Global Environmental Politics, Volume 10, Number 1, February 2010, pp (Article)

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1 h ft n T d n th t rn nd ntr l P f n T n F h r : Th P l t l n f R l t n nd nd tr R p n l z b th H v, L pl n Global Environmental Politics, Volume 10, Number 1, February 2010, pp (Article) P bl h d b Th T Pr For additional information about this article Access provided by Penn State Univ Libraries (21 Feb :23 GMT)

2 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery: The Political Economy of Regulation and Industry Responses Elizabeth Havice and Liam Campling 1 Elizabeth Havice and Liam Campling The Western and Central Paciªc Ocean (WCPO) (Figure 1) is home to the largest and most valuable tuna ªshery in the world. It provides more than half of the global supply of tuna, and vessel owners sell this catch for over US$ 3 billion each year. 2 Since the 1970s, industrial ªshing capacity has grown dramatically, from a catch of 450,000 metric tons in 1970 to an excess of 2.1 million metric tons in As the catch has increased, two persistent problems have emerged in the ªshery. The ªrst is resource sustainability: yellowªn and bigeye tuna, two of four target species in the WCPO, are at or beyond full exploitation. There is substantial concern over the future of these populations if ªshing pressures are not reduced. 4 Second, Paciªc island countries have been unable to realize the perceived economic development potential of their intersections with the global tuna industry, despite the fact that 80 percent of the tuna is caught within their exclusive economic zones (EEZs). They receive a maximum of 6 percent of the value of the ªsh caught within their marine jurisdictions. 5 Most have been unable to maintain stable domestic tuna ªshing or processing industries. 6 Meeting the dual imperative of resource sustainability and tuna-based 1. A draft of this article was presented at the 2008 International Studies Association s Annual Convention and was awarded Runner-up, Best Graduate Student Paper, Environmental Studies Section. The authors are very grateful to Kate Barclay, Henry Bernstein, Gavin Capps, Marcus Haward, Mark Hudson, Satoshi Miyamura, Kate O Neill, Ben Selwyn and three anonymous reviewers for helpful comments on an earlier draft. The usual disclaimer applies. Campling acknowledges support provided by a SOAS Research Student Fellowship and the Matsushita International Foundation. Direct correspondence to: ehavice@gmail.com. 2. Reid 2006, Data represent total catches of albacore, bigeye, skipjack and yellowªn tuna in the Commission statistical area; Secretariat of the Paciªc Community 2005, Western and Central Paciªc Fisheries Commission Scientiªc Committee 2007, 24 25; 2006, v. 5. Dunn, Rodwell, and Joseph 2006, Chand, Grafton et al. 2003; and Reid, Vankurepe et al Global Environmental Politics 10:1, February by the Massachusetts Institute of Technology 89

3 90 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery Figure 1 WCPO Exclusive Economic Zones and Commission Boundary Source: Map created by Elizabeth Havice. economic development is of signiªcant importance to Paciªc island countries. The social and economic conditions for each island country vary, but many share the common problems of high un- and underemployment, low economic growth, and in some cases, social unrest and political instability. Given these conditions, the long-term maximization of government revenue and domestic development from tuna is a high priority for these countries. 7 This revenue is generated by a peculiar type of property rights: Paciªc island countries have rights over tuna while they swim within 200 miles of their shores. The island states grant access to ªshing vessels in exchange for a range of forms of rent Asian Development Bank 1997, For a typology of tuna access, see Havice 2007.

4 Elizabeth Havice and Liam Campling 91 Most academics and policy-makers apply variants of new institutional economics to explain why the tuna industry is not environmentally sustainable and has not improved economic conditions in the Paciªc islands. This approach assigns blame to Paciªc island governments for these problems. The new institutional economics adheres to the market-based principles of neoclassical economics, but investigates the role of institutions (rather than only market forces) in explaining economic growth. 9 It seeks to identify how institutions can structure incentives so that rational individuals make choices that secure collective welfare that might otherwise be evasive. 10 This variant of neoliberalism seeks to explain why some economies advance and others do not, paying particular attention to the role of legal systems, property rights and organizations. Adherents identify transaction costs as a starting point for why policy failure occurs. Following this logic, the only sensible way for Paciªc island countries to beneªt from the tuna resource is to develop robust institutions capable of nurturing comparative advantage and reducing transaction costs in order to generate rents from their rich marine resource. It follows that tuna-based growth has been elusive because Paciªc island governments have not developed appropriate, functional institutions. On the contrary, a neoliberal list of their institutional errors include: misguided internal economic policies, a contested system of national property rights and weak, corrupt domestic political organizations. These same problems have made it impossible for the island states to sustainably manage the tuna. For example, Duncan 11 and Petersen 12 apply neoliberal critiques of poor governance in Paciªc island countries to the tuna sector. 13 They argue that these countries have adopted policies that stall growth, such as inefªcient industrial policies requiring foreign companies to invest in Paciªc islands to qualify for tuna licenses. Both authors argue that Paciªc island governments should retune their institutions to focus on liberalization and facilitating private sector activities that will maximize the Paciªc islands only assumed comparative advantage the generation of rents from ªshing licenses. 14 Yet Paciªc island country onshore investment requirements for tuna licenses the center-piece of their critique inºuence only approximately 15 percent of the region s tuna production. 15 The rest of the catch generates a 9. New institutional economics claims to offer a theory of development in terms of appropriate institutional change (which fosters further economic growth). Harriss, Hunter, and Lewis 1995, Bates 1995, Duncan Petersen For neoliberal accounts of governance in Paciªc islands, see Duncan, Cuthbertson, and Bosworth 1999; and Larmour For a neoliberal account of the failure of the concept of comparative advantage in small developing states, see Winters and Martins For a theoretical critique of comparative advantage, see Shaikh For a critique of comparative advantage in reference to trade policy and tunarelated development in American Samoa, see Campling and Havice Author interview with international ªsheries specialist Interviews referenced in this pa-

