Ecolabels and fish trade
Transcription
Ecolabels and fish trade
Ecolabels and fish trade: Marine Stewardship Council certification and the South African hake industry by Stefano Ponte * tralac Working Paper No 9/2006 August 2006 * Senior Researcher, Danish Institute for International Studies [email protected] Abstract Protecting consumers from unsafe food, the environment from overexploitation of resources and pollution, and workers and producers from unjust labour and trade relations are generally considered objectives worthy of intervention – whether through regulation or, increasingly, through the establishment of voluntary standards and codes of conduct. Yet, abstract principles are eventually applied in concrete situations and have a variety of effects on differently endowed countries, groups and individuals. Developing countries have been generally reluctant to participate in ecolabelling initiatives. They have highlighted the embedded protectionist elements of some of these initiatives, and the naiveté of some standards in assuming that certain models of environmental management can be exported tout court to the South. This reluctance has been countered by assurances of transparency, nondiscrimination and technical assistance. In essence, ecolabels are assumed to be ‘good for the global commons’ and their justification has been offered within a discourse of science, objectivity, independent certification, transparency and systems management. If shortcomings arise, they can be fixed technically and managerially. Yet, the case study of Marine Stewardship Council (MSC) certification of the hake industry in South Africa illustrates that ecolabelling is sought in the context of competitive pressures, political economies, and specific interpretations of conservation, not simply on the basis of value-free science or systemic management alone. Although couched in ‘impartial’ readings of conservation and competition, MSC certification in South Africa was employed as one of the tools against the redistribution of fish quotas away from ‘white-owned companies’ to the possible benefit of ‘black-owned companies’. Developing country fisheries, and small-scale ones in particular, have been marginalised in the MSC system. This is not surprising if one looks at comparative evidence from other ‘new wave’ sustainability initiatives in timber and coffee. Entry barriers to ‘sustainability’ entail economies of scale and scope that require managerial resources and access to networks. Because managerial and systemic objectives are harder for developing country actors to match, this creates a hidden imbalance in favour of the better-endowed participants. The paper concludes that independent auditing, transparency of standard-setting, accountability, and the need for standards to be based on ‘good science’, are not enough to facilitate certification 1 in small-scale developing country fisheries. What is needed are special systems of compliance and verification that cater to their needs. Until this happens, and until premiums are not paid at the producer level, MSC and similar initiatives will keep putting ‘sustainability’ at the service of commercial interests. 2 Table of contents List of Abbreviations ................................................................................................................ 4 Acknowledgements ................................................................................................................. 5 1.Introduction................................................................................................................6 2. Ecolabels and fisheries ...................................................................................................... 9 3. The Marine Stewardship Council initiative .................................................................... 12 3.1 General features ......................................................................................................... 12 3.2 Early criticism of MSC ................................................................................................ 15 3.3 New challenges ........................................................................................................... 17 4. MSC and the South African hake industry ................................................................... 25 4.1 Main markets for South African hake....................................................................... 25 4.2 Industry structure ........................................................................................................ 27 4.3 Motivations for the adoption of MSC certification .................................................. 31 4.4 The certification process ............................................................................................ 36 4.5 Verification after certification ..................................................................................... 40 4.5 MSC, hake and beyond ............................................................................................. 43 5. Comparative analysis: timber, fish and coffee .............................................................. 45 6. Conclusion .......................................................................................................................... 47 Appendix 1: Ecolabels and WTO rules ............................................................................. 52 3 List of Abbreviations ANC African National Congress ASHQI Association of Small Hake Quota Industries COFI FAO Committee of Fisheries CTBT Committee on Technical Barriers to Trade CTE Committee on Trade and Environment EEZ Exclusive Economic Zone EUREP-GAP Euro-Retailer Produce Working Group - Good Agricultural Practices FAO Food and Agriculture Organization FSC Forestry Stewardship Council GAA Global Aquaculture Alliance GATT General Agreement on Tariffs and Trade HDI Historically-Disadvantaged Individual ICSF International Collective in Support of Fishworkers ISEAL International Social and Environmental Accreditation and Labelling Alliance ISO International Standards Organization MAC Marine Aquarium Council MCM Marine and Coastal Management MLRA Marine Living Resources Act MSC Marine Stewardship Council npr-PPMs non-product related process and production methods pr-PPMs product-related process and production methods RFMO Regional Fisheries Management Organization SACIFA South East Coast Inshore Fishing Association SADSTIA South African Deep-Sea Trawling Industry Association TAC Total Allowable Catch TBT Agreement on Technical Barriers to Trade USEPA United States Environmental Protection Agency WTO World Trade Organization WWF World Wildlife Fund for Nature 4 Acknowledgements Fieldwork for this project was funded by the Danish Social Science Research Council (SSF). I would like to thank the Program on Land and Agrarian Studies (PLAAS) at the University of the Western Cape and the Trade Law Centre for Southern Africa (tralac) where I was affiliated while in South Africa. Thanks also to various officers at Marine and Coastal Management for their openness and collaboration during fieldwork. Special thanks go to Trudi Hartzenberg, Moenieba Isaacs, Jesper Raakjær, Lance van Sittert and Andries du Toit for their intellectual and moral support. Valuable feedback on earlier versions of this paper was also received from Jennifer Bair, Simon Bolwig, Constance Douglas, Steen Folke, Peter Gibbon, Stine Jessen Haakonsson, Dave Japp, Peter Kragelund and Niels Jon Mortensen. All mistakes, misinterpretations and undue omissions are my own. 5 1. Introduction Protecting consumers from unsafe food, the environment from over-exploitation of resources and pollution, and workers and producers from unjust labour and trade relations are generally considered objectives worth intervention in development circles – whether through regulation or, increasingly, through the establishment of voluntary standards and codes of conduct. Yet, abstract principles are eventually applied in concrete situations and have a variety of effects on differently endowed countries, groups and individuals. What may seem a good idea to consumer groups or government agencies in a Northern setting, may not turn out to be so advantageous to producers in the South – even though the initial stimulus in the North may have been exactly to safeguard these producers. Food safety, environmental and social standards have become key features in the trade of agro-food products in the last 15 years. International organisations, government agencies, industry associations, and NGOs behind the formulation of these standards were initially defensive of efforts aimed at critically examining their effects in different settings. Questioning the inherent ‘justness’ of these initiatives was considered reactionary and necessarily intended to discredit them. This may still be the case in certain circles, but recently there has been a more open attitude towards reaching a better understanding of the contradictions, limitations, and differential impact of these standards. From a ‘defensive’ phase, these organisations and NGOs have now moved into a ‘constructive dialogue’ phase, where they are making efforts to be more inclusive (sometimes for public-relations reasons), and to reflect upon past experiences to improve the content, monitoring and management of their standards. In other words, they are trying to ‘make their system management right’. This means that standards development procedures, governance structures, indicators, monitoring, verification and management systems have become much more sophisticated than even a decade ago. Where there has been little movement so far has been in acknowledging that standards are developed and applied in specific political economies, within complex power relations, and in extremely diverse local conditions and politics. In a sense, an increased focus on systems management brings these initiatives even further away from a politico-economic understanding of their effects. 6 The growth of market-based instruments such as ecolabels or other ‘sustainability’ labels reinforces a systems management approach to food safety and environmental and social protection. The legitimacy of these instruments in a neo-liberal setting is based on non-discrimination and equality of opportunity. In this line of thought, if the system has been devised openly, is monitored transparently, and is administered properly, standards simply perform a market-lubricant function of providing full(er) information to those involved in transactions. Where clear disadvantages are highlighted for certain countries, groups or individuals, technical assistance and capacity building instruments are provided, or simply suggested, as solutions. This paper is mainly empirical in nature and is based on original fieldwork material collected for the second in a series of three studies on the political economy of standards on food safety, social and environmental impact, quality management and geographic origin. The three case studies examine the impact of these standards on developing country agro-food export industries in Africa (coffee, fish and wine) and on small operators in these. A first case study was dedicated to ‘sustainability’ standards in coffee (Daviron and Ponte 2005; Giovannucci and Ponte 2005; Ponte 2004; Ponte and Kawuma 2003). The second and current case study covers standards in two export-oriented fish industries: Nile perch in Uganda (food safety and quality management standards) (see Ponte 2005; 2007); and hake in South Africa (Marine Stewardship Council standard). A third case study will focus on quality management and geographic origin standards in the wine industry, also focused on South Africa. Finally, comparative and more theoretical work will follow in the context of recent theoretical discussions on governance and upgrading in global value chains (Gereffi, Humphrey and Sturgeon 2005; Ponte and Gibbon 2005).1 Fieldwork for the MSC case study was undertaken in London at the offices of the Marine Stewardship Council (May 2004) and in South Africa (July-August 2004; June-December 2005). In addition to secondary data and documentary collection, a total of 51 semi-structured interviews were carried out. These included interviews with MSC officers, members of the certification team that worked on MSC certification 1 This paper does not include a detailed analysis of global fish markets and trade rules, and has only limited coverage of the local context in which the South African hake industry operates. For a broader understanding of these issues, this paper should be read in relation to: (1) an article on the role of subsidies, tariff and non-tariff barriers in shaping market access to the EU for African fishery products (Ponte, Raakjæar and Campling 2005); and (2) two papers on ‘Black Economic Empowerment’ and other processes of transformation in South African industrial fisheries (Crosoer, Ponte and Van Sittert 2006; Ponte and Van Sittert 2006). 7 for hake in South Africa, South African hake industry association officers, officers of the regulatory agency (Marine and Coastal Management, MCM), quality management companies, fisheries consultants, interest groups, conservation NGOs, and representatives of twelve companies/groups holding hake quotas. These included the top five companies by size of quota allocation (representing 75% of total allocated quota in 2005) and seven medium and small quota holders. To maintain confidentiality, the identity of individuals and companies covered during fieldwork has been concealed (interviews are coded MSC1 to MSC4 if they took place in London at MSC; and SAH1 to SAH47 if they took place in South Africa and refer to the hake industry). MSC, South Africa and the hake industry were selected – an instructive combination for a case study for the following reasons: (1) MSC is the main ecolabel in the global fish market; (2) only two developing country fisheries have been certified, in South Africa and Mexico; (3) MSC certification in South Africa concerned the hake industry; hake is also the largest fishery in the country, accounting for approximately 50% of total value of catches and 40% of total value of exports; and (4) South Africa is the largest exporter of fishery products from Africa by value (Ponte, Raakjær and Campling 2005). Much of the burgeoning literature on the effects of standards, labels and certifications in agro-food trade focuses on two aspects: (1) standard setting (development of principles, indicators, measurement devices and compliance systems) and (2) standard implementation (compliance and certification). Two areas that have been relatively neglected are: (1) standard adoption (decision to attempt compliance and certification); and (2) standard verification after certification (routine monitoring, auditing, and recertification). This paper, while covering some ground in relation to standards setting and implementation, places particular emphasis on standard adoption and verification after certification. On what basis do industry actors and associations decide to implement a standard? What are their motivations? What are the expectations and political/economic calculations? What is routine verification achieving? Under what circumstances is it possible to ‘fail’ after certification? What are the commercial and political pressures under which verification takes place? 8 Section 2 of the paper provides a taxonomy of ecolabels in fisheries. Section 3 discusses the history and general characteristics of the Marine Stewardship Council (MSC) initiative, and the criticism that has been levied against it. Section 4 examines the political economy of adoption, implementation and further verification of the MSC standard in the South African hake industry. Section 5 places the MSC case study in a comparative setting, drawing from other ‘sustainability’ initiatives in timber and coffee. This is followed by a conclusion and by Appendix 1, which examines whether ecolabels are in breach of WTO disciplines. 2. Ecolabels and fisheries In the last couple of decades, FAO and conservation groups have repeatedly highlighted the plight of over-exploitation of fish stocks around the world, and the impact of intensive fishing efforts on the overall aquatic environment. To address these challenges, several fishery management systems have been devised, such as: (1) legal instruments, including global conventions and national/local fisheries laws;2 (2) soft instruments, such as the FAO Code of Conduct for Responsible Fisheries; and (3) market and civil society initiatives, such as the ISO 14000 series of standards and the MSC label (Allison 2001: 942). Due to the perceived failure of international and national law to control fishing behaviour, governance of fisheries is increasingly carried out through voluntary codes of conduct and market-based instruments (Allison 2001). Environmental labelling initiatives in fisheries can be of voluntary or mandatory nature (see Box 1). They include ecolabels, single-attribute certification, report cards, and information disclosure on hazard warnings (USEPA 1993; Wessells et al. 2001). 2 The need for improved fisheries management and conservation of biodiversity were recognised as early as the 1982 UN Convention on the Law of the Sea. Further political support and increased visibility were given to fisheries management at the UN Conference on Environment and Development in Rio de Janeiro in 1992, including a specific call to expand environmental labelling. Marine conservation and biodiversity objectives were embedded in the 1992 Convention on Biological Diversity (CBD). The 1995 FAO Code of Conduct for Responsible Fisheries and the 1972 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) provide additional instruments for conservation and fisheries management efforts (Wessells et al. 2001: 2). 