the trade in live reef food fish volume 1

294 Pages·2017·11.22 MB·English

THE TRADE IN
LIVE REEF FOOD FISH
GOING
GOING
GONE
VOLUME 1
MAIN REPORT
Acknowledgements
This report was prepared by ADM Capital Foundation and the University of Hong Kong. We would like
to thank Sam Inglis, Lisa Genasci, Jane Chu, Kathleen Ho and and Ellie Appleby for their diligence in
reading and editing; Doug Woodring, who drove the initial concept; and DESIGNORM for their innovative
and informative graphics. Rachel Wong helped to compile some of the data, and Liu Min, Joyce Wu and
Felix Chan kindly provided data. We are grateful to the government staff of the Marine Department, the
Agriculture, Fisheries and Conservation Department, the Fish Marketing Organization and the Customs
and Excise Department for responding to our questions and clarifying issues raised, as well as reviewing
an earlier draft, and to the many traders and participants of the trade who we interviewed.

Disclaimer
This document (the ‘Document’) has been prepared by ADM Capital Foundation (‘ADMCF’) for general
introduction, overview and discussion purposes only and does not constitute definitive advice on
regulatory, investment or legal issues. It should not be used as a substitute for taking regulatory, financial,
tax or legal advice in any specific situation. Information provided in the report has been obtained from, or
is based upon, sources believed to be reliable but have not been independently verified, and no guarantee,
representation or warranty is made as to its accuracy or completeness. Information contained in this
Document is current as of December 2017 and is subject to change without notice. Information contained
in this Document relating to unrealised data and projections is indicative only, and has been based on
unaudited, internal data and assumptions, which have not been independently verified and are subject
to material corrections, verifications and amendments. This information is not intended to constitute a
comprehensive statement of any matter, and it should not be relied upon as such.
None of ADMCF, its sponsors, affiliates, officers or agents provides any warranty or representation in
respect of information in this Document. In no event will ADMCF be liable to any person for any direct,
indirect, special or consequential damages arising out of any use of the information contained in this
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provide addresses or hyperlinks which lead to other websites; however, ADMCF may not have reviewed
any such websites, and is not responsible for the content of any such websites or pages. ADMCF makes
no representation or warranty, expressed or implied, with respect to the accuracy or completeness of any
of the information in the Document, and accepts no liability for any errors, omissions or misstatements
therein or for any action taken or not taken in reliance on this Document. The Document should not be
regarded by recipients as a substitute for the exercise of their own judgment. All statements contained
herein are made as of the date of this Document. This Document is for information purposes only and
should not be construed as an offer, or solicitation of an offer, to buy or to make any investment.
Suggested Citation:
Sadovy de Mitcheson, Y., Tam, I., Muldoon, G., le Clue, S., Botsford, E. & Shea, S. (2017). The Trade in Live Reef Food Fish
– Going, Going, Gone. Volume 1: Main Report. Parts I, II & III, pp.1-288. ADM Capital Foundation and The University of
Hong Kong, Hong Kong Special Administrative Region.
II
GLOSSARY
ACCS Air Cargo Clearance System
ACE Advisory Council on the Environment
ADB Asian Development Bank
AFCD Agriculture, Fisheries and Conservation Department
AIS Automatic Indentification System
AO Administrative Order
APEC Asia-Pacific Economic Cooperation
APFIC The Asia-Pacific Fishery Commission
APT ASEAN Plus Three
ASC Aquaculture Stewardship Council
ASEAN Association of Southeast Asian Nations
AWB Air Waybill
BSAP Biodiversity Strategy and Action Plan
C&ED Customs and Excise Department
C&SD Census and Statistics Department
CACC Court of Appeal Criminal Appeal
CBA Capture-based Aquaculture
CBD Convention on Biological Diversity
CCAMLR Convention on Conservation of Antarctic Marine Living Resources
CITES Convention on International Trade in Endangered Species
COFI FAO Committee on Fisheries
CoP CITES Conference of Parties
CPUE Catch Per Unit Effort
CTI Coral Triangle Initiative
CTI-CFF Coral Triangle Initiative for Coral Reefs, Fisheries, and Food security
DAF Department for Agriculture and Fisheries (Queensland)
DCCC District Court Criminal Case
DFEH Director of Food and Environment Hygiene
EAFM Ecosystem Approach to Fisheries Management
EC European Commission
EFSA The European Food Safety Authority
EMAN Electronic System for Cargo Manifests
EU European Union
FAK Freight of All Kinds
FAO Food and Agriculture Organization of the United Nations
FEHD Food and Environmental Health Department
FEHD Food and Environmental Hygiene Department
FIFO Fish-In-Fish-Out’ Ratios
FMO Fish Marketing Organization
FoC Flags of Convenience’
FSO Food Safety Ordinance
FSQC Flag State Quality Control
GATT General Agreement on Tarrifs and Trade
I
GLOSSARY
GT Gross Tonnage
HBA Hatchery-based Aquaculture
HCMA High Court Magistracy Appeal
HKCSM Hong Kong Chamber of Seafood Merchants Ltd.
