Tuna trade and terrorism

["Ian Murray" <seamus2001@xxxxxxxxx>]

< http://www.feer.com >
U.S. TRADE POLICY

Canned Heat
New moves on the tuna trade contradict the notion that to fight
poverty is to fight terrorism
By Murray Hiebert/WASHINGTON and Shawn W. Crispin/BANGKOK with
Trish Saywell/SINGAPORE
Issue cover-dated June 13, 2002


ENTHUSIASTIC HOMILIES from the United States on the virtues of free
markets are growing a bit stale in the fishing villages and tuna
canneries of Southeast Asia.

Recent U.S. trade preferences for the Andean nations of Latin
America have effectively increased the tariffs on tuna from
Thailand, the Philippines and Indonesia. Decreased demand for more
expensive tuna could lead to lay-offs of thousands of Muslim
workers at the same time that Washington is looking for increased
support in the region for its effort to end terrorism.

In Asia, the conflict is most poignant in light of U.S. President
George W. Bush's comments in April that fighting poverty is key to
fighting terrorism. The divergent policies strike hard on the
Philippine island of Mindanao, where U.S. troops are training armed
forces in the fight against Abu Sayyaf Muslim insurgents. "The U.S.
is giving $5 million to look for terrorists," says former President
Fidel Ramos, who heads the Ramos Peace and Development Foundation.
"Yet in the very same areas they're looking at prejudicing hundreds
of thousands of people" who will lose their main source of income.
Compounding the irony, the U.S. Agency for International
Development will direct much of this year's $70 million assistance
budget for the Philippines to Mindanao.

The Philippines exported $42.6 million in tuna to the U.S. in 2001,
according to the U.S. Department of Commerce. Indonesia, another
key partner in the hunt for terrorists, sent $37 million worth.

Thailand led the pack with $167.5 million in exports, and could be
hit hard by the new regime. "America has been preaching free trade,
but this is not free and fair to all countries," says Thirapong
Chansiri, president of Thai Union Frozen Products, Thailand's
leading tuna exporter and the second-largest tuna-canning company
in the world.

The Andean trade preferences will reduce the tariffs on tuna from
Latin America to zero, while Southeast Asian exporters will
continue to face duties of 12.5%. "It will wipe out most of the
[Southeast Asian] tuna industry," says Thirapong, whose firm holds
a majority stake in canned-seafood company Chicken of the Sea
International. "We only make 3%-5% margins. With a 12.5% tariff, we
can't compete."

Tariffs on tuna are only the latest U.S. trade restrictions to
prompt scepticism about Washington's commitment to free trade. In
May, Bush signed a new farm bill into law that will boost crop
subsidies in the U.S. Three months earlier, he imposed duties on
steel imports. At the World Trade Organization meeting in Doha,
Qatar last November, India, Pakistan and other developing countries
complained that the U.S. and other developed nations did not do
enough to improve access for products from poorer parts of Asia.

"The U.S. government needs to practise what they preach with free
trade," says Thai Deputy Commerce Minister Suvarn Valasathien. "The
U.S. is trying to serve its own purposes, whether through
protectionism or free trade."

Some American analysts agree. "We've lost our moral compass," Greg
Rushford, editor of a monthly newsletter on the politics of
international trade, says of recent moves by the Bush
administration to back down on free trade in order to win the
support of voters. "Asians are getting frustrated and their
frustration level is higher than I've ever seen it," says Rushford,
who recently visited the region.

The move by the U.S. Congress to cut import tariffs on canned tuna,
textiles and cut flowers is targeted at getting Bolivia, Colombia,
Ecuador and Peru to curtail their dependence on the drug trade. But
the result is that it increases the relative cost of Southeast
Asian tuna in American supermarkets. In an April letter to U.S.
senators, Southeast Asian ambassadors to Washington warned that the
preferential treatment for the Andean nations "will destroy the
level playing field" in the global tuna market and have "a
detrimental effect" on countries supporting the global campaign
against terrorism.

According to Thai government estimates, Thailand exports 25% of its
tuna to the U.S. If the tariffs are maintained, officials say, half
of the country's 20 canneries will be forced to close and 16,000
workers will lose their jobs.

Washington's image as a champion of free trade was hurt earlier
when Bush signed a farm bill throwing $180 billion-worth of new
subsidies at agricultural states that could help determine whether
the Democrats or Republicans control Congress after the November
elections. The bill, which Bush had earlier opposed, angered key
American allies in Asia--including China, which had pledged to get
rid of farm subsidies ahead of joining the WTO last year. "The U.S.
farm bill will depress the price of our farm products," says Thai
Deputy Commerce Minister Suvarn. "We will need to shore up prices
if this is U.S. policy."

The farm bill dented the credibility of the U.S. "We're increasing
our subsidies when we're trying to get everyone else to decrease
theirs," says William Reinsch, head of the National Foreign Trade
Council, a Washington-based trade association whose members include
many Fortune 500 companies. "It sends a horrible signal."

Asian scepticism about the Bush administration's trade policy first
peaked in February when Bush imposed duties of 30% on steel
imports. Bush called the tariffs a "temporary protection" to give
the U.S. steel industry, much of which is located in states that
were key to Bush's narrow election win in 2000, "breathing space to
regain competitiveness." China, in its first appeal to the WTO,
joined Japan, South Korea and the European Union in asking the
trade organization to rule on the legality of U.S. duties on steel
imports.

Do Washington's recent moves mean the U.S. is becoming
protectionist? "It's a false fear," says Clyde Prestowitz, who
heads the Economic Strategy Institute in Washington. "It's a little
hard to call a country that has a $500 billion current-account
deficit protectionist."

On top of that, some of Washington's harshest critics have not
always promoted free trade themselves. Japan has a tight lock on
agriculture, while Thailand protects its cement industry, Malaysia
shelters cars and the Philippines has been reluctant to open up to
foreign hypermarket retailers.

Gary Hufbauer, an international trade specialist at the Institute
for International Economics in Washington, calls the Bush
administration's measures a political gamble. Washington has made
many concessions to domestic protectionist interests in the hope
that this would help win congressional support authorizing the
government to negotiate a new global trade round. "The president
has made several leaps backward," says Hufbauer. "It's a
high-stakes gamble that Bush will be able to reverse policy and
come back to his original trade policy. Asians have a right to be
concerned."

The trade economist says that the new tariffs and subsidies could
damage the credibility of American officials ahead of the next
round of trade talks. "They could put on a T-shirt that reads 'I'm
a hyprocrite'," Hufbauer says. "People now say 'How can you talk to
us when you don't do it yourself?' . . . In any negotiation, [U.S.
Trade Representative Robert] Zoellick and his colleagues will have
to say 'Do as I say, not as I do'."

In the wake of the September 11 terrorist attacks, Zoellick made
several impassioned speeches arguing that trade liberalization was
a key weapon in the battle against terrorism.

Will recent U.S. trade moves dampen the support of Asian countries
for the war on terrorism? Reinsch, a member of the U.S.-China
Security Review Commission, believes these measures could "affect
their level of enthusiasm." For example, if Washington asks for
help in tracking down terrorist-linked money launderers in
Southeast Asia, Reinsch says, "people won't say 'no,' but they'll
say, 'it will take some time'."