EU yellow card decision on Thailand will have ‘spillover’ benefits: January 7, 2019
‘Thai seafood exporters can spend to expand, innovate and launch new value-added products,’ says analyst.
The European Union’s removal of its “yellow card” on Thailand — a recognition of its progress in tackling illegal, unreported, and unregulated (IUU) fishing — is expected to lead to “spillover” benefits that will lift several companies and segments of the industry.
The move, announced Jan. 8, will benefit major Thai seafood exporters, especially Thai Union, which has heavier seafood sales exposure to Europe than Charoen Pokphand Foods (CPF), according to Prasit Sujiravorakul, an analyst at Bualuang Securities.
“We also expect the two seafood exporters under our coverage to see gains in other markets this year,” he said.
Thai Union and CPF both stand to benefit from the dropping of the yellow card, but Thai Union’s revenues are overwhelmingly seafood-based, while CPF’s Thai seafood exports to the EU comprise only about 1 percent of its top-line.
Thai Union’s Thai-originated seafood exports to the EU account for about 7 percent of its total sales but the company also has substantial fisheries and processing operations in West Africa, the US, and Europe.
Others in Thailand’s private sector also welcomed the EU decision, saying the reforms would benefit the fishing industry, reported Nikkei.
“This will boost investment and confidence in Thai seafood exports in the international market,” Poj Aramwattananont, the vice chairman of the Board of Trade of Thailand, said in a statement.
Jim Gulkin, managing director of the Siam Canadian Group, a Thai shrimp specialist, told IntraFish the decision from the EU was not a surprise given the work that has been done over the years.
“The Thai authorities have taken this very seriously from the outset and have put serious measures into place to correct this situation,” said Gulkin. “Therefore, it is not surprising that the yellow card was finally lifted.”
Gulkin said Thailand qualified to have the yellow card lifted quite some time ago. “But the EU authorities have their own criteria to follow,” he said. “Regardless, it is good news that it was lifted.”
Thai seafood exports stood at $2.1 billion (€1.8 billion) in 2017, Commerce Ministry data shows, recovering to their 2014 level after a drop in 2015 to $1.8 billion (€1.6 billion) following the European Union warning.
About 9.9 percent of Thai seafood exports went to the European Union last year, versus 10.3 percent in 2014, according to the data.
“I think much more consideration and care will be taken by many countries now to ensure that the fishing industry as a whole follows international standards and guidelines and that abuses do not occur,” added Gulkin.
The European Commission (EC) announced it would dropping its “yellow card” on Thailand and issue a “green card” in its place because Thailand successfully addressed shortcomings in its legal and administrative systems for fishing and made progress in tackling IUU fishing.
The yellow card was issued in Apr 2015 as a warning that Thai seafood exports risked being banned from the EU.
Since then, the EC and Thailand have worked together to upgrade governance of Thai fisheries and strengthen the legal framework for compliance with international law.
Thailand has reinforced controls, monitoring, and surveillance of the national fleet and fishing activities.
In its latest update, the EC also recognized Thailand’s efforts in tackling human trafficking and improving living conditions in the fishing industry.
Although human trafficking is not part of the bilateral dialogue over IUU fishing, human rights abuses and forced labor in the fishing industry is an issue in the international spotlight.
Sujiravorakul said the moves lay the groundwork for positive reviews in the US State Department’s next Trafficking In Persons (TIP) report, a key measure of the country’s efforts to tackle forced labor.
In its June 2018 report, the United States upgraded Thailand from “Tier-2 Watch List” to “Tier 2.”
“We think Thailand is on-track for a further upgrade to ‘Tier 1,’” he said.
The entire Thai seafood industry will benefit from the dropping of the “yellow card,” said Sujiravorakul, both in terms of market access and EU consumer sentiment towards the Thai national brand.
“Enhanced EU sentiment should also have spillover benefits across other markets—the US, Asia and the Middle East,” he said.
“Thai seafood exporters can spend to expand, innovate and launch new value-added products in the confidence that they will maintain access to important markets.”