HKHS Hong Kong Harmonized Commodity Description Codes
HKLFC Hong Kong Licenced Fish Carriers
HKLFV Hong Kong Licenced Fishing Vessels
HKLRD Hong Kong Law Reports and Digest
HKSARG Hong Kong Special Administrative Region Government
HKSARG Hong Kong Special Administrative Region
HKSR Hong Kong Shipping Register
HKU Hong Kong University
HS Hormonized System
IMO International Maritime Organization
IPOA-IUU International Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and
Unregulated Fishing
ISPS International Ship and Port Facility Code
ITQ Individual Transferable Quotas
IUCN International Union for Conservation of Nature
IUU Illegal, Unreported, and Unregulated
LegCo Legislative Council
LN Legal Notice
LRFF Live Reef Food Fish
LRFFT Live Reef Food Fish Trade
MarDep Hong Kong Marine Department
MF(M)O Marine Fish (Marketing) Ordinance
MFN Most Favoured Nation
MMSI Maritime Mobile Service Industry
MPA Marine Protected Area
MSC Marine Stewardship Council
MSRA Magnuson-Stevens Fishery Conservation and Management Reauthorization Act
MT Metric Tonne
NDF Non-detriment Findings (from CITES)
NESOI Not Elsewhere Specified or Indicated/Included
NGO Non-Governmental Organization
NMFS US National Marine Fisheries Service
NOAA US’s National Oceanic and Atmospheric Administration
NPOA National Plan of Action
OFWG Ocean Fisheries Working Group
OIE World Organisation for Animal Health
OSCO Organized and Serious Crimes Ordinance
PCSD Palawan Council for Sustainable Development
PNG Papua New Guinea
II
GLOSSARY
PPMs Process abd Production Methods
PRC People’s Republic of China
PRQC Pre-Registration Quality Control
PSC Port State Control
PSMA Port State Measures Agreement
RFMO Regional Fisheries Management Organisation
SDG Sustainable Development Goals
SEAFDEC Southeast Asian Fisheries Development Centre
SOLAS International Convention for the Safety of Life at Sea
SPS Sanitary and Phytosanitary Measures Agreement
STC Said To Contain
TAC Total Allowable Catch
TBT Technical Barriers to Trade Agreement
TID Trade and Industry Department
UK United Kingdom
UN United Nations
UNCLOS United Nations Convention on the Law of the Sea
UNEP-WCMC United Nations Environment World Conservation Monitoring Centre
UNODC United Nations Office on Drugs and Crime
US United States
USAID United States Agency for International Development
US-CTI US Coral Triangle Initiative support group
VAT Value-Added Tax
VMPR Versatile Maritime Policing Response
VSL Vessel Monitoring System
WTO World Trade Organisation
WWF World Wildlife Fund
III
PAGE
1 EXECUTIVE SUMMARY
11 PREFACE
15 PART I
SWIMMING AGAINST THE TIDE
145 PART II
SLIPPING THROUGH THE NET -
POLICY AND REGULATIONS IN HONG KONG

261 PART III
NAVIGATING TOWARDS
CALMER WATERS
EXECUTIVE
SUMMARY
ince the late nineties, intergovernmental agencies, NGOs, academics and extensive
literature have highlighted the unsustainability of the South East Asian Live Reef Food
Fish Trade (LRFFT). Despite the economic benefits for many involved, there is undeniably
S a dark side to this lucrative trade in colourful fishes which involves a wealth of issues.
Collectively, these represent a major challenge to ensuring the LRFFT’s long-term sustainability.
A disturbing pattern has emerged of overfishing, illegal trade, tariff avoidance, of conservation
threats to several species, destructive and damaging fishing methods and even corruption.
