TUNA ANYONE? CANNED TUNAFROM THAILAND AND THE
PHILIPPINES IN THE EUROPEAN
UNION
Aｌfredo C. Robles, Jr.
De La Salle University
19 December 2009

It is well-known that the EU is one of the major
partners of developing countries.
In addition to providing ODA (Official
Development Assistance), the EU constitutes
the largest trading bloc in the world, and the
EU is the single most important trading
partner of many developing countries,
particularly the least developed ones.

For over forty years, the EC’s trade relations with
developing countries have appeared to form apyramid of privilege.
At the top were the ACP (African, Caribbean
and Pacific) countries, comprising mostly
former European colonies in these regions,and enjoying duty-free access for over 99% of
their exports to the EU, without the obligationof reciprocity.

At the bottom of the pyramid were thedeveloping countries that benefited only fromthe GSP (Generalized System of Preferences),
mainly the countries of South and Southeast
Asia and the Latin American countries.

Although the Southeast Asian countries havebeen more successful than the ACP countries
in diversifying the composition of theirexports to the EU away from agricultural andfisheries products towards manufactured
goods, several Southeast Asian countries,
notably Thailand, the Philippines andIndonesia, continue to export substantial
quantities of agricultural and fisheries
products to the EU.

The differential (many in Southeast Asia would say
discriminatory) treatment of imports of canned
tuna from the ACP countries, on the one hand,and imports of the same product from Thailand
and the Philippines, is instructive in at least two
respects.
First it provides a graphic illustration of the way inwhich the EU’s rules appeared to have thepotential of pitting developing countries against
each other (Southeast Asia vs. ACP).

Second, despite the more favorable tariff
treatment accorded to the ACP, the EU
implements SPS (sanitary and phyto-sanitary,referring to food safety and animal and plant
health) measures and rules of origin thatgenerate dissatisfaction among the ACP
countries and diminish the benefits ofpreferential treatment for the ACP (the ACP vs.
the EU).

The rules of origin create the suspicion that they
were formulated for the benefit of the EUfishing and canning industry.

Why discuss EU imports of canned tuna? There
are several reasons.
A. The nature of the product itself
1. Tuna is widely considered to be a healthy
product.
a. It is an inexpensive source of protein.
b. It is said to be rich in omega-3(polyunsaturated) fatty acids that build up
good cholesterol (Tacio, 2009, p. 3).

2. Tuna is traded primarily in the form of canned
tuna, even if it is also marketed in other forms,
such as flakes, or fresh/chilled/frozen tuna
(Tacio, 2009, p. 2).

B. The structure of the industry
1. The world’s largest fishing grounds are in theWestern and Central Pacific, but the main tunafishing states are in Asia, with the Japanese andTaiwanese fleets being the most important (Tacio,
2009, p. 2).
2. While some of the major exporters of canned
tuna are also fishing nations, many tunacanneries in these countries depend on imported
tuna for their raw materials.

C. The changing structure of the canningindustry.
1. In the 1970’s, the five major tuna processing
states were the United States, Japan, Spain,
France and Italy.
2. Since the 1980’s the participation of Asianstates, notably Japan, Korea, Taiwan, Thailand,
the Philippines and Indonesia, has increased
significantly (Tacio, 2009, p. 2)

At present, Thailand and the Philippines arerespectively, the world’s first and second
exporters of canned tuna. Thailand exports
over 21 million cases worth $608 million; thecomparable figures for the Philippines are 6
million cases and $100 million (Tuna Tech
Services, Tuna Consultant, n.d., p. 1).

D. The differential (discriminatory) tariff treatmentin the EU
1. Based on the degree of processing – imports ofraw tuna for further processing in the EU enter
Europe duty-free, while all other products are
subject to duty of between 22 and 24%.
2. Based on the origin - Imports of canned tunafrom the ACP countries, on which no tariff isimposed, and imports from other sources,
including Thailand and the Philippines, which pay
a tariff of 24%.

