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COFI:FT/VII/2004/4

Table of Contents

INTRODUCTION

OVERVIEW

RESULTS OF E-MAIL CONFERENCE

SUGGESTED ACTION BY THE SUB-COMMITTEE

INTRODUCTION

1. Globalization of trade and internationalization of the fishing industry expose domestic operators strongly to international developments. Firstly, country membership in international bodies such as WTO or regional fishery bodies, binds countries to international agreements. Secondly, country membership in international trade areas such as NAFTA, MERCOSUR, SADC or ASEAN, places the fishing industry in individual countries on the same trajectory as the fishing industry of the trade area as a whole. This means that national policy and planning in the domestic fishing industry at some point in the future will, if not converge with, at least be influenced by the policy of the trade area as a whole.

2. International agreements on trade rules, tariffs, quality standards and fishery management have become important to national operators, but also decisions taken by individual countries influence other countries through effects on trade in fish and fishery products. Products are now increasingly sourced globally, and a short-fall in supplies of one species or one specific origin, will soon be filled with substitutes from other sources.

3. At the same time, domestic fishing industries are influenced by global trends. Globalization and increasing international trade in seafood commodities and fishery products lead developments in one market to have rapid repercussions in other markets. In addition, long-term global trends in supply and demand, including developments in distribution and consumption, have broad implications for the domestic industry and for domestic consumers.

OVERVIEW

4. A large share of fish production enters international trade, with about 40% exported in 1998 (live weight equivalent). For other commodities, the share is much lower. Thus, only 6 to 8% of forest products enter international trade as primary forestry products. The trade flows of fishery products are mainly from developing to developed countries, and from the Southern to the Northern Hemisphere. There is little trade between developing countries, although regional trade is increasing.

5. In 1995, 1996 and 1997, world trade of fishery products was fairly stable at around US$ 51 000 million (export value), with preliminary figures for 1998 showing a slight decline, manly due to the El Niño effect. Imports are concentrated, with the top ten countries taking over 75% of world fish imports. Japan's share of world fish imports in 1998 was adversely affected by the problems in its domestic economy and fell to 24%. The European Union represents 39% and the United States 16%. The role of China as an importer and exporter continued to expand in 1996 and 1997, but the trend was reversed slightly in 1998.

6. The value of fish exports from developing countries was slightly down in 1996 and 1997. Net foreign currency earnings of developing countries from fish trade in 1997 were US$ 15 800 million, underlining the important role of fishery products in foreign exchange earnings. In fact, net foreign exchange earnings from fishery products are more important than the net earnings from exports of coffee, tea, rice and rubber combined.

7. As stated above, in value terms, total fish trade exceeded US$ 51 000 million in 1997, with more than 90% representing processed products in one form or another. Live, fresh or chilled fish exports represent only a small, though growing, share of world fish trade, due to its perishability. However, trade in live as well as fresh fish will grow, reflecting improved logistics and increased demand.

8. In value terms, frozen fish is the main item in international trade. This category experienced a strong increase in the 1980s, but has stabilized in recent years (from US$ 7 000 million in 1985 to US$ 18 000 million in 1996, or 35% of total international trade in fishery products). Frozen crustaceans (shrimp, crabs and lobster) are the second major category, representing 38% of international trade. Canned fish accounts for about 10% of trade, with canned tuna as the main export item. Fish meal and fish oil represent a 5% share in international trade in terms of value.

9. Globalization of trade in fish and fishery products was a fact long before the word came into fashion. It can generally be stated that fish exports concentrate on the higher end of the price scale (shrimp, tuna, lobster, salmon), and often are produced exclusively for the export market (aquaculture). In addition, the importance of fish processing as a source of employment in disadvantaged areas (shrimp peeling industry, tuna canning industry) must be underlined. Finally, net foreign currency earnings from fish trade enable countries to import less expensive protein, and thus, contributing to food security.

RESULTS OF E-MAIL CONFERENCE

10. The FAO E-mail Conference on Fish Trade and Food Security (FTFS) was held between 19 October and 12 December 1998. The Conference had its genesis in a recommendation in 1997 of the FAO Advisory Committee on Fishery Research which identified three topics as deserving particular scrutiny: trade and food security; the distribution of benefits from trade; and barriers to international fish trade.