9 Box 1: Environmental labelling initiatives in fisheries (1) mark of origin, used to draw attention to the origin of fish (sometimes this is mandatory); (2) product certification and catch documentation, sometimes used in relation to import and export controls, or by Regional Fisheries Management Organizations (RFMOs) to promote compliance with conservation and management objectives; (3) EU requirements to mark or label the commercial designation, production method and area of capture of fish; (4) ‘dolphin-safe’ and ‘turtle-friendly’ labels on tuna and shrimp respectively, designed to minimize by-catch (see Appendix 1); (5) current development of standards and certification systems for organic seafood, especially for aquaculture products; (6) Nordic Technical Working Group on Fisheries Ecolabelling Criteria, adopted by Nordic Ministers of Fisheries in 2001 for use in the North-eastern Atlantic region; (7) Marine Aquarium Council (MAC) certification for ornamental marine life, aimed at conserving coral reefs; (8) Global Aquaculture Alliance (GAA) codes of practice and certification on environmentally responsible aquaculture products; (9) ISO 14000 series standards on environmental management performance, and ISO 14020 series standards on designing and implementing environmental labelling programs; (10) MSC label on sustainable fisheries. Source: Wessells et al. (2001: 5-10). Ecolabels are seals of approval that transmit environmental information to consumers. They are normally based on life-cycle analysis that is devised to determine the environmental impact of a product or service from point of production to point of disposal. These labels are awarded to products that are deemed to have a more friendly impact on the environment than ‘functionally-equivalent or competitively similar products’ (Wessells et al. 2001: 10; see also Appendix 1). Fishery ecolabels tap into a perceived growing consumer demand in developed countries for environmentally friendly products and production processes (Ibid.). They can be categorised in three broad groups: (1) First party labels: they are developed by individual companies, are based on their own standards, and transmit information about environmental management to consumers or other operators via a ‘self-declared’ label. (2) Second party labels: they are developed by industry associations, sometimes with inputs from conservation and consumer groups, and are applicable to the members’ products; they can be verified internally or through an external auditor or certifier. 10 (3) Third party labels: they can be developed by public, private, or public-private initiatives; they are theoretically independent from market players; a third-party certification system is in place, and the use of a label is licensed to the producer or retailer for use on- and/or off-product; ‘chain of custody’ certification is usually required to assure traceability of the product and separation from non-labelled products; accreditation of certifiers is provided either by the initiator of the label or, increasingly, by an independent organisation (cf Wessells et al. 2001: 11). Wessells et al. (2001: 54) state that ‘voluntary ecolabelling provides one of the leastcoercive market-based mechanisms to improve conservation outcomes’. They highlight the potential commercial benefits of ecolabelling for fishery industries, which include: (1) gaining access to new premium markets; (2) adding value to existing products; (3) expanding presence in existing markets; (4) maintaining market share in competitive markets; (5) achieving product differentiation and export earnings; (6) providing opportunities for attracting capital investment and new joint venture in developing countries; and (7) maximising long-term competitiveness (Ibid.). At the same time, a number of concerns arise from the adoption of ecolabels in fisheries: possible lack of transparency and participation in standard-setting; underlying protectionist motives; high potential costs of complying with required management practices and data collection; high costs of certification in developing countries relying on expensive imported experts; inadequate institutional and technical capacity in developing countries (Ibid.: 55-57); and the de facto mandatory nature of ecolabels when a majority of market players require them. Voluntary ecolabels in fisheries are a recent phenomenon, and their coverage of products and markets has been so far limited. Their potential for future expansion can be linked to three main factors: (1) market/consumer acceptance; (2) whether or not they are recognised as being actually beneficial to the sustainability of fisheries resources; and (3) whether or not they comply with WTO rules. The first two factors will be analysed in some detail in the next section of the paper. A discussion on WTO compatibility can be found in Appendix 1. 11 3. The Marine Stewardship Council initiative 3.1 General features Ecolabelled products are a small but growing segment of the fish industry. Their rise relates to increasing concern with environmental issues, including the management of natural resources, and to increased competition in the retail sector, thus the search for additional properties in products to add profitability and/or market share. The history of voluntary labels before the advent of MSC was limited to two single-issue labels, aimed at reducing by-catch of dolphin in tuna fishing and of turtles in shrimp fishing. In both cases, the main issue was not one of over-fishing and over-capacity, but one of animal rights and the protection of endangered species (Allison 2001: 945; see Appendix 1). Current efforts in developing organic certification of fishery products are mainly focused on aquaculture (Mansfield 2004). The Marine Stewardship Council is the main third-party certified ecolabel that covers wild-catch fisheries.3 It was established in 1996 as a joint initiative of the World Wildlife Fund for Nature (WWF), the world’s largest private non-profit organisation, and Unilever, the world’s largest frozen fish buyer and processor. Unilever operates its own internal evaluation system on ‘sustainable fisheries’4, but also actively promotes MSC certification among its suppliers. At the MSC launch, Unilever committed to buy fish only from sustainable sources by the year 2005. MSC became an independent initiative in 1999. In the words of a representative of MSC ‘half of the fishery world hated Unilever; the other half hated WWF; continuing the original setup would have been crazy’ (MSC2). The idea behind the initiative is to address worldwide decline in fish stocks by awarding ‘sustainably-managed’ fisheries with a certification and a label that could be affixed to retail products (MSC2). The underlying claim is that governments and international organisations on their own have failed to implement sustainable management in fisheries. 3 Other minor fishery ecolabels include: (1) Carrefur’s own ‘Pêche responsible’, a first-party label introduced in 2004 in France and Belgium, covering only a frozen product line consisting of Icelandic cod fillets; and (2) the ‘Friend of the sea’ label (a project of the Earth Island Project Network), which covers both farmed and wild-caught fish and shellfish products; this label is presently used only in Italy – by Carrefur for farmed seabass and seagram, and by Coop Italia for a range of canned seafood products (Globefish 2005). 4 Source: Fishing for the future: Unilever’s fish sustainability initiative (FSI). [Online]. Available: http://www.unilever.com/Images/2003%20Fishing%20For%20The%20Future%20II%20Unilever's%20 Fish%20Sustainability%20Initiative_tcm13-5078.pdf (accessed February 2006). 12 MSC certification is administered through a chain of custody system that keeps ‘sustainable’ and ‘other’ fish separate from each other from catch to supermarket shelf or ice display (MSC1). In the view of its promoters, MSC allows consumers to promote sustainable fishing through a market-based (rather than regulation-based) mechanism (MSC2). Certification is granted against a specific standard called the ‘Principles and Criteria for Sustainable Fishing’ (thereafter ‘the MSC standard’). Assessment is carried out on voluntary basis by accredited third-party certification bodies. The MSC standard is based on three principles, which are elaborated by a number of criteria (MSC 2004b: 4): 1. The status of the target fish stock ‘A fishery must be conducted in a manner that does not lead to over-fishing or depletion of the exploited populations and, for those populations that are depleted, the fishery must be conducted in a manner that demonstrably leads to their recovery’ (Ibid.: 14). 2. Impact of the fishery on the eco-system ‘Fishing operations should allow for the maintenance of the structure, productivity, function and diversity of the ecosystem … on which the fishery depends’ (Ibid.: 15). 3. Performance of the fishery management system ‘The fishery is subject to an effective management system that respects local, national and international laws and standards and incorporates institutional and operational frameworks that require use of the resource to be responsible and sustainable’ (Ibid.: 16). The third principle is where the socio-economic aspects of a fishery are considered. However, explicit reference to equity concerns, and the impact on fisheries on local communities are vague and defined without reference to historical dynamics. MSC has actively avoided including social aspects in its certification system, as they would be ‘too difficult and complex to comply with’ (MSC2). Management system criteria include provisions for transparency and the involvement of stakeholders, a design that is ‘appropriate to the cultural context, scale and intensity of the fishery’ (MSC 13 2004b), the observation of legal and customary rights, and the provision of incentives (economic and social) that contribute to sustainable fishing. At the catch level, certification is awarded to a ‘fishery’, not to individual operators. Individual operators in the trade, processing and retail sectors can apply for chain of custody certification and for the use of the MSC logo. Certification is carried out by independent bodies that are accredited by the MSC Accreditation Committee. In the future, accreditation will be carried out by an independent organisation. The certification process starts with a confidential pre-assessment by a certification body for a client or client group. Clients are usually associations of fishing operators that catch and handle one or more species in a specific area. If the results of the preassessment are such that the client decides to go ahead with a full assessment, an expert team is appointed. This team develops performance indicators and scoring guide-points (MSC1). Stakeholders can at this point provide feedback on the suitability of these indicators. The fishery is then scored against these indicators, which are aggregated to obtain a score for each of three principles. Depending on the score, a fishery can be: (1) rejected; (2) asked to fulfil some pre-conditions before obtaining certification; (3) certified with conditions that need to be addressed within a certain period; or (4) certified with no conditions. Fisheries that are certified are subject to annual audits. After five years, a new assessment has to be carried out (MSC1; MSC 2004a). Box 2: MSC’s view on the benefits of its certification: For the Fishing Industry: - Evidence and recognition of good fisheries management - Improved fishery management - Preferred supplier status and potential for increased returns – particularly in niche markets For Retailers: - Demonstrates commitment to buy from well-managed, sustainable sources - Increased confidence in sustainability of product - Maintaining or increasing market share - Stability of supply For Consumers: -Confidence that buying MSC-certified products will not contribute to overfishing or harm marine ecosystems - Empowers consumers to influence management of fisheries Source: Peacey (2000: 4) 14 In Box 2, we can see that MSC lists a number of benefits of its certification for the fishing industry, retailers and consumers. Noticeable is the lack of reference to a premium for the fishing industry in these statements – ‘increased returns’ are of more generic nature and could refer to a larger market share. This is consistent with most ‘new wave’ certification schemes on sustainability – such as Forestry Stewardship Council (FSC) certified timber (Klooster 2005; Taylor 2005), and Utz Kapeh and Rainforest-certified coffees (Giovannucci and Ponte 2005; Muradian and Pelupessy 2005; see Section 5; Table 7). These schemes, while offering preferred supplier status to certified suppliers, rarely offer a premium. In time, the standards that underpin them may become the new ‘minimum standards’ for the market, effectively redesigning the nature of market access. This has already happened to food safety and good agricultural practice standards such as EUREP-GAP (Hanataka, Bain and Busch 2005). ‘Old wave’ coffee certification schemes, such as fair trade and organics, do offer premiums over non-certified coffees at the production level. 3.2 Early criticism of MSC The set-up of MSC’s governance structure and the elaboration of its standard drew a heated debate in fish industry circles in the second half of the 1990s. Many of these early discussions can be found in various issues of SAMUDRA, a publication of the International Collective in Support of Fishworkers (ICSF), and are summarised in Constance and Bonanno (2000). In short, ICSF and other critical stakeholders questioned the MSC initiative on the basis of: (1) the motivations of Unilever in starting it; (2) the centralised and corporate structure of MSC; (3) a bias in favour of industrial fisheries, and developed country fisheries in particular; (4) the lack of consultation with fishers in general, and developing country representatives in particular; (5) the perception in developing countries that ecolabels constitute technical barriers to trade; (6) the financial and human resource costs that achieving certification would entail in developing country and especially artisanal fisheries; and (7) the recognition that the current state of scientific knowledge is no guarantee of sustainability – one contributor argued that the Newfoundland cod fishery would have been awarded the label just before its collapse (see also the New Zealand hoki story below) (SAMUDRA, various). 15 In the 1990s, MSC and other supporters of the initiative responded to these criticisms in the pages of SAMUDRA, assuring that workshops and consultations were being carried out around the world. MSC also argued that their certification system was being field-tested in various settings, including small-scale fisheries and fisheries in the developing world. It assured that because the scheme was voluntary, it would not be imposed on anyone, and that it would be market-neutral and non-discriminatory. Finally, MSC claimed that their standard was not going to work against the interests of small-scale fishers because it would promote, among other things, sociallyresponsible fishing.5 As a matter of fact, an argument was made that MSC ‘could actually result in a market advantage for Southern fisheries’ (Ibid.), and that the experience of FSC supported such a proposition – as if managing fish and forests were similar processes.6 The comments summarised above show that the original governance structure of MSC was not perceived to be sufficiently inclusive. As a result, alongside the Board of Trustees, the executive decision-making body of the MSC, two groups reporting to it were created in 2000: the Technical Advisory Board and the Stakeholder Council. The Technical Advisory Board provides advice on technical, scientific and quasijudicial issues to the Board of Trustees; it has some ‘delegated decision-making authority over the technical and methodological guidelines used by certification bodies when assessing fisheries and chain of custody’ (Cummins 2004: 88). The Technical Advisory Board is comprised mostly of fishery and ecological scientists, and of experts on chain custody and processing; there is only one natural resource economist in the Technical Advisory Board, and no other social scientist. The 5 Interestingly, in one contribution, WWF argued that they had ‘invited social scientists and experts on Southern fisheries’ (SAMUDRA, January 1998: 28; emphasis added), rather than from Southern fisheries, to make sure that their standard was non-discriminatory. 