TED Case Studies

IRISH FISHING QUOTAS UNDER TAC

CASE NUMBER: 337

CASE MNEMONIC: Irish

CASE NAME: Irish Fishing Quotas and the TAC

I. Identification

1. The Issue

The European Union has a long history of working to reconcile trade interests with environmental and labor concerns. In recognition of declining fish stocks in its seas and in an effort to avoid catastrophic economic and environmental consequences resulting from the possible extinction of fish species, the European Union ("EU") implemented a Common Fisheries Policy ("CFP"), applicable to each of its Member States, in 1983. This policy is implemented primarily through the tabulation and enforcement of fish quotas in the form of Total Allowable Catches (TACs), and attempts to regulate the size of Member States' fishing fleets. Although the Member States realize that strict quotas are crucial in the long-term to the fishing industry, when confronted with angry, unemployed fishermen they have lacked the political will to accept fish quotas. Every year, when the TACs are reformulated, the representatives of individual Member States and officials of the European Commission invariably stay up all hours of the night haggling over them. In a small state like Ireland, completely surrounded by water, the issue of quotas is especially important.

2. Description

The Common Fisheries Policy originated in the 1970s, when the EU extended its exclusive economic zones (EEZs) from 12 to 200 miles offshore. This decision was in response to similar actions taken by other nations at the time, in an effort to protect its waters from possible encroachment by foreign fleets. The EU recognized that while protecting its fish stocks from foreign fleets by denying them access to its waters, it also needed to protect its fish stocks from potential overfishing by its own Member States in their new 200 mile zone. TACs were intended to achieve this end.

Another thrust of EU policy is to ensure that the fishing fleet is competitive and to improve the balance between fleet capacity and the fishing opportunities in European Union waters. The Commission realizes that one of the main problems facing the European Union fishing industry is overcapacity. Too many boats are chasing too few fish. Since 1991 Member Countries have been required to reduce the capacity of their fleets by 20 percent, but few countries have achieved anything like that reduction. This year, Brussels will propose a second program of capacity of cuts, which it threatens will go a lot further than the original one.(1) The Commission is also involved in a number of other fishing related decisions, for example, it decides permissible net sizes, and therefore the potential for undersize fish to escape and the horsepower of fishing boats and other "technical measures".

However, to date TACs have been the primary tool of conservation employed by the European Union. The calculation of the sustainable catch depends on the relationship between the current catch and future catch possibilities, which is very difficult to establish, partly due to the "intertemporal relationship involved and partly due to the multispecies character of most fisheries, which involves complicated interactions between different species."(2) Each of Europe's 49 fishing areas is assigned a "total allowable catch" or TAC which is then divided among the Member States according to formulae determined by a number of socio-economic factors. Member States are then allocated quotas for each commercial species. The area to be fished includes all waters within European Union Member States' 200-mile limits, except in certain specified inshore waters.(3) Each state is expected to police what were once its sovereign waters, to check catches in port, and periodically correlate them to the skipper's logbook of catch.(4)

Theoretically, quotas appear to be a practical way of conserving fish stocks. In practice, however, this is not necessarily true. This effort to preserve its fish stocks by controlling and incrementally decreasing the number of fish that can be caught appears at times to be in direct contradiction to the European Union's interest in sustaining its fishing industry.

The CFP is perceived as unresponsive and inconsistent in that it makes general rules that are applicable to all of its Member States. The implementation of the CFP has also led to a feeling of powerlessness and unfairness among some Member States. This has also lead to different levels of compliance within the community.

As a result of this frustration, some fishermen have sought to circumvent the TAC by trading "black" fish. These are fish that are caught in excess of the TAC, hidden from inspectors and sold on the "black market". These are often the best of the catch. "Black" fish push market prices down and make the science of stock assessment, which incorporates commercial landings, more difficult.(5)

Another method fishermen use to get around TACs is to throw fish they deem to be too small back into the sea, where they are left to die [this is known as "by-catch"]. In so doing, fishermen are further depleting future fish stocks because those young fish will not be able to reproduce. British and Dutch scientists have estimated that for every pound of sole dragged off the sea-bottom, some North Sea beam trawlers discard 10 pounds of by-catch.(6) Global by-catch is estimated at about a third of all fish caught. The gap between actual and recorded catches is widening, as fishermen complain that quotas are set too low, and as more cautious TACs lend to greater discarding and more "black" trading.(7)

In negotiations for lower TACs, its policing of its waters, proposals for CFP changes, and even in the European Court of Justice, Ireland has steadfastly sought to protect its fishing interests within the framework of the CFP.

