Crab Poached from Russian Waters Hurts US Industry and Economy

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1 Crab Poached from Russian Waters Hurts US Industry and Economy MEAGHAN BROSNAN & MARK GLEASON AUGUST 2015

2 Over the last decade, reality television has put a spotlight on the Bering Sea Alaskan king crab trade and revealed some of the mortal perils and difficult conditions crab fisherman face. Shows such as Discovery s Deadliest Catch have brought the drama of harvesting this delicacy to a mass audience. However, an element that has received less media attention is the ongoing threat posed to the fishery and lawful fisherman by illegal king crab fishing in neighboring Russian waters and adjacent to the Russian Exclusive Economic Zone (EEZ). The Bering Sea Alaskan king crab fishery is important to the U.S. economy. In 2013, U.S. landings of king crab were more than 15.4 million pounds valued at over $82.9 million. The majority of Alaska Bering Sea king crab are caught by fishermen working in small, independently owned family businesses that provide living wage jobs to thousands of Americans. In 2012, the Alaskan seafood industry as a whole supported nearly 56,000 jobs in Alaska and added $2.2 billion to the U.S. economy. These jobs include not only fishing jobs, but also jobs in seafood processing, transportation, logistics, restaurants, and retail. While king crab makes significant contributions to the U.S. economy, its impact could be significantly greater. Illegally caught king crab enters the market using the same labels and packaging as legally caught king crab, increasing the supply and decreasing the prices law-abiding fishermen earn. During the seasons, Alaskan crabbers lost an estimated total of $560 million during the seasons to poaching; meaning Alaskan coastal communities also lost millions of dollars in tax revenue. Over 40% of king crab sold in world markets during 2012 was from illegal harvests in Russian waters, contributing to a $2.73/pound decrease of prices fishermen earned for their catch. Ex-vessel prices in 2013 remained low with the glut of illegal crab still swamping the market, decreasing profits for some king crab fishermen by as much as 10-25%. So what are the underlying causes of this threat to the U.S. industry, and what can be done about it? To understand this, you must first understand the way these fisheries are managed and how the resulting product is processed and distributed. Comparison of U.S. and Russian North Pacific Crab Fishery Management The advent of the modern fishery management system in the U.S. began in 1976 with the entry into force of the original Fishery Conservation and Management Act. This act created a transparent, rigorous fishery management system establishing Regional Fishery Management Councils, which meet publicly to discuss and set Fishery Management Plans for all fisheries commercially targeted in United States Federal waters. By contrast, the fall of the Soviet Union in the early 1990 s brought a period during which the newlyformed Russian government was unable to effectively manage, control, or enforce its fisheries, resulting in an explosion of illegal fishing for crab in Russian waters. The Russian government has repeatedly modified its management process since that time, starting in the early 2000 s when it began allocating quotas to vessels and companies.

3 Given the different historical perspectives of the management systems in these two countries, it is not surprising that their management techniques and outcomes would also differ. The below table outlines generally accepted positive management measures and their use in each of these two countries. When appropriately executed, these measures contribute to the long-term sustainability of the king crab resource. Table 1. Comparison of Red King Crab Fishery Management Measures Management Measure U.S. Russia (Far East) Total-Allowable-Catch Yes Yes Quota-Allocation-System Yes Yes Observer Coverage % Dependent on location and species. 3 5% Vessel Monitoring System Yes No Open and Closed Seasons Yes Yes Closed areas, when necessary Transparent and Detailed Catch Documentation Yes E.g., Pribilof Islands closed area is still active. Yes Yes E.g., Western Kamchatka Sub-zone Current publicly available catch documentation does not detail where crab is caught. No female/juvenile retention Yes Yes Transparency of Management Process Data Transmission Requirements linking catch location to processed product? Highly transparent all Regional Fishery Management Council Process materials are web accessible. Electronic Landings Reporting is required including catch location details. Details of management process, such as how Total Allowable Catch is calculated, are not publicly available. Data transmitted starts at place of landing/export and does not include catch location. Sources: World Wildlife Fund; National Marine Fisheries Service, Alaska Regional Office As the table suggests, the U.S. manages its fishery more stringently and transparently than Russia. Lack of such rigorous management sets the scene for the illegal fishing practices that occur in Russian waters.

