PACIFIC TRADE PATTERNS THURSDAY, APRIL 18, 1963 U.S. SENATE, COMMITTEE ON COMMERCE, The committee met, pursuant to recess, at 10:15 a.m., in room 5110, New Senate Office Building, Hon. Clair Engle presiding. Senator ENGLE. The committee will be in order for further proceeding on the hearings with reference to the Pacific trade patterns. This morning we have with us Mr. Clarence Pautzke, Commissioner of Fish and Wildlife, Department of Interior, accompanied by Donald L. McKernan, Director, Bureau of Commercial Fisheries; Harold E. Crowther, Assistant Director, Bureau of Commercial Fisheries; and Arthur Sandberg, staff member, Branch of Foreign Fisheries and Trade. We will be very happy to have you gentlemen come forward. STATEMENT OF CLARENCE PAUTZKE, COMMISSIONER OF FISH AND Mr. PAUTZKE. Thank you, Mr. Chairman. I have a short statement. I wonder if I may read this, Mr. Chairman, for the record? Senator ENGLE. Yes; that will be very fine. Go right ahead. Mr. PAUTZKE. Mr. Chairman and members of the committee, we appreciate the opportunity to appear before your committee to discuss international trade in fishery products conducted by the countries of the Pacific area. This is an area of the world in which the U.S. fishing industry and the Fish and Wildlife Service have a current, as well as a historical interest. In the Pacific region there are economically advanced countries, such as Japan, Australia, and New Zealand, with Japan being a leading exporter of fishery products to the United States. For the most part, however, the developing countries in the region are in the process of expanding and modernizing their fisheries. A considerable part of their fishery production is used for domestic consumption, but a significant and increasing part is going into the export trade. The fishery export trade of the developing countries is mainly intraregional and is mostly in traditional-type oriental products. Such fishery products as shrimp and tuna, however, have recently been exported to countries outside the region. The United States is the recipient of increasing amounts of these products from a number of the Pacific countries. It is interesting to note that many of the developing countries of the Pacific region have been, and still are, large consumers of low-cost fishery products. At one time, before and immediately after World War II, the United States exported large amounts of canned California pilchards, canned squid, and other fishery products to the developing countries. This U.S. export trade has diminished sharply because of many factors, the principal ones being competition from fishery products of other countries and restrictions which have at times been placed on imports by some of the Pacific countries. As we will show later, countries in the Pacific area have a vast potential for fisheries development. With large and growing populations in many of these countries, the demand for fishery products can be considered practically unlimited. In some countries, future consumption levels may very likely surpass local production. At present, markets in the developing countries can best use lowcost fishery products to provide the people with much-needed protein. It is our opinion that these markets and this need will not be supplied for some time. In recent years, Japan has shown great progress in developing its fisheries. It exports significant quantities of fishery products to countries in Western Europe and North America. Japan has also been able to trade effectively with the developing countries in the Pacific region, this trade being primarily in traditional oriental fishery products and in low-cost canned products. For its higher cost fishery products, however, Japan has found more profitable outlets in more prosperous countries elsewhere in the world. Although many of the developing countries have undernourished peoples, the latent fishery resources at their doorsteps have not been fully utilized. Most research and development in the Pacific region has been conducted by Japan, with its tremendous and growing fishing fleet. Because Japan is the major industrial nation in Asia and the leading exporter-in dollar value-of fishery products in the world, many of the important aspects of Pacific trade relationships revolve around that nation. Japan's importance in the fishery trade of the Pacific region will undoubtedly increase as her role in economic and technical assistance in the area increases. Economic and technical assistance in fisheries is expected to expand in the developing countries; such assistance is also directly related to Japan's trade and raw material require ments. Although the more spectacular advances in expanding fishery production and export trade have been made by Japan, other countries in the Pacific region have shown marked progress in fishery development. India has large shrimp resources in its waters and these can be more extensively utilized. Likewise, Pakistan is also favored with shrimp resources. Some development has taken place in these countries, and trade is expected to build up in the near future. For several years, intense efforts have been made in Korea to develop its commercial fisheries, both for domestic consumption and for export. Some progress has been made here, and further gains are expected. Taiwan is also making efforts to develop its fisheries, primarily