In 1989, the Commission of the European Communities brought an action against Ireland under Article 169 of the European Community Treaty before the European Court of Justice alleging that, by requiring nationals of other Member States to set up an Irish company before obtaining a license to fish at sea, Ireland had failed to fulfill its obligations under Article 52 of the EEC Treaty.(8)

Article 52 states: "Free movement of persons -- Freedom of establishment -- Fisheries -- Grant by a Member State of fishing licenses for vessels entered on its register -- Grant of license subject, only for nationals of other Member States, to the requirement of incorporating a company under national law -- not permissible."(9)

Unlike Irish nationals, nationals of other Member States were required to set up an Irish company having its principal place of business in Ireland before they could obtain a license authorizing them to operate their fishing boats under the Irish flag. Therefore, even though the Irish legislation did not apply to boats registered in other Member States, it did apply to nationals of other Member States insofar as it prevented them from fishing in Irish waters under the same conditions as those applying to Irish nationals.

Ireland contended that this requirement was justified because its purpose was to protect the quotas allocated to Ireland from the abuse known as "quota hopping". It was eventually decided that Ireland had in fact failed to fulfill its obligations under Article 52 of the EEC Treaty.(10)

The dissatisfaction with the CFP is also due to job loss. Ireland, whose fishermen have lost jobs because of endangered species laws limiting their take, worries that Spanish "plundering" of their fishing grounds will further hurt local industry,(11) and have aggressively tried to protect its interests. When 93 Spanish fishing boats acquired licenses to fish in the Irish Box this year, British and Irish fisheries police noted that a third of the nominated Spanish captains already had convictions for illegal fishing.(12) In 1994, faced with the prospect of Spain and Portugal gaining access to its waters, Ireland demanded improved monitoring of its waters and also managed to restrict Spanish vessels' access to the Irish Sea fishery zone -- 40 Spanish boats at a time are allowed in the Irish Box as of January 1996.(13) Ireland has detained two Spanish trawlers for exceeding their quotas, and in one week alone Ireland seized seven vessels, six of them Spanish, for taking fish off its coast. It should also be noted that in the recent Canada-EU fishing dispute, while the Irish officially supported the EU position, many of its fishing boats flew the Canadian flag in a gesture of support to the Canadians.(14)

The Irish fishing industry would like to see a revamp of the criteria used in the allocation of fishery resources, so that its share of the available catch can be altered considerably in its favour. The current criteria used by the EC -- past fishing performance, the needs of regions particularly dependent on fishing and losses suffered as a result of the extension of fishing limits by third countries -- are not helpful to the Irish position.(15)

Two of Ireland's fishing organizations -- the Irish Fish Producers' Organisation and the Killybegs Fish Producers' Organisation -- proposed alternative criteria to consider: proximity to the resource, by which adjacent regions should benefit most from the fish stocks in their areas; addressing the peripheral disadvantage, where the allocation of fishing quotas should reflect the Community's commitment at a wider level to reducing disparities between central areas and island countries such as Ireland; and the impact of third country agreements where quotas in Community waters should reflect that some Member States also benefit exclusively from agreements with countries outside the Community on access rights to fish resources.(16)

Ireland exports roughly 200 million worth of fish annually, primarily to Spain, Germany, France, the United Kingdom, Japan, Nigeria, Egypt and the former states of the Soviet Union. Despite the fact that its catch has decreased due to the implementation of TACs, its trade revenues have not correspondingly declined, because as fish has become more scarce its price has increased.(17) Furthermore, despite the fact that Spain was recently permitted access to the Irish Box, it is not expected that either Ireland's fish catch or its exports to Spain will decrease because theoretically Spain cannot catch any more fish than it could before, and because the demand for fish in Spain is extraordinarily high.

