John Connelly is president of the National Fisheries Institute, the largest trade group representing the U.S. seafood industry. Connelly spoke with SeafoodSource for its “What a Biden Presidency Means for the Seafood Industry” webinar on 27 January, 2021.
SeafoodSource: Can you give an overview of how the Trump presidency affected the U.S. seafood industry? How would you describe the last four years, from NFI’s perspective?
Connelly: President Trump did tap into a sentiment many Americans had and part of that was on trade – particularly imports and whether supply chains that are reliant heavily on overseas production are good for America. And we certainly disagreed with much of his approach on that, but he did tap into something that is important for us to understand and appreciate going forward. People did get tired of him personally and the way he went about things. That’s why the suburban voters he had in 2016 left him in November. But over the last four years, he certainly did some good things. From NFI’s perspective, deregulation broadly of the economy is good for our industry and members. A vibrant economy gets people out and spending money in restaurants, and seafood is still primarily eaten out of home, despite COVID. And we had record low unemployment in at least some segments.
On the downside, probably the biggest challenge from our perspective was the trade disruption he caused, both incoming and outgoing. We always talk about trade being two sides of a coin, and when President Trump threatened Europe and some of their seafood exports [with tariffs], Europe turned around and said fine, we have seven times as many imports from the U.S. as we have exports, we’re happy to knock out those imports from the U.S. So trade disruption became a problem.
Overall, Trump did some good things and some bad things. The way he went about it was disruptive. That got people thinking in a new way about what Washington is and what it could be, but certainly he did some things that were terribly disruptive as well.
SeafoodSource: Do you agree that the Trump administration seemed much more engaged on seafood issues than previous administrations? And was that a good thing? Do you hope for that kind of engagement from the Biden administration?
Connelly: Like most organizations, we like the attention. Except when we don’t. Thinking back to December of 2016, incoming Commerce Secretary [Wilbur] Ross was taped talking with Trump about things they wanted to get done and they had a specific conversation about seafood, which just shocked us. Secretary Ross who was close to Trump … and he could quote unsolicited statistics about the seafood trade deficit, the amount of U.S. coastline dedicated to aquaculture, and that was unique – there have been secretaries of commerce in the past who could not spell ‘fish.’ Secretary Ross took a personal interest in this industry, and some of that was good and some bad. The good parts were that he made sure NOAA Fisheries had a good leader who people largely respected, and the downside again was trade. I have been here at NFI 18 years now, and I will say the Trump administration’s approach was unique in their attention to seafood.
Going forward, with President Biden, there are going to be some very good things he does and we suspect there are going to be some real challenging things. Regarding the president himself, he’s from a small coastal state, which is helpful – there are seafood processing plants there and operations in Delaware that the president personally would know, as it’s a small state where everyone knows everyone. And the incoming commerce secretary, Rhode Island Gov. Gina Raimondo, is from our smallest state, a true coastal state. In her confirmation hearing, she was talking about her commitment to oceans and fishing, and fishing communities, and I think her own background growing up in that pretty tightknit community connected to the fishing industry is beneficial. And elsewhere, we think some of people Biden has appointed either know or come from communities that understand seafood industry, and that’s important, because having some of the key department leadership and senior staff understand the importance of seafood trade and the number of jobs it creates makes our job that much easier. [One of those people is] incoming U.S. Trade Representative Katherine Tai. She comes from a point of view but is well-respected by the business community as well as unions. And other countries know her because she was involved in advising in past trade negotiations, including negotiations on the TPP.
SeafoodSource: When you initially sat down to hash out your post-election approach and priorities, what did you identify as the greatest opportunities and threats presented by a Biden administration?
Connelly: Reviewing [U.S.] trade policy is something we’re interested in on both the exports and imports side. Every time Trump whacked on imports, exports also got whacked. We’re looking for opportunities to talk with the White House and some other key partners about the importance of seafood trade and the link between those who seek to import here and our own opportunities to export – they are connected.
One other opportunity that has poked around on is the issue of consumer protection. NFI continues to be concerned about a lack of enforcement on labeling issues. One, the net-weight issue, continues to be a problem with our constituency. As a reminder, companies can fill a 40-kilo box of fish with 32 kilos of fish and eight kilos of ice and call it 80 percent net-weight. We continue to urge the FDA to enforce the law on that. The new administration may be more interested in how that affects consumers negatively. Secondly, [we’re looking for] proper labeling on the plant-based proteins. We think plant-based proteins are a good choice for some consumers, and they’re certainly a growing area. But if you want to buy a salad, buy a salad. Just don’t call it tuna. It’s not tuna. If we [in the seafood industry] have to adhere to a 5,000-word labeling law, we’re hoping there will be a little more truth in labeling at the FDA and we’re hoping the FDA views it as a consumer issue and there will be more attention paid there.