6 Opposition to MSC in the 1990s also came from a very different source. In 1998, the Nordic Council sponsored a FAO ‘Technical Consultation on the Feasibility of Developing Non-Discriminatory Technical Guidelines for Ecolabelling of Products from Marine Capture Fisheries’. The argument put forward by the Nordic Council was that fishery ecolabels (read ‘MSC’) do not fulfil the requirements of transparency and credibility set by the 1995 FAO Code of Conduct for Responsible Fisheries. The Council further claimed that global reach and credibility could only be achieved under the guise of FAO (SAMUDRA, December 1998: 22). This arose from the deep suspicion among Nordic fishery industries and governments of the motivations of the other partner in MSC, namely the WWF, with whom they had earlier conflicts on the protection of marine living resources (SAMUDRA, April 1999: 27). This attempt at sidelining MSC was not thwarted by supporters of MSC, but rather by countries, especially in Latin America and Asia, that saw ecolabels of any kind as a form of discrimination against their fishery products. This position was forcefully put forward by Mexico, which had lost significant export earnings as a result of the ‘dolphin-friendly’ tuna dispute with the US, despite having won the formal case at the GATT/WTO level (see Appendix 1). More recently, a sign of a possible turn-around in Nordic countries has been the announcement that the Norwegian saithe fishery has started an assessment with MSC. 16 Stakeholder Council represents specific interests, grouped under eight categories,7 among which we find a ‘developing nation group’ represented by three academics (from Brazil, Mexico and Nigeria) and a Canada-based organisation of fish harvesters and workers. Half of the members of the Stakeholder Council are appointed by the Board; from 2004, a Stakeholder Council Steering Group has been created to ensure more coordination between the Council and the Board. Even though MSC has been fashioned after the Forest Stewardship Council (FSC, established in 1993, also with input from WWF and other conservation groups), the latter is an open-member organisation, while the MSC structure is ‘significantly different and more corporate. Its managerial structure is designed to insulate the Board of Trustees from the political influence of civil society actors … The Stakeholder Council can only advise the Board of Directors on its views, it cannot compel them to take action; and there is no equivalent of FSC’s biennial General Assembly where stakeholders put forward resolutions to alter the organization’s very constitution’ (Gale and Haward 2004: 28-29). Gale and Haward (Ibid.) tentatively argue that WWF, having learnt from the FSC experience, decided to promote a less inclusive and more efficient governance structure for MSC that could keep up with a fast-moving business environment. This very insulation, however, meant that MSC in its formative years was blind to the needs of developing country fisheries, and smallscale ones in particular. 3.3 New challenges In the 2000s, criticism of the MSC initiative coalesced around three main issues: (1) limited market coverage; (2) the actual ‘sustainability’ of certified fisheries; and (3) the failure of certifying a significant number of developing country fisheries and of adapting the standard to small-scale, data-poor fisheries. Limited market coverage In the first few years of operation, MSC certified a number of fisheries of limited commercial importance to Unilever and other industrial processors and came under 7 The eight groups are: scientific, academic and resource management interests; general conservation NGOs and interests; marine conservation NGOs and specialist interests; general interests and organisations; catch sector interests; supply chain and processing interests; retail, catering and processing interests; and developing nation and fishing community interests. 17 fire for it. This prompted MSC to pay more attention to commercial interests and volume requirements of certified fish. To some extent, this has been achieved. By early 2006, MSC had certified 15 fisheries, among which large fisheries such as Alaska pollock, Alaska salmon, New Zealand hoki, and South African hake. Alaska Pollock is the largest fishery in the world, supplying most of the raw fish material to fast food chains, including McDonald’s. Four of the certified fisheries in 2006 were going through re-assessment. There were also 21 fisheries undergoing first assessment and ‘dozens more in the confidential pre-assessment stage’ (Fish4Thought, March 2006). The most important fisheries undergoing assessment are North Sea herring and Chilean hake, although the assessment of the latter seems to have been in a dormant phase since 2003. In 2004, MSC estimated that certified and under-assessment fisheries represented four per cent of global wild edible supply of fish (MSC1; MSC2). If we consider only certified fisheries, however, this proportion in 2004 was less than one per cent. Within some sub-categories, MSC seems to be much stronger. According to 2006 estimates, fisheries that have obtained or are undergoing MSC certification represent 32% of the global ‘prime white fish’ catch and 42% of the wild salmon catch (Fish4Thought, March 2006). MSC-certified products have significant commercial presence at the retail level only in the UK, Switzerland, and Germany – with some presence in the US, France and other European countries (MSC2). In 2003, Sainsbury was the first retailer that committed to source fish only from sustainable sources (Cummins 2004: 93). According to MSC, 223 labelled products are marketed in 23 countries worldwide. Eighty-nine per cent of these products contain Alaskan salmon or New Zealand hoki. The MSC logo is used by 12 European retail chains under their own private label on more than a total of 70 products. Two-thirds of these products are found in two Swiss retail chains.8 In key fish markets such as Spain and Italy, however, very few MSClabelled products are available to the public. As mentioned above, in 1996 Unilever had committed to purchase all its fish from sustainable sources by 2005. Most of the fish Unilever sells comes from groundfish species, specifically Alaskan and Russian pollock, Russian and Norwegian cod, saithe and haddock, South African and Chilean hake, and New Zealand hoki. These 8 Source: [Online]. Available: http://www.globefish.org/dynamisk.php4?id=2495 (accessed March 2006). 18 are sourced in the form of frozen blocks from around 100 suppliers and sold mainly as frozen products under Unilever’s own brands, such as Iglo, Birds Eye, Findus, Frudesa and Knorr. By the end of 2004, Unilever was buying about 50% of fish used in Europe (not the overall volume) from MSC sources,9 and expected this figure to rise to 60% by the end of 2005.10 Unilever’s turnover on frozen fish products in Europe is USD 1.25 billion a year (The New Zealand Herald, 18 July 2005). One of the main setbacks Unilever experienced in relation to MSC-labelled products was the marketing disaster of New Zealand hoki in the UK. It heavily promoted ‘sustainable’ New Zealand hoki in an attempt to break British consumers’ preference for cod and haddock. The campaign started in 2002, pitching MSC hoki products under the Birds Eye brand at one-third discount under the price of ‘unsustainable’ cod – a hoped for win-win situation of cheaper and more sustainable fish.11 The uptake from consumers, however, was less than satisfactory. In addition, Unilever suffered from a retailer price war on cod, a big seller where margins are normally low. Cod prices soon became lower than those for MSC-labelled hoki. By 2004, all supermarket chains had delisted hoki products (Ibid.). In addition to highlighting the limited power that even giant branded food processors have vis-à-vis supermarket chains, the hoki story suggests that marketing ‘sustainability’ is tricky in an environment of competitive pricing. Given that a typical European hypermarket or medium sized supermarket sells several hundred seafood products, the incidence of MSC is still small, with the exception of Switzerland (where 70 different products carry the MSC label). This situation may change dramatically, however, following the announcement that WalMart has committed to sell only MSC-labelled fresh and frozen seafood in North America within 3-5 years. Metro, the world’s third largest retailer, and Deutsch See, Germany’s leading seafood supplier, have announced that they will increase the availability of MSC-certified seafood in Germany (Fish4Tought, March 2006). The certification of Alaskan pollock is also having an impact in terms of the number of products carrying the MSC label, especially in the UK. Finally, traditional and 9 Alaska pollock, South African hake and New Zealand hoki are MSC-certified; Chilean hake is undergoing certification. 10 Source: [Online}. Available: www.unilever.com/ourvalues/environmentandsociety/sustainability/fish (accessed March 2006). 11 Incidentally, the first cod fishery (Pacific freezer longline cod) started an assessment with MSC in January 2006. 19 important fish markets, such as Portugal, Spain and Italy, are slowly adopting a small number of MSC products (under the South African brand I&J) (Fish4Thought March 2006). As an MSC officer stated (MSC2) ‘certification is driven not by consumers, but by supermarket chains and branded processors’ based in developed countries. ‘MSC is used by these corporations as one of the tools in their Corporate Social Responsibility portfolio … Selling fish is about three things: (1) white quality; (2) price/quality ratio; and (3) as an afterthought, sustainability’ (MSC2). MSC is sought by retailers and branded processors also because of its chain of custody system, which ensures traceability from vessel to point of sale (MSC2). MSC has had some difficulties in gaining consumer recognition and market acceptance in the first few years partly because it did not certify fisheries that could supply large volumes. Large processors and retailers seek high volumes and continuity of supply. This is particularly important for retailers to avoid ‘stock-outs’ (see also Gibbon and Ponte 2005). In a sense, the certification of South African hake (see below) was an important step for MSC to ensure adequate volumes of white fish to large fish processors and supermarkets chains (MSC2). Sustainability A second line of recent criticism has come from conservation groups arguing that certified fisheries are not ‘sustainably managed’ in reality. The New Zealand hoki fishery is, again, at the centre of this criticism. The seafood industry in New Zealand is the fourth largest export earner, and 25% of fish exports are represented by hoki. Forest and Bird, a conservation group based in New Zealand, appealed against the certification of the hoki fishery in 2001 arguing that the fishery was ‘clearly unsustainable’. A formal dispute panel was formed in 2002 and confirmed the certification outcome, although it raised issues in relation to the impact of the fishery on the surrounding environment.12 In 2001, the total allowable catch (TAC) for hoki was 250,000 tons. By 2004, the New Zealand Ministry of Fisheries had to cut down the TAC to 100,000 tons following reports of rapidly decreasing stocks. Forest and Bird called on MSC to withdraw its certification of the hoki fishery, due to the dramatic decrease in stocks and also because the fishery ‘kills hundreds of absolutely 12 Source: [Online]. Available: www.forestandbird.org.nz/mediarelease/2004/0523_unsustainablehoki.asp (accessed March 2006). 20 protected seals, petrels and albatross every year’ (Ibid.). The Hoki Fishery Management Company responded that it was actually a sign of proper management that the TAC had been cut, and that poor recruitment was due to environmental factors.13 Whatever the reason for poor recruitment, the hoki saga raises the issue of what a fishery can possibly do to lose MSC certification. One of the MSC principles states that fishing activities need to be conducted ‘in a manner that does not lead to … depletion of exploited populations’ (Principle 1). If good management takes place, and the fishery is depleted, this is still ‘sustainable’. Apparently, only nonmanagement and depletion would lead to decertification. The hoki story is even more peculiar, as the fishery went through reassessment in the period March 2005-March 2006 – a result of which it was recommended for recertification. This happened despite a peer-reviewer noting that ‘The fishery 1) has been or is very likely to have been experiencing overfishing for some time, 2) is depleted or very near depleted, and 3) is not likely to experience significant recovery based on the model projections and lack of a rebuilding plan. Therefore, I would suggest that a passing score on Principle 1 is largely unjustified’ (Ibid.: 62).14 To this, the evaluation team responded that: Principle 1 relates to avoiding over-fishing and depletion of the exploited population, but also to modifying fishing practices so that there is demonstrable recovery. In its evaluation of the fishery, the team provides standards in relation to the level to which recovery should occur (both target and limit). Furthermore, the team notes that the catch limit has been reduced and fishing practices modified to promote recovery, although it is much too soon to determine whether recovery is occurring at a reasonable rate and there is no formal recovery plan. (Ibid.)15 These events should be read in connection to internal discussions at MSC that took place in 2004 on whether the term ‘sustainability’ should be removed from the 13 Source: [Online]. Available: www.hokinz.com (accessed March 2006). Source: New Zealand Commercial Hoki Fishery. 2006. MSC Fisheries Certification: Final Report. [Online]. Available: http://www.msc.org/assets/docs/New_Zealand_Hoki/Final_RepApri2006.pdf (accessed May 2006). 15 Source: Ibid. 14 21 claim.16 At a joint meeting of the Stakeholder Council and the Technical Advisory Board in May 2004, a decision was made to stick to the term. Developing country, small-scale and data-deficient fisheries A third line of criticism against MSC concerns the failure of certifying developing country fisheries, especially artisanal ones. Linked to this concern are issues of compliance, certification costs, and shortcomings of scientific data (MSC4). So far, only two developing country fisheries have been certified (South African hake and Mexican Baja California Red Rock Lobster) and two are undergoing certification (Chilean hake and Patagonian scallops [Argentina]). All four fisheries are located in more advanced developing countries. Especially in the early years of operation, MSC did not pay much attention to developing country needs (MSC2; MSC4), despite the warnings raised as early as 1996 in the pages of SAMUDRA by ICSF. Representatives from developing countries were only invited to one consultative meeting in London. Out of about ten workshops that were carried out to present the initiative to various fisheries, only one took place in a developing country (South Africa). Barriers to achieving MSC certification in developing countries range from institutional weakness (lack of know-how) to financial costs (MSC does not provide funding, although it facilitates contacts). Now a ‘Sustainable Fisheries Fund’ has been set up, independently from MSC, to help developing country fisheries to go through the certification process (MSC4). However, the fund can only make small grants to ‘help ensure broadbased stakeholder input into fishery assessments . . . It will not be in a position to support large-scale research projects’ (SAMUDRA July 2002: 25). The costs of MSC certification to the client industry can be broken down in three components: (1) pre-assessment; (2) fishery assessment; and (3) annual audits. Preassessment costs range from a few thousand USD to over 20,000 USD. Direct costs for a full assessment have varied between under USD 35,000 for a small, simple 16 New Zealand hoki is not the only MSC-certified fishery where doubts persist on ‘sustainability’. An article in The Guardian (21 February 2004) mentions a series of investigations funded by five large US foundations on MSC certification of Alaskan salmon, South Georgian toothfish, Alaskan pollock and New Zealand hoki. These revealed serious flaws, especially in relation to hoki and toothfish. 22 fishery to almost USD 350,000 for a large, complex fishery (MSC1; MSC2).17 The overall cost of obtaining certification depends on the nature of the problems uncovered in the assessment and the corrective actions that have to be undertaken. Most MSC products are processed seafood preparations. Retailers are generally able to push chain of custody and licensing costs upstream to processors. Therefore, retailers are generally supportive of what is for them a ‘cost-free’ initiative (MSC2). However, in the food service sector, where margins are small, chain of custody costs make a difference. This explains why MSC has made limited inroads in this sector, together with the problem of ‘visibility’ of the logo and a more complicated management of traceability (MSC2). Market penetration has also been small in the fresh fish sector. Placing labelled fresh fish on ice presents challenges as ‘operators may not be aware of where to put the logo’ (MSC2). In terms of cost reduction initiatives, MSC is cooperating with the British Retailer Consortium to coordinate auditing, so that processors can go through a joint audit for both certifications (MSC1).18 The last article on MSC that appeared in SAMUDRA (July 2004: 41-42) highlights that financial arrangements for certification are left to private negotiation between clients and certification agencies. The same article calls for MSC to channel such negotiations, which would allow discounts and ‘soft’ payment options for selected fisheries. It also calls for a revision of principles and criteria, either amending them to fit developing country fisheries and small-scale fisheries, or devising a separate set of principles and criteria for these fisheries. Another problem with certification costs is that only three certifiers are currently accredited to carry out fishery certification, providing a small base for competitive pricing.19 At the same time, the Technical Advisory Board has registered ‘concerns by some certification bodies about fishery assessment clients shopping around for an easier assessment.’20 17 See also: MSC. Information sheet 4 – Costs explained. MSC: London. [Online]. Available: http://www.msc.org/assets/docs/fishery_certification/InfoSheet4_Costs.pdf (accessed February 2006). 18 Other costs related to MSC certification are the cost of chain of custody assessment and logo licensing. The cost of chain of custody certification varies with size and complexity of the supply chain. MSC estimates range between USD 1,000 and 5,000 (Peacey 2000: 4; MSC4). Off-product use of the logo is granted under a licence agreement with MSC’s trading company, MSCI. The fee for on-product use of the logo is USD 2,000 for companies under a 1 million turnover, otherwise 0.1% of value of sales. Agreements are signed between MSCI and retailers or their suppliers, mostly the latter (MSC4). 19 Three more agencies are accredited for chain of custody certification only; six agencies are undergoing accreditation for fishery and/or chain of custody accreditation. 