British Food Journal

The export competitiveness of the tuna industry in Thailand

Kulapa Supongpan Kuldilok P.J. Dawson John Lingard

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Kulapa Supongpan Kuldilok P.J. Dawson John Lingard, (2013),"The export competitiveness of the tuna industry in
Thailand", British Food Journal, Vol. 115 Iss 3 pp. 328 - 341
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BFJ
115,3

The export competitiveness of the

tuna industry in Thailand
Kulapa Supongpan Kuldilok

328

Department of Agricultural and Resource Economics, Kasetsart University,

Bangkok, Thailand, and (formerly) School of Agriculture,
Food and Rural Development, Newcastle University, Newcastle, UK, and

Downloaded by Panyapiwat Institute of Management At 00:40 11 September 2016 (PT)

P.J. Dawson and John Lingard

School of Agriculture, Food and Rural Development, Newcastle University,
Newcastle, UK
Abstract
Purpose Thailand dominates world exports of canned tuna with a market share of around 40
percent which is at least four times higher than any other exporter. The aim of this paper is to examine
the export competitiveness of the canned tuna export industry in Thailand for 1996-2006.
Design/methodology/approach The paper uses a revealed comparative advantage (RCA)
approach and calculates RCA indices for both major exporters in the world market and competitors in
individual export markets.
Findings Thailand has comparative advantages in all major export markets; these have remained
stable in the USA, the Middle East, Japan and Canada but have fallen substantially in Australia.
Practical implications First, Thailand urgently needs to consider tuna farming. Second, smaller
processing and fishing companies should merge to increase profit margins and market share. Third,
Thailand should engage in effective trade negotiations with importers. Fourth, stock management and
conservation could be used to support the industry. It is unlikely that current levels of comparative
advantage can be maintained because of import tariffs, rules of origin, labour shortages and increasing
unskilled labour costs.
Social implications Tuna management and conservation in Thailand could be used to support the
sustainability of the industry.
Originality/value By contrast to Kijboonchoo and Kalayanakupt who find that Thailands market
share declined between 1987-1998 and revealed comparative advantage fell, these results show that
this declining trend has since been arrested.
Keywords Exports, Revealed comparative advantage, Tuna, Thailand, Fish (food), International trade,
Competitive strategy, Market share
Paper type Research paper

British Food Journal

Vol. 115 No. 3, 2013
pp. 328-341
q Emerald Group Publishing Limited
0007-070X
DOI 10.1108/00070701311314174

1. Introduction
Tuna exports are an important component of Thailands trade-oriented economy. In
2006, total exports comprise 76 per cent of gross domestic product (World Bank, n.d.).
Total fish exports are $US6.93bn or 4.6 per cent of total exports of which 15 per cent or
$US1.07bn is from canned tuna (FAO, 2008). On the world market, tuna accounts for 8
per cent of total fish exports (FAO, 2009, p. 56) and Thailand is the dominant exporter:
its market share is 41 per cent which is at least four times higher than any other
exporter (FAO/GLOBEFISH, 2008). Thailands dominant position in the world export
Kulapa Supongpan Kuldilok is grateful for a Royal Thai Government Scholarship which funded
her PhD research at Newcastle.

