2

Some Policy and Economic Considerations

U.S. TUNA AND MARINE MAMMAL POLICY

The U.S. policy and regulatory framework relevant to the tuna and dolphin issue is a subset of general U.S. fisheries and marine mammal policy. In this section, we briefly summarize the U.S. laws and policies that have had significant effects on the tuna-dolphin issue. We first describe the general policy framework for tuna fisheries and then the marine mammal policies that have affected the tuna industry.

U.S. Tuna Policy

The U.S. government has been involved in some form of tuna-policy negotiations since the 1940s and in formal regulatory activity concerning tuna fisheries since the 1960s. These laws and activities include the founding of IATTC in 1949 and the Tuna Conventions Act of 1950; the Fishermen's Protective Act (1954); the International Commission on the Conservation of Atlantic Tunas and the Atlantic Tuna Conventions Act (1975); the U.S.-Canada Pacific Albacore Treaty (1982); the South Pacific Tuna Act (1988); and others (Orbach and Maiolo, 1989). IATTC and the Tuna Conventions Act and the Fishery Conservation and Management Act of 1976 (FCMA) have had the greatest impact on the tuna industry. The Tariff Act of 1930 (and amendments) and the 1946 General Agreement on Tariffs and Trade (GATT) have also affected the industry.



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DOLPHINS AND THE TUNA INDUSTRY 2 Some Policy and Economic Considerations U.S. TUNA AND MARINE MAMMAL POLICY The U.S. policy and regulatory framework relevant to the tuna and dolphin issue is a subset of general U.S. fisheries and marine mammal policy. In this section, we briefly summarize the U.S. laws and policies that have had significant effects on the tuna-dolphin issue. We first describe the general policy framework for tuna fisheries and then the marine mammal policies that have affected the tuna industry. U.S. Tuna Policy The U.S. government has been involved in some form of tuna-policy negotiations since the 1940s and in formal regulatory activity concerning tuna fisheries since the 1960s. These laws and activities include the founding of IATTC in 1949 and the Tuna Conventions Act of 1950; the Fishermen's Protective Act (1954); the International Commission on the Conservation of Atlantic Tunas and the Atlantic Tuna Conventions Act (1975); the U.S.-Canada Pacific Albacore Treaty (1982); the South Pacific Tuna Act (1988); and others (Orbach and Maiolo, 1989). IATTC and the Tuna Conventions Act and the Fishery Conservation and Management Act of 1976 (FCMA) have had the greatest impact on the tuna industry. The Tariff Act of 1930 (and amendments) and the 1946 General Agreement on Tariffs and Trade (GATT) have also affected the industry.

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DOLPHINS AND THE TUNA INDUSTRY IATTC and Tuna Conventions Act Although there have been recent significant shifts in fishing effort by the U.S. high-seas tuna fleet to areas such as the western Pacific, the majority of the fleet's activity in the last 45 years has been in the ETP (see Figure 2-1 for recent distribution of catch in the ETP) off the coasts of countries from Mexico to Peru. In 1949, IATTC was formed by treaty between the United States and Costa Rica; a number of other coastal or fishing nations have subsequently adhered to the convention. The commission was codified into U.S. law through the Tuna Conventions Act of 1950. The original purpose of IATTC was to address and research issues pertinent to the conservation of tunas. For a number of reasons the attention of the commission has since expanded to include other large pelagic species such as billfish and coordination of certain international marine mammal conservation efforts (Joseph and Greenough, 1979). Beginning in the early 1960s, IATTC recommended a series of yellowfin tuna quotas to be implemented through seasonal closures in the commission's FIGURE 2-1 Average annual catches of yellowfin in the eastern Pacific during 1979–1987 for all purse-seine trips from usable log-book data. (1 short ton = 0.907 metric ton.) Source: Adapted from IATTC, 1989b.