20 Source. MSC Technical Advisory Board, public summary, meeting No. 7, 6-7 June 2005, p.2. [Online].Available: 23 MSC has finally recognised that its standard and certification procedures are not geared towards the realities of developing country fisheries, especially small-scale and data-deficient ones. A special programme (MSC Developing World Fisheries Programme) is seeking to improve the awareness of MSC in developing countries and to develop guidelines for the assessment of small-scale and data-deficient fisheries.21 The project aims at developing guidance for certifiers on the use of ‘unorthodox’ information on fisheries, such as traditional ecological knowledge and management systems. It also aims at using a ‘risk-based’ approach to qualitatively evaluate fisheries.22 The aim is not to write a separate standard, but rather to develop ‘operational interpretations’ to assess small-scale and data-deficient fisheries.23 It is still early to assess the likely impact of such a programme. Funding will not be available to developing country fisheries directly from MSC, however.24 Failure in certifying developing country, small-scale fisheries in the short-to-medium term will seriously dent the legitimacy of MSC. Given that more than half of global fish exports come from developing countries, one would expect MSC to push harder on this element even just on the basis of strictly commercial criteria. The challenges highlighted in these pages refer to the MSC initiative as a whole. The case study of MSC certification of South African hake that follows will highlight how ecolabelling is far from being a non-political, neutral and scientific tool in the fight against over-fishing and towards guaranteeing the sustainability of marine resources. In South Africa, MSC certification was sought in an environment of competition against other hake/hoki supplier countries to Northern fish importers and processors (especially Unilever), of internal divisions within the hake industry (between trawlers and longliners), and of fears of further quota losses due a post-apartheid, http://www.msc.org/assets/docs/Governance/PubSumm_TABMeeting7_Jun2005.pdf [ (accessed February 2006). 21 Wilson et al. (2002) suggested possible modifications to the current MSC certification methodology and practice to accommodate the needs of ‘small-scale’ fisheries. In their report to the MSC, they suggest the use of ‘local ecological knowledge’, combined as appropriate with ‘research-based knowledge’, they list specific indicators that are appropriate to developing country fisheries, and argue for the possibility of using analysis of hazard (a specific threat to sustainability posed by the practice) when analysis of risk (the calculated probability of a practice having a negative impact) is not possible, practical or it is too expensive. 22 Sources: Interview MSC4 and MSC. Protecting fisheries, improving livelihoods: MSC Developing World Fisheries Programme. MSC, London. [Online]. Available: http://www.msc.org/assets/docs/Resources/DWP_6pp_final.pdf (accessed January 2006). 23 Source: MSC minutes of the Special joint session of the Stakeholder Council and the Technical Advisory Board – The MSC claim of sustainability, Rome, 27 May 2004. 24 MSC refers interested parties to the Sustainable Fisheries Fund, administered by the Resources Legacy Fund, the WWF Community Fisheries Grants, and the Sea Change Investment Fund. 24 government-engineered attempt to ‘transform’ industrial fisheries. The rest of this paper seeks an understanding of MSC certification and of its effects that are political and politico-economic, rather than biological/scientific and managerial per se. 4. MSC and the South African hake industry 4.1 Main markets for South African hake The value of hake exports is approximately 40% of the total value of South African exports of fish and fishery products. This represented a value of 2.6 billion ZAR or USD 143 million in 2003. Sixty per cent of hake exports by value are frozen fillets, 23% are frozen fish (mostly headed and gutted) and 17% are fresh fish (mostly just gutted) (Fish Industry Handbook 2004; see Table 1). Table 1: South African hake exports (2003) ZAR (´000) fresh hake frozen hake frozen fillets total hake exports total fish exports 187,014 250,661 647,580 1,085,255 2,625,645 USD % of total % of total hake fish exports exports 24,704,624 33,112,417 85,545,575 143,362,616 346,848,745 17 23 60 100 41 100 Exchange rate 1USD=ZAR 7.57 (www.oanda.com, average for 2003) Source: Fish Industry Handbook: South Africa, Namibia and Mocambique 2004 Spain imports 38% of all value of hake exports from South Africa, followed by Italy (17%), Australia (13%) and Portugal (12%). Exports to EU-15 countries make up almost 80% of all South African hake exports by value (see Table 2). In terms of volume, South African hake represents 19-21% of total EU hake imports (depending on the data source and the year). South African hake imports represent 19% of total fresh hake imports into the EU, 25% of frozen hake (headed and gutted) imports, and 23% of frozen fillet imports (see Table 3). 25 Table 2: South African hake exports by country of destination (2003) fresh hake (ZAR) Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden UK frozen hake (ZAR) frozen fillets (ZAR) 50 total (ZAR) 932,342 8,455,331 91,872,460 981,063 40,073,841 126,376,379 179,104,880 111,193,501 2,322,253 2,109,758 2,330,155 15,621,265 150 5,115,102 147,051 0 60,123,039 17,087,487 1,767,927 191,729 188,150,286 0 9,387,673 132,927,364 416,674,760 2,322,253 20,061,178 20 675,707 19,425 0 7,942,277 2,257,264 233,544 25,327 24,854,727 0 1,240,115 17,559,757 55,042,901 306,771 2,650,090 EU-15 USA Australia Other 242,507,899 185,727,825 425,720,275 1,213,817 1,739,116 62,988,048 2,680,326 50 134,647,217 853,955,999 64,727,164 137,327,593 112,807,926 8,550,484 18,141,029 3,863,176 Total exports 187,014,000 250,661,000 647,580,000 1,085,255,000 143,362,616 2,039,017 1,011,350 724 100 5,115,102 147,051 total (USD) 763,988 187,353 1,427,494 57,320,034 15,888,784 339,709 191,729 500 169,051,575 19,098,211 % of % of exports to exports to all EU countries 0 1 0 0 7 2 0 0 22 0 1 16 49 0 2 0 0 0 0 6 2 0 0 17 0 1 12 38 0 2 79 6 13 3 Exchange rate 1USD=ZAR 7.57 (www.oanda.com, average for 2003) Source: Own calculations from Fish Industry Handbook: South Africa, Namibia and Mocambique 2004 Table 3: EU-15 imports of hake from third countries (2003) From all third countries tons fresh hake frozen hake frozen fillets other total* total** 49,570 69,567 122,873 18,713 260,723 260,723 From south africa % of total volume of imports tons 9,558 17,520 28,372 na 55,450 51,663 19 25 23 21 20 Sources: all third countries: Lien (2006); South Africa: * Table 2; ** Lien (2006) South Africa is the third largest exporter of hake to the EU by volume, behind Namibia and Argentina (see Table 4). Hake itself represents 20% of total EU-15 imports of groundfish by volume, the largest single species after cod (Table 5). In essence, the hake sector is a key component of the South African fish export industry. The EU, and especially Spain, is its main destination market. Conversely, South Africa is an important source of total hake imports to Europe. Hake itself a major component of total European groundfish imports. 26 Table 5: EU-15 imports of groundfish (2004) Table 4: EU-15 imports of hake by main exporting country (2004) tons Namibia Argentina South Africa Chile Uruguay Other Total 76,392 56,695 48,590 28,132 14,472 33,241 257,522 tons % of total 30 22 19 11 6 13 100 Source: Lien (2006) % of total hake hoki haddock saithe cod redfish pollock 257,522 12,002 79,068 74,190 258,719 52,503 217,900 20 1 6 6 20 4 17 total of 7 main species other saltwater species other freshwater species of which Nile perch and tilapia imports from Lake Victoria 951,904 198,242 119,854 75 16 9 Total 59,555 1,270,000 100 Source: Lien (2006) 4.2 Industry structure The hake fishery of South Africa is currently organised into four sectors: deep-sea trawl, in-shore trawl, longlining, and handlining, of which deep-sea trawl is by far the most important. The hake fishery started in the 1890s, with the employment of the first deep-sea trawlers, and grew rapidly after World War II. Before 1978, the fishery was by and large unregulated and catches peaked at over 300,000 tons in the early 1970s. Following the establishment of an Exclusive Economic Zone (EEZ) in 1977, the industry has been regulated through the allocation of an annual total allowable catch (TAC) quota and of individual (non-tradable) quotas assigned to fishing companies. Foreign vessels have been excluded from the EEZ from 1983. The regulatory agency in charge of fisheries is Marine and Coastal Management (MCM), a branch of the Ministry of Environmental Affairs and Tourism. The hake deep-sea trawl TAC has fluctuated between a minimum of 105,000 tons (in 1983) and a maximum of 140,000 tons (in 1997), generally hovering around 130,000 – 135,000 tons since the early 1990s. Two species of hake are caught in South African waters: Merluccius paradoxus and Merluccius capensis. The former is mainly caught by deep-sea trawlers, but also by longliners; the latter is caught mainly by inshore trawlers and the handline sector. For the first time, the 2005/06 assessment provided a split among the two species. Currently, 83% of the hake quota is reserved 27 for deep-sea trawl, 6% for inshore trawl, and 10% for longline and handline combined (MCM 2006: 6-7; see Table 6). Table 6: Structure and characteristics of South African hake industry Quota allocation (% of total hake quota) Actual TAC volume (metric tons, 2006) Number of rights holders Jobs sustained Jobs per 1000 tons of TAC 83 6 124500 9000 11000 5500 (max) 46 17 132 na 8938 1480 1495 na 71 164 136 na Proportion of TAC by HDIcontrolled companies (%; 2002) 25 50 90 na Sectors deep-sea trawl in-shore trawl longlining handlining Sectors deep-sea trawl in-shore trawl longlining handlining 10 Main export forms Size of operations Fleet (no. of vessels) Proportion of TAC by HDIcontrolled companies (%; 2006) frozen, fresh frozen, fresh fresh (little export) large medium medium-small small 79 31 64 130* 43 54 91 (low) Source: www.feike.co.za * Total allocated effort (TAE) Deep-sea trawl The deep-sea trawl fishery is the most important fishery in South Africa and in the last decade has accounted for approximately half of the wealth generated from commercial fisheries in the country (MCM 2006: 6). According to data provided by fishing companies for the 2006 long-term rights allocation, the deep-sea hake trawl sector provides 8,938 jobs (see Table 6), most of which are full-time with benefits. Sixty-five per cent of full-time jobs are land-based. The total book value of assets in the industry is reported at over ZAR 890 million (or USD 139 million) of which 79% is harbour and sea-based (MCM 2006). About two-thirds of the total hake trawl catch is landed in order to be packaged and exported in one of over 50 shore-based facilities (a few of these have ‘value-adding’ processing lines). The balance is processed and packaged aboard factory ships at sea (Hutton 2003). The deep-sea trawl fleet is constituted by 79 vessels, over half of which are factory vessels with freezing and/or processing facilities, and the rest are wet-fish vessels.25 Established rights holders are organised in the South African Deep-Sea Trawling Industry Association 25 All vessels are stern trawlers and have a typical length of 30-70m. Typically, wet-fish vessels land 50 tons of fish. Factory vessels can process fillets on board, and typically process 400-500 tons of fish in 35-40 day trips. 28 (SADSTIA). Newer and smaller entrants in the industry have formed a separate organisation, the Association of Small Hake Quota Industries (ASHQI). In order to understand what drove the deep-sea trawl hake industry to apply for MSC certification in the early 2000s, it is first necessary to provide a historical background of hake quota allocations in the context of apartheid and post-apartheid politics. The history of the hake trawl fishery under apartheid is one of exclusion. The system systematically excluded ‘black’ ethnic groups from access to fishing quotas, licenses and harbours.26 When individual quotas were introduced in 1979, three white-owned companies controlled over 90% of the TAC. Despite the entrance of other trawling companies in the following years, the TAC remained in the hands of white capital. By 1991, there were less than 20 quota holders in the hake trawl sector, and 80% of the TAC was still in the hands of two groups. The opening up of the industry to disadvantaged groups started only in the early 1990s (Hersoug and Holm 1999; Nielsen and Hara 2006; Van Sittert 2002a; 2002b; Ponte and Van Sittert 2006). Following the first post-apartheid elections in 1994, there were high expectations among disadvantaged groups that the ANC-led government would radically alter the distribution of fishing rights even in industrial fisheries such as hake (Nielsen and Hara 2006: 47). The period of 1995-2000 was marked by the entrance of new players despite the protestations of the established industry. It was also marked by the long and tortuous formulation of a new fisheries policy, the 1998 Marine Living Resources Act (MLRA). The MLRA mandated that the fishing industry should reflect in ownership and management the demographics of contemporary South Africa. The urgency of an upcoming election and the assumed appeal to the coloured vote in Western Cape translated in the ANC minister exercising the powers conferred under the MLRA to redistribute access rights. However, the proposed redistribution of 199899 provoked an unprecedented legal challenge from the established industry. The subsequent government defeat in the courts, in combination with the ANC loss in the provincial elections of 2000 in the Western Cape, resulted in the effective abandonment of the ‘external redistribution’ agenda (Van Sittert 2002b). 26 In this paper, I use the term ‘black’ as defined in the ‘Broad Based Black Economic Empowerment Act’: ‘a generic term that means Africans, Coloureds and Indians.’ 29 The first half of the 2000s saw the start of a switch from an ‘external’ transformation approach focused on new entrants to an ‘internal’ transformation approach focused on what happens within established companies. The argument put forward by the government regulator (MCM) was that: (1) with some exceptions, new entrants had not performed well in the 1990s, often leasing their rights to others – thus operating ‘paper quotas’; and (2) large fishing companies had already started an internal process of transformation that should not be discouraged (Fish Industry Handbook 2002: 242). The 2001 allocation, which for the first time covered a period of four years instead of one (2002 to 2005), provided the maintenance of the status quo in the distribution of quotas. This meant that in 2002 only 25% of the total TAC was in the hands of majority HDI-owned companies (HDI = historically-disadvantaged individuals) (MCM 2004: 11). This period also witnessed a second wave of litigation. From 2001 to early 2004, MCM defended 40 court cases successfully (Fishing Industry News Southern Africa, April 2004: 23). In 2006, the proportion of the total TAC controlled by majority HDI-owned rights holders increased to 43% (for details on the 2006 allocation, see Ponte and Van Sittert 2006). In-shore trawl Inshore trawl grounds are located on the South Coast between Cape Agulhas and East London. To protect the inshore areas, vessels operating in the inshore fishery may not exceed 30m and may not use heavy trawl gear. In addition, vessels fishing on deep-sea trawl permits may not operate in water depths of less than 110 meters or within 20 nautical miles of the coast, whichever is the greater distance from the coast. However, inshore vessels are not restricted from fishing deeper than 110m (MCM 2005a). The inshore hake trawl fishery employs 31 vessels, with an average length of just over 20 metres. Its transformation record is slightly better than the deep-sea trawl industry, but not by much: in 2002, HDI-owned companies controlled 50% of the in-shore hake TAC (MCM 2004: 15). This proportion increased to 54% in 2006 (see Table 6). Rights holders in the inshore trawl fishery are organised in the South East Coast Inshore Fishing Association (SECIFA). Longlining and handlining Longlining is a technique that was used originally by the Portuguese and Spanish. It was first introduced by a South African company using Spanish vessels experimentally, and later expanded through Portuguese interests. Hake caught this 30 way (both in-shore and deep-sea) is exported with minimal processing (usually, only cleaning and gutting), thus does not require large capital outlays (SAH41). Longline vessels are much smaller and cheaper than trawlers. Hake of this kind (called PQ, or premium quality) is air-freighted chilled on ice. It attracts a premium price. Many players in the longlining industry have direct relationships with Spanish importers (SAH11). Longlining is a relatively new ‘official’ technique in hake fishing in South Africa.27 The first rights were issued in 1997/98, but the process remained blocked in litigation for 2-3 years. The allocation issue was finally resolved in 2002, when longline operators were awarded quotas for a four-year period (SAH43). There are currently 64 vessels in operation in the sector. In general, MCM is seen to have facilitated the establishment of a longlining industry for political reasons – over 90% of the longline TAC is held by HDI-owned companies (SAH35; MCM 2004: 16). Finally, the handlining industry is a small component of the hake industry (although not small as a method of fishing in general). The fresh hake export market was actually supplied first by handliners in the early 1990s. Before then, handliners were targeting other species, hake catches were incidental and volumes insignificant (SAH43). The handline industry is actually dominated by whites (Ibid.). Handline management takes place through an allocation of effort (a limited number of boats and crew are allowed) (SAH35). In general, much less information is available on handlining than on the other three hake sectors. By regulation, the allocated effort is for a maximum of 130 vessels and a total crew of 785, equivalent to a maximum volume of 5,500 tons. 4.3 Motivations for the adoption of MSC certification Various motivations for seeking MSC certification were mentioned by South African hake industry actors in interviews with the author. I have divided these in two categories: ‘official’ motivations are those promoted by MCM and by major SADSTIA members – these fall within mainstream understandings of what ecolabelling can achieve in competitive fish markets. ‘Unofficial’ motivations are those stemming from 27 Longlining at the commercial level was started by one of the medium-sized trawling companies in 1983 targeting kingklip. The fishery was stopped in 1990 due to signs of kingklip stock depletion. Longliners at that point started to target hake and obtained a quota. When fresh hake exports started to gain momentum in 1992, MCM closed a legal loophole that had allowed longliners to fish hake with a shark longline permit, and started a longline experiment (1994-1997). 