Author Archives: Greg Rushford

Charlie the Tuna’s Troubles in Pago Pago

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As if Thailand didn’t already have enough troubles, now comes an influential U.S. congressman who wants to attack one of the bright spots in the Southeast Asian nation’s economy: its thriving seafood-exports. Last year, Thai exports of canned tuna to the U.S. reached $360 million, a 19 percent increase from 2008, according to the UN’s Food and Agriculture Organization. In the view of Rep. Eni Faleomavaega, this is “unfair” trade that deserves to be rolled back with stiff U.S. anti-dumping tariffs. Faleomavaega is a Democrat who represents the U.S. territory of American Samoa. While he doesn’t get a vote, the lawmaker is nevertheless a force to be reckoned with. Known for his gregariousness, Faleomavaega once told the Comedy Channel’s Stephen Colbert that “I tattoo my butt,” explaining with a grin that he was only conforming to Samoan cultural traditions. More importantly, Faleomavaega chairs the House Foreign Affairs Committee’s subcommittee for Asia and the Pacific. Educated at Brigham Young University, Faleomavaega earned a law degree from the University of Houston. He has important friends on the Hill, including fellow Mormons like Sen. Majority Leader Harry Reid (D-NV) and Utah Republican Orrin Hatch, a senior member of the powerful Finance Committee which has jurisdiction over trade.

It’s not that the gentleman from Pago Pago has evidence that the Thais are guilty of anything other than being very good in competing in the global tuna trade. Far from it. But Faleomavaega does have ample evidence that the tuna industry in his American Samoa — a dot in the South Pacific, about half-way between Hawaii and New Zealand — is collapsing and has no viable future. Canned tuna has long been the backbone of American Samoa’s economy. The other half of the territory’s economy is comprised of various forms of federal welfare dispensed by the U.S. government, the largest employer in Pago Pago. The federal largesse includes generous tax breaks, hurricane disaster-relief monies, Medicaid, Nutrition Assistance Block Grants, and so on. “[T]he tuna canneries and federal financial aid accounted for virtually all of the economic growth in American Samoa between 1975 and 2005,” according to a 2008 report submitted to the American Samoa government by U.S. consultant Malcolm McPhee. The territory’s annual per-capita income of about $8,000 is “about one-fifth the US average,” McPhee noted. “American Samoa has the lowest per capita income in the entire US system including 3141 counties, 50 states and the other US territories.”

American Samoa’s poor performance illustrates that bad economic policies — in this case, so obviously bad that they would be quickly understood and discredited in any Econ 101 classroom — have consequences. Beyond the basic economics lessons, American Samoa’s unfortunate economic plight has ramifications that go far beyond remote South Pacific fishing grounds. The fight over tuna tariffs and access to U.S. markets is being closely watched by other important U.S. trading partners from Asia to Latin America. For those who study tuna tariffs, national security issues are never far from the surface. Muslim tuna workers in the southern Philippines, for instance, have long protested that they have been disadvantaged because Uncle Sam gives preferences to otherwise uncompetitive American Samoans that are withheld from Filipinos. And diplomats from Ecuador have stressed to U.S. officials in recent years that the tuna trade is an important national security priority for them — one alternative to narco-trafficking. Charlie the Tuna is a political fish — swimming in seas where economic favors granted or withheld can affect bottom lines, not to mention real lives in global tuna canneries.

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Charlie the Tuna’s economic woes

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Some hard numbers highlight the decline of the canned tuna industry in American Samoa, an economically depressed U.S. territory in Polynesia. In 2007, the U.S. Congress passed legislation gradually raising the minimum wage for American Samoa cannery workers from USD 3.26-per-hour to USD 7.25, the same level as the U.S. mainland, by 2014. Currently, it stands at USD 5.26.

The territory’s two tuna canneries have reacted predictably. Chicken of the Sea, which had been operating in American Samoa for a half-century, shut down its Pago Pago cannery, moving some 2,000 workers to other tuna-exporting nations like Thailand, where workers are still paid less than USD 1 per hour. StarKist quickly dropped plans to produce tuna in pouches in American Samoa, which would have added 300 new jobs. Now, StarKist’s cannery in Pago Pago, which had employed some 3,000 workers two years ago, is down to about 1,700 — and is phasing out another 600 to 800 jobs by year’s end. As the canneries had long constituted the backbone of American Samoa’s economy, the territory is reeling.

U.S. Rep. Eni Faleomavaega, American Samoa’s non-voting representative in the U.S. Congress, blames “unfair” foreign competition from low-wage tuna-exporting nations. The lawmaker has been pressing for a USD 25 million subsidy package to keep StarKist in Pago Pago, while accusing StarKist’s two major competitors of being “un-American.” Both Chicken of the Sea and Bumble Bee, Faleomavaega has complained, “have adopted a business model of exploiting cheap foreign labor to clean their fish while employing skeletal crews of 200 employees or less in small U.S. operations in Georgia, Puerto Rico and California to package the final product.” Faleomavaega is calling for a U.S. antidumping investigation that could slap on punitive tariffs on canned tuna exports from Thailand, aimed mainly at Thai Union, which owns Chicken of the Sea. The congressman says the tariffs would help save American jobs.

While nobody would blame any politician who fights for his constituents, a closer look at who is really “American” in the eyes of the bureaucrats who administer the U.S. antidumping laws indicates that this is not a simple matter. And Faleomavaega’s complaints about the adverse impact that foreign minimum-wage rates have for American jobs are undercut by a little economic research, as American Samoa itself has long been living off comparatively lower minimum-wage rates that, undeniably, pulled several thousand jobs away from the U.S. mainland. In sum, while StarKist’s Charlie the Tuna is a true American icon, he might perhaps be a little confused about his real nationality these days.

