Newlyn Fish Market - boats due to land.

Sunday, 3 May 2020

Fisheries in the Brexit negotiations

The political declaration committed the UK and the EU to reach agreement on arrangements for future allocation of fishing rights by July.

What do British fishers want from the Brexit negotiations?

In short, more fish. British fishing organisations believe that the EU’s Common Fisheries Policy means that they have not received their fair share of quotas – that is, rights to catch a certain amount of fish – in UK waters. This has, they believe, contributed to the decline of the fishing industry and fishing communities over the last 40 years.

Where are UK fishers currently entitled to catch fish?

Historically, coastal states exercised control over their ‘territorial waters’. The definition of territorial waters varied across times and places: in the 18th century some countries argued that it should be the distance a cannonball could be fired from the coast, while in the second half of the 20th century a distance of 12 nautical miles (nm) from the coast became generally accepted. Within those limits, fish could only be caught by boats belonging to the coastal state or in accordance with a treaty between that state and the country the fishing boat came from. Outside those limits, on the high seas, anyone could catch fish.
This changed dramatically in 1982 with the conclusion of the UN Convention on the Law of the Sea (UNCLOS), which allowed coastal states to extend an ‘Exclusive Economic Zone’ (EEZ) 200nm from their coastline. Within its EEZ, a state could, subject to certain conditions in UNCLOS, exercise control over all fishing.
Under the EU’s Common Fisheries Policy, the EEZs of all member states are managed as a common resource, termed ‘EU waters’. All EU fishing vessels have the right to fish anywhere in these waters, provided they hold a quota allocation for the stock of fish concerned. British fishers want the UK’s EEZ – one of the largest in Europe – to be reserved principally for them, rather than available to fishing vessels from all EU member states.

Why are quotas imposed?

In the 20th century, global population growth increased demand for fish, while technological advances increased the number of fish that a single boat could catch. This led to substantial overfishing in many historic fishing grounds. In response to this, coastal states began to manage their fisheries more actively, allocating quotas to fishers to prevent them catching unsustainable quantities of fish. This tendency accelerated with the creation of 200nm Exclusive Economic Zones in 1982.

How are fishing quotas set by the EU?

In order to prevent overfishing, the EU annually determines a Total Allowable Catch (TAC) for each stock of fish. A stock of fish is a particular species of fish caught in a particular geographical area – for example, herring in area IVb (the central North Sea) or cod in area VIId (the eastern English Channel).
Each year, the International Council for the Exploration of the Sea (ICES), an international scientific body founded in 1902, and the EU’s Scientific, Technical and Economic Council for Fisheries make a recommendation as to an appropriate TAC for each stock. Based on this, the European Commission formulates a proposal. Then, in December, fisheries ministers from across Europe meet in the Council to agree what the TAC for the next year should be. While their decision is based on the scientific advice, the ministers can choose to deviate from it – and often do by simply increasing the size of the TAC.
The TAC is divided between individual member states and then to individuals and companies within each member state. While the EU’s total TAC figure changes from one year to the next, the share of the TAC each member state gets does not. This is due to the principle of ‘relative stability’, according to which each member state receives a fixed share based on how much of the stock concerned it was fishing during a reference period between 1973 and 1978. UK fishers argue that this period is actually unrepresentative, because at that time UK fishing vessels tended to fish not around the UK but in distant North Atlantic waters that were closed to them when UNCLOS was signed in 1982.

How are quotas allocated by member state governments?

Each member state has discretion as to how it allocates that share among fishers. While some member states allocate quota based on socioeconomic and regional development considerations, the UK has opted to treat quota allocations as quasi-property rights that can be bought, sold and leased out. This has led to a significant concentration of quota allocations: Greenpeace calculated in 2018 that over a quarter of UK quota rights were held by just five families.[1] 
UK quotas can also be sold to non-UK companies. The UK also allows fishers to sell their vessels and the attached quota on to others, including non-UK nationals – for example, over 90% of the UK’s quota for herring in certain parts of the North Sea is held by vessels owned by EU companies.[2] This practice, called ‘quota hopping’, is also one of the causes of UK fishers’ unhappiness with the EU system.   

How does the EU want fisheries quotas to work in the future relationship?

According to the EU’s mandate for Brexit trade talks, a fisheries deal between the UK and the EU should provide for the UK and EU to continue to have access to each other’s waters on a long-term basis. As at present, a TAC for shared stocks would be agreed annually between the UK and the EU, based on scientific input. If the two sides cannot agree a TAC before 24 December each year, they would be required to accept the TAC recommended by ICES earlier that year.
This TAC would be divided between the EU and the UK based on a fixed percentage split agreed in the trade deal. Unlike the TAC itself, these percentages would be set out in the EU-UK trade deal and would not change from year to year.  Ideally, from an EU point of view, this would be the same fixed percentage that applies at present under the relative stability principle: the negotiating directives approved by member states specify that the UK–EU fisheries agreement should “uphold existing… quota shares” indefinitely. It then goes on, however, to say that the agreement should “uphold stable quota shares, which can only be adjusted with the consent of both Parties”. This is distinctly more flexible: it suggests that the shares taken by the UK and EU need not be the same shares they receive under the ‘relative stability’ principle provided that, once decided, they remain constant from year to year.
The EU’s draft treaties showed similar ambiguity. The Commission’s leaked first draft featured a table setting out its proposed quota split for each stock – left entirely blank. After discussions with member states, this position hardened. In the published version, the table is still blank, but is headed with the words “It is planned to uphold here existing quota shares”.

