StarKist And COS Received Hundreds Of Millions Of Dollars In Tax Creditsff

Source: Samoa News, based on Press Release

Cong. Faleomavaega met late last month with Mr. Kim Jae-chul, Chairman of the Dongwon Corporation which purchased StarKist from Del Monte in 2008 for some $363 million. Presently, StarKist employs about 1,800 workers in American Samoa.

“For too long, American Samoa’s economy has hinged on two tuna canneries – StarKist and Chicken of the Sea – with more than 80% of our private-sector economy dependent on this single industry,” Faleomavaega said.  “But, with the rise of foreign competition, Chicken of the Sea has closed its operations in the Territory and StarKist is barely hanging on by a thread.”

“Given the seriousness of the situation, Chairman Kim and I met again to discuss the current status of our ongoing efforts to keep StarKist in American Samoa.  We both agree that the entire U.S. tuna industry has undergone a tremendous transformation and, as a result, American Samoa is now facing one its most difficult challenges.”

“For years, three major brands of canned tuna -- StarKist, Chicken of the Sea and Bumble Bee – have dominated the U.S. market.  Together, they have supplied more than 80% of all canned tuna consumed in the U.S., and most of that tuna was cleaned and canned in American Samoa.”

“However, Thailand is changing the tuna industry as we know it.  As of today, Thailand is the number one producer of canned tuna in the world and its private label canned tuna business is now competing for U.S. market share. In fact, the competition from Thailand is so strong that Thailand’s private label business has taken over about 30% of the U.S. market.”

“In 2006, before minimum wages were ever increased in American Samoa, both StarKist and Chicken of the Sea were already operating at about a $7.5 million loss per year when compared to Thailand, as the new GAO report verifies.  In part, this is because Thailand pays its fish cleaners only about $0.75 cents and less per hour, which makes Thailand better able to offer its private label tuna to the American consumer at a lower cost than StarKist, Chicken of the Sea, or Bumble Bee.”

“Because Chicken of the Sea is owned by Thai Union, which is the largest tuna cannery in the world, Chicken of the Sea has since shifted the majority of its production back to Thailand and opted to downsize its operations in Lyons, Georgia where it now employs a skeletal crew of about 200 workers to put pre-cooked tuna, or loins cleaned in Thailand, into cans for final packaging.  Put another way, Chicken of the Sea has chosen to exploit workers in low-wage countries rather than clean whole fish in American Samoa and, consequently, StarKist is the only remaining major brand of canned tuna that still cleans whole fish in America.”

“But, as I stated earlier, StarKist is operating at a loss.  And while I am deeply appreciative of StarKist’s commitment to the people of American Samoa, none of us can or should expect StarKist to continue operating at a loss, or to stay in the Territory if it cannot effectively compete.”

“Fortunately for us, Chairman Kim has assured me that he is patient, that he has no immediate plans to leave American Samoa, and that he wants to do all he can do to keep StarKist in American Samoa if we can work out a solution that levels the playing field for StarKist.  Because of the time he spent in American Samoa as a young fisherman, Chairman Kim told me he has a sentimental attachment to our people and that it is not the Asian way to just up and leave without notice.”

“As we all know, Chicken of the Sea closed its operations in American Samoa without even the courtesy of discussing its departure with any of American Samoa’s elected leaders,” Faleomavaega said.  “But Chairman Kim has said he will not do that to us.  Instead, he promised to work with us as long as it is feasible.  How long this will be, we do not know.”

“During our discussions, I updated Chairman Kim about what is taking place at the federal level to provide StarKist with the assistance it needs.  While I would like to publicly announce all that we are working on, my job is to put the interests of our people first and sometimes that means working quietly behind the scenes so as not to give our competitors an edge during these sensitive times.  What I can say is that ASPIRE is not dead.”

“We are working closely with the Administration to modify it in a way that would be helpful to American Samoa without hurting workers in California, Georgia and Puerto Rico where Chicken of the Sea and Bumble Bee are located.  And, I still have hopes that the U.S. tuna industry might come together to work out a solution that is beneficial to everyone involved so that our three major brands of canned tuna can more effectively compete against Thailand.  StarKist and I are also working on a federal tax incentives package that would provide a more long-term solution for broad-based economic growth and development for the industry.”

“Regarding recent media reports about a tax proposal that ASG gave me for consideration, I would like to provide a brief overview for the record.

Some 4 years ago, the U.S. Department of the Interior (DOI) awarded ASG about $90,000 to conduct a study related to American Samoa’s economic development.

Instead, the consultant, who was hired or recommended by ASG, drafted a tax bill to be introduced in Congress. The legislation was drafted without any input from our tuna canneries and without the knowledge of my office.  Given that DOI knows full well that the drafting of federal legislation is the sole responsibility of the U.S. Congress, it is my understanding that the DOI was also unaware that the consultant had drafted a tax bill.”

“Also, unbeknownst to me, ASG took its draft tax bill to the Senate Committee on Energy and Natural Resources which has no jurisdiction over tax matters.  I first received a copy of the proposal when a staff member from the Committee alerted my office to ask if I was aware of ASG’s draft bill.  I informed the Committee staff that I was not aware of the proposal and it was not until after ASG’s efforts on Capitol Hill failed that ASG provided my office with a copy of its draft tax bill.”

“In any case, I am pleased that ASG is supporting StarKist at the local level where its efforts are most needed. Also considering that at the federal level StarKist and Chicken of the Sea have received hundreds of millions of dollars in tax credits over the course of the past 20 years, I remain hopeful that ASG will be able to offer StarKist a local tax package that is as good as what Georgia gave Chicken of the Sea.”

“For now, the only promise I can make is that I will continue to do my very best to keep StarKist in American Samoa even though there are no guarantees due to the unprecedented exploitation of cheap labor from foreign countries,” Faleomavaega concluded.