I. Southeast Asia vs. the ACP?
The differential tariff treatment led to a WTO
mediation to which Thailand and thePhilippines, on the one hand, and the EU, on
the other, were the parties, but it can beargued that the EU was acting in defense of
the ACP countries.
A. The WTO Mediation
B. In Defense of the ACP Countries

A. The WTO Mediation
1. The origins of the mediation
2. The arguments of the parties
3. The outcome of the mediation
4. The implementation of the compromise1. The origin of the mediationa. In March 2000, the EU filed a request for a waiver fromthe WTO for the Cotonou Partnership Agreement that it
had signed with the ACP countries.
b. For nearly two years, the EU failed to respond to concerns
expressed by Thailand over the disparity in treatment ofcanned tuna.
c. In November 2001, at a WTO Ministerial Conference in
Doha, Thailand and the Philippines were able to obtain EU
agreement to consultations in exchange for the twocountries withdrawing their objection to the adoption of
the meeting’s final declaration (Schifferes, 2002).

2. The arguments of the parties
a. Thailand
1) The EU market continued to grow and this growth
was matched by the growth in ACP exports.
2) Yet imports from Thailand fell by 46% between
1994 and 2000, at a time when Thai exports to othermarkets were stable or had grown. Even the
depreciation of the baht following the Asian financial
crisis was not sufficient to stimulate Thai exports to
Europe (Xuto, n.d.).

Thailand was said to have asked for a zero duty
or a high import quota (70,000 tons)(“EUDenies Import Prejudice,” 2002; Ponvutitham,2002).
Later, it was said that the two countries wanted
the EU to lower tariffs to 5% (“Philippines,
Thailand Seeking WTO Help in Tuna Dispute”,
2002).

b. The EU rejected all arguments and demands presented
by the two countries.
1) The 24% duty had been bound and applied since the1970s, when there was no canning production ineither Thailand or the Philippines.
2) The zero duty for the ACP had been applied since
1975.
3) The EU denied that the tariff differential had had any
impact on the two countries’ exports, and went so far
as to argue that this was proven by the increase in theirexports to the EU (Fajardo, 2002, p. 4).

In the event of the failure of negotiations, Thailand
and the Philippines would have preferredrecourse to a WTO dispute settlement panel.
The EU wished to avoid WTO dispute settlement,
perhaps because it realized that its case wasweak.
As a compromise the parties agreed to a mediation,
the first of its kind under WTO auspices.

3. The outcome of the mediation
The WTO-appointed mediator proposed a quota of
25,000 tons from July 2003 to June 2004, to beaugmented to 25,750 for the following 12 months
and extended regularly for one year.
52% was allocated to Thailand, 36% to thePhilippines; 11% to Indonesia, and 1% to othercountries. Exports to the EU within the quota
would be subject to a rate of 12% (Council
Regulation (EC) No 975/2003).

4. Implementation of the compromisea. The three countries were reportedly able toexpand their exports to the EU (Brus, 2003a,
2003b; “Tuna Market Report-EU April 2007”).
b. Thailand was normally able to fill its quota forthe year within days (Campling and Doherty,
2007, p. 10).
c. The Philippines was able to fill its quota for theyear in a few weeks (“Tuna Market Report-EU
February 2007”).

d. Exporters in both countries continued to clamor
for a higher quota or a lower tariff.
In the Philippines, the major tuna canneries, which
employ mostly Muslim women, are located in
Mindanao, which has been plagued by the
problem of Muslim secession and terrorism(Brus, n.d.)In the major tuna canning city, tuna canninggenerates employment for 120,000 people(Espejo, 2008).

The Philippine quota was only 9000 tons,
whereas annual production was at least
100,000 tons (Adlaw, 2009).
e. The quota ended in June 2008.

