The Tuna War

Following the recent Cottage Cheese War, tuna is now the cause for battle, and the gov't is in the vanguard.

By
January 28, 2012 22:31
3 minute read.
can of tuna

can of tuna 390 . (photo credit: Thinkstock/Imagebank)

Having only recently waged the Cottage Cheese War (where, despite the hype, our victory remains doubtful), few of us realize that we’re now in the throes of the Tuna War.

This time, the government is in the vanguard. In keeping with its Trajtenberg undertakings, it aims to reduce import levies to lower the cost of canned tuna, a common Israeli dietary staple – just like cottage cheese. The plan has raised an outcry from local canners, who threaten to fire employees if forced to face foreign competitors.

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Anxious employees, fearing for their livelihood, were sent to demonstrate in Tel Aviv last Thursday.

Their angst isn’t unfounded. In our globalized economic reality, there’s cogent justification for claims that local industries are put at a disadvantage vis-à-vis low-cost foreign imports. The competition with overseas manufacturers, who pay meager wages, is regarded by beleaguered entrepreneurs as intrinsically unfair. In their view – which shouldn’t be dismissed out of hand – there’s nothing as indispensable as tariffs designed to even the scales between imports and goods produced domestically.

This is important to keep in mind as Israeli consumers decry the high cost of living and the fact that they’re forced to pay excessively for what are basic items. These are conspicuously inexpensive abroad, yet pricey here.

Part of the problem is that we’re told we must shell out more of our hard-earned income to make it possible for more of our compatriots to keep their jobs.

Our social solidarity is pitted against our household budget. But is this dilemma unavoidable, or are we being cynically manipulated? The Tuna War offers an instructive case in point.

There are five tuna canning operations in Israel, among them ostensibly foreign brands like Starkist, which produces half of all the canned tuna marketed here. These canneries are all in the periphery – Beersheba, Kiryat Malachi, Hatzor, Tirat Hacarmel and Tira – employing nearly 1,300 workers. Their raison d’etre is predicated on the fact that already processed tuna imported frozen in bulk is untaxed. All that’s left to do is defrost and pack it. However, imported already-canned tuna is taxed between 30% and 40%, a fact that shields domestic canneries from competition.

IT WOULD be a shame to undermine growing Israeli concerns. The question, however, is whether these are truly viable concerns or are merely enterprises propped up artificially, via protectionism – underpinned by the unofficial tax that high prices constitute. Put simply, ordinary Israelis are required to carry these plants on their backs.

This accentuates the predicament of whether charitable considerations should override economic sense and, if so, whether in the long run benevolent intentions justify themselves.

We’ve seen it all before in the shape of textile and plastics factories that were set up in development towns but couldn’t, over the decades, survive in a competitive setting.

They only managed to exist in what became a subsidized environment, and even then found it harder and harder to make a go of it.

Before us is seemingly a cruel choice between rendering more of the least upwardly mobile Israelis redundant or paying fractionally more for given products. The additional cost for each such product wouldn’t break the bank, but when all such inordinate extra expenditures are combined, the standard of living of too many Israelis is compromised, including Israelis who do not necessarily earn more than cannery employees.

BUT THERE’S another factor in the equation besides overpaying and job-protection. The industrialists aren’t altruists. While fighting hard against lower customs duties, as is only to be expected, they are also about to raise prices heftily. They had already put the authorities on notice that each tuna can would soon cost us more by between 10% and 15%, depending on the specific tuna type.

It’s in their obvious interest to avoid a more competitive marketplace. But to justify that, the least they can do is not charge us more, as this will surely increase popular pressure facilitate imports.

Their excuse is hiked commodity prices, but an industry that claims to be viable must absorb higher overheads or face competition. It cannot have it both ways.


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