Since Ecuador’s preferential duty tariff for tuna pouches to the USA expired in mid-February, U.S. importers decided to reduce part of their purchase volume of Ecuadorian tuna and sought alternatives in other markets like Thailand, which has also an extensive pouch industry.
The reaction came after the tuna in pouch produced in Ecuador, that was exempted of duty, now is slapped with 12.5% to enter the United States market.
Agustin Jimenez, businessman in the tuna industry, said that many U.S. buyers, as prevention and pending resolution of the renewal of the ATPDEA, “believe the should not continue buying the same volumes from Ecuador and are switching to purchasing from Thailand."
Because of the 12.5% duty, prices could increase substantially. Ecuadorian tuna then loses its advantage because the product is sold to supermarkets where shoppers are price oriented, according to exporters.
Based on that, Thailand becomes a strong competitor. Even though Thai duty tariffs are similar to the Ecuadorian, the Thai export products have more government support to compete and are produced with lower labor costs.
Empesec, the Ecuadorian company that packs tuna pouches for the American brand StarKist, estimates that its output has gone down by 18% since the expiry of the preferential duty tariff.
To avoid a significant downfall of its exports, the company agreed to share part of the tariffwith U.S. customers. In some cases, Empesec is assuming 50% of the total tariff hoping that once the ATPDEA is extend these taxes will be returned.
Before Ecuador enjoyed the benefits of the preferential duty tariff, as compensation for unilateral U.S. counternarcotics, shipments of canned tuna were limited. Now exports range from USD 100 million and USD 120 million annually.
Only Empesec estimates that if the ATPDEA is not approved this year, its exports could drop to USD 20 million in the worst case scenario.
According to Rafael Trujillo, director of the National Chamber of Fisheries, selling the production that is normally exported to the U.S. to other Latin American countries is not an easy task due to high competition. “There are many companies trying to place their product in South America and other markets,†he said.
According to the tuna trade association, the U.S. market represents about 15% of Ecuadorian tuna exports. Hence, Trujillo feels the need for far-reaching trade agreements for better planning.
In an interview at Radio City, the minister coordinating Production, Nathalie Cely, acknowledged that the tuna industry is facing a difficult situation after the non-renewal of the ATPDEA. “Logistically, it is difficult to compete in other marketsâ€, she said.
