WASHINGTON, D.C.—STATEMENT OF THE HONORABLE ENI F.H. FALEOMAVAEGA
BEFORE SPECIAL INDUSTRY COMMITTEE NO. 25
U.S. DEPARTMENT OF LABOR WAGE AND HOUR DIVISION REGARDING THE MINIMUM WAGE IN AMERICAN SAMOA

According to a 1954 U.S. Congressional House Report, “from January through April 1954, Van Camp Co. and the Tokyo Marine Products Corp., with whom the former had entered into contract, carried out in American Samoa the first joint American-Japanese venture in the history of Central Pacific tuna fishing.  A fleet of 7 long-line boats, manned by Japanese fishermen, based in Pago Pago, with the logistical support of 2 American freezer ships, fished in a several hundred mile radius of American Samoa.”

 “During 1954, the cannery was in operation for only 6 months, yet over 200 tons of fish were processed and another 400 tons of frozen fish were sent to the United States…The results indicate[d] that a continuing and expanding tuna fishery in American Samoa [was] a distinct possibility, providing certain basic problems of supply and organization [were] met and solved.”

 Forty-nine years later, American Samoa is home to the largest tuna cannery in the world and since 1975 Chicken of the Sea/Samoa Packing and StarKist have exported billions of dollars worth of canned tuna from American Samoa to the United States.  But our history with the industry has been tangled and our future is in no longer certain due to tremendous competition from foreign nations that catch and produce canned tuna at lower labor costs.    

Only last year, American Samoa faced one of its most critical hours as a result of aggressive efforts by the H.J. Heinz Co., and its then subsidiary StarKist Seafoods, to include canned tuna in the Andean Trade Preference Act (ATPA).  As part of the ATPA and in an effort to curb drug production in Latin America, the U.S. agreed to provide preferential, mostly-duty-free treatment to certain products exported to the U.S. from Bolivia, Colombia, Ecuador, and Peru.  In my honest opinion, had StarKist been successful in its effort to include canned tuna under the provisions of the ATPA, American Samoa would have faced massive unemployment and insurmountable financial difficulties.

Briefly, the economy of American Samoa is more than 85% dependent either directly or indirectly on the U.S. tuna and fishing processing industries.  Two canneries, Chicken of the Sea and StarKist, employ more than 5,150 people or 74% of the workforce.  American Samoa processes about 950 tons of tuna per day which is equivalent to 228,000 tons of tuna or 20.5 million cases per year. 

On the other hand, the Andean Pact countries control more than 35% of the catch in the Eastern Pacific Tropic (EPT) and, in the past ten years, the Andean tuna fishing fleet has also grown from about 20 to 90 fishing vessels.  Ecuador and Colombia now have the capacity to jointly process 2,250 tons of tuna per day which is equivalent to 540,000 tons of tuna or 48.6 million cases per year.
 
It should be noted that the U.S. only consumes 48 million cases per year while the Andean countries have the production capacity to supply the entire U.S. market and wipe out the economy of American Samoa.  Additionally, labor rates for cannery workers are $0.69 per hour and less in the Andean countries but on average $3.26 per hour in American Samoa.  With these differences in wage rates, I did not believe then and I do not believe now that StarKist’s interest in the ATPA was to curb drug production in the Andean countries.  More likely, I believe StarKist fought the matter for one reason and one reason only—to displace $3.26 workers in American Samoa and exploit $0.60 labor in Ecuador. 

I do not believe this is what fair trade should be about and I am pleased to state that my colleagues in both the House and Senate agreed with me on this point and excluded canned tuna from the ATPA.  Parenthetically, I am also pleased that StarKist has since changed ownership and I am hopeful that our new corporate partner, Del Monte Foods, will work with us to rebuild the heap of stones that has collapsed.  E ta’ape a fatuati, or the collapse of the heap or structure of stones, is a Samoan proverb which refers to the practice of setting up a heap of stones under the water to attract fish.  Sometimes the structure collapses as a result of deliberate acts or accidental causes.  Either way, when the heap collapses, the fishermen will come to rebuild it for the good of the community which is solely dependent on the fishing industry. 