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DOLPHINS AND THE TUNA INDUSTRY Yellowfin Regulatory Area of the ETP mmm00004 (see Figure 2-2). The United States was the only member nation of IATTC that did not claim jurisdiction over tuna within its 200-mile resource-control zone under its national fisheries legislation (this position has recently changed, as mentioned below). All other nations claimed such jurisdiction (see below). This difference in national fisheries policy, along with competition for the tuna resource itself, led to friction among the member nations that included seizures of U.S. tuna vessels by other member nations, retaliatory embargoes by the United States of tuna products from other member nations, and disagreements over national allocations. This situation led to the withdrawal of Mexico from the commission in 1978 and Costa Rica in 1979 (Van Dyke and Heftel, 1981). Costa Rica has recently rejoined the commission. Vanuatu, a nation new to the fishery, has also joined, and Colombia and Venezuela have applied for membership. Current members of IATTC are Costa Rica, France, Japan, Nicaragua, Panama, the United States, and Vanuatu. IATTC has continued its activities, however, in research and data collection for ETP tuna fisheries and has developed a principal role in the international marine mammal conservation effort, in particular in research efforts concerning the tuna-dolphin issue in the ETP. IATTC has been successful in obtaining the cooperation of both member and nonmember nations in data collection concerning dolphin mortality and, in many cases, in facilitating the cooperation of these nations in developing marine mammal protection regulations. However, no tuna management regime has existed in the ETP since 1979 (Orbach and Maiolo, 1989). All nations fishing for tuna in the ETP participate in the IATTC tuna-dolphin program, which includes the observer program, programs to reduce dolphin mortality through diagnosis and solution of gear problems, and training programs for captains and crews. Fishery Conservation and Management Act The FCMA is the principal U.S. federal law governing the management of domestic U.S. fisheries. Under the FCMA, until its amendment in 1990 the United States claimed jurisdiction over all fish species within 200 miles of its coast except “highly migratory species.” The act defines these as tuna “which, over the course of their life cycle, spawn and migrate over great distances in waters of the ocean” (Section 3). This provision, the so-called “tuna exemption,” was lobbied for by the U.S. high-seas tuna fleet. Their principal argument was that the U.S. fleet must fish for tuna off the shores of other nations, often within the 200-mile jurisdictions of these countries, and because all other nations include tuna in their jurisdictions, the U.S. fleet needed this provision to claim exemption from the laws of those nations. Under this law and the Fisherman's Protective Act, the United States has implemented its embargoes and other reactions to the seizure of U.S. vessels by Latin

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DOLPHINS AND THE TUNA INDUSTRY FIGURE 2-2 IATTC's Yellowfin Regulatory Area (CYRA). Source: Adapted from IATTC, 1989b.

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DOLPHINS AND THE TUNA INDUSTRY American nations. The FCMA was amended in 1990, and the United States now includes tuna in its jurisdiction. Although the circumstances surrounding U.S. tuna policy under the FCMA are extremely complex, two important implications of this policy are important for the tuna-dolphin issue. (1) The U.S. tuna exemption, among other factors, has strained the relationship between the United States and its Latin American neighbors to such an extent that it is expensive and sometimes difficult for U.S. vessels to fish inside the 200-mile resource-control zones of many of these countries. Thus, the U.S. fleet must fish primarily outside the 200-mile zones where the incidence of the tuna-dolphin relationship is greater. (2) Much of the potential for international cooperation on marine mammal issues is dependent on the general marine policy relationship among the countries bordering the ETP, which has been adversely affected by the U.S. tuna policy (Cicin-Sain et al., 1986). Recent amendments to the FCMA may alleviate these difficulties. U.S. Marine Mammal Policy In addition to the general U.S. tuna-policy framework, the U.S. policies on marine mammal conservation and protection have significantly affected the U.S. high-seas tuna fleet. The most significant of these policies result from the Marine Mammal Protection Act of 1972 (MMPA). Marine Mammal Protection Act The MMPA directs that all marine mammal populations be managed for their “optimum sustainable population,” defined as “the number of animals which will result in the maximum productivity of the population or species” (Section 3). This law took effect in December 1972, at which time it placed a moratorium on the “taking ” of marine mammals; “taking” is defined as “to harass, hunt, capture or kill . . . any marine mammal” (Section 3). Two exceptions were made to the moratorium. The first exception was taking marine mammals for subsistence or traditional native handicraft purposes by native Americans, and the second was taking marine mammals in the course of commercial fishing operations. These exceptions could not be granted when the marine mammal population in question was endangered. Special conditions were required even when the population was not endangered. For example, in issuing permits for taking marine mammals during commercial fishing operations, the Secretary of Commerce was required to consider, among other things, “the conservation, development, and utilization of fishery resources ” and “the economic and technological feasibility of implementation” (Section 103). The MMPA (Section 1371) was amended in 1981, to state that “ . . . [the] goal [of zero mortality] shall be satisfied in the case of the