5 92 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery straight economic rent for Paciªc island governments exactly the strategy that Duncan 16 and Petersen 17 tout. Further, their analyses do not address environmental sustainability. Instead, they rely on an implicit assumption that improved institutions will generate the foundation for long-term economic development. Yet the relation of this assumption to environmental outcomes is not made explicit. Further, Parris and Grafton 18 build from the Asian Development Bank s 19 good governance principles accountability, participation, predictability and transparency to argue that institutional weakness and corruption has marred socio-economic performance in the tuna sector. They advocate correcting economic failings by channeling resources into strengthening domestic institutions, eliminating corruption and shifting regulatory power from domestic to international organizations. 20 Parris and Grafton s 21 critique of governance deserves credence to the extent that institutional capacity is an undeniable problem in the region, as elsewhere. 22 But their analysis lacks the framing of power relations required to explicate the underlying causes of this form of institutional failure. Further, to identify weak institutions as the primary inhibitor of tuna-based socioeconomic performance is too narrow to encapsulate the regulatory challenges presented by a global industry. In addition, Parris and Grafton 23 suggest that domestic governance improvements be coupled with expanded international ªsheries management. Inexplicably, this suggestion follows their own analysis of signiªcant gaps in existing international management efforts, 24 but does not engage the factors that underwrite weak measures in international cooperation. Instead, Paris and Grafton 25 assert that cooperation makes every stakeholder better off, optimistically suggesting that this alone is incentive enough for all actors to direct resources towards reducing harvest and increasing economic returns for the island states. 26 However, they ignore the factors that have prevented progress in the past. The neoliberal approaches taken by these authors are methodologically and analytically weak. Methodologically, neoliberals blame domestic governments, but ignore the contexts within which they operate. This creates a false dichotomy between internal and external relations and processes in an undeniably global industry. Analytically, neoliberals fail to acknowledge how rela- per were conducted in Interview subjects and sites are abstracted to protect anonymity. 16. Duncan Petersen Parris and Grafton Asian Development Bank Parris and Grafton 2006, Parris and Grafton Hanich and Tsamenyi Parris and Grafton Paris and Grafton 2006, 279, Paris and Grafton Parris and Grafton 2006, 290.

6 Elizabeth Havice and Liam Campling 93 tional political and economic dynamics among states and ªrms in a global industry inºuence not only the formulation and behavior of institutions, but also the distribution of resources. In short, neoliberal explanations fail to deal with the exercise of political power and the manipulation of economic advantage when analyzing institutions and institution building. 27 Recent work has addressed these gaps by tracing the historical trajectory of neoliberal approaches to ªsheries regulation 28 and demonstrating that regulatory practices formulated around neoliberal principles are political projects shaped by geographical, historical and ecological variation. 29 Degradation in ocean ecosystems has been identiªed as an outcome of capitalist relations of production and consumption; an analysis that illuminates the market-based drivers of conºicts between human society and ocean ecosystems, and the pitfalls of market-based solutions to such conºicts. 30 Still other work investigates how neoliberal approaches to ªsheries institutions (particularly private property rights) drive class transformation and theorizes the social processes, structures and resilience that might be lost along the way. 31 Building from these traditions, we identify the signiªcance of vertical political and economic relations on institutions and outcomes in the tuna sector. We focus on interactions between ªrm-level decision-making and regulatory regimes, particularly around an ideological and material institution central to the trajectory of the tuna industry: the deªnition and allocation of property rights. To do so, we analyze two periods of property rights formation and allocation in the WCPO, and the strategies two major players in the tuna industry the Japanese and Taiwanese ºeets employ to secure favorable ªshing access. We select these players because they are economically important in the region (Tables 1 and 2), have discrete industry structures, and home governments that actively interact with Paciªc island countries. We detail how property rights and industry practices co-evolve in response to dynamic environmental and economic conditions and processes. The comparison of the Japanese and Taiwanese ºeets demonstrates differential responses by capital and states to regulatory change. A sub-text to our analysis then is a comparative political economy of the accumulation strategies of these players over time. Three ªndings from our empirical analysis support our argument that neoliberal approaches are insufªcient to explain economic and environmental problems in the WCPO tuna ªshery. First, the regionalization and internationalization of ªsheries management is eroding Paciªc island countries sovereignty over ªsheries property rights and associated tuna production, hindering domestic capacity to regulate and control tuna-related environmental or economic gains. Second, foreign countries with ªshing activities in the region exert pres- 27. Harriss, Hunter, and Lewis 1995, Mansªeld 2004a. 29. Mansªeld 2004b. 30. Clausen and Clark St. Martin 2007.