31 domestic politics or are reflections on the established relations of power within the SA hake industry (see Box 3). Among the ‘official’ motivations, we find the following: (1) MSC certification was expected to allow South Africa to remain competitive internationally; the South African hake industry started being serious about MSC certification only after the competing New Zealand hoki industry achieved its own MSC certification.28 One of the arguments was that they needed to ‘keep up’ with New Zealand and keep abreast of other competitors such as Namibia, Argentina and Chile (SAH1; SAH4; SAH15; SAH38). Yet, it is not completely clear whether Argentina and Namibia should actually be seen as pure competitors. One of the two main fishing companies in South Africa has invested in fleet and processing plants in Argentina. Some South African companies also hold quotas in the Namibian hake fishery. (2) Some actors in the South African hake industry hoped that MSC would open up markets (or allow them to increase market share) in countries where there is environmental demand, such as in the UK, Germany and Switzerland. Others argued that they saw MSC certification as a preparatory move in the expectation that more ‘traditional’ markets such as Spain, Italy and Portugal would become more environmentally sensitive (SAH29; SAH30). Finally, others mentioned the need to increase volume (if not price) in some markets that for South African exports are still small or emerging such as the UK, the USA and Australia (SAH1). Finally, MSC was expected to be received well by the upscale domestic market – Woolworths, the main up-market retail chain in South Africa, has indeed started carrying the MSC logo on its private brand of frozen fish products. (3) The industry argued that it needed to cater to Unilever’s demands, whatever these may be. Unilever, one of the founders of MSC, is the main buyer of fish from the two dominant companies in the South African hake sector; therefore, these companies felt the need to defend their status of preferred suppliers. According to a representative of one of the major fishing companies in South Africa, they were actually under direct pressure from Unilever to certify hake with MSC (SAH19). 28 MSC and WWF held a workshop in South Africa in 1999 to promote the MSC concept. At that time, the South African industry was not convinced and thought it would be demanding and expensive. The hake industry actually asked MSC to be certified for free. After New Zealand hoki was certified, however, the South African industry changed its mind (SAH11; SAH19). 32 (4) Finally, there were hopes that MSC would be followed by a market premium for ‘sustainable’ fish, therefore adding value in non-material aspects of fish quality – an expectation that has not materialised so far. Box 3: Motivations for adopting MSC certification: ‘official’ and ‘unofficial’ ‘Official’ motivations: - International competitiveness – keep up with New Zealand hoki (also MSC certified); and remain ahead of Namibia, Chile and Argentina; - Open up/increase market share in new markets where there is ‘environmental demand’ (UK, Germany, Switzerland) – mostly for frozen products; keep ahead of possible developments in ‘traditional’ markets, such as Spain, Italy and Portugal; - Buyer demand – Unilever is the biggest buyer of fish for the two main South African fishing companies; maintaining preferred supplier status; defensive mechanism; - Achieve a price premium for sustainable fish management. ‘Unofficial motivations’: - Entrench interests of major South African fishing companies; - Avoid external transformation via ‘conservative management’ legitimised through MSC certification; the claim is that fewer players entail easier management of the resource; - Intra-industry battle – marginalise longliners, seen as competitors; send message that only trawling is sustainable; trawling and longlining in the same areas threaten the resource; pressure to limit the expansion or even deregister the longline industry. Source: Own interviews While these ‘official’ motivations played a role in gathering momentum for the application of MSC certification, three other ‘non-official’ motivations seem to have provided the decisive stimulus. The first is that MSC certification would have benefited the two large companies that dominate the industry. These companies have ‘value-added’ lines, where they prepare processed products such as fish fingers, burgers, cutlets, and marinated fillets. The MSC label ends up mostly on the frozen export product (fished mainly by trawlers) rather than on the fresh export product (fished by longliners and trawlers). There is a good historical record of fisheries management in South Africa, so there was a certain level of confidence that certification would not have been problematic for the trawl industry. These two companies dragged along SADSTIA and the in-shore hake sector, even though other companies have much less interest in MSC certification because their main markets (domestic, Spain, Italy) are not particularly interested in ecolabelling for fisheries products (SAH1; SAH23; SAH42). This view is shared by MSC officers in London as well. According to one of them, ‘commercially speaking, Spain is the main buyer of South African hake, and MSC certification for the main Spanish fish importers would 33 be a good reason to avoid buying fish’ (MSC4). As of 2005, only three companies held a MSC chain of custody certification in South Africa. In essence, smaller players in the deep-trawl hake industry (and the in-shore trawl industry as a whole) were mostly passive regarding the prospect of achieving MSC certification, especially given the fact that it would not cost them much if anything (see below). They took SADSTIA’s ‘official’ arguments for certification at face value and did not perceive that there were other motivations behind the initiative that could have worked against them (SAH7; SAH24; SAH29; SAH32, SAH34; SAH37). The second ‘unofficial’ motivation is that MSC certification was expected to provide a guarantee against the possibility of a further re-allocation of quotas away from the main (white-owned) fishing companies as a result of the ongoing process of ‘transformation’. These companies sought to gain international recognition for their efforts to ‘sustainably manage’ the South African hake fishery (SAH1; SAH4; SAH15; SAH36; SAH38). MSC certification helps large quota holders to make claims against further fragmentation in the allocation of hake quotas. As we have seen above, very few players held HDST hake rights up to the 1990s (see Ponte and Van Sittert 2006). But following the end of apartheid, the number of rights holders increased to 40-50. In addition, quotas were assigned to longliners and handliners alongside the trawling industry. The overall argument constructed by large trawling companies is that it is easier to manage the resource and police catch levels when there are few players in the industry (SAH1; SAH 4; SAH 11; SAH17; SAH21; SAH23; SAH26; SAH28, SAH38; SAH42). This argument was developed and put forward at a key moment in time, when the regulatory agency in charge of managing quotas (MCM) was thoroughly revising its system of allocation. According to a South African hake operator ‘MSC certification had a political value, showing the government that the industry is serious about conservation. The industry association also believed that the discipline of planning for MSC certification was a way to keep the government interested in fishery conservation’ (SAH4). Another added that ‘the two main fishing companies were under pressure because of the transformation process. They were trying to preserve the oligopoly condition of the industry. Conservative management of the resource helps big companies because of 34 more difficult management with more players. MSC certification was a political move, not an environmental one’ (SAH36). A number of industry actors suggest that large hake quota holders expected that MSC certification (through its managerial demands) would safeguard their allocations. These companies were seeking ‘legitimacy’ in the new South Africa through ‘internal transformation’ (‘Black Economic Empowerment’ deals, ‘blackening’ of management), rather than ‘external transformation’ (entrance of many new players, radical redistribution of quotas). Interestingly, this safeguard worked only partially as some companies lost significant allocations in 2006 (see Ponte and Van Sittert 2006). The third motivation relates to an intra-industry battle between the trawling and longlining sectors after the establishment of the latter in hake fishery in the early 1990s. This conflict is couched in two discourses: one of natural resource management; and one of job creation and the ‘ideal’ structure of the industry. But mainly, for the trawling industry, keeping longlining out of the MSC process sent an implicit message that longlining is not sustainable (SAH1). Not that longliners would have been willing to cooperate with trawlers on MSC certification – they perceive that their main market (Spain) is not interested in it and the MSC process as an expensive one. According to a prominent player in the longline industry, ‘MSC is a scam … the premium stays with the brand owner that puts the label on … MSC will matter for longliners only if the EU starts to ask for it in regulation’ (SAH41). The conservation conflict around trawling and longlining runs as follows: longliners accuse trawlers of destroying the seabed and of catching small fish; trawlers accuse longliners of targeting bigger females. There is no definitive evidence on which of the two techniques affects the hake stock more adversely, but there is a general scientific understanding that a badly managed combination of the two can be lethal (SAH36; SAH38). When only hake trawling took place, hake could find sanctuary in rocky areas where trawling is not possible. When these areas started to be targeted by longliners, this sanctuary was removed. MCM has been considering two options: (1) fisheries management areas that are separate for longlining and trawling; and (2) that each fishery conducts environmental assessment on their activities at their own cost (SAH35). Neither of these plans has been operationalised so far. 35 The second conflict revolves around claims about job creation and industry structure. Before fuller information on job creation was available with the 2006 quota allocation, the trawling industry claimed to be creating 60 jobs per 1000 tons of fish allocated. The longline industry claimed to be creating 125 jobs per 1000 tons allocated (SAH41). As we can see in Table 6, these claims seem to be supported by new evidence. Longliners argue that they are a threat to the trawling industry, not to the hake stock. This is because if they can show that they are a viable business, and that they do not have deleterious impacts on the stock, there could be political pressure to increase their share of the total hake TAC (SAH6). A prominent figure in the trawling industry claims, on the other hand, that ‘longliners promote a romantic and false idea of gentle-fishing, small-scale operations, which plays well in current South African politics. Yet, they are hard to monitor. At the end of the day, they are competitors to the trawling industry: fish is fish is fish’ (SAH4).29 4.4 The certification process MSC certification was the result of an evaluation process that lasted almost two years, and that started with an application prepared by SADSTIA (SAH4). As seen above, within SADSTIA, the drivers of this initiative were large companies that have interest in defending their quota allocation from further erosion to the benefit of other trawling companies and the longline industry. They also have value-added lines producing retail pack products, and the MSC logo is more easily used on retail packs than on fresh fish sold on the ice display (SAH19; SAH38). The overall cost of fishery certification to the industry was USD 100,000 in direct costs of certification, plus USD 100-200,000 to meet conditions in the mid-term (SAH4).30 The direct cost of certification has been paid by SADSTIA members in proportion to the quota allocated to them. 29 The battle over ‘legitimate’ industry structure and size of operations was also played within the trawling industry itself. When MCM proposed in 2005 to re-allocate 10% of the deep-sea hake trawl quota specifically to SMMEs, it faced direct pressure and media-propagated criticism from large fishing companies. Eventually, it had to withdraw the proposal (see Van Sittert and PontePonte and Van Sittert 2006). 30 Chain of custody certification did not entail substantial changes at the processing plant level (SAH25; SAH26). The only issue was to keep South African hake separate from South American hake that is imported in frozen blocks to manufacture some fish products for the domestic market. Because South African companies do not export these products, this was relatively easy to achieve (SAH31). 36 The assessment conducted by the certification body resulted in a relatively high scoring on stock management (88 points out of 100; the minimum pass is 80) – the first of the three principles of the MSC standard. According to industry sources, this was expected as there has been a relatively long history of proper monitoring of the resource in South Africa. One condition was appended by the certification team: the development of a sampling programme (to be implemented within two years from certification) to address deficiencies in understanding the variability of recruitment to the populations and the age structure of both hake species (Merluccius capensis and Merluccius paradoxus) (Powers et al. 2004: 40). In relation to the second principle (ecosystem impact), the South African hake industry barely made the grade (80 points). Gaps were identified in four areas: (1) bycatch management; (2) ecosystem relations; (3) impact of trawling on the benthic habitat; and (4) impact of trawling on seabird populations. In relation to the first area, the certification team demanded the development of a by-catch management plan within a year from certification (and its implementation within 18 months). In relation to the second area, an appraisal of research requirements within 12 months was mandated, followed by initial outputs of research within two years. In relation to the third area, the certification team demanded further research efforts, a review of gear, the identification of habitat types, and considering the creation of protected areas. In relation to the fourth area, the development of a monitoring plan was mandated within six months of certification, and implementation of such a plan within 12 months (Ibid.: 40-42). In relation to the third principle (fishery management system), the industry’s score was relatively high (88 points). The only condition placed was a review of the compliance system, possibly followed by instruction, training or corrective actions, within 12 months (Ibid.: 42). Despite the fact that the South African hake industry achieved certification, a number of problematic issues arise: (1) the trawling sector has been certified, but not the longlining sector, even though they exploit the same stock; (2) furthermore, there are questions about whether the stock is shared with Namibia, which is not certified either; and (3) complaints have been raised on the relevance and rigidity of some indicators in the MSC standard, and on the lack of participation by some segments of 37 the industry in the process. I take these in turn in the next paragraphs. In the following section, I examine the process of post-certification monitoring and verification. Trawling vs. longlining Hake longliners (and handliners) have not been certified, either because they lacked a strong association that could represent them and guarantee a proper management system or because they are one of the potential threats to the incumbent oligopoly. A paradoxical situation has thus been created, where the trawling sector in a fishery is certified ‘sustainable’, while the smaller-scale longline sector catching the same stock is not. Yet, the overall stock is deemed to be ‘sustainably managed’. MCM did raise this issue with the certifiers, but the response from MSC was that their approach focuses on fishery by fishery (a management approach), not stock by stock (SAH11). However, the establishment of separate fishing grounds for the two industries (admittedly, a potentially difficult political process) was not suggested by MSC certifiers as a way of addressing this issue, apparently because it is not up to the certifiers to tell the state how they should manage their resources. In addition to this, it is peculiar that a stock is said to be sustainable even though it is made up of two separate species and there was only limited knowledge of the two individual stocks at the time of certification (although more research has been mandated by MSC in this area). One stock, two countries The MSC approach is to divide up fisheries in management units, even though they may share the same stock. This allowed MSC to certify the South African hake industry without certifying the Namibian sister industry, even though it is widely believed that they share the same stock. According to one informant, Namibia first considered applying for MSC certification, but then decided against it because it would encounter problems in qualifying due to management problems – there are uncertainties about the health of the stock in Namibia, plus the country allows seal culling (SAH1). A trawling operator stated that he approached the Namibian Minister of Fisheries to explore the possibility of a joint MSC certification, but the Namibians refused, arguing that they did not need MSC as they had ‘an efficient management regime in place already’ (SAH38). 