Pacific Partners Outlook: The "Fishy Business" of Negotiations

Volume II | Issue 3 | 8th March, 2012

The South Pacific Tuna Treaty is about more than just fish.

The treaty has served as the cornerstone of U.S.–Pacific Island relations since the Forum Fisheries Agency (FFA) and the United States negotiated the agreement in 1988. It was designed to provide aid and development opportunities to the island nations in return for U.S. access to the vast Western and Central Pacific Ocean’s tuna resources. But events last year revealed that the treaty has not lived up to expectations.

After five fruitless rounds to renegotiate the treaty, in May 2011 Papua New Guinea unilaterally announced it was withdrawing, giving all parties one year’s notice before the treaty would be nullified. With the Obama administration pledging to reengage the region, the 18 parties to the treaty have scrambled to breathe new life into the agreement.

The treaty collapsed for several reasons, the most visible being that it failed to adapt to the drastically changing Pacific tuna industry. Free-school tuna stocks have collapsed worldwide because of growing global demand and the introduction of purse seine vessels— ships that use weighted nets to bring in catches far larger than those previously possible. The West and Central Pacific fisheries now contain the last moderately healthy tuna stocks in the world thanks to their distance from traditional consumers and fisheries, and they now provide more than 50 percent of the total global catch.

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The Week That Was

  • Gillard wins leadership ballot and remains Australia’s prime minister
  • Officers responsible for navigating the Rena plead guilty in New Zealand
  • Fiji misses deadline to begin constitution consultation

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Looking Ahead

  • Georgetown to host lecture March 22 on Australia and the Asia-Pacific
  • New Zealand-U.S. Council 10th Anniversary Conference on May 4
  • Australian American Leadership Dialogue (AALD) July 15-18

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THE "FISHY BUSINESS" OF NEGOTIATION: THE TUNA TREATY AND U.S. ENGAGEMENT WITH THE PACIFIC

By Gregory Poling, Research Assistant, and Elke Larsen, Researcher, Pacific Partners Initiative, CSIS

The South Pacific Tuna Treaty is about more than just fish.

The treaty has served as the cornerstone of U.S.–Pacific Island relations since the Forum Fisheries Agency (FFA) and the United States negotiated the agreement in 1988. It was designed to provide aid and development opportunities to the island nations in return for U.S. access to the vast Western and Central Pacific Ocean’s tuna resources. But events last year revealed that the treaty has not lived up to expectations.

After five fruitless rounds to renegotiate the treaty, in May 2011 Papua New Guinea unilaterally announced it was withdrawing, giving all parties one year’s notice before the treaty would be nullified. With the Obama administration pledging to reengage the region, the 18 parties to the treaty have scrambled to breathe new life into the agreement.

The treaty collapsed for several reasons, the most visible being that it failed to adapt to the drastically changing Pacific tuna industry. Free-school tuna stocks have collapsed worldwide because of growing global demand and the introduction of purse seine vessels— ships that use weighted nets to bring in catches far larger than those previously possible. The West and Central Pacific fisheries now contain the last moderately healthy tuna stocks in the world thanks to their distance from traditional consumers and fisheries, and they now provide more than 50 percent of the total global catch.

The increasing scarcity of tuna led eight FFA members, whose exclusive economic zones accounted for approximately 30 percent of the world’s tuna, to form the Parties to the Nauru Agreement (PNA) in 1982 as a cartel to control prices and promote the development of local fisheries. By the 1990s even the PNA fisheries were facing the collapse of two of their four major tuna species—Bigeye and Yellowfin—and therefore adapted their organizational mission to include sustainability. Early efforts to control fish catches in the 1990s by limiting the number of purse seines were largely ineffective, however, as improvements in boat capacity and efficiency relentlessly increased catch sizes.

The PNA developed a new strategy in 2007 to combat overfishing by establishing the Vessel Day Scheme (VDS). The VDS limits the number of days that purse seine vessels can fish in PNA-exclusive economic zones. Each PNA member receives a fixed number of “fishing days” according to its share of tuna biomass. Each member can either reserve those days for its domestic tuna industry or sell them to outside fishing nations. Overall, the VDS has been largely successful in boosting conservation, and in January 2012 it received a sustainability certification from the Marine Stewardship Council, marking the area as the largest sustainable purse seine fishery in the world. The VDS is strongly endorsed by the Forum Fisheries Agency.

The South Pacific Tuna Treaty’s biggest problem is that it has not adapted to the VDS. Conservation measures remain limited to the 1990s’ system of capping the number of U.S. purse seine vessels in the area at 40. The Pacific Islands rightfully complain that this system could contribute to overfishing. The U.S. purse seine fleet has dwindled to 14 registered vessels, but the United States has made the controversial decision to allow 25 Taiwanese vessels to purchase the right to use the United States as a “flag of convenience” in order to get around the rules of the VDS.

