Foreign Investment in U.S. Seafood Processing Industry Difficult To Assess

Recent increases in foreign investment in the U.S. seafood processing industry have caused concern among industry and public officials that U.S. owners and managers are losing control of the industry. They fear that foreign investors may unduly influence U.S. production, marketing, pricing, and fisheries development. GAO studied the extent and nature of foreign investment and its impact on the seafood processing industry.

GAO identified 61 U.S. seafood processing firms with foreign ownership, and 27 seafood processing firms which had loans from foreign sources. Federal and State Government information on the extent of foreign investment in seafood processors is incomplete. Data classification procedures, consolidated reporting practices, and filing exemptions prevent a complete and accurate disclosure of foreign ownership in a specific industry such as seafood processing. The Commerce Department office with primary responsibility for analyzing the effects of foreign investment has not studied the seafood processing industry because it considers it to be a minor industry. Most of the states covered by the review did not require firms doing business in their states to disclose foreign investment. GAO found no consensus on the effects of foreign investment on seafood processors. Many respondents to a GAO questionnaire were reluctant to answer certain questions or said they had no basis to judge the impact of foreign investment. GAO noted that: (1) a high percentage of foreign investment originates from relatively few companies within one country, Japan; (2) foreign investors may use a variety of indirect investment methods to gain control of seafood processors; (3) the percentage of the industry's total output by processors with foreign investment is unknown; (4) foreign representatives are sometimes on the boards of directors of U.S. seafood processors; and (5) foreign investors may specify certain provisions in loan agreements with U.S. processors.