In order to answer the question at hand, it is imperative to first understand what brexit is and how the UK got into this situation in the first place. Brexit is a term created by Sir James Goldsmith from the UKIP party. It is a word that is used as a shorthand way of saying the UK leaving the EU – merging the words Britain and exit to get Brexit, in the same way as a possible Greek exit from the euro was dubbed Grexit in the past. The European Economic Community was created on the Fifteenth of March 1957 with the intent of achieving economic integration between neighbouring countries, it was only in 1969 when negotiations begun about British membership of the EU. The terms of this agreement therefore meant that British fisherman went from being able to fish two hundred nautical miles from the seashore to only twelve, causing there to be a hatred of being apart of the EU from the very beginning. Fast forward to 2016 and the brexit vote was well underway. British commercial fishermen were promised that they would regain its territorial waters and that the UK government could allow other countries to fish in UK waters on Britain’s own terms.
My keen interest in economics combined with my love of fishing has allowed me to indulge myself into the research of the pros and cons of brexit. In this essay I am going to set out to explain the current regulations and restrictions that fisheries are having to follow, the forecasted fishing rights for the UK after the brexit vote and how reliant the UK is on the EU in the fishing industry. I will then go on to discuss the effect of each different scenario brexit will have on the UK’s fishing industry. I shall then discuss the negative and positive impact the free movement of goods, capital, services, and people will have on the UK fishing sector. This will then be followed by the exploration of sustainability before and after Brexit and how it will affect the UK’s commercial fishing. I will then go on to discuss the access of the UK waters. This should give a sufficient enough insight into what sort of position the UK is in and shall move on to discuss my personal opinion of what sort of situation the UK’s seafood industry is in. In the conclusion I shall discuss how the UK’s fishing industry is going to be affected by leaving the European Union in both a hard and soft brexit.
Hard Brexit & Soft Brexit
The term hard brexit means that the deal that will be taking place when the UK does not just leave the EU but it leaves the single market and the customs union as well.
The term Soft brexit means that the UK will be able to keep a relationship similar to what it was before brexit. However this would still mean that the UK would have to continue to make the same budgetary contributions to the EU and would also have to allow the free movement of people.
The Common Fisheries Policy
The Common Fisheries Policy (CFP) is a set of laws that regulate the fish stocks and also the European fishing fleet. It gives all EU fishermen access to all waters within the EU. This aims to give fisherman equal competition within all countries in the EU. The Fish stocks are finite however they are also renewable which is why they need careful monetisation. Since their creation in 1983 the Common Fisheries policy had the objective of preserving the finite stock of fish which is currently available to the EU. This is an issue because some fish stocks have been overfished and so the EU have made it their mission to ensure that there fishing industry is a highly productive and sustainable one. The CFP was created in the 1970s and since then has gone through some successive updates such as the creation of the european maritime fisheries fund. The common fisheries policy is deeply unpopular among the fishering community of the EU, which to this date has failed to preserve the stock of fish available.
Goods
The free movement of goods into the EU from the UK is essential for the survival of the seafood industry. The UK currently is importing approximately 75% of the fish caught into the EU with little/no tariffs. The table below shows the tariffs in specific fresh seafood products that take place between EU countries.
Figure 1
Figure 2
As we can see in figure 1 the tariffs that EU countries abide by are very low for example fresh cod and mackerel, both do not have tariffs on them.
Sardines have a 6.9% tariff and squid only have a 6% tariff for the EEA which European Economic Area. This means that the UK is able to export on a large scale without having to worry about tariffs. Figure 2 shows us the tariffs on countries that are not apart of the EU importing to the EU. It is clear that there is a dramatic increase in almost all of fresh, frozen imports into the Eu . For example as the UK is still apart of the EU it does not get taxed when it comes to fresh cod. However if there is a hard brexit it will mean that we will have to pay a 12% tax on fresh cod into the UK because we would be governed by the world trade organization (WTO). This would mean that UK exporters would have to compete with larger countries that can catch and produce fish at lower costs. Britain will also have to pay extra tariffs on sardines, alaska pollock, pangasius and squid. This would have a dramatic effect on British fishermen, it would mean that there would be an increase in price followed by a decrease in output because of the cost of the new tariffs. The quantity of frozen, fresh fish will be impacted greatly if there is a no-deal brexit because there would be a decrease in amount of fish being exported due to a raise in price of the goods. This will be disastrous for fisherman however it would be be good for the British public because it will mean that they will no longer be able to export as much and so they would have to sell more to the British public lowering the price. This was found by a new analysis that was conducted by researchers at wageningen university & research (WUR) in the netherlands, the new study found that there would be a decrease in price of fish within the short run because the surge in supply that has not been bought by the EU because of the new expense would drive the prices down and therefore would leave the British public better off in the short run. However it would cause some difficulty for the fisherman because their sales would decrease as their main importer the EU will have put tariffs on fresh/frozen fish. Their sales will not decrease as much as we would think because the British public will have a higher demand at a lower price of seafood. This could lead to more fishermen changing career.