7 94 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery Table 1 Japanese and Taiwanese Catch in the WCPO: a 1,000 Metric Tons Country & Vessel Type Japan Purse Seine b Taiwan Purse Seine c Total WCPO Purse Seine Catch ,203 1,559 Japan % of Purse Seine Total 2.7% 42% 19% 17% Taiwan % of Purse Seine Total 0% 1% 20% 13% Japan Longline Taiwan Longline Total WCPO Longline Catch Japan % of Longline Total 90% 73% 29% 21% Taiwan % of Longline Total 0% 6% 8% 13% Notes: a. Source: SPC Data reºect vessels actively reporting and do not include estimates of illegal, ªshing, a documented problem in the WCPO. b. Data for 2005 vessel numbers are estimates based on 2004 vessel activity. c. Taiwanese ªrms often use ºags of convenience (or open vessel registries, see DeSombre 2006); thus data are a signiªcant underestimate of catch from vessels owned by Taiwanese capital. Table 2 Estimated Value of Japanese and Taiwanese Catch and Access Fees (US$ millions) a Country Catch Value Access Fee Catch Value Access Fee Japan Taiwan Total in WCPO , Note: a. Source: FFA database; and Lewis Access fee estimate based on an assumed rate of return of ªve percent of the value of the catch. sure on ªsheries regulation at regional and national levels. In doing so, they inºuence the terms of regulation towards the interests of their own ºeets, even though these interests often conºict with the environmental and economic objectives of Paciªc island countries. Finally, ªshing ªrms employ multiple strategies to adapt to management changes and secure their place in an increasingly competitive production environment. Firm-level strategies have important implications for environmental and economic patterns in the WCPO, but are largely outside of the control of Paciªc island countries.

8 Elizabeth Havice and Liam Campling 95 From these ªndings, we suggest that resource use patterns cannot be entirely attributed to, or controlled by Paciªc island countries, but are instead subject to the competitive logics of industry-level accumulation strategies and interstate power relations. The dynamics of these relationships are particularly complex because tuna is a highly migratory species and travels through multiple states jurisdictions. Therefore, all of these forces, dynamics and institutional forms must be engaged to generate change, and not just rectiªcation of statelevel governance failings as neoliberals would have it. Our criticisms of neoliberal analyses of the WCPO tuna industry are not simply an academic exercise, but have important political implications because the existing neoliberal framing directly inºuences policy making, and thus environmental and economic conditions, in the region. The Historical Formation of Tuna Fisheries in the Western and Central Paciªc Ocean Industrial tuna ªshing in the WCPO began in earnest after World War II, with Japan leading the charge. In the 1960s, the Japanese distant water longline ºeet established ªshing bases throughout the Paciªc. By the early 1970s, Japan began to test a distant water purse seine ºeet in the region and by 1976 eight purse seines were ªshing in the WCPO year round, expanding to 33 by Drawing upon Japan s success and the growing demand for ªsh products in the Japanese market, Taiwan followed suit. Its tuna longline industry grew rapidly through government ªnancing and subsidization, 33 importation of secondhand vessels, and international aid for vessel construction. 34 In the early 1970s, Japanese trading companies extended ªnancial and technical assistance to Taiwanese ªrms to supply the booming Japanese market for sashimi (raw) tuna. 35 After developing a longline ºeet, the Taiwanese started purse seine ªshing for canning-grade tuna and by 1985 had four operational purse seines in the WCPO. 36 Until the late 1970s, distant water ºeets ªshed in the WCPO virtually unregulated and free of charge as no property rights were assigned in the sea beyond twelve miles offshore. 37 By the late-1970s, however, following the initiative of coastal states around the globe, Paciªc island countries began to declare sovereignty over their 200 mile EEZs (Table 3). 38 Paciªc island countries began to 32. Doulman 1987a, 136. Purse seine vessels set a wall of netting around schooling tuna and close the bottom of the net. Longline vessels deploy a central ªshing line (often miles long) equipped with baited hooks. On pole and line vessels, ªshers catch one ªsh per pole. Purse seining is the most capital intensive and catches the highest volume of ªsh. 33. The vast extent of subsidies supporting ªshing industries is well documented and under scrutiny for contributing to overªshing. See: Porter 2001; and Sumaila and Pauly Haward and Bergin 2000, Comitini 1987, Clark 1986, Doulman 1987b, Paciªc island countries refers to 14 independent countries: Cook Islands, Federated States of Micronesia (FSM), Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Sa-