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market for tuna is related to its strategic geographic location for fishing and landing,
its processing technology and capacity, and the availability of low wage labour.
Almost all of Thailands tuna exports is canned. This paper seeks to examine the
export performance of this industry using data for 1996-2006 and a revealed
comparative advantage (RCA) approach. We calculate RCA indices both for major
exporters in the world market and for competitors in individual export markets. The
only recent study of RCA for world tuna exporters of which we are aware is
Kijboonchoo and Kalayanakupt (2003) which shows that although Thailand had a
comparative advantage in the 1990s, it was declining. A major concern for Thailands
tuna industry is that despite its dominant position, its level of comparative advantage
is unlikely to be maintained because of upward pressure on wages, concerns of
importers about rules of origin, and rising trade barriers (Corey, 1993, p. 367;
Kijboonchoo and Kalayanakupt, 2003; Xuto, 2005; FAO/GLOBEFISH, 2006).
The remainder of the paper is organised as follows. Section 2 provides some
background to the Thai tuna industry. Section 3 discusses RCA indices and notes some
of their shortcomings. Section 4 discusses the data and presents the results. Section 5
provides a discussion and some policy recommendations.
2. Some background
The Thai tuna industry is an innovator of modern production processes and both
domestic and foreign vessels land tuna in Thailand. Tuna exports are divided into two
sectors: processed canned tuna are caught by purse seine vessels; and larger,
higher-quality and higher-priced fresh and frozen tuna for the sashimi market are
caught by longline vessels. Canned tuna exports comprise 96 per cent of total tuna
exports in 2006 (Thailand Customs Department, n.d.) and this is our focus.
Tuna carrier vessels procure tuna for canning from vessels at sea which they then
land at Thai ports. The tuna is allocated to factories after their agencies have accepted
order confirmations. Traders then distribute tuna to canneries. Thailands canned tuna
processing industry has grown from one cannery in 1972 to 31 by 2005 when exports
reached 450,000 tonnes (Department of Business Development, n.d.). The industry has
a annual capacity of 800,000 tonnes and it employs 40,000 workers (Bangkok Business
News, n.d.). It is characterised by imperfect competition and is dominated by the Thai
Union Group which has a market share of 37 per cent. The second largest cannery is
Sea Value which has a market share of 15 per cent. A total of 23 other companies have
market shares of less than 7 per cent each. It is unclear whether the Thai Union Group
acts as a price leader or whether, with Sea Value, the industry is a duopoly.
A key advantage of the Thai economy in general and its tuna canning industry in
particular is comparative low real labour costs. In 2003, earnings in Thailand were
US$152/month in the manufacturing of food products and beverage sector. In
comparison with its competitors, this is lower than monthly earnings in Spain
(US$1829), Ecuador (US$332), Seychelles (US$523), and the Philippines (US$230). Only
earnings in Indonesia are lower (US$94) (sources: earnings from ILO (n.d.) and
exchange rates from World Bank (n.d.)).
Thailands fishery policies aim to maintain its status as a leading producer and
exporter. The Department of Fisheries aims to maintain and increase the supply of raw
tuna to Thai processors. Overseas fisheries are developed by raising the capacity and
technology of overseas fishing fleets, and fishing operations are controlled and

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330

regulated in compliance with agreements with other coastal states or joint-venture

partners. The Ministry of Commerce aims to increase exports by encouraging new
products and new exporters to meet higher foreign demand. Foreign trade policies aim
to increase competitiveness and Thailand has entered into bilateral free trade area
(FTA) agreements whereby access is gained to other markets and benefits accrue from
preferential tariff rates. Thailand has entered into FTA agreements with Australia
under the Thailand-Australia Free Trade Agreement (TAFTA), with Japan under the
Japan-Thailand Economic Partnership Agreement (JTEPA), and with the EU, New
Zealand, and the US. Rules of origin are an important element of FTA agreements since
they determine the country of origin of traded products to avoid trade deflection from
re-routing goods through third countries. Special rules apply to fish products and relate
to where fish are caught, the ownership/flag of vessels, and the nationalities of
captains/masters/crew.
3. Conceptual framework
The concept of RCA concerns relative trade performances of individual countries in
particular commodities (Balassa, 1965). Comparative advantage is revealed from
observed trade patterns such as high market shares in export markets (Balassa, 1977).
RCA is a commonly-used method to evaluate international competitiveness (Ferto and
Hubbard, 2003). However, a countrys comparative advantage cannot be measured
directly because such measures require pre-trade relative prices which are
unobservable. Accordingly, much of the literature uses indirect measures of
comparative advantage such as RCA which is grounded in conventional trade
theory and measure a countrys exports of a commodity relative to those of a set of
other countries. Balassas (1965) original RCA index, which has subsequently been
modified into a plethora of measures, is the ratio of a countrys exports of a product to
its total exports, relative to the ratio of world exports of that product to total world
exports. The RCA index of country i in exporting product j is:
RCAij

X ij X Wj
=
Xi XW

where Xij is country is export value/volume of product j, Xi is the total export

value/volume of country i; XWj is the total world export value/volume of product j, and
XW is the total world export value/volume. Comparative advantage is revealed if
RCAij . 1, and country i has a comparative advantage of product j on the world
market. On the other hand, if RCAij , 1, country i has a comparative disadvantage of
product j on the world market (Balassa, 1989, p. 45).
A second RCA index that we use measures a countrys exports of a product relative
to another countrys imports. The revealed comparative advantage index of country i
in exporting product j to country m is:
RCAimj