38 A strict interpretation of sustainable management of stock would suggest that the South African fishery could only be ‘sustainable’ if both it and the Namibian fishery were certified, but the latter either did not want or was not invited to participate in the certification process. Therefore, the certification team stated that ‘although mixing [of the South African and Namibian stocks] will inevitably occur, from a fishery management perspective the South African hake populations may be considered as a discrete stock’ (Power et al.: 5).31 This managerial approach to sustainability allows MSC to ‘match market demand’ by ensuring appropriate supply volumes of certified fish. Relevance and rigidity of indicators, participation in the process Thirdly, the MSC standard was reportedly too rigid to accommodate South African realities. Some indicators and conditions were not flexible enough, and data had to be ‘massaged in’ (SAH1). Other conditions were ambiguous (especially in relation to eco-system impact). Some indicators did not apply at all (socio-economic impact on coastal communities is not so relevant in an off-shore industrial fishery). Other key indicators were missing, such as labour conditions on vessels, transformation and equity issues – although they are not part of MSC’s focus (SAH1). Priority was given to ‘system functioning’ objectives, again indicating a bias towards a managerial approach to sustainability. Conservation groups also complained that ‘the certification process could have been better in the initial stages with better stakeholder participation …[the certification agency] met environmental groups individually, but there was no stakeholder forum to exchange ideas and comments’ (SAH36). When the draft report came out, no scores were available … [Conservation groups] asked to turn some recommendations into conditions. The team responded that only by scoring below a certain level, you could set conditions, but no indications were given on the scores. Eventually, the team was persuaded. The final report came out with the scoring, but it 31 Biological justifications of this argument have also been attempted. According to a scientist at MCM, catch levels in Namibia are low, while they are higher in South African waters. This may suggest a natural barrier between the two countries, perhaps due to high fresh water discharge and sedimentation from the Orange River (SAH11). Others have pointed out that this barrier cannot be larger than 5 km from shore (SAH24) on the boundary between the two countries. Another informant stated that ‘it is inevitable that there is migration between the two countries, especially of the deep-sea species’ (SAH11). In a 2004 workshop hosted by the Benguela Large Marine Ecosystem (BCMLE) programme it was stated that ‘there are reasonable grounds that M Paradoxus might be a single stock that moved between the South Coast and the northern extremes of Namibia’ (Fishing Industry News, June 2004: 30). 39 would have been too late to do anything about it’ (SAH36). According to WWF, even after certification, there has been no concerted effort to work on implementation of conditions, and this has been done on an ad hoc basis. WWF would like to see a consultative implementation committee set up for that purpose, including stakeholders from government, industry and NGOs. Conversely, some industry players complained that conservation groups exercised undue influence and managed to convince the certification team to insert some conditions to certification relating to bird mortality, eco-systems impact analysis and impact on benthic habitat. The certification team had suggested inserting only recommendations in relation to these issues (SAH1; SAH36). 4.5 Verification after certification In 2005, the South African hake industry was subjected to the first surveillance exercise by the certifying team. This resulted in a surveillance report released in May 2005 (Tingley et al. 2005) that covers progress in all the conditions that were set at the time of certification. It is worth going into the details of some of these to understand in broader terms what it means to maintain compliance with the MSC standard. Condition 1 related to by-catch and refers to the claim that there are some species under pressure from hake trawling (kingklip especially). The condition demanded a management plan to be in place within 12 months and its implementation soon thereafter. Disagreements within the industry on a by-catch policy meant that it was not prepared in time for the first surveillance visit by the certification team.32 Yet, the surveillance report noted that the industry had made moves in that direction, and that implementation was going to proceed quickly after the plan was in place. The message is that although the system is not in place, it would be soon. This should be read in connection with Condition 6 on compliance monitoring. In this case, the team 32 MCM developed a by-catch policy proposal, but the industry rejected it. MCM wanted the industry to deduct by-catch volumes from the allocated hake quota. The industry wanted a system where bycatch should be in line with historical performance (SAH11). Even within SADSTIA there have been different ideas on how to manage by-catch. Different companies have different business models, and for smaller companies by-catch is more important for their financial stability. Large companies wanted to establish a maximum proportion of by-catch over the hake quota allocated. Medium and small companies instead argued for a system based on historical performance and an indication of not going above these levels. They also proposed an inverse proportional system, where smaller companies could have larger proportions of by-catch (SAH28). 40 observed that measures have been implemented, and that partial fulfilment is due to ‘ongoing issues with staffing’. The report notes that ‘no regulatory infringements occurred during the current reporting period’ (Tingley et al. 2005: 12). Problems with staffing (see also below) should raise alarm on the ability of the regulatory agency to carry on managing the resource effectively. Yet, here they are used as a mitigating factor. In addition to this, in July 2005, a hake trawler was arrested and fined by MCM for ‘illegally catching’ snoek. The vessel was found in possession of 39 tons of hake (for which it has a quota allocation) and 300 tons of snoek, which is supposed to be ‘bycatch’ (Cape Times, 20 July 2005). An industry operator, however, claimed that everyone has been using by-catch to make their operations more viable for at least 15 years.33 Evaluated in terms of systemic performance, the arrest of the vessel is a positive outcome, thus will be probably scored positively by the next monitoring team – at least in relation to the by-catch condition. However, the underlying situation is not addressed. Condition 2 related to deficiencies in understanding the variability of recruitment to the population of both species of hake. Albeit not specifically to address the MSC conditions, MCM has created two dedicated posts for fish ageing and a hake fecundity sampling program. This was deemed to have met the condition, which was ‘closed’. A brief look into the recent history of human resource management at MCM is necessary at this point. First of all, the two positions were created, but no indication was given on whether the posts have been filled. A large number of advertised positions in MCM have not been filled in the last decade (SAH47). MCM has experienced a severe ‘brain-drain’ of managers and fishery scientists in the last decade, a trend that has accelerated in the 2000s (see below). Therefore, and again, matching the systemic requirement does not necessarily mean that there is capacity to carry out the work program. 33 In general, a vessel is operational for a total of 10 months a year. If, for example, a vessel has a quota of 1,400 tons of hake, and catches 250 tons each trip, it will fulfil its quota in the equivalent of seven months of operation. It needs to recoup at least the capital costs for the remaining three months as well. Targeting snoek, a low value, low profit species, is one of the ways of doing this. But the real money is in monk and kingklip fishing – the two species targeted in the by-catch management plan mandated by MSC certifiers (SAH 47). 41 Condition 3 related to gaps in understanding of ecosystems relations. This is one aspect that even MSC recognizes as difficult to achieve, even in the most advanced fisheries. In addition to a new research program on the topic, the certification team noted that the allocation policy of 2006 ‘explicitly recognises the ecosystem approach and it seems will be entrenched in the future management of all fisheries’ (Tingley et al. 2005: 7). A policy statement is sufficient to appease the certifiers. As long as (the appearance) of movement is made towards an abstract goal, certification will not be lost. In its general comments, the monitoring team reflected upon the results of stock assessment in 2004, which indicated that stock levels had not changed. The team noted a series of weaknesses in data collection and in the understanding of longterm historical and ecological implications. According to an informant, ‘the hake stock is going through a tough time at the moment, although MCM is doing a good job in management. In the last 1-2 years, catch per unit of effort has decreased, and smaller sized fish are being caught. Small size is not necessarily a bad sign, it means that there is good recruitment, but it needs to be accompanied by catch of many bigger fish as well. This is not happening’ (SAH37). There are also widespread concerns about the sustainability of the resource in Namibia, where there is speculation that overfishing is taking place. South African operators feel that the Namibian TAC is too high (SAH46). Interestingly, the 2006 TAC in South Africa was reduced by 10,000 tons below the 2005 TAC. This figure, however, was arrived at on the basis of the precautionary principle – for the first time since the 1970s the hake survey did not take place in 2005 due to an unresolved dispute on overtime payment for the vessel crews that were supposed to operate the survey. This led to a nonscientific reduction that could in theory undermine MSC certification. Yet, ‘MSC needs South Africa hake, especially after New Zealand hoki collapsed … following MSC certification!’ (SAH46). The overall assessment of the monitoring team was a positive one, and continuation of certification was recommended. No MSC-certified fishery has been decertified so far. Is this an instance of ‘path dependency’ or a sign of improved management? South African observers of the fish industry made it clear that with the current rate of loss of scientists and managers at MCM, there will be no capacity to properly monitor the use and possible abuse of quotas (SAH45; SAH46). Thirty-five scientists have 42 left MCM between 1996 and 2005 (Fishing Industry News, December 2005: 12). In January 2005, two of the key management figures at MCM resigned in response to being accused of racism and lack of transformation at MCM during a formal briefing to the portfolio committee on environment and tourism. This is particularly interesting as one has impeccable ‘struggle credentials’, and the other is a ‘previouslydisadvantaged individual’. After their resignation, the Minister brought them back under a consultancy contract to carry out the same functions (at a much higher cost) (SAH44; SAH46).34 According to an industry source, current management at MCM lacks deep understanding of allocation issues. After the 2006 allocation, which for the first time assigned quotas for a period of 15 years (instead of one year, or more recently five years), compliance by industry to regulation is likely to decrease. A review of allocation should follow every 2-3 years to assess compliance with the terms of the allocation policy, but there is no capacity at MCM at present to undertake that. ‘Many quota holders are privately admitting that there will be a free ride for the next 15 years’ (SAH46). 4.5 MSC, hake and beyond The expected commercial benefits that were to accrue to the South African hake industry from MSC certification have for the most part not materialised. The MSC standard explicitly refers to the provision of ‘socio-economic incentives for sustainable fishing’. Yet, according to industry sources, MSC fish is sold at the same price as ‘regular’ fish at the retail level (SAH38). A source at MSC explained that retailers refused steadfastly to put a price premium on the labelled product (MSC2). They argued that the product would sell only if it did not cost more to the consumer, and that the organic premium works only because it is sold as a ‘health’ benefit, thus refers directly to benefits accrued to the consumer (SAH1; SAH43; MSC2). This is reflected in prices paid for MSC fish to South African exporters, which is the same paid for ‘other’ fish. As in other ‘sustainability initiatives’ in the agro-food sector, MSC certification may only entail maintaining a preferred supplier status, rather than providing an explicit financial incentive to ‘sustainable’ producers (see Daviron and Ponte 2005; Giovannucci and Ponte 2005). This has led one of the drivers of certification to state that MSC had not delivered commercial advantages to the 34 Three further senior officers left MCM or took leave of absence in the first few months of 2006 (www.feike.co.za). 43 industry – neither in terms of a premium nor in terms of market share (SAH38). Another company, however, has started to sell small amounts of its own branded frozen products with the MSC logo in ‘traditional’ markets such as Spain, Portugal and Italy. In terms of actual impact on sustainability, recent reports emerged suggesting that the hake stock is in danger, and that catches are at historically low levels (Fishing Industry News, June 2006: 10; Mail & Guardian, 30 June 2006). This is similar to what happened to the hoki industry in New Zealand, suggesting that MSC and other market-based instruments per se are not sufficient to ensure sustainability. One of the most respected fisheries management experts in South Africa, Horst Kleinschmidt, proposed a ‘rescue plan’ for hake that smacks of old-style regulation, not market-based labelling: establishing extensive Marine Protected Areas and a strict compliance regime, and putting observers on all vessels (Fishing Industry News, June 2006: 11). However, the relative commercial failure of MSC for the South African hake industry may not be such a problem, since the drivers of the initiative have achieved two other objectives. First, the longlining industry has not been allocated a higher proportion of the total hake TAC in 2006. But even more importantly, MCM embedded the argument that fewer players are better for conservation than a larger number in its own policy that guided the 15-year allocation of 2006 (MCM 2005b). No new entrants were assigned quotas and some of the smaller existing quotas were not renewed. Although the big companies lost a proportion of their quotas (a sizeable volume for one of the main players), the allocation of long-term rights is likely to create a secondary market for quotas. As a result, an even more concentrated industry may emerge in the mid-term (Ponte and Van Sittert 2006). Given the lack of price incentives, it is unlikely that MSC certification will be expanded to other fisheries in South Africa. The South African who sits in the Stakeholder Council of MSC (a representative of a mid-sized trawling company) has been working on sensitising the MSC on the specific problems of small fisheries in relation to certification (SAH7). Also, conservation groups have been trying to attract funding to certify other, smaller, fisheries in South Africa. They argue that, despite the launch of the Sustainable Fisheries Programme, it is still a huge problem to find funding and organise fisheries to prepare for certification. One of these groups wants to facilitate longline hake and West Coast Rock Lobster, but they are encountering 44 problems because of lack of incentives for the fisheries. ‘If there is no premium in it, these smaller fisheries will not get involved … They will not do it just for the sake of the environment; only if there is a market incentive; in South Africa, there are no strong NGOs that could smear mud on big fish companies’ (SAH36). 