9 96 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery Table 3 Paciªc Island Country Exclusive Economic Zone Declarations Country Year Declared Country Year Declared Cook Islands 1977 Palau 1979 Federated States of Micronesia 1979 Papua New Guinea 1978 Fiji 1981 Samoa 1977 Kiribati 1983 Solomon Islands 1978 Marshall Islands 1979 Tonga 1979 Nauru 1978 Tuvalu 1984 Niue 1978 Vanuatu 1978 Source: Doulman 1987b, require foreign ºeets to pay a fee, and observe management and reporting practices to ªsh in their waters, sparking a radical transformation in the business of ªshing in the WCPO. Paciªc Island Resource Sovereignty and Industry Responses in the 1970s-1990s Resource Sovereignty and Cooperative Tuna Management by Paciªc Island Countries As distant water ºeets were developing technology for purse seine ªshing and increasing their presence and tuna catch in the WCPO, an international legal agreement changed the rules governing ªshing relations between coastal states and distant water ºeets. Several years after the emergence of 200 mile EEZs in customary international law, the 1982 United Nations Convention on the Law of the Sea (UNCLOS) institutionalized coastal state claims for the right to control the sustainable harvest of marine resources within these zones. During UNCLOS III negotiations ( ), two approaches to tuna species came into conºict. Distant water ªshing nations argued that highly migratory species are not the property of any one nation. Rather, since they move from zone to zone, effective management requires coastal states and distant water ªshing nations to work together. Coastal states argued that they had the sovereign right to manage any ªsh while in their 200 mile EEZ. 39 UNCLOS ended up as a compromise between these positions. It awarded coastal states sovereign rights to exploit and manage all living resources within their EEZ, exclude distant water ºeets in favor of developing their own ºeets, and charge distant water moa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. That these countries are grouped in our analysis does not imply that there are no differences in interests among them (at times these are signiªcant). Collective ªsheries relations are mediated by the Forum Fisheries Agency (FFA), formed in 1979 to represent the Paciªc island countries in the sustainable development of tuna resources. Forum Fisheries Agency Joseph 1977, 280.

10 Elizabeth Havice and Liam Campling 97 ºeets rent for access. 40 However, in what is often referred to as the use it or lose it clause, UNCLOS requires coastal states to offer catch that they cannot harvest themselves to distant water ªshing nations through ªsheries access agreements. 41 UNCLOS also required international and regional cooperation to manage transboundary resources (including tuna) to guarantee their effective conservation and optimum use. 42 Following from these provisions and the global political context of the time (particularly the Third World call for a New International Economic Order), the property rights UNCLOS secured were predicted to generate a substantial reorganization of the ªshing industry and a redistribution of wealth in favor of developing countries. 43 Many coastal states turned to distant water ºeets for rents, evoking UNCLOS to impose terms and conditions (e.g. license limits) upon distant water ºeets seeking resource access. 44 Coastal states also made demands on the ºag states of the distant water ºeets (e.g. the governments of Japan and Taiwan), including: requests for ªnancial assistance, ªshing vessels, infrastructure development, training and research programs, and marketing assistance. 45 Other states prioritized domestic ªsheries-based development over rent generation. In short, UNCLOS provided coastal states with a legal framework to dictate management and production terms. Empowered by UNCLOS and building on growing experience negotiating access agreements, in the 1980s Paciªc island countries applied South-South cooperation to strengthen their control over tuna resources. 46 Rather than charging rents and managing access at the national level, Paciªc island countries concluded three regional agreements to limit ªshing licenses and encourage ªshing-related investment in their domestic economies, with mixed (sometimes unintended) outcomes and an array of responses from distant water ºeets. The Nauru Agreement In the early 1980s, the eight Paciªc island countries with the most productive tuna waters and thus the greatest potential to collectively control access to the region s transboundary ªshery formed a sub-regional alliance. 47 Given that 80 percent of the WCPO purse seine catch took place in their waters, they began standardizing relations with distant water ºeets, utilizing collective bargaining power to increase their rents. 48 In 1982, they signed the Nauru Agreement. It dictated minimum and uniform terms of access for foreign vessels and required 40. United Nations Convention on the Law of the Sea, Article 56, para 1a. 41. United Nations Convention on the Law of the Sea, Article 62, para United Nations Convention on the Law of the Sea, Article Copes 1981, United Nations Convention on the Law of the Sea, Article 62, para Carroz and Savini On the emergence of South-South cooperation since World War II, see Campling These countries are: The Federated States of Micronesia (FSM), Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Solomon Islands and Tuvalu. 48. Doulman 1987c, 257.

11 98 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery the Parties to the Agreement to identify ways to prioritize domestic over foreign vessels. 49 In short, the Parties to the Nauru Agreement, known as the PNA countries, asserted their property rights to control access, albeit primarily for economic rather than conservation objectives. As discussed below, interconnected political and economic factors limited the success of this strategy. The Palau Arrangement In the late 1980s, concern grew that WCPO tuna were becoming subject to overexploitation (and thus, population decline). In response, in 1992, the PNA countries created the Palau Arrangement for the Management of the Western Paciªc Purse Seine Fishery, which limited the number of purse seines licensed in PNA waters. 50 In the early 1990s, the provisional purse seine limit was set at 164 vessels. When the Arrangement came into force in 1995, the limit was set at 205 vessels, where it remained until the end of On paper, the Arrangement gave the PNA countries relative control over the WCPO purse seine ªshery because the majority of ªsh are caught in their waters and because purse seine operations require access to contiguous EEZs to ªsh effectively (i.e. ªshers need to follow the ªsh regardless of legal borders in the sea). The Arrangement had a two-fold economic rationale, with an environmental justiªcation (preventing resource decline). First, because limiting ªshing vessels would improve catch rates in the medium- and long-term, reduced effort to catch ªsh was predicted to translate into higher prices for available ªsh and, in turn, higher access fees for the PNA countries. Second, the Arrangement enabled Paciªc island countries to restrict foreign licenses in favor of domestic licenses. In 1994, the PNA countries reduced foreign purse seine licenses by 10 percent and allocated them to domestic/locally-based vessels. This shift did not spur sparse local capital into the industry, but encouraged foreign operators to base their vessels locally, use local goods and services, and, in some cases, make onshore processing investments. 51 FSM Arrangement and Domestication Efforts When initial Paciªc island country investments in the ªshing sector were frustrated by lack of capital and experience, market access constraints, and the turbulent global market for tuna products, 52 the PNA countries sought more effective interventions to nurture domestic development. Along with the realloca- 49. Nauru Agreement Concerning Cooperation in the Management of Fisheries of Common Interest 1982, Article II (b, a) (respectively). 50. With the exception of Tuvalu who has signed but not ratiªed ,000 people are employed directly in the Paciªc island tuna sector; 31,000 indirectly. Locallybased tuna vessels contribute US$150 million to Paciªc island economies annually. Gillett and Lightfoot 2001, 34. Three tuna canneries tied to Paciªc island management cooperation have opened since See Campling, Havice, and Ram-Bidesi 2007, Hyndman 2005, 13; and Schurman 1998, 132.