On the side of challenges, we think there’s going to be some continue challenges with issues of climate and where the administration goes with that. There continues to be an emphasis on marine protected areas, or walling off parts of the ocean to commercial fishing, somehow as an effort to protect against climate change. We just don’t see it. Seafood is among the best proteins as far as carbon footprint goes – why would you want take that out of the supply chain, when this food source is going to help the climate? I just don’t know. I just don’t see the connection between those two. Work on climate, absolutely, but don’t put it on the back of fishers, because we put product into the food supply that is among the best as far as climate footprint.
IUCN is a group of unelected officials trying to get together in a biennial congress where they make pronouncements or put out challenges, but there are no governments represented [in it]. Previously, they said 20 percent of oceans should be walled off by 2020. Now they’re saying 30 percent by 2030 – that doesn’t smack to me of a lot of accountability. The IUCN doesn’t have the democratic accountability of other institutions like the FAO or United Nations have. But elections matter and President Biden campaigned on climate issues like this, so he gets to implement initiatives like this. If you don’t like it, then vote next time.
SeafoodSource: What should the seafood industry expect to see as a result of Democratic control of Congress? Will it have a significant impact on how the country is run, or are the margins tight enough in both chambers that one-party control of Washington won’t have much of an impact?
Connelly: Certainly one-party control, whether Rs or Ds, tend to present challenges, as they think they were elected with a mandate and they want to implement their programs. We don’t think there was a mandate, certainly when you’re at 50-50 in the Senate and have a four-vote margin in the House, that’s certainly nearly as closely divided as you can be in our legislative system. Ultimately, Democrats will control the agenda, and Senate Majority Leader [Chuck] Schumer can put things onto the floor when he wants, but he still has to deal with Republicans, particularly as some key Democrats have rejected calls to kill the filibuster. The agreement to keep the filibuster means there will be some accommodation for Republicans and that Democrats will not just jam things through. But they do have the process of budget reconciliation in which they can pass some of their agenda. That said, Democrats will still have to deal with Sen. [Susan] Collins, who has been very good for seafood community not only in Maine but more broadly.
Specifically to the Senate, we think there are some very good leaders in some of the key committees to seafood. Senator Cantwell from Washington certainly knows the seafood industry and the importance of those jobs created through the seafood supply chain. She also knows a fair number of import-related issues there, given the Seattle-Tacoma port is in her state. So Cantwell, as chair of the commerce committee, is going to be very important. We’re pleased she knows NFI and a number of other seafood and fish-related advocacy and trade groups, as does Senator Murray [D-Washington], another senior leader in the Democratic party.
Other issues on Biden’s docket, not specifically tied into seafood, include a minimum wage hike and immigration reform.
SeafoodSource: President Biden has said he will prioritize the passage of another COVID relief bill. Do you think the seafood industry stands to receive any direct aid from the new pandemic aid package currently being discussed? And for that matter, do you think a new aid bill will be approved by Congress?
Connelly: Relief has come over last four packages in a couple of ways. One direct way was the fisheries direct relief fund, which had USD 350 million allocated to it in the past package and USD 300 million in this package. In Gov. Raimondo’s testimony in front of the Senate, she vowed to get that released faster. It took nine months to distribute the first USD 250 million, and that’s sad, and we’re glad Gov. Raimondo is committed to looking at that issue. Certainly there could be a need for additional funds like that, but what is as least as important reimbursements for direct costs companies have incurred in order to protect their workers. A lot of Alaskan companies took steps to make sure they kept their vessels and processing plants were as safe as possible, and they have been largely successful, though there have been some spots where there has been some challenges. This has come at an enormous cost to those companies. I think the seafood industry should be working collaboratively to make sure anyone who has incurred those direct costs should get some help immediately in the next COVID bill.
