Until yesterday, provision for the self-employed was the biggest gap in the UK…
A New Equilibrium
The tectonic plates of European and internal UK politics are shifting. One consequence of this is that fishing has been thrust into a political prominence not seen since the cod wars with Iceland in the 1970s. Fishing rights have become one of the most emblematic issues associated with the UK’s departure from the EU. The NFFO examines where this shift will take the UK fishing industry.
Back to Bite
Some clever manoeuvring in 1973 by the existing EC member states, on the entry terms for UK’s entry to the EEC, gave them a huge advantage over 40 years. This has come back to haunt the present in a powerful way.
The principle of equal access, insisted upon as a precondition for UK entry, denied the UK’s prospects for a future as an independent coastal state. This would have given the UK control over its fisheries out to 200 miles (or the median line) in line with the emerging international norm at the time. Instead, the UK has been tied into an asymmetric, essentially exploitative, relationship with the other EU fishing members of the EU for over forty years. That relationship was called the Common Fisheries Policy. The British Government of the time knew what it was doing but considered fishing expendable to achieve other national objectives.
The statistics arising from that decision are now familiar. The UK is allowed to catch about 40% of the fisheries resources within its own waters, whilst other countries catch 60%. The EU fleet fishes around six times as much in UK waters as the UK fishes in EU waters. Fishing by UK vessels within the 12-mile limits of the EU member states is negligible. Fishing by EU vessels within the UK 12-mile limit is extensive.
There has been nothing balanced, fair, or reciprocal about these arrangements, especially when compared to the arrangements in other coastal states outside the CFP.
When quotas were introduced in 1983, the UK’s quota shares reflected those distorted access arrangements. The most notorious of these are becoming well known:
- Channel cod: UK share 9%, France’s share 84%
- Celtic Sea haddock: UK share 10%, France’s share 66%
A good negotiated agreement is one in which both parties emerge more or less equally happy, or unhappy. Although in the intervening years British fishermen have made common cause with European fishermen to resist the more damaging aspects of the CFP’s over-centralised form of regulation, the underlying grievance arising from the UK’s entry terms never went away.
That grievance has now proved politically toxic, feeding powerfully into the respective narratives in the referendum in 2016. It will not now go away until the terms of the relationship on fisheries between the UK and the EU are reset.
That is why comparisons between respective contributions to the GDP made by financial services and the fishing industry are irrelevant to the political arguments – a comparison between apples and oranges.
The visibility of the fishing issue is key to understanding that the UK government cannot afford, politically, to emerge from the negotiations ahead with a deal on fishing rights that does not reflect the UK’s changed status as an independent coastal state. This was true of the previous government. It is even more true of this administration. The general election results are heavily freighted with expectations that left behind communities will be a central focus of government attention. Many coastal communities are significant amongst those left behind. A reset of fishing rights is one way in which their prospects can be improved.
This explains the huge groundswell of support for a new deal on fishing across the parliamentary spectrum, large parts of the media, and the country.
A sell-out on fishing would irreparably damage the Government’s credibility. Given this background, all the signals from the Prime Minister downward, are that the UK will stand its ground on fishing.
There is nothing uncertain or opaque about the UK’s destination as an independent coastal state. The EU’s current relationship with third countries like Norway provides the standard model of how independent coastal states relate to each other in the management of shared stocks . For more than 40 years annual bilateral fisheries negotiations have successfully delivered effective management of shares stocks through:
- Total allowable catches set on the basis of scientific advice
- Quota shares that reflect the resources located within the respective zones (zonal attachment). In practice these tend to be quite stable over time.
- Agreed access arrangements
- Exchanges of fishing opportunities, where these are of mutual benefit
This is a relationship that is reciprocal and balanced, with that balance carefully calibrated through cod-equivalents.
This is a very different relationship to that which pertains to the UK’s current fisheries relationship with the UK and which the EU wishes to retain.
The Commission’s assertion that there are too many stocks to be handled by bilateral negotiations suggests a degree of desperation. It is not as though the December Council of EU Fisheries Ministers, with its history of generating unintended consequences and perverse outcomes, such as large-scale discards, could be considered the epitome rational fisheries management.
On fisheries, the UK government could not be clearer about the future.