X ij X mj
=
Xi Xm

where Xmj is the total import value/volume of product j in country m, Xm is the total
import value/volume of country m (Balassa, 1989, p. 45). If RCAimj . 1, country i has a
comparative advantage for product j in market m; and if RCAimj , 1, country i has a

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comparative disadvantage for product j in the import market. Both RCA indices are
affected by changes in exchange rates and to control for this effect, we measure exports
in US$. The RCA index in (1) uses export data while that in (2) uses both export and
import data. Economic theory suggests that a countrys factor endowments of land,
location, natural resources (in this case access to tuna fish), and labour largely
determine its RCA (Balassa, 1965).
An important advantage of RCA indices is that they are easy to calculate. However,
a large literature has emerged which highlights their shortcomings and three are
particularly relevant here. First, RCA indices only show whether a country has
comparative advantage in a commodity only at one point in time and they are neither
cardinal nor ordinal measures (Hillman, 1980; Yeats, 1985). Nevertheless, they have
been used to examine comparative advantage patterns across time, industries and
countries (Richardson and Zhang, 1999). Second, RCA indices are asymmetric (De
Benedictis and Tamberi, 2004): when a country has a revealed comparative advantage,
RCA . 1 but there is no upper bound; but conversely, when a country has a revealed
comparative disadvantage, RCA has an upper bound of unity. Third, as Ferto and
Hubbard (2003) note, observable trade patterns can be distorted by government policy
and RCA indices may be biased measures of comparative advantage. Policy distortions
are more pronounced on the import side, and this criticism pertains particularly to the
RCA index in (2) which contains both exports and imports. Notwithstanding these
criticisms, Ferto and Hubbard (2003) argue that RCA indices are a useful measure of
comparative advantage which can highlight specialisation patterns. Moreover,
government intervention and competitiveness tend to be inversely related, and
products which reveal a comparative advantage could become more competitive if
markets were more open (Vollrath, 1991).
4. Data and results
Our focus is on canned tuna exports, and RCA indices of exporters for 1996-2006 are
estimated from data on world exports by value (sources: UN, n.d.; ITC, 2008;
GLOBEFISH/FAO, 2008). RCA indices for Thai exports are compared with other large
exporters, namely, Ecuador, Spain, the Seychelles, Mauritius, Indonesia, and the
Philippines. The largest importers of tuna from Thailand are US, the EU-15
(comprising of France, UK, Italy, Germany, Spain, The Netherlands, Luxembourg,
Austria, Greece, Denmark, Belgium, Portugal, Sweden, Finland, and Ireland), the
Middle East (comprising of Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon,
Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen), Japan,
Australia, and Canada.
RCA indices of both Thailand and its export competitors to these import markets
are calculated from export and import data for 1996-2005 (source: ITC, 2008).
A basic measure of international competitiveness is export market share, that is the
ratio of a countrys exports to total world exports. Table I shows the shares of canned
tuna exporters for 1996-2006. Thailand dominates world exports with a market share
of around 40 per cent, and no other country has a market share of more than 10 per
cent.
Table II shows RCAij indices using (1) for the main tuna exporters for 1996-2006.
RCAij . 1 for all individual countries except for Spain in 1996 and all have a
comparative advantage. The Seychelles, with an average of 6 per cent of world exports,

