...they don't welcome our fish

It seems so simiple - Japan eats lots of fish, we have plenty to sell. But politics keeps getting in the way. By Graham Reid

At the recent Apec trade ministers' meeting in Auckland, it was the US decision to slap tariffs on our lamb that attracted most attention.

But the hypocrisy of that move overshadowed an issue which, for those committed to liberalising trade, has lingered far too long: access to the lucrative Japanese market for more of our fish.

"The New Zealand fishing industry has been lobbying for the last 15 years - and the Japanese stonewall every approach," says Peter Talley of Talley's Fisheries in Motueka.

He says the Japanese have cited quality, packaging, delivery - just about anything to block access or any advance on the tariff question. Each of those issues has been countered by involving Japanese in packaging and quality control - and still no progress.

"It's an indictment of our politicians," Talley says bluntly.

Equally forthright was Bruce Young, chief executive of Moana Pacific Fisheries, speaking at last year's Japan/New Zealand Business Council meeting in Auckland.

At a conference long on politeness, protocol and publicly papering over differences, Young addressed the tariff issue with admirable directness.

Japan's total fish catch had declined 50 per cent in volume since 1985, he said, and its domestic waters are incapable of feeding its population. Its distant water fleet had been progressively cut out of other nation's exclusive economic zones.

Given all that, said Young, it was hard to understand why Japan had been resistant to the complete liberalisation of trade in seafood, especially the elimination of tariffs.

And it isn't as if Japan has been rushed into anything.

As Young noted, the timetable for the elimination of quantitative restrictions, which Apec countries agreed on some five years ago, allowed Japan a full decade before implementation.

Contrast that with the World Trade Organisation's requirement that India dismantle its comprehensive collection of quota restrictions within five years and "it could be said that Japan has negotiated a Ôgood deal' on the issue."

Young indicated it was time for some transparency and serious talk.

However the address by Susumu Ono, general manager of Sumitomo Corporation's food and fertiliser division, was long on statistics and trends but less clear on what could be done.

"The Japanese economy has entered a maze from which there seems to be no escape," he said, and suggested that New Zealand capitalise on its "clean" image.

He then embarked on a lengthy digression into matters of hygiene and concluded his report by limply - and somewhat condescendingly - saying "I hear that New Zealand is making steady progress toward the development of the seafood industry ... I am confident that we can achieve continued growth by working to strengthen the friendship between our two nations ..."

Put crudely, Ono said little of consequence.

It would seem that in this new era of liberalisation, New Zealand has embarked on a path which our major trading partners have selectively applied.

On paper the issue looks simple. At a time when Apec countries have agreed to dismantle the tariff regime by the end of 2005, the Japanese - among others - have been intransigent, largely because Japanese law makers count on votes from vocal and well organised industries such as fisheries.

In Malaysia last September, Apec ministers could not reach consensus on removing tariffs affecting fishing and forestry, and passed the issue over to the World Trade Organisation.

Ironically, at the time Japan was desperately looking at ways of stimulating domestic spending, even to the point of giving all households a one-off injection of cash to spend. (Economists pointed out that most Japanese would simply bank the money so the idea was dropped.)

Lowering or removing tariffs on fish would have had exactly that effect.

High price, good quality fish, such as crayfish, had dropped off the menus at top class restaurants because it was too expensive. Remove the tariff, the argument goes, the price would drop and people would buy the stuff again. That simple.

Japan's unwillingness to move on the tariff issue makes fishing a major philosophical discussion point on the Apec agenda in Auckland.

The reason it is such an important issue, however, has more to do with money than philosophy.

Japan, being an enormous consumer of fish, is a lucrative market.
But its fishing industry is also heavily subsidised. Auckland University's Basil
Sharp, a leading fisheries research economist, estimates that the Japanese industry is subsidised by over $US500 million. The European Union's fishing subsidies are a little less and the US supports its industry to the tune of $US30 million.

Fishing in New Zealand - which employs around 10,000 people in harvesting and processing - enjoys no such subsidies.

But the Japanese fishing industry, although small, is a powerful lobby. The introduction of the single-seat constituency system in Japan's Lower House has made its votes extremely important - and it has insisted its government maintain tariffs which currently run at between 2 and 10 per cent on fresh and frozen fish, and fillets.

"We could never accept tariff cuts which would make workers suffer more by the increase of imports," said Eiko Kaneta, a member of the Lower House representing the fishing and forestry-strong constituency of Hokkaido at Apec last year.

But Talley says the fishing industry in Japan is protecting an archaic distribution system of auctioneers, agents, distributors, people involved in preparation, transport and the like.

Each is "a clip the coupon process" and adds a margin.

"It's protectionist and keeps employment high, but it's like an old boys' club," he says.

Progress has been made on a number of issues relating to free trade, but what Robert Scollay, director of Auckland University's Apec Study Centre, calls "the main prize" - the abolition of tariffs - remains unresolved and will be high on the agenda in this round of Apec talks.

"Virtually without exception all fish into the Japanese market is subject to some form of tariff or restriction," says Talley.

"Mackerel and squid, for example, are subject to import quotas. On mackerel there's a total import ban, on hoki and red cod there's a 5 per cent tariff - and squid would be the most valuable for us if we could just get into the market."

To outsiders, our fishing industry looks in difficulty: about 85 per cent of our harvest is exported but we can't influence price, we face significant tariffs, and compete with subsidised products while enjoying no similar support at home.
But our harvest is based on a maximum sustainable yield and, while significant areas of the Pacific are over-fished, "we're squeaky clean" says Young.

When the inevitable tariff reductions come, says Sharp, New Zealand will be able to enjoy the benefits of liberalisation because fishing here is a lean, economic and driven industry - and because we are prepared for the new era in a way that subsidised and tariff-protected nations are not.