The decision by the United States last month to withdraw from the 30-year tuna treaty with Pacific Island countries will take effect in January next year.

The treaty is one of the most important aid and political arrangements the US has had with the South Pacific.

The 17 Pacific parties to the US tuna treaty are Australia, Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, United States and Vanuatu.

Washington had agreed last year to pay $128 million for its fishing days this year, but has now reneged on the deal, offering the reason that its fleet can’t afford to pay.

In a letter to the Pacific Islands Forum Fisheries Agency (FFA), the US State Department said that under current conditions the treaty wasn’t viable (PDF): ‘rather than serving as a means of facilitating opportunities for the US fleet to fish in the region, the treaty itself prevents the fleet from doing so’.

The ABC’s Pacific economic reporter observed that for some of the smaller Pacific states, such as Tokelau, the impact of the US reneging on payments for its 2016 fishing days is ‘frightening’; almost half of Tokelau’s budget is provided by fishing fees, with three quarters of its fishing days allocated to the US. Tuvalu derives around 50% of its budget from fisheries access revenue and for Kiribati  it’s about 60%.

The deputy director of the FFA, Wez Norris, has pointed out that the impact of the US withdrawal will be different among individual island states. Some have viable alternative markets that could absorb their fishing days with relatively little impact. But others are reliant on the treaty to sell their fishing days and would ‘struggle to achieve revenues similar to those currently enjoyed.’

Why has the US torn up the treaty? The reality is that tuna prices have dropped substantially and the US tuna industry won’t pay.

In hindsight, it’d appear that the US got their negotiating strategy wrong when they met in Brisbane in August last year.

The US got the deal they wanted last year, which was 155 days per boat in the waters of the Parties to the Nauru Agreement (PNA). The PNA controls the world’s largest tuna purse seine fishery. They include the Federated States of Micronesia, Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Solomon Islands and Tuvalu. (The PNA has successfully introduced a vessel-day scheme that creates a limited number of fishing days within the entire PNA region with a standardised minimum fee per day.)

The revised US proposal is about 100 days per boat. But the US, it would appear, made a mistake in requesting more fishing days. It’s now in an untidy situation: although the US government is the signatory, most of the financial liability rests with the US tuna industry association.

That hasn’t previously been a major problem. There’s always been a high degree of trust and an assumption that the US government, as a responsible fisheries partner, would guarantee the payment.

Even if island states can find a way to try and put a band-aid on what they perceive to be a breach of trust by the US, there’s little doubt it’ll impact the degree of confidence that the island countries will have in future fisheries diplomacy with the US.

Arguably there’s not a lot in it for the US government to subsidise the US fleet, including an aid component of $21 million: it’s really chump change in terms of economic assistance—the official US government designation of this money.

In the recent past, the FFA have decreased the proportion of money that contributes to access fees and forced industry to pay a greater proportion.

But the argument from the islands has always been that there’s a legitimate role for the US to pay a premium for vessels to get valuable multilateral, rather than bilateral, fisheries access, like all the other fleets.

The benefits that the US derives from the tuna treaty, and therefore the incentive to keep putting that money in, have been largely political influence, (although it’s also been driven by the strength of the US tuna fishing lobby).

The treaty has allowed US vessels (now numbering 37) to maintain the largest purse seine fleet in the region, even though it’s sometimes hard to tell how many are genuine US boats, as many new vessels have some Asian links.

The treaty arrangement has given the Western Central Pacific Fisheries Commission (WCPFC) quality fisheries data that they otherwise wouldn’t have, and the US a greater footprint in terms of their monitoring, control and surveillance engagement in the Pacific.

The US fleet has substantially increased its high seas effort. But it’s limited by the WCPFC and they reached that limit last year.

The US couldn’t afford to fish solely outside EEZs, and this year it can’t fish in the high seas: the main areas are included in the so-called tuna ‘treaty area’, and they can’t fish there without a ‘treaty license’.

In the end, it’s likely the US pulled out of the treaty because they felt they couldn’t afford the costs: they wish to be independent, and to enter the market and buy what they need—the same as everyone else—and not be burdened with a block of fishing days they don’t want.

Many of the US vessels based in Pago Pago, for example, are tied to processing and trading interests and may therefore be able to use that as leverage if they were allowed to negotiate directly.

Pacific islands states have been struggling to introduce the kind of flexibility into the tuna treaty that would allow direct negotiations to occur between parties, where the treaty would still be in place but wouldn’t rely on a single transaction (x days for y dollars).

In that scenario, the treaty would set the rules of the game, create a government-to-government relationship and perhaps include a small pool of multilateral access. It would empower vessel operators to engage in direct commercial relationships with the countries that they want to do business with.

According to FFA’s deputy director the regional fisheries body will focus on redesigning the treaty so that it can ‘still play its vital government to government roles, but can cater for more flexible commercial arrangements between individual vessel operators and countries that sell then fishing days’.

But the US notice of withdrawal will complicate future discussions and make it difficult to rebuild the treaty in anything like its current form. As the FFA’s Norris points out: ‘events like this (the notice of withdrawal) can damage relationships and erode trust that may take significant time to rebuild’.