Let’s look first at who might be considered a true American according to the U.S. antidumping regime. StarKist, which has headquarters in Pittsburgh and employs about 70 Americans in the United States, is owned by Korea’s Dongwon Industries Co. Ltd. While no tuna company was willing to be interviewed for this article, it is unlikely that StarKist, which also exports canned tuna from its operations in Thailand to the United States, would support the imposition of antidumping tariffs on that country. Moreover, even though Thai Union’s Chicken of the Sea has opened a USD 20 million canned-tuna facility in Lyons, Ga., which directly employs some 200 Americans, for purposes of the antidumping laws these employees could be excluded from the definition of the American tuna industry. And even Bumble Bee, which is American-owned and employs several hundred domestic tuna jobs in southern California and Puerto Rico, might not be considered “American” enough. Bumble Bee imports tuna loins from countries like Fiji and also has tuna operations in Thailand.

What about those dwindling “American” jobs in Pago Pago? American Samoans, strictly speaking, are U.S. nationals, not U.S. citizens. And according to a 2008 report to the American Samoan government by consultant Malcolm McPhee, “80 percent of the employees in fish processing are foreign workers,” many from the neighboring independent nation of Samoa, where wage rates are several times lower. The foreign workers, McPhee observed, came to American Samoa “in search of higher pay.”

Published statistics from the U.S. Department of Labor reveal what has been going on. The U.S. Congress used to set the minimum wage lower for the Samoans than for other U.S. territories and the mainland. In 1974, the minimum wage for Puerto Rico and the U.S. mainland was USD 2-per-hour, compared to USD 1.42 in Pago Pago. By 1998, the minimum wage for the Puerto Ricans and Americans had been raised to USD 5.15, thus giving American Samoa, then at USD 3.17-per-hour, a comparative wage advantage. By 2001, the American canneries (except for Bumble Bee’s remaining two in California and Puerto Rico) had all fled the United States for American Samoa and other lower-wage countries. Now, with Chicken of the Sea’s new cannery in Georgia, there are three — none of them “American” enough in Faleomavaega’s eyes.

As a U.S. territory, American Samoa has been able to export its tuna duty-free to the mainland, while other tuna exporting countries have had to pay U.S. tariffs on canned tuna, which average about 9 percent, depending upon whether the tuna is packed in water or oil. But in recent years Congress has also given some other countries the same duty-free access to U.S. markets. StarKist, for example, now exports to the United States tuna packed in pouches by some 2,500 workers in Ecuador, paying no tariffs. Bumble Bee’s tuna that is canned in the United States is made from loins that are processed in low-wage countries like Fiji; loins are virtually duty free.

The American Samoan economy has long been propped up by artificial tariffs and wage rates that were supposed to shelter Samoans from the global economy. But now, American Samoa is facing the consequences of trying to live on an economic diet that is unsustainable in the long run.

 

Imelda Marcos, the CIA, and the Pope: A Historical Footnote with a Current-News Context

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This article is based upon formerly secret documents that were declassified without fanfare and published by the U.S. Department of State in 2006, but apparently gathered the proverbial dust on the shelves since then — unnoticed until now by prying journalistic eyes.

In Sept., 1970 Imelda Marcos, then the First Lady of the Philippines, feared that domestic political opposition threatened plans by her husband, President Ferdinand Marcos, to revise the Philippine constitution and thus extend his term in office, which would otherwise lapse in 1973. Mrs. Marcos these days is perceived in the public mind as a comic figure, thanks to her famous love of expensive shoes and jewelry. But in her prime, the politically ambitious First Lady was considered a woman with an independent power base who was accordingly treated with respect by heads of state. So when Mrs. Marcos flew to Washington, D.C. that Sept., she was able to obtain a private audience in the White House with U.S. President Richard Nixon. The First Lady also summoned Director of Central Intelligence Richard Helms to her suite in the Madison Hotel — the presidential suite. The declassified State Department and White House documents reveal that in her Sept. 22 private meetings with Nixon and Helms, Mrs. Marcos asked for some $23 million in CIA covert funding. The money was to be used to buy political support to elect pro-Marcos delegates to the Constitutional Convention two months later.

Nor was Mrs. Marcos content to seek only CIA assistance. Before going on to Washington, she had reached out to a higher authority, flying to Italy, where she had a private audience with Pope Paul VI. In that meeting, the First Lady vented her frustrations with internal political opposition from the Catholic Church in Manila, especially, she complained, from the liberal Jesuits. What could His Holiness do to help?

We’ll get shortly to the admittedly titillating details of how the highest levels of the Nixon White House and the Pope (who had his own Higher Authority to consult) responded to the pleas for political support. But first, it is worth noting that the revelations are hardly likely to be regarded as ancient history. This is because the same Philippine family dynasties that have been jockeying for power for more than four decades are still at it — while the same controversies involving possible revision of the country’s constitution that Imelda Marcos raised in 1970 are still the stuff of current headlines in Manila.

And beyond the little slice of history, there is a broader context for the story. This week the Philippines — which doesn’t get much press beyond Asia — will be in the international headlines. On Wednesday, Filipinos will inaugurate a new president. — marking another opportunity for a fresh start that would get their laggard economy moving in the right direction. It is conceivable — if not likely — that the Philippines could, at long last, be primed to become another Asian tiger, or perhaps a tiger-cub economy.

A closer look at both the past- and present history — from an admittedly American perspective, as I have followed Philippine politics during the entire 40-year background of this story — suggests why.

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