For more than forty-five years, American Samoa’s economy has been dependent on a structure which is also used to attract and protect investment in the Territory.  This structure, known as the U.S. tariff or tax structure, provides duty-free treatment for canned tuna entering the U.S. from American Samoa.  This structure also assesses a low duty of 6% and a high duty of about 12% on canned tuna packed in water entering the U.S. from foreign countries.  For tuna packed in oil the tax is about 30%.  Whether 6%, 12%, or 30%, foreign countries must pay a U.S. duty, or tax, to send their canned tuna to the U.S. while American Samoa’s canned tuna enters the U.S. free of charge. 

Fortunately, this tariff or tax structure levels the playing field for American Samoa and allows us to compete against countries with lower wage rates of $0.60 and less per hour.  This tax structure safeguards us.  It protects us.  It maximizes the profits of our canneries and without it American Samoa’s canneries cannot survive.  This is why I am disappointed that H.J. Heinz, the once parent company of StarKist, fought so hard to give Ecuador the same trade advantages as American Samoa.  Thanks to H.J. Heinz, Ecuador can now send tuna packaged in pouches to the U.S. free of duty but the U.S., including American Samoa, must pay a duty rate of 20% or more to export canned tuna to Ecuador.  Again, this is neither free nor fair trade and, although Heinz was unsuccessful in its attempt to eliminate duties or collapse tariff and tax rates for canned tuna, I am concerned that American Samoa’s canneries are at risk. 

Whether by a deliberate act or accidental cause, the taxes (and mostly specifically the average duty of 12%) which foreign countries once paid to export canned tuna to the U.S. are now in question.  As a result, Heinz has left American Samoa and the U.S. tuna industry vulnerable to other trade initiatives now being put forward to provide duty-free treatment for canned tuna originating from ASEAN nations and Central American countries.  Heinz’s aggressive efforts to give Ecuador the same trade advantages as American Samoa also divided the U.S. tuna industry which historically has stood united against unfair trade practices and foreign competition.  

Now StarKist is testifying before Special Industry Committee No. 25 once again stating that it cannot afford to pay our workers a decent standard of living.  What kind of sense does this make when StarKist (under previous and present leadership) spent hundreds of thousands of dollars trying to do away with the 12% duty protection that keeps our canneries in business?  If StarKist can live without the millions in savings that the 12% duty provides who is to believe that StarKist cannot afford to increase the minimum wage for its workers in American Samoa?

For your information, lobbyists in Washington do not come cheap.  At a minimum, StarKist paid out more than $250,000 and more likely over $500,000 to fight and lose the Andean Trade agreement.  Needless to say, I believe that $500,000 could have been better spent on increasing wages for workers in American Samoa.  It is our workers, after all, who have made StarKist the number one brand of tuna in the U.S. and I was hopeful that when Del Monte took over ownership of StarKist that more thoughtful consideration would be given to the needs of our cannery workers. 

In fact, it was my sincere hope that there would be a shift in thinking on the part of our tuna processors.  I was hopeful that our processors would come to believe that employees are as important as stockholders and I am disappointed that this has not been the case.  In fact, I am especially disappointed that StarKist’s Vice President for Seafood Operations and Procurement began his minimum wage statement by saying that “one basic idea guides the actions of all major businesses.  A business has an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders.  Simply stated,” he said, “businesses are obligated to maximize their profits.”

My friends, I support business and the need for business to make a reasonable profit.  But to paraphrase President Franklin D. Roosevelt, I will not let calamity-howling executives with million dollar incomes tell me that wage increases will have a disastrous effect on the U.S. economy or that we must exploit labor in developing countries to remain competitive.  Neither will I support the notion that businesses are to maximize their profits without a moral obligation to also increase the wages of our cannery workers. 