The Prime Minister, and senior ministers, have been explicit that:
- The UK will act as an independent coastal state, in line with rights and responsibilities defined in international law (UNCLOS)
- The UK will have regulatory autonomy within the UK’s EEZ
- There will be no automatic access rights for non-UK vessels: access will be subject to negotiation
- The UK is open to annual bilateral fisheries agreements with the EU and other countries
- Legislation passing through Parliament will provide UK ministers with the powers to manage UK fisheries outside the CFP
- Although in the immediate future EU retained law will apply, the Fisheries Bill contains provisions which will allow those CFP rules to be rapidly adapted to meet UK requirements
By contrast, the EU has indicated that any free trade deal between the UK and the EU will be contingent on free access to UK waters and maintenance of the current quota shares. Not unexpectedly, the EU member states which have benefited disproportionately from the CFP over 40 years, wish to retain the current arrangements.
The Commission, in its proposed mandate, has subsequently tried to open some negotiating space for itself by referring to reciprocal access and stable quotas. This careful use of words is a fig leaf for retreat and has brought a swift response from those member states who stand to lose under this formula. Reciprocity means mutual benefit and not disproportionate benefit for one party. And stable suggests a new equilibrium, not the status quo. This first wobble on the EU side suggests that the negotiating realities on fisheries are understood in Brussels, if not yet accepted in the capitals of some member states.
The logic of the UK’s status as an independent coastal state, is that if there is no agreement in July or December, there is no automatic access to each other’s waters – exactly the same outcome if the EU and Norway currently fail to agree in their annual fisheries negotiations.
Forcing the UK to trade on WTO terms, unless it again sacrifices its fishing sector, would hurt the UK, but it would also carry serious collateral damage for several EU member states, who might be expected to withhold their consent. This looks like an opening negotiating gesture rather than a realistic outcome.
What we have at this stage are the polarised positions that might be expected at the beginning of any tough negotiations. On fisheries, the differential dependence of UK and EU fleets on access gives the UK an unusually strong hand.
The UK government has been explicit that leaving the EU means leaving the single market and the customs union (leaving aside the complexity of the Northern Ireland backstop.) Trading with the EU will therefore change. Frictionless trade will end. That is a political choice made by the UK by a government endorsed by the outcome of a general election.
The precise shape of the UK’s future trading relationship with the EU will be the subject of parallel negotiations, which will take place over the rest of this year, unless they are truncated mid-year.
The new Government is explicit that the new trading and customs terms will require businesses to adjust, including those trading in fish and shellfish across the UK/EU border. There will be significant challenges.
There will be more bureaucracy at borders to adapt to. Live shellfish and fresh fish are especially vulnerable to any form of delay. What is clear amidst the uncertainty is that fish and shellfish will continue to be caught, landed, sold, transported, processed and consumed. There are businesses in the supply chain on both sides of the Channel which need this trade to work smoothly.
No one knows what the future will bring. It is possible to speculate, however, on the general outline of a future fisheries landscape.
First and foremost, the Government’s positioning and the political dynamics within the UK, suggest that the UK will not back down on fishing in the forthcoming negotiations with the EU.
The big change, however, requires no negotiation and happens by default. There will be a new legal architecture. When the UK leaves the EU and after the transition arrangements expire, the UK will be an independent coastal state under international law. The Withdrawal Agreement recognises as much and accepts that access to fish in each other’s waters will no longer be automatic – but will be a matter of annual negotiation. The UK will negotiate fisheries agreements as an independent party and as a coastal state independent of the EU.
Within this context, the Government has signalled that it is open to a fisheries agreement in which access to UK waters by EU vessels can be presumed, subject to agreement on:
- Total allowable catch
- Rebalancing of fishing opportunities
There will be a new equilibrium. This is the shape of a future deal on fisheries.
In international fisheries negotiations, without the UK the EU will be a much-diminished force. In the North Sea, for example, it will control only around 20% of the sea area, with the balance held by the UK and Norway. In Western Waters, the UK and EU will be roughly equal partners in any future fisheries agreement. That is very different from the CFP when the UK was a single voice amongst 15 or 28.
Many fishing communities in the UK have something to look forward to. Significantly increased fishing opportunities will be available, although the changes will vary by fleet and area.
