House of Lords - European Union - Twenty-First Report

Select Committee on European Union Twenty-First Report

Chapter 3: Ongoing Challenges

139. In this chapter, we examine the key challenges that will need to be addressed as part of any future reform of the Common Fisheries Policy. We survey our witnesses' attitudes to these issues, and set out our own recommendations for the future of fisheries management under the CFP.

Management Tools

140. In its annual policy statement on fishing opportunities for 2009[31], the Commission warned that Total Allowable Catches are consistently being set too far above scientifically recommended levels, and that the days-at-sea system of effort controls (see Paragraph 24 above) has proved ineffective. As a result, over-fished stocks are not being allowed to recover, and 88 per cent of EU stocks are over-fished—compared to a global average of 25 per cent. The Commission concluded that there has been no overall improvement in the state of the Community's fish stocks since 2003, when the last major CFP reform entered into force.

141. The Commission takes the view that TACs are being set too high due to short-term political pressures and due to the practice of limiting year-on-year variations in TACs to 15 per cent—a rule introduced to provide stability to the fishing industry. This has prevented the EU from acting decisively to protect stocks whose biological condition is so poor that they cannot respond to more gradual measures. With respect to the days-at-sea system of effort controls, the Commission argues that the large number of complex derogations introduced at the request of Member States have effectively neutralised the impact of the scheme, and made it almost unworkable. The reductions in effort achieved are far smaller than those that would have been required to bring about a significant reduction in fishing mortality.

142. The Commission is therefore proposing that in the next round of negotiations on fishing opportunities—due in December 2008—TACs be reduced by up to 20 per cent a year for stocks with a low level of biomass, and increased by up to 25 per cent a year for stocks that have achieved maximum sustainable yield. Where scientific advice recommends that catches should be reduced right down to zero, TACs should be reduced by at least 25 per cent. With respect to effort controls, the Commission proposes to extend the approach enshrined in the revised Cod Recovery Plan to all effort controls. It envisages that effort ceilings, expressed in kilowatt-days, should be set for groups of vessels or fleet segments. These ceilings would then be managed at national level, allowing Member States to decide on the balance between fleet capacity and fishing opportunities, and enabling them to distribute effort allocations in a way that promotes the attainment of other goals, such as reducing discards. The Commission has recently also published a proposal for a Council Regulation concerning the conservation of fisheries resources through technical measures, and aims to implement the new arrangements from 2009.[32]

Witnesses' Views

TACS AND QUOTAS

143. A number of our witnesses expressed dissatisfaction at the way in which TACs and quotas—the main management tools used under the CFP—had been working. The Commission identified, first, "a general problem of lack of compliance with TACs", observing that "quota overshoot by national fleets is a phenomenon that exists all round the Community" (European Commission Q 591). The RSPB corroborated this, noting that "TACs and quotas have been a pretty blunt instrument" and pointing out that "Total Allowable Catches are not really even that: they are total allowable landings" (Q 217).

144. The second weakness identified by the Commission is that the current system "sets individual TACs, individual catch limitations for individual species, when we know very well that fishermen do not catch individual species, they catch assemblies of species". This means that the TACs for individual species may be out of proportion to each other, leading to discards (European Commission, Q 591). Dr Joe Horwood, Chief Fisheries Science Adviser to the UK Government, explained that "if we have an accuracy of plus or minus 20 per cent for each one of these species, it is really very difficult to get a package where at least one of them is not significantly off and is not causing quite a lot of discarding. It is certainly an imperfect conservation tool" (Q 15).

145. This was a view shared by the Joint Nature Conservation Committee, which noted that while output controls can work effectively for single-species fisheries, "when you transpose that to more complex mixed demersal fisheries then those exact same tools are not going to work; in fact they are going to be counterproductive because … once fishermen have met the quota of one species they will continue to fish after other species to fill those quotas". In these circumstances, "output controls are not going to deal with over-fishing and you are going to get excess catch and discards" (JNCC Q 260).