A second problem is that the treaty has not responded to changes in market pricing as tuna have become scarcer. Under the treaty’s original terms, the United States gives the island nations $21 million dollars in aid and rent, equivalent to $1,800 per fishing day under the VDS. This sum is greatly undervalued considering that Japan pays an average of $6,050 per fishing day. The imbalance is made worse because the South Pacific Tuna Treaty is a multi-access agreement while the others are bilateral. This makes a “fishing day” under the treaty inherently more valuable because U.S. ships can follow fish across international borders.

The tuna treaty’s woes cannot be blamed solely on the United States. The Pacific Island parties to the agreement have been neither cooperative nor transparent during the renegotiation process. The United States made multiple requests to the Pacific Island parties for (1) a framework explaining what the VDS actually entails, (2) copies of bilateral agreements concluded under the VDS, and (3) the amount of additional aid needed to maintain the treaty. The requested framework, treaties, and ballpark figures were never delivered.

The South Pacific Tuna Treaty is currently being renegotiated, and the latest round of talks was held February 27 in Hawaii. Negotiations had a rocky start, highlighted by Secretary of State Hillary Clinton’s reported threat in December 2011 to withdraw U.S. aid if the treaty expires in May. Since then, negotiators have made some impressive progress and it seems that an agreement will be finalized. Papua New Guinea’s requirement that the United States agree to pay at least $45 million to rejoin the negotiations has been met, and, during talks in Nadi, Fiji, in January, the United States offered $58 million for 9,000 fishing days ($6,444 per day), an amount significantly closer to the islands’ demand for $60 million for 7,000 fishing days.

Progress in the negotiations is important for two reasons. First, the treaty is one of the only transparent agreements in the Pacific tuna industry and acts as an information clearing mechanism, making the island parties more accountable for their actions.

Second, and more importantly, tuna is the most significant U.S. economic interest in the region. It is feared that if the treaty is not renegotiated successfully, the United States will lack a sound foundation for fulfilling its pledge for reengagement with the Pacific Islands. The South Pacific Tuna Treaty is about more than simply the prized fish itself. It is about fostering an enduring and reciprocal relationship between the United States and the Pacific Islands. Anyone concerned with the United States’ ability to follow through in its “rebalance” toward Asia should pay attention to the negotiations.

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The Week That Was

Australia

Gillard wins Labor Party leadership ballot and remains prime minister. Australian prime minister Julia Gillard handily defeated former prime minister Kevin Rudd 71–31 in a Labor Party leadership ballot February 27. Gillard scheduled the ballot after Rudd resigned his post as foreign minister in a 1:30 a.m. press conference February 22 in Washington, D.C. Gillard proceeded to consolidate her power March 2 by removing Rudd supporters from her cabinet and appointing former New South Wales premier Bob Carr as foreign minister. Gillard supporters hope that Carr’s reputation will help heal intra-party divisions and bolster her image ahead of a general election in 2013.

Lynas faces stiff local opposition to its rare-earth processing plant in Malaysia. Australian mining company Lynas faces widespread local opposition to its nearly complete rare-earth processing plant in Kuantan, Malaysia. A 5,000-strong “Green Gathering” organized by a coalition of NGOs February 26 expressed fear that the facility could poison ground water by leaking radioactive waste. Lynas decided to build the facility in Malaysia because of its inexpensive royalties and hopes that its production of rare earths could break China’s 95 percent industry share.

Footage of an Indonesian abattoir mistreating Australian cattle sparks outrage. Footage of Indonesian abattoirs, including one whose license was suspended in 2003, mistreating Australian cattle sometime between February 24 and February 26 has sparked public outrage in Australia. The scandal comes just six months after Canberra passed new regulations on the live cattle trade following a May 30, 2011, media exposé of cruelty in Indonesian abattoirs. Australia has exported six million cattle to Indonesia over the last decade, earning $375 million annually.

Qantas announces plans to cut 500 jobs and reduce international routes. Alan Joyce, CEO of Australia’s Qantas Airlines, announced February 16 that his company plans to cut 500 jobs in its heavy maintenance operations and suspend some international routes, including flights from Los Angeles to Auckland and from Singapore to Mumbai. Joyce said Qantas’s updated fleet requires less maintenance than in the past and that the airline needs to cut costs because of the strong Australian dollar. The announced job cuts follow a series of labor disputes in late 2011 between Qantas and its employees.

New Zealand

Captain and officers responsible for navigating the Rena plead guilty. The captain and officers of the cargo ship Rena, which ran aground in October 2011 on a well-charted reef off the port of Tauranga, pled guilty to operating the ship dangerously and altering documents after the crash. They now face up to seven years in jail. The Rena leaked 440 tons of fuel into the ocean and cleanup costs are estimated at $108.4 million.