B. In Defense of the ACP countries
1. The ACP response to the mediation
2. The level of development of the ACP canned
tuna exporting countries

1. The ACP response to the mediationa. The Commission’s position
The proposal was reasonable, as the quota wasequivalent to 4.6% of EU consumption in
2002, 9.6% of total imports in 2001 and 37%
of total MFN imports. The quota would notprejudice either ACP exports or EU
production of canned tuna (European
Commission 52003 PCO141, 2003).

b. The ACP countries’ negative attitude
At a meeting of the ACP-EU Joint Parliamentary
Assembly in Brazzaville in March-April 2003,
the Assembly called on the EU not to adopt
the mediator’s proposal, for the following
reasons (ACP-EU Joint Parliamentary Assembly
ACP-EU 3547/03/fin.):1) Export companies in Thailand and thePhilippines are highly competitive;2) The two countries are in one of the regions of
the world that attract the most investment;
3) The two countries have an extremely large
fishing capacity, enabling them to comply withrules of origin more easily;4) Increased market access for the two countries’
exports would lead to no less than the
disruption and disappearance of the ACP tunacanning industries.

The fact that Thailand and the Philippines areable to fill their quotas in a short period
demonstrates that even with a 12% tariff, theirexports of canned tuna to the EU are still
attractive to European importers (Campling
and Doherty, 2007, p. 10).

2. The level of development of the ACP countries
a. The major exporters to the EU (Block andGrynberg, 2005, p. 5) are1) small island countries – the Seychelles (16.5%
of EU imports), Mauritius (6.3%); OR
2) countries geographically far from the EU –Fiji(0.9%), the Solomon Islands (1.0%), Papua New
Guinea (0.9%)(these three are also small island
countries), OR3) least developed countries – Madagascar(3.9%), Senegal (2.7%).
Only Côte d’Ivoire (17.6%) and Ghana (9.5%) do
not belong to any of the three categories.

b. An example – the Seychelles
1) area of only 444 km2
2) population of only 80,000
3) Exclusive Economic Zone (EEZ, 200 nautical
miles from the coastline) of 1.4 million km2
4) Fishing has replaced tourism as the mostimportant source of revenue (Michaud, 2003,
pp. 1, 7).

5) The tuna cannery (Michaud, 2007) is- the single largest employer (7.6% of theworking population);- the single biggest buyer of electricity andwater;- the single biggest exporter;- the single biggest earner of foreignexchange.

Hourly wages in the Seychelles ($1.90) arehigher than in Thailand ($0.65).
35% of the workforce is composed of foreign
workers, but because of the small population
it is difficult to employ more locals.
Absenteeism and low productivity of workers
are problems in the Seychelles (Campling andDoherty, 2007, pp. 18-19).

II. The ACP vs. the EU?
The differential (discriminatory) treatment of EU
imports of canned tuna has created the ACPtuna canning industry. Yet the ACP countries
are dissatisfied with the development
outcomes of EU treatment, which in their vieware limited by the application of SPS measuresand complex rules of origin.

It appears that while tariff barriers on imports ofcanned tuna from the ACP are negligible, nontariff barriers prevent the ACP countries frommaximizing the benefits of the preferences inways that will contribute to their development.

A. The application of SPS measures
B. The application of complex rules of origin.

A. The application of SPS
This is essential in order to protect the health of
consumers.
Seafood production in developing countries has
to match EU hygiene and food safety
standards (Campling and Dougherty, 2007, p.
23).

ACP complaints refer to the operation of the EU
system.
1. Delegation of implementation andenforcement to national competentauthorities
2. Inspection by the EU Food and Veterinary
Office (FVO)

1. Delegation of implementation andenforcement to national competentauthorities through a two-tier-systema. A country has to be licensed to export fish to
the EU.
b. Each exporting company has to apply to thecompetent authority (CA) within the country
for permission to export to the EU (Campling
and Dougherty, 2007, p. 23).

At first glance, the system is advantageous to
the developing countries, which presumably
enjoy a degree of autonomy (if not flexibility)
in implementation and enforcement of EU
food safety legislation.

In the ACP countries, the CA’s interpret EU
legislation as constituting a check list thatallows no subjective judgment, without taking
into account the local environment (Campling
and Doherty, 2007, p. 36).