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DOLPHINS AND THE TUNA INDUSTRY incidental taking of marine mammals in the course of purse-seine fishing for yellowfin tuna by a continuation of the application of the best marine mammal safety techniques and equipment that are economically and technologically practicable.” The MMPA is important to the U.S. high-seas tuna fleet because setting of nets on yellowfin tuna in association with dolphins has traditionally resulted in significant dolphin mortality. Beginning in the early 1970s, regulations began to be placed on the U.S. high-seas fleet under the MMPA. In 1975, NMFS, the branch of the U.S. Department of Commerce with delegated authority for marine mammal regulations under the MMPA, instituted a quota of 78,000 dolphins as the maximum that could be “taken” by the U.S. tuna fleet per year. Accompanying this quota, which was designed to be reduced each year until it reached “insignificant levels,” several gear and procedural restrictions were also placed on U.S. vessels. Significant among these were requirements for the use of the Medina panel and the backdown procedure (Coe et al., 1984). In 1981, the quota for dolphin mortality was set at 20,500 animals per year, a mortality level that had been achieved by the U.S. fleet since 1977, shortly after the initial regulations were put into place. In 1988, the MMPA was reauthorized and amended. Additional regulations have been developed on the basis of these amendments. Full observer coverage on all U.S. high-seas tuna vessels is required, and a prohibition has been placed on sets after sunset and on the use of certain explosives in sets on yellowfin associated with dolphin. Restrictions were also placed on the percentages of certain species and stocks in the total dolphin mortality. Perhaps the most important new regulations were those concerning the U.S. embargoes of tuna products from countries that do not have marine mammal protection regulations comparable to U.S. regulations or whose performance with regard to dolphin mortality exceeds the standard set by the U.S. fleet. These regulations stipulate that all countries whose vessels seine yellowfin tuna in association with dolphins must achieve a dolphin mortality rate of no more than two times the U.S. fleet mortality rate by 1989, and no more than one and one-fourth times the U.S. fleet rate by 1990. If these rates were not achieved, the embargo provisions would be activated. (An embargo on Mexican tuna was imposed in October 1990, and shortly afterward tuna from Vanuatu and Venezuela were also embargoed. A panel of GATT recently (1991) ruled that the embargo violates the provisions of GATT.) International Policy Context The tuna fishery is part of a highly capitalized and international foodprocessing industry. This situation, combined with the migratory nature of the tuna, results in complex policy and management conditions that are critical to