5. Comparative analysis: timber, fish and coffee The main commercial interests for fishing industries in applying for MSC certification, in South Africa and elsewhere, have been to obtain (or maintain) preferred supplier status with fish buyers and to expand (or maintain) market share. There has been little discussion in the sustainability standards literature of what this commercial approach means for actually matching sustainability objectives. In relation to sustainable timber initiatives and the Forest Stewardship Council (FSC) certification, Klooster (2005) argues that large buyers, such as IKEA and Home Depot, do not only demand certification, but also high volumes, uniform characteristics and a competitive price. ‘These commercial values condition the ability of other actors to fully realise the social and environmental values of environmental certification of forests’ (Ibid. 404). In the same way, the certification of large fisheries such as Alaskan pollock, New Zealand hoki and South African hake was a central commercial objective for MSC, an objective that put sustainability per se in the background. Table 7: 'Sustainability' certifications in coffee, timber and fish Product Coffee Timber Fish Certifications and labels Old wave/ new wave (O/N) Fair trade Organics Utz Kapeh Rainforest Alliance Bird-friendly FSC MSC O O N N N N N Corporate Public Stakeholderinvolvment in support for driven? formulation? certification? N N Y N N Y Y Y/N Y N N N Y N N Y* N N N N Y** Premium paid to the producer? Producers bear cost of certification? Small producerfriendly? Special flaxibilites for smallscale producers? Y Y N Y/N Y/N N N N Y/N* Y Y Y Y Y Y Y/N N N N N N Y Y N N N Y N * Many organic certification schemes are subsidized either by governments or aid agencies ** Support in terms of providing scientific/managerial resources, research inputs Case studies on timber and coffee, alongside the case study of fish in this paper, have shown that sustainability certifications can marginalise smaller producers and producers in poorer countries (Klooster 2005; Taylor 2005; Giovannucci and Ponte 2005; Daviron and Ponte 2005; see Table 7). These studies also show how certification agencies have recognised the problem of marginalisation and tried to 45 address it externally by inviting small producers to contact NGOs or foundations that would provide technical assistance and capacity building. Only those initiatives that are (at least partially) stakeholder-driven, however, have developed special flexibilities for small-scale producers.35 ‘Old wave’ certifications are the only ones paying regular premiums at the farm (or cooperative) level, and are the only ones where certification costs are not fully paid by producers.36 In no case where corporate involvement was heavy at the time of starting a sustainability initiative a premium is paid to producers on a regular/systematised basis (see Table 7). Klooster (2005) aptly describes the historical path of FSC certification in four phases. It is worth describing them here in some detail, since the flow of events follows fairly closely the one described above for MSC. In a first phase, conservation groups organised boycotts and direct actions against big wood retailers and logging companies. The parallel in fisheries was the pressure from conservation groups against consumption of ‘dolphin unfriendly’ tuna, and other initiatives that drew lists of ‘irresponsible’ fisheries to be boycotted by consumers. In a second phase, WWF and other groups started to work on guidelines for ‘good wood’ buying and then facilitated the creation of an organisation (FSC) that also included large wood buyers, and a standard to be applied. As we have seen above, WWF was also instrumental in setting up the MSC and in drawing the standard together with Unilever. In a third phase, the same conservation groups aggressively promoted the FSC label among retailers under the silent threat that avoiding certification would damage their brands. During this phase, certification also spread to forest management companies. The FSC initiative, which started as a grass-roots campaign to curb deforestation in the tropics, became a mainstream, ‘document-intensive, buyer-driven preoccupation for delivering large quantities of certified wood products to market, with a focus on big forest producers and large wood consumers’ (Klooster 2005: 412; Taylor 2005). As a result, 80% of the current certified forest area is located in the US, Canada and Europe – with only 10% in tropical countries, and only 3% under community management (Ibid.). There are strong parallels with MSC here as well, with the important caveat that developing country fisheries were never a priority to begin with at MSC. According to Klooster, FSC is going through a fourth phase that entails 35 In the case of fair trade coffee, only smallholder members of cooperatives can be certified. In fair trade coffee, cooperatives do not pay for certification. In organic coffee, producers do pay for certification, but often not in full – in many schemes, governments and aid agencies heavily subsidise the cost. 36 46 working on corrective measures to reduce costs of certification and modify methodologies and indicators to adapt them to the needs of small-scale producers. Exactly the same is happening within MSC. The difference is that FSC, a memberdriven organisation, has devised a special procedure for small-scale forest management; in organic coffee, a special ‘group’ procedure has been devised to minimise the costs of certification in developing countries; instead, MSC is considering special ‘flexibilities’ within the same procedural framework and standard that are applied to large, developed country fisheries. A similar overall evolution of events took place in two ‘new wave’ coffee sustainability initiatives, with the difference that Rainforest Alliance and Utz Kapeh skipped the first phase of ‘negative publicity’ altogether, since this ground had already been covered by the fair trade movement and NGOs such as Oxfam. Rainforest Alliance and Utz Kapeh were able to focus on a more ‘positive’ approach, and a commercially-friendly one, from the start. They also adopted standards on environmental impact and social conditions of production that individually were less demanding than existing fair trade, organic and ‘shade-grown’ standards (Giovannucci and Ponte 2005). In all three value chains for timber, fish and coffee, ‘new wave’ certification organisations rarely provide direct funding for facilitating standard compliance. Normally, they facilitate access to a network of foundations and NGOs financing these initiatives (usually on a small scale) and providing technical assistance. This is consistent with a neo-liberal approach to trade, where inequality of resources can be addressed by equality of opportunity, even though technical assistance is spotty, politicallymotivated, and reliant on expensive expatriate advice. 6. Conclusion Many observers of agro-food industries in the South see third-party certification and labelling as a way of addressing skewed power relations along global value chains. First- and second-party certifications are indeed more open to manipulation by powerful actors (Mutersbaugh 2005) than third-party certifications. Yet, third-party certifications only go part of the way, as they play themselves within specific political economies and power relations (Hanataka, Bain and Busch 2005). By externalising functions such as achieving sustainability, ‘lead firms’ in global value chains, such as large retailers and branded processors, may actually be in a better position to focus 47 on what they do best and at the same time outsource ‘trouble-solving’. This allows them to be even more ‘hands-off’ with their immediate suppliers and to outsource ‘non-core’ functions more effectively – thus to perform better in key financial indicators. Lead firms then can pay better attention to short-term returns, play more effectively in switching between ‘preferred’ suppliers, and fine-tune economies of scale and scope to their advantage (Ponte and Gibbon 2005). This happens in an operational environment where the extra costs of achieving food safety, environmental and social standards are moved up the value chain towards producers. Increased sustainability may indeed result from these initiatives, but Northern consumers and corporations rarely foot the bill. Not surprisingly, developing countries have been generally reluctant to participate in ecolabelling initiatives. They have highlighted the embedded protectionist elements of some of these initiatives, and the naiveté of some standards in assuming that certain models of environmental management can be exported tout court to the South. This reluctance has been counteracted with assurances of transparency, nondiscrimination and technical assistance. In essence, ecolabels are assumed to be ‘good for the global commons’ and their justification has been offered within a discourse of science, objectivity, independent certification, transparency and systems management. As long as market-based mechanisms of ensuring sustainability, such as ecolabels, are seen as ‘neutral’, larger politico-economic factors, market structures and the role of special interests and expert knowledge will remain in the twilight. The Maritime Stewardship Council (MSC) initiative has offered more sophisticated fish suppliers a way of increasing their visibility in the market place under the guise of sustainability, alongside other ‘new wave’ sustainability certification schemes, such as Forestry Stewardship Council (FSC) certified timber (Klooster 2005; Taylor 2005) and Utz Kapeh and Rainforest Alliance-certified coffees (Giovannucci and Ponte 2005). These schemes, while offering preferred supplier status to certified suppliers, are expensive to comply with and rarely offer a premium. In time, the standards that underpin them may become the new ‘minimum standards’ for the market, effectively redesigning the nature of market access. This has happened, for example, to voluntary food safety and good agricultural practice standards such as EUREP-GAP. 48 ‘Old wave’ coffee certification schemes, such as fair trade and organics, instead offer premiums over non-certified coffees at the production level. Fair trade attempts to address some of the inequalities that are built within the trading system itself. The organic movement questions the very nature of an industrial approach to agriculture. In both cases, however, these ‘radical’ challenges seem to be on the wane (Guthman 2002; Raynolds 2002; 2004; Raynolds, Murray and Taylor 2004; Taylor 2005) in the name of commercial success. This has happened in parallel to a general move from a holistic and hands-on engagement with suppliers and towards more hands-off, auditable, systemic and managerial approaches to sustainability (Daviron and Ponte 2005). In these approaches, expert knowledge has come to play an increasingly important role. Scientists (marine biologists in the case of MSC) and systems managers are key actors. Social scientists and even economists are relatively marginalised. At the same time, activists are ‘expertised’. If shortcomings arise, they can be fixed technically and managerially. But systemic compliance masks as much as it reveals. For example, the arrest of a vessel that fished illegal quantities of by-catch is a positive indicator for MSC in terms of fisheries control, monitoring and compliance. But the underlying cause of by-catch fishing (assuring the financial viability of a fishing company) is not addressed. The ritual of verification is used to reconcile the contrasting objectives of ensuring both conservation and financial viability. In similar ways, in the Ugandan Nile perch industry, important chunks of the regulatory and monitoring system on fish safety exist only on paper. The food safety assurance system there allows the achievement of a series of contradictory objectives: to facilitate efficient logistics and ensure food safety; to match market demand and take care of sustainability; to implement a topdown food safety monitoring system and a bottom-up fisheries co-management system. This means that at least some food safety-related operations have to be carried out as ‘rituals of verification’ (Ponte 2005; 2007; Power 1997). Thus, conformity to systems performance and specific rules becomes more important than achieving the stated objectives of ‘sustainability’, safe food or fair trade. Principles are being ‘chocked’ by managerial rules and demands, although a countermovement may be detectable in the auditing profession to go ‘back to principles’. Verification in particular is explicitly constructed as a pedagogical exercise. It is not meant to exclude, but to teach management and better conformity. This is implicit in 49 the nature of auditing (Power 1997), but does not bode well for actually achieving ‘sustainability’. Much of the literature on sustainability labels has focused on standard setting, governance and implementation. Under this rubric, the MSC initiative has been criticised on a variety of counts: for having been driven by the largest commercial player in the industry – at least at the beginning; for not having consulted with fishers and with developing country industry actors at the stage of standard development; for having a centralised and corporate structure; for being biased in favour of industrial fisheries – and developed country fisheries in particular; for the high costs of compliance and certification; and for not ensuring ‘sustainability’. This paper placed more emphasis on the motivations behind the adoption of MSC, on verification procedures that follow certification, and on local settings. MSC certification, far from being simply a neutral and equal instrument yielding better conservation for humanity, is achieved in the context of global and local competition, special interest battles, and local politics. In South Africa, although couched in a discourse of conservation, MSC was one of the instruments used to justify positions in debates that had race relations and possible redressing of past wrongs under apartheid as the main issues at stake. It was played as a tool against the redistribution of quotas away from main, white-owned, quota holders to the possible benefit of ‘black’-owned smaller quota holders and new entrants within the deep-sea hake sector. It was also used as a tool to avoid redistribution of quota away from the large, mainly white-owned, deep-sea trawling sector to the advantage of the mostly ‘black’-owned longlining sector. Similarly, in the case of timber, ‘FSC [certification in Mexico] provides communities and indigenous groups with a defence against criticism for their alleged role in forest degradation and sometimes has been a key resource in communities and indigenous groups’ struggle for more secure land resource tenure’ (Taylor 2005: 138). Local politics and the situated political economy of conservation do matter for ‘sustainability’ certifications. Developing country fisheries, and small-scale ones in particular, have been marginalised in the MSC system. Only two fisheries in South Africa and Mexico have been certified so far. This is not surprising if one looks at comparative evidence from other ‘new wave’ sustainability initiatives in timber and coffee. Delivering 50 ‘sustainability’ at no additional cost and in large volumes demands standards that are tough in terms of systems compliance, but actually quite approachable in terms of the thresholds of sustainability indicators. Entry barriers to ‘sustainability’ entail economies of scale and scope that require managerial resources and access to networks. Because managerial and systemic objectives are harder for developing country actors to match, this creates a hidden imbalance in favour of more endowed participants. A stimulus for revising the MSC system in a way that is friendlier towards developing countries could have been the adoption in March 2005 by the FAO Committee of Fisheries (COFI) of voluntary guidelines for ecolabelling of fish products (FAO 2005). These guidelines provide a framework of reference for governments and organisations that have or want to establish ecolabels for marine capture fisheries. They include the need for independent auditing, transparency of standard-setting and accountability, and the need for standards to be based on ‘good science’. They also lay down minimum requirements and criteria for assessing whether a fishery should be certified and an ecolabel awarded, drawing on FAO’s Code of Conduct for Responsible Fisheries. Unfortunately, transparency and inclusivity in standard setting do not work retroactively. Also, instead of calling for special standards and verification systems to be applied in developing countries, the FAO guidelines simply call for ‘financial and technical support’. MSC stated that its system would be wholly consistent with the FAO guidelines by June 2006 (Fish4Thought, March 2006). The MSC system can apparently be fixed just by outsourcing accreditation to an independent organisation, and by making ‘decisions relating to complaints and appeals … fully independent of the MSC. A fee structure for complaints is a further necessary change to conform with the guideline, and this will be designed to protect equitable access for all interest groups’ (ISEAL Gazette, March 2006). Special systems of compliance and verification are necessary to cater for the needs of developing countries and small-scale producers. MSC was proposed such an instrument (see Wilson et al. 2002), but decided not to adopt it. Until this happens, and until premiums are not paid at the producer level, MSC and similar initiatives will keep putting ‘sustainability’ at the service of commercial interests. The most 51 important question is not whether a set of stricter or looser standards are needed to ensure ‘proper sustainability’. What is more important is to promote a movement from rules and indicators back to principles. This entails a less managerialist approach and more room for judgment on how principles can be achieved in specific political economies and local conditions.37 Appendix 1: Ecolabels and WTO rules This Appendix examines the issue of WTO-compatibility of ecolabelling in general terms, and specifically in relation to the basic principle of non-discrimination. In relation to trade-related environmental issues, the principle of non-discrimination ensures that national environmental protection policies do not arbitrarily discriminate between foreign and domestically produced ‘like products’ (‘national treatment’ principle, GATT Article III), or between like products imported from different trading partners (‘Most-Favoured Nation’ or MFN principle, GATT Article I). The issue of nondiscrimination has been discussed in the Committee on Trade and Environment (CTE) in relation to general product-related environmental requirements, and in the Committee on Technical Barriers to Trade (CTBT) in relation to the interpretation of the Agreement on Technical Barriers to Trade (TBT) (Vitalis 2001). Ecolabelling has been in the workplan of CTE since 1994, but only with the Doha work programme in 2001 did the CTE receive a formal mandate to address this issue. CTE only acts as a convener for discussions. It does not have formal rulesetting powers in the area of ecolabelling, thus its recommendations would have to be decided upon by the Committee on TBT (Rotherham 2004). ‘The CTE has recognised that ecolabelling programs can be valuable environmental policy instruments. Nonetheless, there is also concern that the use of ecolabelling schemes may reduce market access for some countries because of the potential for prohibitively expensive or complicated requirements, or by the inadvertent or intentional creation of disguised restrictions on trade’ (Polack 2003: 6). The TBT agreement was adopted to clarify the treatment of technical requirements under the GATT and to ensure that these do not create unnecessary barriers to trade 37 Unfortunately, fair trade, which was based on a less managerialist approach than other sustainability initiatives, is actually going the opposite way with the separation of producer support functions from certification. 