A shared vision for self-determination: the PNA story in print

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A Solomon Islander who is a household name in the Western and Central Pacific tuna industry has written the story of how the Davids of the industry prevailed against the Goliaths.

Fishing for success: lessons in Pacific regionalism is the story of how the Parties to the Nauru Agreement came into being, and is written by one of those involved in its formation: Transform Aqorau.

The book was published recently by the Coral Bell School of Asia Pacific Affairs at the Australian National University. 

Dr Aqorau said in an interview with the Coral Bell School that it was “one of the happiest stories” to come out of the region.

“The huge increases in revenues, from our work in getting hard limits for the Vessel Day Scheme (VDS), and in restructuring the VDS and running it as a business, demonstrated that we can manage our resources more effectively,” Dr Aqorau said. 

“I wanted to share this story because for a long time we were really played off by the foreign fishing operators. It was quite unfair how the distant-water fishing nations, for the better part of 30 years, did not pay us for the true value of our tuna.”

Dr Transform Aqorau on deck of a purse-seine fishing vessel. Photo: Giff Johnson.
Dr Transform Aqorau on board the purse-seine fishing vessel Lojet during a two-week voyage. Photo: Giff Johnson.

The PNA began operating from a small office in Majuro, Marshall Islands, in 2010. Dr Aqorau said that, at that time, the PNA states collected US$60 million in revenue from tuna fishing. 

Because of the agreement, in 2019 the same states earned revenue of US$500 million. 

It was an achievement “that donors, regional organisations and political leaders have been trying to do for years, but could not”, Dr Aqorau said.

“it is about how a group of countries, friends and colleagues – through their friendship, alliance, shared vision and desire to control their fisheries … – put their heads together and created the largest capitalised tuna fishery in the world.” 

He was motivated by wanting “to ensure that our peoples – the young, the old and feeble, the people in the village – get a fair share of the returns from our tuna resources”.

Dr Aqorau charts the early discussions on the agreement, and the opposition, challenges and victories along the way. 

The development of the agreement is threaded through many of the tuna conservation and management tools used in the region today. They include the Vessel Day Scheme for purse-seine and longline fishing vessels, and the Fisheries Information Management System (FIMS). They also include the achievement of the first Marine Stewardship Council certification in the region, and the related set up of the Pacifical tuna-marketing brand.

Some arrangements had been more successful than others, he said, but from the beginning the countries saw that the conservation of tuna populations and economic gain went hand in hand. 

“The story of the PNA has been a remarkable one, especially the success of the VDS and how its significant economic returns have made such a large impact on the development of Pacific communities,” Dr Aqorau said.

The eight states that are members of the PNA are Federated States of Micronesia (FSM), Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Solomon Islands and Tuvalu.

Initial economic impact of COVID-19 reported for Micronesia, Marshall Islands, and Palau: media release

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WASHINGTON, 23 June 2020 – US Department of the Interior Assistant Secretary, Insular and International Affairs Douglas W. Domenech today announced the publication of three technical notes from the Graduate School USA’s Economic Monitoring and Analysis Program (EconMAP) providing an initial assessment of the economic impacts of the novel coronavirus disease 2019 (COVID-19) on the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau. 

“While each of the three Freely Associated States continues to remain free of COVID-19 cases, the slow down and near termination of transportation across the region has had strong repercussions on their economies,” said Assistant Secretary Domenech. 

“It is hoped that the data and analyses in these technical notes can help illuminate impacts as FAS leaders draft fiscal measures and implement mitigation strategies to maintain financial and economic stability now and as they emerge from the impacts of COVID-19.”

Funded through the US Department of the Interior’s Office of Insular Affairs (OIA), the projections made in the EconMAP technical notes assume that travel will remain limited for all three of the FAS through fiscal year 2021 or until a COVID-19 vaccine is developed. 

The technical notes also utilize economic modeling techniques that project the economic impact of the COVID-19 pandemic without consideration of any external donor assistance and in the absence of any confirmed domestic cases. Should any of the three FAS report COVID-19 cases and develop community transmission, the projected negative impacts of the pandemic could be compounded. 

As laid out in the reports in more detail, the following highlights reflect initial expected COVID-19 impact in each FAS in fiscal years 2020 and 2021.

