[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]





                   H.R. 3583, ``AMERICAN SAMOA PRO-
                    TECTION OF INDUSTRY, RESOURCES,
                         AND EMPLOYMENT ACT''

=======================================================================

                          LEGISLATIVE HEARING

                               before the

                    SUBCOMMITTEE ON INSULAR AFFAIRS,
                          OCEANS AND WILDLIFE

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                      Wednesday, November 4, 2009

                               __________

                           Serial No. 111-40

                               __________

       Printed for the use of the Committee on Natural Resources



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                               index.html
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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
          DOC HASTINGS, Washington, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Jeff Flake, Arizona
Frank Pallone, Jr., New Jersey       Henry E. Brown, Jr., South 
Grace F. Napolitano, California          Carolina
Rush D. Holt, New Jersey             Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Louie Gohmert, Texas
Madeleine Z. Bordallo, Guam          Rob Bishop, Utah
Jim Costa, California                Bill Shuster, Pennsylvania
Dan Boren, Oklahoma                  Doug Lamborn, Colorado
Gregorio Sablan, Northern Marianas   Adrian Smith, Nebraska
Martin T. Heinrich, New Mexico       Robert J. Wittman, Virginia
George Miller, California            Paul C. Broun, Georgia
Edward J. Markey, Massachusetts      John Fleming, Louisiana
Peter A. DeFazio, Oregon             Mike Coffman, Colorado
Maurice D. Hinchey, New York         Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Cynthia M. Lummis, Wyoming
    Islands                          Tom McClintock, California
Diana DeGette, Colorado              Bill Cassidy, Louisiana
Ron Kind, Wisconsin
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South 
    Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
                 Todd Young, Republican Chief of Staff
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

          SUBCOMMITTEE ON INSULAR AFFAIRS, OCEANS AND WILDLIFE

                MADELEINE Z. BORDALLO, Guam, Chairwoman
     HENRY E. BROWN, JR., South Carolina, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Jeff Flake, Arizona
    Samoa                            Doug Lamborn, Colorado
Neil Abercrombie, Hawaii             Robert J. Wittman, Virginia
Frank Pallone, Jr., New Jersey       John Fleming, Louisiana
Gregorio Sablan, Northern Marianas   Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Bill Cassidy, Louisiana
    Islands                          Doc Hastings, Washington, ex 
Diana DeGette, Colorado                  officio
Ron Kind, Wisconsin
Lois Capps, California
Carol Shea-Porter, New Hampshire
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico
Nick J. Rahall, II, West Virginia, 
    ex officio
                                 ------                                









                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, November 4, 2009......................     1

Statement of Members:
    Bordallo, Hon. Madeleine Z., a Delegate in Congress from Guam     1
        Prepared statement of....................................     2
    Brown, Hon. Henry E., Jr., a Representative in Congress from 
      the State of South Carolina................................    27
        Prepared statement of....................................    28
    Faleomavaega, Hon. Eni F.H., a Delegate in Congress from 
      American Samoa.............................................     3
        Prepared statement of....................................    11

Statement of Witnesses:
    Binotto, Donald J., President & Chief Executive Officer, 
      StarKist Co................................................    34
        Prepared statement of....................................    36
    Curto, Renato, President, Cape Fisheries Holdings, LLC.......    60
        Prepared statement of....................................    62
    Furchtgott-Roth, Diana, Senior Fellow and Director, Center 
      for Employment Policy, Hudson Institute....................    57
        Prepared statement of....................................    59
    Hamby, Joe, Managing Director, Global Tuna Supply, Tri Marine 
      International..............................................    48
        Prepared statement of....................................    49
    Lischewski, Christopher D., President & Chief Executive 
      Officer, Bumble Bee Foods, LLC.............................    42
        Prepared statement of....................................    44
    Pula, Nikolao, Director, Office of Insular Affairs, U.S. 
      Department of the Interior.................................    23
        Prepared statement of....................................    24
    Sawyer, John, Senior Vice President, Sales and Marketing, 
      Chicken of the Sea, International..........................    40
        Prepared statement of....................................    41
    Tulafono, The Honorable Togiola T.A., Governor of American 
      Samoa......................................................    17
        Prepared statement of....................................    21
    Walsh, James P., Legal Counsel, South Pacific Tuna 
      Corporation................................................    53
        Prepared statement of....................................    54


 
   LEGISLATIVE HEARING ON H.R. 3583, ``AMERICAN SAMOA PROTECTION OF 
               INDUSTRY, RESOURCES, AND EMPLOYMENT ACT''

                              ----------                              


                      Wednesday, November 4, 2009

                     U.S. House of Representatives

          Subcommittee on Insular Affairs, Oceans and Wildlife

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 2:50 p.m., in 
Room 1324, Longworth House Office Building, Hon. Madeleine 
Bordallo [Chairwoman of the Subcommittee] presiding.
    Present: Representatives Bordallo, Faleomavaega, Sablan, 
Christensen, Brown, and Flake.
    Also present: Representative Napolitano.
    Ms. Bordallo. Good afternoon. The hearing by the 
Subcommittee on Insular Affairs, Oceans, and Wildlife will come 
to order.
    The Subcommittee is meeting today to hear testimony on H.R. 
3583, the ``American Samoa Protection of Industry, Resources, 
and Employment Act,'' or the ASPIRE Act, which would provide a 
subsidy to sellers and buyers of fish delivered to American 
Samoa.
    I would like to make an announcement. I apologize for the 
delay in this hearing, but there are votes on the Floor. And we 
of the territories did our amendment voting, but we do have 
Members that are still down there for final passage.
    Also, I would like to say that I will give my opening 
statement. Mr. Faleomavaega, the author of the bill, will give 
his opening statement. And then we will recess if our 
colleagues are not back yet for a short time until they return, 
and then we will continue with the hearing.
    And I apologize to you, Governor and Mr. Pula, for having 
to begin late. This is life in the U.S. Congress.

 STATEMENT OF HON. MADELEINE BORDALLO, A DELEGATE IN CONGRESS 
                   FROM THE TERRITORY OF GUAM

    Ms. Bordallo. First, there is no one here who has worked 
harder to represent and serve the needs of his district than 
the gentleman from American Samoa. As he and I both know from 
firsthand experience, it is not always easy to make our 
colleagues aware of the magnitude of some of the challenges we 
face in the territories, given their geographic distance from 
the continental United States. Mr. Faleomavaega does not let 
that sway him, however, from his tireless efforts on behalf of 
his constituents.
    Second, there is no question that the tuna processing 
industry has been a linchpin in the economy of American Samoa 
for decades. Recent changes in minimum-wage requirements and 
the ongoing trend toward a truly global economy have threatened 
the sustainability of the American Samoa tuna industry at a 
time when they can ill afford it.
    Third, the recent tsunami that brought such devastation to 
the region and to American Samoa, in particular, only increases 
the urgent need to grow and diversify the economy of these 
islands to provide a vibrant and a sustainable future for their 
people.
    Today's hearing will give us an opportunity to hear whether 
the legislation before us provides the tools that American 
Samoa needs to move its economy forward. I know we have 
witnesses on both sides of the issue who will provide their 
views. And, hopefully, in the case of those who do not support 
the bill, we will hear their suggestions for alternative 
policies that could provide economic benefits.
    We all share the goal of helping Congressman Faleomavaega 
and the people of American Samoa. The question is whether the 
policies embodied in H.R. 3583 have the support they will need 
to navigate the legislative process or whether further 
discussion will be needed to build consensus. So I look forward 
to hearing from the witnesses this afternoon on this point and 
again commend the gentleman from American Samoa for his 
efforts.
    [The prepared statement of Ms. Bordallo follows:]

     Statement of The Honorable Madeleine Z. Bordallo, Chairwoman, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    The Subcommittee is meeting today to hear testimony on H.R. 3583, 
the American Samoa Protection of Industry, Resources and Employment 
Act, or the ASPIRE Act, which would provide a subsidy to sellers and 
buyers of fish delivered to American Samoa.
    In a few minutes, I will recognize my colleague and good friend, 
Eni Faleomavaega, to explain his legislation further, but before doing 
so I would like to make a few observations.
    First, there is no one who has worked harder to represent and serve 
the needs of his district than the gentleman from American Samoa. As he 
and I both know from firsthand experience, it is not always easy to 
make our colleagues aware of the magnitude of some of the challenges we 
face in the territories given their geographic distance from the 
continental United States. Mr. Faleomavaega does not let that sway him, 
however, from his tireless efforts on behalf of his constituents.
    Second, there is no question that the tuna processing industry has 
been a linchpin in the economy of American Samoa for decades. Recent 
changes in minimum wage requirements, and the ongoing trend toward a 
truly global economy, have threatened the sustainability of the 
American Samoa tuna industry at a time when they can ill afford it.
    Third, the recent tsunami that brought such devastation to the 
region and to American Samoa in particular, only increases the urgent 
need to grow and diversify the economy of these islands to provide a 
vibrant and sustainable future for its people.
    Today's hearing will give us an opportunity to hear whether the 
legislation before us provides the tools that American Samoa needs to 
move its economy forward. I know we have witnesses on both sides of the 
issue who will provide their views, and hopefully, in the case of those 
who do not support the bill, we will hear their suggestions for 
alternative policies that could provide economic benefits.
    We all share the goal of helping Congressman Faleomavaega and the 
people of American Samoa, the question is whether the policies embodied 
in H.R. 3583 have the support they will need to navigate the 
legislative process or whether further discussion will be needed to 
build consensus. I look forward to hearing from the witnesses today on 
this point and again commend the gentleman from American Samoa for his 
efforts.
                                 ______
                                 
    Ms. Bordallo.And now I would like to introduce my colleague 
and my friend, Eni Faleomavaega, to explain his legislation 
further. The Senator from American Samoa--or the----
    Mr. Faleomavaega. I just got promoted.
    Ms. Bordallo.--Congressman from American Samoa.
    Mr. Faleomavaega. No, you can call me Senator.
    Ms. Bordallo. It is good to promote.

STATEMENT OF HON. ENI F.H. FALEOMAVAEGA, A DELEGATE IN CONGRESS 
              FROM THE TERRITORY OF AMERICAN SAMOA

    Mr. Faleomavaega. Madam Chair, I sincerely thank you for 
your leadership and especially for calling this hearing on this 
bill that is very, very critical and important for the economic 
development of my district. And I sincerely thank you and the 
members of the staff for putting this hearing together and 
inviting our guests to testify, whether for or against the 
provisions of the proposed bill.
    Madam Chair, for more than 55 years, American Samoa has 
been the backbone of the U.S. tuna fishing and processing 
industries, just like for years Puerto Rico and the Virgin 
Islands were the backbone of the rum industry. Today, the U.S. 
tuna processing industry includes three major brands of canned 
tuna: StarKist, Chicken of the Sea, and Bumble Bee.
    StarKist is headquartered in Pittsburgh, Pennsylvania, and 
has about 1,800 employees in the Territory of American Samoa. 
StarKist is a U.S. corporation that pays U.S. taxes. StarKist 
is also a subsidiary of the Dongwon group, a leader in the 
food, beverage, and fisheries industries in South Korea. And 
this Dongwon group recently purchased StarKist from Del Monte 
for some $363 million.
    Chicken of the Sea is a subsidiary of Thai Union, the 
world's largest producer of canned tuna, located in Bangkok, 
Thailand. Chicken of the Sea has about 200 tuna cannery workers 
in Lyons, Georgia, and also has corporate offices in San Diego, 
California.
    In 2004, Bumble Bee was sold off to Connors, a Canadian 
company. And, only recently, Bumble Bee was purchased by a 
group of U.S. investors. Mr. Lischewski, who will be testifying 
as the President and CEO of Bumble Bee, now personally owns a 
significant share of Bumble Bee.
    Bumble Bee claims to employ some 1,800 workers in the U.S., 
but how many of its U.S. workers are tuna cannery workers is 
undetermined, though I intend to ask the questions concerning 
this issue. The bulk of Bumble Bee's employees are not U.S. 
workers, but thousands of foreign cannery workers who clean and 
cook the fish and then ship the tuna as cooked loins to the 
United States for canning and then sell to the U.S. consumer 
market.
    As many members of this Subcommittee know, more than 80 
percent of American Samoa's private-sector economy is dependent 
either directly or indirectly on two of the three major brands, 
StarKist and Chicken of the Sea, which until recently employed 
more than 74 percent of our private-sector workforce.
    What you may not know, Madam Chair, is that 1 day after 
American Samoa was struck by the world's most powerful 
earthquake and tsunami in the year 2009--it set off a tsunami 
that was some 20 feet, and untold damage and human lives were 
lost--Chicken of the Sea closed down its operations in American 
Samoa, leaving more than 2,000 workers without jobs. Chicken of 
the Sea left without the courtesy of even discussing departure, 
either with me or the Governor of American Samoa, although 
Samoan workers made Chicken of the Sea one of the most 
profitable brands of canned tuna in the United States.
    On the issue of minimum wage, Madam Chair, Chicken of the 
Sea left for Lyons, Georgia, where it now employs a skeleton 
crew of some 200 workers. Chicken of the Sea pays its workers 
in Georgia some $7.25 per hour or more. And yet, from 1954, 
Madam Chair, when Chicken of the Sea's then parent company, Van 
Camp, first arrived in American Samoa, the company set about to 
suppress the wages of Samoan workers--yes, suppress the wages 
of the workers by demeaning their worth and work.
    In 1956, the company testified before the U.S. Senate 
Committee on Labor and Public Welfare, urging consideration of 
the legislation for the exemption of American Samoa from the 
wage and hour provisions of the Fair Labor Standards Act of 
1938.
    So while you will hear much about minimum wage from those 
who oppose ASPIRE or this bill, including a think-tank witness 
that, in my opinion, is somewhat naive--anything but naive, let 
me share with you our history regarding equal pay for equal 
work so that my colleagues may know the truth about minimum 
wage in American Samoa, which has now barely reached $4.76 an 
hour after some 50 years of presence of our tuna industry in 
the territory.
    Let's begin with a statement from Chicken of the Sea's then 
parent company, Van Camp, commenting on its company's desire to 
pay Samoan workers 27 cents per hour as opposed to the 
prevailing minimum wage rate at the time of $1 per hour. This 
is what the company officials testified before the Senate 
committee, and I quote: ``Samoans are Polynesians. They are not 
American citizens.'' And about the women of American Samoa, 
according to the company, ``We now employ 300 Samoans, mostly 
women. The wages range from 27 cents per hour for the women who 
clean the fish to $1 per hour for one employee who is a 
technician.''
    ``The difference in labor costs is attributed to the lower 
production output in Pago Pago, where we have found that it 
takes from three to five Samoans to produce what one Stateside 
employee can produce.'' Mr. Collins, the legal counsel for Van 
Camp, also put it this way: ``The company found that it takes 
from three to five Samoan workers to perform what one 
continental worker in the United States will do. It is 
therefore felt that this justifies a lower rate for Samoans.''
    Forgive me for pausing here, Madam Chair, but what company 
in good conscience would suppress wages in a U.S. territory in 
the mid-1950s and claim that the more than 300 Samoan women 
cleaning fish in American Samoa for 27 cents an hour were 
somewhat inferior to the Stateside employees being paid $1 an 
hour?
    While some in the room may think this does not matter, it 
does, and it does to me, especially when 55 years later Chicken 
of the Sea shut its doors in American Samoa and immediately 
pays Stateside workers in Lyons, Georgia, twice as much as they 
were currently paying our men and women in American Samoa. 
Different year, same Chicken of the Sea.
    And, yes, I would say that the U.S. tuna industry has 
exported well over $40 billion worth of canned tuna from 
American Samoa to the U.S. for the past 50 years, at tremendous 
profits, on the backs of the low-paid Samoan workers. Some say 
it is cheap labor; I say it borders on slave labor.
    This is the kind of prejudice and gender inequality we have 
been dealing with for 55 years in American Samoa. Quite 
frankly, Madam Chair, I think this is so unfair, and treats the 
people of my territory somewhat like second-class citizens.
    On the question of loins, testifying before this 
Subcommittee there will be two competing tuna canneries, 
Chicken of the Sea and Bumble Bee, both of which oppose this 
proposed bill. The current business model of having their tuna 
cleaned in low-wage countries where they pay workers 75 cents 
per hour or less and then employ skeleton crews in the U.S.--
California, Georgia, and Puerto Rico, to be exact--pack and 
clean tuna or loin in order to take advantage of the duty-free 
treatment. I call this the outsourcing business model.
    This business model is based on loins. A loin is a fish 
already cleaned and cooked. And because 90 percent of labor 
employment costs come in the cleaning of the fish, the 
outsourcing business model maximizes profits but will severely 
reduce jobs in a U.S. territory like American Samoa, while 
increasing employment in low-wage countries. This is why both 
Chicken of the Sea and Bumble Bee employ more workers outside 
the United States than we do in the U.S.
    In my opinion, Madam Chair the outsourcing business model, 
as I have indicated, is an un-American way of doing business. 
And I believe if the American public knew what is really going 
on in the U.S. tuna industry, it would not support these kinds 
of practices.
    Nike and Gap are already under fire for adopting a similar 
business model in the garment industry and in other industries 
where low-wage workers in foreign countries are paid only 50 to 
60 cents an hour and, by the time that Nike shoe reaches the 
American market, they charge $125.
    So that there is no misunderstanding about this, Madam 
Chair, I will be asking Chicken of the Sea to state for the 
record how many tuna workers are employed in Lyons, Georgia, 
versus how many tuna workers in its parent company, Thai Union, 
whose employees clean the bulk of the tuna Chicken of the Sea 
now puts in its cans. The answer will be something to the 
effect of 200 workers in Lyons, Georgia, versus, I would say, 
some 20,000 fish cleaners or cannery workers that work in 
Bangkok, Thailand.
    I will also ask Chicken of the Sea to tell us how much it 
pays its workers in Lyons, Georgia, how much it paid its 
workers in American Samoa, and how much its parent company, 
Thai Union, pays its workers in Thailand. The answer to this 
question will be $7.25 per hour in Georgia, and barely reaching 
$4.76 per hour in American Samoa, and 75 cents per hour in the 
canneries in Thailand.
    While Bumble Bee touts before this Subcommittee that it 
employs a thousand U.S. workers, I would ask Bumble Bee to make 
it plain for the record how many actually are working in the 
tuna industry.
    As a matter of record, I will ask Bumble Bee to inform the 
Subcommittee how many tuna workers it employs in Puerto Rico 
and California versus the number of workers in Fiji and Papua 
New Guinea that clean the bulk of the tuna Bumble Bee puts in 
its cans. Members of this Subcommittee will learn that Bumble 
Bee employs about 325 workers in Puerto Rico, perhaps even less 
in California, both with the price of cheap labor, again, at 70 
cents or less per hour in foreign countries.
    I will also ask Bumble Bee how much it pays its workers in 
Puerto Rico and California versus how much workers in Fiji or 
Thailand or Papua New Guinea are paid by contractual agreement. 
I hope my colleagues will understand more clearly the 
outsourcing business model that is now employed by these two 
canneries, and they couldn't care less about StarKist trying to 
reestablish a viable tuna industry in my district.
    The bottom line, Madam Chair, is that neither Chicken of 
the Sea nor Bumble Bee makes mention of their low-wage 
contractual agreements with Fiji and Papua New Guinea and 
Thailand on their company Web sites. In my opinion, Bumble Bee 
whitewashes its way of doing business by stating that--and I 
quote--it ``works continuously to drive higher production 
efficiencies and lower operating costs in an effort to maintain 
profitability.'' That is just another way of saying Bumble 
Bee's ideal efficiency is offshore American jobs to low-wage 
countries just to increase its profits.
    One only has to look at the thousands of workers Bumble Bee 
laid off in Puerto Rico and California in the past decade, and 
its way of doing business speaks for itself. And Chicken of the 
Sea is following the same procedure as Bumble Bee is doing now, 
and that is: Buy tuna loins at very cheap prices from foreign 
countries and then in the United States bring them in duty-free 
to a skeleton crew in California, Puerto Rico, and Georgia--
thus maximizing its profits in terms of that price 
differential.
    As much as I oppose the outsourcing business model, Madam 
Chair, I do not blame Bumble Bee or Chicken of the Sea for 
their businesses practices. Because the fact is, none of our 
U.S. tuna companies can compete against low-wage countries 
which clean fish cheaper than workers in my district.
    That is why we are here today. And today we are here to 
bring the U.S. tuna industry back to America, hopefully, by 
offering grants to any company that wants to clean its fish in 
the Territory of American Samoa. The idea behind this bill is 
not much different than the rum excise tax we provide for 
Puerto Rico and the U.S. Virgin Islands. And I completely 
support this benefit that Puerto Rico and the Virgin Islands 
continue to get through the rum tax.
    Concerning the U.S. tuna fishing fleet, Madam Chair, the 
U.S. tuna fishing fleet is currently made up of 39 purse seiner 
vessels, with one license still unavailable. About 14 of these 
vessels are 100 percent U.S.-owned. The other 25 tuna boats are 
newer vessels built in foreign countries, with 51 percent U.S. 
ownership and 49 percent foreign ownership.
    Most of the foreign-built boats are part of the company 
known as the South Pacific Tuna Corporation. Mr. Lischewski, 
the CEO and President of Bumble Bee, is a part owner of the 
South Pacific Tuna Corporation and also a majority owner of 
Bumble Bee. Chicken of the Sea and its parent company, Thai 
Union, is also a part owner of these foreign-built tuna boats 
that make up the South Pacific Tuna Corporation.
    The American Tunaboat Association, which represents all of 
the 39 tuna boats, both U.S.- and foreign-built, was invited to 
testify today but unfortunately declined because not all the 
U.S. tuna boat owners agree with the South Pacific Tuna 
Corporation, as you will be hearing different opinions from the 
tuna boat owners.
    I want to note for the record, Madam Chair, that there is 
an obvious conflict of interest here in this proceeding. Both 
Mr. Lischewski of Bumble Bee and Chicken of the Sea/Thai Union 
have financial interests or ownership of these foreign-built 
purse seiners that make up the South Pacific Tuna Corporation.
    And, because of this, that South Pacific Tuna Corporation 
has been allowed to testify, I have asked that Mr. Renato Curto 
now be allowed to testify also on behalf of the U.S.-built tuna 
boats, of which he owns most as President of Cape Fisheries.
    I have also asked that Mr. Joe Hamby be invited to testify 
on behalf of Tri Marine. Tri Marine is one of the largest tuna 
supply companies in the world and has a contractual argument 
with StarKist. Neither StarKist nor Tri Marine has financial 
ownership in each other.
    On the point of our U.S. tuna fishing fleet, Madam Chair, 
whether U.S.- or foreign-built, all 39 tuna boats, or the 
entire U.S. tuna fishing fleet, fishes under the auspices of 
the South Pacific Tuna Treaty, a treaty between the United 
States and 16 Pacific island nations. Under the terms of the 
treaty, the U.S. Government pays out $18 million annually to 
the South Pacific parties in return for the right of our U.S. 
tuna boats to fish in the exclusive economic zones of these 
Pacific island nations.
    The U.S. tuna boats also pay the Pacific island parties 
approximately $3 million or more per year, depending on the 
amount of tuna they catch. According to the U.S. Department of 
State, the landed value of the catch last year was in excess of 
$200 million, but the value of the tuna, as it moves through 
the processing and distribution chain, may be worth as much as 
$400 million to $500 million a year.
    Madam Chair, on the question of the whole fish, this is an 
aspect of doing business. In my opinion, ASPIRE is the American 
model for doing business; it is based on whole fish. For now, 
StarKist is the only major-brand canned tuna that follows the 
whole-fish business model, and it is the last remaining tuna 
cannery in American Samoa.
    In American Samoa, StarKist is about greater economic 
development, and the bottom line is jobs. Jobs are created when 
the cannery chooses to clean the whole fish rather than pack 
tuna loins that have been cleaned elsewhere. As I stated 
previously, 90 percent of the value of the tuna is associated 
with any tuna cannery that is in the business of cleaning whole 
fish.
    While Chicken of the Sea and Bumble Bee have opted to 
outsource their fish-cleaning jobs to low-wage countries, 
StarKist has chosen to clean whole fish in American Samoa and 
thereby create more jobs for our workers in the territory. And 
this has put StarKist in a competitive disadvantage.
    StarKist cannot hold out much longer in American Samoa, 
giving an unfair trade advantage to Chicken of the Sea and 
Bumble Bee, which are using cheap labor to get ahead, when our 
U.S. tuna boats are selling off U.S. tuna to foreign countries 
rather than making direct deliveries to American Samoa.
    If these unfair trade practices force StarKist to leave 
American Samoa and adopt the Chicken of the Sea and Bumble Bee 
model of cleaning fish in low-wage countries, I submit, Madam 
Chair, American Samoa's economy definitely will collapse. It is 
as plain and simple as that.
    To prevent a complete economic meltdown that will lead to 
nearly full unemployment, I ask my colleagues to act quickly if 
we are to save American Samoa's jobs and economic development 
and if, more broadly, we are to bring the U.S. tuna industry 
back to U.S. shores.
    StarKist employs more than 1,800 workers in the territory. 
And while some may say that this hearing will try to discredit 
our workforce, let's be straight about this: While many of our 
workers are from the neighboring islands of Samoa, they are 
legal residents, married to U.S. nationals--the same culture, 
the same language. Their children are also U.S. Nationals, and 
they are just as much a part of the family, unlike in other 
given situations.
    StarKist also abides by U.S. labor and environmental laws. 
Like, I don't know, I question seriously the canneries in 
Thailand and Fiji in supplying Bumble Bee and Chicken of the 
Sea.
    What may not be so readily known, Madam Chair, is that 
American Samoa is a single-industry economy, entirely dependent 
on the tuna fishing and processing industries, just as Puerto 
Rico and the Virgin Islands were once solely dependent on the 
rum industry.
    Because of the fragile state of our economy, especially in 
the aftermath of a devastating earthquake and tsunami, if we 
lose our one remaining private-sector employer, it will be next 
to impossible for us to rebuild. If StarKist leaves, American 
Samoa will be left with no private-sector base.
    And while some of my colleagues and our so-called experts 
trivialize the situation by suggesting that we just need to 
adjust the minimum-wage rates, I am hopeful that my testimony 
has made clear the complexities of this matter. Whether or not 
minimum-wage rates are $3 per hour or $7.25 an hour in American 
Samoa, the entire U.S. tuna industry, including Chicken of the 
Sea, Bumble Bee, and StarKist, can no longer compete against 
low-wage-rate nations that pay their fish cleaners 75 cents or 
less per hour, which means the increase of minimum-wage rates 
in American Samoa only accelerated a process that was already 
under way the day Bumble Bee and Chicken of the Sea decided to 
outsource American jobs to foreign countries.
    While Bumble Bee will testify that we just need to be like 
Guam in developing tourism, I would suggest that Mr. Lischewski 
take a hard look at American Samoa's location in relation to 
Asia and also take a look around at our lack of land. American 
Samoa is not Guam. We are not benefiting from a $15 billion 
infusion into Guam's economy as a result of troop transfer of 
some 8,000 Marines and their families from Okinawa to Guam. 
American Samoa is situated in the middle of the world's best 
tuna grounds. Tuna is our main industry. Tuna is our past and 
our future.
    And while Bumble Bee will try and convince you today that, 
if ASPIRE is enacted, we will have to worry about U.S. trade 
violations, nothing could be further from the truth. Our 
Federal Government currently subsidizes almost every 
agricultural product made in the U.S., including sugar and corn 
and dairy products. And because the rule is, as long as 
American products are homegrown and headed for the U.S. market, 
which is where American Samoa's canned tuna goes, there is no 
trade violation in this respect.
    So, despite the hype you will hear today, I am asking my 
colleagues to consider the facts and support ASPIRE or this 
proposed bill. The proposed bill is good for our tuna industry, 
and it is right for American Samoa.
    The U.S. cannot afford to sit idly by while American 
Samoa's economy collapses and while members of the U.S. tuna 
fishing fleet sell hundreds of millions of dollars' worth of 
tuna to foreign nations while the American taxpayer, in my 
humble opinion, gets nothing in return.
    For those Members of Congress from the States, respectively 
Hawaii, Alaska, California, or others who may have concerns 
about the fishing fleet, the proposed bill does not impact any 
other fishing fleet except the 39 tuna boats that fish in the 
U.S. South Pacific Tuna Treaty area. Because there was a 
technical error, this has been corrected. I just want for the 
record to make that known, Madam Chair.
    Finally--and I am sorry that I am taking this long, but I 
felt it is absolutely necessary that I share this with my 
colleagues--the question of how we are going to pay for this. 
For the Administration and a Congress that wants to know how 
this proposed bill will pay for itself and to address the false 
claim made by Republicans that this bill is a bailout that puts 
the American taxpayer on the hook, it estimated that the 
program would cost about $23 million per year and would 
increase by $2 million per year depending on Federal minimum-
wage rates, about $11.2 million per year would be offset by the 
6.25 tax on the value of the 180,000 metric tons of tuna now 
being transshipped to foreign nations by these tuna boats. If, 
however, the tuna boats offload more often in American Samoa, 
the offset would decrease.
    And approximately $4.2 million would be made available by 
the $250,000 licensing fees for tuna boats that do not make 
three direct deliveries to American Samoa per year. This figure 
is based on the current number of tuna boats that transship 
their fish to foreign countries. However, if more tuna boats 
direct-delivered to American Samoa, then this offset would also 
decrease.
    Madam Chair, while the American Samoa Government would need 
to provide input, I would be supportive of a cost-share 
arrangement between the Federal Government and the local 
government if ASG began to see revenues from the multiplier 
effect. In the discussions with the U.S. Department of the 
Interior, we are also looking at the possibility of the $10 
million of the CIP projects that we get each year maybe as a 
means to encourage and support private-sector development, 
especially for the only major industry we now have in the 
territory, and that is the tuna industry.
    Long term, Madam Chair, it would be my hope that my 
colleagues in the Congress would establish a PAYGO plan modeled 
after the Caribbean Basin Economic Recovery Act, which provides 
a special rule for excise taxes collected on rum imported into 
the United States from any country. Such excise taxes are 
covered over to the treasuries of Puerto Rico and the Virgin 
Islands. And there is no reason why a similar program could not 
be established for tuna imported into the U.S. from foreign 
countries possibly.
    And while ASPIRE may not be perfect, Madam Chair, in the 
aftermath of the earthquake and tsunami that has left American 
Samoa teetering on the brink of economic collapse, we need 
action, and we really need it now.
    I continue to be open to make the necessary adjustments 
that would make this a win-win situation for the entire U.S. 
tuna industry, but I am not open to doing nothing. Nothing is 
not an option for the more than 68,000 residents of the 
territory who need and deserve support of our Nation.
    I believe, Madam Chair, that, as fellow Americans, we 
deserve equal treatment under the law. This is why I ask my 
colleagues to stand with us the same way we have stood with 
you, especially in the defense of our Nation. And, as has 
already been reported to Congress, the sacrifices of American 
Samoan soldiers in the Iraq war was tremendously 
disproportionate to the territory's small size, approximately 
138 percent, far higher than any State or territory, according 
to the USA Today report that was issued in March of this year. 
And I want to share that with my colleagues.
    For my Republican friends who have cheapened our sacrifice 
at this hearing by issuing a press release, which I would like 
to include for the record, calling this bill a ``tuna bailout'' 
before even listening to both sides of debate, I say, shame on 
you. Shame on you for trivializing our sacrifices, and shame on 
you for making a mockery of our call for help. While the color 
of our skin may be dark, our blood still runs red, white, and 
blue.
    And, finally, in response to the Republicans' 
misinformation about minimum wages in the American Samoa, it 
was a Republican who introduced an amendment to the Iraqi 
Accountability Appropriation Act of 2004, which required the 
minimum wage in American Samoa to be increased in a phased 
manner until it reached the same level of the rest of the 
United States.
    So if the policy is a failure, it is a failure on the part 
of my Republican colleagues. The Republicans should also make 
it right, and not by asking Samoans to ride in the back of the 
bus, but by supporting legislation that puts American Samoa 
back to work.
    My people are not begging or asking for handouts, Madam 
Chair. We just want to work. And I think that this is the best 
possibility that we have, by this proposed legislation. And, 
again, I urge my colleagues to support this proposed bill.
    Thank you, Madam Chair.
    [The prepared statement of Mr. Faleomavaega follows:]

