INTEGRATION OF JAPANESE AND UNITED STATES SABLEFISH 



MARKETS 



Dale Squires,' Samuel F. Herrick, Jr.,' and 

 James Hastie^ 



ABSTRACT 



As United States sablefish production becomes more tightly interwoven with Japanese markets, the U.S. 

 sablefish fleet could become more vulnerable to changes in Japanese market conditions and government 

 policies, and U.S. policies would have to be formulated with an eye on Japanese conditions. If U.S. ex- 

 vessel and Japanese markets are integrated by prices, then price information transmitted from the 

 Japanese market affects the behavior of the U.S. markets, while in turn, if the markets are not price 

 integrated. U.S. market behavior is independent of price movements in Japan. To assess this likely market 

 integration, this paper examines the price integration of the Pacific coast and Alaska's fixed gear ex- 

 vessel markets and the Tokyo central wholesale market over 1981-1986. The Pacific coast market is 

 found to be segmented from the Tokyo market while a form of price integration exists between the Tokyo 

 and Alaska markets. The paper concludes with a number of implications for policies in both the United 

 States and Japan. 



Following the Manguson Fishery Conservation and 

 Management Act (MFCMA) of 1977, United States 

 fishermen have been given an opportunity to replace 

 foreign harvesters of several species as the first link 

 in a chain of supply for some foreign markets. In 

 few fisheries have the results of this industry domes- 

 tication been more strongly demonstrated than in 

 those for Pacific sablefish. As the Japanese witnessd 

 their harvest in U.S. territorial waters fall from 

 25,000 to 50,000 thousand metric ton (t) range in 

 the mid-70's to negligible amounts in recent years, 

 U.S. producers expanded their sablefish operations, 

 thereby facilitating greater U.S. exports. Through- 

 out much of the early 1980's, these increases in U.S. 

 exports were accompanied by continued reductions 

 in Japanese harvests. 



These factors have combined to increase the ex- 

 vessel sablefish revenue received by Pacific coast 

 and Alaska groundfish fishermen to a level second 

 only to that for Alaska pollock. In contrast to pol- 

 lock, which is currently harvested predominantly by 

 joint venture operations, sablefish is almost exclu- 

 sively domestically harvested and processed. The 

 dramatic increase in U.S. production and revenues 

 had coincided with an increase in U.S. sablefish ex- 



'Southwest Fisheries Center La Jolla Laboratory, National 

 Marine Fisheries Service, NOAA, P.O. Box 271, La Jolla. CA 

 92103. 



^Northwest Fisheries Center Seattle Laboratory, National 

 Marine Fisheries Service, NOAA, 7600 Sand Point Way NE, 

 Seattle, WA 98115. 



Manuscript accepted November 1988. 

 Fishery Bulletin, U.S. 87:341-351. 



ports to Japan from just 340 t in 1981 to roughly 

 12,000 t in 1986. 



The growing reliance of Japanese sablefish mar- 

 kets on U.S. exports concomitant with an expand- 

 ing U.S. sablefish fleet suggests the possibility of 

 a growing integration of the Japanese and U.S. ex- 

 vessel sablefish markets. To the extent that U.S. 

 production becomes more tightly interwoven with 

 Japanese markets, the U.S. sablefish fleet will be- 

 come more vulnerable to changes in Japanese mar- 

 ket conditions. Changes in Japanese prices or the 

 exchange rate have a much greater potential for im- 

 pacting U.S. fishermen today than even 5 or 10 

 years ago. This possibly increasing integration of 

 U.S. ex-vessel and Japanese sablefish markets by 

 both price and commodity flows and the increased 

 economic dependence on the U.S. export of sable- 

 fish for both societies underscores the need for a 

 better understanding of the manner in which these 

 markets are integrated. 



This paper empirically examines the integration 

 by prices of U.S. and Japanese sablefish markets 

 over the time period 1981-86. We consider the 

 Tokyo central wholesale (Tsukiji) market and the 

 U.S. ex-vessel markets in Alaska and along the 

 Pacific coast. Because quite a sizable amount of the 

 domestically caught sablefish is retained in the 

 United States, consideration of U.S. markets at 

 some level beyond the ex-vessel might seem desire- 

 able, but we restrict our attention to the ex-vessel 

 level because of data availability. We further restrict 



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