Another help to the seafood industry has been accounts receivable relief. The seafood industry operates on credit – we provide credit to restaurants – so when we sell a product to a restaurant, they sell it and then give us the money for the product, so we’re actually financing our customers. When the restaurants closed down between March and May, they suddenly weren’t selling those products, so obviously they couldn’t repay the cost of those products. NFI did some surveying and found it was a USD 2.2 billion hit to the industry, which was a problem, obviously. Now, restaurants can use PPP money in order to repay some of that bad debt. That’s not direct relief to us but it’s a very important part of that package coming out of bipartisan work between Sen. [Ben] Cardin [D-Maryland], Sen. [Susan] Collins [R-Maine], Sen. [Marco] Rubio [R-Florida], Sen Shaheen (D-NH)and others.
There are two other areas where we’re seeking more help. One is, we’re at a disadvantage in that we are regulated by NOAA on the harvest side and FDA on the processing side, whereas other protein producers are regulated by USDA, and that means they’re actually promoted by the USDA. The seafood industry doesn’t have anyone that promotes us like the Agricultural Marketing Service does for farmers. [Secondly], we are at disadvantage with food assistance programs doing billion-dollar purchases that initially don’t have seafood involved. Where the Trump administration screwed us, to be blunt, in the last couple of weeks of his administration, was on the [USDA] Food Box program, which some senators worked very hard to get seafood included in. But the way the Trump administration wanted to get that out under their own Adminisration and claim credit they rushed the process. So while seafood was technically eligible for the program, the specs were written in a way we could never get in it, or the people distributing the product had no idea what seafood was. So that’s work that we have to do with the incoming administration and some of the legislative leaders in Congress so that what they wrote in the bill in December actually gets done, and we’ll be working with USDA and others on that.
The last thing we have do is, we have got to get restaurants open. We can continue funneling money into the hands of fishing companies and processing companies, we can get some food assistance going, but we’re not getting whole until restaurants reopen. So the president’s focus on the pandemic and getting vaccines out, whether Biden wants to claim credit or share credit with the Trump administration, doesn’t matter to us. All that matters is that restaurants have to open. We are so dependent on restaurants for sales and until those get going again, we’re not going to be robust as we can be. I realize lots of companies have made amazing shifts into retail and those companies have done a great job, but at the end of the day we need the restaurants and need to work through this next package to get them the support they need, because ultimately, if we help our customers, we’re helping ourselves.
SeafoodSource: A larger question, but one that directly affects the seafood industry, concerns Biden’s approach to Trump’s trade wars and efforts to rebalance the country’s seafood trade deficit. Do you have any idea how Biden will approach trade issues in general? And what about the specific U.S. trading relationships with China and the European Union?
Connelly: President Biden and his team are in a very tough spot. Most people will acknowledge that President Trump’s focus on China and how they were dealing with things was probably a good thing, but the way went about solving it might not have been good. I’m a former naval officer and what China is doing in the South China Sea, claiming territorial rights over disputed islands, creates huge challenges for us as a nation. So trade is one part of that and part of a package that the president needs to deal with. He’s going to have some folks in his diplomatic world that are more interested in soft diplomacy, working directly with the Chinese to see if we can come to a understanding, And he’s going to have some on the hawkish side – President Biden has strong union backing – and they’re not going to want any kind of softening of our relationship with China. So he’s in a very tough spot politically, because if he unilaterally pulls down tariffs on Chinese products, he’s going to look weak to the Chinese and terrible to his union supporters. What they have largely said is that they’re going to build a political coalition, unlike Trump who always wanted to do things alone or in a bilateral way. But where do you go to build a coalition? You start with the Europeans. But they want things from the U.S., like a digital services tax. And they don’t want to open up their agricultural markets to U.S. products. Biden needs the Europeans to counter China, not just on trade, but on geopolitical questions, but the Europeans know we need them and they feel like they got treated pretty poorly over the last four years, so [it’s likely they] would like [the U.S.] to reconsider its position on things like the digital services tax. This is my personal opinion here, not NFI’s position, but people look at us differently now. Very unfortunately, they wonder if we can be trusted in long-term relationships. As Biden seeks to build a coalition to counter China, he will have that to deal with as well. But the specific issue of China is a complete Rubik’s cube and it’s going to take a lot of smart people to figure it out. We just don’t think that’s going to happen in first 100 days. There’s going to be a lot of work that has to happen with other nations. That will include Australia, New Zealand, and some of our other allies in the Pacific, but also the Europeans. But everyone wants something out of this and they’re not going to do things just because Biden is in office.
