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Select Committee on Foreign Affairs Written Evidence


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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