Coastal States Fisheries Agreements
The UK will emerge as a significant independent player in coastal state negotiations. Norway, Faroes, Iceland and Greenland are all closely watching political developments between the EU and the UK. All have important commercial interests at stake in the new emerging relationships in which the UK is a major independent fishing country – but also major market for fisheries products.
The number of coastal states operating in the North Atlantic will increase from six to seven. It can be expected that the UK will not behave in any way different from the existing coastal states. It will prioritise, equally:
- Sustainable fisheries management
- Its own interests
Domestic Fisheries Policy
The content of the Fisheries Bill currently passing through Parliament provides, in outline, the future shape of domestic fisheries policy.
- Initially, EU retained law, adjusted where necessary to make it operable, will be the basis for fisheries management. There will be no dramatic overnight change
- Responsibility for managing fisheries will continue to be be devolved, with international negotiations retained as a reserved power and coordination maintained through a memorandum of understanding and Joint Fisheries Statements agreed between the Secretary of State and the devolved administrations
- Management plans will provide the vehicle for sustainable fisheries management, and achieving the different objectives laid down in the primary legislation; these will be applied at the level and scale of the fishery to be managed. This structure provides significant scope for co-management, building on the forms of collaboration between fishers, fisheries managers and fisheries science already in operation
- All the signs are that the shortcomings of the CFP have been well understood and the Fisheries Bill framed to avoid the pitfalls. In particular, the CFP’s rigidity and cumbersome decision-making will be avoided. UK fisheries policy can be expected to be much more agile and adaptive. For this to be tractable, significant powers are delegated to avoid being hamstrung by over-centralisation. Over time, these powers will be used to replace EU retained law
In 1995 Tony Blair and the then President of the European Commission, Jacques Delors, exchanged letters on measures that a member state might lawfully take to ensure that national quotas bring proportionate economic benefits to the country that they are allocated to, irrespective of who holds those quotas or where the fish is landed. The resultant economic link licensing conditions have been in place ever since.
Leaving the EU means that the EU Treaty provisions on freedom of movement of labour and capital and right of establishment, and oversight by the European Court of Justice, no longer apply. There is an opportunity to do things differently. Some have called for all landings of fish caught by British vessels to be made in the UK. Some would go further and reallocate all quota held by non-UK interests.
A number of factors are salient:
- What will be the UK government’s general policy be towards inward investment? Is Britain “open for business”? Or will a more restrictive approach based on narrower national priorities prevail?
- Would fishing be treated differently because fish is regarded as a national resource?
- What would the practical effect of a requirement to land all UK caught fish into the UK be, if the end user is abroad?
- What is the government’s general position on concentration of ownership of fishing rights?
- What is the legal position on the reallocation of quota? Would compensation have to be paid where the quota holders have a legitimate expectation upheld by the courts?
- Where would quota be reallocated to and on what criteria and what would the consequences be?
These are big and complicated questions that deserve proper attention. All the signs are that they will not be addressed in the first phase of adjustment to the new post-CFP equilibrium. What is more likely is a review and strengthening of the economic link licensing conditions, to ensure the UK benefits properly from its resources. Currently, UK registered fishing vessels may meet their economic link requirements in a number of ways:
- landing over 50% by weight of their catch (which are subject to EU quotas) into UK, Channel Islands and Isle of Man ports.
- demonstrating that at least 50% of the total crew man days at sea were accounted for by crew normally resident in UK coastal areas.
- providing proof that routine expenditure in the UK on goods and services for the vessel was equal to either: i) 50% of the value of quota stocks landed net of crew wages, or ii) 50% of the vessel’s total operating expenditure for the year, net of crew wages.
- donating quota to the English under-10m fleet equivalent to a value representing 10% of the value of catch landed overseas.
- any combination of the above methods agreed by the MMO.
One loophole which will require addressing relates to valuable fisheries that are not currently under quota. Bringing all catches by UK vessels under the economic links requirement would be a relatively straightforward way to deal with this gap.
The UK’s altered legal status as an independent coastal state, along with the UK Government’s publicly stated political priorities, suggests that although the forthcoming negotiations with the EU will be tough, change will follow.
As a coastal state, working within the framework of the UN Law of the Sea, the UK can be expected to behave like a responsible independent coastal state, which will, nevertheless press for its own interests in fisheries negotiations.
After a period of transition, things will settle down into a new equilibrium.