The EU “Field Guide for Sanitary Inspection ofFish and Fish Products as Food for Human
Consumption” does not enable local
inspectors to make decisions in non-standard
situations (Campling and Doherty, 2007, pp.
26, 36).

For example, according to one rule, the netted
catch should not touch the deck of the vessel.
This rule assumes a risk of contamination bywooden decking.
However, the rule might make less sense if thevessel had stainless steel decking (Campling
and Dougherty, 2007, p. 24).

“The amount and strictness of EU requirements…[are] adding to production costs (Campling
and Dougherty, 2007, p. 26).”
One solution would be to prepare
implementation manuals for inspectors on aregional basis that reflect different areas ofrisk associated with the local environment(Campling and Dougherty, 2007, p. 36).

2. Inspection by the EU Food and Veterinary
Office (FVO)
a. Frequency of inspections
b. Outcomes of inspections

a. Frequency of inspections
The EU FVO inspected the competent authority(CA) of the Seychelles in 1998, 2000, 2004
and 2006, and that of Mauritius in 1998 and2006.
Thailand’s CA was inspected in 1998, 2000 and
2005.

The two ACP countries are under the impressionthat they are inspected more frequently thanThailand (Campling and Dougherty, 2007, pp.
26-28).

b. Outcomes of inspections
1)In the ACP:
In the Seychelles, the FVO found instances in2004 of non compliance and recommended
that the CA suspend exports to the EU from acannery.
In 2006, the FVO while noting full compliance,
noted additional deficiencies that had to be
remedied through an Action Plan.

In Mauritius, the 1998 and 2006 inspections
found deficiencies in compliance andrecommended new legislation. In 2006, theCA’s authority to approve additional
companies that could export to Europe wassuspended (Campling and Doherty, 2007, pp.
27-28).

In Thailand, the 2000 inspection identified
deficiencies that Thailand promised to rectify.
The 2005 inspection found a much better
situation in the export-oriented operations
but legislation on fishing vessels was not fully
enforced.

Facilities for cleaning/disinfecting in theprocessing areas were inadequate.
Doors were not pest-proof.
Maintenance of walls and floors was inadequate.
Stagnant water was used for cleaning hands andequipment (Campling and Doherty, 2007, p.
27)

Unlike the Seychelles and Mauritius, Thailand isable to guarantee only internal traceability of
the fish (i.e. inside the cannery) and notexternal traceability (outside the cannery).
Thailand obtains large quantities of tuna fromcold stores based in Singapore, which containfish from both EU approved vessels and nonEU approved vessels (Campling and Doherty,
2007, p. 30).

Thailand is accused of failing to rectify the
deficiencies identified by the inspections, yet
the EU FVO has never suspended the Thai CA’s
authority to approve any company’s export
operations (Campling and Doherty, 2007, p.
27).

B. The implementation of rules of origin
Rules of origin are intended to prevent thirdstates (i.e., neither from the EU or from the
ACP group) that export to Europe fromcircumventing the regular (MFN) tariffs towhich their exports would be subject bydiverting them through the ACP countries.

1. The content of the rules of origin
2. The negative consequences of the rules oforigin1. The content of the rules of origin
a. For the raw fish
1) if the tuna is caught in the territorial seaof the ACP country, it is considered asoriginating from the ACP country.

2) if the tuna is caught outside theterritorial sea but within or outside the
Exclusive Economic Zone (EEZ) of the ACP
country, it is considered as originatingfrom the ACP country only if the vesselthat caught the fish complies with strict
requirements Block and Grynberg, 2005,
p. 7) :

• Registration in an ACP country, or in the EU• Sailing under the flag of an ACP or EU country• Ownership of at least 50% by nationals of ACP
or EU countries or by a company with its head
office in an ACP or EU country whose chairand board members are nationals of ACP or
EU countries• At least 50% of crew must be nationals of ACP
or EU countries

b. for the processed fish (including cannedtuna) – the processed fish will only beconsidered as originating from an ACP
country if the raw material (the tuna)
itself originates from the ACP country (i.e.,
it fulfills the above conditions).