3. Related Cases

UKCODcase

TURBOTcase

DRIFTECcase

CANCODcase

SALMONcase

DONUTcase

MAGNUSONcase

MEDITcase

Keyword Clusters:

(1) Trade Product = FISH

(2) Bio-geography = OCEAN

(3) Environmental Problem = Species Loss Sea [SPLS]

4. Draft Author:

Sharon McDermott (July, 1996)

II. Legal Clusters

5. Discourse and Status:

AGReement and INPROGress

The TACs are reformulated annually and after much haggling are agreed upon by the Member States. However, there is growing frustration with the Common Fisheries Policy and in 1996 a round of negotiations has been launched on its future. At the most recent meeting of the Fisheries Council, the Council agreed on the need for a Regulation managing fishing quotas which will introduce some flexibility into the system by allowing a limited transfers of quotas between years, as well as imposing penalties on Member States that exceed their quotas. In 2002, in principle access to almost all the Community's fishing areas will be open to any EU vessel.(18)

6. Forum and Scope:

EURCOM and MULTIlateral

At the most recent meeting of the Fisheries Council, the Council adopted 1996 tariff quotas for imports of certain fish products.(19) This could be interpreted as a protectionist measure by other countries, both within and without the Union.

7. Decision Breadth:

12 [EURCOM]

8. Legal Standing:

TREATY

The number of fish Member States are permitted to catch in European Union waters is determined by the European Commission using a complex formula to determine total allowable catches. These quotas are also intended to reflect the importance of fishing to each European Union nation. Ideally, those countries which depend on fishing more directly for their livelihood will be allowed a higher percent of the quotas.

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Atlantic

b. Geographic Site: Eastern Atlantic

c. Geographic Impact: Ireland

10. Sub-National Factors:

NO

11. Type of Habitat:

OCEAN

The habitat is the northeast Atlantic, including the waters surrounding Ireland stretching into the Azores, North Azores, East Greenland and Southeast Greenland.(20)

IV. Trade Clusters

12. Type of Measure:

Regulatory Standard [REGSTD]

13. Direct v. Indirect Impacts:

INDIRECT

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES, Fish

b. Indirectly Related to Product: NO

c. Not Related to Product: NO

d. Related to Process: YES, Species Loss Sea [SPLS]

15. Trade Product Identification:

FISH

Ireland has quotas for many species: Herring, Cod, Haddock, Saithe, Pollack, Whiting, Hake, Norway Lobster, Anglerfish, Megrim, Sole, Plaice, Mackerel.(21)

16. Economic Data

TACs have direct effects on many aspects of EC fishing industries. Fishermen are losing jobs because they cannot catch as many fish as in previous years and because boats are being decommissioned. Between 1989 and 1991, the number of fishermen in Ireland decreased from 7900 to 4949.(22) European Union deficiency payments are made from the European Social Fund to the fishermen in both cases in order to reimburse them for revenue lost through quotas. But thus far efforts to find alternative occupations for these fishermen are inadequate. In addition, fishing provides jobs and incomes directly, but also in back-up industries, like boat yards, processing, packaging and equipment suppliers. Every job at sea creates a further four to five onshore.(23)

17. Impact of Trade Restriction:

MEDIUM or HIGH

18. Industry Sector:

FOOD

19. Exporters and Importers:

IRELAND and MANY

V. Environment Clusters

20. Environmental Problem Type:

Species Loss Sea, SPLS

21. Name, Type, and Diversity of Species

Name: FISH

Type: Animal/Vertebrate/Fish/Bony

Diversity: MANY

22. Resource Impact and Effect:

MEDIUM and SCALE

23. Urgency of Problem:

MEDIUM and 10 years

24. Substitutes:

Conservation [CONSV] and AQUACulture

Aquaculture, or Irish fishing farming, has grown from almost nothing in 1979 to an industry which now earns IR30m pounds ($45m) in export revenue and has created 3,000 jobs. There are increasing numbers of people in local communities, particularly in the west of Ireland, who rely on fish farming for their livelihood. This could create sustainable long-term employment in rural coastal communities. However, aquaculture is not a solution for the difficulties of the EU's fishing industry. It too can create environmental problems and conflicts over water and land use.(25)

VI. Other Factors

25. Culture:

YES

The citizens of Ireland have fished for thousands of years, both for trade and to sustain themselves. The reductions in fishing quotas are wreaking havoc with the socio-economic and cultural framework of Ireland.