12 Elizabeth Havice and Liam Campling 99 tion of domestic/locally-based licenses through the 1995 Palau Arrangement, the PNA countries implemented the Federated States of Micronesia Arrangement for Regional Fisheries Access (FSM Arrangement). The Arrangement offers vessels that are based in PNA countries discounted ªshing licenses and reciprocal access (i.e. ªshing rights to all of the PNA country waters, rather than just the one in which the vessel is licensed). 53 In so doing, the Arrangement provides vessels with a huge strategic commercial advantage: cut-price access to extensive tuna resources. The Arrangement deªnes criteria (e.g. vessel ºag and onshore investment) that, when met, make a vessel eligible for an FSM license. 54 The objective for PNA countries was to generate spin-off beneªts and local economic development. Despite Paciªc island countries emphasis on the FSM Arrangement, FSM vessels represent a very small portion of the purse seine access agreements in the region. In 2006, less than 15 percent of purse seine catch in the WCPO was made by FSM vessels, 55 demonstrating the limited capacity of Paciªc island countries to control ªsheries production despite their control over access and management procedures. Japanese Response to Paciªc Island Country Resource Sovereignty EEZ declarations had a signiªcant impact on Japanese tuna ªsheries. In 1977, 48 percent of the Japanese ºeet s tuna catch was made within the EEZs of 54 different coastal states. UNCLOS meant that to continue ªshing legally, the Japanese ºeet would be forced to pay rent to each of these countries. 56 Initially, the ºeet resisted recognizing claims and continued to ªsh in Paciªc island country waters without paying for access. 57 As other ºeets began to comply, the Japanese capitulated for fear of losing access, turning to political and organizational tactics to make access conditions as commercially favorable as possible. First and foremost, the ºeet looked to the Japanese government and relied on its strong presence in the region to mediate favorable access conditions. 58 Lead negotiators from the Japanese government had extensive international experience, particularly compared to the resource constrained, newly independent Paciªc island countries. In negotiations, Japanese ofªcials demanded an access payment worth only 3 percent of the value of the catch, rather than the 5 percent Paciªc island countries sought. To ensure that these terms were met, the Japanese government systematically isolated island countries in individual negotiations (although this conºicted with the UNCLOS concept of cooperative management of transboundary resources), preventing Paciªc island countries 53. The FSM Arrangement for Regional Fisheries Access 1995: Article These criteria have evolved reºecting the changing perspectives of what adds value. 55. Author interview with international ªsheries specialist, Matsuda 1987, Bonanno and Constance 1996, Comitini 1987, 261.

13 100 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery from bargaining collectively. The Japanese mandated distinct reporting requirements for each agreement, hindering Paciªc island efforts to collect uniform harvest data and making it difªcult to calculate the sums owed to the island states. 59 For additional leverage, the Japanese government tied aid and special development assistance to the successful conclusion of access agreements a practice of indirect subsidization that continued at the time of writing. 60 For example, Japan s quasi-government Overseas Fisheries Cooperation Foundation provides assistance only to those states that have signed access agreements with the Japanese distant water ºeet. 61 With this help from the Japanese government, the Japanese ºeet secured access agreements with 15 Paciªc island countries by In the 1990s, the Japanese government openly contested management cooperation among Paciªc island countries. 63 Japan argued that it had the right to inºuence regulations (particularly the allocation of ªshing rights) because of the UNCLOS requirement for cooperation between coastal states and distant water ºeets with mutual interest in a resource. 64 The Japanese delegation went as far as to argue that countries that were not included in such important management decisions would also not be obliged to comply with the resulting resolutions. 65 While the government undertook this political wrangling, the Japanese ºeet began to adapt to new economic conditions in the WCPO. In the 1970s and early 1980s, the costs of access associated with UNCLOS were compounded by increasing operational costs (mainly wages and fuel), high debt, low international ªsh prices and crew shortages, which accumulated to put Japanese distant water ºeets under considerable strain. 66 To maintain competitiveness, the ºeet underwent economic restructuring. It reduced its pole and line ºeet (a very labor intensive ªshing method) by nearly 50 percent, and its longline ºeet by 20 percent, replacing this ªshing capacity with a more efªcient (but capitalintensive) purse seine ºeet. This shift was supported ªnancially by the Japanese government. 67 The industry entered into joint venture tuna processing operations with Paciªc island countries to secure ªshing rights outside of UNCLOS dictums. 68 From the late 1960s onwards, Japanese ªrms developed 13 tuna ªshing and processing joint ventures with Paciªc island countries. 69 In the 1980s, as Paciªc island countries began to cooperate to improve 59. Schurman 1998, Bergin and Haward 1996, 72; and Tarte 1997, 4; Authors interviews with Japanese and Paciªc island ofªcials and international ªsheries specialists, Authors interviews, Japanese ofªcials, Fujinami 1987, Dunn, Rodwell and Joseph 2006, Bergin and Haward 1996, Aqorau and Bergin 1997, Haward and Bergin 2000, Fujinami 1987, Haward and Bergin 2000, Barclay 2004, 510.