As Senator Borah from Idaho said during the 1937 fair labor standards debate, “whether North or South, East or West, there [is] a standard of…living, and we ought to recognize that and fix a minimum wage upon that basis.”   Senator Borah also said that he looked upon “a minimum wage such as will afford a decent living as a part of a
sound national policy.”  

“I would abolish a wage scale below a decent standard living just as I would abolish slavery,” he said.  “If it disturbed business, it would be the price we must pay for good citizens…. I take the position that a man who employs another must pay him sufficient to enable the one employed to live.”

Senator Pepper from Florida asked, “What if he cannot afford to pay it?”

Senator Borah responded, and I quote, “If he cannot afford to pay it, then he
should close up the business.  No business has a right to coin the very lifeblood of workmen into dollars and cents…. Every man or woman who is worthy of hire is entitled to sufficient compensation to maintain a decent standard of living…. I insist that American industry can pay its employees enough to enable them to live.”

Senator Ellender from Louisiana then asked, “Without exception?”

Senator Borah replied, “Yes without exception.  If it cannot do so, let it close up…I am opposed to peon labor, whether it is employed by one man or another.  I start with the proposition that the right to live is higher than the right to own a business.”

As I said two years ago in my statement before Special Industry Committee No. 24, I also believe that the right to live is higher than the right to own a business. Furthermore, I believe a business has an economic, legal, and moral responsibility to pay its employees enough to enable them to live and I believe this should be the basic idea that guides the actions of all major businesses, including those of the tuna industry.

Quite frankly, it is an insult to our people for executives who are paid top dollar to recommend that there be no increase to the minimum wage and to suggest that their only obligation is to their investors or stockholders.  If this is the basic idea that guides StarKist or Del Monte, so be it.  But I believe that higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us. 

Indeed, I do not believe one corporate executive at Del Monte, StarKist, or Chicken of the Sea/Samoa Packing would oppose minimum wage increases if their mothers, fathers, sisters, brothers, sons or daughters toiled day in and day out in tuna canneries here or abroad.  If suppressed wages are not good enough for their families and low yields are unacceptable to their stockholders, why should wages of $3.26 and less per hour be sufficient for our cannery workers?  Furthermore, why should low wages be acceptable for cannery workers anywhere?  This is not the way the world should be and I will do everything I can to make sure this is not the way things will be in American Samoa. 

Nevertheless, I do not have a vote in these proceedings and neither do the people of American Samoa.  The U.S. Department of Labor picks and chooses its Special Industry Committee and, for the most part, the outcome is determined before we testify.  In some ways, it is unclear to me why the U.S. Department of Labor bothers to hold these hearings.  If the Department of Labor was serious about minimum wage then it would be serious about conducting a study to determine the cost of living in American Samoa.  If it was serious about minimum wage it would be serious about making the tuna industry declare its margin of profit.  Simply put, until we know what the canneries are making we cannot determine what a fair wage is for our workers.

Having spent the past year and half fighting to protect the interests of American Samoa in the U.S. Congress, I can tell you that I understand what our canneries are up against when it comes to competing against countries with low wage rates.  I understand the realities of supply and demand.  I understand that production will leave high cost locations when low cost alternatives exist.  I also understand that these are the same words the U.S. tuna industry has been regurgitating for the past 47 years. 

In 1956, as part of its lobbying effort to suppress wages in American Samoa and pay Samoan workers only 27 cents per hour, Van Camp (now Chicken of the Sea/Samoa Packing) said that “a minimum wage of $1 per hour, as required under present laws, is unrealistic, unwarranted, and unquestionably will have a deleterious effect upon the economic and social structure of the islands.”   Forty-seven years later, neither Samoa Packing nor StarKist thinks any more or less of our cannery workers and I can assure you that neither will think any more or less of cannery workers in Papua New Guinea or Ecuador, for that matter. 