This darker side is particularly relevant to the wild capture aspect of the trade.
While many of these issues were recognised more than two decades ago, concerns continue
be expressed. Despite various interventions having been launched and completed, the overall
result has not reversed the worrying trajectory these fisheries are on and, today, continued
overfishing and unregulated and unsustainable practices persist. If not addressed, the future
of the trade looks bleak, potentially impacting thousands of livelihoods in the region, not to
mention the viability of populations of several particularly favoured LRFF species.
This report aims to reflect upon why so little progress has been made to date towards achieving
a sustainable LRFFT, by examining the trade’s many components and characteristics. It thus
provides a comprehensive profile of the LRFFT over two decades, based on the best available
information from both major exporting and importing countries, as well as from independent
surveys and studies. It is hoped that it will serve as an important reminder of the inertia that
has plagued efforts to reform the LRFFT, and also as a catalyst for a reinvigorated pursuit of
options that could direct the LRFFT towards a sustainable path. It explores:
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EXECUTIVE SUMMARY
• the nature of the product (i.e. live fish) in relation to the rising influence of ‘conspicuous
consumption’ in key demand countries;
• the nature of the biological resources and their vulnerability to overexploitation from a
range of impacts and drivers;
• trends in mariculture, including the realities of substitution and environmental impacts;
• trends in international trade of LRFF by species, country of origin and transport mode and
the reliability of available data in determining these trends;
• supply chain characteristics and trade dynamics;
• the ‘economics’ of the LRFF value chain including scarcity, pricing, value distribution and
power structures;
• the regulatory landscape in Hong Kong including transport, monitoring and inspection of
LRFF imports;
• past and ongoing interventions and their successes or otherwise in improving the trade;
and
• action that is needed for moving forwards to safeguard the value of the LRFFT while
containing and reducing those elements that are undermining its potential.
The report thus identifies where the possible solutions and next steps may lie, to:
i) increase incentives for management in source countries; and ii) to ensure better oversight and
control of the international trade in general. More radical, effective and innovative approaches
are urgently needed.
Relatively and Absolutely, the LRFFT is a High Value and Regionally
Important Trade
For almost three decades, an international trade in live reef fishes has grown and flourished
in the Indo-Pacific region in response to demand for ultra-fresh seafood, which is part of
the culinary tradition of southern China. The trade is not large by global fishery standards,
estimated to hover between 20,000 and 30,000 Metric Tonnes (MT) annually, but it is
disproportionately valuable because it supplies a luxury seafood market with high value fishes.
Its annual retail value is estimated to substantially exceed US$1 billion, with some species
fetching in excess of US$600 per kg at retail. To place this in a global context, the annual
trade value is roughly four times the global value of the marine aquarium trade and about one
third of the valuable Western and Central Pacific tuna fisheries. In the context of Hong Kong,
the global trade hub for the live fish trade was worth almost six times the total production of
the city’s own fishing fleet in 2016.
Importantly, the LRFFT is capable of providing income and good profits along the trade chain,
from fishers and their communities to exporters, transporters, importers and retailers. Given
the high values involved, it should also generate substantial export and import tariffs and
income tax returns for trading countries. However the clandestine nature of the trade, a culture
of deliberate tax avoidance, poor governance, and lack of transparency in transport of live fish
collectively result in significant erosion of these potential revenues.
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EXECUTIVE SUMMARY
Unrelenting Overexploitation Persists
Since the late 1990s the relentless overexploitation of LRFF has been repeatedly documented,
and bought to the attention of both exporting (source) and importing countries, and the trade
is growing. Hong Kong’s trade data, which serve as a proxy for trends in the LRFFT, indicate
that in 2016 imports were some 32% higher than in 1999.
The extent of overexploitation is clearly evidenced by the serial depletions of LRFF fisheries,
whereby the trade takes advantage of once easy and voluminous catches when initiating
a fishing and export operation in one area, then moving on to new fishing grounds when
catch rates decline, oftentimes leaving behind severely degraded fisheries and dislocated
communities. The result is the shifting of fishing grounds, from the now depleted northern
sector of the South China Sea to the increasingly depleted waters further south. In many
places, catch levels continue to outstrip the naturally sustainable supply rates of target
populations by between two-and-a-half and six times.