11. In response, FAO's Fish Utilization and Marketing Service (FIIU) commissioned three papers, one on each of the particular topics, and those papers were put forward as starting points for discussion in the e-mail conference.

12. The discussion centred quickly on various aspects of globalization and the implications for fish trade and food security. It became clear that there exist varied interpretations of food security, depending on level of aggregation: local, national, international, regional and global. The lack of a clear definition of "trade barrier" with its various implications was also addressed by many.

13. Certain topics stimulated more response than others. In particular, issues such as eco-labelling and HACCP, and the need for more market and product development were debated by many participants.

14. The key arguments stated were the following:

• Several participants stated that, in general, international trade could only marginally solve the food security problem, but that fish trade is necessary for food security for many landlocked countries. There is no firm evidence to show that fish exports are detrimental to food security in the exporting country as generally the products exported are different from those consumed locally. At the same time, there is no substantial evidence that fish export revenues substantially alleviate poverty problems in the exporting country. Several participants stated, however, that this aspect is more a problem related to distribution of benefits from trade rather than a problem inherent in trade as such.
• Several countries fear that their sovereign right to fishery management might be infringed by eco-labelling schemes. However, eco-labels may be attractive to consumers in some markets but it is in doubt whether consumers are willing to pay enough to cover the costs. If not, the costs will have to be born by producers. With 50% of fish exports coming from developing countries, this fact will have particular consequences for producers in these countries. Some participants stressed that eco-labels must in any case be considered just an additional tool in fisheries management, alongside more traditional controls.
• The introduction of mandatory HACCP schemes for fish exports to the most important markets has had consequences for exporters in developing countries. There was disagreement over whether HACCP can be considered a non-tariff trade barrier, as exporters are able to influence their own position and adapt to the new regulations. Several participants mentioned that trade barriers, even though lower than in the past, remain considerable in many parts of the world, especially for processed fish products.
• Several participants stressed the need for more research into the development of new products to satisfy low-income markets. There was disagreement over whether available processing technologies are insufficient for production of low-cost fish products or whether there are particular causes behind lack of distribution of available products, such as frozen pelagic species. Several participants urged a reduction in use of fish for non-food purposes and a reduction in discards.
• Some participants stressed that subsidies and overcapacity are problems in international fisheries, as are ill-defined property rights to resources in many countries.

15. It was recommended that the FAO consider the possibility of investigating the effects of trade in fish products on those individual countries that are thought to be at risk of uncertain food supplies.

16. It was further recommended that FAO and other international, non-industry organizations attempt, within the resources available, to undertake more market research and stimulate further product development in low-cost fish products, including improvement of traditional production methods such as drying, smoking, curing and freezing.

17. The Second Session of the FAO Advisory Committee on Fisheries Research, held in 1999, noted in its report the participation and success of the e-mail conference. The Committee agreed further that the Working Group on the Impacts of Trade and Benefit Distribution, which had commissioned the e-mail conference, should continue its work focusing on the following key research areas with the following modalities for implementation:

1. Acquire further information and conduct analysis on four key Barriers to Trade, namely tariffs, quotas, currency regulations and quarantine and quality controls. This work should be conducted via the Fish INFOnetwork;
2. A study on the effects of fish trade on food security in selected LIFDCs, taking account of the nature and quantity of fish imports and exports;
3. The Fish INFOnetwork should conduct review studies, as relevant, on the reasons for past failures in efforts to divert small pelagics to human food instead of reduction for fish meal;
4. E-mail conference on the prospects for and barriers to increased intra-regional trade in fish and fishery products in developing country regions;
5. Gather information through the Fish INFOnetwork on trade subsidies for fishery products.

SUGGESTED ACTION BY THE SUB-COMMITTEE

18. As globalization has implications on domestic fishery industries through trade in fish and fishery products, the Sub-Committee is invited to consider likely developments. It may wish to recommend that studies to assess current and future impact on international trade in fish and fishery products should be undertaken. The studies may be related to (1) fish exports from developing countries in the light of the WTO Agreements of the Uruguay Round and the new multilateral trade negotiations, (2) experiences by developing countries in adapting to changes in fish import regimes in major markets, (3) the potential for increased regional fish trade with LIFDCs and (4) regional experiences in development of new low-cost fish products based on exploitation of improved production technologies.