In his statement before this Committee, StarKist’s Vice President mentioned that many of our neighbors in the South Pacific continue to aggressively attempt to enter the tuna processing industry.   Ironically, as the Ranking Member of the International Relations Subcommittee on Asia and the Pacific and as American Samoa’s Representative in the U.S. Congress, I am also working just as aggressively to protect American Samoa’s tuna industry from unfair competition. 

In a press release dated June 11, 2003, I recently stated that there is movement to increase the amount of tuna the Federated States of Micronesia and the Marshall Islands could send to the U.S. exempt from duty.  This has come about as a result of negotiations to renew the Compact of Free Association and the matter is serious for American Samoa.
While the previous Compact exempted duty for up to 10 percent of the United States consumption of canned tuna for the Marshall Islands and the Federated States of Micronesia collectively, U.S. State Department and USTR officials recently announced that it is their intent to grant each government duty-free treatment for up to 10% which collectively equates to 20% of U.S. consumption

Given the seriousness of the current situation, I am pleased that State Department officials informed my office that it would favorably grant my request and expeditiously work to revise the canned tuna provisions before the Compacts of Free Association are submitted to Congress.  I am hopeful that the USTR will do the same.  However, I will not rest until both the USTR and the State Department are on record stating that the canned tuna provisions will be revised to reflect our past agreement with FSM and the Marshall Islands and this is why I must be present on June 18, 2003 when this matter is taken up by the International Relations Subcommittee on Asia and the Pacific.  Although I am disappointed that I will be unable to attend the minimum wage hearings as a result of this scheduling conflict, I believe it is critical to protect our tuna industry for generations to come. 

Regarding tuna loins, I would like to publicly state that I am deeply concerned about the number of loins that are being shipped to American Samoa for processing.  It is an insult to our intelligence for both StarKist and Samoa Packing to assume that Samoans do not understand what this means for the Territory.  Samoans understand that the use of precooked tuna loins as a raw material in canning operations could significantly influence the amount of labor needed in the production process.  Samoans also understand that the production of loins, including the butchering and cleaning steps, accounts for up to 80% of the cost of labor in a full-scale cannery.  

This means that if a cannery buys loins instead of whole fish it can substantially reduce its labor costs.  In other words, the more loins you send to American Samoa, the less labor you need in our canneries.  Less labor means downsizing and downsizing means many of our cannery workers will be out of jobs if StarKist and Samoa Packing continue to ship loins into American Samoa.  Furthermore, our U.S. tuna boat owners who not only contribute more than $22 million per year to our economy but also supply 70% of the tuna processed in our canneries will also be out of business.  

Let me explain.  Currently, there is a tuna loin operation in the Marshall Islands where approximately 10,000 tons of tuna is offloaded per year.  Almost all of this fish is caught by foreign flag ships including Taiwanese, Chinese, and Japanese fishing vessels.  The Marshallese cut, clean, and convert this fish to loins.  In fact, the Marshallese process 45 tons of loins per day, 300 tons per month and most of these loins are bought by StarKist, shipped to American Samoa and packed directly into cans.  Samoa Packing does the same thing by shipping tuna loins from its canning operations in Thailand to American Samoa.    

Why are our canneries doing this?  Our canneries are doing this because they have to pay our workers on average $3.26 an hour to convert whole fish to loins while workers in Thailand and the Marshall Islands do this work for less than $1.50 per hour.  Let me also say that PM&O Shipping, based in San Francisco and the principal investor in the Majuro factory in the Marshall Islands, asked for and received an exemption from the country’s minimum wage law of $2 per hour. 

To PM&O Shipping, to Special Industry Committee No. 25, to our friends at StarKist, Del Monte and Samoa Packing, let me be perfectly clear.  I cannot and will not support an increase in loins being shipped from foreign countries into American Samoa for use in our canneries.  This trend must stop or American Samoa must be compensated for revenue lost as a result of this backdoor attempt to reduce our labor force, suppress our wages, and allow foreign countries to send their tuna into the U.S. exempt from duty.  Let me say this again. 