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332

Table I.
Market shares of
exporters (%), 1996-2006

has the largest comparative advantage throughout the sample period; its index grew
from 825 in 1996 to a high of 2,423 in 2004 before falling back to 1,730 in 2006. The
Seychelles average RCAij index is around ten times greater than that of Ecuador which
is ranked second and 20 times greater than Mauritius which is ranked third. Both
Ecuador and Mauritius have low export market shares which average 7 and 3 per cent.
Despite Thailands dominance of world exports, its comparative advantage is ranked
fourth: its RCAij index is relatively stable over the sample period, ranging from 30 in
2000 to a peak of 41 in 2005, before declining to 35 in 2006. This stability contrasts with
the Seychelles, Ecuador, and Mauritius which have greater comparative advantages
but more volatile indices.
Table III shows the shares of Thailands exports in individual import markets. The
US is the largest importer of Thai canned tuna: in 2006, it imported 103,200 tonnes and
over our sample period US imports averaged 29 per cent of Thai tuna exports
(FAO/GLOBEFISH, 2009). The Middle East and EU each import around 15 per cent of
Thai exports. In the Middle East, Egypt, Libya and Saudi Arabia are important
markets with tuna imports from Thailand of 34,100 tonnes, 27,600 tonnes and 20,100
tonnes in 2006. Similarly, in the EU, the UK and Germany are important markets with
imports from Thailand of 19,700 tonnes and 18,600 tonnes in 2006. Market shares of
Thai exports to Japan, Australia, and Canada are around 8 per cent each or 26,300
tonnes, 29,700 tonnes and 32,600 tonnes.
Table IV shows the market shares of tuna exporters to Thailands main export
markets for 1996-2005. Thailand dominates tuna imports to the US, the Middle East,
Japan, Australia and Canada where average market shares are 43, 76, 50, 77, and 96 per
cent respectively. Ecuadors share of the US market is 19 per cent. Indonesias share of
the Japanese market is 24 per cent, and it also exports to the Middle East and the US
with shares of 10 and 8 per cent. The Philippines has shares of 10 and 13 per cent of the
US and Canadian markets, and small shares in the Middle East and Japan. Fiji has a
small market share of exports to Canada. The largest market share of exports to the EU
is internally from Spain with an average of 13 per cent; Cote dIvoire follows at 12 per
cent and Thailand at 8 per cent. The African, Caribbean and Pacific (ACP) Group of
countries, and in particular the Seychelles, Cote dIvoire, Mauritius and Senegal and to
a lesser extent Ghana, have developed successful canned tuna industries. They are
important competitors to Thailand in the EU market because, as ACP countries and
former EU colonies, they are favoured by zero-rated tariffs and have targeted this
rapidly expanding market (IDDRA, 2004). In addition, they benefit from rules of origin

Thailand
Spain
Ecuador
Seychelles
Indonesia
Philippines
Mauritius
Others

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Average

37
4
5
2
5
9
3
35

39
7
5
3
4
8
2
32

35
9
5
4
5
7
2
33

37
8
6
6
5
5
2
32

33
9
6
7
6
4
2
32

38
11
8
7
5
4
4
23

35
10
10
8
4
5
3
26

35
10
9
8
4
5
3
26

37
10
8
7
5
5
3
25

40
10
9
6
5
2
4
25

41
10
9
6
4
3
5
23

37
9
7
6
5
5
3
28

Source: FAO/GLOBEFISH (2008)

Seychelles
Mauritius
Ecuador
Thailand
Philippines
Indonesia
Spain

824.7
137.2
47.7
33.6
21.4
5.4
0.9

1996
1,560.7
150.7
46.2
35.1
16.5
4.1
1.2

1997
1,731.2
168.9
68.3
34.0
11.8
5.7
2.5

1998
2,168.6
75.9
75.3
34.5
7.0
5.4
1.6

1999

96.6
83.5
30.2
6.8
5.7
3.2

2000

140.8
103.1
35.1
7.4
5.2
3.2

2001

118.5
119.2
32.0
8.2
4.6
3.9

2002
2,209.4
119.7
108.6
32.1
9.6
5.1
4.3

2003
2,423.4
174.9
99.6
39.0
12.0
7.6
8.1

2004

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2,071.7
212.3
100.4
40.6
6.3
5.9
7.2