    Statement of The Honorable Eni F.H. Faleomavaega, a Delegate in 
                      Congress from American Samoa

    Madam Chair, Ranking Member:
    I thank you for holding this hearing on ASPIRE, the American Samoa 
Protection of Industry, Resources, and Employment Act, or H.R. 3583, a 
bill I introduced to put American Samoa back to work and to put the 
U.S. tuna industry back in America.
    Before I begin, I would like to ask that the following letters of 
support be included for the record.
    For more than 55 years, American Samoa has been the backbone of the 
U.S. tuna fishing and processing industries, just like for years Puerto 
Rico and the Virgin Islands were the backbone of the rum industry.
    Today, the U.S. tuna processing industry includes three major 
brands of canned tuna--StarKist, Chicken of the Sea and Bumble Bee.
    StarKist is headquartered in Pittsburgh, Pennsylvania and has 1,800 
employees in the U.S. Territory of American Samoa. StarKist is a U.S. 
corporation and pays U.S. taxes. StarKist is also a subsidiary of the 
Dongwon Group, a leader in the food, beverage and fisheries industries 
in South Korea.
    Chicken of the Sea is a subsidiary of Thai Union, the world's 
largest producer of canned tuna. Chicken of the Sea has about 200 tuna 
cannery workers in Lyons, Georgia.
    In 2004, Bumble Bee was sold off to Connors, a Canadian company, 
and only recently was Bumble Bee purchased by a group of U.S. 
investors. Mr. Lischewski, who will be testifying as the President and 
CEO of Bumble Bee, now personally owns a significant share of Bumble 
Bee. Bumble Bee employs about 1,000 workers in the U.S. but how many of 
its U.S. workers are tuna cannery workers is undetermined, though I 
intend to ask during the course of this hearing. The bulk of Bumble 
Bee's employees are not U.S., but foreign employees.
    As many members of this subcommittee know, more than 80% of 
American Samoa's private sector economy is dependent, either directly 
or indirectly, on two of the three major brands--StarKist and Chicken 
of the Sea--which until recently employed more than 74 percent of our 
private sector workforce.
    What you may not know is that one day after American Samoa was 
struck by the world's most powerful earthquake of 2009 that set off a 
tsunami that left untold damage and loss, Chicken of the Sea closed 
down its operations in American Samoa, leaving more than 2,000 workers 
without jobs.
    Chicken of the Sea left without the courtesy of discussing its 
departure either with myself or the Governor of American Samoa, 
although Samoan workers made Chicken of the Sea one of the most 
profitable brands of canned tuna in the U.S.
Minimum Wage
    Chicken of the Sea left for Lyons, Georgia where it now employs a 
skeletal crew of about 200 workers. Chicken of the Sea pays its workers 
in Georgia some $7.25 per hour.
    Yet from 1954 forward, when Chicken of the Sea's then parent 
company, Van Camp, first arrived on American Samoa's shores, the 
company set about to suppress the wages of Samoan workers by demeaning 
their worth and work. In 1956, the company testified before the U.S. 
Senate Committee on Labor and Public Welfare, urging consideration of 
legislation for the exemption of American Samoa from the wage and hour 
provisions of the Fair Labor Standards Act of 1938.
    So while you will hear much about minimum wage from those who 
oppose ASPIRE including a think-tank witness whose naive testimony is 
anything but expert, let me share with you our history regarding equal 
pay for equal work so that every Member of Congress may know the truth 
about minimum wage in American Samoa which has now barely reached $4.76 
per hour for our tuna cannery workers.
    Let's begin with this statement from Chicken of the Sea's then 
parent company, Van Camp. Commenting on his company's desire to pay 
Samoan workers 27 cents per hour as opposed to the prevailing minimum 
wage rate of the time at $1 per hour, the company said:
        ``The Samoans are Polynesians. They are not American 
        citizens.''
    About the women of American Samoa, the company said:
        ``[We] now employ 300 Samoans, mostly women''. [W]ages range 
        from 27 cents per hour for the women who clean the fish to $1 
        per hour for 1 employee, who is a technician...

        The difference in labor costs is attributed to the lower 
        production output in Pago Pago, where we have found that it 
        takes from 3 to 5 Samoans to produce what 1 stateside employee 
        can produce.''
    Mr. Collins, legal counsel for Van Camp, put it this way:
        ``The company has found that it takes from 3 to 5 Samoan 
        workers to perform what 1 continental worker in the United 
        States will do. It is therefore felt that this justifies a 
        lower rate for Samoans.''
    Forgive me for pausing here but what company, in good conscience, 
would suppress wages in a U.S. Territory on the claim that the more 
than 300 Samoan women cleaning fish in American Samoa for 27 cents an 
hour were somehow inferior to the stateside employees being paid $1 per 
hour?
    While some of you may think this does not matter, it does, 
especially when 55 years later, Chicken of the Sea shut its doors in 
American Samoa and immediately paid stateside workers in Lyons, Georgia 
twice as much as they were currently paying our women and men in 
American Samoa. Different year, same Chicken of the Sea.
    This is the kind of prejudice and racism and gender inequality we 
have been dealing with for 55 years in American Samoa and, frankly, we 
are tired of being treated like second class citizens and we are fed up 
with the attitude that is now permeating the U.S. tuna and fishing 
processing industries.
Loins: The Outsourcing Business Model
    Testifying before this Subcommittee are two tuna canneries, Chicken 
of the Sea and Bumble Bee, both of which oppose ASPIRE because ASPIRE 
opposes their current business model of having their tuna cleaned in 
low wage countries where they pay workers $0.75 cents and less per hour 
and then employ skeletal crews in the United States--Georgia, 
California and Puerto Rico, to be exact--to pack the cleaned tuna, or 
loin, in order to take advantage of duty-free treatment.
    I call this the outsourcing business model. This business model is 
based on loins. A loin is a cleaned fish. Because 90% of labor costs 
and employment come in the cleaning of the fish, the outsourcing 
business model maximizes profits and decreases employment in America, 
while increasing employment in low-wage rate countries. This is why 
both Chicken of the Sea and Bumble Bee employ more workers outside of 
the U.S. than in the U.S.
    In my opinion, the outsourcing business model is an un-American way 
of doing business, and I believe if the American public knew what is 
really going on in the U.S. tuna industry it would not support these 
kinds of practices. Nike and the GAP are already under fire for 
adopting a similar business model in the garment industry, and there is 
not a Member in this room that supports off-shoring American jobs to 
low-wage countries.
    So that there is no misunderstanding about this issue, I will be 
asking Chicken of the Sea to state for the record how many tuna workers 
it employs in Lyons, Georgia versus how many tuna workers its parent 
company, Thai Union, employs to clean the bulk of the tuna Chicken of 
the Sea puts in its cans. The answer will be something to the effect of 
200 workers in Lyons, Georgia versus thousands in Thailand.
    I will also ask Chicken of the Sea to tell us how much it pays its 
workers in Lyons, Georgia, how much it paid its workers in American 
Samoa, and how much its parent company, Thai Union, pays its workers in 
Thailand. The answer to this question will be $7.25 per hour for 
Georgia workers, barely reaching $4.76 for workers in American Samoa, 
and about $0.75 cents per hour for Thai workers.
    While Bumble Bee touts before this subcommittee that it employs 
1,000 U.S. workers, I will ask Bumble Bee to make it plain for the 
record how many of these workers work in the tuna industry. Bumble Bee 
and I both know that it does not employ 1,000 tuna workers in the U.S., 
and its testimony is misleading on this point.
    As a matter of record, I will ask Bumble Bee to inform the 
Subcommittee how many tuna workers it employs in Puerto Rico and 
California versus the number of workers in Fiji that clean the bulk of 
the tuna Bumble Bee puts in its cans. Members of this Subcommittee will 
learn that Bumble Bee only employs about 325 workers in Puerto Rico, 
less in California, and thousands in foreign countries.
    I will also ask Bumble Bee how much it pays it workers in Puerto 
Rico and California versus how much workers in Fiji and/or Thailand are 
paid by contractual agreement. When Members of this Committee receive 
this information, they will understand more clearly the outsourcing 
business model.
    Because neither Chicken of the Sea nor Bumble Bee is proud of the 
outsourcing model they have adopted, neither company makes mention of 
their low-wage contractual agreements with Fiji and Thailand on their 
company websites.
    Instead, before this Subcommittee, Bumble Bee whitewashes its way 
of doing business by stating that ``it works continuously to drive 
higher production efficiencies and lower operating costs in an effort 
to remain profitable.'' That's just another way of saying that Bumble 
Bee's idea of efficiency is to off-shore American jobs to low-wage 
countries just to increase its profits. One only has to look at the 
thousands of workers Bumble Bee laid off in Puerto Rico and California 
in the past decade, and its way of doing business speaks for itself. 
The same can be said of Chicken of the Sea.
    However, as much as I oppose the outsourcing business model, I do 
not blame Bumble Bee or Chicken of the Sea for their business practices 
because the fact is none of our U.S. tuna companies can compete against 
low-wage countries which clean fish cheaper than American workers.
    That is why we are here today. Today, we are here to bring the U.S. 
tuna industry back to America by offering grants to any company that 
wants to clean its fish in the U.S. Territory of American Samoa. The 
idea behind this bill is not much different than the rum tax we provide 
for Puerto Rico and the U.S. Virgin Islands, which brings us to the 
issue of our U.S. tuna fishing fleet.
The U.S. Tuna Fishing Fleet
    The U.S. tuna fishing fleet is currently made up of 39 vessels, 
with one license still available. About 14 of these vessels are 100% 
U.S. owned. The other 25 tuna boats are newer vessels, built in foreign 
countries, with 51% U.S. ownership, and 49% foreign-ownership. Most of 
the foreign-built boats are part of a company known as the South 
Pacific Tuna Corporation (SPTC).
    Mr. Lischewski, CEO and President of Bumble Bee, is a part-owner of 
South Pacific Tuna Corporation, and owns a significant share of Bumble 
Bee. Chicken of the Sea and/or its parent company, Thai Union, is also 
a part-owner of the foreign-built tuna boats.
    The American Tunaboat Association (ATA), which represents all 39 
tuna boats, both U.S. and foreign-built, was invited to testify today, 
but declined.
    Given that the South Pacific Tuna Corporation only represents the 
foreign-built boats and also because Chicken of the Sea and/or Thai 
Union and Mr. Lischewski of Bumble Bee own financial interest in the 
foreign-built boats, I asked that SPTC be removed from the witness list 
so that there would be no conflict of interest, especially since Mr. 
Lischewski did not disclose his ownership in the SPTC, but only noted 
that he ``owns a minority position in a U.S. tuna fishing company.''
    However, because SPTC has been allowed to testify, I asked that Mr. 
Renato Curto now be allowed to testify on behalf of the U.S.-built tuna 
boats, of which he owns most, as President of Cape Fisheries.
    I have also asked that Mr. Joe Hamby be invited to testify on 
behalf of Tri Marine. Regarding Tri Marine, Tri Marine is one of the 
largest tuna supply companies in the world, and has a contractual 
arrangement with StarKist. Neither StarKist nor Tri Marine has 
financial ownership in each other.
    On the point of our U.S. tuna fishing fleet, whether U.S. or 
foreign-built, all 39 tuna boats, or the entire U.S. tuna fishing 
fleet, fishes under the auspices of the South Pacific Tuna Treaty, a 
treaty between the United States and 16 Pacific Island nations. Under 
the terms of the Treaty, the U.S. government pays out $18 million 
annually to the Pacific Island parties in return for the right of our 
U.S. tuna boats to fish in the exclusive economic zones (EEZ) of the 
Pacific Island parties to the Treaty. The U.S. tuna boats also pay the 
Pacific Island parties about $3 million or more per year, depending on 
the amount of tuna they catch.
    According to the U.S. Department of State, the landed value of the 
catch in 2008 was in excess of $200 million but the value of the tuna 
as it moves through the processing and distribution chain may be as 
much as $400 to $500 million.
    Of the approximate 300,000 metric tons of tuna that is caught, 
which is referred to as whole fish, about 120,000 metric tons is 
direct-delivered to American Samoa per year. Direct delivery means the 
tuna boats actually pull into American Samoa's port and offload their 
catch. Given Chicken of the Sea's closure, the amount of tonnage 
direct-delivered to American Samoa is now less.
    Nonetheless, for purposes of this hearing, let us go ahead and 
consider that on average, 120,000 metric tons of tuna is direct-
delivered to American Samoa. What happens to the other 180,000 metric 
tons, given that American Samoa has the capacity to process up to 
280,000 metric tons with room for growth?
    Let me tell you. Remember the foreign-built tuna boats I spoke of 
earlier, the tuna boats owned by the South Pacific Tuna Corporation 
which Bumble Bee and Chicken of the Sea and/or Thai Union have part 
ownership in? These tuna boats are the last puzzle piece to the 
outsourcing business model because these are the very tuna boats that 
transship their catch to foreign nations where the tuna is cleaned, or 
loined, for $0.75 cents and less per hour.
    In other words, 25 members of our very own U.S. tuna fishing fleet 
sell off their catch to foreign nations and then send the cleaned tuna 
loin back to Bumble Bee and Chicken of the Sea so that these two tuna 
canneries can maximize their corporate profits while off-shoring 
American jobs. These 25 members of the U.S. tuna fishing fleet do this 
despite the fact that they fly the U.S. flag and are subsidized by the 
American taxpayer to the tune of $18 million per year to fish in the 
South Pacific Tuna Treaty Area. And what does the American taxpayer get 
in return? A depleted tuna stock, that's what we get.
    In the time it takes to make 3 direct-deliveries, the new foreign-
built tuna boats can make 5 transshipment deliveries by off-loading 
their catch to a big mother ship meaning that they can return more 
quickly to the South Pacific Tuna Treaty fishing grounds where they can 
catch more and more tuna at a more maddening pace.
    For conservation reasons, too, we must change the way our tuna 
boats behave by rewarding tuna boats that direct-deliver their fish to 
the U.S. Territory of American Samoa or by taxing the value of the tuna 
which is transshipped to foreign nations, and by requiring a license 
fee for tuna boats that don't direct-deliver at least 3 times per year.
    And this is why I have introduced ASPIRE. ASPIRE brings the U.S. 
tuna industry back to America and, above all, puts America Samoa back 
to work.
Whole Fish: The American Model
    ASPIRE is the American model of doing business. It is based on 
whole fish. For now, StarKist is the only major brand of canned tuna 
that follows the whole fish business model and is the last remaining 
tuna cannery in American Samoa.
    In American Samoa, StarKist is about jobs, jobs, jobs. Jobs are 
created when a cannery chooses to clean whole fish rather than pack 
tuna loins that have been cleaned elsewhere. As I stated previously, 
90% of the labor associated with any tuna cannery is in the cleaning of 
the whole fish. While Chicken of the Sea and Bumble Bee have opted to 
outsource their fish cleaning jobs to low-wage countries, StarKist has 
chosen to clean whole fish in American Samoa and thereby create jobs 
for our workers.
    And this has put StarKist at a competitive disadvantage. StarKist 
cannot hold out much longer in American Samoa, given the unfair trade 
advantages of Chicken of the Sea and Bumble Bee, which are using cheap 
labor to get ahead and when our U.S. boats are selling off U.S. tuna to 
foreign countries rather than making direct deliveries to American 
Samoa.
    If these unfair trade practices force StarKist to leave American 
Samoa and adopt the Chicken of the Sea and Bumble Bee model of cleaning 
fish in low-wage countries, American Samoa's economy collapses. It's as 
plain and simple as that.
    To prevent a complete economic meltdown that will lead to nearly 
full unemployment, Congress must act quickly if we are to save American 
Samoa's jobs and economy and, if more broadly, we are to bring the U.S. 
tuna industry back to America.
    StarKist employs more than 1,800 workers in American Samoa, and 
while some at this hearing will try to discredit our workforce, let's 
be straight about this. While many of our workers are from the 
neighboring island of Samoa, they are legal permanent residents, 
married to our U.S. nationals and citizens, and their children are also 
U.S. nationals, which make them a part of us.
    StarKist also abides by U.S. labor and environmental laws, unlike 
tuna canneries in Thailand and Fiji, which are supplying Bumble Bee and 
Chicken of the Sea.
    While StarKist has an operation in Ecuador, which are opponents 
will also try and use against us, let's be clear about this, too. 
StarKist does not can any tuna in Ecuador. In Ecuador, StarKist 
produces pouch tuna under the provisions of the Andean Trade Agreement. 
And pouch tuna has nothing to do with ASPIRE. ASPIRE is about canned 
tuna, not pouched tuna, and Chicken of the Sea and Bumble Bee know this 
full well.
    What may not be so readily known is that American Samoa is a 
single-industry economy, entirely dependent on the tuna fishing and 
processing industries just as Puerto Rico and the Virgin Islands were 
once solely dependent on the rum industry. Because of the fragile state 
of our economy, especially in the aftermath of a devastating tsunami, 
if we lose our one remaining private-sector employer, it will be next 
to impossible for us to rebuild.
    If StarKist leaves, American Samoa will be left with no private 
sector base. And, while some of my colleagues and our so-called experts 
trivialize the situation by suggesting we just need to adjust the 
minimum wage rates, I am hopeful that my testimony has made clear the 
complexities of this matter. Whether or not minimum wage rates are 
$3.00 per hour or $7.25 per hour in American Samoa, the entire U.S. 
tuna industry, including Chicken of the Sea, Bumble Bee and StarKist, 
can no longer compete against low-wage rate nations that pay their fish 
cleaners $0.75 cents and less per hour which means the increase of 
minimum wage rates in American Samoa only accelerated a process that 
was already underway the day Bumble Bee and Chicken of the Sea decided 
to outsource American jobs to foreign countries.
    While Bumble Bee will testify that we just need to be like Guam and 
develop tourism, I would suggest that Mr. Lischewski take a hard look 
at American Samoa's location in relation to Asia and also take a look 
around at our lack of land. American Samoa is not Guam. We are not 
benefiting from troop realignment or proximity to Asia.
    American Samoa is situated in the middle of the world's best tuna 
grounds. Tuna is our oil. Tuna is our past and our future. And while 
Bumble Bee will try and convince you today that if ASPIRE is enacted, 
we will have to worry about U.S. trade violations, nothing could be 
further from the truth.
    America subsidizes almost every agricultural product made in the 
U.S.A. including sugar, corn, dairy, etc., because the rule is, as long 
as American products are home-grown and headed for the U.S. market, 
which is where American Samoa's canned tuna goes, there is no trade 
violation.
    So despite the hype you will hear today, I am asking Congress to 
consider the facts, and support ASPIRE. ASPIRE is good for America and 
right for American Samoa.
    The U.S. cannot afford to sit idly by while American Samoa's 
economy collapses and while members of the U.S. tuna fishing fleet sell 
off hundreds of millions of dollars worth of tuna to foreign nations 
while the American taxpayer gets nothing in return.
    Nor can we turn a blind eye to the depletion of our tuna stock in 
the Western Pacific Tropic.
    It is time for Congress to act, and to act quickly.
    For those Members of Congress from Hawaii, Alaska and California, 
or others who may have concerns about their fishing fleet, ASPIRE does 
not impact any other fishing fleet except the 39 tuna boats that fish 
in the South Pacific Tuna Treaty Area. Because there was a technical 
error on page 7, line 11, of H.R. 3583, with use of the word ``or'' 
which should have been ``and'', I have asked that we strike the 
reference to the Western Pacific Regional Fishery Management Council so 
as to avoid any further confusion about the Hawaii fishing fleet which 
will not be impacted at all once this correction is made before final 
passage.
PAYGO
    Finally, for an Administration and a Congress that want to know how 
ASPIRE will pay for itself, and to address the false claims made by 
Republicans that this bill is a bailout that puts the American taxpayer 
on the hook, it estimated that the program would cost about $23 million 
per year, and would increase by $2 million per year depending on 
federal minimum wage rates.
    About $11.25 million per year would be offset by the 6.25% tax on 
the value of the 180,000 metric tons of tuna now being transshipped to 
foreign nations. If, however, the tuna boats offload more often in 
American Samoa, the offset would decrease.
    About $4.25 million would be made available by the $250,000 
licensing fees for tuna boats that do not make 3 direct-deliveries to 
American Samoa per year. This figure is based on the current number of 
tuna boats that transship their fish to foreign nations. However, if 
more tuna boats direct-deliver, then this offset would also decrease.
    However, it is expected that if more tuna boats direct-deliver 
their whole fish to American Samoa rather than transship U.S. tuna to 
foreign nations, then the presence of these tuna boats in American 
Samoa would create a multiplier effect in the economy as the boat 
owners would have need to purchase fuel, food, and lodging while in 
port.
    While the American Samoa Government (ASG) would need to provide 
input, I would be supportive of a cost-share arrangement between the 
federal government and the local government if ASG began to see 
revenues from the multiplier effect. In discussions with the U.S. 
Department of the Interior, we are also reviewing the possibility of 
restructuring the $10 million Congress already provides the Territory 
for Capital Improvement Projects as a means to encourage and support 
private sector development.
    Long-term, it would be my hope that Congress would establish a 
PAYGO plan modeled after the Caribbean Basin Economic Recovery Act 
which provides a special rule for excise taxes collected on rum 
imported into the United States from any country. Such excise taxes are 
covered over to the Treasuries of Puerto Rico and the U.S. Virgin 
Islands, and there is no reason why a similar program should not be 
established for tuna imported into the United States from any country. 
Tuna excise taxes, including those on any and all loins, would be 
covered over to the Treasury of American Samoa, making ASPIRE a fully 
pay-as-you-go program.
    While ASPIRE may not be perfect, in the aftermath of a tsunami that 
has left American Samoa teetering on the brink of economic collapse, we 
need action and we need it now. Still, I continue to be open to making 
the necessary adjustments that would make this a win-win for the entire 
U.S. tuna processing and fishing industries, but I am not open to doing 
nothing. Nothing is not an option for the more than 65,000 residents of 
American Samoa who need and deserve the support of our nation.
    We need help rebuilding our economy in a way that is as fair for 
American Samoa as the rum tax is for Puerto Rico and the Virgin 
Islands, or sugar subsidies are for Louisiana, or beef and dairy 
subsidies are for the heartland.
    As fellow Americans, we deserve equal treatment under the law. This 
is why I ask you to stand with American Samoa the same way we have 
stood with you. As has already been reported to Congress, the sacrifice 
of American Samoa in the Iraq war was disproportionate to the 
territory's small size, as residents of the territory were 15 times 
more likely to be killed in action in Iraq than residents of the United 
States as a whole.
    For my Republican friends who have cheapened our sacrifice and this 
hearing by issuing a press release--which I would like to include for 
the record--calling this bill ``a tuna bailout'' before listening to 
both sides of the debate, I say, ``Shame on You.'' Shame on you for 
trivializing our sacrifice and shame on you for making a mockery of our 
call for help. While the color of our skin may be dark, our blood still 
runs red, white and blue.
    And finally, in response to the Republican's misinformation about 
minimum wage in American Samoa, it was the Republicans who introduced 
an amendment to the U.S. Troop Readiness, Veterans' Care, Katrina 
Recovery, and Iraq Accountability Appropriations Act of 2007 which 
required the minimum wage in American Samoa to be increased in a phased 
manner until it reached the same level as the rest of the United 
States. So, if the policy is a failure, it is a Republican failure, and 
the Republicans should make it right, not by asking Samoans to ride in 
the back of the bus, but by supporting legislation which puts American 
Samoa back to work and ends the outsourcing of American jobs to foreign 
countries.
    Enough is enough. Support H.R. 3583.
                                 ______
                                 
    Ms. Bordallo. I thank the gentleman from American Samoa, 
the author of H.R. 3583.
    And I would like, at this time, to welcome my colleagues, 
The Honorable Donna Christensen, representing the Territory of 
the Virgin Islands, and Mr. Kilili Gregorio Sablan, 
representing the CNMI.
    I would now like to ask for just a very brief recess to 
allow our colleagues in the minority who are still voting, and 
also the majority, to make their way back here. I understand it 
will be just probably another 10, 15 minutes.
    Mr. Faleomavaega. Madam Chair?
    Ms. Bordallo. Yes?
    Mr. Faleomavaega. I just wanted to have something inserted 
into the record, if I may----
    Ms. Bordallo. Yes.
    Mr. Faleomavaega.--ask unanimous consent that I have 
several letters that I have received in support of the proposed 
bill from about 10 to 15 companies, business interests in 
American Samoa to be made part of the record.
    Ms. Bordallo. On behalf of the gentleman from American 
Samoa.
    Mr. Faleomavaega. Also, a copy of USA Today newspaper dated 
March 18, 2009, concerning the contributions of the American 
Samoan soldiers in the defense of our Nation, especially the 
war in Iraq.
    And, also, a copy of this press release that was just 
issued yesterday, entitled, ``A Fish Too Big to Fail,'' issued 
by our friends from the other side of the aisle. I want to make 
that as part of the record.
    [NOTE: The information submitted for the record has been 
retained in the Committee's official files.]
    Ms. Bordallo. There is no objection to adding these to the 
record. So ordered.
    Mr. Faleomavaega. Thank you.
    Ms. Bordallo. So we will recess just very briefly, if you 
don't mind, before we begin hearing from our first panel. And, 
again, my apologies to the Governor of American Samoa and Mr. 
Pula.
    [Recess.]
    Ms. Bordallo. I would like to resume the hearing of the 
Insular Affairs, Oceans and Wildlife Subcommittee.
    And, again, I apologize to the Governor of American Samoa 
for having to wait this long--I am very sorry, sir--and also to 
Mr. Pula, representing the Department of the Interior.
    On the first panel of witnesses, of course, is The 
Honorable Togiola Tulafono--was that good, Governor?
    Governor Tulafono. Perfect.
    Ms. Bordallo. Well, Eni helped me out.
    --the Governor of America Samoa and Mr. Nick Pula, the 
Director of the Office of Insular Affairs, United States 
Department of the Interior.
    Ms. Bordallo. And I would now like to welcome you, 
Governor, back before the Committee and invite you to testify 
for 5 minutes.
    And, Eni, would you mind if we just go ahead, because we 
are running so very late.
    Mr. Faleomavaega. Madam Chair, I just apologized to the 
Governor in his Samoan language for his patience, and he has 
accepted our apology.
    Ms. Bordallo. Thank you. Thank you very much.
    And so, Governor, you are welcome to begin with your 
testimony. And you can take as much time as you wish.

