Agreement Helping Fend Off Damage to Shrimp Fishery

?PREMIER'S OFFICE--Agreement Helping Fend Off Damage to Shrimp Fishery

A $15-million agreement signed in Beijing this week between Clearwater Fine Foods Inc. and Shandong Shanhai Fishery Business Center is a positive step toward reducing Chinese tariffs that could severely impact the Atlantic shrimp fishery.

Nova Scotia Premier John Hamm, who is among the delegates joining Prime Minister Jean Chretien on the Team Canada Trade Mission in the People's Republic of China, attended a Memorandum of Agreement (MOA) signing ceremony in Beijing on Tuesday.

The agreement secures for Clearwater a $15 million deal to sell 12,500 tonnes of frozen-at-sea shrimp to Shandong Shanhai Fishery Business Center over the next five years. Both companies also pledged to work co-operatively with their respective governments to reduce tariffs on shrimp products entering China.

"We are very pleased with this agreement," said Premier Hamm. "It is a sizable contract for a successful Nova Scotian company, and with companies in both countries working toward the same end, this MOA represents a significant step toward reducing high tariffs on Canadian seafood."

Last year, the Chinese government stepped up enforcement of a 30 per cent tariff on fish products entering the country. Combined with a 17 per cent value-added tax, the price of the product is being pushed out of reach for Chinese consumers, and the Atlantic shrimp fishery stands to lose one of its biggest markets.

China is currently going through the long process of being admitted to the World Trade Organization. Observers speculate it will happen sometime this year. As a part of the arrangement, China has committed to bringing tariffs down to about 12 per cent through incremental reductions over a four-year period. But the four-year delay would inflict serious damage on the Atlantic fishing economy.

"This agreement is with a major Chinese seafood company and represents their confidence in the market place for our shrimp products," said Peter Matthews, vice-president, Clearwater Fine Foods Inc., who represented the company at the signing ceremony. "Development of this market is being hindered by the present excessively high tariffs. Our hope is that, by both companies working co-operatively together, we can focus our respective governments on the need for an accelerated rate of tariff reduction after China enters the World Trade Organization."

Clearwater is one of Canada's largest harvesters, processors and marketers of seafood. Established in 1976, the Bedford-based company employs about 1,500 people, operates eight fish processing plants in Nova Scotia and Newfoundland and owns a fleet of 22 vessels, which permit harvesting of more than 35 million pounds of seafood each year. Shrimp accounts for about $70 million of Clearwater's more than $300 million annual sales.

Clearwater has invested more than $100 million in plant and vessel upgrades in the past five years. The company operates eight sales offices around the world, three of which are in China.

"Clearwater's ambitious marketing strategy in the emerging Chinese market holds great potential for our shellfish product line, including northern shrimp," Mr. Matthews said.

Canada was one of the first countries to break into the China coldwater prawn market. Trade in fish products to China has almost doubled in three years from $57 million in 1997 to $93 million in 1999. Without this market, the Atlantic Canadian fishing industry, notably shrimp, crab, clams and herring roe, would be in serious difficulty.

Mr. John Angel, executive director of the Canadian Association of Prawn Producers, accompanied Premier Hamm as part of Team Canada's Nova Scotia delegation. Mr. Angel is negotiating with Chinese counterparts in an effort to secure a similar commitment to supporting immediate tariff reductions.

"The current China market is huge and has an insatiable appetite for northern shrimp," Mr. Angel said. "The price for the product at a realistic tariff of about 12 per cent could provide an enormous opportunity for Canada to grow the market."