146. Most witnesses, however, expected that in spite of their drawbacks, TACs and quotas would continue to be used. The Commission made clear that they would be "extremely difficult to get rid of for a very simple reason, which is that they are the carriers of relative stability and relative stability is a principle that for most Member States has been a sacred principle of the Common Fisheries Policy" (European Commission, Q 591).

EFFORT RESTRICTIONS

147. The Commission has nevertheless responded to warnings from the scientific community that "TACs are not really controlling fishing mortality … and that direct effort control is necessary" by introducing a system of effort restrictions (European Commission, Q 591). The expectation was that this would resolve some of the problems linked to multi-species fisheries, and that "it should in principle be easier to enforce and simpler to control." Implementation of the scheme has, however, been disappointing in the Commission's view. The regulation governing the effort limitation system applicable in the Community is "considered by everyone as overly complex" and "has become just as difficult to control as the TACs, if not more" (European Commission QQ 587, 591). Ernesto Peñas, Head of the Commission's Fisheries Conservation Unit, put this down to negotiations in the December Council, in which "Member States, under pressure from the industry, request more special conditions, derogations … and that results inevitably in a regulation that tends to be overly complex" (Q 587). Mr Peñas concluded that effort control "is an instrument that still carries tremendous potential for being very easy to control but the way it is applied now … does not lend itself very much to good control" (Q 591). In an attempt to overcome these difficulties, the Commission has attempted to "devolve some of the technical details of what you can do to avoid by-catches [in this instance, of cod] to the industry itself or the Member State concerned" (Q 587).

148. Dr Horwood, Chief Fisheries Science Adviser to the UK Government, agreed that "conceptually, effort control has an awful lot of good going for it because you can regulate the amount of effort going into a fishery and then hopefully they can land it all". But he acknowledged that "our experience with the cod recovery shows that in truth this is not a simple process". Indeed, implementing effort control "is really hugely complicated", because of the "range of different sorts of vessels and gear which are exerting different sorts of fishing pressures" (Q 15). He went on to suggest that perhaps "a more reasonable answer is one where our fishing capacity, i.e. the basic size of the fleet, is much more in line with the size of the resource, so even if they [vessels] are working flat out they cannot cause a significant amount of damage to the stock".

149. A number of witnesses, however, did not accept that effort controls were desirable in principle, let alone in practice. Fisheries economist Aaron Hatcher of CEMARE, favoured quotas because "the ultimate aim is to have some leverage, some control, over what has been taken out of the fish stock, and it is generally preferable to try to do that directly rather than indirectly" (Q 59). He warned that if this is done indirectly, via effort controls, "we have to try and second-guess the relationship between those different types of input and catches, which is very difficult to do, and it imposes a lot of unwelcome regulation on the industry" (Q 59). The National Federation of Fishermen's Organisations seconded this, declaring its willingness to "dispense quite happily with effort control". It took the view that effort controls are "entirely counter-productive", because they "provide an incentive to increase the intensity of fishing when you are at sea" (QQ 173, 178). Barrie Deas, the NFFO's Chief Executive, went on to explain that vessels can adapt their behaviour in a number of undesirable ways (e.g. limiting their geographical range) to maintain their earnings when they are pushed for time at sea (Q 173). Mr Deas concluded that since the era of large-scale black fish seemed to have come to an end "the fundamental rationale for effort control is not there" (Q 178).

150. A further drawback to managing EU fisheries through effort control is that in the present context, effort controls cannot be used alone: Ernesto Peñas of the European Commission pointed out that a system of pure effort controls (landing everything that is caught) would not be feasible because it would not be consistent with the principle of relative stability (QQ 592-594). The result is that "we have introduced a new instrument, effort management, as recommended by the scientific community but we have not done away with the existing one and the problem then is that we have a kind of double system", he observed (Q 591). This outcome was also flagged up to us by the industry, which argued that simplification of the CFP is not aided by "layering one measure on top of another, making it very difficult then to see which one is working" (SFF, Q 142).