14 Elizabeth Havice and Liam Campling 101 their returns on tuna, Japanese ªrms sought to counteract these efforts by ºexing their collective muscle as a powerful distant water ºeet. For example, Japan s three industry associations (representing different ªshing gear types) only entered into deals with Paciªc island countries that included access for all of the associations. If Paciªc island countries were unwilling to sign deals with any one of the gear types, all would refuse. In 1987 when Papua New Guinea required that all longline vessels were domestically owned and operated, all Japanese ºeets refused to conclude agreements, walking away from access to one of the world s richest EEZs. Japan s strategy was based on the assumption that its ºeet was irreplaceable. However, by the late 1980s Taiwanese and other Asian ºeets claimed Japan s foregone licenses. In the 1990s, the Japanese ºeet continued to face economic hardships. 70 Strict Japanese government regulations required the ºeet to return to port in Japan a 15 day (and fuel costly) journey from WCPO ªshing grounds to ofºoad catch. 71 The government enforced safety and environmental requirements that were much stricter (and more costly) relative to those of competing distant water ºeets (including Taiwan). Requirements for use of Japanese crew added higher wage costs at a time when an inºow of low cost tuna products from competing ºeets drove prices down. 72 To cope, ªshing companies took two paths to streamline costs: deepening vertical integration of their company s operations, or diversifying operations away from the costly catch sector and towards ªsh processing, trade and/or distribution. 73 Despite these changes, the Japanese ºeet had difªculty complying with Paciªc island countries enhanced regulatory requirements (both environmental and economic). Taiwanese Response to Paciªc Island Country Resource Sovereignty Taiwan recognized resource access in the WCPO as crucial to its ªshing industry. Initially, access payments hit Taiwan s distant water ºeet hard. In the late 1970s, Taiwan had close to 200 operational vessels in the WCPO, but by 1983, the number had dropped to To increase its competitiveness, the Taiwanese ºeet employed government and private resources to rebuild and redeploy its ºeet. The Taiwanese government concluded bilateral ªsheries access agreements with four Paciªc islands, while the industry negotiated directly with three 70. Based on: authors interviews with multiple Japanese ofªcials and industry representatives in 2006; Barclay and Koh 2008; Bergin and Haward 1996; Fisheries Agency of Japan 2005a, b; Fujinami 1987; and Haward and Bergin By 2006, the Japanese purse seine ºeet was experimenting with ofºoading to refrigerated reefers because of high fuel costs. Campling, Havice, and Ram-Bidesi 2007, Authors interviews with Japanese ofªcials and industry representatives, and international ªsheries specialists, Bergin and Haward 1996, 6; and Campling, Havice, and Ram-Bidesi 2007, Secretariat of the Paciªc Community 2005, 59.

15 102 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery others. 75 As a result, the longline ºeet grew to 85 vessels by 1989 and the purse seine ºeet, ªrst introduced in 1983, grew to 45 vessels in less than ten years. 76 By the early 1990s, the Taiwanese ºeet was a formidable source of competition to its higher-cost Japanese equivalent because of its access to low-cost labor from mainland China and the use (by some vessels) of ºags of convenience to take advantage of the lax regulations of lenient ºag states. 77 The ºeet developed strong links with Taiwanese tuna trading companies, which helped the ºeet with ªnancing, supply chain coordination and market access. 78 Taiwanese vessels were was also better able to handle economic ºuctuations through crosssubsidization because they were often owned by large diversiªed ªrms. 79 As Paciªc island countries began to cooperate with each other to limit available licenses, Taiwanese interests successfully lobbied Paciªc island countries for licenses that had been allocated to other ºeets, but were not being used. In the 1980s, Taiwan s expansion (along with that of other East Asian ºeets) increased competition, broke Japanese control over the licensing market, and pushed the rate of return on ªshing access from 3 to 4 percent of the catch value. When the licensing market became saturated with Taiwanese and other Asian longliners in the early 1990s, the returns on agreements rose to 5 percent a price increase that the Taiwanese could afford because of their lower cost operations, but which strained the Japanese. 80 The increase in access fees demonstrates that the competitive regulatory framework elicited by UNCLOS and an expanding global tuna market not any one Paciªc island government s domestic policy interventions improved economic returns for the island countries. Summary: Paciªc Island Resource Sovereignty and Industry Responses The mid-1970s to the early-1990s saw the formation of a complex regime of property rights in the WCPO tuna ªshery. The declaration of EEZs enabled Paciªc island countries to strengthen their regulatory control to augment tunarelated revenues. On the one hand, Paciªc island countries individual and cooperative management efforts dramatically redeªned the terms of ªshing in the WCPO, and concomitantly, the operational structure of the industry. Fishing access fees, and the regulations that accompanied them, put the Japanese ºeet under economic strain, but created an opportunity for new entrants, such as the Taiwanese. On the other hand, Paciªc island regulatory efforts were limited by 75. Shieh 1992, Secretariat of the Paciªc Community 2005, 59, Authors interviews with Japanese ofªcials and industry representatives, Authors interviews with Taiwanese industry representatives 2006; Campling, Havice and Ram- Bidesi 2007, Authors interviews with Taiwanese and Japanese industry representatives, Schurman 1998, 114.