2005

Average
1,840.0
150.0
85.1
34.6
10.3
5.4
4.2

2006
1,730.3
254.7
83.8
34.9
6.6
4.5
9.5

The tuna
industry
in Thailand
333

Table II.
RCAij indices for main
exporters, 1996-2006

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334

Table III.
Market shares of
importers from Thailand,
1996-2005

regulations because they trade in tuna from own-flag vessels. Other exporters to the
EU are Ecuador and the Philippines.
Table V shows RCAimj indices using (2) for the main exporters in Thailands export
markets for 1996-2005. In the US market, RCAimj . 1 for all exporters and all have a
comparative advantage. Ecuador is a relatively recent exporter to the US with the
highest comparative advantage over the sample period, increasing from 83 in 1996
increased to 161 in 2002 before falling back to 59 in 2005. Nevertheless, its market
share is less than half that of Thailand which is ranked second with a stable index
trending slightly upwards from 36 to 44 over the sample period. The Philippines is
ranked third and its index increased substantially from 3 in 1999 to 29 in 2005; its
market share albeit small is generally increasing and it is becoming an important rival.
Thailand pays a 12.5 per cent import tariff in the US market but it could retain its
comparative advantage with the highest market share if restrictions are not imposed
on rules of origin in FTA agreements.
In the export markets of the Middle East, Japan, and Australia, Thailand has the
highest comparative advantage. In the Middle East and Japan, its index generally
increased until 2000/2001 but then fell back with averages over the sample period of 59
and 18. Thailands competitors in these markets are the Philippines and Indonesia but
both have much lower market shares and RCAimj indices. It may be possible for
Thailand to maintain its comparative advantage in the Middle East since it pays a low
tariff rate. However, in the Japanese market, Thailand faces rules of origin under the
Japan-Thailand Economic Partnership Agreement ( JTEPA) where Japan requires tuna
be caught using authorized fishing vessels on the Indian Ocean Tuna Commission
(IOTC) record[1]. Accordingly, Thailand has lost competitiveness to Indonesia and the
Philippines which have their own fishing vessels. Most raw fish imports into Thailand
ports come from foreign vessels from Vanuatu, Japan, South Korea, South Africa and
the Philippines which are on the IOTC record, and from foreign vessels, particularly
from Taiwan and the Maldives which are on other commission records such as the
Secretariat of the Pacific Community. Thailand lacks its own boats and is
over-dependent on foreign fishing vessels to supply its processing plants. If Thai
exporters need a preferential tariff rate from the JTEPA, they must avoid using tuna
fish sourced from Taiwan and Maldives boats ( Julintron and Chalatarawat, 2007).
Even though Thailand imported over 780,000 tonnes of tuna in 2006
(FAO/GLOBEFISH, 2008) and almost half of total tuna imports came from IOTC
members, rules of origin are biased against sourcing tuna from some countries,
particularly those from the Western Pacific Ocean which supplies over 50 per cent of

USA
Middle East
EU
Japan
Canada
Australia
Others

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Average

27
14
20
10
9
6
14

28
13
17
10
10
5
16

32
19
16
7
8
6
13

34
14
14
8
10
7
14

28
17
12
11
10
7
15

30
19
13
9
9
7
13

28
16
14
10
9
8
15

30
14
13
9
7
8
19

30
14
11
11
8
8
19

27
14
15
9
7
8
20

29
15
14
9
9
7
16

Source: FAO/GLOBEFISH (2008)

1996

1999

2000

2001

2002

2003

2004

2005

43
18
3
6

39
23
5
9

44
18
12
9

38
28
11
7

41
25
12
8

41
19
13
8

44
17
12
8

43
19
10
8

Shares of exporters to the Middle East

Thailand
72
74
78
75
Indonesia
7
8
8
9
Italy
3
3
2
3

75
13
4

75
11
4

76
13
4

78
12
4

78
13
4

82
9
4

76
10
3

Shares of exporters to
Spain
10
Cote dIvoire 22
Thailand
10
Seychelles
3
Ecuador
1
Mauritius
3
Senegal

Philippines
3
Spain
10

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Shares of exporters to
Thailand
44
Ecuador
19
Philippines
11
Indonesia
11

1997

1998

the US
48
48
14
12
11
8
5
7

the EU
12
16
9
5
3
3

4
12

Average

11
16
8
5
2
3

3
11

12
11
7
9
3
3

2
12

14
11
6
13
3
4
2
1
14

18
8
8

4
6
3
2
18

13
10
7

4
5

2
13

13
8
7
12
4
4
3
2
13

13
9
6
10
5
5
3

13

14
6
9
10
8
6
2
1
14

13
12
8
7
4
4
2
2
13

39
28
4

44
25
4

54
25
4

53
31
4

54
24
6

54
25
6

58
26
0

55
22
1

50
24
4

Shares of exporters to Canada

Thailand
67
78
65
Philippines
23
16
15
Fiji
8
1
2

75
16
2

80
10
1

87
10
1

77
16
3

78
14
3

76

85
7
3

77
13
3

Shares of exporters to Australia

Thailand
97
98
95
Vietnam

Italy
0.4
0.3
0.2

96

0.6

96

0.7

98
0.1
0.5

95
2
0.5

95
3
0.6

96
0.5
0.9

97

0.5

96
1
0.5

Shares of exporters to Japan

Thailand
47
45
Indonesia
16
20
Philippines
8
7

Source: ITC (2008)