The Republic of Palau

The Republic of Palau – Heavily dependent on tourism with 20 per cent of all its workers employed in the tourism industry, Palau attracted 90,000 foreign visitors in fiscal year 2019, with the tourism industry contributing 20 per cent to gross domestic product. Prior to the pandemic, Palau’s fiscal year 2020 first quarter tourism numbers were on track to grow more than 30 per cent and estimated to attract 116,000 visitors for the year. Instead, it is now projected that Palau will experience a 51 per cent reduction of tourists, with a total expected of about 44,075 visitors, and a further 89 per cent reduction in fiscal year 2021.

Overall, Palau is expected to experience a 22.3 per cent decline in GDP and a loss of 3,128 jobs, primarily in the private sector.

The fiscal deficit for Palau, resulting from the loss of tax revenues such as the payroll tax, gross revenues tax, hotel room tax, and import taxes, is projected to be about US$40 million; however, this impact is partially mitigated by Compact grants and trust fund revenues. Construction and infrastructure projects already planned for Palau are anticipated to serve as an important economic stimulus when the cyclical negative impact of COVID-19 on Palau’s economy is being realized.

The Federated States of Micronesia

The Federated States of Micronesia (FSM) – While the FSM does not enjoy the same level of visitor arrivals as Palau, the majority of the COVID-19 impact will also be felt in the private sector, namely in the transportation and tourism sectors. The hotel and restaurant industries are projected to fall by 46 per cent in fiscal year 2020 and then an additional 75 per cent in fiscal year 2021, reflecting the absence of tourists and minimal interstate visitors. Similarly, the transportation sector, which includes shipping, port services, aviation, and airport ground handling, is projected to decline by 27 per cent in fiscal year 2020 and an additional 14 per cent in fiscal year 2021. Notably, the total projected loss to the FSM economy will be the most severe decline in the FSM economy since the start of the amended Compact period in 2004. 

Ultimately, the FSM is expected to experience a 6.9 per cent decline in GDP and a loss of 1,841 jobs, reflecting an 11 per cent reduction of employment levels in the FSM compared to fiscal year 2019. 

Optimistically, given the FSM’s strong fiscal position at the outset of the COVID-19 pandemic, the application of targeted internal and external assistance, including Federal assistance, to bolster health sector investments, improve resiliency in the health system, provide budgetary resources to offset revenue losses during the pandemic, and to provide direct support to affected individuals and businesses, will be sufficient to offset much of the projected threat to the FSM economy and to its fiscal position going forward.

The Republic of the Marshall Islands

The Republic of the Marshall Islands (RMI) – The overall RMI economy relies very little on tourism and visitor arrivals with the hotel and restaurant sector representing only 2.3 per cent of GDP. It is, however, more heavily dependent on the public sector, which includes important fisheries activity and sovereign rent receipts. The Marshall Islands Marine Resources Authority is already seeing declines ranging from 30 to 50 per cent across aquarium fish exports, the tuna loining plant operations, purse seining operations, and shore-based support to the longline fishing industry. With airline travel to the RMI near complete shutdown, wholesale fuel operations are projected to drop by 45 per cent, reflecting the loss of nearly all of its aviation fuel sales. 

Overall, the RMI is projected experience a 6.9 per cent decline in GDP and a loss of 716 jobs.

The projected impact on tax revenues, employment, and job loss coupled with potential significant reductions in fisheries revenues may result in a sizeable fiscal shock in the range of US$14 to US$20 million, larger than previous fiscal downturns experienced by the RMI. The RMI will benefit significantly from donor assistance that can help mitigate the projected negative impacts on the economy as a whole and to avoid a dangerous deterioration of its fiscal position. 

Breadth and depth of impact in three countries

In all three countries, the breadth and depth of economic impact will be substantial in the tourism, transport, and fisheries sectors, again under the current modeling with each country still reporting zero COVID-19 cases. Although Palau is hardest hit due to its tourism-centered economic structure, the FSM and RMI are also deeply affected. The EconMAP team expects to update the technical notes to eventually quantify the full range and impact that internal mitigating efforts and external donor assistance will have in each FAS, eventually providing a full report to better understand the combined impact of assistance and the net impact of the COVID-19 response.

The full and complete COVID-19 technical notes for the FSM, RMI, and Palau can be accessed at http://www.pitiviti.org. EconMAP technical notes are intended to provide a concise and timely analysis of an immediate situation for decision-makers, utilizing currently available data sets and macroeconomic tools developed in close collaboration with stakeholders.