16 Elizabeth Havice and Liam Campling 103 uneven inter-state relations in property right negotiations and changing economic conditions in the expanding tuna industry and the world economy. Powerful foreign governments used leverage to inºuence conditions of ªshing access, and ºeet compliance was shaped by changing conditions in the global market for tuna. In keeping with the theory of new institutional economics, the legal form of the property rights regime in the WCPO framed economic development in the tuna industry. However, the formation, evolution and outcomes of the social relations underlying this form reºected features of the global political economy, not just the interests of Paciªc island countries. Thus Paciªc island countries not only attempted to direct domestic development patterns, but tried to become a site around which the global industry formed, and an agent through which powerful state and private actors expressed their interests. During this period, the property rights regime was oriented towards tuna-based economic growth, not resource conservation. With limited environmental concerns in the ªshery, Paciªc island countries and distant water ºeets sought to expand ªshing efforts. As a result, total catch more than doubled from 1982 to the late 1990s. 81 Resource Scarcity, Re-regulation and Industry Responses in the 2000s Beginning in the late 1990s, tensions between Paciªc island resource sovereignty and international management emerged and were fueled by a heightened concern over the health of tuna populations. On one hand, a new regional ªsheries management organization with membership including both Paciªc island countries and distant water ªshing nations was tasked with setting catch limits and allocation rights in the greater WCPO region, including within Paciªc island countries EEZs (see Figure 1). On the other hand, the PNA countries used cooperative management to bolster the resource sovereignty that the new regional management organization could erode. As Paciªc island countries struggled to maximize control over property rights, distant water ºeets and their governments continued to adapt to (and inºuence) changing regulatory structures. Western and Central Paciªc Fisheries Commission The 1995 United Nations Fish Stocks Agreement 82 clariªed the UNCLOS mandate that coastal states and distant water ªshing nations cooperatively manage highly migratory ªsh stocks in EEZs and on the high seas. It requires that re- 81. Secretariat of the Paciªc Community 2005, 176. Statistics include catches in EEZs and the high seas. 82. Commonly known as the Fish Stocks Agreement, adopted August 1995 and entered into force November 2001.

17 104 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery gional organizations be set-up to facilitate management cooperation. To comply, in 1997, Paciªc island countries, along with Australia and New Zealand, and the distant water ªshing nations active in the WCPO (including China, France, Korea, Japan, the Philippines, Taiwan and the United States) began inter-state negotiations to form the Western and Central Paciªc Fisheries Commission (hereafter the Commission ). Much was at stake for all actors as the Commission would determine total allowable catch for all ªshing in the region as well as Paciªc island country powers to allocate ªshing rights in their own EEZs. 83 The negotiations that ensued articulate the interplay among state actors seeking to represent their interests in binding international law. When the Commission came into force in 2004, Paciªc island countries had successfully preserved control over their property rights; all agreements were to be undertaken without prejudice to the sovereign rights of coastal states for the purpose of exploring and exploiting, conserving and managing highly migratory ªsh stocks within areas under national jurisdiction. 84 While the text did not prioritize Commission-level processes over coastal state-level processes, it did set the stage for explicit conºicts between the two. For example, while the Commission is served by a subsidiary scientiªc committee 85 that helps deªne total allowable catch, catch allocation is made by consensus among Commission members. 86 This means that Paciªc island countries are subject to Commission decisions when allocating licenses for ªshing conducted in their own waters. Also up for debate is the extent to which the Commission can (and should) be the sole proprietor of resource management decisions in the region, an issue unresolved by the vague terms of Commission agreements. Paciªc island countries seek to strengthen the Commission on some accounts, and weaken it on others. For example, they look to the Commission to strengthen monitoring, surveillance and ºag state responsibilities since they have little domestic capacity to enforce bilateral access agreements. On the other hand, they seek to limit Commission control over the deªnition and allocation of total allowable catch to maximize their resource sovereignty. On a more day-to-day level, Paciªc island countries struggle with the Commission policy making process, including: the costs associated with attending meetings, engaging in multiple negotiating issues, and diplomatic coordination to develop regional positions among a range of island states. The effect is that Paciªc island countries are unable to fully participate in Commission negotiations. 83. For an overview of these negotiations, known as the Multilateral High Level Conference on Fisheries, see Tarte Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Paciªc Ocean 2004, Article 10(1). 85. The scientiªc committee s work was done by the Secretariat of the Paciªc Community as of Parris and Grafton 2005, 158.