total tuna imports to Thailand (Julintron and Chalatarawat, 2007). Consequently and
mainly as a result of the JTEPA, Thailands comparative advantage is likely to decline.
In the Canadian market, Thailand dominates imports with a market share of 77 per
cent; it has a relatively stable index which averaged 223; and it is ranked second behind
Fiji which has a high average index of almost 1,600 but a low market share of 3 per
cent. The Philippines also has a large index but it had lost some comparative
advantage by 2005 because the number of its canneries has fallen due to declining
catches, competition particularly with Thailand, and difficulty in accessing new
markets (Vera and Hipolito, 2006). Thailand is likely to maintain its comparative
advantage in the Canadian market if the tariff remains low at 5 per cent.

The tuna
industry
in Thailand
335

Table IV.
Market shares of
exporters in main import
markets (%), 1996-2005

Table V.
RCAimj indices of
exporters in import
markets, 1996-2005
17.4
5.4
5.8
1,011.6
239.3
136.0
63.2

0.1

17.3
4.4
7.7

Exporters to Japan
Thailand
Indonesia
Philippines

Exporters to Canada
Fiji
1,963.1
Thailand
191.4
Philippines
186.6

Exporters to Australia
Thailand
70.7
Vietnam

Italy
0.2

1342.2

60.0
59.6
145.5
19.8
17.4
3.2

1410.9

19.4
53.4
201.8
21.9
17.7
2.6

55.1
15.3
5.7
0.5

64.8
37.9
10.7
5.7

1997

Exporters to EU
Seychelles
Ghana
Senegal
Ecuador
Mauritius
Cote dIvoire
Thailand
Philippines
Spain