The tuna loins being sent from the Marshall Islands and Thailand are caught by foreign fleets and our U.S. tuna boat owners will either be forced to offload in locations other than American Samoa or they will be forced out of business.  Either way this is also a loss to our economy and I sincerely hope our local leaders will seriously address this situation in the near future.  Indeed, I recommend that our local leaders assess a duty of at least 10% on all tuna loins offloaded in this Territory. 

Workers in American Samoa are the backbone of the U.S. tuna industry and I believe that men and women of conscience will agree with me that businesses are also obligated to act in the interest of its workers.  After 47 years of working against us, I believe it is time for our canneries to work with us and I am pleased that the U.S. tuna industry has united in support of H.R. 1424 -- a bill I introduced in Congress to make permanent or extend the federal IRS section 936 tax credit to American Samoa for another ten years. 

I am also pleased that our local Senate issued a Concurrent Resolution in support of H.R. 1424.  However, I need to understand why StarKist has taken the position that favorable local and federal tax treatment makes little difference to our canneries.   Since our tax incentives make little difference, I would again suggest that a 10% duty on loins coming into this Territory will be a good source of revenue for our local government. 

My point is you can’t have it both ways.  Either favorable tax treatment benefits our canneries and frees up cash to increase minimum wages or it doesn’t.  If StarKist is not in need of favorable local tax treatment and if 936 means so little, then by all means increase the minimum wage.  Increase the minimum wage for our cannery workers and also increase the minimum wage for our government workers who make less than the federal standard of $5.15 per hour. 

The federal government has sent more than a billion dollars to American Samoa in the past seven years and I believe this is reason enough to support an increase in minimum wage for ASG workers.  I also believe if we take another look at the tax breaks we are giving to foreign companies doing business in this Territory, we will be able to find the revenue we need to increase minimum wage for entry level workers in other industries.

Finally, if the minimum wage cannot be increased, I believe our canneries should subsidize medical care at the LBJ Tropical Medical Center.  In any other U.S. location, the tuna industry would be required to provide health care benefits for its employees.  In American Samoa, however, ASG subsidizes the tuna industry by providing health care for sick or injured employees and their families.  In itself, this is a savings of at least $5 million per year to our canneries and it is time for our canneries to return this money to LBJ and assume responsibility for the medical care of its employees. 

It is also time for our canneries to increase pensions for our workers and I believe something needs to be said on and in behalf of Samoans who stand for 8 hours a day cleaning fish and after 20 years of service only get a pension of approximately $120 per month.  This is not right and this is simply un-American. 

For 47 years, the U.S. tuna industry has told us it would leave American Samoa if wages were increased.  Forty-seven years later, both canneries are with us and only last year StarKist erected a statue and declared that American Samoa is the permanent home of Charlie the Tuna.  Maybe I missed it but I did not see any fine print beneath the statue stating that Charlie the Tuna’s home is conditional on whether or not we raise the minimum wage.  In fact, as I recall, StarKist’s Vice-President was emphatic in stating that StarKist had no intention of leaving American Samoa.  However, he also said StarKist was not up for sale and only a few months later it was sold to Del Monte. 

Given these nonsensical statements, I have come to believe that the only thing we may know for certain is that our future with the industry is uncertain.  But with the Andean Trade agreement behind us and the minimum wage hearings before us, I am again reminded of a Samoan proverb--O le upega e fili i le po ae talatala i le ao-- which means that the net that became entangled at night will be disentangled in the morning.  In other words, I am hopeful that when the night passes and the morning comes we will settle our differences and work together to protect American Samoa’s tuna industry. 

To this end, I support business and the need for business to make a reasonable profit.  To this end, I also support an increase in minimum wage for our cannery workers.  I believe this is what fair trade demands and I am hopeful that this is what men and women of conscience will thoughtfully consider.