Sale of state-owned assets to raise an estimated $5 billion. The New Zealand government estimates that the partial privatization of four state-owned energy companies and national carrier Air New Zealand will raise $5 billion, $800 million more than initially thought. Profits from the asset sale will be used to offset government spending and borrowing. No time frame has been set for the privatizations, but Prime Minister John Key said February 20 that Air New Zealand shares will not be sold until the airline market rebounds.

Air New Zealand cuts 400 jobs after profits drop. State-owned Air New Zealand announced February 23 that it would cut 400 jobs following a 61 percent drop in half-year profits. The airline blamed a weak global economy and the high cost of jet fuel for the profit collapse. Analysts cite Air New Zealand’s expansion of routes as evidence the company will survive despite its financial troubles.

pacific Islands

Legislation to reserve seats for women in Papua New Guinea’s parliament fails. Papua New Guinea’s parliament February 22 failed to pass legislation that would have reserved seats for women in the legislature. The bill needed an absolute majority of 73 votes in the 109-member parliament to pass but received only 58. Papua New Guinea’s opposition leader and only female member of the parliament, Dame Carol, said she was disappointed but not surprised. She hoped that reserved parliamentary seating for women would improve gender perception and equality.

Fiji misses deadline to begin constitution consultation. Fiji’s military regime missed its self-imposed deadline to begin a constitution consultation by the last week of February. Commodore Frank Bainimarama said March 1 that the constitution consultation would begin the following week, but the Fijian Labour Party claims he is bluffing. A February 21 IMF report said political instability since Fiji’s 2006 military coup has led to economic stagnation.

Nauru becomes the first Pacific Island nation licensed for deep-sea mining exploration. The International Seabed Authority (ISA) February 22 granted a Nauru company a license for deep-sea mining of copper, manganese, cobalt, and nickel in international waters in 2012. Seabed mining presents an economic opportunity for the resource-poor Pacific Island countries, leading others, including Papua New Guinea, to begin exploration within their exclusive economic zones. Conservation groups have raised concerns about the environmental impact seabed mining will have on local fisheries.

Pacific population set to reach 18 million by 2050. A report released February 29 by the New Zealand Department of Labor projects that the population of the Pacific Islands will reach 18 million by 2050. The report recognizes the developmental challenges that population growth poses for the islands, which already face high unemployment rates, but highlights the opportunities presented by the region’s favorable demographics.

Solomon Islands’ foreign minister dismissed after discussions to boost relations with Russia. Solomon Islands’ foreign minister Peter Shanel Agovaka was dismissed February 9 after meeting with Russian foreign minister Sergei Lavrov in Fiji to discuss improving bilateral ties, including by recognizing the independence of Abkhazia and South Ossetia. Prime Minister Gordon Darcy Lilo said the Solomon Islands need to strengthen traditional ties before pursuing new diplomatic relations. Former minister of health Clay Forau Solaui was appointed minister of foreign affairs February 28.

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Looking Ahead

Georgetown to host lecture on Australia and the Asia Pacific. Georgetown University’s Center for Australian and New Zealand Studies will host a lecture on how Australian electoral campaigns reflect politicians’ attempts to manage the perceived threat of the Asia Pacific. The lecture, entitled “’Asian Anxiety’: Australia and the Asia Pacific,” will be held at Georgetown’s Edward B. Bunn, S. J. Intercultural Center, Room 462 on March 22 from 12:00 to 1:00 p.m. The speaker, Stephanie Brookes, is a lecturer at Melbourne University’s School of Culture and Communication. Please RSVP here.

ANZAC Day on April 25. ANZAC (Australia New Zealand Army Corps) Day will be celebrated in Australia, New Zealand, and Tonga on April 25. ANZAC Day was originally established to commemorate Australian and New Zealand troops that fought at Gallipoli during World War One, but is now celebrated in honor of all Australian and New Zealand soldiers, sailors, and airmen and women. The Australian and New Zealand Embassies in Washington hold ceremonies each year to commemorate the holiday. For more information, visit the Australian Embassy’s ANZAC webpage.

New Zealand-U.S. Council 10th Anniversary Conference on May 4. The New Zealand United States Council will host its 10th Anniversary Conference on May 4 at the Sky City Convention Centre in Auckland. The theme of the conference will be “Growing beyond the crisis: the Trans Pacific Partnership – prospects and opportunities for business.” For more information, please visit the Council’s website at www.nzuscouncil.com.

Australian American Leadership Dialogue July 15-18. The American Australian Education Leadership Foundations in Washington and Melbourne will host the annual Australian American Leadership Dialogue (AALD) July 15-18 in Washington. AALD is a private bipartisan diplomatic initiative that brings together leaders from both countries to explore ways to strengthen the bilateral relationship. For more information, please visit www.aald.org.

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Gregory B. Poling
Senior Fellow and Director, Southeast Asia Program and Asia Maritime Transparency Initiative

Elke Larsen