18 Elizabeth Havice and Liam Campling 105 Vessel Day Scheme As the operational remit of the Commission emerged, the PNA countries announced that they would license purse seine vessels based on vessel days, rather than the vessel numbers strategy used in the past. The resulting Vessel Day Scheme commenced in December 2007 after a one year trial. 87 The scheme deªnes total ªshing days in PNA waters and distributes the ªshing days to PNA members, who in turn allocate them to distant water ºeets at their discretion. The Vessel Day Scheme also details the management terms of ªshing days and sets up a secretariat (of one person) to monitor and enforce the scheme. The ofªcial position of the PNA countries is that the Vessel Day Scheme increases control over ªshing efforts to enhance biological sustainability and increase economic returns for both PNA countries and participating vessel owners. 88 Unofªcially however, the impetus for the Vessel Day Scheme is embedded in the political, economic and environmental challenges that have emerged with lenience in past management regimes. For example, PNA countries began to exceed the vessel number cap when (under pressure from distant water ºeets) they reassigned unused licenses. Since this practice became ubiquitous, the Parties formally agreed to allow countries to license vessels as long as the total number of operational vessels stayed within the 205 vessel limit. In short, the PNA countries were not maintaining pre-agreed quotas, allowing distant water ºeets to expand ªshing activities. Through this practice, the PNA countries saturated the market with licenses, reducing the competition (and upward driving effect on access fees) that the vessel number cap was intended to generate. The Vessel Day Scheme was implemented to address three concerns. 89 First, the vessel number scheme locked-in speciªc ºeets, making it difªcult for the PNA countries to introduce new ºeets and increase competition. 90 Second, the vessel number arrangement could not account for relentless effort creep (driven by technological advances and increases in vessel size). For example, older purse seines have a hold capacity of metric tons of ªsh, while newer vessels have a hold capacity of 1,200 2,000 metric tons but each was equal only to one vessel. 91 Third, the PNA countries were concerned that the vessel number arrangement could disadvantage them in Commission-level ªshing allocation processes. This is because the vessel number scheme allocated licenses (i.e. temporary rights to ªsh Paciªc island property ) to distant water ºeets. Paciªc island countries would prefer that the Commission recognize 87. Palau Arrangement for the Management of the Western Paciªc Purse Seine Fishery Management Scheme (Vessel Day Scheme) Rodwell 2004, Dunn, Rodwell and Joseph 2006, 4; and Rodwell 2004, In ten years the only new entrants into the ªshery were twelve Spanish vessels in 2000 (down to ªve by 2005) and eight Chinese vessels in Secretariat of the Paciªc Community 2005, 89, VDS may still be subject to effort creep if vessel days remain constant and vessel capacity increases.

19 106 Shifting Tides in the Western and Central Paciªc Ocean Tuna Fishery Paciªc island resource ownership while ªsh are within their EEZs. Assigning ªshing days allows Paciªc island countries to assert their property rights and control ªshing access within the Commission framework. However, the Vessel Day Scheme has monitoring and enforcement complications. In a year long trial period, more than 30 percent of distant water ºeets failed to consistently report their ªshing activities. Japan proved the most problematic, with 10 of their 35 licensed vessels failing to report regularly. Taiwan also had signiªcant reporting lapses. 92 According to a ªsheries specialist working on Vessel Day Scheme monitoring, We need for them to report at the minimum every four hours...if they re not reporting they won t be charged a ªshing day. This is money lost. 93 Additionally, incomplete reporting contributes to imperfect assessments of resource health. Further complicating matters, the value of access is never simply about the revenue drawn. According to a ªsheries specialist, there is little chance that the Vessel Day Scheme will have strong enforcement clauses: Other incentives are going to interfere. Taiwan continues to try to give [Paciªc island countries] aid to win diplomatic recognition, Japan gives [Paciªc island countries] technical assistance and grants, the Philippines try to leverage good standing through domestic investment, China gives loans and grants and sports stadiums in Fiji and FSM. 94 Japanese Response to the Commission and Vessel Day Scheme The Commission and the Vessel Day Scheme have led the Japanese to look to international, rather than bilateral, negotiations to maintain economic competitiveness. A key objective of Japan s negotiating strategy at the Commission was to secure equal decision making powers for all members, including the determination of management terms. At the start of negotiations, the Japanese government sought to water-down references to the precautionary approach and to the provision of technical and ªnancial assistance to the island states. It sought to stall implementation of the regional vessel monitoring system and to protect its vessels from unnecessary enforcement measures. 95 The Japanese have used the Commission to attack competitors ªshing practices, including Taiwan. For example, Japan identiªed Taiwan s use of ºags of convenience, the increasing size of its vessels and the use of ªshing methods (such as ªsh aggregating devices) with harmful environmental effects, and proposed restrictions. 96 These demands could prove beneªcial for the environment, but given Japan s track record of resistance against environmental improvements at the Commission (see 92. Author interview with international ªsheries specialist, Author interview with international ªsheries specialist, After December 2007, vessel reporting improved. Island Business, 13 March Author interview with international ªsheries specialist, Tarte 1999, Delegation of Japan 2003.