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DOLPHINS AND THE TUNA INDUSTRY any effort to preserve and conserve dolphin populations (Joseph and Greenough, 1979). At present, the most critical element in this international policy is the relationship between the United States and the other countries fishing for tuna in the ETP. The United States has the strictest set of marine mammal protection laws and policies among the ETP fishing nations. These laws include 100% observer coverage on all U.S. tuna vessels. The most significant organization assisting the other ETP fishing nations in the dolphin monitoring and protection effort has been IATTC, which runs an observer program in which ETP fishing nations cooperate on a voluntary basis. In this program, currently 100% of trips by boats from Vanuatu, Ecuador, Panama, Venezuela, and the United States carry observers. Other countries carry observers on approximately one-third of their trips. Overall, close to 57% of all 1991 departures for non-U.S. trips carry observers. It is through this program that data are obtained concerning the levels of dolphin mortality in the foreign fleets. As noted elsewhere in this report, the relationship between the United States and many of the other ETP fishing nations—notably Mexico— concerning fishery resources has not been smooth. With Mexico in particular, the arrest and confiscation of U.S. vessels in Mexican waters and U.S. embargoes against Mexican tuna products have created considerable tension between the two countries (Cicin-Sain et al., 1986). This circumstance is important because the 1988 amendments to the MMPA provide for new embargoes against the tuna products of any nation whose fleet dolphin-mortality rates do not meet the U.S. standards noted above. The recent embargo on Mexican tuna and the subsequent GATT decision favoring Mexico have complicated matters and made it even more difficult to predict how relationships between the U.S. and embargoed countries will affect their cooperation in the voluntary IATTC observer program and the ability to monitor or enforce restrictions on dolphin mortality in the non-U.S. portion of the ETP fleet. The potential embargoes under the MMPA, the actions of the tuna-processing firms, and the responses of the U.S. and international fleets to these events will be critical in determining the ability to monitor and enforce any prohibitions on dolphin mortality associated with tuna fishing. ECONOMIC CONSIDERATIONS Apart from the present backdown procedure, the Medina panels, and improved techniques for releasing dolphins from nets (including improved net design and speeding up of the process), most technological innovations that have been tested over the years have failed for one reason or another to reduce the incidental kill of dolphins during tuna purse seining. It is clear that,

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DOLPHINS AND THE TUNA INDUSTRY as currently practiced, purse seining for tuna associated with dolphins will continue to kill some dolphins in the ETP and in other oceans where it is used. Engineering solutions to the problem may exist but experience so far suggests that “promising new techniques for finding and catching yellowfin tuna without killing porpoises” (statement of task for the committee) in the ETP are elusive, may be costly to develop, and may require considerable investments in new vessels and equipment. To put such an overall effort in perspective, it is useful to consider the economic structure of the modern tuna industry and the relative contribution of dolphin-associated fishing to the world tuna harvest and international tuna markets. Such a perspective may also reveal the difficulties of developing national policies and programs to deal with dolphin mortality in this international fishery. Sakagawa (1991) provides a more detailed discussion of these matters. Recent Tuna-Harvesting Operations During 1988, the global tuna harvest was 2.5 million metric tons (see Table 2-1). The cumulative maximum sustainable yield from all world tuna fisheries was estimated to be about 3.5 million metric tons (R. Francis, University of Washington, Seattle, personal commun., 1990), so the annual tuna harvest from all oceans could increase if all the world's tuna fisheries were fully exploited. Not all of the world's tuna resources can be exploited commercially using current fishing methods, so the annual harvest from world tuna fisheries may never reach the global maximum sustainable yield. During 1989, approximately 232,000 metric tons of tuna or about 9% of the global tuna harvest was taken in association with dolphins in the ETP (NMFS, unpublished data). All of this dolphin-caught tuna was harvested from the ETP by 123 large high-seas purse-seine vessels from nine nations (IATTC, unpublished data). Twenty-nine of these vessels operated under the U.S. flag; they accounted for 26% of the tuna harvest and about 12% of dolphin mortality during 1989 (NMFS, unpublished data). The remaining 94 vessels accounted for 74% of the tuna harvest and about 88% of the dolphin mortality. TABLE 2-1 World Tuna Harvest in Thousands of Metric Tons by Ocean, 1981–1988 a Ocean 1981 1982 1983 1984 1985 1986 1987 1988 Atlantic 421 470 451 385 439 396 387 391 Pacific 1,208 1,193 1,290 1,440 1,366 1,599 1,593 1,643 Indian 144 199 221 271 319 342 384 473 Total 1,773 1,862 1,961 2,096 2,123 2,338 1,365 2,507 a Data from the Food and Agricultural Organization of the United Nations (FAO, 1984, 1989).

