to pay a $258,000.00 fine as settlement with the U.S. department of Labor.
Years ago, the Occupational, Safety and Health administration, U.S. Department of Labor, cited Heinz Corporation/Star-Kist for 42 willful violations, 35 serious violations and 12 repeated violations of U.S. labor laws relative to providing safe, working conditions for the cannery workers. As a result of these numerous violations Heinz Corporation/Star-Kist was fined and agreed to pay $1.8 million in penalties for federal violations, which included:
How ironic, Mr. Chairman, that in his annual statement to corporate stockholders of the Heinz Corporation, former Chairman of Heinz Corporation, Anthony O’Reilly, who by the way gets paid $65 million a year plus other bonuses, noted that “life is a random walk.” Nelson Mandela, the African political leader who was imprisoned for some 30 years by the white-racist apartheid regime, and who later became liberator and President of South Africa, made this observation about life as a walk. Mandela always made the point, “If they say you must run, insist on walking. If they say you must walk fast, insist on walking slowly.”
What is the whole point to be made here, Mr. Chairman? There needs to be a basic and fundamental shift now on ASG policy towards Heinz Corporation/Star-Kist and Thai Union/Samoa Packing as our corporate partners. For some forty years now, the terms and conditions of these tax exemptions and incentives have been so one-sided in favor of these corporations that now even the existence of our own U.S. purse seining industry is seriously at risk.
It is for this very reason why we are here today, Mr. Chairman. Make no mistake about this one fundamental truth – without the fish caught by our purse seiners, these canneries cannot operate at their current rate of production. Why is it that our purse seiners are given lower preference for off-loading than foreign vessels right here in our own port? Why is it that foreign vessels are paid special bonuses by our canneries if there are delays in off-loading, but our own purse seiners get nothing? Why is it that our purse seiners are often paid as much as $50.00 per ton less than the prevailing prices paid by Bangkok processors?
I believe, Mr. Chairman, a major reason that prompted Governor Tauese and his administration to sponsor this legislation was because these foreign vessels and mother ships were not contributing one penny into our economy. While our purse seiners are struggling to survive, the Heinz Corporation/Star-Kist and Thai Union/Samoa Packing appear not at all concerned about our purse seiners. They continue to buy tuna from foreign sources. Again, these are one-sided advantages for the canneries over our purse seiners.
Mr. Chairman, Heinz Corporation/Star-Kist and Thai Union/Samoa Packing are not going to be part of our economy forever. I predict these canneries will leave American Samoa in another 7 to 10 years, if not sooner. Our leaders and our people need to face up to this reality and we must remember, these companies are here to make a profit on their investment, and only that – a profit.
Looking at the situation globally, countries like Mexico, Peru, Ecuador, Bolivia and Colombia, as part of the Andrean Agreement, are all pushing for duty free imports of canned tuna to the United States similar to the Caribbean Basin Initiative. The countries of Japan, Costa Rica, and Italy can now export yellow fin tuna to the United States. You can be sure that Star Kist and Chicken of the Sea care going to find ways to maximize their profits in other locations, and leaving American Samoa to do it will be a reality.
Whether it is through this legislation as a matter of policy, or by way of negotiation, I honestly believe it is time for our elected leaders to demand a more equitable and fair level playing field from our corporate partners.
Corporate profits should also mean moral obligations in terms of good corporate citizenship. In FY 2000, Heinz Corporation made a $30 million donation to the Heinz Company Foundation. In Canada recently, Heinz donated $250,000.00 to a children’s hospital foundation. Also, Heinz donated $2 million to the city of Pittsburgh for community development. Heinz also awarded some $6 million to various community organizations. Now I understand Heinz is going to donate $500,000.00 to a private high school here in American Samoa – and I sense that perhaps this is as a direct benefit primarily for the students whose parents hold management positions within Heinz/Star-Kist operations in the territory.
After some 38 years of corporate partnership with Heinz Corporation and Samoa Packing formerly with Ralston-Purina and Van Camp – and after exporting almost $6 billion worth of canned tuna from American Samoa to the United States-- is it asking too much for the two largest tuna canning corporations in the world to establish perhaps a $2 million scholarship trust fund to benefit our youth who want to pursue studies in post secondary education?
Some of the committee members are afraid of lay-offs if this bill passes. For your information, Heinz Corporation/Star-Kist already has canneries in Papua New Guinea and in other places. Cannery workers in Papua New Guinea are being paid 50 cents an hour for the same work in loining operations we do here. What are the implications? Samoan workers doing loining work may no longer be needed, or perhaps even now will be laid off because of the changes in the operations.
Make no mistake, in ten years or less, the canneries are going to make the same announcement like they did with the recent closure of Star-Kist Puerto Rico – not enough profits – and they will leave us, and we should prepare now for other options.
If passage of this bill is the only way to get the attention of Heinz Corporation and Thai Union, then let’s pass the bill.
- failure to provide adequate machine guards for dangerous points of operations resulting in 11 amputations
- failure to provide some 1900 Samoan workers with puncture resistant gloves to protect their heads from cuts from sharp fish bones, knives and wire racks, resulting in numerous injuries that required surgery
- failure to provide hearing conservation measures, although the company was aware that some 19 employees had already developed serious hearing problems due to such conditions.