2. The negative consequences of the rules oforigina. Protection of EU tuna canneries
European canneries can purchase their raw
materials from the cheapest sources.

Like Thailand and the Philippines, tuna canneries
in the ACP countries have to purchase theirraw material (tuna).
The ACP countries lack the resources to acquireand support their own industrial tuna fleets.
One vessel (industrial purse seiner) costs atleast $20 million (“Case: Fishy Business,” 2007,p. 3).

In order to comply with the rules of origin andthus benefit from the EU zero tariff on importsof canned tuna, canneries in the ACP countries
are forced to purchase the tuna from highpriced EU fishing fleets (“Case: Fishy
Business,” 2007, p. 3).

If they purchased less expensive tuna caught by
non-EU vessels fishing in their EEZ or in theWestern and Central Pacific Ocean, thecanned tuna that they produce would not
enjoy the zero tariff in the EU.

The higher cost of the raw material will
inevitably raise the price of the canned tuna,
because the fish accounts for 39-48% of the
final price of the canned tuna (Campling andDoherty, 2007, p. 6).

ACP canneries are willing to absorb the cost of
higher raw material because the zero tariff still
gives them an advantage over canned tunafrom Thailand and the Philippines.

b. Subsidy to the European tuna fishingindustry
Since the ACP countries exporting canned tuna
do not have their own fishing fleets, they arecompelled to license EU vessels to fish in their
EEZ’s. These vessels could then sell their catchto the ACP canneries, whose raw material(and therefore the final product, canned tuna)
would be considered originating.

The Spanish fishing industry is the largest,
followed by the French, Portuguese andBritish.
In 2000, Spanish vessels caught 400,000 tons oftuna, mostly from ACP EEZ’s (Block andGrynberg, 2005, p. 3).

The European fishing industry is exertingpressure on the EU to sign access agreementsthat would allow them to fish in the waters of
the ACP and other developing countries
because of declining fish stocks in EU waters
and overcapacity of fishing fleets and/or
processing plants (Block and Grynberg, 2005,
p. 3).

Without the access agreements, unemployment
in the industry would rise (Block and Grynberg,
2005, p. 3).

The Pacific countries, which are very distantfrom Europe, might not even be able to attract
European fishing fleets.
If so, they would not be able to enjoy the zero
tariff on canned tuna to which they areentitled.

For example, Fiji tried and failed to attract
Spanish fishing fleets.
Fiji’s one national cannery then formed apartnership with a US quota, but the canned
tuna that is produced (apart from a quota set
by the EU) does not enjoy the zero tariff in the
EU (Block and Grynberg, 2005, p. 16).

European fishing vessels fishing in an ACP
countries’ EEZ are not obliged to sell theircatch to the ACP country concerned, whichmeans that the supply of raw material to thecannery in the latter may not even be
guaranteed.

It has been noted that in the Seychelles, thelandings of EU vessels have not increased, inspite of the increased canning capacity in the
country (Block and Grynberg, 2005, p. 17).

“The preferential access offered to the ACP for
the processed and canned tuna that theyexport to the EU is a form of upstream subsidy
to EU vessels, not a trade concession to the
ACP (“Case: Fishy Business,” 2007).”

If the EU wished to promote the development of
the ACP countries, it could:- allow them to purchase tuna from thecheapest source;- assist them in developing their own tunafishing fleets;- assist them in diversification of economic
activities.

Conclusion
The case of canned tuna from Thailand and thePhilippines is not an isolated one in the EU’s
trade relations with developing countries.
The recently concluded banana dispute with theLatin American countries over the EU’s
preferential treatment of bananas from the
ACP countries provides another example.

The differential (discriminatory) treatment
might disappear under the following
circumstances:
1. the introduction of reciprocity in traderelations between the EU and regional
subgroups of the ACP countries;
2. the conclusion of a new WTO round; and/or
3. the conclusion of an ASEAN-EU FTA.

The case study highlights the importance ofcomparing (and contrasting!) the rhetoric of
EU policy and the reality of EU actions as wellas the extreme difficulty of any attempt to doso.

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