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DOLPHINS AND THE TUNA INDUSTRY The national flag of a high-seas tuna purse-seine vessel is important because it determines under which set of national laws the vessel operates, at which ports it may deliver fish, and the nature of its operating costs. However, the national flag of the vessel reveals very little about the impact of that vessel's operations on any national economy. For example, with an average crew of 17 per vessel, about 500 fishermen were employed aboard the 29 U.S. tuna purse-seine vessels that engaged in dolphin-associated fishing during January 1990, but fewer than one-third of them were U.S. citizens. Since vessels can deliver fish to ports outside their home countries, and they refuel, refurbish supplies, and make repairs primarily at those ports, they often generate economic impacts and “multiplier effects” (King and Bateman, 1985) primarily outside their home countries. On the other hand, a number of U.S. citizens work in the foreign fleets, as skippers, helicopter pilots, navigators, deck bosses, or fleet managers, and may send their earnings back to the United States. These fleets also generate economic benefits for the United States through the involvement of U.S. companies and citizens in activities such as equipping and maintenance of vessels and shipping and handling of fish. Most vessels of all flags use engines, winches, power blocks, helicopters, and other equipment manufactured in the United States. Thus, although few U.S. boats currently participate in the ETP dolphin-associated tuna fishery, that fishery continues to have some economic importance to the United States. Historical Perspective Until about 1975, U.S. tuna companies assured themselves of reliable raw tuna supplies through contractual and equity-sharing agreements with “independent” tuna fleets or by maintaining “corporate” tuna fleets. However, during the late 1970s and early 1980s, the size of the international tuna purse-seine fleet and the number of nations involved in tuna purse seining increased dramatically. As the major market for the harvest of this growing international tuna fleet, the U.S. tuna companies were in an increasingly strong buyers' position. With so many new fishermen, the threat of shortages of raw tuna greatly diminished. As a result, these companies divested themselves of their corporate U.S. fleets, entered into fewer long-term contractual arrangements with independent U.S. fleets, and began procuring raw tuna supplies on the international market from the lowest bidder. During this period, many U.S. tuna vessels were sold to nations with lower fuel and labor costs and more advantageous tax climates. This conduct put independent U.S. tuna boats at a competitive disadvantage in terms of harvesting costs during this period when the growing global tuna harvest was holding down raw tuna prices and canners had many new supply sources. According to IATTC and NMFS data, the U.S.-flag high-seas tuna purse-seine fleet

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DOLPHINS AND THE TUNA INDUSTRY operating in the ETP declined from 124 vessels in 1971 to 36 vessels in 1985. In 1991 the fleet consisted of only 11 vessels. Eight had moved to the western Pacific fishery and 6 of the 11 remaining in the ETP had licenses to fish in the western Pacific (NMFS, unpublished data). Tuna-Processing Operations Until the 1980s, significant differences existed in the canned tuna products from different nations. However, during the early 1980s, high-priced canned tuna in the United States and abundant low-cost raw tuna supplies from the western Pacific and Indian Ocean fishing grounds attracted many Asian nations to begin processing tuna to meet U.S. canned tuna standards. Today, most nations that process canned tuna for export meet standards for the U.S. market. This increase in the homogeneity of global canned tuna production during the 1980s and the increase in cannery production around the world greatly expanded the sources of canned tuna products for the U.S. market. U.S. companies could choose to import raw/frozen or canned tuna to meet their market requirements and began reevaluating their investments in tuna processing as well as harvesting operations. The change also placed U.S. tuna canneries in direct competition with foreign canneries who had many cost advantages and produced canned tuna that was acceptable to U.S. retailers and consumers. From 1975 to 1989, canned tuna imports increased from 8.9% (NMFS, 1980b) to 35% (U.S. International Trade Commission, 1990) of the U.S. market, and all of the major U.S. tuna companies were putting their nationally advertised labels on imported canned products. The same general process is used to clean, cook, and can tuna in most parts of the world. The economics of tuna processing differs substantially from nation to nation, however, because of differences in direct wage rates, the costs of worker health and safety requirements, environmental regulations, and tax and trade concessions. During the 1960s and 1970s, U.S. tuna companies relocated most of the canning operations from the U.S. west coast to offshore U.S. sites in American Samoa and Puerto Rico to take advantage of favorable economic conditions including relatively inexpensive labor and tax advantages offered by commonwealth and territorial governments. During the 1980s, these companies began shifting from these offshore U.S. territories to Asian sites to take advantage of even cheaper labor and less costly worker benefits and environmental restrictions. As competition from foreign producers of canned tuna has increased and profits from tuna canning have declined, most U.S. tuna companies have pulled out of the canning industry. As of March 1990, only one small tuna cannery is still operating within the United States; Starkist, with about 36% of the U.S. market (Iverson, 1987), is the only U.S. company still operating in American Samoa or Puerto Rico. Van Camp Seafood (Chicken of the Sea),