Popular Species Traded are Inherently Vulnerable to Over Exploitation
A major contributing factor to LRFF overexploitation is the biological vulnerability of the
popular species in this trade. The LRFFT involves the sourcing of approximately 15-20 species
of reef fishes, the great majority being groupers, which come predominantly from developing
countries in Southeast Asia. A notable exception is the Leopard Coralgrouper, Plectropomus
leopardus, which is also sourced from Australia. The biology of many of these species, which
includes late sexual maturation, long life and aspects of their reproduction (e.g. sex change
and spawning aggregations), makes them particularly vulnerable to fishing pressure and more
susceptible to overfishing than many other exploited species in the coral reef ecosystem.
The fishes included in the LRFFT come from both wild populations and from mariculture/
farmed sources with the major source countries, currently, being Indonesia and the Philippines;
several Pacific Island nations commenced and then stopped exporting their live fish due to
concerns over trade operations and fishery sustainability. Several grouper species that make
up the trade have been overexploited to the extent that they are considered ‘Threatened’ or
‘Near Threatened’, according to the IUCN Red List. The Napoleon, or Humphead, Wrasse,
Cheilinus undulatus, albeit a relatively low volume species, was listed on CITES Appendix
II in 2004 as a direct consequence of declines due to exploitation pressures from the trade.
It lives longer than three decades and is naturally uncommon. The targeting of spawning
aggregations (especially those of the Camouflage, Epinephelus polyphekadion, Squaretailed,
P. areolatus, and Tiger, E. fuscoguttatus, Groupers) can quickly lead to population declines,
while the blatant and illegal taking of threatened species plague parts of an industry that is
poorly monitored and virtually unmanaged.
3
EXECUTIVE SUMMARY
An Extended Regional Trade Chain, Supplied by Many and Controlled
by a Few
Wild fishes typically pass along an extended trade chain, caught in small numbers by tens
of thousands of small-scale fishers, then consolidated by a small number of traders, and
exported in large fish carrier vessels or by air, mainly to Hong Kong.
While Hong Kong is also a consumption centre for live fishes a substantial amount of live
seafood imported into the city is re-exported to mainland China. Initially these fishes were
destined for Guangzhou and Shenzhen, southern China, but interest in the colourful reef fish
has grown and they are now also shipped to high end restaurants in Shanghai, Beijing, tier 2
cities like Qingdao and beyond. A handful of traders, therefore, control a trade that is supplied
by tens of thousands of fishers to supply millions of consumers. In reality, wholesalers in Hong
Kong appear to control the market both up and down the supply chain and often maintain
control over the fishers, and middlemen who buy from them, through ‘patronage systems’.
This indebtedness, along with limited alternative livelihood options that can match LRFFT
incomes, repeatedly forces fishermen to continue fishing to meet debt obligations even as
fish become scarce. Small and strong trade networks limit newcomers from entering the
centre of the trade chain.
Conspicuous consumption is a hallmark of the LRFFT and continues to drive overexploitation
The trade satisfies a major consumer interest; extremely fresh and highly desirable reef fishes
that are attractive to look at and diverse in character. This is a major draw for seafood tourism
especially for Chinese diners. Live reef fish are amongst the most desired dishes in high end
restaurants, including major hotels and resorts, and a regular central feature of banquets,
weddings and seasonal celebrations such as Chinese New Year and Mother’s Day. This rise
of conspicuous consumption is a hallmark of the LRFFT, associated with rising incomes and
motivated by the desire for social status, for engendering personal and business relationships
and for cultural reasons (i.e. health and well-being). Paradoxically, it is the high prices paid
by consumers that enable the trade’s ongoing viability, despite high transport costs and
ongoing overexploitation of target species, leading to population declines. The trade has
also stimulated the grouper mariculture industry, which helps to meet demand and supplies
several lower priced species.
Economic Characteristics Mean that Perverse Incentives Lead to
Overfishing
From an economic standpoint, the LRFFT is a high-value, low-volume, fishery that can deliver
large profits and sustain a highly lucrative business, even at relatively low volumes of trade,
despite high transportation and transaction costs and high levels of risk around transport
mortality. The profitability of the trade acts as a considerable incentive to persistently overfish
areas that are poorly or entirely unmanaged, and drives the ‘boom and bust’ nature of the
fishery. As stocks become depleted, in some cases locally extirpated, traders turn their
attention to seek ever new fishing grounds.
4