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5 The Nature of the Illegal, Unreported and Unregulated Problem Black and Grey Black and grey fleets are two distinct types of illegal fishing vessels that one can find in Russian waters. Black fleet fishermen, also referred to as pirate fishermen, are vessels that have no licenses to fish in Russian waters and blatantly violate their sovereignty by fishing without permits. The fish product captured by these vessels is most commonly offloaded in ports in Korea and Japan via transshipment, circumventing Russian authorities altogether. Transshipment entails the transfer of fish that have been caught at sea illegally to large vessels that act as floating, chilled storage tanks and are far away from the purview of Russian authorities. These vessels are normally registered with the nationality of countries known as Flags of Convenience because of their lax laws and oversight of vessels. Such countries also make it easier for pirate vessels to access an otherwise legitimate registration. Industry news coverage of seizures of black fishing vessels caught poaching in Russian waters is reasonably frequent, though the degree to which these efforts make a dent in the total amount of illegal activity is unclear. Interestingly, the seizures covered in the news most frequently identify the crew and captain of these pirate fishing vessels as being Russian, even though they are operating vessels flagged to foreign countries. A 2014 World Wildlife Federation (WWF) report noted one such example. In September 2014, a vessel flagged in the Republic of Togo named Katraps attempted to evade a Russian Border Patrol vessel Upon inspection, Katraps contained fragments of crab, was equipped to transport live crab, yet had no documentation or permission to fish within the Russia s EEZ. Katraps was crewed by 13 people 11 Russians and 2 Ukrainians and the ship owner was registered in Belize. The vessel was impounded in the port of Petropavlovsk-Kamchatsky. Incidents such as this one could indicate a possible association of the pirate fishing industry with Russian-based organized crime organizations another layer to this illegal fishing issue that has yet to be fully revealed. Grey market illegal fishing techniques are those where Russian-flagged fishing vessels and companies that are otherwise legally licensed and entitled to fish in Russian waters circumvent the law. One example of this is when licensed Russian fishing fleets significantly exceed their allowable catch quota, and then comingle the illegal product with legally caught fish. These exports from Russia are integrated into the global supply chain and further comingled with legal product as it is processed and exported to the United States and other countries, using an inherently non-transparent global supply chain system to its advantage. As already described, the influx of this illegal product into the global market has a direct negative impact on U.S. fishermen and the U.S. economy. For example, in 2011 there was a 25% decline in the price U.S. king crab fishermen received as a result of illegal crab entering U.S. market. This decline has further downstream effects of decreasing the tax revenue and additional market impacts that this $82.9 million industry contributes to the U.S. economy. Fortunately, some governments have recently adopted regulations to help prevent illegal, unreported, and unregulated (IUU) fishing, including separate Japanese and South Korean policies that prevent undocumented crab from passing through the country. In the past, this was a common method of grey-washing crab to blur the origin.

6 Viable Solutions Exist The good news is that reasonably simple solutions exist that can have tangible positive impacts on this problem, and that the U.S. has the full power to enact or influence. Three of these solutions are described below. Improved Port State Controls The Port State Measures Agreement is an international treaty that would require all parties to conduct inspections of foreign-flagged fishing vessels that land fish product in their ports, and to then transparently share information regarding those inspections. Ultimately, this would bring the policing practices of the rest of the world much closer to the standards that already exist in the U.S., and make it more difficult for illegal product to enter the supply chain and diminish the value of product caught by U.S. fishermen. The U.S. Senate already provided its advice and consent for the ratification of this treaty in However, the U.S. cannot deposit its instrument of ratification with the United Nations until implementing legislation for the treaty has been passed. U.S. ratification will move the treaty one step closer to the 25 ratifications it requires for entry into force. It would also give the U.S. additional leverage when encouraging additional countries of particular interest to U.S. fishermen and the U.S. economy to become a party to the treaty. U.S. Senate and House passage of the Port State Measures Agreement implementing legislation, called the Pirate Fishing Elimination Act, is the first step the U.S. can take to address this illegal fishing problem. The Port State Measures Agreement is an international treaty that would require all parties to conduct inspections of foreign-flagged fishing vessels that land fish product in their ports, and to then transparently share information regarding those inspections. Ultimately, this would bring the policing practices of the rest of the world much closer to the standards that already exist in the U.S., and make it more difficult for illegal product to enter the supply chain and diminish the value of product caught by U.S. fishermen. The U.S. Senate already provided its advice and consent for the ratification of this treaty in However, the U.S. cannot deposit its instrument of ratification with the United Nations until implementing legislation for the treaty has been passed. U.S. ratification will move the treaty one step closer to the 25 ratifications it requires for entry into force. It would also give the U.S. additional leverage when encouraging additional countries of particular interest to U.S. fishermen and the U.S. economy to become a party to the treaty. U.S. Senate and House passage of the Port State Measures Agreement implementing legislation, called the Pirate Fishing Elimination Act, is the first step the U.S. can take to address this illegal fishing problem. Require More Information on Package Labeling Currently, there is no requirement for cooked king crab, generally sold frozen in the U.S., to have country of origin labeling. Since Russia supplies an estimated 80% of the frozen king crab sold in the U.S., this regulatory gap prevents U.S. consumers from supporting domestic fishermen by choosing to buy U.S. caught king crab (FishChoice). Also, this gap not only limits the transparency of information associated with king crab catch products but also complicates the ease of tracing the product to its catch origin. Tracing could be easily executed with technology and systems that already exist in the U.S. currently and would make laundering illegal product more difficult. Closing this regulatory gap by the U.S. Food and Drug Administration by requiring country of origin labeling on all king crab products, is another step the U.S. can unilaterally take to support U.S. fishermen.