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DOLPHINS AND THE TUNA INDUSTRY with about 20% of the U.S. market (Iverson, 1987), was sold in 1988 to an Indonesian company, and Bumble Bee, with about 15.5% of the U.S. market (Iverson, 1987), was sold in 1989 to a Thai company. Brand-name recognition will continue to be important in the U.S. market, but the distinction between foreign and domestic canned tuna in the eyes of U.S. consumers and U.S. tuna wholesalers and retailers no longer exists. Imported canned tuna, which already accounts for 35% percent of the U.S. market (U.S. International Trade Commission, 1990), is likely to increase as a percentage of U.S. canned tuna supplies at the expense of domestic canned tuna produced in American Samoa and Puerto Rico. Industrywide Trends The U.S. tuna market is 31% of the global tuna market, and an estimated 70% of the U.S. tuna supply is imported in either raw/frozen or canned form (Peckham, 1989). U.S. tuna harvesters and processors have been moving away from the United States, leaving it more dependent on tuna imports. This trend will probably accelerate if any new costs are imposed on U.S. tuna harvesters or processors that are not incurred equally by foreign tuna companies. To the extent that attempts by the United States to reduce dolphin mortality increase costs or reduce productivity for U.S. vessels, these vessels will lose what little competitive advantage they have in the ETP tuna fishery and are likely to be sold to foreign investors to remain competitive. It remains unclear whether the U.S. government can (1) require U.S. tuna fishermen to operate at a competitive disadvantage; (2) subsidize fishermen to remain under U.S. jurisdiction; or (3) remove the advantage of foreign vessels by restricting access to the U.S. market. Developing engineering-based solutions to the tuna-dolphin problem should be viewed as only the first step in reducing dolphin mortality. Unless the solution is cost-effective, U.S. and foreign tuna harvesters will not be influenced easily to employ new dolphin-saving equipment or procedures or to avoid dolphin-associated fishing. The Effects of Recent Changes The committee notes that two recent changes are likely to affect the tuna industry and dolphin mortality. These changes are the inclusion of migratory tuna in the 1990 amendments to the Fishery Conservation and Management Act and the decision of three major tuna canneries not to sell tuna in the United States unless it is certified “dolphin-safe. ” Tuna from the ETP is considered dolphin-safe by the canneries if it is (1) caught by purse seiners of greater than 400 tons capacity and is caught on a fishing trip where an IATTC or NMFS observer certifies that no dolphins were intentionally encircled; (2) caught by purse seiners of less than 400 tons; or (3) caught by any method

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DOLPHINS AND THE TUNA INDUSTRY other than purse seining. Tuna caught elsewhere is considered dolphin-safe regardless of method of capture. In addition, the Dolphin Protection Consumer Act of 1990 (P.L. 101–627, Title IX) sets forth requirements for labeling of tuna as dolphin-safe and requires the Secretary of State to “immediately seek, through negotiations and discussions with appropriate foreign governments, to reduce and, as soon as possible, eliminate the practice of harvesting tuna through the use of purse seine nets intentionally deployed to encircle dolphins.” The committee believes the effects of the changes could be substantial, with the greatest impact probably on U.S. boats (see Sakagawa, 1991), but understanding them will take careful analysis. It is also probable that the effects will take some time to work their way through the industry. For these reasons, the committee has not attempted to analyze the effects of the changes, but believes such an analysis would be useful to policymakers.