In the event of a bilateral trade agreement (a soft brexit) the EU have said that “It would only allow British seafood exporters tariff- and quota-free access to EU markets in exchange for a reciprocal agreement that EU fishing fleets can continue to operate in British waters.” This would mean that the UK’s trade agreements with EU markets would be reduced between the EU. A good amount of the UK’s seafood good’s would be tariff free. Which would be good for the UK fishermen this is because it allows them to continue to sell their fish to the EU at the same price without having to worry about extra tariffs. For this to work there would be have to be a good number of restrictions that apply to the UK; free trade would depend on the EU because they would make sure that a sufficient amount of the products value went to them. The EU would also require a few other things in exchange for free trade i.e EU product regulation meaning that the product would have to abide by EU legislations, non tariff barriers and access to the UK’s waters. This would be negative because it would mean that the UK will not be ‘regaining their waters’ but instead would have to allow non tariff barriers and the same obdurate access to their waters. It would also mean that the UK would not be able to negotiate another trade agreement with the EU. However a positive to this would be that it would allow us to make trade deals with counties outside of the UK-EU trade agreement for example the new trade deal between the UK, Norway and iceland this is ‘vital, as 70% of the fish consumed in the UK is imported, most of that supply coming from Iceland and Norway.’ this will means that in the event of a no deal the trade between these countries will be not affected. There are 8 other current trade deals with other countries which will mean that in the event of a hard brexit the UK’s fishing industry will not be as badly affected.
Capital
Funding from the EU has been beneficial to Britain’s seafood industry. One example of this is that the European maritime fisheries fund (EMFF) has given the UK fishing industry €243 million to help support the growth and development of Britain’s seafood sector this will be split up into four: England, Scotland, Northern Ireland and Wales. The shares will look roughly like as shown in the table below.
PLACE :
AMOUNT IN € MILLIONS
ENGLAND
92..1
SCOTLAND
107.7
NORTHERN IRELAND
23.5
WALES
19.7
Figure 3
Figure 3 shows us that the EU’s funding is allowing the UK to adapt and improve the their seafood industry. A small scale example of the benefits european funding has on the UK is the £1 million invested to “achieve an industry production target of 21,000 tonnes of farmed mussel by 2030.” this funding should increase the amount of mussels produced in shetland waters from 8000 to 21000 tonnes. The impact on Shetland should be great as Fergus Ewing said: “EMFF grants will provide a vital financial ‘leg-up’ to projects from the Shetland Islands to Dumfries and Galloway – with the nearly £5 million being invested helping to support the whole fisheries supply chain to reach into new markets, and improving the overall quality of Scottish produce.” There are obvious benefits to being within the EU when it comes to capital/Investment. Due to brexit the UK is no longer entitled to claim the EMFF. This could have a dramatic negative effect on the UK because it would mean there will not be anymore essential investment into the UK giving it “vital funding” which acts as a “leg up” for its fishing industry. However the UK does infact pay around £19 billion a year and so it would mean that once these payments stop flowing into the EU the UK could possible direct some of these payments into the seafood industry allowing the industry to not rely on the EU but on the UK instead. This would be beneficial however it would take time for the payments to stop and so the UK would be worse of in the short run but may be better of in the long run.