7 Strengthen Global Traceability Requirements In 2014, the Presidential Task Force on Combating IUU Fishing and Seafood Fraud (Task Force) formed to address IUU fishing and its impact on the U.S. economy. The Task Force is crafting traceability requirements to be applied to fish caught in international fisheries known to be subject to IUU fishing. These requirements would prevent illegallycaught fish from entering the U.S. marketplace and unfairly competing with domestically caught fish, which often cost more due to more stringent U.S. regulatory and sustainability standards. The Bering Sea king crab is one such fishery in which the U.S., as a major consumer of king crab, can directly influence. By requiring greater transparency and traceability in the supply chain of king crab imported from foreign markets, the U.S. can reduce the amount of illegal activity. Imposing these requirements will bring the data transmission requirements associated with this imported product closer to those already required in U.S. federally managed fisheries. And they could make the laundering of illegally caught crab more difficult. This in turn would greatly benefit U.S. fishermen and the U.S. economy. (World-Wildlife-Fund-28\29). Conclusion Illegally caught Russian king crab enters the market and directly competes with that caught in U.S. fisheries. This reality hurts not only U.S. fishermen but also the U.S. economy as a whole. Alaskan crabbers lost an estimated total of $560 million during the seasons to illegally caught Russian crab meaning Alaskan coastal communities lost millions of dollars in tax revenue (Carlton). Over 40% of king crab sold in world markets during 2012 were from illegal harvests from Russian waters (Alaska Bering Sea Crabbers), contributing to a $2.73/pound decrease, or nearly 25%, in prices fishermen earned for their catch (Carlton). Many of the causes of this problem, such as unlicensed pirate fishers poaching in Russian waters and Russian fishermen exceeding their allowable catches, occur in Russia and other Pacific Rim trade countries. However, there are many steps the U.S. can take as a major importer of king crab to combat this problem and protect its domestic fishermen. These include supporting improved global port state controls through the passing of the Pirate Fishing Elimination Act, closing the regulatory loophole that does not require country of origin labeling on cooked king crab and implementation of traceability requirements on king crab that is imported from countries known to be hot spots of illegally caught product. Works Cited 1. WWF Report WWF Report

8 About the Authors Meaghan Brosnan Meaghan Brosnan is an expert in the field of compliance and enforcement and is the Director of Fisheries Compliance at Frequentz. She started her career as a federal law enforcement officer in the U.S. Coast Guard, operating in the Eastern Pacific and Alaska and became Deputy Chief of the Coast Guard s Living Marine Resource Enforcement Program. After the Coast Guard, she managed The Pew Charitable Trusts Ending Illegal Fishing campaign, where she developed technology and policy solutions for illegal, unreported and unregulated fishing in coastal Africa and throughout the Pacific. She is the managing director and founder of Exulans, an organization specializing in compliance and enforcement solutions for ocean conservation. She also continues to serve in the U.S. Coast Guard Reserve, leading a 22-person law enforcement team. Meaghan earned her Bachelor s degree from the U.S. Coast Guard Academy and her Masters in Marine Affairs from the University of Washington s School of Marine Affairs. Mark Gleason Mark Gleason is the Executive Director of the Alaska Bering Sea Crabbers, a trade association representing 70% of the Bering Sea crab fleet. He has testified on IUU issues for U.S. Senate hearings and is an advisor on illegal Russian crab to the US Departments of State & Commerce. His recent work has focused on bridging the gap between the seafood industry and environmental groups to find common ground on the IUU problem. Prior to his current position, Mark was the government affairs representative for a Seattle based fishing company, a Sea Grant Fellow in the U.S. Senate and a commercial fisherman in Alaska, Washington and California for 14 years. He earned his Bachelor s degree in Earth Systems, Science and Policy from California State University, Monterey Bay and his Masters in Marine Affairs from the University of Washington s School of Marine Affairs. About Frequentz Frequentz is a global leader and champion of end-to-end visibility, offering comprehensive traceability, serialization and information management technologies. Its transformative tools bolster businesses and brand reputations by improving productivity, product quality, and profitability. To accomplish this, Frequentz provides valuable insight into end-to-end supply chains and critical business processes by collecting, storing, and analyzing serialized life history data. Applications of its software are currently used in the life sciences, agricultural, fishery and sustainability, retail, and automotive industries worldwide to promote intelligent analytics and consumer safety. For more information visit For more information, contact us at info@frequentz.com 3960 Fabian Way Palo Alto, California