26. Trans-Boundary Issues:

YES

This has become a source of friction between the Members of the European Union who believe their fishing grounds are being unjustly ceded by the European Commission and invaded by other Member States, especially Spain. The Council also adopted 1996 tariff quotas for imports of certain fish products,(26) which could be a further source of friction between nations.

27. Rights:

NO

28. Relevant Literature

Benseler, James. UK-Spain Cod Fishing Dispute. Http://gurukul.ucc.american.edu/ted/UKCOD.htm.

European Commission Directorate-General for Fisheries. The New Common Fisheries Policy. Luxembourg: Office for Official Publications of the European Communities, 1994.

Gibbs, Geoffrey. "Fishermen Look to European Flags, Cornish Shippers on Offensive to Counter Spanish." The Guardian December 11, 1995: 8.

Hargreaves, Deborah and White, David. "EU Fisheries Ministers Try to Carve Up a Shrinking Catch: The Struggle to Balance Preservation of Stocks Against Fishermen's Livelihoods." Financial Times December 22, 1995: 3.

Knud Jorgen Munk et Malene Motzfeldt. Definition and Measurement of Trade Distortion for the Fishing Industry. Luxembourg: Office for Official Publications of the European Communities, 1993.

Seafood International, April, 1991.

Siggins, Lorna. "EU Talks Aim to Break Deadlock on Fisheries." Irish Times December 22, 1994: 2.

Smyth, Patrick. "All Night Trawl for Agreement Nets Success." Irish Times December 22, 1995: 7.

Wigan, Michael. "Fishermen Caught in the Political Net: Michael Wigan Explores the Reasons Behind the Rise in "Black Fish" Catches in British Harbours and How the Industry has Become a Political Embarrassment." Financial Times. March 23, 1996.

Summary of the Judgment, Commission of the European Communities v. Ireland, p. I-4570-4579.

ENDNOTES

1. M2 Presswire, "The European Commission -- 26 April 1996 - - the Week Ending 19 April 1996, M2 Communications, M2 Presswire, April 26, 1996.

2. Knud Jorgen Munk et Malene Motzfeldt, Definition and Measurement of Trade Distortion for the Fishing Industry (Luxembourg: Office for Official Publications of the European Communities, 1993) 17.

3. European Commission Directorate-General for Fisheries ("ECDGF"), The New Common Fisheries Policy (Luxembourg: Office for Official Publications of the European Communities, 1994) 21.

4. ECDGF 21.

5. Michael Wigan, "Fishermen Caught in the Political Net," The Financial Times 23 March 1996: 1.

6. Wigan 1.

7. Wigan 1.

8. Summary of the Judgment, Commission of the European Communities v. Ireland, p. I-4570.

9. Summary of the Judgment, Commission of the European Communities v. Ireland, p. I-4570.

10. Summary of the Judgment, Commission of the European Communities v. Ireland, p. I-4582.

11. Patrick Smyth, "All Night Trawl for Agreement Nets Success," The Irish Times 23 December 1995: 7.

12. Smyth 7.

13. Jim Fox, "Fish Dispute Deepening/Ireland, Britain, S. Africa Join Fray; Deal Possible Today," USA Today 12 April 1995: 4A.

14. Fox 4A.

15. Seafood International, August, 1991.

16. Seafood International, August, 1991.

17. Government of Ireland, Department of the Marine, Laura Jo O'Connor.

18. ECDGF 5.

19. M2 Presswire, "The European Commission -- 26 April 1996 - - the Week Ending 19 April 1996," M2 Communications Presswire, 26 April 1996.

20. European Commission Directorate for Fisheries. Fishing TACs and Quotas 1994 (Map)

21. European Commission Directorate for Fisheries. Fishing TACs and Quotas 1994 (Map)

22. ECDGF 5.

23. ECDGF 43.

24. European Commission Directorate for Fisheries. Fishing TACs and Quotas 1994 (Map)

25. ECDGF 27.

26. M2 Presswire, "The European Commission -- 26 April 1996 - - the Week Ending 19 April 1996, M2 Communications Presswire, 26 April 1996.


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