People
The fundamental idea there is a free movement of people between Member States of the European Union was a key principle. However it has changed and developed into becoming a belief that there can be such thing as an ‘EU citizenship’. The original thought that you could go to a neighbouring EU country and work there has subsequently changed into now being allowed to bring your family across and live there as an EU citizen. This has been good for the UK seafood industry because it has meant that people have come to england in the hope that they can get a job, in most cases these people are low skilled and so choose a job in which has a relatively low pay, and live in prosperity. The EU also benefits the UK because it protects 335,000 jobs in the UK fishing sector. This is good for the UK because it means that fishermen could have cheapish labour and be able to have a higher output of fish because it is making them more efficient. However if there is a no-deal brexit it will now mean that the UK will not allow people from the EU to come over with their families and find work because there will be a hard border. This will have negative effect on the seafood industry because there will be less people looking for work on top of the fact that a lot of people will be ‘kicked out’ of the country because their visa will have expired. The knock on effect of this is that UK fishermen will become less efficient due to the lack of labour meaning they will no longer be able to fulfill some of their fish quotas. It could then lead to fishermen either having to work extra hours to fill their quota or it they could not manage to full the quotas at all which then would make them get fired from their job. The outcome of this would be that fishermen would either not be able to cope with the extra hours and change profession to one that does not require so much time or there would be a considerable amount of people being fired, causing a dramatic impact on the UK seafood industry. In the event of a bilateral trade arrangement (A bilateral trade is the exchange of goods between two nations promoting trade and investment. The two countries will reduce or eliminate tariffs, import quotas, export restraints, and other trade barriers to encourage trade and investment.) it would be very likely that people would still be allowed to keep their residence and the movement between EU neighbouring countries with the UK would be the same
Another negative is caused by the CFP. This is because it is currently employing around 65,000 people this is because of the funding given to the UK by the CFP. This funding goes towards the support of the UK fishing sectors in areas such as the improvement in breeding rearing and harvesting all areas of seafood. When the UK does officially leave the EU it is going to miss out on all the CFP investment and help into the UK fishing industry. This is going to have a negative impact because the investment that has been put into the industry by the CFP has created around 65,000 jobs and so when we do leave it is going to put 65,000 people out on the streets without a job. This will impact the industry because it will mean that there will be no more investment into the breeding and rearing of seafood.
Services
The CFP have helped the UK a lot with “approximately 20% of funding from the European Maritime and Fisheries Fund is planned to be invested in the aquaculture sector.” this is extremely helpful for the UK fishing sector because it means that services such as breeding farmed fish to release into the wild will become more efficient due to the investment from the EU. This will mean that the amount caught by the UK can be more because it will not have as bad an effect on the environment as if we caught the same amount of non farmed fish. Brexit will mean that the UK will no longer receive any investment from the CFP meaning there will no longer be improvement in quality of services such as fish farms. This will cause a negative effect on the UK commercial fishing industry because it will mean that there will not be as many fish being farmed because there is a lack of investment into the industry. This will lead to a surplus in demand because the industry cannot keep up with the UK’s demand.
Sustainability before and after Brexit
Before the UK joined the CFP on the 22nd January 1972 the amount of fish caught can be seen on the graph below on the blue star.
Figure 4
This graph shows us the amount of fish caught in tonnes each year by the UK fishing industry it also shows us that the amount of fish caught from 1972 to 2007 is the lowest it has been, apart from when the UK was apart of the two world wars, since before 1987. This is a good thing for commercial fishing in the UK because it has allowed the fish stocks to be replenished. Brexit could allow a whole new problem to arise. The Problem being the UK is currently still apart of the EU and it still has to abide by the CFP. however when the UK does officially leave the EU and no longer has to follow the CFP laws it will be free to do what it wants in its own waters. This means that the UK will be able to increase its quotas and lift restrictions on the minimum size fish that are allowed to be kept. This would not impact the UK very much in the short run because there is a sufficient amount of fish to be able to increase the quotas. However there would be a problem in the long run for the UK’s fishing industry. This is because fish is a scarce resource (a resource that is limited) and so without preservation and limitation on how many is a sustainable amount to be caught each year there would be a point of no return meaning the fish stock would never recover because they are being harvested quicker than they can reproduce leading to a permanent impact on the fish levels and so the UK’s seafood industry would then struggle to supply such a high demand of fish. This would make the price in fish increase dramatically. The demand would then lessen for fish because it is a luxury instead of a necessity. This would then mean that some of the UK’s fishermen would be forced out of their job because there is not enough profit incentive to do such a straining job. Overall it would lead to a very negatively impacted seafood industry. However the UK will most likely come up with a new plan to replace the CFP. The system has not yet been chosen however the UK government has stated that it aims to ‘continue to work towards ending the wasteful practice of fish discards, including through the development of new initiatives with industry and other interests.’ This could solve the problem at hand however there has not yet been a working system the UK plans to use.
There would also be a negative externality (occurs when the consumption or production of a good causes a costs to a third party) on UK fishermen because of the damage to the UK’s marine ecosystem due to the effects of a hard brexit. This damage will occur because within the EU the Habitats Directive ( a directive on the conservation of natural habitats) has allowed the marine environment to flourish. However when the UK leaves the EU it will mean it no longer has to abide by EU rules. This will in turn mean that the UK will exploit their own waters and as a result of this the UK’s fishermen will not be able to fulfill their catch quotas due to the overfishing of certain species.
24.4.2019