           STATEMENT OF HON. TOGIOLA T.A. TULAFONO, 
                   GOVERNOR OF AMERICAN SAMOA

    Governor Tulafono. That is quite all right.
    Talofa and greetings to you, Madam Chairwoman Bordallo and 
the honorable members of the Committee.
    Special greetings to our Congressman Faleomavaega.
    I greatly appreciate this opportunity to testify before the 
Committee on the urgent need for passage of H.R. 3583, the 
American Samoa Protection of Industry, Resources, and 
Employment--the ASPIRE--Act.
    But before I begin my testimony with respect to that, I 
wish to address an important issue that has received much 
attention owing to a recent three-part CNN story on the tragic 
September 29, 2009, earthquake and tsunami disaster. I feel 
that a statement on behalf of the American Samoa government is 
timely, as the story has created a cloud of suspicion that 
affects the way that we are viewed as a government and as a 
people.
    On September 29th, as you all know, we suffered the effects 
of a destructive tsunami, so large that no one in the South 
Pacific has any living memory of a similar event. There has 
been no natural disaster in our region with which to compare 
this event in both loss of life and severe damage to property.
    The single issue of the absence of a territory-wide alert 
system for such a disaster was chosen as an issue for the media 
story. Clearly, it was not American Samoa's choice to be 
without such an alert system nor was it our choice to be 
without Federal funding to run our emergency coordination and 
preparedness programs. These were situations borne out of a 
most unfortunate situation that we have been trying to resolve 
with Federal counterparts over several months of hard work and 
difficult decisions.
    Just weeks before the disaster, however, we were informed 
by Federal officials that our funding, which was frozen for 
some time, was just being released. This was the culmination of 
a long and arduous process whereby the American Samoa 
government had to come to terms with the fundamental flaws with 
our local programs as well as severe staff problems.
    With the help of our Federal funding agency and our new 
local staff, we were able to work through our challenges and 
set a new action plan for bringing our programs in line with 
Federal requirements encouraging accountability and 
transparency. In opportunistic fashion, however, reports about 
our funding freeze as a link to a delayed, territory-wide alert 
system was seized upon.
    The simplistic portrayal of an island without an island-
wide alert system leading to deaths was sensational, this, even 
more so with the mention of public corruption. However, the 
report mentioned nothing of the work done by the Territory's 
Department of Homeland Security in preparing our islands for 
such disasters.
    Without our Federal funding for full-scale emergency 
planning and preparedness, our local agency worked long and 
hard in public outreach and education. With significant 
portions of our population living within close reach of the 
coastline, there is little doubt that without the public 
outreach and preparedness education efforts, American Samoa 
would have lost countless more lives. However, nothing in the 
media report suggests that this was ever done.
    Further, there was no discussion with current American 
Samoa Department of Homeland Security officials who are most 
informed about the issues involved. And at every turn in the 
report there is the implication that had there been a 
territory-wide warning system in place, there would have been 
no deaths and widespread damage would have been avoided 
altogether. This was highly speculative and irresponsible.
    In a recent study conducted by the Australian Tsunami 
Research Center in the aftermath of the recent tsunami, where 
they engaged the help of 96 scientists, they found that the 
partnerships of the government and local village communities to 
react to earthquakes without waiting for an official tsunami 
warning worked to save many more lives in Independent Samoa.
    Ultimately, the question was asked, could a more effective 
warning system have saved more lives in this incident? The 
conclusion was ``no.'' In quote, their report states, ``The 
detection, monitoring and warning systems worked well and could 
not have done anything different. The earthquake that caused 
the tsunami occurred so close to the coast of Samoan islands 
that there simply was not enough time to process the seismic 
data and issue an effective warning.'' The distance between the 
two islands was about the same from the epicenter of that 
earthquake.
    The American Samoa government takes issue with the report, 
and we look forward to presenting our case with regard to these 
and other issues once our recovery is substantially complete.
    We recognize that mistakes have been made, but when those 
mistakes have been made, we have worked hard to correct them 
and to ensure that they are not repeated. This is not the sign 
of a government that is rampant with corruption.
    At the outset of my comments, now turning to H.R. 3583, let 
me be very clear, the American Samoa government, including our 
leadership and our Office of Samoan Affairs, supports this 
legislation in its current form, and we respectfully request 
and look forward to a favorable report out of your Committee, 
ma'am.
    As of September 30, 2009, one of our tuna canning plants, 
Chicken of the Sea, discontinued its tuna canning operations in 
the Territory. Samoa Packing has roots in the Territory dating 
back to 1959; Samoa Packing directly employed over 2,000 
residents. Together with StarKist, Samoa Packing was directly 
and indirectly responsible for over 80 percent of employing 
American Samoa's private sector and approximately 46 percent of 
employment as a whole.
    Together, the tuna canning industry canneries were 
responsible for infusing approximately $80 million into the 
American Samoan economy. These numbers are contained within our 
DOI-funded report, American Samoa's Economic Future and the 
Cannery Industry, by McPhee & Associates. Copies of this report 
have been submitted to both the Subcommittee and the Department 
of the Interior. I would be glad to provide the report to any 
of the members of the Subcommittee or the witness panel 
gathered here today.
    As you may be aware, over the past 2 months the American 
Samoa government has been engaged with Samoa Packing in 
discussions to purchase the assets in the canning operation 
located in the Territory. We are informed that the American 
Samoa government purchase may have an ill effect on this 
important legislation. As such, these discussions have been 
suspended. Nonetheless, the American Samoa government's 
explanation of this move should be understood by this 
Committee.
    The purchase of the assets was explored with one motivation 
in mind: to keep the operation whole. ASG was convinced that 
the maximum potential of the business assets may only be 
achieved if the operation remains a whole, self-contained tuna 
canning plant. The prospect of a turnkey operation is much more 
attractive than a collection of assets that do not support a 
whole operation. This was the intent of the discussions with 
Chicken of the Sea Samoa Packing to protect the future 
possibility of a tuna canning operation.
    We see H.R. 3583 as an integral part of carrying out our 
intent, which is why we are here today. At present, we 
understand that Samoa Packing has the operational capacity to 
produce at least four product lines with their current assets 
remaining in American Samoa.
    As this Subcommittee may also be aware, my administration 
has had some serious discussion with our Congressman over this 
legislation which may require some explanation with regard to 
our position. To be clear, my administration has never 
disagreed with the main intent of the bill, which is to provide 
much-needed assistance to our tuna cannery and our fishing 
fleets.
    The main concern that we have had with H.R. 3583 is the 
minimum wage provisions, namely section 3(w)(1)(A)(i) of the 
bill, which provides for an automatic adjustment of the 
assistance offered by this bill should the minimum wage 
escalate every year per the current U.S. minimum wage law for 
American Samoa.
    It has always been the American Samoa government's position 
that minimum wage increases must be based in economic reality. 
Before the recent change, which provides for mandatory 
increases annually, there was a careful economic analysis that 
took place every 2 years conducted by the Secretary of Labor 
and presided over by a special industry committee. These 
committees would take into consideration the positions for all 
industries, as well as the state of the economy in American 
Samoa. Only after careful consideration of whether increases 
would result in a substantial curtailment of employment did the 
committees make their decisions as to the final minimum wage 
for each industry in American Samoa.
    The belief in the U.S. Congress, which resulted in the 
mandatory escalators, was that the committees were artificially 
depressing the minimum wage in American Samoa. However, it is 
our position that mandatory increases with no basis in economic 
conditions of the Territory are even more dangerous. Thus, the 
inclusion of the provision noted above in this legislation was 
for ASG, akin to lending credence to a process that we have 
been diametrically opposed to from its inception. Furthermore, 
ASG viewed this provision as a wedge issue that would 
effectively remove the canneries from supporting the common 
view that the minimum wage escalators were arbitrary and 
without any economic foundation.
    We have since, however, changed our view in light of the 
worsening global and local economic conditions. We also have 
placed much trust and faith that a workable resolution to the 
minimum wage issue may result from the current General 
Accountability Office study that is currently being conducted 
and which will be presented to Congress in early 2010.
    And having said that, it is my testimony today, madam, that 
we are in full support of the bill as submitted and as proposed 
by our Congressman.
    And, last, I would like to thank the members of the 
Committee and the individual members of the witness panel for 
their wonderful support for the Territory owing to the 
September 29, 2009, earthquake and tsunami disaster in American 
Samoa. Your prayers, thoughts and condolences during this 
difficult time have made a lasting impression on all of 
American Samoa's residents. During the whole ordeal we have 
never felt that we faced any of it alone; for this, we are 
grateful to all of you.
    We also thank you for your donations and man-hours for 
cleaning cleanup activities, monetary donations to relieve the 
suffering of our disaster victims and your overall support for 
our general recovery.
    As recovery efforts are continuing in American Samoa--and 
it looks to be a long time before we reach true recovery--we 
ask that you continue to keep us in your prayers.
    Madam Chairwoman and members of the Committee, I thank you 
once again for allowing me to express our thoughts on this 
important legislation. I thank Congressman Faleomavaega for his 
leadership and his foresight in introducing this legislation. 
And I look forward to your favorable report of this legislation 
out of Committee.
    I also ask for your support of H.R. 3583 to The Honorable 
Chairman Rangel and members of the House Ways and Means 
Committee, which also has jurisdiction over this bill. I remain 
available to the Committee and to individual Members to discuss 
this legislation and other matters affecting the Territory.
    Thank you again for the opportunity. Soifua.
    [The prepared statement of Governor Tulafono follows:]

           Statement of The Honorable Togiola T.A. Tulafono, 
                       Governor of American Samoa

    Talofa and greetings Madame Chairwoman Bordallo and honorable 
members of the Committee. I greatly appreciate this opportunity to 
testify before the Committee on the urgent need for passage of H.R. 
3583, the American Samoa Protection of Industry, Resources and 
Employment (ASPIRE) Act. This legislation would provide much needed 
assistance for American Samoa to stabilize its current employment base 
and in turn, to shore up our ongoing economic development efforts.
    At the outset, let me be as clear as possible--the American Samoa 
Government, inclusive of the Fono leadership and the Office of Samoan 
Affairs which represents local government, supports H.R. 3583 in its 
current form, and we look forward to a favorable report out of this 
subcommittee.
    As of September 30, 2009, one of our tuna canning plants, Chicken 
of the Sea (COS) Samoa Packing discontinued its tuna canning operations 
in the Territory. COS Samoa Packing has roots in the Territory dating 
back to the 1959. Samoa Packing directly employed over two thousand 
residents. Together with StarKist Samoa, COS Samoa Packing was directly 
and indirectly responsible for over eighty percent of employment in 
American Samoa's private sector and approximately forty six percent of 
employment as a whole. Together, the tuna canning industry canneries 
were responsible for infusing approximately $80,000,000 into the 
American Samoa economy. These numbers are contained within our DOI 
funded report American Samoa's Economic Future and The Cannery 
Industry, by McPhee and Associates. Copies of this report have been 
submitted to both this Subcommittee and the Department of Interior. I 
would be glad to provide the report to any of the members of the 
Subcommittee or the witness panel gathered here today.
    As you may be aware, over the past two months the American Samoa 
Government has been engaged with Samoa Packing in discussions to 
purchase the assets of the tuna canning operation located in the 
Territory. We are informed that the American Samoa Government purchase 
may have an ill effect on this important legislation. As such, these 
discussions have been suspended indefinitely. Nonetheless, the American 
Samoa Government's (ASG) explanation of this move should be understood 
by this Committee. The purchase of the assets was explored with one 
motivation in mind--to keep the operation whole. ASG was convinced that 
the maximum potential of the business assets may only be achieved if 
the operation remains a whole self-contained tuna canning plant. The 
prospect of a turn-key operation is much more attractive than a 
collection of assets that do not support a whole operation. This was 
the intent of the discussions with COS Samoa Packing--to protect the 
future of possibility of a tuna canning operation. We see H.R. 3583 as 
an integral part of carrying out our intent, which is why we are here 
today. At present, we understand that COS Samoa Packing has the 
operational capacity to producing at least four product lines with 
their current assets which remain in American Samoa.
    As this Subcommittee may also be aware, my administration has had 
some very serious discussions with the Congressman over this 
legislation which may require some explanation with regard to our 
position. To be clear, my administration has never disagreed with the 
main intent of the bill, which is to provide much needed assistance to 
our tuna canneries and our fishing fleet. The main concern that we have 
had with H.R. 3583 is the minimum wage provisions namely Section 
3(e)(1)(A)(i) of the bill, which provides for an automatic adjustment 
of the assistance offered by this bill should the minimum wage escalate 
every year per the current U.S. minimum wage law for American Samoa.
    It has always been the American Samoa Government's position that 
minimum wage increases must be based in economic reality. Before the 
recent change which provides for mandatory increases annually, there 
was a careful economic analysis that took place every two years 
conducted by the Secretary of Labor and presided over by a Special 
Industry Committee. These committees would take into consideration the 
positions of all industries as well as the state of the economy in 
American Samoa. Only after careful consideration of whether increases 
would result in a substantial curtailment of employment did the 
committees make their decisions as to the final minimum wage for each 
industry in American Samoa.
    The belief in the U.S. Congress, which resulted in the mandatory 
escalators, was that the committees were artificially depressing the 
minimum wage in American Samoa. However, it is our position that 
mandatory increases with no basis in the economic conditions of the 
Territory are even more dangerous. Thus, the inclusion of the provision 
noted above in this legislation was for ASG, akin to lending credence 
to a process that we have been diametrically opposed to from its 
inception. Furthermore, ASG viewed this provision as a wedge issue that 
would effectively remove the canneries from supporting the common view 
that the minimum wage escalators were arbitrary and without any 
economic foundation.
    We have since changed our view in light of the worsening global and 
local economic conditions. We also have placed much trust and faith 
that a workable resolution to the minimum wage issue may result from 
the current General Accountability Office study that is currently being 
conducted and which will be presented to Congress in early 2010.
    The one concern that we have regarding funding of this initiative 
is whether the fees contemplated in Section 3(e)(2)(A) are the sole 
funding source for this assistance. If so, then I am unsure as to 
whether this would be sufficient for paying for the trust fund by 
itself. Further, I would ask whether with this new law, fishing vessels 
contemplated by the provision are expected to continue in their current 
status? Would reflagging be an issue and would this affect the funding 
stream available for the trust fund? These answers and others would be 
helpful in understanding further H.R. 3583, a measure which is highly 
welcome and very timely.
    While the growth of the fish canning industry boosts employment and 
spurs development in the territory, such a heavy reliance on this 
single industry however is not economically sound, and my 
administration with assistance from the Department of Interior 
continues to pursue opportunities to diversify the territory's economy. 
The territorial government has actively promoted business investment 
opportunities in agriculture, fisheries, tourism, call centers, 
electronic information processing, and earlier this year, the 
installation and launching of a fiber optic cable connection for 
American Samoa. The premise of the fiber optic cable connection was to 
expand telecommunications technology sectors in the Territory, 
encourage new business and to attract high-tech businesses to American 
Samoa, especially call U.S. call centers. If American call centers can 
operate in India and Guatemala, they should certainly be able to 
operate in American Samoa.
    There remain challenges to setting up call center operations in the 
Territory. One of these challenges is the constantly increasing minimum 
wage for industries in the private sector. However, while we may be 
able to work through these challenges, stability in the single largest 
private sector industry is critical to these efforts. The failure of 
one of our canneries has created a precarious position for the 
Territory, whereby the ASG will have to forego millions of dollars in 
revenue as well as general economic activity that COS Samoa Packing 
once contributed to our economy. H.R. 3583 would go a long way toward 
shoring up the activities of our remaining tuna cannery StarKist Samoa, 
as well as creating an environment that would encourage the entry of 
any one of a number of canneries to do business in the Territory.
    Lastly, I would like to thank the members of this committee and the 
individual members of the witness panel for their wonderful support for 
the Territory owing to the September 29, 2009 earthquake and tsunami 
disaster in American Samoa. Your prayers, thoughts and condolences 
during this difficult time have made a lasting impression on all of 
American Samoa's residents. During the whole ordeal, we have never felt 
that we faced any of it alone. For this, we are grateful to all of you. 
We also thank you for your donations of man-hours for clean up 
activities, monetary donations to relieve the suffering of our disaster 
victims and your overall support for our general recovery. As recovery 
efforts are continuing in American Samoa and it looks to be a long time 
before we reach true recovery, we ask that you continue to keep us in 
your prayers.
    Madame Chairwoman and members of this committee, I thank you once 
again for allowing me to express our thoughts on this important 
legislation. I thank Congressman Faleomavaega for his leadership and 
his foresight in introducing this legislation and I look forward to 
your favorable report of this legislation out of committee. I also ask 
for your support of H.R. 3583 to Honorable Chairman Rangel and members 
of the House Ways and Means Committee, which also has jurisdiction over 
this bill. I remain available to the committee and to individual 
members to discuss this legislation and other matters affecting the 
Territory.
    Soifua ma ia manuia.
                                 ______
                                 
    Ms. Bordallo. I thank you very much, Governor. And, again, 
I wish to apologize on behalf of the Subcommittee for having to 
have you wait so long when you have traveled so far to be here. 
So thank you, again, very much for your testimony.
    And before we begin, before I introduce Mr. Pula, I would 
like to introduce another one of our Members, Mrs. Grace 
Napolitano, who is a Subcommittee Chair on Natural Resources as 
well. And she hails from California.
    So thank you, Grace, for being with us.
    Mr. Pula, please go ahead.

STATEMENT OF NIKOLAO I. PULA, JR., DIRECTOR, OFFICE OF INSULAR 
            AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR

    Mr. Pula. Thank you. Madam Chair and members of the 
Subcommittee, thank you for the opportunity to discuss H.R. 
3583, the American Samoa Protection of Industry, Resources, and 
Employment Act.
    The prospects for the American Samoa economy have been of 
concern for some years now. For a substantial time, there have 
been predictions that the two tuna canneries would leave the 
Territory. Now Chicken of the Sea has left. Until this year, 
the two tuna canneries operating in American Samoa since the 
1950s have shipped virtually all their finished products to the 
United States as if it were manufactured in the 50 States.
    The canneries have been the backbone of the Territory's 
private sector. In 2007, the two canneries employed 4,600 
workers, about 27.2 percent of total employment in the 
Territory. The canneries also have supported a wide range of 
activities directly and indirectly, including most of the local 
trade and services sector.
    A GDP estimate for American Samoa was 483.1 million for 
2007. The value of manufacturing output in American Samoa, 
nearly all tuna, was 22.3 percent of the total GDP.
    An important part of the financial mix that sustained the 
canneries over the decades has been tax and economic activity 
credits allowed under Federal tax rules. Other key factors 
contributing to financial viability of the canneries have been 
local financial incentives, duties on U.S. imports of canned 
tuna and relatively low wages.
    Ending years of speculation, one of the canneries, Chicken 
of the Sea Samoa Packing ended its operation in September of 
this year. It appears that the unique mix of factors--low-cost 
labor, duty-free export to the United States and tax and other 
credits from the Federal Government and the American Samoa 
government--that sustained canneries for more than 50 years is 
no longer sufficient for financial viability. Also, in a larger 
context, moving the basic labor-intensive manufacturing 
activities to low-cost labor markets has been a trend in the 
United States and other industrial countries for some years 
now.
    It is reasonable to say that American Samoa lost some 
comparative advantage in financial viability after it became 
subject to minimum wage, Federal minimum wage rules in July 
2007. What makes the loss of even one cannery so critical is 
the proportion of the economy that is eliminated. There is no 
economic activity on the horizon to replace a cannery's 
economic value.
    With the loss of over 2,000 jobs, or 12.7 percent of total 
employment, American Samoa will lose roughly 21.7 million in 
annual wages. That would be 10.7 percent of the Territory's 
total wage bill under normal conditions.
    Wage losses in other economic activities will depend on the 
degree of their dependence on the canneries. All together, the 
immediate losses in wages following a shutdown of one of the 
canneries may amount to an estimated 31.5 million a year. This 
amount represents 15.6 percent of the Territory's total 
estimated wages of 202.5 million.
    Whether it is the loss of workers or wages, loss of one of 
the canneries and the activities it supports directly and 
indirectly is the equivalent of a major economic disaster. If 
the other cannery follows suit, it would mean at least double 
the economic and financial losses.
    H.R. 3583 is intended to support the remaining tuna cannery 
in American Samoa. The Administration is supportive of efforts 
to strengthen the economy of American Samoa, but has some 
concerns regarding the implementation of H.R. 3583.
    First, the Administration is actively working in the WTO to 
strengthen the rules regarding fisheries, and the proposed 
legislation may have implications for that effort. Finally, the 
Administration notes that the bill increases mandatory spending 
which would need to be fully paid for in this congressional 
session out of the Administration's pay-as-you-go proposal as 
provided for in H.R. 2920.
    The Obama Administration appreciates the magnitude of the 
current problems faced by American Samoa, including the 
potential departure of the tuna canneries and the impact of the 
Federal minimum wage requirements. The Administration would 
like to work with this bill's sponsors and the American Samoa 
government to address these significant economic problems in 
the near future.
    Thank you.
    [The prepared statement of Mr. Pula follows:]

Statement of Nikolao I. Pula, Jr., Director, Office of Insular Affairs, 

                    U.S. Department of the Interior

    Madam Chair and members of the Subcommittee, thank you for the 
opportunity to discuss H.R. 3583, the ``American Samoa Protection of 
Industry, Resources, and Employment Act.''
    The prospects for the American Samoa economy have been of concern 
for some years now. For a substantial time, there have been predictions 
that the two tuna canneries would leave the territory. Now, Chicken of 
the Sea has left. ASPIRE, with its proposed aid for tuna processors and 
fishing vessels, is an attempt to strengthen conditions for retaining 
the other cannery, StarKist. While we support the ultimate goal of 
preserving jobs and protecting the remaining economy of American Samoa, 
the Administration has significant concerns related to PAYGO 
requirements. Also, the United States is working to eliminate practices 
in ongoing World Trade Organization (WTO) negotiations that have for 
decades let to over-capacity and over-fishing, particularly with regard 
to the build-up of foreign fishing fleets. This legislation could have 
implications for that important effort.
BACKGROUND
    Until this year, the two tuna canneries operating in American Samoa 
since the 1950s have shipped virtually all their finished product to 
the United States as if it were manufactured in the fifty states. The 
canneries have been the backbone of the territory's private sector. In 
2007, the two canneries employed 4,633 workers, 27.2 percent of total 
employment in the territory, according to American Samoa Statistical 
Yearbook 2007. The canneries also have supported a wide range of 
activities directly and indirectly, including most of the local trade 
and services sector. This includes retail stores, restaurants, car 
repair shops and other service providers. The two canneries have paid 
more than half of American Samoa's corporate taxes, which, in turn, 
support a large number of American Samoa Government (ASG) workers, as 
well as benefitting the American Samoa Power Authority.
    An unofficial GDP estimate for American Samoa was $483.1 million 
for 2007. The value of manufacturing output in American Samoa, nearly 
all tuna, was 22.3 percent of total GDP. The American Samoa Government 
followed the canneries with a 19.8 percent share of GDP. Local retail 
trade was in third place with 14.1 percent. Other important 
contributors were agriculture, including subsistence production, and 
information and business services with a 9.6 percent share each. In 
fifth place was wholesale trade, with 8.2 percent. These five sectors 
of the economy made up 83.8 percent of GDP.
Financial Viability of the Canneries
    An important part of the financial mix that sustained the canneries 
over the decades has been tax and economic activity credits allowed 
under Federal tax rules. Other key factors contributing to financial 
viability of the canneries have been local financial incentives, duties 
on U.S. imports of canned tuna, and relatively low wages.
    Ending years of speculation, one of the canneries, Chicken of the 
Sea Samoa Packing, announced in May 2009 that it would end its tuna 
canning operations in American Samoa at the end of September 2009. 
According to media accounts, the parent corporation of COS Samoa 
Packing, a Thai seafood conglomerate, has moved the labor-intensive 
part of its fish processing (cleaning) to Vietnam where the cost of 
labor is about 70 cents an hour. That wage contrasts with the roughly 
$5.10 minimum wage paid in American Samoa today, after three 
consecutive 50-cent raises of the minimum wage rate since July 2007. 
The mechanical part of fish processing (sorting, canning and handling) 
of the American Samoa operations is being accommodated in Lyons, 
Georgia, with a highly automated plant that processes frozen fish 
arriving in pouches from Vietnam and delivers canned fish to U.S. 
consumers via American supermarkets.
    It appears that the unique mix of factors (low-cost labor, duty-
free export to the United States and tax and other credits from the 
Federal Government and ASG) that sustained the canneries for more than 
50 years is no longer sufficient for financial viability. Also, in a 
larger context, moving the basic, labor intensive manufacturing 
activities to low-cost labor markets has been a trend in the United 
States and other industrial countries for years now. It is reasonable 
to say that American Samoa lost some comparative advantage in financial 
viability after it became subject to Federal minimum wage rules in July 
2007.
    It is important to note the losses the American Samoa economy is 
enduring and potential future losses it may further endure. There are 
economic, financial and social losses. What makes the loss of even one 
cannery so critical is the proportion of the economy that is 
eliminated. There is no economic activity on the horizon to replace a 
cannery's economic value.
Potential Wage and Work Losses
    According to a letter the Governor of American Samoa wrote to the 
Secretary of the Interior on May 14, 2009, a total of 2,172 jobs were 
estimated to have been lost with the closing of COS Samoa Packing. The 
two canneries, according to the Governor, account for 60 percent of all 
economic activity in the territory. With the loss of 2,172 jobs or 12.7 
percent of total employment, American Samoa will lose roughly $21.7 
million in annual wages. That would be 10.7 percent of the territory's 
total wage bill under normal conditions.
    Excluded from these figures are the immediate, secondary and 
tertiary losses resulting from the shutdown. These would include goods 
and services provided to fishing fleets and crews and other suppliers 
of the canneries. After accounting for all wages, salaries and benefit 
losses directly connected to the cannery, the total loss is likely to 
be significantly higher than the $21.7 million in lost wages.
    Given the proportion of American Samoa's economic activity that 
depends on the canneries, indirect job losses resulting from the 
shutdown may also be substantial. The ASG Department of Commerce 
estimated in 2006 that ASG would lose 700 ``local government'' workers 
following a closure of both canneries.
    Wage losses in other economic activities will depend on the degree 
of their dependence on the canneries. While it is currently not known 
whether a shutdown of both canneries would lead to large losses in the 
retail trade sector, anecdotal evidence suggests that this area depends 
heavily on the canneries, and major losses may be incurred in the near 
future. This sector, according to the U.S. Department of Labor data, 
employed 964 workers in 2006. If the shutdown of one cannery causes the 
layoff of half of that total, wage losses to the retail sector could 
approach $5.4 million a year. Also, one cannery's closure may eliminate 
half of the shipping and transport workers, and could eventually cause 
losses in a wide range of activities, from printing and publishing to 
construction. Altogether, the immediate losses in wages following a 
shutdown of one of the canneries may amount to an estimated $31.5 
million a year. This amount represents 15.6 percent of the territory's 
total estimated wages of $202.5 million.
    Unlike the loss of wages, the loss in the number of workers is 
likely to be greater as a percent of the total because most of these 
workers are in the lower-wage brackets. Still, the immediate loss in 
payroll employment directly and indirectly attributable to the 
cannery's closure could approach 2, 954 workers, or 17.3 percent of 
total employment in the territory.
    Whether it is the loss of workers or wages, loss of one of the 
canneries and activities it supports directly and indirectly is the 
equivalent of a major economic disaster. If the other cannery follows 
suit, it would mean at least double the economic and financial losses. 
In that case, the American Samoa economy would likely never recover to 
pre-closure levels in our lifetimes.
CANNERY CLOSURE AND FEDERAL OUTLAYS
    For many years, observers have been predicting that the canneries 
in American Samoa will leave the territory, and that without the 
canneries, American Samoa would become even more dependent on Federal 
largesse than it is currently. By a substantial amount, the Federal 
budget outlays as a consequence of cannery closure would likely 
surpass, by a substantial amount, the $25 million authorized in H.R. 
3583 as aid for tuna canneries and vessels. For example, taking into 
consideration Federal aid for residents of American Samoa and their 
families, those who may move to Hawaii or the mainland United States, 
and Federal programs such as the Supplemental Nutrition Assistance 
Program (formerly food stamps), TANF, WIC and Medicaid, the Federal 
cost would likely surpass the amount contemplated in the bill.
    While the bill involves costs for the Federal government, those 
costs could be less than Federal cost for remedial aid to the 
territory.
H.R. 3583
    H.R. 3583 is intended to support to the remaining tuna cannery in 
American Samoa.
    H.R. 3583 would amend the insular areas technical assistance 
program to provide:
      payments to canneries in the amount of $200 per metric 
ton for whole tuna processed in American Samoa (which amount shall be 
adjusted annually according to the following ratio: increase in Federal 
minimum wage applicable to American Samoa over the Federal minimum wage 
applicable in American Samoa during the prior year),
      payments to specified fishing vessels in the amount of 
$200 per metric ton of tuna delivered in American Samoa for processing,
      payments to such specified fishing vessels that are U.S.-
documented in the amount of $100 per metric ton of tuna delivered in 
American Samoa for processing,
      payment of an annual fee of $250,000 by all such vessels 
to the United States treasury, which fee shall be waived if the vessel 
has made not less than three direct deliveries of whole tuna to 
processors in American Samoa during the year for which the fee is paid,
      payment of a fee by each U.S.-documented vessel in the 
amount of 6.25 percent per metric ton for each delivery it makes to 
another vessel or non-American Samoa location for the purposes of 
transshipment, which is expected to generate approximately $15 million 
a year that can be used as aid for tuna canneries and vessels,
      deposit of all fees in an ``American Samoa Economic 
Development Trust Fund'' to be administered by the Office of Insular 
Affairs for the benefit of the territory of American Samoa, and
      authorization of $25 million for Fiscal Year 2010 and 
such sums as may be necessary thereafter for the aid to the American 
Samoa canneries and vessels.
INTERIOR POSITION
    The Administration is supportive of efforts to strengthen the 
economy of American Samoa, but has several concerns regarding the 
implementation of H.R. 3583. First, the Administration is actively 
working in the WTO to strengthen the rules regarding fisheries, and the 
proposed legislation may have implications for that effort.
    Finally, the Administration notes that the bill increases mandatory 
spending, which would need to be fully paid for in this congressional 
session under the Administration's pay as you go proposal as provided 
for in H.R. 2920.
    The Obama Administration appreciates the magnitude of the current 
problems faced by American Samoa, including the potential departure of 
the tuna canneries and the impact of the Federal minimum wage 
requirements. The Administration would like to work with the bill's 
sponsors and the American Samoa government to address these significant 
economic problems in the future.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Mr. Pula.
    And I would like to ask unanimous consent that 
Congresswoman Napolitano be allowed to participate in the 
hearing.
    Hearing no objection, so ordered.
    And now I would like to introduce the Ranking Member of our 
Committee, who just came from the Floor after voting, The 
Honorable Henry Brown from South Carolina and also The 
Honorable Jeff Flake from Arizona.
    Henry, if you would like to begin.