Exporters to the Middle East

Thailand
45.7
Philippines
7.8
Indonesia
5.8
Italy
0.4

83.1
36.1
12.4
12.9

1996

59.3

0.1

1,464.3
210.8
175.4

14.5
8.5
2.9

1130.8
192.6

58.8
48.4
146.1
16.2
10.1
2.8

62.7
18.9
6.5
0.3

68.8
37.6
7.4
9.8

1998

47.8

0.2

1,338.0
229.1
109.5

16.6
7.5
2.4

1414.9
249.6

89.4
59.7
117.8
15.9
5.3
3.2

50.9
25.9
6.5
0.4

110.8
36.0
3.4
8.5

1999

42.0

0.3

1,123.4
245.9
69.4

20.2
6.6
2.4

1885.4
315.5
115.1
122.7
76.5
146.2
11.7
2.9
3.8

48.7
12.4
8.6
0.5

156.7
33.0
5.1
12.7

2000

43.1
0.1
0.2

1,606.0
244.6
79.7

17.9
8.3
2.6

176.3
124.5
119.6
90.0
16.3
5.4
4.7

71.9
27.9
8.9
0.6

117.2
39.0
15.3
14.4

2001

38.5
1.0
0.2

1,407.4
213.0
96.8

17.4
6.7
4.0

111.1
96.5
96.9
15.5
6.3
3.4

63.3
12.5
10.9
0.7

160.6
33.7
15.1
10.4

2002

33.9
1.5
0.2

2,107.4
198.2
109.0

17.5
6.9
3.7

1581.2
267.0
225.4
96.6
97.5
73.3
15.7
7.1
3.1

67.4
33.4
13.2
0.7

134.5
38.8
20.7
13.4

2003

36.4
0.3
0.3

2,256.1
196.0

18.6
11.5

1718.2

219.6
161.0
119.5
108.2
14.2

3.4

61.0

15.4
0.8

88.2
40.6

14.3

2004

31.5
0.2
0.2

1,654.9
259.8
87.4

18.4
6.4
0.8

1693.2

230.4
219.4
153.0
80.6
22.6
6.2
3.8

61.9
21.7
9.9
0.8

58.8
44.4
28.6
13.3

2005

336

Exporters to USA
Ecuador
Thailand
Philippines
Indonesia

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46.6
0.3
0.2

1,593.2
222.8
116.7

17.6
7.2
3.6

1664.2
267.0
225.2
159.0
123.3
87.4
17.5
6.6
3.4

58.9
19.6
9.1
0.6

104.3
37.7
13.2
11.6

Average

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Thailand monopolizes the Australian market with a market share of 96 per cent but it
lost comparative advantage and its RCAimj index trended downwards from 71 in 1996
to 32 in 2005. Other exporters to Australia Vietnam and Italy have comparative
disadvantages. Thailand has a strategic benefit in the Thailand-Australia Free Trade
Agreement (TAFTA) which started in January 2005. Importantly, the TAFTA has
reduced the tariff rate to Thailand which was 5 per cent tariff in 2005, 2.5 per cent in
2006, and was eliminated in 2007 (Department of Trade Negotiations, n.d.). Thailands
dominance of the Australian market appears secure.
In the EU, market shares are more evenly distributed and no exporter exceeds 13
per cent on average over the sample period. RCAimj . 1 for all exporters and all have a
comparative advantage. The Seychelles has by far the largest comparative advantage;
its index never fell below 1,131 (in 1998) and it averaged over 1,600 throughout the
sample period. Ghana, Senegal, Ecuador and Mauritius have indices that generally
exceeded 50 and have increased comparative advantage substantially over the sample
period. Cote dIvoires index averaged 87 but trended steeply downwards. Thailands
comparative advantage in the EU market is ranked seventh; its index is 22 in 1996 but
this declined to 12 in 2000 due to a 24 per cent import tariff before increasing to 23 in
2005 as a result of an import quota. Since 2007, Thailand has been faced with a 24 per
cent tariff by the EU and its comparative advantage may have subsequently fallen.
Spain is an internal exporter to the rest of the EU and is not subject to import tariffs
or quotas; it has the largest market share but the lowest comparative advantage.
A summary of Thailands RCAimj indices in its export markets is shown in Figure 1.
A notable feature of these indices is that all are high and relatively stable although that
for Australia showed a marked and continuous decline. Comparative advantage is
highest in the Canadian market and is four times that in the Middle East which is the
second highest. The lowest index is for the EU market but this never fell below 10 per
cent. Thailands comparative advantage in all key export markets would have to fall
substantially before it became disadvantaged.

The tuna
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337

Figure 1.
Thailands
RCA(imj)-indices in import
markets, 1996-2005

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338

5. Discussion and policy recommendations

Thailand has the largest market share of world canned tuna exports. This paper
examines the competitiveness of this industry within a revealed comparative
advantage framework for 1996-2006. Results show that its international
competitiveness is substantial: it has the highest market share in all main import
markets with the exception of the EU, and it maintained a relatively stable comparative
advantage which ranged between 30 in 2000 and 41 in 2005. By contrast, Kijboonchoo
and Kalayanakupt (2003) find that Thailands market share, both by volume and value,
gradually declined from 50 to 30 per cent between 1987-1998 and measures of revealed
comparative advantage showed a decreasing trend from 60 to 25. Our results show that
since the Asian financial crisis of 1997, this declining trend appears to have been
arrested. Further, the continuing weakness of the Thai baht following its floatation in
1997 has increased the baht value of export earnings.
A second revealed comparative advantage index is calculated that measures a
countrys exports of a product relative to another countrys imports. We find that
Thailand maintained the level of its comparative advantage in all major markets
except Australia. In the North American markets of the US and Canada, we expect
Thailands comparative advantage to remain stable if low import tariffs remain. In the
Australian market, its comparative advantage may increase given zero tariffs under
the Thailand-Australia Free Trade Agreement (TAFTA). In the EU, Thailand
experiences difficulties because of high tariffs and it may lose competitiveness to ACP
exporters who enjoy tariff exemption. Thailands comparative advantage in the Middle
East was stable and this may be retained if low tariff rates persist. In the Japanese
market, Thailand will lose its comparative advantage because it is facing tight rules of
origin requirements.
Thailand draws much of its competitiveness from low real labour costs. Changes
occasioned externally by the current global financial crisis and internally by the
growing need to improve minimum wage rates to meet rising living costs present real
challenges for Thailands competitiveness. Moreover, the world tuna market is facing
limited stocks from overfishing. We now explore some policies that may help to
maintain competitiveness.
First, consider how supply can be increased to meet global demand. Both
international and domestic demands are important to the Thai tuna industry. Stronger
international demand helps Thai companies expand their leadership in the global
market and higher export demand provides a competitive advantage. However, tuna
demand might decrease in future because of declining population growth rates in the
main export markets, low income growth as a result of the current financial crisis, and
uncertain consumption trends due to environmental concerns. An optimistic case is
where there is sufficient tuna supply to meet increased international demand, and
processors extend tuna exports into countries that have higher income growth rates
such as the Middle East, Canada, and some African countries. Thai tuna producers
could also focus more on the domestic market by increasing local promotion such as
advertising, and developing a wider variety of products. By contrast, a pessimistic case
is where there is a lack of supply resulting from overfishing and conservation. Here,
processors require strategies to increase other supplies, such as tuna from aquaculture,
substitute seafood products, and new non-tuna products. With tuna supply being
globally unbalanced, it is difficult to increase tuna supply from the high seas, and tuna

