Can U.S. import regulations reduce IUU fishing and improve production practices in aquaculture?

Abstract

Illegal, Unreported, and Unregulated (IUU) fishing is a significant challenge to sustainable seafood production which is difficult to address in traditional governance systems. Recently, the U.S. has implemented a Seafood Import Monitoring Program (SIMP) to combat IUU fishing and seafood fraud by requiring chain-of-custody documentation of 13 species when imported to the U.S. This will exclude IUU seafood from the U.S. market. If the U.S. has market power due to large imports, it will also give exporters incentives to improve management to comply with the SIMP. However, if the U.S. has no market power, the effect of the SIMP will be a change in trade patterns and the costs associated with the SIMP will be carried by U.S. consumers in the form of higher prices and lower seafood consumption. In this paper, a residual supply approach is used to investigate whether the U.S. has buyer power for three species included in the SIMP: shrimp, crab, and tuna. The standard residual supply framework is augmented to account for exchange rates. The results indicate that the U.S. has buyer power for most products. Hence, the SIMP will give incentives to improve the management practices in the investigated supply chains.