  STATEMENT OF HON. HENRY E. BROWN, JR., A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF SOUTH CAROLINA

    Mr. Brown. Thank you, Madam Chair. And I apologize for the 
inconsistency in our scheduling. We have no control over when 
we might vote, but we certainly appreciate the witnesses being 
here.
    Madam Chairwoman, I will give my formal statement.
    The loss of 2,000 jobs, when one of only two tuna canneries 
in American Samoa moved its operation, was a tremendous loss to 
the economy of American Samoa. To then be hit by as tsunami has 
been a one-two punch that has been economically disastrous to 
my friend from American Samoa's district. I completely 
understand his interest in trying to maintain a vibrant, stable 
economic base in American Samoa and understand his interest in 
trying to bring back those canneries that have abandoned 
American Samoa.
    Unfortunately, I have strong reservations about the 
direction this legislation takes to address this problem. While 
I understand the need to maintain jobs in American Samoa, I 
will have a hard time telling my constituents why their tax 
dollars should be used to prop up just one company.
    I am afraid I also have concerns with manipulating the 
market by requiring all U.S.-flag vessels, even those vessels 
that have never delivered to American Samoa, to deliver to one 
company or be charged an annual fee and a percentage of their 
earnings.
    Madam Chair, I would like to help my friend from American 
Samoa, but I cannot support this legislation. Having said that, 
I would like to ask our witnesses to help us come up with some 
more innovative way of addressing this problem and to find ways 
to not just maintain, but to create jobs in American Samoa.
    I look forward to hearing from our witnesses, and I look 
forward to working with you, Madam Chair, and my great friend 
from American Samoa.
    Thanks. I yield back.
    [The prepared statement of Mr. Brown follows:]

  Statement of The Honorable Henry E. Brown, Jr., Ranking Republican, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    Madam Chairwoman, the loss of 2,000 jobs when one of only two tuna 
canneries in American Samoa moved its operations was a tremendous loss 
to the economy of American Samoa. To then be hit by a tsunami has been 
a one-two punch that has been economically disastrous to my friend from 
American Samoa's district.
    I completely understand his interest in trying to maintain a 
vibrant, stable economic base in American Samoa and I understand his 
interest in trying to bring back those canneries that have abandoned 
American Samoa.
    Unfortunately, I have strong reservations about the direction this 
legislation takes to address this problem. While I understand the need 
to maintain jobs in American Samoa, I will have a hard time telling my 
constituents why their tax dollars should be used to prop up just one 
company. I'm afraid I also have concerns with manipulating the market 
by requiring all U.S.-flag vessels--even those vessels that have never 
delivered to American Samoa--to deliver to one company or be charged an 
annual fee and a percentage of their earnings.
    Madam Chair, I would like to help my friend from American Samoa, 
but I cannot support this legislation. Having said that, I would like 
to ask our witnesses to help us come up with some innovative ways of 
addressing this problem and to find ways to not just maintain, but to 
create, jobs in American Samoa.
    I look forward to hearing from our witnesses and I look forward to 
working with you, Madam Chair, and the Gentleman from American Samoa.
    Thank you.
                                 ______
                                 
    Ms. Bordallo. I thank the gentleman from South Carolina for 
his opening statement.
    And now we are going to go to the Members, alternating 
between the majority and the minority. And I am going to have 
to tell you, I am going to hold on to a 5-minute limit very 
strictly, because we do have two panels after this, and I am 
going to put the two panels together.
    So those on the third panel, be ready; we will put you all 
together for the next panel.
    So at this time I would like to introduce the author of the 
bill, Mr. Faleomavaega from American Samoa.
    Mr. Faleomavaega. First of all, Madam Chair, I do want to 
thank our distinguished Ranking Member for his comments. And I 
totally respect his concerns about some of the provisions of 
the bill.
    If I may just restate the very beginning, the advent of--
the purpose of the bill is not just to help the only remaining 
cannery that we have. Basically, it is to reestablish our tuna 
industry. And this is just to benefit StarKist, because 
StarKist is the only one that we have, but it is also to 
encourage other tuna processing companies to come and be part 
of the industry as we have it.
    The unfortunate situation to my good friend from South 
Carolina that--I have been a member of this Committee for 20 
years, and it is a real challenge knowing that the tuna 
industry are never together or unified. Under most conditions, 
they are constantly at each other's backs or cutting each 
other's throats, I would best say, about competition.
    And as I have said from the very beginning, as I was trying 
to meet with as many members of our tuna industry--both the 
fishing boats as well as the processors--was that I am open to 
any suggestion so that everybody could mutually benefit from 
the proposed bill.
    My situation, to my friend from South Carolina, is that--as 
I have said earlier in my statement, is that the whole U.S. 
tuna industry has changed--some 55 years now, has completely 
changed from what it was 50 years ago. Now we are getting much 
greater competition from foreign countries. And as it is, three 
brand names are now in place where some 20--80 percent of the 
tuna consumer in the United States is produced by these three 
brand names--StarKist, Chicken of the Sea and Bumble Bee.
    I had hoped that we would come up with some kind of a 
compromise where everybody would mutually benefit. But I am sad 
to say that this has not been the case in my experience in 
trying to figure out how we can best work together so that 
everybody would mutually benefit.
    So, with that--also, Madam Chair, I just want to say I am 
sorry that the Governor had left, but I do want to thank him 
for his support of this proposed legislation.
    And I also want to say that his earlier comment about the 
CNN video controversy that was brought to bear, I think it is a 
real sad commentary on how the media has taken issues, 
especially something that is so important in my own territory. 
I was interviewed by CNN for 15 minutes; and when this video 
was shown, I was given, I think, only 30 seconds of the 15-
minute part. And I was trying to explain about the situation 
with the grant programs; and this issue, totally taken out of 
context, in my opinion of how this whole thing has come about, 
and giving a real bad name for the Territory.
    And basically what I have said is true with all Territories 
and States: Federal agencies are responsible for each of these 
grants and funding; and they have oversight responsibility, and 
if something goes wrong, they are then to report it to the FBI 
and let the U.S. Attorney prosecute the people and put them in 
jail.
    And we have had cases like that in the Territory where 
people who violate the law go to jail. But it is unfortunate 
that the way they come out and say that there is total 
corruption down there, that people are stealing blind. I just 
really am saddened that this is the state of how we--the media 
in our day have taken issues that are so important, and yet 
twist it, take it out of context and put it in such a bad--
there is no question it has been an embarrassment to my people.
    And the sad part about it is, there is no way we can return 
the favor by saying, can we have another source that we can 
explain in a better way the accusations that were made.
    I know my time is up, Madam Chair, and I haven't even had a 
chance to thank and to welcome Mr. Pula, from the Interior 
Department. And I do look forward to working with him to see 
how we can better strengthen this bill. I am open to any 
suggestions by our processors, as well as in the tuna boat 
industry. And I will take very seriously the suggestions and 
the concerns that my good friend from South Carolina has said.
    Thank you.
    Ms. Bordallo. I thank the gentleman for his statements.
    And now I would like to turn to the Ranking Member from 
South Carolina, Mr. Brown. 
    Mr. Brown. Thank you, Madam Chair. And I want to let my 
good friend know--I mean, having visited you all and 
experienced the hospitality of your great people, certainly my 
compassion is for you and them as you were inflicted by the 
tsunami the other day. And I am sure some of the same people 
that we met on our visit were impacted by the tsunami.
    Coming from South Carolina, not many years back we were 
confronted with a similar--not a tsunami, but we were 
confronted with a similar economic situation where we were very 
heavy in textiles. And we have lost, I guess, 120,000 or more 
jobs in the textile industry, that has now been exported to 
some of the other countries that you are having to compete with 
today.
    I know we met with some of the cannery people that have 
actually exited you all; and their wage base--from where the 
minimum wage has taken you, which is something--I don't know 
whether anybody has addressed that or not.
    Is there anything that can be done to not mandate the 
minimum wage on your people?
    Mr. Faleomavaega. Will the gentleman yield?
    Mr. Brown. Yes, sir.
    Mr. Faleomavaega. I just want to say that the way the whole 
tuna industry has now taken a turn is that rather than having 
U.S. workers clean the fish--90 percent of the value of the 
tuna comes from cleaning and processing the fish in their 
country. But what has happened is that foreign countries now 
clean the fish at 60 cents an hour or less.
    So with the higher wages--it is the same way that the 
textile industry was lost. What has happened is that some of 
our tuna processors have gone on to these foreign countries to 
buy loins that were produced by workers at 60 to 70 cents an 
hour, and then bring it duty free, and then just hire maybe 200 
to 300 people in the United States just to can it and then--
just sell it then to the consumers.
    So the disproportionate pricing because of the labor costs 
is what makes these--Bumble Bee as an example, as well as 
Chicken of the Sea; that is finally what Bumble Bee is going to 
do. This is the only way that they can offset or increase their 
profit margins is by letting these poor countries do the cheap 
labor and then bring it in and then increase it.
    Just like how we produce Nike shoes, 25 or 50 cents an hour 
in Third World countries, and by the time it reaches the U.S. 
market, it is $125 a pair. So this is where we are having the 
problem right now with it.
    Mr. Brown. Well, I am certainly interested in the dollar. I 
know we try to reach as much, I guess, input as possible so 
that we can make the best solution we can. We even talked about 
trying to retool and try to become, in a manufacturing 
environment, different from the tuna market. And I am not sure 
exactly how that would work, but we are looking to help with 
the problem. We just don't think that this solution is going to 
be a long-lasting solution.
    Ms. Bordallo. I thank the Ranking Member, Mr. Brown, from 
South Carolina.
    Now I would like to recognize the gentlelady from the 
Virgin Islands, Mrs. Christensen.
    Mrs. Christensen. Thank you, Madam Chair. And I am sorry 
that the Governor had to leave. I did convey my sympathy for 
what the people of American Samoa had to go through, in 
private; but on the record I wanted to say to my colleague here 
that, having been there several times, my heart really and our 
prayers from all of my community have gone out to the people of 
American Samoa. And we hope that you have received some of the 
goods that we have sent over there from the Virgin Islands.
    Mr. Pula, welcome back to the Committee. You list two areas 
that--or two reasons why the Administration doesn't support the 
bill as it is, but is willing to work with the Committee and 
the Congressman from American Samoa.
    The first one is cost. Just why is it that every time it is 
a territorial issue cost, $25 million, becomes a problem? We 
have gone through this with health care reform and here we are 
again.
    You have already said in your testimony that cost may be 
even more with the closure to support WIC, Medicaid and all of 
the other--TANF, and all of the other programs that may come 
into play. So that the funding that might be needed in the 
event the cannery closes, the last remaining cannery closes, 
the cost to the Federal Government may be more.
    So isn't it better to help support the industry and 
economic development to teach the people to fish rather than 
give the fish, so to speak?
    Mr. Pula. I thank the Congresswoman for the question.
    Yes, it is true. The question on funding, as I stated in 
our testimony, has to deal with the PAYGO situation here.
    But based on your question about, is it better to teach the 
people to fish, I totally agree.
    Mrs. Christensen. And the other one is a WTO issue.
    Somebody in another--on the next panel made a suggestion, 
if I remember correctly, about maybe the excise tax on imported 
fish loins being lower here than other places.
    Are there other proposals being considered, like raising 
the tax on tuna loin, if that is a proper term, imported from 
outside the United States or any other way that you might be 
able to assist the tuna industry in the absence of the outlay 
of $25 million?
    Mr. Faleomavaega. Will the gentlelady yield?
    Mrs. Christensen. I would be glad to yield.
    Mr. Faleomavaega. Currently, it is my understanding that on 
oil-packed tuna, imported--coming from foreign countries, we 
put a 25 percent tariff on it. And if it is a water-packed 
tuna, I believe it is 13 to 15 percent tariff that we put on 
it. And the money goes into Uncle Sam's Treasury, of course. 
But this is the way the situation is being placed at now.
    Mrs. Christensen. OK. Like I said, that answers my 
question.
    I don't have any further questions, Madam Chair. I don't 
have any further questions.
    Ms. Bordallo. I thank the gentlelady.
    And now I would like to recognize the gentleman from 
Arizona, Mr. Flake, for any questions he may have.
    Mr. Flake. Just a brief question. You had mentioned that 
the Administration supports the goal, obviously, of improving 
the economy of American Samoa, but has some issues with this 
legislation.
    Can you spell out specifically some of the issues that you 
have with, as you mentioned, implementation of the legislation?
    Mr. Pula. Like, I think, the other departments within the 
Administration dealing with WTO issues with the USTR, I have 
concerns about that. And I think it is something that we had 
mentioned to the Congressman that we would be willing, the 
Administration, to work with the sponsors of the bill regarding 
these issues.
    Mr. Flake. But--that is in relation to other international 
obligations or agreements that we have, but do you have any 
specific concerns about the legislation itself or expenditure 
of these monies? Or is that----
    Mr. Pula. No, not necessarily. It is mostly on that issue 
and the PAYGO issue, looking for funding for that.
    Mr. Flake. All right. Thank you.
    Ms. Bordallo. I thank the gentleman.
    And now I would like to recognize Mr. Sablan, the 
Representative from CNMI.
    Mr. Sablan. I don't have any questions. Thank you.
    Ms. Bordallo. The gentlelady from California, Mrs. 
Napolitano.
    Mrs. Napolitano. Thank you, Madam Chair. I wish the 
Governor would have been able to sit through it a little bit 
more.
    But, Mr. Pula, there are a lot of questions, and I agree 
and associate myself with the remarks of my colleagues in 
regard to the impact it has in our U.S. cannery. I have the 
only U.S.-owned--privately owned cannery in my district, Bumble 
Bee.
    They produce--I have been there twice. I visit them; I know 
intimately how they operate and how they affect my local 
economy. So the 200 and almost 300 workers in my area and $200 
million worth of economy in my area would be gone, essentially 
they would disappear, because this would give unfair advantage 
to American Samoa. And there has got to be a better way to be 
able to help, be more cognizant of how we can get that economy 
recovered in American Samoa so that we do not affect U.S. jobs.
    My area pays $13.75 an hour. There is no way you can 
compete with outside interest.
    So it is a subsidy that sounds great, but we would actually 
be targeting one individual company for assistance, and to the 
detriment of U.S. jobs, the U.S. economy and U.S. sites.
    That would put in jeopardy the possibility opening the 
Georgia site. I have spoken to my colleague Mr. Pierluisi from 
Puerto Rico, and he is adamantly opposed to it. So is the 
Governor of Puerto Rico.
    Again, we need to sit at the table and figure out how best 
we can actually help the area without--to the detriment of U.S. 
jobs and U.S. economy. I am very sympathetic to the plight, and 
somehow we do neglect our brothers and sisters away from this 
area, and we should be more cognizant of how their plight 
really affects us.
    I understand the Department of Labor is undertaking a study 
on the impact of the minimum wage law on the American Samoa 
economy, but that won't be done until sometime in April of 
2010. That study probably will provide some insight as to what 
can be done to assist or provide some of the answers that might 
be able to help the area.
    But I totally, totally oppose it; and I hope that we are 
able to work together to assist in any other way except taking 
the bread from the mouths of my constituents, very simply. 
There has got to be a better way, and somehow--I am more than 
happy to sit with anybody and try to figure out how do we 
support recovery in a better way in a way that will help that 
economy in American Samoa without hurting ours in the United 
States.
    Thank you, Madam Chair.
    Mr. Faleomavaega. Will the gentlelady yield?
    Mrs. Napolitano. Yes, sir.
    Mr. Faleomavaega. I just want to say that I share the 
gentlelady's concerns, and I have no intention whatsoever of 
trying to cause the loss of jobs in your district or our good 
friend from Puerto Rico or others.
    I just wanted to bring up that this is where the tuna 
industry is faced with. And the problem here is that I am in 
real dire straits as far as, if nothing is done, that this is--
another area that I wanted to share with my good friend, this 
is not just to help StarKist. The bill is to propose in trying 
to reestablish--our tuna industry, as it has now, 
realistically, been taken. And basically, if I don't get any 
assistance--this is just for StarKist or any other tuna cannery 
that may want to show presence--then our economy collapses. 
That is the bottom line.
    And I would like to work with the gentlelady to see how we 
can resolve this.
    Mrs. Napolitano. I would be happy to, and I will reclaim my 
time.
    I am looking at a report that StarKist is owned by Dongwon 
of Korea and Chicken of the Sea, by Thai Union Frozen of 
Thailand.
    Bumble Bee a private U.S. company. You know where my 
thoughts are.
    Thank you, Madam Chair.
    Ms. Bordallo. I thank the gentlelady from California.
    And I have one quick question before I release you, Mr. 
Pula. You pointed out that until recently the tuna packing 
industry was responsible for 80 percent of private sector 
employment and 46 percent of employment as a whole. However, it 
appears this may not be a sustainable employment model.
    What could the Administration and the Congress do, then, to 
help diversify the American Samoa economy? I guess I am kind of 
following up on Congressman Flake's question.
    Mr. Pula. In the recent past, in particular for American 
Samoa, we funded out of the Department of the Interior an 
economic commission. And out of that the report produced 
several options for the government of American Samoa. As in any 
community, diversification of the economy is a good thing, and 
that is what the Department of the Interior has been trying to 
do in working with all our territories. In such--and some of 
you have attended and know that we have done business 
conferences, we try to attract U.S. businesses to go to the 
U.S. territories. We have done different things and provided 
some technical assistance grants, perhaps smaller than the 
scale we are talking about with the canneries, to try to help 
the different industries like tourism and a variety of things 
that were done.
    It is a challenge, especially for American Samoa in this 
particular instance because its major private sector is a one-
industry tuna cannery. But we have been working along with all 
the U.S. Territories in terms of trying to diversify their 
respective economies. Of course, they all have challenges in 
locations, distance and such, but it is an ongoing, continuing 
battle to deal with that.
    Ms. Bordallo. Thank you very much, Mr. Pula. And you can be 
excused now. Thank you very much for your statement and 
answering our questions here.
    Mr. Pula. Thank you.
    Ms. Bordallo. And please extend our apologies again to the 
Governor of American Samoa.
    Mr. Pula. Will do so.
    Ms. Bordallo. And now I would like to call on our second 
and third panels to come up to the table. Would the staff 
please arrange more chairs?
    We have on this panel Mr. Donald--if you would, sit in 
according to the way I am going to call you--Mr. Donald 
Binotto, President and Chief Executive Officer of StarKist 
Company; Mr. John Sawyer, Senior Vice President for Sales and 
Marketing, Chicken of the Sea International; and Mr. Chris 
Lischewski, President and Chief Executive Officer of Bumble Bee 
Foods.
    And following those witnesses we have Mr. Joe Hamby, 
Managing Director of the Tree Marine Global Tuna Supply; Mr. 
James P. Walsh, Legal Counsel, South Pacific Tuna Corporation; 
Mr. Renato Curto, President of Cape Fisheries; and Ms. Diana 
Furchtgott-Roth, Senior Fellow and Director, Center for 
Employment Policy, the Hudson Institute.
    Ms. Bordallo. I want to thank you all for being here today, 
and to remind you again that we are on a tight time frame here. 
I understand there are going to be further votes on the Floor, 
so if you would keep your statements to 5 minutes or less.
    And we will begin with Mr. Binotto.
    Mr. Binotto, you can begin.

STATEMENT OF DONALD J. BINOTTO, PRESIDENT AND CEO, STARKIST CO.

    Mr. Binotto. Thank you. Madam Chair, Ranking Member and 
members of the Subcommittee, thank you for inviting me today to 
testify. My name is Don Binotto, and I began my career in the 
tuna industry with StarKist more than 20 years ago. I am proud 
to be their President and CEO today.
    As you know, American Samoa was recently struck by a 
tsunami, and I witnessed this devastation 1 week later; and the 
impact on our employees, their families and the community was 
immense. Words cannot describe what will happen if we are 
forced to leave and the impact it will have on the already 
fragile economy, yet that is why we are here today. American 
Samoa faces the imminent loss of its tuna industry which 
employs 80 percent of all private sector employment.
    A little bit about StarKist Seafood. We are a U.S. 
Corporation, we are headquartered in Pittsburgh, Pennsylvania; 
and we have more than 1,800 U.S. employees and we pay U.S. 
taxes. StarKist is also a U.S. subsidy of the Dongwon Group, 
headquartered in Seoul, South Korea.
    I am here today, fighting to save the jobs of our American 
Samoa workers and the very economic foundation of this U.S. 
territory. I am asking the Committee to quickly pass this 
critical economic stabilization proposal. You will hear 
testimony from our competitors about the threat ASPIRE 
supposedly poses to the U.S. tuna industry. They will tell you 
it favors one company at the expense of another. But I caution 
you to listen very carefully, because when you strip away the 
rhetoric, the reality is, this proposal is about two starkly 
different ways of doing business.
    The difference is quite simple. They use a business model 
that outsources the most labor-intensive jobs to foreign 
countries which pay as little as 60 cents per hour.
    My company is resisting that business model, but we need 
your help. My competitors also want all the privileges of a 
U.S.-flag tuna fleet, so that they can utilize our fishing 
license and prime fishing grounds only to exploit these 
resources to benefit foreign economies.
    ASPIRE seeks to change that behavior so that the benefit of 
these U.S. resources return back to the U.S. workers and 
territories.
    StarKist operates a full-scale tuna cannery that begins 
with the whole tuna fish. It is known as the round fish. This 
fish is cleaned; it is then cooked and then it is packed into a 
can or a pouch. This cleaning and preparation process accounts 
for 80 percent of the total labor process.
    In contrast, our competitors outsource this labor-intense 
aspect, the cleaning and preparing of the tuna itself, to low-
wage countries. Having outsourced most of the jobs, they then 
import frozen tuna loins into the U.S. where they operate small 
loineries that use minimal U.S. employment to pack the final 
product for destination. They are proud to admit that they have 
stripped nearly all the labor cost from their products.
    I have been asked a dozen times, why doesn't StarKist just 
do the same. The answer is really simple. It is about 
preservation of jobs. If we were to outsource these jobs, it 
would leave this important U.S. Territory with a wrecked 
economy; it will have greater than 50 percent unemployment and 
virtually no hope to attract a replacement industry.
    Equally problematic for American Samoa is the fact that the 
majority of U.S.-flag vessels now deliver to the nearest 
transshipment carrier bound for foreign countries. Today, 
direct deliveries to American Samoa are less than one-third of 
what they were just 15 years ago.
    Direct delivery, they create jobs. When a boat delivers 
fish directly, they refuel, they buy nets, they buy fuel, they 
buy food and they spend hundreds of thousands of dollars per 
trip. The decline in direct deliveries creates a downward drag 
on the economy.
    If American Samoa loses both tuna processors, the industry 
will be reduced from having contributed $80 million in wages 
from 5,000 jobs to contributing almost nothing. The only 
resource to make up for this shortfall would be direct 
assistance from the U.S. Government.
    In my view, it would be more prudent to make a modest 
investment to create real jobs than face sending mere 
subsistence checks to a territory that has lost nearly all 
employment.
    ASPIRE seeks to level the competitive playing field against 
outsourced, low-wage labor. It doesn't pick any winner or 
loser, and it is not really singling out StarKist, but it does 
help anyone wanting to create employment in American Samoa by 
providing a grant for processing whole fish directly delivered 
by a U.S. fleet. This encourages processors to remain and 
employment to return, thus establishing what we would see as a 
viable, long-term economic stimulus and improved tax base.
    ASPIRE encourages boat owners to make direct deliveries and 
it is also creating disincentives for transshipping, a practice 
that results in vessels spending more than 80 percent more time 
fishing. It is also fully consistent with U.S. Policy directed 
at improving fishery sustainability. Quite plainly, more direct 
delivery means fewer fish that will be caught.
    In summary, StarKist supports ASPIRE. We believe it gives 
Samoa, American Samoa, its last if not its best chance at 
survival; and we urge you to support ASPIRE as well.
    Ms. Bordallo. I thank the gentleman, Mr. Binotto.
    [The prepared statement of Mr. Binotto follows:]

Statement of Donald J. Binotto, President and Chief Executive Officer, 
                              StarKist Co.

    On behalf of the StarKist Company, I want to thank Chairwoman 
Bordallo, Ranking Member Brown, and the Members of the Subcommittee for 
inviting me to discuss the importance of the American Samoa Protection 
of Industry, Resources, and Employment (``ASPIRE'') Act to our company 
and its employees in American Samoa. I also want to thank 
Representative Eni Faleomavaega for his dedication to American Samoa 
and his leadership in introducing this important economic stabilization 
proposal.
    My name is Don Binotto, and I began my career in the tuna industry 
with StarKist more than twenty years ago as a member of the Company's 
finance department. Since then, I've worked in operations, marketing 
and sales for StarKist, and am proud to now lead a team of several 
thousand dedicated U.S. employees as President and CEO.
    As you know, American Samoa was recently struck by an earthquake 
and subsequent tsunami, which devastated the island. I know and can 
speak to that devastation first hand because I traveled there less than 
a week later to offer StarKist's support and to assess the damage to 
our own facilities. The impact on our employees, their families and 
communities was immense; I saw first hand the lives and homes lost to 
this catastrophe. I will be forever moved by the plea of one of our 
workers asking to borrow money to bury her young children. But however 
destructive the tsunami was, this natural disaster is going to be 
quickly matched by a rapidly moving economic disaster that is already 
developing.
    It is not hyperbole to say that when Chicken of the Sea closed its 
factory doors and took 2,000 jobs away on September 30th, leaving my 
company as the only remaining large employer in American Samoa, it was 
the economic equivalent of the earthquake that gave rise to the 
tsunami. And now, if we were to have to close our doors, it would be 
like another wave washing across the island to complete the economic 
devastation. Over eighty percent of the private employment would be 
wiped away, with no apparent replacement anywhere on the horizon.
    American Samoa faces the imminent loss of what remains of its tuna 
industry--the island's economic engine--due to massive competition from 
low-wage countries and diminished incentives for fishing vessels to 
deliver whole fish to American Samoa. I believe ASPIRE's economic 
development framework will provide the modest assistance to the 
Territory that is necessary to address these issues. And I believe 
ASPIRE has the clear and achievable goal of once again making American 
Samoa globally competitive. StarKist, therefore, wholeheartedly 
supports Congressman Faleomavaega's efforts to preserve a viable 
private sector economy in American Samoa.
About StarKist
    StarKist is a leading manufacturer, distributor, and marketer of 
shelf-stable seafood products in the United States, best known for our 
tuna products and our beloved icon Charlie the Tuna. We are a U.S. 
corporation headquartered in Pittsburgh, Pennsylvania, we have more 
than 1,800 employees in the United States, and we pay U.S. taxes. 
StarKist is also a subsidiary of the Dongwon Group, a leader in the 
food, beverage and fisheries industries in South Korea. Our plant in 
Pago Pago, American Samoa is our largest processing facility.
    Our biggest challenge to remaining in American Samoa is a supply 
chain profile that is no longer competitive on a global basis. 
Consequently, we continue to lose market share to low-cost, foreign-
manufactured products that come in the form of private label tuna on 
U.S. store shelves. ``Private labels'' are the store-brand products you 
see at your grocery chains. In shelf-stable tuna, private label has 
grown more than any other brand over the past three years, and private 
label is the only brand with positive sales during that period. Private 
label's share in one of our core category segments (chunk light halves) 
is up 57 percent to date versus 2004. Private label competes mostly on 
one metric: price.
StarKist in American Samoa
    Our company's long history in American Samoa provides some insight 
into why the island and its people are important to us, and why we are 
working hard to stay. Tuna canneries first arrived in American Samoa in 
the early 1950s. StarKist's facility was built in the early 1960s, and 
we have been there ever since. It was American Samoa's prime location 
in the heart of the most prolific fishing ground in the world that drew 
processors to the island initially. The advantages that come with being 
a U.S. territory also drew processors; specifically, the ability to 
send finished tuna product to the mainland U.S. duty-free. Because of 
these and other factors such as wages, American Samoa offered a 
favorable cost structure for many years.
    It was in this environment that the tuna industry thrived, growing 
to be the island's largest source of private sector employment by far. 
Until the closure of the Chicken of the Sea facility September 30th, 
tuna processing accounted for 80 percent of American Samoa's private 
sector employment. It is also important to note that most of the other 
private sector employers in American Samoa are dependent on the tuna 
industry, as their businesses consist of providing goods and services 
to us, the fishing vessels that come into port to supply us, and to our 
employees. StarKist alone employed 40 percent of the island's private 
sector workers. StarKist has employed generation after generation of 
American Samoans, and we value the dedication the island's people have 
demonstrated to StarKist for decades. We recognize that our success has 
in many ways been due to their hard work and commitment.
    While these factors have historically combined to attract whole-
fish processors to American Samoa, in today's global economy, the 
fierce foreign competition faced by U.S.-based processors means that 
mere proximity to fish and a favorable trade status are no longer 
enough to make American Samoa competitive.
Changes in the Tuna Processing Business
Two Different Business Models
    The increasingly global nature of the tuna business has enabled the 
industry to shift operations from one location to another, allowing 
producers to adjust more easily to supply and demand and the changes in 
input costs and prices. An example of this dynamic is the shift made by 
my competitors to outsource the most labor intensive aspects of tuna 
processing to low-wage countries, and then make final product and 
packaging from imported frozen tuna loins. The loin is the light, 
meaty, edible part of tuna.
    In a full scale tuna cannery, such as the cannery we (and until 
recently, Chicken of the Sea) operate in American Samoa, the 
manufacturing process starts with a whole fish--known as a ``round'' 
fish--and ends with a consumer-ready product in a can. Upon delivery to 
our dock, the whole fish is cleaned, cooked, combined with other 
ingredients and packaged into cans by our American Samoan workforce. We 
then ship those cans directly to the U.S. mainland and distribute 
throughout the country for sale.
    In contrast, the alternate business model adopted by my competitors 
is the use of outsourced foreign labor for nearly all of the tuna 
preparation and then a small domestic loinery for final product 
packaging. In their business model, they have outsourced the most labor 
intensive aspect of tuna processing to extremely low wage countries. In 
these mostly South Asian factories, workers making as little as sixty 
cents per hour clean, prepare, and cook the whole tuna fish and 
transform it into a tuna loin. That loin is then frozen and exported to 
the Unites States nearly duty free. Having removed nearly 80 percent of 
the labor expense, my competitors then take the frozen loin and use 
minimal U.S. employment to place the product into cans for consumers. 
To illustrate the impact, Chicken of the Sea was able to replace its 
2,000 person workforce in American Samoa with fewer than 300 workers in 
Georgia.
    As you can see, two different business models have emerged in the 
tuna industry. One model involves outsourcing the bulk of the labor-
intensive work to low-wage countries, using as little U.S. labor as 
possible to create the finished product and avoid import duties. The 
other model--the model we are trying to preserve in American Samoa--
uses more U.S. labor to manufacture a can of tuna. The owners of 
loineries in the United States have already maximized their competitive 
advantage by using an outsourced labor approach.
    I have frequently been asked why StarKist simply does not do the 
same thing its competitors have done. The answer is simple--jobs. We 
prefer to not cut our personnel to the minimal number needed for 
processing frozen tuna loins, leaving the American Samoan people with 
two or three thousand fewer jobs than currently are available to them 
today. The citizens of American Samoa have been committed to us for 
more than fifty years, and we owe it to them not to give up on the 
island without working to preserve these jobs. In order to do this, 
however, we need a mechanism, such as has been outlined in ASPIRE, to 
level the competitive playing field between American Samoa and the 
lower-wage frozen loin processing model that has already taken so many 
jobs away.
Imbalances Created by Transshipping Tuna to Foreign Ports
    At the same time, the economics of the tuna fishing industry have 
evolved such that fishing vessels are finding that it benefits them to 
deliver their catch to huge, centralized transshipment carriers rather 
than come to port in Pago Pago and deliver the fish to a cannery there. 
By transshipping, the vessel spends less time at a port, more time out 
fishing, and is able to catch more fish. The unfortunate culmination of 
all of these changes is that boats do not have to come into American 
Samoa as often, or at all. Today, our direct deliveries of fish from 
U.S.-flagged vessels are less than one-third of what they were fifteen 
years ago. The decline in direct deliveries of course creates a ripple 
effect on American Samoa's economy, since it depends on fishing vessels 
to generate much of its economic activity.
    Transshipping also creates a more fundamental imbalance. Fishing 
vessels that enjoy the advantages of flying a U.S. flag, and have 
access to waters secured by a U.S. treaty, send their catch to foreign 
countries, whose ports and labor force reap the benefits. In this 
scenario, the United States is not receiving the maximum benefit of its 
resources, especially when it comes to jobs. We believe it is more fair 
that the U.S. resources in American Samoa be directed toward a program 
that will result in maximum number of jobs and the strongest overall 
economic stimulus.
A Perfect Storm Affecting American Samoa's Tuna Industry
    In light of the tsunami that struck American Samoa last month, to 
say that a ``perfect storm'' is affecting American Samoa is an 
unfortunate metaphor. Yet it aptly describes what has happened to the 
tuna industry on the island:
      First, because there is very little elasticity in what 
consumers will pay for canned tuna, processors confronted with 
comparatively high manufacturing costs in American Samoa are extremely 
limited in how much they can charge for their product. In contrast, our 
competitors who have adopted outsourcing as a business model simply 
lower their shelf price below our cost, making it very difficult for us 
to compete. In fact, it now costs us over $23 million more, after 
duties, to manufacture in American Samoa than if we were to adopt the 
same business model as our competitors.
      Second, the duty advantages that American Samoa 
historically enjoyed are gone. They have been more than offset by 
globalization and open trade policies. As markets continue to open, it 
has become easier for domestic processors to outsource labor-intensive 
work away from places like American Samoa and into low-wage countries 
such as Thailand.
      Third, the current trend in the tuna fishing industry is 
to have vessels transship their catch via carriers rather than coming 
into port to directly deliver it, stunting tuna production on the 
island and igniting a downward economic cycle among supporting 
businesses, which then makes it even less attractive for boats to come 
to port.
    These factors have combined to create an environment where it is 
too cost-prohibitive for processors of whole fish to operate in 
American Samoa without assistance, and where the boat owners are losing 
any incentives to deliver whole fish to the island. We have already 
seen Chicken of the Sea leave American Samoa. Under these conditions, 
it should come as no surprise that StarKist's operation in American 
Samoa is not viable, and that we have been forced to lay off nearly 
1,000 workers in the last 18 months.
    We continue to do everything in our power to make the economics 
work in American Samoa. If StarKist is forced to leave, there will be 
almost no private sector jobs left on the island. The tuna industry has 
already gone from employing almost 5,000 people in 2004 down to fewer 
than 1,700 today--more than 3,000 jobs lost.
    With the loss of both processors and the boats that supplied us, 
American Samoa's tuna industry will be reduced from having contributed 
$80 million of the Territory's annual labor income, as the Department 
of Labor recently reported, to contributing almost nothing. The only 
resource that will remain to make up this $80 million shortfall will be 
direct assistance from the U.S. government. And American Samoa must now 
add the daunting task of dealing with the devastation from the tsunami 
to the list of tremendous challenges ahead.
How ASPIRE Addresses the Challenges We Face in American Samoa's Tuna 
        Industry
    ASPIRE's economic development framework will provide assistance to 
American Samoa's tuna industry to counteract the biggest challenges to 
the industry's existence--an uncompetitive cost structure and 
diminished incentives for fishing vessels to deliver whole fish to 
American Samoa.
    Since American Samoa-based processors can no longer compete against 
those that are able to pay their workers substantially less for the 
most labor intensive phase of tuna processing, ASPIRE seeks to level 
this competitive playing field. ASPIRE would help us improve our cost 
structure by providing a grant for processing whole fish in American 
Samoa. It should be noted that the grant is specifically limited to 
processing whole fish rather than frozen tuna loins. This will ensure 
that the grant goes only to entities that carry out their most labor-
intensive work, hence creating the greatest number of jobs, in American 
Samoa.
    By providing some minimal income replacement grants for vessels 
willing to directly deliver to American Samoa rather than make more 
lucrative transshipment deliveries, ASPIRE also incentivizes a fishing 
practice that is more sustainable, while providing a huge economic 
boost to American Samoa as well. Each vessel delivering directly to 
American Samoa provides several hundred thousand dollars' worth of 
direct economic activity, setting off an important economic multiplier 
effect for related businesses.
    We believe that with these incentives, and continued hard work on 
the part of our management and employees, we can help make the whole-
fish processing business in American Samoa globally competitive once 
again, and re-establish American Samoa as a hub for the tuna industry.
Conclusion
    Starkist supports ASPIRE because we believe it gives American 
Samoa's fifty year ``whole tuna'' processing business a chance at 
survival. It benefits the entire island by creating jobs and a viable 
tax base. American Samoa has already experienced one natural disaster. 
And it is on the brink of suffering a complete economic disaster with 
the loss of the tuna processing industry. Therefore, we urge you to 
support ASPIRE as well.
                                 ______
                                 
    Ms. Bordallo. And now I would like to recognize Mr. John 
Sawyer, Senior Vice President of Chicken of the Sea 
International.

