March 25, 2013

By Bill Jaynes
The Kaselehlie Press

March 15, 2013 Pohnpei, FSM - Members of the National Offshore Fisheries Association (NOFA) have written to Governor Ehsa in an effort to engage him in "a constructive dialogue on issues of great concern" to the organization. Specifically the members of the organization are concerned about the State's announced intention to enforce a law requiring exporters of fish to pay a transshipment fee on top of the transshipment fee they already pay to Pohnpei Port Authority. They say that if that law is enforced the member companies will be forced to take their fish to other ports that do not charge the fee.

Something similar happened at the Chuuk,port several years ago. According to Peter Sitan who was the director of FSM's National Oceanic Resources Management Agency (NORMA) at the time, lawmakers in Chuuk decided to increase the transshipment fee. The fee jumped from about $1.50 per ton to $3.00 to $5.00 dollars per ton depending on the type of vessel. As,a result, even though lawmakers eventually rescinded the increase, fishing companies stopped using the Chuuk port and have not returned.

OFA's January 21 letter announced that it would begin to enforce an old law that requires fishing companies to pay a 10 cent, per kilo transshipment fee, $90.91 per ton, over 18 times the amount of the increase in Chuuk that previously caused transshippers to abandon its port.

Marco Kember of Caroline Fisheries Corporation said that the Pohnpei Port Authority (PPA) recently increased the transshipment fees it charges from $1.75 to $2.00 per pound. He is under the impression that the transshipment fee that Pohnpei's Office of Fisheries and Aquaculture (OFA) announced that it would begin to collect as +of January 21 would be in addition to the Port's fee. He said that so far OFA has not pursued collection of the fee from CFC but that if it does, CFC will simply have to transship their fish at another port.

According to Nick Solomon, the President of the National Offshore Fisheries Association, another port won't be difficult to find because to the best of the group's combined knowledge, no other country in the Pacific charges a similar transshipment fee.

The members of the Association include National Fisheries Corporation, Caroline Fisheries Corporation, Inc., Diving Seagull, Inc., and Luen Thai Fishing Venture, Ltd.

NOFA members represent only a small portion of the fishing companies that currently transship their catches in Pohnpei, each of them injecting thousands of dollars into Pohnpei's economy on every visit. NOFA's letter speculated on the reasons that Pohnpei State had not previously enforced the law requiring fish exporters to pay a transshipment fee. The "lack of enforcement may have been due to legal review which cast doubt on the constitutionality of the law, or based on the fact that implementation of the law would adversely affect the development of a fisheries industry in Pohnpei."

"The decision by the Government now to start enforcing this law as of January 21, 2013, is troubling to the association and the member companies," the letter continues.

Kember says that when the transshipment fee law was passed in Pohnpei it was intended for longline fishing vessels. At the time there was no law against purse seiners transshipping their catch at sea and pretty much all purse seiners were doing so. But a law was later passed that prohibited transshipment at sea and Pohnpei's law was then in effect for Purse Seiners as well. However, until OFA's announcement in January, it had never been enforced.

NOFA says that its members are very happy with the services that are provided by Government agencies and by local vendors and agents that supply services and provisions. Pohnpei "has turned into a large regional base for offloading/transshipping from a number of fishing companies, not only the members of this Association, but also many additional reputable international fishery companies."

The letter points out that the members of the association valuably contribute to Pohnpei's economy through payments of current taxes and fees, purchases of services and goods from local businesses, as well as salaries paid to local employees.

During a hearing at the FSM Supreme Court on February 1 of this year, Luen Thai's Vice President Derrick Wang testified that since it took a lease to operate the former Pohnpei Fisheries Corporation facility in Dekehtik the company spent approximately $6.8 million that directly benefited Pohnpei State and the FSM. He said that money was spent for lease payments, license fees, import taxes, income and other taxes, and other government agency fees. In indirect payments he estimated that the company had spent an additional $20 million in payments to Pohnpei Utilities Corporation, FSM Petroleum Corporation, and salaries for the company's 110 local employees.

NOFA points out that the global market for commercial fishing is highly competitive. The members of the Association are all profit making businesses who must meet the demands of their customers who expect to pay the globally established prices for fish that they buy. It says that the companies have contracts with purchasers based on previous pricing that does not factor in the substantial transshipment fee that the Government now says it will charge.

"The fishery business is very competitive and we are competing with other producers around the world. We cannot simply pass on costs and expect our purchasers to pay. They will simply purchase from other suppliers," the NOFA letter says. "We must take all steps to continue to be competitive. Though we prefer to transship out of Pohnpei and conduct the necessary provisioning here, if Pohnpei makes our product uncompetitive, we will have no choice but to transship elsewhere. It is a matter of simple economics."

NOFA has asked for a meeting with the Governor's office, appropriate State agencies, and the Legislature in order discuss the matter so that "a mutually agreeable resolution can be reached."

According to NOFA, so far OFA has only collected transshipment fees from Luen Thai which recently paid the fees under protest for several containers loaded with fish. Even after they paid the fees, OFA would not provide necessary stamps that would enable the company to export its fish unless Luen Thai would also agree to pay the fee on a retroactive basis for all fish it exported since June of 2006. OFA only provided the stamps releasing Luen Thai's containers after a Supreme Court ruling ordered them to do so.