Ottawa Update January, 2005 Edition

Building a Fishery That Works

What's Happening at the FCC

USA - Bryd Amendment

The WTO has authorized Canada, the EU, Japan and five other countries to impose duties of about $150 million on import of goods from the US. Canada can impose duties of $4 million. WTO has granted the authorization because the US has not repealed the so-called ‘Byrd Amendment” which gives affected US companies the anti-dumping and countervail duties collected by US Customs.

Canada’s Department of Finance identified a wide range of products that they are seeking consultation on regarding their proposal to levy 100% surtax on selected products. The list amounts to about $5 billion of imports of which about $150 million are fish and seafood imports. The proposed fish and seafood items and the amount imported in 2003 are: canned salmon ($75 million), frozen fish blocks ($32 million), frozen warm water shrimp ($20 million), oysters ($6 million), ornamental fish ($6 million), certain frozen, whole/dressed fish products ($4 million), herring liver & roes ($3 million).

The FCC’s Trade Policy Committee reviewed the above and the FCC sent a note to the Department of Finance on the proposal. In summary, our comments were:

* To fully support efforts to get the USA to repeal the “Bryd Amendment”. However, in taking action against some of the proposed items, Canadian fish and seafood processors would also be hurt.

*Requested following items be removed from the retaliation list:

* frozen fish blocks (imported for further processing in Canada) * canned salmon (product is imported by Canadian canned salmon processors who need the volume to keep their Canadian brand names on retail shelves in Canada, Europe, and Australia) * frozen herring liver and roes (the BC industry and DFO are considering amending the current BC roe herring export restrictions. As such, we don’t want to draw undue attention to Canada-USA herring trade at this time) * frozen shrimp (concerned that if market access conditions to the EU are not improved in 2005, significant supplies of Canadian cold water shrimp will be redirected to the USA which could awaken the US West Coast shrimpers’ call for anti-dumping/countervail measures. If this happens, the atmosphere for discussion and negotiations with US authorities would be negatively impacted if Canada already had in place a 100% penalty duty on US shrimp imports).

Cooked & Peeled Shrimp – EU

The UK association and the FCC have become a bit frustrated with the Danish Fish Processing Industries and Exporters Association. Although the Danish association voted in favour of the initiative to expand the 6%, 7000 mt import quota, two of its members voted against it, including the influential Polar group. In addition, Royal Greenland, which isn’t a member, but is influential in Denmark, is working against the initiative. Also, the Danish association is now raising complaints about the high pick-up of the quota by UK processors, complaining that UK Customs is ignoring the end-use restrictions.

The European Commission advises that they want to review the operation of the 2004 tariff quotas, including the cooked and peeled shrimp quota in January, assess what transpired, and determine what, if any, changes, are appropriate.

Consequently, the UK Frozen Food Association, and the FCC have discussed the above and have agreed to the following course of action.

The UK association is to organize a meeting in Denmark in early February of the UK association, the Swedish association, and the two involved Danish associations (the above association and the newly formed Danish Seafood Association – which is strongly in favour of the initiative).

The FCC is to organize a morning meeting in Brussels of the FCC, the UK, Danish, and Swedish associations, followed by an afternoon meeting with the European Commission. The scheduled date is Monday, February 21.

Export Promotion

Part of the mandate of the Department of Agriculture & Agri- Food Canada is to provide assistance to the Canadian fish and seafood industry in its export efforts. The Department established a Seafood Value Chain Roundtable mainly comprised of industry representatives in order to better acquaint the Department with the industry, its challenges, constraints, and opportunities, so that it can better support the industry regarding export initiatives and opportunities. Ken Hirtle, Heritage Salmon, is the industry co-chair.

At its December meeting, the Roundtable struck a Canadian Seafood Image sub-committee with Ron Whynacht, High Liner Foods, as the chair. The sub-committee will examine the merits of developing an overall image brand for Canadian seafood and, if so, what could be some of the key messages in that brand.

What’s Happening on the Hill

Employment Insurance

A subcommittee of the House of Commons Standing committee on Human Resources, Skills Development and the Status of Persons with Disabilities has submitted a report to the Committee regarding employment insurance. The report contains 20 recommendations. Three of the recommendations, if adopted by the Committee and subsequently the government, would substantially change the EI program. In summary they are:

* Establish a uniform EI qualification requirement of 360 hours i.e. 30- hour week over a 12-week period.

* Scrap the current method for calculating average weekly insurable earnings and adopt a new rate calculation period equal to the qualifying period. Only those weeks with the highest earnings in the new rate calculation period would be included, and these would be averaged over the best 12 weeks of insurable employment.

* Increase the benefit rate from 55% to 60% of average weekly insurable earnings. The Committee will be reviewing the recommendations and voting on them when Parliament returns in February. On a parallel stream, we are awaiting the report of the Liberal Caucus Task Force on Seasonal Work under the Chairmanship of Brent St. Denis.

Market Issues

Seafood Trends for 2005

Intrafish talked to some of the industry leaders regarding prospects for 2005. Below are the predictions in no particular order:

* pay attention to currency exchange rates
* demand is rising leading to higher prices more negative media coverage on fish and fisheries. Can the industry respond effectively?
* “sustainability” is now integral to the seafood business leading to further development of eco-labelling, organic seafood, traceability, and other “green” seafood
* processors will feel price pressures from both sides – raw material inputs and price battles among retailers and increased market share of discounters
* more trade disputes
* consolidation to continue in North America and Europe
* companies will need their product line to have healthy eating options in order to maintain market share
* fuel price pinch will be felt in 2005
* traceability takes on new importance; need to know how and where the fish and seafood was caught

FCC 2005 AGM and Conference

Old Montreal

September 27-29, 2005

The location and dates for the 2005 FCC Annual General Meeting and Conference have been finalized. We have booked the beautiful Marriott Spring Hill Suites Old Montreal located in the heart of unique and historic Old Montreal. The Conference begins with a reception on Tuesday evening, September 27 and ends with a breakfast session Thursday morning, September 29. So block out those dates on your new calendar. What could be better than early fall in Old Montreal?

                                       *** Happy New Year! ***
Wishing you many happy beginnings for the New Year.