  STATEMENT OF JOHN SAWYER, SENIOR VICE PRESIDENT, SALES AND 
          MARKETING, CHICKEN OF THE SEA INTERNATIONAL

    Mr. Sawyer. Good afternoon, Chairwoman Bordallo, Ranking 
Member Brown and members of the Subcommittee. My name is John 
Sawyer. I head up the Sales and Marketing Department for 
Chicken of the Sea.
    I appreciate the opportunity to testify on H.R. 3583; but 
because H.R. 3583 is harmful to the tuna industry and, 
specifically, Chicken of the Sea, we oppose this legislation.
    Chicken of the Sea dates back to 1914. Chicken of the Sea 
brand----
    Ms. Bordallo. Would you move a little closer to the 
microphone, Mr. Sawyer?
    Thank you.
    Mr. Sawyer. Chicken of the Sea dates back to 1914, and the 
brand has been worldwide known since 1952. We provide a variety 
of seafood products--canned, pouched, frozen, as well as 
refrigerated.
    Chicken of the Sea recently closed a plant in American 
Samoa after 55 years of operation. We had a tremendous 
relationship with the island, its community, as well as our 
workforce. We struggled to be profitable, fueled by increased 
transportation cost, utility and injury cost, as well as 
increased labor cost as of recent years. We have made numerous 
attempts on numerous occasions to work with the Samoan 
government, as well as the U.S. Government, unsuccessfully 
coming up with a resolution. Thus, we were forced to move from 
Samoa to Lyons, Georgia.
    We are excited about repatriating jobs in Lyons, Georgia. 
The Lyons plant is in Congressman John Barrow's district. It 
employs just over 200 employees with future plans to expand.
    We support efforts related to American Samoa and economic 
development; however, we believe diversifying the economy is 
critical versus subsidizing one profitable tuna category 
leader.
    H.R. 3583 subsidizes sellers and buyers delivering tuna to 
Samoa; and its intentions are to stabilize employment and 
promote economic development. We understand that. But the bill 
does not consider international competition related to the 
industry.
    The bill has a number of objectionable outcomes. First of 
all, minimally, it would cost the taxpayers approximately $25 
million and north. This would subsidize, at this point in time, 
one company, which happens to be the number one tuna branded 
company. This $25 million could either be applied to the bottom 
line or essentially put into the marketplace as a competitive 
disadvantage versus the remaining part of the industry.
    In addition, the tuna fleet potentially will be impacted--
U.S.-flagged fleet--through incremental fees, inconvenience 
costs, penalties--which would really encourage the relocation 
of the fleets to other parts of the world. In addition, the 
Hawaiian longliners could also be impacted through expensive 
$250,000 fees, face taxes on their earnings and, thus, could 
potentially put boat owners out of business.
    And last, we believe that this bill puts Chicken of the Sea 
at a complete competitive disadvantage.
    We have invested a lot of capital in Lyons, Georgia. We are 
proud of repatriating positions here on mainland USA. It puts 
at risk our further investment in those positions moving 
forward. It subsidizes the number one brand. And it puts us at 
a competitive disadvantage related to pricing, which 
essentially could mean Chicken of the Sea downsizing or, 
essentially, brand elimination within the marketplace in years 
to come.
    So we encourage the Subcommittee to explore more efficient 
ways to help American Samoa and the economy. We are empathetic 
related to the situation. And we are willing to help in that 
endeavor.
    Thank you very much for allowing me to share my views.
    Ms. Bordallo. I thank you very much, Mr. Sawyer.
    [The prepared statement of Mr. Sawyer follows:]

 Statement of John Sawyer, Senior Vice President, Sales and Marketing, 
                   Chicken of the Sea, International

    Chairwoman Bordallo, Ranking Member Brown, and members of the 
Subcommittee, my name is John Sawyer, Senior Vice President for Sales 
and Marketing at Chicken of the Sea, International. I appreciate the 
opportunity to testify on behalf of Chicken of the Sea on H.R. 3583, 
the American Samoa Protection of Industry, Resources and Employment 
Act. Because of H.R. 3583's harmful impacts to the tuna industry in 
general, and to Chicken of the Sea specifically, Chicken of the Sea 
opposes this legislation.
Introduction
    Chicken of the Sea's history dates back nearly a century, when 
fishermen referred to the white albacore tuna as ``Chicken of the Sea'' 
because of its white color and mild flavor. Since 1952, the Chicken of 
the Sea brand and iconic Mermaid logo have been known worldwide. With 
more than 90 years of experience in the self-stable seafood business, 
Chicken of the Sea provides consumers a variety of canned, pouched, 
frozen, and refrigerated seafood products.
    We are headquartered in San Diego, California and have a processing 
facility in Lyons, Georgia where we employ more than 200 people. We 
opened our processing facility in Lyons, Georgia in Congressman John 
Barrows' District within the last 6 months. It employs more than 200 
people and has sufficient space for expansion in the future. This is an 
exciting trend for us, as we have been successful in repatriating to 
the mainland United States some of the many jobs that have moved 
offshore.
    After 55 years of operation in American Samoa, Chicken of the Sea 
closed its tuna processing facility in September of this year. We 
enjoyed a tremendous relationship with the island, community and our 
workforce, as demonstrated recently with our donation of more than 
$200,000 of food, labor and medical supplies to the island community in 
the aftermath of the tragic earthquake and tsunami. Despite being a 
part of this close knit community, we struggled to remain profitable, 
due to the high costs of operating there, including increasing 
transportation, packaging, utilities and specifically labor costs in 
recent years. Although we have attempted on numerous occasions to work 
with the government of American Samoa as well as the U.S. Federal 
Government to address these issues, we ultimately were unsuccessful. 
Consequently, we had no choice but to close the facility and relocate.
    We are very supportive of efforts to enhance economic development 
in American Samoa and provide answers to the economic and employment 
challenges there. However, we urge caution in trying to simply 
subsidize our way out of the problem instead of diversifying the 
economy of the island for a successful future. This is especially true 
when the one processing company that would benefit from this subsidy 
has stated that it will not stay in Samoa if ASPIRE does not pass. 
Creating a monopoly by legislation is a dangerous precedent which is 
made even more onerous if it is done under a threat.
H.R. 3583
    H.R. 3583 creates a subsidy to sellers and buyers of fish that 
deliver directly to American Samoa, with the intention of stabilizing 
employment and promote economic development, including ``incentives for 
the continued operation and development of American Samoa's tuna 
processing industry.'' Unfortunately, the legislation, which completely 
ignores the international competitiveness of the tuna industry, has 
several objectionable outcomes.
    With a minimum cost to the Untied States taxpayers of approximately 
$25 million annually, H.R. 3583 virtually ensures that the one 
remaining tuna processing plant operating in American Samoa remains 
profitable by providing its owner with financial hand-outs, thereby 
affording that company an unfair market advantage. This bill appears to 
be tailored to ensure the success of the leading tuna brand in the U.S. 
This legislatively imposed windfall discourages competition and 
encourages waste, with limited benefit to the American Samoan workforce 
and economy. Nearly 80 percent of those working in the tuna canning 
industry are Western Samoans temporarily residing in American Samoa. 
Furthermore, the needs of American Samoa are to diversify, which is 
distorted by putting all the subsidy dollars in one company in only one 
industry.
    The U.S. tuna fleet will also suffer under the bill. Tuna boats 
could be compelled to relocate to other areas as boat owners are forced 
to abandon the U.S. flag due to the fees that the legislation will 
impose. In addition, a limited number of U.S. flagged tuna boats are 
able to deliver their catch to American Samoa. Thus, in addition to 
significant financial penalties, boat owners will also be subjected to 
severe inconvenience and additional costs as they attempt to comply 
with the terms of the legislation by delivering their catch to the one 
cannery operating in American Samoa.
    Moreover, American Samoa's only cannery does not have the capacity 
to handle the amount of tuna delivered, should processors and fishermen 
make deliveries there as encouraged under the bill. Finally, Hawaiian 
long-line fishing could be harmed due to the requirement to deliver 
fish to American Samoa, or face taxes on their catch and $250,000 
annual fees, which would put many if not most of these owners out of 
business. H.R. 3583 also puts at a competitive disadvantage Chicken of 
the Sea's newly-opened facility in Lyons, Georgia affecting the 
livelihood of its 200 employees and discouraging further expansion 
there. The bill subsidizes the number one tuna brand, giving it a 
monopolistic position on tuna supply in addition to the already strong 
competitive advantage in the marketplace. The bill in turn will 
severely punish Chicken of the Sea, which left American Samoa for 
legitimate business reasons, and has made a significant investment in 
developing a facility in Georgia, bringing jobs back to the U.S. 
mainland.
    The competitive advantage provided by H.R. 3583 to the one 
remaining American Samoa-based tuna processor could force competitors 
both Chicken of the Sea and Bumble Bee to downsize or even close 
domestic U.S. operations, with no guarantee of either increasing jobs 
of the economic welfare of the island. We encourage the Subcommittee to 
explore more effective ways to help the economy of American Samoa 
without harming the other participants in the U.S. tuna processing and 
fishing sector. We stand ready to assist with that effort.
    Thank you for the opportunity to share Chicken of the Sea's views 
on H.R. 3583.
                                 ______
                                 
    Ms. Bordallo. And now I would like to recognize Mr. Chris 
Lischewski, the CEO of Bumble Bee Foods.

 STATEMENT OF CHRIS LISCHEWSKI, PRESIDENT AND CEO, BUMBLE BEE 
                           FOODS, LLC

    Mr. Lischewski. Thank you, Chairman Bordallo, Ranking 
Member Brown and Committee members.
    My name is Christopher Lischewski. I am the President and 
CEO of Bumble Bee Foods. I have held this position for 10 
years, and I have held senior positions in the tuna industry 
for more than 20 years.
    Before I start my testimony, I would like to clarify a few 
statements made by the Congressman for the record:
    One, I have a minority ownership stake in Bumble Bee, not a 
majority ownership stake.
    Two, I have absolutely no ownership stake, management role 
or any other stake in SPTC, which will be testifying on its own 
behalf. I do own a minority 5 percent stake in 12 American 
vessels managed by SPTC, but is purely a passive interest for 
which I receive financial statements and have no other 
operating interest.
    Going forward, Bumble Bee is the last significant tuna 
processor that is U.S.-owned. Over the last 10 years, we have 
grown to be the largest branded seafood company in North 
America. In addition to the tuna, we offer a full line of 
canned salmon, sardines, clams and specialty seafood products. 
We are committed to U.S. operations and employ more than 1,000 
workers in the seafood processing facilities in California, 
Louisiana, Maine, New Jersey, Puerto Rico and Washington.
    Like StarKist in American Samoa, we operate in an extremely 
competitive global marketplace with major competitors in 
Southeast Asia. We respond to that by driving higher production 
efficiencies in our factories, introducing new technologies and 
continually innovating our processes.
    We do not come to Congress to ask for handouts and are 
surprised that ASPIRE, which is asking U.S. taxpayers to 
subsidize a foreign-owned company that employs predominantly 
non-Americans is even being considered by this Subcommittee.
    H.R. 3583 creates a new fishery subsidy program that 
generally benefits StarKist. As the last remaining tuna 
processor in American Samoa, StarKist has forced the 
introduction of ASPIRE with a threat to shut down their 
operation and move to Thailand if they don't receive 
substantial taxpayer-funded subsidies.
    H.R. 3583 is built upon the false premise that the only 
solution for retaining a tuna processing sector in American 
Samoa is for U.S. taxpayers to subsidize an inefficient 
processing operation. This operation with a workforce that is 
more than 80 percent foreign has refused to adapt to changing 
global economic conditions, which companies like Bumble Bee 
have done successfully. This is in spite of the fact that they 
already benefit from a minimum wage 31 percent below the 
Federal level, obtain preferential fish costs, are eligible for 
duty-free importation into the U.S. and obtain substantial 
Federal tax benefits.
    The unfair competitive advantage that would be provided to 
StarKist under ASPIRE would force Bumble Bee to downsize or 
even close our domestic U.S. processing operations. More than 
1,000 U.S. processing jobs would be lost, along with an equal 
number of jobs in related support industries. As a U.S.-owned 
and -operated company, we simply cannot compete against this 
type of preferential treatment.
    Passage of H.R. 3583 would also have damaging international 
trade ramifications. The direct payment of incentives by the 
United States to process tuna in American Samoa would be viewed 
as a specific subsidy, actionable under the WTO. This would 
invite the imposition of countervailing import duties on all 
U.S. tuna exports.
    Another major concern is that none of the monies being 
questioned by ASPIRE are targeted for the people of American 
Samoa or the other private sector businesses. Furthermore, none 
of the funds are to be utilized to improve education or 
development of the American Samoa economy. Rather than expend 
its efforts to justify taxpayer subsidizes in support of a 
company that has a history of threatening to leave, I might 
recommend that American Samoa examine how it can more 
effectively utilize the direct grants it already receives from 
the U.S. Federal Government to improve its local economic 
situation. CNN has recently reported that American Samoa has 
received more than $2 billion in direct Federal grants since 
1995. This level of funding that American Samoa already 
receives should provide adequate resources to help attract and 
develop new, sustainable businesses.
    In closing, it is our expectation that ASPIRE will not 
receive support from the Subcommittee for the following 
reasons:
    The bill only benefits one company in American Samoa with 
less than 20 percent of its employees actually being from 
American Samoa;
    It includes a $25 million to $40 million escalating price 
tag to U.S. taxpayers without a commensurate revenue-generating 
offset. Importantly, it should be noted that if the massive 
benefits provided under ASPIRE drive more tuna production in 
American Samoa, as will be suggested in the public testimony of 
what are the upcoming panel members, the price tag to U.S. 
taxpayers could quickly spiral to greater than $100 million;
    Third, there are no incentives to develop new industry or 
jobs that can support the future economic independence of 
American Samoa; and
    The bill potentially destroys domestic tuna processing 
operations in California, Puerto Rico and Georgia.
    Based on my experience, I know that American Samoa can be a 
competitive player in the global tuna industry, but it must be 
prepared to change. Creating a new taxpayer-funded subsidy 
program to maintain obsolete and uncompetitive processing 
practices is not the answer.
    Thank you.
    Ms. Bordallo. I thank the gentleman for his testimony.
    [The prepared statement of Mr. Lischewski follows:]

         Statement of Christopher D. Lischewski, President and 
             Chief Executive Officer, Bumble Bee Foods, LLC

    Chairwoman Bordallo, Ranking Member Brown and Committee Members, my 
name is Christopher Lischewski and I am the President and CEO of Bumble 
Bee Foods, LLC. I have been in my current position for 10 years and 
have held senior management positions in the tuna industry for more 
than 20 years.
    Bumble Bee Foods, an American owned company, is North America's 
largest branded shelf-stable seafood company offering a full line of 
canned and pouched tuna, salmon, sardine, clam and specialty seafood 
products. In the U.S. our products are marketed under leading brands 
including Bumble Bee, Brunswick, Beach Cliff and Snow's and in 
Canada under Clover Leaf. Bumble Bee Foods has invested heavily in 
fishery production facilities and employs more than 1,000 workers in 
the U.S. and 3,000 globally. In the U.S. we currently own and operate:
      Two of the last three U.S. canned tuna production 
facilities in Santa Fe Springs, California and Mayaguez, Puerto Rico,
      One of the last two U.S. canned clam facilities located 
in Cape May, New Jersey,
      The last U.S. canned sardine production facility located 
in Prospect Harbor, Maine
      A research and development facility in Violet, Louisiana, 
formerly the last shrimp canning factory in the U.S., which was rebuilt 
after hurricane Katrina without any federal or state aid and,
      A salmon labeling operation in Kent, Washington.
    We have continuously shown a commitment to maintaining our U.S. 
facilities and U.S. jobs in the face of extremely competitive, low 
cost, foreign competition. And we are succeeding.
    Relevant to today's hearing is that Bumble Bee, with its 
headquarters and operations center located in San Diego, California, is 
America's last significant U.S. owned shelf stable tuna company. 
Despite our North American leadership position, we work continuously to 
drive higher production efficiencies and lower operating costs in an 
effort to remain profitable in an intensely competitive global 
environment.
    I would like to thank you for the opportunity to address our 
concerns with and opposition to H.R. 3583, the American Samoa 
Protection of Industry, Resources and Employment Act. Because others on 
the panel will discuss the concerns of U.S. tuna boat owners, my 
comments will be limited to the likely destructive impacts of the 
legislation on the U.S. tuna processing industry, and specifically on 
Bumble Bee.
    H.R. 3583 creates a new fisheries subsidy program for the benefit 
of only one tuna processing company, Korean-owned StarKist, which is 
the last company operating a tuna processing facility in American 
Samoa. The bill, with a minimum annual cost of $25 million--and 
potential cost of more than $40 million--to U.S. taxpayers, is 
ostensibly designed to offset the increased cost of labor at StarKist's 
tuna processing factory due to the recent application of the U.S. 
minimum wage law to American Samoa and make the company competitive 
with Southeast Asian tuna processors. In reality, the bill represents a 
last ditch effort to continue an uncompetitive way of doing business 
while ignoring the international competitiveness of the global tuna 
industry. Furthermore, the $25 to $40 million price tag is based on a 
benchmarking ``study'' prepared by StarKist comparing its cost of doing 
business in American Samoa with the alternative of shutting down and 
moving its production to Thailand. No one with knowledge of the tuna 
industry (outside of StarKist and its Korean parent company) has seen 
or vetted this purported ``study'' other than the Congressman from 
American Samoa. As someone who has been in the tuna industry for more 
than 20 years, I find these numbers to be highly suspect.
    While it can be argued that increasing the minimum wage from $3.50 
an hour in 2006 to $5.00 an hour in 2008 is significant, the reality is 
that the minimum wage in American Samoa remains 31% below the federal 
minimum wage level of $7.25 an hour. The current minimum wage in 
American Samoa compares to average hourly wage rates of $13.75 an hour 
and $7.75 an hour being paid by Bumble Bee to its hourly employees at 
its California and Puerto Rico tuna canning plants, respectively. And 
we are not asking for a subsidy.
    In evaluating the cost of tuna processing, it becomes clear that 
wages represent a small fraction of the total cost of production. If we 
dissect the cost of a can of lightmeat tuna, about 65% of the cost is 
represented by fish with another 20% represented by cans and packaging 
materials. The balance of 15% is made up of overhead costs and labor 
with labor representing less than 10% of the cost.
    With a work force estimated at about 2,000, we project the total 
cost impact on StarKist related to the wage increase between 2006 and 
2009 to have been about $5.8 million per year. This represents a total 
cost increase of about 1.5% relative to our estimate of total StarKist 
production costs in American Samoa of about $400 million. If we look at 
this on a cost per can basis, our estimate is that this has impacted 
their cost by less than 1 penny per can--a can which is currently 
selling in U.S. supermarkets for about $0.90. The actual cost impact of 
the minimum wage increase is far less than the $25 to $40 million 
subsidy that is being requested and is a cost increase that could be 
offset if the American Samoa-based tuna processor were prepared to 
change its operating methods--like Bumble Bee has done--to become more 
cost competitive.
    Another issue to be highlighted is that it is estimated that about 
80% of the workers at the StarKist tuna processing facility are not 
citizens of American Samoa. Most of the workers come from the 
neighboring island of Samoa and a substantial portion of their wages 
are sent back home to their families. In effect, much of the $25 to $40 
million subsidy being requested for American Samoa's tuna processing 
industry would not benefit American Samoans at all--rather it would 
benefit inhabitants of the neighboring island of Samoa.
    To appreciate the potential lethal impact of the bill on Bumble 
Bee's domestic operations, it is important to understand the global 
nature of the canned tuna market. Canned tuna is a global commodity 
traded in all the major world markets and the industry is extremely 
competitive. U.S. tuna companies must compete with companies in low-
wage countries who benefit from lower production costs as they are not 
required to adhere to the food safety, employee safety, regulatory, 
environmental and conservation measures required of companies operating 
in the U.S. Some pay hourly wages as low as $0.50 an hour. Based on 
these global competitive realities, U.S.-based tuna processors have 
been forced to adapt the way they do business in order to survive and 
retain U.S. manufacturing jobs, such as we have done in Puerto Rico and 
California.
    Today, successful U.S. tuna canneries undertake the initial labor 
intensive cleaning of fish (loining) in areas closer to the fishing 
grounds and then ship the cleaned frozen tuna (loins) back to the U.S. 
for canning. Canning is the most sensitive step in the processing cycle 
in terms of food safety and quality and retaining this capacity in the 
U.S. helps to ensure a safe and high quality product. Having our fish 
cleaned and loined outside the U.S. has allowed Bumble Bee to continue 
to pay excellent wages to our plant workers in the U.S. as demonstrated 
earlier. While we would prefer to undertake all of the fish cleaning 
and loining in our U.S. facilities, it simply isn't feasible if we are 
to remain economically competitive with foreign producers.
    H.R. 3583 is built upon the false premise that the only solution 
for retaining a tuna processing sector in American Samoa is for U.S. 
taxpayers to subsidize a foreign owned private company that continues 
to utilize inefficient and uncompetitive processes. This, in addition 
to the fact that they already benefit from a minimum wage 31% below the 
federal minimum wage level, obtain preferential fish costs from vessels 
delivering to American Samoa, are eligible for duty-free importation to 
the U.S. and are exempt from many regulatory statutes required of 
companies operating in the U.S.
    Imagine if the federal government adopted the approach of 
subsidizing uncompetitive businesses across our country. Are we 
prepared to subsidize every company that has a labor disadvantage 
versus Thailand or China and refuses to modify its business processes? 
I doubt such proposals would ever be considered by Congress. In today's 
global economy, companies must continuously improve their operating 
efficiencies and cost competitiveness if they are to survive. We cannot 
expect the U.S. tax payer to subsidize our inefficiencies.
    Unfortunately, H.R. 3583 embodies the philosophy that the U.S. 
taxpayer is expected to bail out inefficient companies by creating a 
new $25 million fisheries subsidy program that only benefits one 
private, foreign tuna processor, a processor who has shown no 
willingness to change other than to threaten to leave American Samoa if 
it does not receive at least $25 million in U.S. taxpayer subsides.
    I note that none of the funds authorized by the bill are targeted 
for the people of American Samoa or the other private sector 
businesses. Furthermore, none of the funds are to be utilized to 
improve education, health care or develop new domestic industry. 
Despite the recent quote by the Congressman from American Samoa 
thanking Chairman Rahall for ``moving quickly to hold a hearing on this 
important piece of legislation, which I introduced to create jobs and 
rebuild our economy'', the reality is that the requested processor 
subsidy program is designed to benefit the Island's one remaining, 
foreign-owned, tuna processor and its factory workforce, 80% of who are 
not citizens of American Samoa.
    Of concern is that the legislation includes no incentives for tuna 
processing companies on the Island to diversify, change their mode of 
operation or become competitive. To the contrary, the bill's processor 
subsidy is only provided to companies that process whole tuna delivered 
directly to American Samoa. In other words, the bill actually prevents 
innovation by requiring that subsidy recipients continue to operate in 
a manner proven to be unsuccessful in today's global economy. What's 
equally concerning is that the subsidy level is increased annually by 
an amount equal to the percentage increase in the federal minimum wage 
in Samoa. In sum, the sole tuna processor currently operating in 
American Samoa is guaranteed increased subsidy payments (as the minimum 
wage increases to U.S. federal minimum wage levels) without having to 
make any changes to become more efficient or competitive.
    The competitive advantage provided to the American Samoa-based tuna 
processor through this new subsidy program is so great that it could 
force Bumble Bee, and most likely Chicken of the Sea, to downsize or 
even close our domestic U.S. operations. More than 1,000 U.S. 
processing jobs in those canneries could be lost, along with an equal 
number of jobs in related support industries--all of whom currently 
adhere to (or exceed) U.S. minimum wage requirements. As a private U.S. 
company, we simply cannot compete against an American Samoa producer 
who pays no import duties, receives significant federal subsidies and 
does not absorb the cost of federal minimum wage requirements.
    Passage of H.R. 3583 would also have damaging international trade 
ramifications. The direct payment of incentives by the United States to 
process tuna in American Samoa would be viewed by our international 
competitors as a ``specific subsidy'' actionable under the General 
Agreement on Trade and Tariffs (``GATT''). This would invite the 
imposition of countervailing duties by our customer countries on all 
U.S. tuna exports (not just those from the subsidized company), because 
of its distortion of international trade. As mentioned previously, tuna 
is a very competitive international market that is sensitive to any 
force that distorts the market. We risk damaging our entire domestic 
industry by subsidizing one Korean owned company.
    The reality is that for the tuna industry in American Samoa to 
survive, it must adapt its business processes like the rest of the U.S. 
tuna processing and fishing sectors have been forced to do. While this 
may result in the loss of cannery jobs, it won't necessarily affect 
American Samoan jobs since about 80% of the tuna industry work force is 
not from American Samoa. Furthermore, it does not need to result in any 
less production from the canneries (in terms of cases of tuna produced) 
if new operating strategies are adopted. By adapting to changing global 
business dynamics, the American Samoa tuna industry can regain its 
competitive cost position and can retain high levels of employment. 
Asking the U.S. taxpayer to provide annual subsidies in excess of $25 
million is not the answer.
    A further concern is that none of the monies being requested in 
this subsidy provide for the long-term growth or development of the 
American Samoa economy. Clearly the location of American Samoa in the 
south Pacific Ocean makes economic development difficult and the long-
term ability to remain competitive against low cost foreign tuna 
processors is questionable. Accordingly, support for American Samoa 
should be to improve education and offer incentives for the development 
of new, more sophisticated growth industries that create new jobs and 
improve the quality of life of American Samoans. Guam provides a great 
example of how an island nation can prosper by working to win 
government contracts, expand tourism and develop local industry. 
Without a focus on new industry development, American Samoa will not 
have an economy capable of supporting its population a generation from 
now.
    Lastly, I would like to direct a comment to the people of American 
Samoa. As an organization and as part of the global tuna industry, 
Bumble Bee shares a strong affinity and deep concern for the islands 
and the people of American Samoa in the aftermath of the recent 
tragedy. We operate in many remote global locations and can appreciate 
the great losses suffered by so many and the challenges that they will 
face as they rebuild. As a demonstration of our support for the people 
of the islands, our Company and employees have made a donation of 
$100,000 in cash and food to assist in the rebuilding effort.
    In closing, it is our expectation that ASPIRE will not receive 
support from this sub-committee. The bill:
      Would only benefit one, foreign owned tuna processor in 
American Samoa
      Includes a $25 to $40 million price tag that is not 
justified nor supported
      Includes an escalation cause that will allow the subsidy 
to increase annually
      Includes no provision for performance improvement by the 
American Samoa tuna processor and actually provides a disincentive for 
process and cost improvement
      Provides significant benefits to foreign workers who are 
not from American Samoa
      Does nothing to improve education or health care and 
provides no incentive to develop new industry or new jobs
      Potentially destroys domestic tuna processing operations 
in California, Georgia and Puerto Rico
      Would have damaging international trade ramifications
      Sets a dangerous precedent that U.S. tax payers should be 
responsible for bailing out uncompetitive business operators
    Based on my more than 20 years of experience in the tuna industry, 
I believe American Samoa can remain a major player in the global tuna 
industry so long as it is willing to change. Creating a new $25 to $40 
million fisheries subsidy program for one Korean-owned company in 
American Samoa to retain non-competitive business practices--to the 
detriment of all the other U.S. companies involved in the tuna 
business--is not the answer.
    Along with my testimony, I submitted a document to the Subcommittee 
to provide additional information on the background of the tuna 
industry. It illustrates the global reach of the tuna industry and the 
importance of tuna to the U.S. market.
    Thank you, Madame Chairwoman, for inviting me here today to share 
my views with the Subcommittee. I trust I have demonstrated the 
detrimental effects H.R. 3583 would have on the U.S. tuna processing 
industry and why Members of this Subcommittee should not support it. 
Rather we encourage you to seek more effective ways to support and 
diversify the economy of American Samoa and I would be pleased to 
assist you in that endeavor.
                                 ______
                                 
    Ms. Bordallo. And now I would like to call on Mr. Joe 
Hamby, Managing Director of the Tri Marine Global Tuna Supply 
Company.