How does the UK want fishing quotas to work in the future relationship?

Where the EU wants quota shares to be fixed permanently, the UK wants the agreement to provide for annual negotiations on access to UK and EU waters. Those negotiations would cover both the TAC and quota shares, and if agreement was not reached in any given year then EU vessels’ right to fish in UK waters (and vice versa) would automatically stop. This would, of course, not affect UK vessels that happened to be owned by EU companies.
The UK rejects the principle of relative stability and states that it wants each TAC to be allocated between the UK and the EU on the basis of zonal attachment. Under this principle, the EU and UK would attempt to work out what percentage of agreed shared stocks are attached to each of their EEZs. They would then be allocated quotas in line with that percentage. Given the size of the UK’s EEZ, it is thought that this would leave the UK with a much higher quota share than it receives based on the ‘relative stability’ principle.
This principle is applied in the annual EU fisheries negotiations with Norway.

What are the key issues for the negotiations on fisheries?

The key issues for the negotiations are
  1. The duration of the fisheries agreement and what is to happen if agreement on a TAC is not reached in any given year.
  2. What shares of the TAC for each stock should be allocated to UK and EU fishers.
The EU’s key priority for the negotiations seems to be a durable agreement that offers EU fishers stable fishing quotas over time. Ideally, these quotas would be the same as they enjoy now – although the changes between the first and final versions of the draft treaty suggest that the Commission, if not the member states, recognises that this may not be a tenable negotiating position. Conversely, the UK wants an agreement that has to be renewed annually, failing which EU fishers’ access to UK waters would cease. To the extent that the trade deal covers quotas at all, it should give UK fishers significantly larger shares than they currently have.
This is fundamentally a question of leverage. For the EU, a permanent fisheries agreement signed in parallel with wider trade negotiations offers the best prospect of securing the largest possible quota for its fishers. Conversely, an annually renewable agreement would allow the UK to threaten to cut EU fishers out of UK waters if the EU did not concede to UK quota demands in any given year. Given that an estimated 59% of total Dutch landings and 52% of German catches come from UK waters, this would be a strong position for the UK – at least as long as the EU was not able to retaliate with cuts to UK access to its markets (see below).[3]

Is there room for compromise?

Possibly. The UK and EU are agreed that they share a large number of fish stocks and that there will need to be a system for joint management of quotas to fish for them. They also agree that this will involve an annual calculation of a TAC for each stock, based on scientific advice from ICES. In addition, the UK has made it clear that it is not seeking to close UK waters to EU vessels entirely. Rather, the UK seeks to redefine the calculation of quota rights so as to secure a larger share of each TAC for UK vessels.
Both sides have left themselves some room for manoeuvre. On the UK side, the concept of zonal attachment is based on scientific data, which the Department for Environment, Food and Rural Affairs has begun to calculate for the UK.[4] But it rarely gives a precise answer to the question of what fish belong where – which is perhaps why the EU and Norway, which have claimed to apply the zonal attachment principle for four decades, have never disclosed the exact methodology behind their calculations.[5] Imagine a herring which is spawned in Norwegian waters, spends some time off the Dutch coast, and then is eventually caught in the UK’s EEZ. Which zone should it be counted under?
The answer – and thus the exact split of quotas between the UK, the EU, and Norway – could be amenable to political fudge. If the Commission can walk member states back from their extreme position that quotas should remain exactly the same as they are now, it is possible that the two sides will be able to find numbers that satisfy UK fishers’ desire for increased quotas without doing unacceptable harm to the fishing industries of neighbouring EU countries. Revising the quota split progressively over time, as the UK’s fisheries white paper suggests, rather than immediately following the end of the transition period could further smooth this path for EU fishers.
Even though a deal could potentially be done, though, the tense politics on both sides around fishing may make no deal a possibility. This could even collapse the entire trade negotiation.

How would it work if there is no deal at the end of the transition period?

Without an agreement between the UK and the EU, the UK would have full control over its EEZ (as the EU would over its). EU vessels would have no right to catch fish in UK waters and UK vessels would lose their right to fish in EU waters. In theory, this could be advantageous to UK fishers, since EU vessels catch substantially more fish in UK waters than the other way around.
In practice, this might turn out to be less useful for three reasons. Firstly, the UK would still be required under UNCLOS to allow other states access to that share of the TAC it established for its EEZ that its own fleet did not have capacity to harvest. Secondly, it would still have to co-operate with the EU, as well as Norway, to manage the very large number of fish stocks which would be shared between the two EEZs. Without that co-operation, there would be a risk that the individual (sustainable) TACs would be unsustainable when added together.[6]
Even if the UK could catch more fish, it might find itself unable to sell it. Without a deal, the EU would impose its most favoured nation tariffs on UK exports of fish and fisheries products. Fish tariffs vary from species to species: on some major UK catches such as herring and mackerel they are zero. On other species like salmon and certain shellfish, however, they exceed 10%. Given that around 70% of UK seafood exports go to the EU, this could have a serious adverse effect on fishers’ businesses. One study by Wageningen University suggests that while UK fishing would gain US$420 million (just under £ 400m at current exchange rates) from having exclusive access to UK waters, it would lose US$500 million from the imposition of tariffs and non-tariff barriers on its exports.[7]

What are the next steps?

The UK–EU political declaration specifies that the two sides should aim to reach an agreement on fisheries and ratify it before 1 July 2020. If that does not happen, it may be settled as part of a wider trade deal (including market access for UK fish and fish products) at the end of the year, assuming that the two sides do not agree any extension to the transition.