52 (Grote et al. 1999). TBT differentiates technical requirements in two categories: (1) technical regulations, which are mandatory; and (2) standards, which are voluntary. Both regulations and standards may also relate to ‘terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method’ (TBT Agreement, Annex 1). The TBT Agreement and its ‘Code of Good Practice for the Preparation, Adoption and Application of Standards’ prohibit both technical regulations and standards from discriminating between domestic and foreign products that are alike and between ‘like products’ from different WTO members. Yet, the TBT also states that ‘no country should be prevented from taking measures necessary to ensure ... the protection of human, animal or plant life or health, [or] of the environment ... at the levels it considers appropriate’ (Preamble, TBT Agreement). Technical regulations are presumed not to create unnecessary obstacles to trade if they are based in accordance with a relevant international standard (Gardiner and Viswanatan 2004). There is no such statement in relation to standards, such as ecolabels. Yet, ecolabels are still subject to the provisions of the TBT Code. Thus, standardising bodies need to: adopt existing international standards; make efforts to harmonise standards; avoid duplication or overlap with other standardising bodies; and make available copies of the standard for comment (TBT Annex 3). Articles 11 and 12 of the TBT specifically call on developed countries to recognise the difficulties that developing countries may have in setting and applying regulations and standards, and to provide technical assistance and special and differential treatment. A heated debate has been taking place on the interpretation of the TBT in relation to ecolabels. This debate can be simplified into three basic stances. A first stance questions whether the TBT covers eco-labels at all. According to a second stance, ecolabels are consistent with TBT provisions only when they convey information on product-related process and production methods (pr-PPMs). These refer to differences in the physical characteristics of a product, even if the change in these products comes about as a result of requirements addressing process or production methods. This stance states that if labels convey information on non-product related PPMs (npr-PPMs), such as the environmental effects associated with production that are not incorporated in the product, they should not be regulated by the TBT. 53 Arguments against npr-PPMs arise from concerns, especially by developing countries, that they would be used as protectionist devices. Protectionist outcomes can arise as the result of arbitrary rationales that may undercut comparative advantages that developing countries may have, and from ‘well-intentioned but parochial understandings of what is environmentally sound that are derived from domestic ecological conditions that may not apply to conditions in distant countries’ (Wessells et al. 2001: 64). A third stance argues that TBT should also cover nprPPMs (Rotherham 2004). This is because even though a product itself may not harm the environment during or after its use, the methods used for its production or processing may have had adverse environmental impacts. Therefore, it is argued that both kinds of PPMs should be regulated by the TBT, ‘provided that the provision of …information should not be made in a way that restricts the availability of products about which less is disclosed’ (Vitalis 2001: 6-7). Generally speaking, developing countries favour the interpretation that npr-PPMs are not covered by the TBT Agreement. They fear that if they were to be covered by TBT, this would allow developed countries to use them to extend their domestic production methods related to environmental matters extra-territorially. Developing countries are also worried that npr-PPMs would open the door to the consideration of social conditions of production, such as labour standards. Developed countries argue in favour of coverage of npr-PPMs, and generally emphasise their importance to further environmental objectives. These countries also highlight ecolabelling schemes which use npr-PPMs exist already, and thus that these schemes should be subject to discipline (Polak 2003: 6-7). Two WTO-level disputes are particularly relevant in relation to the discussion of ecolabels covering npr-PPMs. Incidentally, both these disputes relate to fishery products – the so-called ‘tuna-dolphin’ and ‘shrimp-turtle’ cases. The first relates to attempts by the US to prohibit imports of tuna caught by countries using purse seines. The US justified this move on the basis that this fishing method results in bycatch and death of many dolphins. The first challenge to this regulation was brought by Mexico to the GATT in 1991. The second challenge to the ‘tuna-dolphin’ regulation was brought by the Netherlands and the EU to the WTO in 1994. In both cases, the US lost. Specifically, the panels found that US rules contravened the TBT because they were regulating non-product-related PPMs. However, the 1991 panel 54 accepted the US voluntary ‘dolphin safe’ tuna labelling scheme as consistent with the provisions of the TBT. It ‘noted that the voluntary label did not illegally restrict the sale of tuna since tuna products could be freely sold both with or without the ‘dolphin safe’ label, and because any competitive advantage conferred by the label depended on the free choice of consumers to give preference to tuna carrying the “Dolphin Safe” label’ (Wessells et al. 2001: 63; see also Bonanno and Constance 1996). Because there have been no similar precedents regarding the application of WTO rules to transnational ecolabelling schemes, it is not clear whether this applies to the MSC label as well. The shrimp-turtle case was brought by India, Pakistan, Malaysia and Thailand against the US. The US had mandated that countries that trawled for shrimp in waters where marine turtles occur must equip their vessels with turtle excluder devices. In 1998, the Appellate Body found this provision in breach of the TBT on the basis of extra-jurisdictional and unilateral application of domestic law. For some, the verdict indicated lack of sensitivity of WTO on environmental issues. Others read it as an encouragement to adopt transparent and multilateral considerations of environmental issues into trade negotiations (Gardiner and Viswanatan 2004: 21-22). As mentioned above, the 2001 Doha Declaration instructed the CTE to examine whether existing WTO rules stand in the way of ecolabelling, and to identify any rules that should be clarified. The CTE was supposed to bring forward a proposal at the Cancun ministerial in 2003, but the EU failed to gather enough support for it. The collapse of talks in Cancun then made progress on minor issues even more difficult. It is unlikely that any further discussion or resolution will take place within WTO on ecolabelling in the near future. A second route for discussion would be through reopening discussions on the TBT Agreement, but almost all WTO members are against this option. Ecolabelling will not be discussed within the current Fourth Triennial Review of the TBT either.38 Where there is more consensus within WTO discussions in relation to ecolabels is that transparency and non-discrimination need to be assured in developing, adopting and applying them. This in practice means that the MSC label is unlikely to be found 38 Source: [Online]. Available: http://www.wto.org/English/tratop_e/tbt_e/tbt_agenda_march06_e.htm (accessed March 2006). 55 in contravention of WTO rules, unless it is found in breach of the TBT Code. Furthermore, FAO took an important initiative to address transparency and nondiscrimination in the preparation, adoption and application of fisheries ecolabelling schemes. Its 2005 ‘Guidelines for the ecolabelling of fish and fishery products from marine capture fisheries’ (FAO 2005) are likely to provide the international standard against which non-discrimination will be measured. Three of the 14 principles upon which the guidelines are based can be used to safeguard developing countries: Principle 2.5 on non-discrimination; Principle 2.10 that allows traditional knowledge of the resources as a legitimate source of information; and Principle 2.11 demanding ‘practical, viable and verifiable’ labelling schemes (FAO 2005: 1-2). The guidelines for setting up standards require transparency and ‘participation of all interested parties, especially of those of developing countries’ (FAO 2005: 12). The guidelines for accreditation specifically state that full recognition should be given to the special circumstances and requirements in developing countries (FAO 2005: 16). The guidelines for certification state that access to certification should not be conditional upon the size or scale of the fishery (FAO 2005: 22). 56 References Allison, E.H. 2001. Big laws, small catches: Global ocean governance and the fisheries crisis. 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WP 1/2002, April A few reflections on Annex VI to the SADC Trade Protocol by Jan Bohanes WP 2/2002, August Competition policy in a regional context: a SADC perspective on trade investment & competition issues by Trudi Hartzenberg WP 3/2002, November Rules of Origin and Agriculture: some observations by Hilton Zunckel WP 4/2002, November 2003 A new anti-dumping regime for South Africa and SACU by Stuart Clark & Gerhard Erasmus WP 1/2003, May Why build capacity in international trade law? by Gerhard Erasmus WP 2/2003, May The regional integration facilitation forum: a simple answer to a complicated issue? by Henry Mutai WP 3/2003, July The WTO GMO dispute by Maxine Kennett WP 4/2003, July WTO accession by Maxine Kennett WP 5/2003, July On the road to Cancun: a development perspective on EU trade policies by Faizel Ismail WP 6/2003, August GATS: an update on the negotiations and developments of trade in services in SADC by Adeline Tibakweitira WP 7/2003, August An evaluation of the capitals control debate: is there a case for controlling capital flows in the SACU-US free trade agreement? by Calvin Manduna WP 8/2003, August Non-smokers hooked on tobacco by Calvin Manduna WP 9/2003, August Assessing the impact of trade liberalisation: the importance of policy complementarities and policy processes in a SADC context by Trudi Hartzenberg WP 10/2003, October An examination of regional trade agreements: a case study of the EC and the East African community by Jeremy Everard John Streatfeild WP 11/2003, October 62 Reforming the EU sugar regime: will Southern Africa still feature? by Daniel Malzbender WP 12/2003, October 2004 Complexities and inadequacies relating to certain provision of the General Agreement on Trade in Services by Leon Steenkamp WP 1/2004, March Challenges posed by electronic commerce to the operation and implementation of the General Agreement on Trade in Services by Leon Steenkamp WP 2/2004, March Trade liberalisation and regional integration in SADC: policy synergies assessed in an industrial organisation framework by Martine Visser and Trudi Hartzenberg WP 3/2004, March Tanzania and AGOA: opportunities missed? by Eckart Naumann and Linda Mtango WP 4/2004, March Rationale behind agricultural reform negotiations by Hilton Zunkel WP 5/2004, July The impact of US-SACU FTA negotiations on Public Health in Southern Africa by Tenu Avafia WP 6/2004, November Export Performance of the South African Automotive Industry by Mareika Meyn WP 7/2004 December 2005 Textiles and clothing: Reflections on the sector’s integration into the post-quota environment by Eckart Naumann WP 1/2005, March Assessing the Causes of Sub-Saharan Africa's Declining Exports and Addressing Supply-Side Constraints by Calvin Manduna WP 2/2005, May A Few Reflections on Annex VI to the SADC Trade Protocol by Jan Bohanes WP 3/2005, June Tariff liberisation impacts of the EAC Customs Union in perspective by Heinz - Michael Stahl WP4/2005, August Trade facilitation and the WTO: A critical analysis of proposals on trade facilitation and their implications for African countries by Gainmore Zanamwe WP5/2005, September An evaluation of the alternatives and possibilities for countries in sub-Saharan Africa to meet the sanitary standards for entry into the international trade in animals and animal products by Gideon K. Brückner WP 6/2005, October Dispute Settlement under COMESA by Felix Maonera WP7/2005, October 63 The Challenges Facing Least Developed Countries in the GATS Negotiations: A Case Study of Lesotho by Calvin Manduna WP8/2005. November Rules of Origin under EPAs: Key Issues and New Directions by Eckart Naumann WP9/2005, December Lesotho: Potential Export Diversification Study: July 2005 by Ron Sandrey, Adelaide Matlanyane, David Maleleka and Dirk Ernst van Seventer WP10/2005, December African Member States and the Negotiations on Dispute Settlement Reform in the World Trade Organization by Clement Ng’ong’ola WP11/2005, December 2006 Agriculture and the World Trade Organization – 10 Years On by Ron Sandrey WP1/2006, January Trade Liberalisation: What exactly does it mean for South Africa? by Ron Sandrey WP2/2006, March South African merchandise trade with China by Ron Sandrey WP3/2006, March The Multifibre Agreement – WTO Agreement on Textiles and Clothing by Eckart Naumann WP4/2006, April The WTO – ten years on: trade and development by Catherine Grant WP5/2006, May A review of the results of the 6th WTO Hong Kong Ministerial Conference – Considerations for African, Caribbean and Pacific (ACP) Countries by Calvin Manduna WP6/2006, June Trade Liberalisation: What exactly does it mean for Lesotho? by Ron Sandrey , Adelaide Matlanyane and David Maleleka WP7/2006, June A possible SACU/China Free Trade Agreement (FTA): Implications for the South African manufacturing sector by Hans Grinsted Jensen and Ron Sandrey WP8/2006, July Trade Briefs 2002 Cost sharing in international dispute settlement: some reflections in the context of SADC by Jan Bohanes & Gerhard Erasmus. TB 1/2002, July Trade dispute between Zambia & Zimbabwe by Tapiwa C. Gandidze. TB 2/2002, August 2003 Non-tariff barriers: the reward of curtailed freedom by Hilton Zunckel TB 1/2003, February 64 The effects of globalization on negotiating tactics by Gerhard Erasmus & Lee Padayachee TB 2/2003, May The US-SACU FTA : implications for wheat trade by Hilton Zunckel TB 3/2003, June Memberships in multiple regional trading arrangements : legal implications for the conduct of trade negotiations by Henry Mutai TB 4/2003, August 2004 Apparel Trade and Quotas: Developments since AGOA’s inception and challenges ahead by Eckart Naumann TB 1/2004, March Adequately boxing Africa in the debate on domestic support and export subsidies by Hilton E Zunckel TB 2/2004, July Recent changes to the AGOA legislation by Eckart Naumann TB 3/2004, August 2005 Trade after Preferences: a New Adjustment Partnership? by Ron Sandrey TB1/2005, June TRIPs and Public Health: The Unresolved Debate by Tenu Avafia TB2/2005, June Daring to Dispute: Are there shifting trends in African participation in WTO dispute settlement? by Calvin Manduna TB3/2005, June South Africa’s Countervailing Regulations by Gustav Brink TB4/2005, August Trade and competitiveness in African fish exports: Impacts of WTO and EU negotiations and regulation by Stefano Ponte, Jesper Raakjær Nielsen, & Liam Campling TB5/2005, September Geographical Indications: Implications for Africa by Catherine Grant TB6/November 2006 Southern Africa and the European Union: the TDCA and SADC EPA by Catherine Grant TB1/2006, May Safeguarding South Africa’s clothing, textile and footwear industries by Gustav Brink TB2/2006, May Agricultural Safeguards in South Africa by Gustav Brink TB3/2006, May The WTO Trade Policy Review Mechanism: application and benefit to SACU by Paul Kruger TB4/2006, June 65