          STATEMENT OF JOE HAMBY, MANAGING DIRECTOR, 
                 TRI MARINE GLOBAL TUNA SUPPLY

    Mr. Hamby. Good afternoon. Thank you, Madam Chair, 
Chairperson, Ranking Member, and members of the Committee. 
Thank you for inviting me to testify today.
    This legislation provides an excellent opportunity for 
Congress to define public policy regarding the U.S. tuna 
industry and, should Congress choose to support it, to save 
American Samoa's private-sector economy, as well as to increase 
the relevance of the United States in the global tuna industry, 
particularly in regard to issues of sustainability and resource 
management.
    My name is Joe Hamby. I am from San Pedro, California. San 
Pedro was the tuna capital of the world in the 1950s and 1960s, 
but times have changed. All those canneries have closed, and 
the business has moved from there. They moved because the costs 
of production in San Pedro was higher than competing sources of 
canned tuna supplying. First it was Puerto Rico, then American 
Samoa; now it is Thailand. There is no mystery. It is cheaper 
to buy imported canned tuna or import tuna loins and can it in 
the United States than to produce it in American Samoa.
    When I was a kid growing up in San Pedro and people lost 
their cannery jobs, people like my father, there was anxiety, 
but there was also hope that they could find jobs in other 
industries. That is not the case in American Samoa. Samoa is 
part of a hugely diversified Southern California economy. 
American Samoa has only 2 main resources: a deepwater harbor 
and canneries located not far from productive fishing grounds. 
There is talk about diversifying the territory's economy, but, 
without the resources, it is going to be difficult.
    The company I work for is one of the largest tuna supply 
companies in the world. And, as the person in charge of our 
global tuna supply business, I have the opportunity to study 
and understand comparative delivered costs of tuna products 
produced all over the world for every major tuna market.
    I am a Stanford MBA, and I love quantitative analysis 
almost as much as watching Stanford beat USC in football. Our 
experience and our knowledge of the global tuna industry tells 
us that, without some action by Congress, action that changes 
the current tuna paradigm with respect to the U.S. market, the 
tuna industry in American Samoa will not survive.
    I don't intend to talk about the minimum wage. It is 
obvious that the higher your labor costs relative to your 
competitors, the harder it is for you to compete, especially 
when your competitor enjoys advantages in packaging, utility, 
and other manufacturing costs.
    Something has to level the playing field. Historically, 
duty and raw material supply advantages have helped to keep the 
American Samoa tuna processing industry competitive. However, 
there is no significant duty on cooked and cleaned tuna loins. 
Chicken of the Sea will replace the production from its closed 
plants in American Samoa with production from a more automated 
plant in Georgia that uses loins instead of whole round tuna.
    If it is cheaper to supply the U.S. market with canned tuna 
made from loins--and cheap is the target--then there is no need 
for the tuna processing plants in American Samoa. And there is 
no demand from those tuna processing plants for the U.S.-flag 
fishing boats that are based in American Samoa.
    I spend a lot of time traveling in the South Pacific, and I 
can tell you that there has been a major shift in the politics 
there. The attitudes of the parties to the Nauru Agreement 
countries have changed. They see tuna as one of their only 
available resources, and they are going to force a change in 
the current practice of selling access--I am talking about 
fishing access--for a small percentage of the value of the 
catch and allowing distant water fishing nations to send all 
the tuna to Bangkok for processing.
    Now is not the time to abandon American Samoa. Maintaining 
American Samoa as a large-scale tuna processing center makes 
the U.S. a major stakeholder in the changing tuna world and 
strengthens and enhances its role in the South Pacific. Without 
the tuna processing industry in American Samoa, the United 
States will likely lose its seat as a relevant party around the 
table that decides future tuna conservation policy.
    Tuna is a global industry driven by the economics of 
business. The economics, however, are determined by government 
policies. I urge to you provide U.S. public policy that will 
make it economical for the tuna industry to remain a leading 
and vital part of the American Samoan economy and providing the 
U.S. with a strong position for future advocacy in the 
international debate regarding tuna conservation and 
management. Adopting the ASPIRE legislation will do just that.
    Thank you for the opportunity to talk about this important 
matter.
    [The prepared statement of Mr. Hamby follows:]

    Statement of Joe Hamby, Managing Director, Global Tuna Supply, 
                        Tri Marine International

    Thank you Chairwoman Bordallo, Ranking Member Brown, and Members of 
the Subcommittee for inviting me to discuss the American Samoa 
Protection of Industry, Resources, and Employment (``ASPIRE'') Act. And 
thank you Congressman Faleomavaega for the timely introduction of this 
legislation. It provides an excellent opportunity for Congress to 
define public policy regarding the U.S. tuna industry and, should 
Congress choose to support it, to save American Samoa's private sector 
economy as well as increase the relevance of the United States in the 
global tuna industry, particularly in regard to issues of 
sustainability and resource management.
    The ASPIRE Act ensures that American Samoa will continue to be a 
large scale tuna processing center employing thousands of workers and a 
vibrant support base for U.S. flag tuna boats fishing in the world's 
most abundant tuna fishing grounds--the tropical waters of the Western 
and Central Pacific Ocean.
About Tri Marine
    Tri Marine is one of the largest tuna supply companies in the world 
handling about 600,000 tons of tuna annually, about 20% of the global 
trade in tuna for the canning industry. It is headquartered in 
Bellevue, Washington and has offices and operating companies in 14 
countries around the world. It owns, operates, and/or contracts fishing 
boats and processing plants to serve the global tuna industry including 
the major brands of tuna in the U.S.
    I am a first generation American. My grandfather emigrated from the 
island of Brac in present day Croatia to this great country when my mom 
was a young girl. He became a tuna fisherman in San Pedro, California 
where I was born and raised. In the 50's and 60's San Pedro was the 
tuna capital of the world with 14 canneries employing over 10,000 
workers. While my grandfather would fish, my grandmother would clean 
tuna in the canneries working for the minimum wage. I was fortunate and 
received a good education, including a MBA from Sanford. Today, I am 
the Group Managing Director of Tri Marine's Global Tuna Supply 
business. I have worked for Tri Marine for over 20 years.
    A large part of Tri Marine's business is identifying optimum supply 
chain solutions for our customers. Everyone wants the low cost, but 
least risky source of supply. This requires that we understand the 
dynamics of costing each major source of production for every major 
market. It is this knowledge of the global tuna market upon which I am 
basing this testimony.
Then and Now
    Today tuna is no longer packed in San Pedro. The industry left in 
search of lower cost sources of supply. What happened in San Pedro is 
also happening in American Samoa. Chicken of the Sea closed its tuna 
plant there because they believe that by doing so they could lower 
their cost of doing business.
    We know that tuna is a global business and if cost reduction to 
achieve international competitiveness is the goal, then I can 
understand why Chicken of the Sea made the decision to close their 
plant and send 2,000 workers home. This change in their business 
practice makes a lot of economic sense for them, but not necessarily 
for American Samoa.
    Frankly, I would not be surprised if StarKist followed their 
economic nose and also decided to leave American Samoa. While that 
would be tragic for American Samoa, unless Congress changes the playing 
field, that is what the numbers say will happen.
Import Duty
    Tuna is a global industry with fishing, processing and trade flows 
driven by economic results. Of course, the economics are a function of 
policies. Fishing access agreements and import duties play significant 
roles in determining where tuna is caught and processed for the world 
tuna markets. The European Union, for example, imposes a 24% duty on 
imports of canned tuna and tuna loins. Much of the processed tuna 
imports into the E.U. come from countries that have been granted duty 
exemptions under different programs and/or treaties.
    By comparison the U.S. duty is only 6 to12.5% for most of the 
canned tuna imports, and it is virtually zero on cooked and cleaned 
tuna loins. American Samoa competes not only with canned tuna, but also 
with tuna loins processed in countries where labor is much cheaper than 
the U.S. As long as there is negligible duty on cooked and cleaned tuna 
loins, this policy supports the export of the labor intensive part of 
the tuna canning process.
    Tuna canned in American Samoa is obviously not subject to import 
duty. This duty advantage is an important part of the economics of 
canning tuna in American Samoa.
Access to Fishing Grounds
    Access to the Western and Central Pacific fishing grounds for the 
U.S. tuna purse seiner fleet is provided by the Multilateral Treaty on 
Fisheries between the U.S. and certain Pacific island countries. 
Without this treaty the U.S. tuna purse seiner fleet would have limited 
access to the Western and Central Pacific fishing grounds and it would 
probably be substantially smaller in number. In the recent past we have 
seen a rapid growth of the U.S. tuna purse seiner fleet operating under 
the Multilateral Treaty. In fact, in 2006 there were only 12 boats 
operating under that Treaty. In 2009 there are 39. This rapid growth of 
the U.S. fleet and its relevance to American Samoa is explained later 
in this testimony. What is important to notice right now is that the 
U.S. policy to maintain duty on canned tuna imports and to provide the 
Multilateral Treaty for fishing access for the U.S. fleet has had a 
substantial impact on the tuna industry and, in particular, on the 
canning tuna industry in American Samoa.
Sustainability of the Tuna Resource
    There is growing concern regarding the sustainability of the 
world's tuna resources. People often ask me if tuna is being 
overfished. They don't know if they should feel good about eating tuna 
for its excellent nutritional value or avoid eating tuna because it may 
be being fished in an unsustainable manner. As you may know, tuna 
fishing in all oceans is managed by regional fisheries management 
organizations (RFMO's). For the Western and Central Pacific, the U.S. 
is a signatory to the Convention on the Conservation and Management of 
Highly Migratory Fish Stocks. This Convention ensures management of the 
tuna fishery in accordance with the 1982 United Nations Convention on 
the Law of the Sea and the 1995 UN Fish Stocks Agreement. It 
establishes a Commission or RFMO for the Conservation and Management of 
Highly Migratory Fish Stocks in the Western and Central Pacific Ocean. 
The Convention Area includes the waters around American Samoa.
    As a Member of the Western and Central Pacific Fisheries Commission 
(WCPFC), the U.S. has the opportunity to participate in the management 
of the tuna fishery and to address and advocate the sustainability of 
the tuna resource. The relevance of the U.S. in the WCPFC was being 
threatened, however, by the decline in the U.S. flag purse seiner 
fleet.
    In its annual report to Congress on the Distant Water Tuna Fleet 
a.k.a. U.S. Purse Seine Fleet of March 2009 the U.S. Coast Guard 
reported that the fleet had declined from 39 vessels in 1998 to only 14 
vessels in 2006. Of these 14 vessels only 12 were fishing under the 
aforementioned Multilateral Treaty.
    This is confirmed by the U.S. 2007 annual report to the WCPFC which 
states:

        Resolution on the Reduction of Overcapacity (Res. 2005-02)
        In 1999, a total of 38 U.S. purse seine vessels were licensed 
        to fish under the South Pacific Tuna Treaty. In 1999, the fleet 
        total hold capacity was approximately 45,000 mt. The current 
        (2006) 12-vessel fleet total hold capacity is approximately 
        15,500 mt. No new vessels entered the fleet from 1999 through 
        2006. Most vessels leaving the Treaty have been sold and are no 
        longer flagged by the United States. They are believed to be 
        fishing in the eastern tropical Pacific Ocean.

    With the reduction in the size of its fleet, the U.S. was no longer 
one of the leading tuna fishing countries operating in the Western and 
Central Pacific. The U.S. was becoming less relevant and there was 
concern that we would lose the opportunity to powerfully influence 
debates and policy formation regarding fishery management issues.
Increasing Aspirations of Pacific Island Countries
    During this time when the U.S. was becoming less important in this 
fishery, the countries that are Parties to the Nauru Agreement (PNA) 
were increasing their demand to participate more equitably in the 
economic benefits of the tuna industry. They argue that the tuna caught 
in their exclusive economic zones (EEZ's) belongs to them and they are 
no longer going to be satisfied with receiving an access fee as their 
share in the value of the fishery.
    More than half of the tuna supply for the global canned tuna 
industry comes from the Western and Central Pacific and about 60% of 
this is caught in the EEZ's of the PNA countries (Nauru, Palau, 
Federated States of Micronesia, Republic of Marshall Islands, Solomon 
Islands, Tuvalu, Kiribati and Papua New Guinea). They are an important 
subset of the Pacific Islands States that are parties to the 
Multilateral Treaty with the U.S. This treaty is currently under 
renegotiation.
    The PNA countries have changed their policy relating to fishing 
access. They are now focused on economic development, not access fees. 
They are using restricted access to negotiate commitments from fishing 
companies to develop their domestic fishing and fish processing 
industries. Essentially, they are saying, ``If you want to fish in our 
waters, you must help develop our economies''. Their governments are 
changing the model. This is a good example of how sovereign rights and 
the will of policy makers dictate the best business practice.
    The U.S. Multilateral Treaty in its current form does not restrict 
access to the boats fishing under it. This is contrary to the PNA's new 
policy which limits the number of days each boat would be allowed to 
fish (Fishing Day Scheme). It is mainly for this reason that the U.S. 
purse seine fleet grew rapidly since 2006. Boats could enter the 
fishery and fish without limitation under the U.S. Treaty.
Conflicts with PNA Countries
    Of the 25 boats that were added to the U.S. fleet during the past 3 
years, 17 of them were built in Taiwan since 2002. Not one of these 17 
boats has ever called at American Samoa even though all but one of them 
lists Pago Pago, American Samoa as their home port. These boats 
transship their catch to refrigerated carriers in ports near the 
fishing grounds. While this may optimize the economics of the fishing 
operation, it certainly does not help the American Samoa economy. 
Additionally, one may wonder whether the newly built, highly 
productive, boats which remain in the fishing grounds and transship all 
the time are putting undue pressure on the resource, complicating 
conservation efforts, not to mention frustrating the development 
aspirations of small island states.
    The PNA view is that the U.S. fleet is using fishing days that 
could otherwise be used by the PNA countries in negotiating for the 
development of their own economies. Due to this conflict with the PNA's 
new policy, there is considerable risk that the Treaty may not be 
renewed in its current form. In a world of limited access, the PNA 
countries will prioritize fishing access to countries or fishing 
companies willing to support their economic development, including 
construction and operation of tuna processing facilities and may 
require that all or part of the catch be processed in these island 
based plants. The PNA do not care if the cost of processing tuna in 
their island based economies is more expensive than elsewhere.
Direct Delivery of Tuna to American Samoa
    This is analogous to the situation now faced by American Samoa 
except that the U.S. government policy of supporting a large U.S. purse 
seiner fleet by providing a Treaty for fishing access does not help 
American Samoa unless the boats call at American Samoa. As it is, the 
U.S. fishing fleets have no incentive to unload at American Samoa. The 
cost of navigating from the fishing grounds all the way to Pago Pago 
and back again to the fishing grounds is a huge disincentive. The 
ASPIRE legislation fixes this.
    While Tri Marine is supportive of the proposed ASPIRE legislation, 
I would like to point out that we do not particularly favor the 
penalties provided in the Bill against those boats that do not directly 
deliver their catch to American Samoa. I believe that the incentive 
provided in the ASPIRE legislation is a sufficient stimulus for the 
vessels to call at American Samoa for unloading. There should be no 
need to penalize boat owners in order to motivate them.
    The boats that transship typically catch an additional 60% or more 
fish than the purse seiners that deliver their catch directly to Pago 
Pago. Boats that transship earn more revenue, have a lower cost of 
catch and use more fishing days than those that deliver their catch 
directly to American Samoa.
    As this legislation will reduce transshipment operations and 
increase the number of direct deliveries to American Samoa, there will 
be a reduction in fishing effort and catch by the U.S. purse seine 
fleet operating in the Western and Central Pacific.
Multiplier Effect
    The boats delivering their catches to America Samoa will need 
locally provided stevedoring, repair, supplies, logistics, and other 
services. This is an important component of the economic stimulus being 
provided by this legislation.
    The change in the operating methodology from transshipping to 
direct delivery would resonate with the PNA and other Pacific island 
countries as they would see that the fish being caught by U.S. boats is 
being processed in American Samoa resulting in job creation for the 
people of American Samoa and other islanders living and working in 
American Samoa.
    This is a key element to the ASPIRE legislation. The processing of 
whole round tuna in American Samoa is labor intensive, and it is an 
integral part of the tuna canning process while it drives the majority 
of the economic benefits created by tuna processing. Importantly, there 
would be no need for the fishing boats to call American Samoa if the 
tuna processing plants there cannot handle whole round fish.
Making American Samoa Competitive
    The ASPIRE legislation will make the canneries in American Samoa 
competitive with other major sources of canned tuna for the U.S. 
market. As American Samoa would be one of the low cost sources of 
supply for the U.S. market, we would expect that there will be 
substantial demand from U.S. buyers for all available processing 
capacity. In this regard we estimate that the existing installed 
capacity of the two tuna plants in American Samoa is approximately 
1,000 tons per day, or 250,000 tons per year.
    Currently, the tuna plant in American Samoa owned by Chicken of the 
Sea is idle. If the ASPIRE legislation is approved, we expect that that 
plant will soon be back in operation and it will resume purchasing fish 
from the U.S. purse seiner fleet calling at Pago Pago. The plant would 
make its production capacity available for the market, and it will be 
the U.S. market, not one company, and not just the America Samoa 
economy that will benefit from ASPIRE.
    I also believe that this realignment in the policy of the U.S. to 
support the American Samoan economy will have a positive effect on the 
renegotiation of the Multilateral Treaty. The U.S. fleet will need 
fewer fishing days and the PNA and other Treaty countries will see that 
the U.S. is sensitive to the need to support the island economies. 
Maintaining the Multilateral Treaty and a strong U.S. fleet will ensure 
that the U.S. will have an important voice in the management of the 
Western and Central Pacific fisheries.
    Tuna is a global industry and is driven by the economics of the 
business. The economics, however, are determined by government 
policies. I urge you to provide U.S. public policy that will make it 
economical for the tuna industry to remain a leading and vital part of 
the American Samoan economy and providing the U.S. with a strong 
position for future advocacy in the international debate regarding tuna 
conservation and management. Adopting the ASPIRE legislation will do 
just that.
    Thank you for the opportunity to testify on this important topic.
                                 ______
                                 
    Ms. Bordallo. I thank you, Mr. Hamby.
    And now I would like to recognize Mr. James Walsh, Legal 
Counsel of the South Pacific Tuna Corporation.

          STATEMENT OF JAMES P. WALSH, LEGAL COUNSEL, 
                 SOUTH PACIFIC TUNA CORPORATION

    Mr. Walsh. Thank you, Madam Chair, members of the 
Committee.
    I first must apologize that I am a former Senate staffer. I 
hope you will welcome me with kindness. I have been involved 
with the tuna industry and with ocean policy and fishery policy 
in this country since 1972 when I went to work for Senator 
Warren Magnuson.
    I am currently a lawyer, a business lawyer, and a 
litigator, and I have practiced law out in the Pacific for the 
last 10 years. And I have represented the tuna industry perhaps 
for 28 years.
    I only have a few points, so I will just offer my testimony 
for the record. And let me begin with the first point.
    First of all, the term ``level playing field'' is a cliche. 
It doesn't apply in this case. There is a level playing field, 
and that is there are fishery resources in the Pacific, there 
are canning facilities at some location, and there is a canned 
tuna market. The players are on the field. This legislation 
changes the rules. Stanford wouldn't have beaten USC if the 
rules had changed.
    The boats that I represent--14, plus seven additional; I 
represent the majority--they see no purpose in saying, ``You 
must go to deliver your 300,000 tons of tuna to a plant that 
might only take 100,000 tons of tuna, and it may already have 
contracts in place for 60,000 tons of tuna.'' Imagine, if you 
would, the StarKist plant with 39 boats lined up in a row, 
waiting to offload. Imagine the monopolistic power of the 
processing facility who says, ``You want to move up in the 
line? You might want to drop your price.''
    That is one of the big problems with this legislation, is 
that I can tell you, in my time looking at fishery policy, I 
have never seen anything so unusual as this proposal.
    One could argue that it is in the national interest that we 
create processing facilities from tuna caught in our waters. 
These are not tuna caught in our waters. This is tuna caught in 
foreign waters pursuant to a treaty, sitting side by side, 
foreign flag, long line and purse seiner vessels, who are just 
as efficient as we are. They didn't used to be, but they are 
now.
    So what has happened is the fleet has gone, from the time I 
have seen it, from 139 vessels to 11 or 12, back to 39. And it 
is because we provided for the ability to compete in the world 
market, accepting the level playing field we all have to face, 
but making sure that we can play by rules that we work by.
    The social engineering that is tried here is certainly, 
because of the circumstances of American Samoa, heartfelt and 
deserving. It is a wonderful place. But the fact is that my 
clients would be penalized if they didn't go there. You would 
be taxing Peter to pay Paul, even though they are in the same 
game.
    We urge you not to pass this legislation. I suggest that 
there must be another way. It seems to me that, drawing on my 
experience as a former deputy administrator of NOAA, I would 
look at this as a territorial policy issue, not as a commercial 
policy issue, not as a foreign policy issue, but as a 
territorial policy issue.
    And it seems to me there have to be ways to help American 
Samoa deal with their problems without asking, forcing a large 
number of vessels to go to a fixed market which may go away 
tomorrow and you still have to pay the fees. There is no club 
here to keep StarKist there; they could leave tomorrow. And my 
clients would have to break all their contracts for delivering 
tuna at other locations and would then hope that they could 
deliver.
    As a litigating lawyer--and I currently am handling some 
major legislation on the West Coast involving the ground fish 
fishery--I look at this litigation from the litigators' 
standpoint. And it seems to me that this is filled with the 
kinds of things that you could bring to a Federal judge.
    The basic fundamental rule of American legislation is, 
basically, all you need is a rational basis to regulate 
economically. This seems--and most legislation involving 
fisheries doesn't, but this legislation is one of those where I 
would have a very good argument before a Federal judge to say, 
``There is no rational basis why the boat owners, who doesn't 
catch fish in the United States, who don't deliver this port, 
who have no contract, should be penalized with a fee and a 
tax.''
    Thank you very much for your time.
    [The prepared statement of Mr. Walsh follows:]

        Statement of James P. Walsh, Davis Wright Tremaine LLP, 
              on behalf of South Pacific Tuna Corporation

    Chairwoman Madeleine Bordallo, Ranking Member Henry Brown, and 
Members of the Subcommittee:
    My name is James P. Walsh and I am a partner in the law firm of 
Davis Wright Tremaine LLP, in its San Francisco, California Office. I 
am appearing today on behalf of the South Pacific Tuna Corporation 
(SPTC), based in San Diego, California, which manages a fleet of 14 
U.S.-flag tuna purse seine vessels that operate in the Pacific Ocean 
pursuant to licenses issued under the South Pacific Tuna Treaty (the 
``Treaty''), representing 36% of the entire U.S. fleet operating under 
the Treaty. Our firm has assisted SPTC since its formation in 2007. 
SPTC appreciates the opportunity to appear today and express its views 
on H.R. 3583, the American Samoa Protection of Industry, Resources, and 
Employment Act, or ASPIRE. In addition, I have been authorized by 
Tradition Mariner LLC of Tampa, Florida, which operates 5 U.S. flag 
vessels under the Treaty, to state that they are in support of SPTC's 
testimony.
    The provisions of the proposed bill, if enacted in present form, 
would have a direct and profound effect on the SPTC fleet by increasing 
the cost of operations, without any concomitant benefit to the fleet, 
thereby making the fleet's tuna harvests less competitive in the world 
market. In essence, H.R. 3583 attempts to legislate markets rather than 
letting cost, price and efficiency be the guide to where fish harvests 
are landed. At the same time, the bill lacks any real forward-looking 
incentive for landing the SPTC fleet's catches in American Samoa. The 
meager ``landing'' subsidy ($100 per metric ton for SPTC vessels) 
provided for in the bill is not an attractive incentive for SPTC 
vessels, given the cost of ``direct delivery'' of tuna catches to 
American Samoa from distant fishing grounds where the vessels fish. The 
ocean area covered by the Treaty exceeds 10 million square miles and 
SPTC vessels operate in ocean areas far from American Samoa. 
Legislation such as H.R. 3583 also cannot provide any guarantee that 
SPTC vessels would realize the proposed subsidy because the price paid 
to our vessels would likely be discounted by the processor. Moreover, 
the processing capacity currently operating on American Samoa is quite 
limited. SPTC has no marketing agreement with the processing company 
still operating there, so our vessels--unlike other U.S.-flag and 
Korean-flag vessels--have no market in American Samoa.
    In my testimony today, I will (1) provide some general background 
about the Treaty and the SPTC fleet, including where the fleet 
currently lands its fish catches; (2) place the proposed legislation in 
the context of the ever-changing and highly competitive business of 
catching and landing tuna in the Pacific Ocean; and (3) address the 
specifics of the bill and indicate the reasons why SPTC must oppose the 
legislation. In summary, H.R. 3583 is misguided public policy. The bill 
lacks an understanding of fundamental market economics, the global 
nature of the tuna fishery, and the competitive realities in which U.S. 
companies and vessels must operate. The bill was written in a manner 
that unfairly favors one processor and one segment of the U.S. fleet 
over their competitors.
The South Pacific Tuna Treaty
    A license issued pursuant to the South Pacific Tuna Treaty is the 
essential ticket to the SPTC's fleet operations in the Pacific Ocean. 
Without it, U.S. tuna vessels would probably not operate at all in the 
region. Entered into first in 1988, the Treaty has just been renewed 
for the third time. The parties to the Treaty are: Australia, the Cook 
Islands, the Federated States of Micronesia, Fiji, Kiribati, Nauru, New 
Zealand, the Marshall Islands, Niue, Palau, Papua New Guinea, Samoa, 
Solomon Islands, Tonga, Tuvalu, the United States, and Vanuatu. The 
Treaty will continue in force until June 1, 2013, unless renewed again.
    According to a 2008 NOAA Report, the U.S. purse seine fishery in 
the region accounted for 79% of the total U.S. catch of highly 
migratory species in 2007. The estimated value of this catch in 2008 
was in excess of $200 million. For the Subcommittee's reference, 
attached as Exhibit 1 is a chart (Figure 1) showing the geographic 
distribution of the U.S. purse seine effort in 2007. It should be noted 
that the prime fishing grounds of the U.S. fleet are thousands of miles 
distant from American Samoa. Furthermore, it should also be understood 
that the SPTC fleet is not eligible to fish in U.S. navigable waters or 
the U.S. Exclusive Economic Zone (EEZ), including around American 
Samoa. Fishing by the fleet may only occur in the waters open to tuna 
purse seining under the Treaty or in waters of the high seas, outside 
the 200-mile EEZ of any nation.
    The Treaty includes an obligation by the United States to provide 
$18 million annually to the Pacific Island nations that subscribed to 
its terms, through an Economic Assistance Program. In addition, the 
U.S. industry provides other payments to these nations, based on 
licensing arrangements and the price of fish caught, that total 
approximately $5.7 million. For this year, each of the 14 vessels in 
SPTC's fleet paid a Treaty license fee to the Pacific Island nations of 
$130,000. Each vessel is also obligated to comply with strict 
conservation and management measures, monitoring requirements 
(including observers on vessels), regular fishing data reporting, and 
full-time vessel monitoring using a satellite-based system. In 
addition, each vessel is subject to U.S. licensing and ocean resource 
management regulations. The treaty area in question is a major source 
of tuna that is used for the world canned tuna market. Access to the 
fishing grounds in the Treaty area is essential to the U.S. tuna 
industry, in particular to the SPTC fleet.
General Background on the SPTC Fleet
    As noted by other witnesses, the United States Government, the 
Pacific Island Treaty nations, and the U.S. tuna industry became quite 
concerned when the number of U.S. flag tuna purse seine vessels 
operating under the Treaty began to decline earlier in this decade. 
Competition with foreign-flag fleets is intense and the U.S. fleet, 
which had started out in 1988 with 50 Treaty licenses available and in 
use, dwindled to as few as 11 vessels in 2005. As in many other 
industries competing in the global market, U.S. vessels had to figure 
out a way to reduce operating costs in order to remain competitive and 
the SPTC fleet is trying to do that.
    Each vessel in SPTC's fleet is documented under 46 U.S.C. 
Sec. Sec. 12103 and 12111 (registry) of the Vessel Documentation Act 
and not under Sec. 12113, which provides for fishery endorsements that 
are general licenses to fish in U.S. waters. Consequently, all of the 
tuna purse seine vessels in the SPTC fleet are owned by American 
companies in which U.S. citizens own 51% of the interests. The 
remainder of the equity investment is provided by foreign investors.
    Today, the overall U.S. fleet operating under the Treaty consists 
of 39 vessels, but by agreement cannot exceed 40. The Treaty nations 
have been discussing further limitations on fishing opportunities 
through something called the ``Vessel Day Scheme'', which would 
allocate a limited number of days for fishing under the Treaty to 
licensed vessels. Obviously, the existing Treaty system is subject to 
change, with potential new limits on fishing opportunities that will 
bring new competitive challenges.
    Over the last several years, as part of the international 
cooperation fostered by the Treaty, the U.S. fleet has been developing 
business networks in the Pacific Island Treaty nations, including the 
following ports and nations: Majuro, Republic of the Marshall Islands; 
Rabual, Papua New Guinea; Kiribati; Pohnpei, Federated States of 
Micronesia, Palau; Honiara, Solomon Islands; Vanuatu; and Papeete, 
Tahiti. The transshipping arrangements in these countries have been 
essential to the overall success of the Treaty.
The Impact of H.R. 3583, ASPIRE, on the SPTC Fleet
    SPTC has great sympathy for the current plight of those who live on 
American Samoa because of the recent tsunami. For many years, 
representatives of the U.S. tuna fleet have had close personal bonds 
with the people of American Samoa and its Congressional leaders. We 
would like to do more to help. However, given the powerful economic 
forces of the world economy, with more changes on the horizon, SPTC has 
no choice but to strongly oppose H.R. 3583.
    The difficulties facing the tuna canneries on American Samoa also 
appear to stem from economic forces affecting their ability to compete 
in the world market, including a high minimum wage requirement relative 
to other global processing locations. The Findings section of the bill 
focuses on the shore-side processing component of the industry and 
admits that the U.S. tuna fleet no longer directly delivers to American 
Samoa. What the Findings fail to recognize is that using a U.S. tuna 
purse seine vessel as a transport for its own catch over long distances 
just to deliver to American Samoa makes no economic sense. Fishing time 
is at a premium and using SPTC's vessels for both fishing and transport 
would take the vessel off the fishing grounds for long periods of 
unproductive time. SPTC estimates that the cost (lost fishing time and 
fuel) of making a single vessel delivery to American Samoa under the 
bill would be prohibitive and make SPTC vessels non-competitive in the 
world market.
    Despite the economic realities in the tuna business, H.R. 3583 
proposes a system of fees, taxes, and subsidies to either lure (or 
force) the U.S. tuna fleet operating under the Treaty to deliver their 
catches to American Samoa. First, in Section 3, each of SPTC's fleet 
would have to pay a new $250,000 fee to the United States Government 
for the benefit of economic development in American Samoa. This annual 
fee is nearly double the license fee currently being paid under the 
Treaty. The fee would be waived if a vessel makes not less than three 
deliveries per year to shore-side processors in American Samoa. This 
fee would be applied regardless of whether the SPTC's fleet had any 
nexus to, or did business in, American Samoa. Second, the SPTC's fleet 
would be subject to a punitive tax of 6.25 percent per metric ton of 
fish delivered if a vessel ``delivers tuna to another vessel or other 
location for the purposes of transshipment.'' The proposed language in 
the bill amending 48 U.S.C. Sec. 1469d(d) with respect to the 6.25 
percent fee is confusing because the words ``ad valorem'' are not 
included. But the intent appears to be a tax on the value of a metric 
ton, not the weight. All of SPTC's vessels currently make such 
transshipment deliveries. Finally, if the SPTC's fleet decides to 
deliver to shore-side processors in American Samoa, the fixed $250,000 
fee and the ad valorem tax of 6.25 percent per metric ton would be 
waived and, for each ton so delivered, a subsidy of $100 per metric ton 
would be paid.
    Our conclusion is that a main purpose of the fees and taxes in H.R. 
3583 is simply to generate a fund to offset the cost of providing a 
subsidy to the only processing plant still operating in American Samoa. 
Further evidence for this conclusion is the fact that the longline 
fleet based in Hawaii is also subject to the bill's system of fees and 
taxes. That fleet has never delivered to American Samoa and probably 
never will, regardless of any incentives for ``direct delivery.''
    The only currently operating tuna processing plant on American 
Samoa is owned by the StarKist Seafoods, a wholly-owned subsidiary of 
Dong Won, a Korean company. That company's capacity for processing 
round light meat tuna is estimated at around 100,000 tons per year. It 
would be the only market for deliveries of tuna under H.R. 3583. The 
current yearly harvesting capacity of the entire U.S. fleet operating 
under the Treaty is approximately 300,000 tons per year. Thus, this 
stark mismatch between the market for accepting deliveries (or demand 
for raw fish) and the mandated direct deliveries (or the supply of raw 
fish) created by the bill makes the entire theory of the legislation 
irrational. Moreover, there is no requirement that the Starkist plant 
should remain open or that the mandated fees and taxes should expire if 
the plant closes. Finally, the only plant in town would surely be able 
to dictate price to those vessels that must make ``direct delivery'' in 
order to avoid the fees and taxes of H.R. 3583.
    Therefore, because of inadequate capacity for processing and the 
possibility of no processing capacity, H.R. 3583 would serve only to 
pressure all, or a substantial part, of the U.S. fleet to land their 
catches at American Samoa simply for transshipment to a processing 
plant located somewhere else in the world. Moreover, the bill would 
also provide monopolistic pricing power to the only processing plant on 
American Samoa relative to those who must make direct deliveries, 
assuming any capacity is available.
    SPTC does not believe that the measures in H.R. 3583 can 
effectively (and artificially) create a shore-side processing industry 
in American Samoa. If there is no such industry in American Samoa, or 
if bill is unexpectedly successful but only at maintaining a limited 
capacity, H.R. 3583 is written in such a way that the SPTC fleet would 
still be hit with punitive fees. Our client's business simply cannot 
withstand these kinds of government-ordered fees and remain 
competitive. Moreover, the subsidy of $100 that would apply to SPTC's 
vessels is so low as to be a meaningless carrot in light of the cost of 
using a purse seine vessel as a transport and the associated loss of 
fishing time. Therefore, SPTC believes that the bill, as written, would 
not achieve its objectives and would punish important segments of the 
U.S. tuna fleet.
    We believe there is a host of other legal problems with the 
proposal, in particular the possible treatment of the program by other 
countries under international trade laws. For example, would the 
subsidies for direct delivery of fish be grounds for anti-dumping 
measures by other countries? Anti-dumping laws allow for other nations 
to impose trade restrictions or duties to offset government subsidies 
to a particular industry. We have not investigated these issues in 
detail but suggest that they should be examined before any action is 
taken on H.R. 3583.
    Finally, while this Subcommittee is properly concerned about 
policies toward the Territory of American Samoa, it must be kept in 
mind that the purpose of the South Pacific Tuna Treaty is to benefit 
the United States as a nation, including all of its interests, 
particularly its foreign policy interests with respect to the Pacific 
Island nations that are party to the Treaty. Enacting H.R. 3583 for the 
purpose of helping American Samoa would quite likely result in the 
transfer and reflagging of the U.S. fleet, thereby undercutting an 
essential commitment of the United States in the Treaty to provide 
payment of vessel permit fees to the Pacific Island nations.
    In conclusion, we urge the sponsor of the bill to look to other 
ways to assist American Samoa that would not be so deeply harmful to 
the U.S. tuna fleet.
    I would now be pleased to try to any questions the Subcommittee may 
have.
                                 ______
                                 
    Ms. Bordallo. I thank you, Mr. Walsh, for your testimony 
before the Committee.
    And now I would like to recognize Ms. Diana Furchtgott-
Roth, Senior Fellow and Director, Center for Employment Policy, 
Hudson Institute.

