Submission from Dr A G James, Managing
Director, Ovenstone Agencies (Pty) Ltd
ACCESS FOR TRISTAN DA CUNHA LOBSTER TO THE
CHINESE MARKET AT PREFERRED TARRIFF RATES TO INCREASE ISLAND'S
REVENUE STREAM
This submission is made in support of the letter
for the Foreign Affairs Committee regarding the above subject
by Conrad Glass, Chief Islander, Tristan da Cunha.[248]
By way of introduction, I am the Managing Director
of the Cape Town, South Africa, based company Ovenstone Agencies
(Pty) Ltd, that is the exclusive operator of the Concession to
catch, process and sell Tristan lobster.
The Licence Fee from the lobster Concession
accounts for over 80% of Tristan's annual revenue, effectively
making it a single crop economy, exposed to a range of factors
outside the operator's or community's control that can significantly
influence the value of the product.
Tristan lobster has two primary export markets:
USA—frozen tails product form.
Japan—whole raw frozen and whole cook frozen
product form.
These markets are subject to cyclical fluctuations
in market demand and price levels, both of which impact directly
upon the Tristan's revenue stream. The traditional Japanese market
for frozen lobster product has been contracting for the last decade.
Tristan lobster does not have access to EU markets
due to the regulatory infrastructure not being in place—and
this situation is not likely to change in the medium term.
There are, therefore, limited opportunities
for development of new markets for Tristan lobster. China represents
the best opportunity at this time.
Ovenstone regularly receives enquiries for Tristan
lobster from Chinese importers. The Chinese market is one that
Ovenstone is keen to develop for Tristan lobster due to the growing
customer base able to afford lobster, a traditionally much sought
after luxury seafood in China.
However, as the situation currently stands,
Tristan lobster is unable to compete with product of other origins
in the Chinese market due to import tariff issues. Because of
the fact that Tristan da Cunha is not included under the umbrella
of the United Kingdom's membership to the World Trade Organisation
(WTO) and reciprocal trade agreements with China, product from
Tristan attracts a punitive import tariff rate in excess of 50%
of product value, rather than the preferred tariff rate of 16.7%.
Lobster from competing origins such as South Africa, Mexico and
Australia all enjoy the lower, preferred rate.
Ovenstone has been communicating with personnel
at the Foreign and Commonwealth Office since 2004 to try to find
a solution to the issue of Tristan da Cunha being included under
the umbrella of the UK's membership to the WTO to attain the preferred
tariff rate of 16.7%. Very little progress has been made to date.
The benefits to the Tristan Community of access
to the Chinese Market at preferred tariff rates for Tristan lobster
are obvious:
1. Development of a new and growing market
for Tristan lobster and a broadening of the customer base and
market demand for the Island's product. It is a reasonable expectation
that within a very short time—two years—the Chinese
market could account for up to 35% of Tristan's lobster product.
2. Increased prices for certain sizes of
lobster, generating increased revenue for the Island.
3. Reduced market risk and exposure to the
large fluctuations in market prices in Japan that affect Tristan's
revenue stream through market expansion and competition for the
limited volume of Tristan's product between Japanese and Chinese
buyers.
China represents the most important opportunity
to increase market penetration and product value for Tristan lobster
in the medium term—the next 5-7 years.
The issue that is blocking the penetration and
development of this market for Tristan lobster is not commercial,
it is bureaucratic.
Ovenstone respectfully requests that the Foreign
Affairs Committee use its good offices to bring to bear the considerable
resources of the FCO to consider solutions that will include Tristan
da Cunha under the umbrella of the UK membership to the WTO and
permit the import of Tristan lobster product into China at the
preferred tariff rate for the ultimate financial benefit of the
Tristan Community.
21 January 2008
248 Ev 223, Ev 241. Back
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