for tuna. Programs conducted by the Agency for International Development (AID) in many developing Pacific countries have sought to stimulate fishery production to meet the needs of local populations and to develop foreign exchange with which to buy other products of world trade. A wide interest also exists in the islands of the Pacific, such as New Caledonia and the Fiji Islands, as bases from which to operate tuna fisheries. Ceylon and Indonesia have started fishery development programs. Australia and New Zealand have made progress in their spiny lobster fisheries. Australia is also making efforts to increase its shrimp and tuna production. Of no small significance to the future trade patterns of fishery products in the Pacific is the possible development of a Communist Chinese high-seas fishery, plus the very real intention of the U.S.S.R. to expand its catch in the Pacific and Indian Oceans. Since most of the U.S.S.R. catch is, at present, used to meet domestic food needs, the effect on trade in fishery products in the Pacific from that country is expected to be minimal for some time. Increased competition, however, for certain resources and species of fish could develop. At some future time, it is conceivable that Communist China and the U.S.S.R. could provide serious threats to both established and potential fishing grounds of developing nations, as well as to trade patterns. We have briefly reviewed the fishery trade situation in the Pacific region and the probabilities that such trade will expand further. Statistical data on fishery trade in the region have been compiled and, if the committee so desires, these data can be made available for the record. Possibilities exist for increased U.S. participation in the trade expansion expected in the Pacific region. Aggressive action, however, needs to be taken by the U.S. fishing industry if it is to compete in the expanding markets offered by the developing countries with their growing populations. The U.S. fishing industry is presently concerned chiefly with harvesting selective species of fish for specific domestic and foreign markets. The principal foreign markets for U.S. fishery products are now in Western Europe. Fish oils and canned fish are the principal exports to that area. Waters directly off the U.S. coast contain abundant quantities of commercially underutilized species of fish. The future harvesting of these resources, together with the technical now-how to process the types of products that could be sold to countries in the Pacific region, would be an important economic step forward for our domestic fishing industry. Means also must be found to market these fishery products in countries where malnutrition is a problem. As an example we might cite fish protein concentrate, a product which could become important in the fishery trade of the Pacific area. The development of an acceptable fish protein dietary supplement is a first step. Then means of market ing this, and also other new low-cost products, must be developed. Until then, the U.S. industry will have to rely on the lower priced fishery commodities presently manufactured. U.S. canned fish is an acceptable product in the Pacific countries but the competition is intense from such countries as Japan and South Africa. The probability that fishery trade in the Pacific area will continue to expand and that imports into the United States will increase are matters of concern for the domestic fishing industry. Although countries in the Pacific region have been expanding their fishery catches for products suitable for local consumption, they have also been concentrating on the production of high-priced products for export. Tuna and shrimp are among the leading products in this latter category. At various times in the past, our domestic tuna and shrimp fisheries have been adversely affected by periodic surges in exports of shrimp and tuna to the United States. Tuna has, so far, come principally from Japan but other Pacific countries, such as the Philippines, Korea, and Taiwan, are gearing their vessel construction to enable them to fish on the high seas for these species. As for shrimp, Pakistan, Indian, Australia, and others have exported continually increasing quantities to the United States. Even though the U.S. market for tuna and shrimp is growing, large influxes of such imported products have tended to disrupt conditions in our domestic fisheries. For the past 2 years, the U.S. tuna and shrimp fisheries have been meeting such competition successfully, but in previous years because of exceedingly sharp rises in imports-U.S. prices fell sharply, inventories increased, and many fishing vessels either had to discontinue operations or operate at a loss. The tuna and shrimp fisheries of the western Pacific area have the potential for sharp increases in production. The United States being a most lucrative market for the higher cost fishery products, it is likely that a great deal of this expected increase in production will find its way to this country. As already mentioned in our statement, the Bureau of Commercial Fisheries will follow the developing situation in the Pacific fisheries and continue to keep abreast of the activities in that area. Senator ENGLE. Without objection, the tabulation which was referred to in your statement will be made a part of the record at this point. |