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farming represents an opportunity to substitute for the worlds natural tuna supplies.
Currently, there are bluefin tuna farms in the Mediterranean Sea region in Turkey,
Italy and Croatia, and in Northern Mexico and Australia; yellowfin farming is carried
out in Mexico; and there are developments and trial operations of yellowfin and bigeye
tuna farming and fishing operations in South East Asia (Hidaka and Torii, 2005).
Thailand urgently needs to consider tuna farming.
Second, the merger of small firms to create more profitable companies is a strategy
for increasing the competitiveness from realizing scale economies, creating market
power, and taking advantage of opportunities for diversification by exploiting internal
capital markets. The Thai tuna industry has the potential for merger and larger
companies have already derived advantages from forward and backward vertical
integration. The largest processer, the Thai Union Group, has acquired US companies
and other subsidiaries; and Sea Value has acquired two unprofitable companies to
become the second largest processor. Thus to increase profit margins and market
share, smaller processing and fishing companies could amalgamate into larger
companies with lower costs, greater economies of scale and lower risks in fishing.
Third, Thailand should enter into further trade negotiations with impoerters. The
main importers of tuna from Thailand are the US, the EU, the Middle East, Japan,
Canada, and Australia. There are relatively low tariffs in the Middle East and Canada
and Thai tuna has a zero tariff with Australia under the TAFTA. However, Thailand
currently faces high tariffs in the EU (24 per cent) and the US (12.5 per cent), and in
Japan, it is restricted by rules of origin. Effective negotiation is required to improve
Thailands situation. For example, a Thailand-EU preferential trading arrangement
which decreases import tariffs and increases import quotas could improve revenues
and investment; and a successful trade relationship with FTA partners could amicably
resolve disputes in the Thailand-EU deal under the ASEAN-EU FTA, and
Thailand-US trade negotiations. Thailand could also co-operate with tuna
processing and fishing companies elsewhere to resolve rules of origin difficulties.
These include the Philippines, Japan, Indonesia, Vietnam, China, the Maldives, and
some ACP countries, particularly the Solomon Islands, Vanuatu, Papua New Guinea,
Cote dIvoire, Fiji, and Mauritius which have both tuna fishing fleets and expert
harvesters.
Finally, stock management and conservation are long-run factors which could be
used to support the industry. Declining tuna stocks make it more difficult for the
industry to maintain profit and competitiveness. Maintaining sustainable tuna
fisheries in the Indian and the West and Central Pacific Oceans are of immediate
concern for Thailand. Scientifically-informed fish conservation policies reinforced by
environmentally-aware, marketing campaigns will be necessary to allay the fears of
green consumers and convince them of the continuing health benefits of consuming
tuna. Overall, it is however most unlikely that Thailand will maintain its current
competitiveness and market share in world markets for tuna fish products.
Note
1. The IOTC is an intergovernmental organization mandated to manage and conserve tuna
stocks in the Indian Ocean and adjacent seas with the aim of preventing over-fishing and
maintaining sustainable fish stocks.

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Corresponding author
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