STATEMENT OF DIANA FURCHTGOTT-ROTH, SENIOR FELLOW AND DIRECTOR, 
         CENTER FOR EMPLOYMENT POLICY, HUDSON INSTITUTE

    Ms. Furchtgott-Roth. Thank you very much. I would like 
permission to submit my written testimony for the record and 
just summarize it.
    And, before I start, I just wanted to clarify for the 
record, Mr. Faleomavaega said that I was a naive think-tank 
economist. I want to say for the record, I am a senior fellow 
at the Hudson Institute. From 2003 to 2005, I was chief 
economist at the U.S. Department of Labor. From 2001 to 2003, I 
served as chief of staff of the Council of Economic Advisors at 
the White House. I have also served as Deputy Executive 
Secretary of the Domestic Policy Council under President George 
H.W. Bush and an economist on the Council of Economic Advisors 
of President Ronald Reagan.
    I would like to say that ASPIRE has very good intentions, 
but there is a simpler way to fix the problem: Allow American 
Samoa to set its own minimum wage.
    The island is having economic problems because our 
government has doubled, or more than doubled, wages in a 2-year 
period, beginning in 2007. If Congress passed a law that said 
that my salary was doubled as a senior fellow at the Hudson 
Institute, I can assure you I would not have my job tomorrow. 
Hudson Institute would not pay twice my wage level.
    And that is what is happening to workers in American Samoa. 
Chicken of the Sea closed. StarKist is perhaps thinking of 
leaving. Other workers are also affected.
    In 2007, the American Samoa Governor, Governor Tulafono, 
who was testifying here before, stated that increasing the 
minimum wage would kill the economy. And Mr. Faleomavaega said 
that it would devastate the local tuna industry.
    Last May, I spoke to Representative Vaito'a Hans A. 
Langkilde of the Ma'oputasi District 10, which represents the 
villages of Leloaloa, Satala, and Atu'u, whose district is home 
to both StarKist and Chicken of the Sea until Chicken of the 
Sea left.
    Mr. Langkilde told me, ``Over the past 50 years, the 
industry provided massive job opportunities for unskilled 
labor. The 2007 law that increased the minimum wage was the 
beginning of the end for the tuna industry and the cause of 
massive job losses for our already fragile economy. The only 
way to resolve the trend toward total economic disaster is for 
Congress, at its soonest opportunity, to reverse its position 
and either exempt American Samoa from the American minimum wage 
or to allow it to set its own minimum wage.''
    ASPIRE does not solve this problem. It encourages only 
certain tuna processes and shippers without the development of 
any other industry. U.S. Government funding doesn't provide any 
certainty because another Congress could just withdraw it. It 
costs $25 million at a time when we have deficits here.
    There are plenty of countries with low wage rates that have 
built up their economies to be very successful, such as Hong 
Kong, China, Singapore, to name just a few. If these countries 
had had the U.S. minimum wage imposed on them, they would 
probably not be in the successful position that they are now.
    American Samoa needs to move beyond tuna canning and a one-
industry economy and explore other industries. You asked for 
concrete suggestions, and, Madam Chairman, I have a concrete 
suggestion for you.
    One idea is to develop community colleges in American Samoa 
to train nurses and other health care workers to work in the 
United States. The education in the health care sector is the 
only one in the United States that has been creating jobs month 
after month here in the United States during the recession. 
Many hospitals have a shortage of the nurses and health care 
workers. American Samoa could become the educational hub of the 
region, with community colleges to train nurse and other health 
care workers.
    If Congress could facilitate immigration from American 
Samoa for these graduates of the community colleges into the 
United States to be placed in jobs, this might be a real 
possibility for an educational opportunity, to help American 
Samoa develop its educational industry as a substitute or a 
parallel with the tuna canning industry.
    Thank you very much for allowing me to appear before you 
today.
    [The prepared statement of Ms. Furchtgott-Roth follows:]

  Statement of Diana Furchtgott-Roth, Senior Fellow, Hudson Institute

    Chairman, Members of the Committee, I am honored to be invited to 
testify before your Committee today on the subject of The American 
Samoa Protection of Industry, Resources, and Employment Act, known as 
the ASPIRE Act, H.R. 3583. Currently I am a senior fellow at the Hudson 
Institute. From February 2003 until April 2005 I was chief economist at 
the U.S. Department of Labor. From 2001 until 2003 I served at the 
Council of Economic Advisers as chief of staff and special adviser. 
Previously, I was a resident fellow at the American Enterprise 
Institute. I have served as Deputy Executive Secretary of the Domestic 
Policy Council under President George H.W. Bush and an economist on the 
Council of Economic Advisers under President Ronald Reagan.
    We think that our economy here in the United States is in poor 
shape, but American Samoa's economy is doing even worse. In 2005, the 
latest data available, before the increase in minimum wage, the 
unemployment rate stood at 30 percent, according to the Department of 
Interior's Office of Insular Affairs. The ASPIRE Act clearly identifies 
the cause of the problem. In Section 2 (a) (4), the bill states:
    ``Due to low-wage labor rates of 0.60 cents and less per hour for 
tuna cannery workers in competing countries, increased transportation 
and energy costs, decreased volumes of direct-delivered fish to 
American Samoa, recent Federal minimum wage policy changes that have 
resulted in mandatory annual wage increases, heavy foreign competition 
for United States market share in the tuna industry, and a number of 
other issues, one of American Samoa's tuna canneries has announced that 
it will shut down by September 2009. This closure will result in job 
loss for nearly 40 percent of the territory's private sector employees, 
as well as increased energy, shipping, and food costs for the remaining 
businesses and public entities because the canneries help subsidize the 
costs of these industries.''
    In response, the ASPIRE Act seeks to pay tuna shippers and 
processors in American Samoa amounts ranging from $100 to $200 per 
metric ton in order to persuade the canneries to stay open and shippers 
to continue to use the island.
    This is the wrong approach. It does not address the fundamental 
issue--that Congress has priced American Samoan labor too high to be 
globally competitive. It is a poor use of funds, at the time when the 
United States has one of the largest deficits in history. It makes 
American Samoa dependent on federal grants for the existence of its 
economy, and future Congresses could easily cut back on the grants. 
Rather than the ASPIRE Act, Congress should exempt American Samoa from 
the U.S. minimum wage and allow it to set its own wages to attract 
businesses.
    Over two years ago, in January 2007, the House of Representatives 
initially exempted American Samoa from the increase in the hourly 
minimum wage to $7.25, but then the bill was changed.
    In 2007 the legislation originally did not include American Samoa, 
perhaps because Del Monte, at the time the parent company of StarKist, 
was headquartered in Speaker Nancy Pelosi's district. Until then, the 
Labor Department had set wage rates in American Samoa every two years, 
following an extensive study on economic conditions on the island. But 
before final passage, Congress included American Samoa.
    There should have been general rejoicing in American Samoa on 
hearing that everyone would get a raise. But not so. American Samoa 
Governor Togiola Tulafono stated that increasing the minimum wage 
``would kill the economy'' and Congressional Samoan Delegate Eni F.H. 
Faleomavaega said that it would devastate the local tuna industry.
    A quick look at American Samoan local wage rates in 2007 tells us 
why the increase in the minimum wage was so damaging. Back then, the 
hourly minimum wage for fish canning and processing was $3.76. The 
minimum wage for government employees, who undoubtedly have an easier 
job than tuna canners, was $3.41. Shipping had the highest minimum 
wage, at $4.59. Garment manufacturers had the lowest, at $3.18 an hour.
    Fans of minimum wage increases say the increases have no effect on 
the economy or on jobs, but American Samoans are smarter. In 2007 they 
knew that industries would go elsewhere if they had to pay $7.35 an 
hour. With higher unemployment in American Samoa, the U.S. taxpayer 
would be called upon to come to the rescue. It did not make sense, and 
it still does not make sense.
    Fast forward to 2009. There is no better illustration of the 
consequences of well-intentioned policy-making than recent events in 
American Samoa. In May, Chicken of the Sea, the tuna company, announced 
that it would close its canning plant in American Samoa in September.
    Chicken of the Sea laid off more than 2,000 employees--12 percent 
of total employment, almost half of all cannery workers. The 2,700 
workers at StarKist, the other American Samoa tuna canning company and 
Chicken of the Sea's rival, are probably concerned that their jobs are 
the next to go.
    American Samoa lost not only the 2,000 jobs at the Chicken of the 
Sea canning plant, but also secondary jobs from the ripple effect of 
loss of income--stores and eateries that cater to cannery workers, 
shops that mend fishing nets, shipyards, and buses that transport 
workers.
    American Samoa's loss is Georgia's gain. Chicken of the Sea will 
move to Lyons, Georgia, (2007 population 4,480) employing 200 people in 
a new $20 million plant on a more capital-intensive production line.
    Last May I spoke to Representative Vaito'a Hans A. Langkilde of the 
Ma'oputasi District #10, representing the villages of Leloaloa, Satala 
and Atu'u, whose district is home to both StarKist and Chicken of the 
Sea.
    Mr. Lankilde told me, ``Over the past 50 years the industry 
provided massive job opportunities for unskilled labor. The 2007 law 
that increased the minimum wage was the beginning of the end for the 
tuna industry and the cause of massive job losses for our already 
fragile economy. The only way to resolve the trend towards total 
economic disaster is for Congress at its soonest opportunity to reverse 
its position.''
    Furthermore, with the United States facing a deficit, it does not 
make sense to spend taxpayers' money subsidizing tuna production in 
American Samoa. The approximate cost of more than $25 million per year 
could be more usefully spent elsewhere.
    A grant given by one Congress could easily be withdrawn by the 
next. Hence, the ASPIRE Act would not provide permanent security either 
for the tuna industry or for the island, because it could vanish in the 
future.
    Besides, the grant just helps the tuna industry. The goal should be 
for American Samoa to diversify its economy. Other types of companies, 
such as call centers or community colleges to train nurses, could 
conceivably locate in American Samoa and help the economy. These 
companies will not choose American Samoa if its wage levels are 
artificially high. Rather, they will choose some other location.
    Rather than having to accept direction from a government thousands 
of miles away where they have no voting representation, residents of 
American Samoa should be given the power to decide on their own minimum 
wage. It makes no sense for Congress to insist on a minimum wage that 
is far above the competitive wage in the area, and drive business away 
from the local economy.
    Thank you for allowing me to testify today. I will be glad to 
answer any questions.
                                 ______
                                 
    Ms. Bordallo. I thank you, Ms. Diana Furchtgott-Roth, for 
your testimony.
    And now for our final witness on the second panel, Mr. 
Renato Curto, President of Cape Fisheries.

             STATEMENT OF RENATO CURTO, PRESIDENT, 
                      CAPE FISHERIES, LLC

    Mr. Curto. Madam Chair, members of the Subcommittee, I had 
to change ``good afternoon'' to ``good evening,'' so good 
evening. And thank you very much for allowing me to appear 
before you today to present my testimony in connection with 
this hearing of H.R. 3583, ASPIRE.
    My name is Renato Curto, and I am testifying in my capacity 
as President of Cape Fisheries Holdings, LLC, owner and 
operator of a fleet of eight large United States flag tuna 
purse seiner vessels based in American Samoa.
    I support ASPIRE because it offers a concrete and 
meaningful way to guarantee the survival of that same tuna 
industry that has provided for many years for the livelihood of 
thousands of families in American Samoa.
    I also support ASPIRE as I consider it a means for the 
United States of America to continue to participate and to 
maintain its leadership role in those international fora which 
deal with matters so important as the protection of the 
environment, the conservation of a well-balanced marine 
ecosystem, and the sustainability of the fishing resources.
    American Samoa is the base for our fleet. Almost everything 
the boats need is sourced there. Besides our office, we have a 
warehouse where we store supplies, spares, and other 
necessities for our vessels. We purchase in American Samoa 
everything that is available there, from fuel to lubes, to 
salt, provisions, parts, et cetera. We use local mechanics to 
assist our own team of port engineers, and the local shops take 
care of the repairs that are needed. To unload the vessels, we 
need local stevedores. Our people and our crews use the local 
establishments, including bars and restaurants.
    In sum, it is not just what the vessels do for themselves, 
but there are a lot of induced benefits to the local economy 
for the simple fact that we are there. If we leave, all those 
additional benefits will be lost for American Samoa.
    The presence of Chicken of the Sea and StarKist in American 
Samoa has been the main reason for the United States tuna fleet 
to be based in Pago Pago. It would probably make no economic 
sense for United States boats to cull American Samoa if they 
did not have the opportunity of delivering their catches 
directly to the canneries there. If no canneries will remain in 
American Samoa, we will probably change our operation and 
become Taiwanese style, and we will establish our base 
somewhere else in the South Pacific, closer to the fishing 
grounds.
    Our method of operation is much different from the method 
used by other fleets operating in the western and central 
Pacific Ocean, mainly Taiwanese, Chinese, and Korean. Those 
vessels remain on the fishing grounds for as long as a full 
year, sometimes more. And as soon as the vessels are full, they 
transship their catches regularly on refrigerated carriers 
utilizing ports that are close to where they are fishing, thus 
maximizing their fishing efficiency and their volumes of 
catches.
    While the information on the catches landing in American 
Samoa by the American Samoa-based fleet is readily available to 
anyone, we do not have information on the actual volume of 
catches of these other fleets. But based on some numbers that 
we have been able to access unofficially, we estimate that 
their average catch is close to double the average catch of the 
American Samoa-based fleets.
    I personally believe, as an American, in the right of 
Americans to conduct their business in any way that is legally 
permitted to do. The incentive that the H.R. 3583 is 
considering is not to help the canneries or the fleet; it is to 
help American Samoa.
    There is undeniable evidence that the vessels based in 
American Samoa are burdened with additional operating costs and 
are, in general, less productive than the foreign-based fleets 
operating in the same general area. The difference, again, is 
operating style. To mitigate the higher costs of operating out 
of American Samoa, the vessels need the grants proposed in H.R. 
3583. And I am thankful to Congressman Faleomavaega for 
proposing that.
    The grants will not cause an increase in catch. On the 
contrary, they will produce less catch, while they would be 
better managed and more controllable. The vessels cannot 
continue to operate in American Samoa if the canneries are 
gone. The canneries need to receive grants in order to be able 
to compete with the cheaper products coming from overseas. And 
they also need vessels to deliver fish to them on a regular 
basis. Two canneries, of course, is better than one, because 
the vessels always need options. We hope that someone will take 
over the cannery left vacant by Chicken of the Sea.
    By the way, if there are no canneries, there will no longer 
be the large container vessels that bring the cans back to the 
United States from Pago Pago and go back to Pago Pago empty 
and, therefore, have a chance to bring to American Samoa all 
the things that they need at a very reasonable cost. Everything 
in American Samoa will become more expensive, and it would be 
tragic for that to happen while most of the island population 
would be unemployed.
    I do support ASPIRE, but I would like to work with Congress 
to see if an amendment to the tax bill can be made to eliminate 
the fees and penalties. We believe in the freedom of the 
entrepreneurs to choose how they operate. If everybody gets a 
fair chance to make use of these grants and there are no 
penalties for those who choose to operate away from American 
Samoa, there is no reason why any American would not want to 
support the great people of American Samoa.
    ASPIRE is the right step in the right direction.
    Ms. Bordallo. Excuse me----
    Mr. Curto. I don't know if American Samoa should diversify 
its economy by attracting other activities. I only know the 
tuna business. And I know that, within our tuna industry, we 
have a concrete chance to make a difference by saving jobs that 
have just been lost and creating new ones. I am talking about 
thousands.
    [The prepared statement of Mr. Curto follows:]

   Statement of Renato Curto, President, Cape Fisheries Holdings, LLC

    Chairwoman Bordallo, Ranking Member Brown, Members of the 
Subcommittee on Insular Affairs, Oceans and Wildlife, good afternoon, 
and thank you for allowing me to appear before you today to present my 
testimony in connection with this Hearing on the American Samoa 
Protection of Industry, Resources and Employment Act, H.R. 3583 
(ASPIRE).
    My name is Renato Curto and I am testifying in my capacity as 
President of Cape Fisheries Holdings LLC, owner and operator of a fleet 
of 8 large U.S.-flag purse seine tuna vessels based in American Samoa 
(F/V Cape Breton, F/V Cape Cod, 
F/V Cape Elizabeth, F/V Cape Ferrat, F/V Cape Finisterre, F/V Cape 
Hatteras, 
F/V Cape May, and F/V Cape San Lucas). I am the majority owner of our 
fleet.
    I support ASPIRE because it offers a concrete and meaningful way to 
guarantee the survival of that same tuna industry that has provided for 
many years for the livelihood of thousands of families in American 
Samoa. I also support ASPIRE as I consider it a means for the United 
States of America to continue to participate and to maintain its 
leadership role in those international fora which deal with matters so 
important as the protection of the environment, the conservation of a 
well balanced marine eco-system and the sustainability of the fishing 
resources.
Background
    I was born and raised in Rome, Italy in 1944. After graduating at 
the University of Rome in Economics and Commerce and after serving the 
Italian army for 18 months, I worked in Arthur Andersen for 3 years 
before I was contacted by a major Italian Tuna manufacturer and brand. 
My journey in the Tuna World started in 1973, when I left my country 
and moved to Mexico to manage a tuna fishing joint venture for my 
employer.
    In 1979, from Mexico, I moved to San Pedro, California, to help 
start a tuna trading company, named Tri Marine International Inc. Tri 
Marine is today one of the largest tuna trading companies in the world. 
In addition to being President of Cape Fisheries Holdings, I am now the 
majority shareholder and Chairman of the Tri Marine Group of Companies.
    The establishment of our company in San Pedro was an easy choice: 
together with San Diego, it was, at the time, the center of the U.S. 
Tuna Industry. We thought it would be a good idea to be in the 
proximity of the major tuna processors and brands in order to better 
cater to their needs.
    I became a U.S. resident in 1980. In 1985 I was offered the 
opportunity to acquire Tri Marine together with my partners in a 
management buyout. This was a major step in my life. I was finally 
embracing my ``American Dream'', which culminated in the year 2001 when 
I proudly became a U.S. citizen, and I was finally in a position to 
fulfill my aspiration of also being a U.S. boat owner. In May of that 
year we concluded the purchase of a tuna fleet of 8 vessels.
    During my 36 years of active work in the tuna industry, I directly 
participated in the ownership and management of companies operating in 
different areas, from fishing, to trading, to processing, to marketing, 
including a joint venture ownership in 1996 of the only remaining 
cannery in the Continental U.S., (Pan Pacific Fisheries ) based in 
Terminal Island, California. A year later, in joint venture with the 
same partners, we acquired one of the three main U.S. brands of tuna: 
Chicken of the Sea. The two companies were merged one year later. In 
2001 we sold our interest to the current owners, Thai Union.
    I believe I can say that I have been able to acquire a fair 
knowledge of the U.S. tuna business.
Use of American Samoa as a Tuna Fishing Base
    The presence of Chicken of the Sea and Star Kist in American Samoa 
has been the main reason for the U.S. tuna fleet to be based in Pago 
Pago. It would probably not make economic sense for the U.S. boats to 
call at American Samoa if they did not have the opportunity of 
delivering their catches directly to the canneries there.
    The closure, on September 30th, of the Chicken of the Sea plant, 
has been reason for serious concern for all the boats based in American 
Samoa. The recent devastation caused by the tsunami has further 
demonstrated how difficult it is for the U.S. boats to operate 
efficiently if they do not have the possibility of a prompt unloading 
of their catch.
    Besides the need to have good sales options for our fish, we have a 
number of logistical reasons for wanting to stay in American Samoa:
    For one, we believe in the right of our crews to take a break after 
each fishing trip, to allow our U.S. fishing masters and captains to 
fly home and visit their families before starting a new trip.
    We also have the need to take care of repairs and maintenance work 
to be done on our vessels. We need a place where we can consolidate the 
shipment of supplies, spare parts, fishing gears, electronic and 
mechanical equipment, and other materials that may be needed on board.
    By using Samoa as a base, we also allow our fleet managers and our 
team of Samoa-based engineers and technicians, to go onboard our 
vessels, discuss any potential issues with the captains, deck bosses 
and chief engineer, make sure that the crews are fine and nobody got 
injured, and then undertake to properly outfit and supply the vessel 
for the next trip.
    There is undeniable evidence that the vessels based in American 
Samoa are burdened with additional operating cost and are in general 
less productive than the foreign-based fleets operating in the same 
area: but the difference, again, is operating style.
Alternative Operating Method--Transshipment
    Our method of operation is much different from the method used by 
other fleets operating in the Western and Central Pacific Ocean (mainly 
Taiwanese, Chinese and Korean). Those vessels remain on the fishing 
grounds for as long as a full year (sometimes even more). As soon as 
their vessels are full, they transship their catches regularly on 
refrigerated carriers, utilizing ports that are close to where they are 
fishing, thus maximizing their fishing efficiency and their annual 
volume of catches.
    While the information on the catches landed in Samoa by the Samoa-
based fleets is readily available to anyone, we do not have information 
of the actual volume of catches of these other fleets, but, based on 
some numbers we have been able to access unofficially, we estimate that 
their average catch is close to double the average catch of the Samoa-
based fleets.
    I personally believe, as an American, in the right of Americans to 
conduct their businesses in any way that is legally permitted.
Why We Need ASPIRE To Be Enacted
    For the reasons explained above, I am here today to request your 
support for the proposed ASPIRE legislation, H.R.3583.
    At the same time, I would welcome the opportunity to work with 
Congress in order to find ways to eliminate the fees and penalties that 
the current text of the ASPIRE legislation is contemplating. I do not 
believe it is necessary to punish boat owners for choosing not to go to 
American Samoa to unload. I believe that the U.S. boat owners should be 
free to decide where to go fishing, where to unload their catches, and 
in which markets to sell their fish.
    The Samoa-based vessels and canneries need an incentive in order to 
continue to operate there, and I believe that this incentive (in the 
form of a grant) should be made available to each and every one of the 
U.S.-flag tuna purse seiners operating in the Western Pacific under the 
South Pacific Tuna Treaty, and it should also be made available to each 
and every U.S. citizen who decides to own and/or operate a tuna cannery 
in American Samoa. This incentive is not for Star Kist. The proposed 
ASPIRE Act provides for the grants to be available to anyone. For 
example, Chicken of the Sea could come back to Pago Pago if the ASPIRE 
legislation is adopted, and Bumble Bee could very well establish their 
own canning operation in American Samoa if they see that it is a 
convenient location and there is enough economic incentive to do so. 
Our hope is that, in any event, someone would come up and take over the 
Chicken of the Sea Cannery: we all need more than one buyer for our 
tuna.
    Chicken of the Sea closed their factory in Pago Pago and moved to 
Georgia, for valid business reasons that are consistent with what I am 
saying. In their new facility they will put in cans tuna loins that 
they can source from around the world at the cheapest available prices. 
Bumble Bee has been doing the same thing for many years already at 
their plant in Santa Fe Springs, California. It was their choice and 
their prerogative, not their obligation.
    While Star Kist's situation may not be much different from that of 
Chicken of the Sea, for the time being, they are still in American 
Samoa processing raw tuna, although they have apparently downsized 
their workforce. Star Kist deserves a chance to survive in American 
Samoa and to be competitive with the canneries that produce and export 
cheap tuna to the U.S. We, as boat owners based in American Samoa 
welcome the decision of Star Kist to remain there, and we hope that the 
proposed ASPIRE legislation will be a sufficient incentive for Chicken 
of the Sea, Bumble Bee and/or others, to use American Samoa as their 
production headquarters, processing mainly raw tuna caught by U.S. flag 
purse seiners.
    ASPIRE is the right step in the right direction. I don't know if 
American Samoa should diversify its economy by attracting other 
activities like tourism or high tech businesses or call centers, as I 
have heard for the past several months. I only know the tuna business 
and I know that, within our tuna industry, we have a concrete chance to 
make a difference by saving jobs that have just been lost and by 
creating new ones. I am talking about thousands of jobs, not hundreds.
    If Star Kist were to decide to also abandon their canning operation 
in American Samoa, we would probably be forced to change our style of 
operation and do what most of the other fleets do: transship 
frequently, increase our volume and be competitive. Or, perhaps, we 
would sell our fleet to foreign interests. If the other Samoa-based 
boats think like me, the unfortunate result would be for American Samoa 
that their tuna industry, which has been providing thousands of jobs 
for the over half a century, will completely disappear. With it, a lot 
of other businesses, suppliers of goods and services to the tuna 
vessels and the carriers calling at Pago Pago, may be forced out of 
business, thus putting virtually all of the population of American 
Samoa out of a job.
    And the large container ships which transport Star Kist and Chicken 
of the Sea canned tuna to the continental United States will no longer 
be available, on their empty return trips, to bring back to Samoa much 
of what the Island needs. The cost of fuel in American Samoa will most 
likely increase a lot due to the much reduced volume that will be 
required after the departure of the canneries and the fleet. The same 
would happen with a lot of other necessities for the Island that may be 
priced on volume usage. The cost of living would dramatically increase 
for all the citizens of American Samoa while, at the same time, there 
would be the highest unemployment ever.
    In summary, there is a symbiotic relationship between the boats 
based in American Samoa and American Samoa itself. Boats need American 
Samoa as much as the American Samoa economy needs the boats. The boats 
need services and supplies. More importantly, they need a market for 
their fish. If there are no canneries, or no buyers for their catch, 
the boats will lose the market for their fish. We cannot allow that to 
happen. And we cannot allow the American Samoa people to remain without 
a job.
    I urge you consider the ASPIRE legislation as a means to accomplish 
the goal of keeping the tuna industry in American Samoa.
    Thank you for your patience and for your allowing me to testify in 
support of this legislation.
                                 ______
                                 
