CAFTA Vital for Tuna Exports
Second in a five-part series on the challenges facing Costa Rica’s fisheries.
PUNTARENAS – Like a guardian angel, a largerthan- life tuna can hovers above the bustling Sardimar factory in this Pacific port town, mounted on a 30-foot pole and framed by mountains and the sea.
Below it, strung to the wire fence that surrounds the plant, a banner with red letters reads, “Sí al TLC.”
The Central American Free-Trade Agreement with the United States (CAFTA), known by its Spanish initials “TLC” in Costa Rica, lingers over every one of the plant’s 1,300 employees – and not just in spirit.
When it comes to the country’s fish-based commerce, explains Francisco Gamboa, director of Economic Studies for the semi- private Foreign Trade Promotion Office (PROCOMER), the tuna industry has the most to gain, or lose.
Under the Caribbean Basin Initiative (CBI), a series of unilateral trade concessions through which more than a dozen Caribbean-basin countries receive preferential access to the U.S. market, most Costa Rican fish exports already enter the United States duty-free.
Processed tuna is the sole exception. Companies such as Sardimar benefit now from a reduced 4.6% tariff on canned and prepared tuna exported to the United States through the initiative – a reasonable rate that allows a small flow of the proteindense fish to the country – $1.2 million in exports from Costa Rica last year.
If CAFTA passes in the Oct. 7 referendum, that barrier would fall to zero, unlocking the door to the world’s largest tuna market virtually overnight.
But if Costa Ricans vote “no”, and the part of the Caribbean Basin Initiative addressing processed tuna expires on schedule in September 2008, that tariff could skyrocket to 35%, effectively shutting out the U.S. market, if no new trade benefits are established, Gamboa said.
Most other species would remain unaffected because they don’t compete with United States fisheries or because they fall under a different section of the initiative.
If the trade pact is rejected, CAFTA opponents say trade benefits for tuna could easily be renewed or renegotiated afterwards. Gabriela Muñoz, director of exports for Sardimar, isn’t convinced.
“Exporting tuna to the United States would then be completely out of the question,” Muñoz explained. “If the agreement is voted down, we will be forced to lay off at least 120 people.”
She said the Puntarenas-based company, in anticipation of a “yes” vote, has begun marketing tuna in glass containers to upscale U.S. supermarket chains like Wild Oats, Trader Joe’s, and Whole Foods under the Caribbean Basin Initiative.
The tuna, she said, retails for $6.99 per container and the size and potential of the market is staggering. The opportunity would be squandered if the free-trade agreement is voted down.
“We would shut down at least one line of production, and likely move it to Nicaragua or another country that already offers free trade,” she said.
While it might not mean certain death for Sardimar in Costa Rica – the company still sells 60% of its production inside Latin America – it would be a serious blow, she said.
“The United States is a giant, and it’s close. But without a free-trade agreement, it’s out of reach,” she said.
According to statistics from PROCOMER, the United States is Costa Rica’s largest fish trading partner.
Last year, Costa Rica exported $64 million total in fish products to the United States, ranging from fresh and canned tuna to clams and shrimp.
The vast majority of Costa Rica’s exported seafood is fresh fish and filets (see sidebar) and since many of these species aren’t commercially fished in U.S. ocean territory, they already enter free of tariffs, explains Alberto Trejos, former foreign trade minister who negotiated the details of CAFTA with the United States.
Instead, the limiting factor has traditionally been “unjustified,” sanitary measures imposed by the United States, he said.
Such measures, particularly in a country with a traditional, low-tech fishery, have historically made the export of fish prohibitively expensive, he said.
“The passage of TLC will force these measures to be based on rational science, not politics, which will mean far fewer barriers to fish exported to the United States,”Trejos said.
That means seafood exports would likely rise – particularly whole fish and filets of such species as swordfish, dorado, marlin and others. Environmentalists fear such a wide-open market could spike demand, and force an increase in pressure on the country’s already spent marine resources.
But Trejos assured The Tico Times that the laws that pertain to Costa Rica’s fisheries will remain sacred, whether or not the agreement is ratified.
“The U.S does not acquire a ccess, throughthe treaty, to our marine resources. These will continue being strictly Costa Rican,” he said.
And according to Marvin Mora, technical director of the Costa Rican Fisheries Institute (INCOPESCA), quotas governing migratory species such as tuna, swordfish and marlin, are pre-set by international regulatory bodies, such as the Inter-American Commission on Tropical Tuna (CIAT), and unaffected by politics.
“The quotas will not change as a result of the TLC vote,” he said. Regardless of the outcome of the October referendum, Randall Arauz, director of the Marine Turtle Restoration Program (PRETOMA), believes responsibility ultimately falls upon Costa Rica to defend its natural resources by enforcing its own laws and expecting fishermen to obey them.
Arauz said he will vote no on CAFTA – but he believes when it comes to fisheries, Costa Rica has to address internal issues first.
“For me, what effects us is when we don’t respect our own legislation, which is designed to defend the public interest. If we can observe our own laws, I don’t think it will be a problem,” he said.
Fisheries: Economics at a Glance
Limón (Caribbean): 240
Small-Scale (Pangas): 1,761
Mid-Size Boats (Botes): 101
Large Offshore Ships (Barcos):
The National Catch
Pacific: approx. 15 million kg
Atlantic: approx. 540,000 kg
Product, 2006: 0.002%
Percentage Seafood Sold Inside/Outside Country, 2006:
Top Five Seafood Product Export Countries, by dollars, and percentage of total (2006):
United States: $64 million (61%)
El Salvador: $6.1 million (5.8%)
Mexico: $5.8 million (5.5%)
Spain: $4.8 million (4.6%)
China (including Hong Kong): 4.6 million (4.4%)
Top Five Export Products, and percentage of total (2006):
Fresh Fish Filets: $23.2 million (22%)
Canned Tuna: $12.3 million (12%)
Fresh whole dorado: $9,820,000 (9%)
Shrimp: $9.8 million (9%)
Sardines in Tomato Sauce: $7.2 million (6.8%)
Next: A look at how dwindling resources and inefficient government policies are affecting fishermen on the Central Pacific coast.
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