All three FAS governments are working closely with Federal partners in the United States government, including the Department of the Interior, to invest in strengthening their health systems and to mitigate the impact on affected individuals and businesses. For a partial list of US Federal assistance to the FAS related to the COVID-19 pandemic, visit https://www.doi.gov/oia/covid19.

Funded through the Office of Insular Affairs’ Technical Assistance Program, EconMAP is managed by the Graduate School USA’s Pacific & Virgin Islands Training Initiatives. EconMAP produces annual economic statistics and economic reviews for the RMI, FSM, and Palau, as well as occasional technical notes on emerging issues.

The Assistant Secretary, Insular and International Affairs, @ASIIADomenech, and the Office of Insular Affairs (OIA) carry out the Secretary of the Interior’s responsibilities for the US territories of American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the US Virgin Islands. Additionally, OIA administers and oversees federal assistance under the Compacts of Free Association to the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau.

For more information, contact Tanya Harris Joshua, Deputy Policy Director, Office of Insular Affairs – Policy Division, US Department of the Interior, ph. 202 208 6008 | mob. 202 355 3023.

FSM to review tuna fishing access concession practices

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Republished from Marianas Variety, 31 January 2019

PALIKIR, Pohnpei (FSM Information Services) — During a recent cabinet meeting in Palikir, President Peter M. Christian ordered an official review of current FSM tuna fishing policy and practices, as a component of ongoing internal tuna fisheries development policy review.

He expressed particular concern that concessions may have been granted without tangible proof of full performance by the concession grantee of agreed business investments and the delivery of benefits to the FSM and its people. Officials were instructed to ensure a proper and fair balance between maximizing revenues from licensing foreign fishing boats and promoting greater national participation in on-shore services and investment.

President Christian was explicit: the FSM government must not grant concessions until fishing investors and operators can demonstrate genuine on-shore business investments and tangible results that show an overall net gain to FSM’s economy and the well-being of its people and communities.

He called for more robust enforcement of concession trade-offs to be established by 2020.

“Genuine investors and partners should have no fear about a tightening up of FSM policies and practices,” President Christian said. “They will understand that delivering genuine and equitable two-way benefits provide the best assurance of long-term business viability and the sustainability of the tuna resource.” 

While the first 12 nautical miles from land is considered territorial waters — i.e., the surface water and everything below is officially part of the country it’s near — an Exclusive Economic Zone is the sea zone stretching 200 nautical miles from the coast. While the surface water is considered international (i.e. ships can travel through it) everything below the water, including its fish, is for that country’s use. The value of tuna fishing access in the FSM’s EEZ has grown steadily since 2007, resulting from the implementation of the Vessel Day Scheme by the Parties to the Nauru Agreement  and the Western and Central Pacific Fishery Commission fishing effort restrictions. The FSM is poised to benefit significantly from restructuring and transforming its tuna fishery from foreign-based fishing operations to domestically-based fisheries.

The FSM, like most other Pacific Island Countries, has granted fishing fee concessions, or discounts, to fishing companies that are nationally owned or based in the FSM. Since 1987 the FSM has provided incentives to help offset initial high establishment costs that companies might face in order to invest in or transfer their operations to FSM. This concession policy was based on the understanding that those investments and activities would generate clear and tangible socio-economic benefits to the FSM economy and community, within an agreed timeframe, that would offset the fishing access revenues given up by the government when it grants the concessions.

The FSM’s fishing industry has grown from just two fishing companies with five purse seiners to 23 purse seiners in 2019. The growth is primarily attributed to the practice of granting concessionary VDS rates for domestic-basing that creates jobs for FSM citizens and enables the FSM’s full participation in the fishery and its development. FSM’s goal is to maximize the contribution of the fishery industry toward socio-economic development of the FSM and maximizing benefits to the resource owners (the people of the FSM). With larger values at stake in the fishery, the FSM government is reviewing and tightening up its investment and fishing access concession policies to ensure that they achieve the level of benefits that they seek within its national development aspirations.

FSM government officials emphasize the importance of full compliance by fishing concession holders to prove, as much as possible, the level of benefits they had promised to deliver in return for the concessions they have received.

The National Oceanic Resource Management Authority, its Executive Director Eugene Pangelinan said, “will implement robust monitoring of concessions to inform annual FSM VDS allocations to its fishing industry as called for by the president.”