SeafoodSource: Has the trading relationship between the U.S. and China been fundamentally changed as a result of the Trump administration’s more aggressive approach toward bilateral relations? And as a result, do you think that means that historical seafood trading ties, for example, with China doing a lot of processing of U.S. products, have disappeared forever?
Connelly: There were specific actions at the urging of the previous administration to move manufacturing out of China, not just for trade reasons but for broader strategic reasons. But yes, a lot of seafood production has moved to elsewhere in Asia like Vietnam and Thailand, and other places. Some companies brought production back to the U.S. and said we can do what we used to do in China here in the U.S., and that’s a good thing. That happened not just in the seafood industry – most industries went through that same calculus.
It’s really important to not just think of this as only about trade, but rather from a geopolitical perspective and how we are going to coexist in the Pacific, or if China is going to seek some kind of hegemony in the Pacific, which would be of grave concern to the U.S. and its allies. But China will remain an enormous market for the U.S. – we’ll never get away from that. And there are some Chinese companies that do produce some good product. But now, U.S. companies are seeking more protections they didn’t think about as recently as five years ago.
SeafoodSource: Do you have any insight into how Biden will handle Trump’s executive order on seafood?
Connelly: Included in that executive order was an emphasis on exports, and we really liked [that] and were deeply frustrated that what was supposed to get done in 45 or 60 days didn’t get done in seven months. We know there was a draft export strategy and it was never published. We were disappointed that work didn’t get done. We hope the current administration sees opportunities to increase exports markets and opportunities to help the industry here in the U.S. There was also an emphasis on increasing aquaculture production, and there may be a relative deemphasis on aquaculture in the new administration as they look at it with a bit more careful eye to make sure their actions are still aligned with environmental concerns, which will be brought more to the fore than in the Trump administration. But I don’t think the Biden administration will try to kill the aquaculture initiative.
SeafoodSource: How about Trump’s approach to growing the size and scope of the domestic aquaculture sector – have you heard anything yet about whether Biden intends to continue that effort?
Connelly: I think acting assistant administrator Paul Doremus and other leaders at NOAA Fisheries feel that their work is a complement to the management and conservation work they do on the harvest fisheries side. It may be deemphasized in different administrations but aquaculture is not going away entirely.
SeafoodSource: What about the Trans-Pacific Partnership? Is that dead?
Connelly: President Trump’s concept on trade was bilateral negotiations. He didn’t believe in multilateral agreements, so that’s why you saw him engage in individual deals with individual countries. The TPP is a multilateral approach or initiative where all the Pacific Rim countries would have worked together to create a trade advantage zone. The country that was most advantaged when the U.S. pulled out of TPP was China. They hated the idea that everyone in their region but them was going to have some unified trade agreement. So in a perverse way, the death of TPP helped the country that Trump was most concerned about. Looking forward, I go back to the concept that President Biden and his team have a lot of work to do to build a coalition of trust among countries interested in working with us on trade matters, and he’s going to have to balance that with his strong union support, who are not big fans of free trade or specifically the TPP. Even though Biden is considered an internationalist, he’s going to have pick a side in the fight between those in his administration who are in favor of soft diplomacy and engagement and those who are more hawkish who believe we need to use all our powers to block out Chinese power.
SeafoodSource: How do you think Biden will proceed on the issue of IUU fishing?
Connelly: I don’t think IUU is a terribly partisan issue. No one wants to be involved in it. Recently, the Coast Guard commandant gave a speech outlining the U.S. fight against IUU, and the fact that the service’s senior officer delivered a speech on this policy shows our maritime forces are interested in that, and that they see a connection between labor issues, drug running, and other illegal activity, so it’s on their radar. One other facet of this conversation is a requirement in a bill passed in December that NOAA analyze the effectiveness of SIMP to determine whether it actually stopped any illegal fish from coming into the country, and it will be interesting the see the results of that.
NFI’s policy has always been if the U.S. has a problem with country A, let’s deal with country A. But why the heck are we spending time concerned about Icelandic cod, which has a fish on every one of its coins? Why are we spending any time on a country that cares so much about fish that has it on their currency. Let’s focus on countries where there are problems and not waste time and government and industry resources on these broader regulations.
SeafoodSource: Any advice to foreign companies looking to export product into the U.S.?
Connelly: If you want to import to U.S. just do things right. It makes it very difficult when a number of small actors in any country do things inappropriately. Start by doing things right, that gives you an advantage. Then it’s about providing a quality product so that enough customers in the U.S. want to buy it.
Photo courtesy of John Connelly
