Director, Office of Insular Affairs
Department of the Interior
House Subcommittee on Insular Affairs, Oceans and Wildlife
H.R. 3583 -- ASPIRE
November 4, 2009
Madam Chair and members of the Subcommittee, thank you for the opportunity to discuss H.R. 3583, the "American Samoa Protection of Industry, Resources, and Employment Act."
The prospects for the
Until this year, the two tuna canneries operating in
An unofficial GDP estimate for
Financial Viability of the Canneries
An important part of the financial mix that sustained the canneries over the decades has been tax and economic activity credits allowed under Federal tax rules.Other key factors contributing to financial viability of the canneries have been local financial incentives, duties on
Ending years of speculation, one of the canneries, Chicken of the Sea Samoa Packing, announced in May 2009 that it would end its tuna canning operations in
It appears that the unique mix of factors (low-cost labor, duty-free export to the
It is important to note the losses the
Potential Wage and Work Losses
According to a letter the Governor of American Samoa wrote to the Secretary of the Interior on May 14, 2009, a total of 2,172 jobs were estimated to have been lost with the closing of COS Samoa Packing.The two canneries, according to the Governor, account for 60 percent of all economic activity in the territory.With the loss of 2,172 jobs or 12.7 percent of total employment,
Excluded from these figures are the immediate, secondary and tertiary losses resulting from the shutdown.These would include goods and services provided to fishing fleets and crews and other suppliers of the canneries.After accounting for all wages, salaries and benefit losses directly connected to the cannery, the total loss is likely to be significantly higher than the $21.7 million in lost wages.
Given the proportion of
Wage losses in other economic activities will depend on the degree of their dependence on the canneries.While it is currently not known whether a shutdown of both canneries would lead to large losses in the retail trade sector, anecdotal evidence suggests that this area depends heavily on the canneries, and major losses may be incurred in the near future.This sector, according to the U.S. Department of Labor data, employed 964 workers in 2006.If the shutdown of one cannery causes the layoff of half of that total, wage losses to the retail sector could approach $5.4 million a year.Also, one cannery's closure may eliminate half of the shipping and transport workers, and could eventually cause losses in a wide range of activities, from printing and publishing to construction.Altogether, the immediate losses in wages following a shutdown of one of the canneries may amount to an estimated $31.5 million a year.This amount represents 15.6 percent of the territory's total estimated wages of $202.5 million.
Unlike the loss of wages, the loss in the number of workers is likely to be greater as a percent of the total because most of these workers are in the lower-wage brackets.Still, the immediate loss in payroll employment directly and indirectly attributable to the cannery's closure could approach 2, 954 workers, or 17.3 percent of total employment in the territory.
Whether it is the loss of workers or wages, loss of one of the canneries and activities it supports directly and indirectly is the equivalent of a major economic disaster.If the other cannery follows suit, it would mean at least double the economic and financial losses.In that case, the
CANNERY CLOSURE AND FEDERAL OUTLAYS
For many years, observers have been predicting that the canneries in
While the bill involves costs for the Federal government, those costs could be less than Federal cost for remedial aid to the territory.
H.R. 3583 is intended to support to the remaining tuna cannery in
·payments to canneries in the amount of $200 per metric ton for whole tuna processed in American Samoa (which amount shall be adjusted annually according to the following ratio: increase in Federal minimum wage applicable to American Samoa over the Federal minimum wage applicable in American Samoa during the prior year),
·payments to specified fishing vessels in the amount of $200 per metric ton of tuna delivered in American Samoa for processing,
·payments to such specified fishing vessels that are U.S.-documented in the amount of $100 per metric ton of tuna delivered in
for processing, American Samoa
·payment of an annual fee of $250,000 by all such vessels to the United States treasury, which fee shall be waived if the vessel has made not less than three direct deliveries of whole tuna to processors in American Samoa during the year for which the fee is paid,
·payment of a fee by each U.S.-documented vessel in the amount of6.25 percent per metric ton for each delivery it makes to another vessel or non-American Samoa location for the purposes of transshipment, which is expected to generate approximately $15 million a year that can be used as aid for tuna canneries and vessels,
·deposit of all fees in an "American Samoa Economic Development Trust Fund" to be administered by the Office of Insular Affairs for the benefit of the territory of American Samoa, and
·authorization of $25 million for fiscal year 2010 and such sums as may be necessary thereafter for the aid to the
canneries and vessels. American Samoa
The Administration is supportive of efforts to strengthen the economy of
Finally, the Administration notes that the bill increases mandatory spending, which would need to be fully paid for in this congressional session under the Administration's pay as you go proposal as provided for in H.R. 2920.
The Obama Administration appreciates the magnitude of the current problems faced by