    Ms. Bordallo. Thank you. Thank you very much, Mr. Curto.
    Mr. Curto. I apologize for being longer.
    Ms. Bordallo. That is all right. I do want to remind the 
witnesses that your full written statement will be entered into 
the record.
    Mr. Curto. Thanks.
    Ms. Bordallo. So we are just trying to hold on to time. We 
have lost a few more Members again because there are votes. But 
because we only vote in the Committee of the Whole, we still 
have the territories present here.
    So I would like now to thank all of you, and we will 
recognize the members of the Subcommittee for any questions 
they may wish to ask. And we will begin with the author of the 
bill, Mr. Faleomavaega.
    Mr. Faleomavaega. Thank you, Madam Chair.
    And I do want to thank the members of the panel, 
representing their various interests as far as the U.S. tuna 
industry is concerned. Quite obvious, Madam Chair, we have 
quite diverse opinions, in terms of the issue.
    And I would just say, with all the respect that I have in 
Mr. Binotto; Mr. Lischewski, whom I have known and respect his 
opinion as one of our great leaders and experts as far as the 
tuna industry is concerned. And, Mr. Renato, good to see you, 
as well.
    Ms. Roth, I did not mean to suggest that you are not an 
economist. I was only saying you are being naive in terms of 
how American Samoa ended up where we are, as far as the minimum 
wage has been. And I don't know how else to say that, for 50 
years, I just think that our people have not been given the 
fair treatment, as far as proper wages. And here, again, it is 
an economic issue. And our friendly canneries have always been 
competing and cutting each other's throats in every way 
possible. And so it is true with the fishing fleet. So my 
problem is, how can I possibly bring our friendly tuna 
processors and our friendly tuna fleet to work together so that 
we can all mutually benefit?
    And the problem that I wanted to share with you, StarKist 
is the only remaining cannery that I have left in the 
territory. And I would like to ask Mr. Binotto, do you see that 
you will also be doing the same thing that Chicken of the Sea 
and Bumble Bee is going to be doing, if there is no playing 
field given to your problems, just in terms of the price and 
the wages and the higher costs of living?
    And, by the way, the minimum-wage issue is another issue in 
itself, but I just want to say: The wages are down, but the 
cost of living continues to go up. And my constituents are very 
concerned about that. But that is a different issue.
    But I would just like to ask Mr. Binotto quickly, do you 
actually think that you are going to follow what Chicken of the 
Sea and Bumble Bee is doing now if nothing gets done to help 
our tuna industry in American Samoa?
    Mr. Binotto. Good Congressman, as you probably know, 
StarKist was sold last October 6th, actually a year ago from 
now, a year and a little bit.
    I can assure you right now, despite--well, we are a private 
company, not to share the financials that we have, but Del 
Monte didn't sell StarKist Seafood because they made a lot of 
money. Profitable companies don't get sold. That is just a 
fact.
    And so, as you know, when I came onboard on October 6th and 
took a look at the financial situation of the StarKist 
business, it was really apparent that the company is having a 
very difficult time competing against low-wage countries and 
against those processors who have made, I believe--and it is 
not a criticism of what Bumble Bee and Chicken of the Sea have 
done--they made a logical choice, a logical economic choice, 
and that was to bring third manufacturing process onto the 
United States. But they do that by employing low-wage countries 
to do all the labor to process the fish.
    We can do the same. It is not a secret. That is what the 
whole testimony was about today. I don't want to do that. We 
have been there for 50 years. The American Samoa people have 
built the brand and business. They are as largely responsible 
for the success of StarKist tuna as the management team is.
    And I think, when you came to us with the bill that you 
sponsored, it offered us a solution, an opportunity. It wasn't 
picking out StarKist; it doesn't pick out just StarKist. It is 
saying, if you want to stay in American Samoa, we have an 
option for you to help you lower your costs so that you can 
compete not only against the domestic groups who made a very 
good, wise decision, but also against the low-wage countries 
that produce tuna much lower than we can.
    I didn't come here to tell you the day that I was going to 
resign from American Samoa. That was not the purpose of this 
testimony. I don't want to do that. I want to come here to see 
if there is a way that we can stay.
    But I can tell you personally, if you were to take a look 
at the financial statements that we have and the financial 
statements that we had last year, time is of dire--we are in 
dire straights right now. We need something to compete against 
low-wage countries.
    I hope that helps answer the question.
    Mr. Faleomavaega. I appreciate that.
    I will wait for the second round. Thank you, Madam Chair.
    Ms. Bordallo. I thank the gentleman from American Samoa. We 
will have a second round.
    I would like to recognize the gentlelady from Virgin 
Islands, Ms. Christensen.
    Mrs. Christensen. Thank you. I am going to ask just one 
question, and then I will yield to the gentleman from American 
Samoa, if he would like.
    I would also like to ask Mr. Binotto: Several of the people 
who have testified have made reference to the increase in the 
minimum wage in American Samoa. And I would like you to tell me 
how big a factor that is in the whole picture of all of the 
things that are going on.
    Is the increase in the minimum wage a major factor that you 
think would cause your company to have to move?
    Mr. Binotto. It would be silly to say it wasn't. The big 
issue is the gap. It is the gap between what we pay American 
Samoans and the wage that is being paid to those in lower-wage 
countries, which----
    Mrs. Christensen. But it is not specifically because we 
have raised the minimum wage in American Samoa, is it?
    Mr. Binotto. The higher wages that we have in American 
Samoa is obviously a huge challenge for us to be profitable. It 
is without question.
    Mrs. Christensen. Sure, I understand that 70 cents an hour 
compared to $5 an hour is a huge gap. But I did not think that 
the small increase that we have imposed on American Samoa had 
created the problem.
    Mr. Binotto. Let me give you a quick number. I am an old 
CPA, so one number rolls through my head.
    Next year, the next wage increase, we will go up to 
approximately to $5.60 an hour. And you will understand, I 
hope, why I explained the gap. We are competing against 
countries that are being paid 50 to 60 cents. Every one of us 
testified to that number. If you were to take the 2,000 
employees we basically have in American Samoa times 2,080 
hours, times that gap, it is not a magical number; it comes up 
to $23 million.
    So I think you can quantify it very easily, to those who 
don't believe or understand the significance of it, it is 
important. Because let me state one last fact to it. Selling 
tuna in the United States--the reason why two competitors are 
here is because they know it is an extremely competitive 
business. I don't have an issue with them testifying to what 
they are saying, but I do want you all to understand: It is an 
extremely competitive situation.
    We don't make $2 a case on chunk light halves. On some of 
the businesses that we have, the margins are razor thin. 
Pennies then become extremely important. So, yes, higher wages, 
the example I just gave you which sites the $23 million, I 
think you can start to understand how important it is, 
especially when this company was sold last year and it lost 
money. Just a fact. Those records are public.
    Mrs. Christensen. I would like to yield the rest of my time 
to the gentleman from American Samoa.
    Mr. Faleomavaega. I thank the gentlelady for yielding.
    I just want to say to Mr. Sawyer, I have always held 
Chicken of the Sea with the highest regard. And, over the 
years, I thought we had a good working relationship.
    But I want to note for the record, Madam Chair, that at no 
time did any of the Chicken of the Sea officials ever tell me 
that they were very concerned about these issues and that there 
were any plans about leaving. They only told me the day that 
they leaving.
    And I just went to say that I was very disappointed and 
saddened by the fact that I had hoped and thought that there 
would be some consultations or give us a warning bell or 
something to say that we have some serious problems here. You 
just stood up and left and just said goodbye. And I just want 
to say that there were no consultations with my office about 
your prior plans to leave at any time. And I just want to say 
that.
    To my good friend, Mr. Lischewski, I have the utmost 
respect for you as a dear friend. And you know the industry as 
well as anyone here, with Mr. Binotto and others. And you know 
we had discussions about this issue.
    And I wanted to ask you, what would be your suggestion in 
helping the tuna industry in American Samoa? I have no 
intention of wanting to hurt the workers in Puerto Rico or 
California or even in Georgia. My only intent is just try to 
figure how can we help the tuna industry.
    Your suggestion about a grant to education and all this 
other stuff is nice and good, but I am looking at the reality. 
We have been dealing with this industry for 50 years, and we 
have the expertise, we have the ability to grind out or produce 
some $40 billion worth of canned tuna that has been exported to 
the United States. I think that speaks well with the ability of 
the Samoan people to work diligently.
    But I would like to ask your suggestions, how can we 
improve this bill?
    Mr. Lischewski. Congressman, I don't know, in our opinion, 
if there is a way to improve the bill. I think you know that I 
am on record, and I would probably disagree with Mr. Binotto, 
that I believe it is up to the companies themselves to ensure 
that they are competitive.
    We have never counted on the U.S. Government in a free-
enterprise system to subsidize our business or make us 
competitive. We also used to have----
    Mr. Faleomavaega. Well, let me just--you are saying----
    Ms. Bordallo. Let the witness finish.
    Mr. Lischewski. We also, at a time, had 1,500 jobs in 
Puerto Rico. We had a lot of jobs in Hawaii. And based on the 
reality of the competitive environment we dealt with, we were 
forced to reduce those jobs. We have moved our loining 
offshore, as you have mentioned, but we have retained U.S. 
processing operations.
    We believe American Samoa can continue to be extremely 
competitive without the benefit of subsidies if they were to 
move to a loining strategy. It is clearly a far lesser 
employment number than what you have today, but it retains an 
industry, it retains the can-making industry, it retains the 
shipping industry, it retains the infrastructure of American 
Samoa.
    But giving an advantage, to the extent that you are talking 
about, the amount of dollars, gives our competitor, as Don 
mentioned, in an extremely competitive environment, an unfair 
competitive cost advantage which we just cannot survive.
    Mr. Faleomavaega. Well, I just wanted to say, Chris, that 
you are currently getting an $18 million subsidy to help our 
fishing fleet to fish in the South Pacific island nations.
    Now, that is perfectly OK to get a subsidy to do fishing, 
but it is not OK to get some kind of assistance to help the 
only tuna cannery left that we have that produces whole tuna 
and not just loins in the way that Chicken of the Sea and your 
company currently operates?
    Mr. Lischewski. Again, I think you would have to speak with 
the State Department on the U.S. tuna treaty in the South 
Pacific. I would not characterize it as a subsidy. I would 
characterize it as U.S. Foreign policy in the South Pacific. It 
enables the entire U.S. tuna fleet--and that means any U.S. 
individual that wants to get in the tuna fishing fleet today 
that can get one of the limited licenses we have--gives them 
multilateral access to the fish grounds of 17 island nations.
    The State Department has maintained that treaty for some 
time. And, again, I do believe they would consider it foreign 
trade--I mean, not foreign trade, but foreign policy rather 
than a subsidy.
    Ms. Bordallo. I thank the gentleman from American Samoa.
    I would like to give an opportunity now to the gentleman 
from CNMI, Mr. Sablan.
    Mr. Sablan. I wasn't going to ask any questions, I was 
going to be nice, until Ms. Roth testified.
    Truly, Ms. Roth, I don't know what planet you came from 
that lower wages make everyone successful.
    But I will go to a--I come from a low-wage district. So, 
Mr. Walsh, if I may ask--and this is probably related to the 
question Eni just asked of Mr.--I will call you Chris. You 
testified that the U.S. Government should not subsidize the 
tuna processors. And I can't say you got this in the Senate, 
because, you know, I used to work there too. But yet the U.S. 
Government pays over $450,000 annually to secure fishing rights 
for its U.S. tuna fishing boats while each boat pays $75,000.
    So, again, is it OK to subsidize your boats but not the 
processors, if I may?
    Mr. Walsh. The question was intended for me and not for my 
colleague here.
    Mr. Sablan. Mr. Walsh, yes.
    Mr. Walsh. I think the answer to the question is just 
exactly as Mr. Lischewski has answered it. When the U.S. tuna 
fleet had to depart the Eastern Tropical Pacific, there simply 
was not enough tuna available in U.S. waters to support the 
fleet. So we had to have an access agreement.
    And it was very clear that, if we compared the licenses 
that had to be paid by other countries, Japan and Korea, it was 
very unlikely that our boats could compete. It is also true, 
quite frankly, that the islanders would prefer to deal with 
U.S. vessels, they would prefer to deal with the U.S. 
Government. And so, as a consequence----
    Mr. Sablan. Mr. Walsh, I only have 5 minutes.
    Mr. Walsh. As a consequence, the State Department said 
there is a foreign policy reason for paying $18 million. And 
that has been the case ever since the treaty was signed.
    Mr. Sablan. OK. So it is OK to subsidize the boat but not 
the processors. That must be the answer.
    I was really was going to be nice until Ms. Roth testified. 
I am not talking to--you don't have to answer that, Ms. Roth.
    Ms. Furchtgott-Roth. It is OK. I can answer any question 
you like.
    Mr. Sablan. Mr. Sawyer, Chicken of the Sea, we understand 
that you do not support the economic development--the proposal 
in ASPIRE. So what do we do with the people of American Samoa? 
Do we just walk away from them? Leave them no jobs and probably 
put them on food stamps and Medicaid for every Samoan who lives 
in American Samoa? What do we do with them?
    Mr. Sawyer. Well, I think that we need to diversify----
    Mr. Sablan. They are Americans that go to work so that you 
and I can sit here and discuss, argue over this economic issue. 
What do we do with these people?
    Mr. Sawyer. Re-educate them----
    Mr. Sablan. Oh, really?
    Mr. Sawyer. When you specialize the economy, you need to 
diversify.
    Mr. Sablan. Right. Like having nursing home training there, 
like Ms. Roth suggested. Take people from the East Coast, send 
them there for nursing education, and then send them back after 
they get their degrees.
    What do we do with them, truly, in the present reality?
    Mr. Sawyer. I don't have a solution. I don't have a 
recommendation.
    Mr. Sablan. So we leave them alone. Thank you.
    Ms. Furchtgott-Roth. Oh, I wasn't suggesting sending them 
from the East Coast.
    Mr. Sablan. It is my time.
    Ms. Furchtgott-Roth. I was suggesting sending them from 
surrounding areas.
    Mr. Sablan. It is my time, please.
    Chris, you said that you pay some of your workers as much 
as $13 an hour. I would like to know some more about your 
workforce. How many workers get paid $13 an hour? What do they 
do exactly? And where are they; are they outside the United 
States or in the United States?
    Mr. Lischewski. In the United States. We have 220 workers 
in our canning operation in Santa Fe Springs, California. The 
average hourly wage is $13.75. They are engaged in the canning 
of tuna.
    Mr. Sablan. And you still make money?
    Mr. Lischewski. Yes, we do.
    Mr. Sablan. And you were paying your workers less in 
American Samoa.
    Mr. Lischewski. Bumble Bee has never been in American 
Samoa.
    Mr. Sablan. All right. But, so, the canneries in American 
Samoa pay their workers less, and they are losing money also.
    Mr. Lischewski. I can't speak for that.
    Mr. Sablan. All right. How much do you pay the workers who 
clean and process the fish into loins?
    Mr. Lischewski. We don't have any operations involved in 
the cleaning of loins. We buy fish and the finished loins.
    Mr. Sablan. The finished loins. So those fish are----
    Mr. Lischewski. I will tell you, to your question, while we 
are not involved and these are not our employees, the factory 
we operate in Fiji pays around $2.80 an hour, and the factory 
in Trinidad around $3.15 an hour. But, again, those are not our 
employees.
    Mr. Sablan. I understand that. So the finished product has 
no one, in your opinion, that process anything before they get 
to California, got paid $13.25 an hour. Probably no American 
citizen.
    Mr. Lischewski. I am not aware of anyone getting paid that 
rate to process round tuna.
    Mr. Sablan. All right. Thank you.
    Madam Chair, thank you very much.
    Ms. Bordallo. I thank the gentleman from CNMI.
    I have a few questions, and then we will end up with the 
author of the bill again, Mr. Faleomavaega. I am sure he has 
more questions.
    All right. For Mr. Binotto, StarKist, what guarantees do we 
have that, even if this bill were to pass, that you wouldn't 
pull your operations out of American Samoa once the next 
minimum-wage increase kicks in?
    Mr. Binotto. Madam Chair, one of the things I can tell you 
about--let me give you just a little bit of background and then 
I will answer your question specifically.
    Historically, American Samoa, StarKist American Samoa, used 
to employ approximately anywhere from 2,400 to 2,600 employees 
annually--or at any one given time, excuse me. And, in the last 
several months, actually in the last 18 months, we have taken 
that employee count down from 2,500 people to less than 1,700, 
which it is today.
    I will look you straight in the eye and I will assure you 
of one thing for sure. If ASPIRE was to get passed, we believe 
we would have an opportunity to bring it back to the historical 
levels. And if ASPIRE was to get passed, it would provide us at 
least the ability to go--as it is written today, it would give 
us the ability to go forward and stay into American Samoa 
through the foreseeable future.
    Ms. Bordallo. And if the next minimum-wage increase kicks 
in, would your company still----
    Mr. Binotto. The way ASPIRE is written right now, it does 
have a wage escalation clause, which basically keeps the gap 
from us to the low-wage countries. That is why the importance 
of that clause is in there.
    Ms. Bordallo. All right.
    Mr. Binotto. As long as that clause is in there, I can 
assure you we will stay in American Samoa through the 
foreseeable future.
    Ms. Bordallo. OK. The next question is, would you support a 
provision in the legislation that would require a minimum time 
commitment for any company which receives the subsidy?
    Mr. Binotto. Absolutely.
    Ms. Bordallo. OK.
    And then I have a question for Bumble Bee, Mr. Lischewski. 
One of the issues addressed in your testimony is that tuna 
processors like Bumble Bee will not receive any of the proposed 
subsidies unless they operate in American Samoa. I heard that 
in your testimony.
    Then why not simply open a plant in American Samoa?
    Mr. Lischewski. I think the cost of opening a plant entails 
a very high cost of capital. Bumble Bee has made significant 
capital investments over the last 10 years to establish a 
processing network which includes the factories in Puerto Rico 
and California. Forcing us to pick up and move and build a new 
factory because of a government subsidy program we think is not 
part of the U.S. system.
    Ms. Bordallo. Mr. Sawyer, to follow up on a question that 
Mr. Faleomavaega asked, can you expound on your statement that 
you attempted, over the years, to work with the U.S. Federal 
Government to address the issues with operating in American 
Samoa but were ultimately unsuccessful? Did you make specific 
proposals, and can you recall what they were and what the 
responses were?
    Mr. Sawyer. I, personally, was not involved in any of the 
discussions. In fact, I have never met the Governor that was 
here earlier or the congressman. And we have had a number of 
leadership changes.
    However, my understanding is that our leadership team has 
diligently worked through both a American Samoa team as well as 
a U.S. Government. I do not have any recollection of what the 
details were related to those programs because I was not 
intimately involved with it.
    Ms. Bordallo. All right.
    Then for Mr. Walsh, the ASPIRE legislation appears to be 
built on the premise that, if you charge the boats that don't 
currently deliver to American Samoa, they will change their 
behavior and encourage greater deliveries. Your testimony 
contends this won't be the case. Would you please expand on 
this point?
    Mr. Walsh. Well, I think--let me make one point. I think 
all the boat representatives here today said that the 
additional fee and the taxes seem not to be sensible. The 
question then would be whether there would be sufficient 
enticement through the subsidy--and, for my clients, it would 
be $100 a ton--to offset the issue of simply turning these 
fishing boats into transport vessels and cold storage 
facilities.
    We just simply do not believe that that number, given the 
reality of the business of having to deliver, is going to come 
anywhere close to taking care of the extra cost of taking 
fishing vessels away from what they should be doing, which is 
fishing, and instead taking them into transport vessels.
    I provided a map with my testimony, and it is a very stark 
indication of where the tuna fishing grounds are for the 
fleets. And they are a fair distance away from American Samoa. 
And they run all the way across, 10 degrees north, 10 degrees 
south. And that is where the good fishing is.
    And they need to get their boats empty so they can go back 
to do what they are supposed to do, which is fishing. And this 
whole legislation would simply say, ``We are going to make you 
into a transport vessels, and you may or may not break even 
with a subsidy.''
    Ms. Bordallo. Thank you very much.
    I will now refer to the author of the bill, Mr. 
Faleomavaega.
    Mr. Faleomavaega. Thank you, Madam Chair.
    I just want to make an observation. Ms. Roth, you had made 
a statement about a simple way to fix this is to allow American 
Samoa to set up their own minimum wages.
    Well, I just want to share with you an experience. These 
are my Republican friends who have come up and complained to me 
and said, ``Eni, why should American Samoa be treated 
differently from us?'' If my district has got 19 percent 
unemployment--so why should American Samoa be treated with 
smaller wages than what our national government provides for 
both States as well as territories?
    Ms. Furchtgott-Roth. Well, your Republican friends are 
wrong. Here, the U.S. Congress, our government, is putting 
American Samoa and its workers out of business. As I said 
before, if Congress said my salary should be doubled, had to be 
doubled, I would be fired tomorrow.
    And if you just look at the example of teenagers in the 
United States, when the minimum wage here went up to $7.25, 
unemployment hit 26 percent among American teenagers----
    Mr. Faleomavaega. Reclaiming my time, Ms. Roth. And I see 
where you are driving at, but here is my concern. We went 
through the system under the auspices of the Department of 
Labor, and they came up with recommendations: 2-cents-an-hour 
increase in wages, 3-cents-an-hour increase in wages.
    What can you possibly do with an increase in wages at 24 
cents a day when the cost of living continues to go up? This is 
what my constituents complain to me about; the wages just are 
not commensurate with the cost of living. This has been the 
problem with us for all these years. And I just wanted to note 
that.
    Mr. Walsh, you had indicated that there needs to be some 
kind of a more comprehensive foreign policy about the whole 
tuna industry, and I agree with you. But I think, to Mr. 
Lischewski, about this idea that it is OK to subsidize our tuna 
fishing fleet with $18 million, but it is not all right to put 
some kind of a subsidy for our processors.
    Now, in fairness, obviously, we have three of our main tuna 
processors here this afternoon having a totally different 
operation in terms of how this thing has now been done for the 
past 50 years.
    Where we are now, would you recommend that StarKist should 
also leave and be part of the trend that we are to take 
advantage of the cheaper labor out there for gutting and 
processing the fish, rather than in a U.S. territory like 
American Samoa?
    Mr. Walsh. I don't think I can give you any recommendation 
with regard to the processing facilities. I really don't. That 
is not my portfolio here today.
    I do know that in other places in this country in fisheries 
policy, for example in Alaska, because they had a very large 
pollock resource, Congress, led by the Representatives of 
Alaska, said that 10 percent of all the pollock went to the 
native tribes in Alaska. Many of them had become 
multimillionaires as a result of it. It is considered a very 
wise public policy for the natives in that area. They have made 
great use of that.
    And that is a good policy if you are dealing with your own 
fishery resource. But if you are not dealing with your own 
fishery resource, it is hard to say that people who catch fish 
overseas should pay a fee or a tax into a domestic program in 
the United States.
    Mr. Faleomavaega. All right.
    Mr. Walsh. If there is no $18 million, you know what is 
going to happen better than anyone, Congressman. You work out 
there all the time. I have practiced law in Yap and Guam. There 
won't be any U.S. tuna fleet if there is no treaty like that.
    Mr. Faleomavaega. Well, I will say that there is absolutely 
no question about the changes coming about from the Pacific 
island nations that. The Nauru Agreement that is now pending, 
where they are going to want to control the pricing of the 
tuna, the fish days, requirements are now being discussed.
    Mr. Renato, thank you so much for coming. And I just wanted 
to ask you, did you think that your friends from the South 
Pacific Tuna Corporation, are they being truly disadvantaged 
with this offering in trying to bring our tuna fleet to help us 
revive the tuna industry in American Samoa?
    Mr. Curto. Congressman, I think I said in my testimony that 
I believe that the only part of your proposed legislation I 
would like to work on is the issue of the fees and the 
penalties.
    The SPTC and our group, other boat owners that are not here 
today, belong to an association which is called the American 
Tunaboat Association; and we share the meeting rooms and we 
share the same common problems that we have. So it is not 
pleasant to consider in the same group to say, OK, you are 
going to pay for me to get the subsidy.
    So if the subsidies are eliminated, what I said is that I 
see no reason, without the subsidies and the fees, why any boat 
under U.S. flag would oppose this legislation.
    Mr. Faleomavaega. I am sorry. My time is up, Madam Chair. 
Thank you.
    Ms. Bordallo. I thank the gentleman.
    And returning from voting we have Grace Napolitano, the 
gentlelady from California. You are recognized.
    Mrs. Napolitano. Thank you, Madam Chair. I am sorry I 
missed, but then we had to run to the Floor and do our duty.
    I am not sure what I missed while I was gone. I am sure 
there is a lot of other testimony that was presented, and I 
think a lot of it has already been asked.
    One of the things that if the bill were to pass is, how do 
you believe--and this is for Mr. Lischewski--that would impact 
the jobs in my district, in your Santa Fe Springs cannery, and 
if you have any information about what it would do to Puerto 
Rico and the proposed plant in Georgia.
    Mr. Lischewski. Speaking for Puerto Rico, it would clearly 
put us in a very strong position to leave Puerto Rico. And 
Santa Fe Springs would be absolutely borderline. We would 
really have to look at whether it makes sense to stay in the 
U.S. at all or move all of our operations offshore.
    I can't speak for Georgia.
    Mrs. Napolitano. You have two tuna canning facilities in 
the U.S., and both pay higher than minimum, California paying 
the higher $13 an hour.
    Both receive loins. And I may add, and I think I mentioned 
to you before, when I visited the plant, that I have a son who 
worked in the seafood industry, so I have a little more 
knowledge about the loin issue. Both canneries receive loins 
that have been processed overseas to produce the finished 
product.
    When did you first begin operating under this system? And 
is it cost competitive, and do you think this business model 
could succeed in American Samoa?
    Mr. Lischewski. Bumble Bee first started into loining 
probably about 15 or 16 years ago and converted to a 100 
percent loining operation around 2001. We believe it is a very 
competitive cost model. We believe it allows us to be cost 
competitive with imports from Southeast Asia, as demonstrated 
by our own profitability and our market share, and we believe 
it is something that can be replicated in American Samoa.
    As you mentioned, we pay $13.75 an hour average wage in 
California and $7.75 in Puerto Rico; and again, those are all 
high-quality positions, very stable, year-round positions, and 
again it does give us a very competitive cost structure.
    Mrs. Napolitano. But you have been able to restructure, or 
your infrastructure has been updated and upgraded and otherwise 
made more efficient.
    Mr. Lischewski. We continue to invest in high-speed 
technology, whether it is fillers, seamers, our whole labeling 
and packaging lines. So, you know, clearly we recognize that a 
solution for us in the global competitive environment that we 
operate in is not just to add jobs. We recognize that we live 
in a zero-inflation environment, so as labor rates go up, we 
need to offset that with increases in efficiency, and a lot of 
that is through capital spending in our facilities.
    Mrs. Napolitano. And you have been able to compete and 
still stay in business even though there is a marked difference 
between your operation and others' and the wages.
    Mr. Lischewski. Yes, we have been able to show regular 
increase in profitability from year to year.
    Mrs. Napolitano. You also mention the need to understand 
the global nature of the canned tuna market. And are these 
factors, outside of the extremely low foreign hourly wages, 
that we should further understand?
    Mr. Lischewski. Again, I think a couple of things.
    You know, there are some trade factors that benefit 
American Samoa. Canneries from Thailand that we have talked 
about do benefit from significantly lower labor costs, but they 
also pay 12.5 percent import duty on their canned products into 
the U.S., which we would argue would offset part of the wage 
discrepancy. Tuna loins carry a very low import duty, and that 
is why we are able to run that model.
    So, you know, there are trade factors that clearly have to 
be considered. Labor, by itself, is only about 10 percent of 
the product cost, so even when we talk about a 30 or 40 percent 
increase in labor, again, the cost of our product is the fish 
and the cans; that is 65 to 70 percent of the product cost.
    That is clearly one of the factors we focus on. And then 
import duties from non-U.S. countries make up another major 
cost component.
    Mrs. Napolitano. Thank you for your testimony.
    And, Madam Chair, that is all the questions I have. But I 
do pledge to my colleague to sit and work with him on finding 
another suitable way to be able to help his area and help their 
economy. That is not a problem. It is just I don't want it at 
the expense of our U.S. jobs.
    Thank you.
    Ms. Bordallo. I thank the gentlelady from California.
    And now I would like to recognize for final questioning, 
the author of the bill, Mr. Faleomavaega.
    Mr. Faleomavaega. And I sincerely want to assure my good 
friend, the gentlelady from California, that this was never my 
intention, to put her constituents out of work.
    The basis of what I am trying to figure out, and hopefully, 
that our friends from the tuna industry will be more 
constructive in their efforts in trying to see how we can best 
work this thing out to be helpful.
    Mr. Binotto, I know you have been characterized as the sole 
beneficiary of this proposed bill, if it passes, and I just 
wanted for you to elaborate. Is this really to the benefit only 
of StarKist?
    Because my whole effort was trying to, yes, to be helpful 
to you because of the cost factors but, at the same time, to 
invite other tuna canneries or processors also to participate 
in this effort--as well as our tuna fishing fleet to come and 
deliver whole fish to our canneries so that we can process and 
export it to the U.S., as we have done for all, how many, 50 
years now.
    Would you care to comment on that?
    Mr. Binotto. Sure I would.
    I have read the bill several times, Congressman. I don't 
recall anywhere in that bill that it stipulates the benefits 
were only allotted to StarKist Seafood.
    The intent of the bill is very simple. It is to entice the 
boats to come back into the harbor, deliver fish direct to the 
processor, for the processors to take it and be able to process 
that fish so that it levels the economic playing field of us 
being able to process fish into loins at a similar cost of what 
is being done overseas by low-wage countries. That is as simple 
as it gets.
    So, as far as it being designated only to StarKist, I don't 
think so. I think it is a matter of choice. There are other 
companies outside, there are companies that can make the same 
decision as we would to stay, to come to American Samoa and 
utilize the good island and its good resources that have both a 
U.S. license, U.S. boats, U.S. processors.
    To me, it just makes some sense that we should have the 
ability to lure back the resources that are being drug away 
from us right now and being exploited by low-wage countries. 
The fish that we need to produce, I can't get.
    I would like to correct one statement that our good friend, 
Mr. Walsh, has stated with regards to us not being able to 
utilize all the fish that would come into there. Let me be very 
specific about that; it is a misleading fact.
    There are 39 boats. And if those boats all fish in a 
transshipment method, it is, of course, being able to harvest 
300,000 tons.
    Now, if those 39 boats were to utilize the direct delivery 
method, that tonnage decreases in half. You know that. I know 
that. Those are facts.
    We are not requesting all 39 boats to come in 100 percent 
of the time. We are only requesting them to come in three 
times. And, frankly, I can take all that tonnage tomorrow.
    So excuse me for the emotion. It is not slated for just 
StarKist Seafood.
    Mr. Faleomavaega. Is it also one of the problems, Mr. 
Binotto, in our tuna fishing activities that, in actuality, we 
produce--I mean, we process about 120,000 tons; but then the 
180,000 tons that are being caught by our fishing fleet are 
sold to foreign countries?
    Mr. Binotto. Exactly right.
    Mr. Faleomavaega. Am I correct on this? I just wanted to 
make sure we are clear on the record.
    Mr. Binotto. You are 100 percent correct.
    Mr. Faleomavaega. Mr. Walsh, I don't mean to pick on you.
    Mr. Walsh. That is all right. I was a Senate staffer. It is 
quite all right.
    Mr. Faleomavaega. And God bless you for that.
    I just wanted to say that--a little bit of history--as I 
recall, one of the reasons why our tuna fishing fleet had some 
very serious problems was because of this belief that because 
tuna was a highly migratory fish, they can fish anywhere they 
want to go.
    Well, lo and behold, they came to the zones of Latin 
American countries and they took possession of our fishing 
boats. And they got away from the eastern Pacific; then they 
went to the south Pacific and what happened? The Jeanette Diana 
was confiscated by the Solomon Islands, and then the whole 
world was up, where Secretary Shultz had to say, We have to do 
something about this.
    And this is how we got the tuna fishing treaty to help get 
the Pacific Island nations to work with us, allowing us to do 
the fishing grounds.
    Now, our foreign policy is something that is a very good 
question. What really is the U.S. foreign policy toward the 
whole fishing industry? If we can make protective actions on 
our corn, our dairy products and our subsidies, can we also 
possibly do the same for the tuna?
    Mr. Walsh.
    Mr. Walsh. Well, there are a lot of questions there. And 
you and I probably should talk about this some time later on, 
because I can tell you about the fact that the U.S. tuna policy 
was put into the Magnuson-Stevens Act. I put it in the bill in 
order to exclude tuna; and then eventually, of course, we 
discovered that the rest of the world did not support us.
    And it led to seizures. But the seizures began before then 
because they began in Peru; and thank God for John Negroponte, 
who got some of our boats out. So that goes even farther back.
    But we should talk about this.
    Mr. Faleomavaega. I know, because he was the one 
instrumental in doing the tuna treaty.
    Thank you, Madam Chair. I want to thank all the members of 
our panel for taking the time from their busy schedule to come 
and give their expert testimony to this Subcommittee. Thank 
you.
    Ms. Bordallo. I thank the gentleman from American Samoa, 
the author of the bill.
    And I do appreciate the witnesses for their participation 
in the hearing today. You spent many hours here, and I do 
appreciate it; and I am sure the members of the Committee also 
appreciate your testimonies. And remember that your full 
written statement will be entered into the record.
    Members of the Subcommittee may have some additional 
questions for the witnesses, and we will ask you to respond to 
those in writing. The hearing record will be open for 10 days 
for any other information that witnesses or other interested 
parties would like to submit.
    And if there is no further business before the 
Subcommittee, the Chairwoman again thanks the members of the 
Subcommittee and our witnesses. And the Subcommittee now stands 
adjourned.
    [Whereupon, at 5:42 p.m., the Subcommittee was adjourned.]

                                 
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