CLOSURES

151. This did not deter a number of our witnesses from endorsing other management measures that could be used to complement or temporarily substitute for catch restrictions and effort controls. The UK fishing industry and fisheries administrations have recently put in place a system of real-time closures in the North Sea, which a number of our witnesses highlighted as a promising development. The Scottish Executive explained that, where aggregations of cod were detected, the authorities were closing sea areas of 15 miles by 15 miles for 21 days to protect spawning and nursery areas (Q 450). The system has been put in place in cooperation with industry, which according to the Scottish authorities, is eager to take action, but does not want to take action in isolation—"they want others to do so too". Fishermen are keen that such closures should operate in "real time, so they reflect the reality now" and that they should be "time limited, so they do not stay in place for ever" (Q 450). Initially the closures were voluntary, but since February 2008 compliance with the closures has been tied into a formal Conservation Credits scheme run by the Scottish Executive (see Box 10 above).

152. Scottish Executive officials reported that compliance with the closures had been "excellent", especially as foreign vessels' cooperation is voluntary (Q 450). They also emphasised that the closures were introduced and suspended much faster than current CFP procedures could allow for: "twenty-eight days is the fastest you could ever do an emergency measure [under the CFP] and by then we are saying in 21 days it [the aggregation] disperses" (Q 450). The officials went on to suggest that in due course, provisions might be introduced in the CFP to allow Member States, "subject to certain criteria, to introduce real-time closures which others respect". They warned, however, that "because of the mutual suspicion in the Council", there was a risk that real-time closures would be perceived as a protectionist measure.

153. The Joint Nature Conservation Committee welcomed the scheme, describing it as a "novel and innovative measure" (JNCC, Q 267). The RSPB also expressed support for temporary closures to protect spawning and nursery areas (QQ 220-221). Meanwhile the Scottish Fishermen's Federation welcomed the Scottish authorities' approach to the closures, premised on "the carrot of an inducement, by way of effort, to obey these rules and the penalty of losing that inducement if you break the rules" (Q 145). It pointed out that the system "has not been abused by other nations" (Q 143), but nevertheless favoured the prospect of real-time closures becoming "mandatory for all and not voluntary for all" (Q 157).

154. Some witnesses were careful to qualify their support. Dr Joe Horwood, Chief Fisheries Science Adviser to the UK Government, observed that "we have yet to see whether these real-time closures can actually provide a significant mechanism", and pointed out that "the measures so far off the west of Scotland and the Irish Sea have not proved fruitful" (Q 20). The RSPB emphasised the importance of doing "a bit of modelling" to identify potential unintended consequences, taking account of "the fact that you cannot just shift fishing effort about and expect nothing to happen" (Q 216).

155. Others stressed that closures could only work alongside more conventional management measures. Aaron Hatcher of CEMARE explained that "if you relied on marine protected areas as your major management measure, you would have to close off something like three-quarters of the North Sea, or more, in order to achieve the sort of objectives that you would be looking at". He therefore argued that closed areas "have a role to play, perhaps, in avoiding sensitive habitats, nursery grounds, spawning grounds at various times of year, but will never be a major plank in the management of fisheries" (Q 87). The Scottish Executive acknowledged this, recognizing that "we need other things and we need selectivity measures" (Q 458).

SELECTIVE GEAR

156. Selectivity measures in fact also form part of the Scottish Conservation Credits Scheme. Officials explained that "the whole fleet is receiving in 2008 the same days at sea it received in 2007 and as a requirement of that the nephrops fleet will have to carry a square mesh panel of 110 millimetres" (Q 462). Their approach, we were told, was based on past experience that "if the industry does not like a technical measure it will find a way round it", and was therefore designed to "go with the grain of the industry" and ensure that fishermen "share the objective we are trying to achieve" (Q 459). The UK Government confirmed that "changes to gear regulations that are not supported by the fishing industry can be difficult to enforce". With industry involvement and general acceptance, on the other hand, "they can deliver useful improvements" (DEFRA Memorandum, Para 19).

157. This assessment was shared by environmental organisations and fishermen's associations alike. Barrie Deas, Chief Executive of the NFFO, judged that the advantages of selective gear had not been fully exploited. He took the view that encouraging their adoption and use "is more of an economics and incentives issue than a technical issue", and explained that this was why selective gear formed part of the Cod Avoidance Plans advocated by the NFFO (Q 184—see also Box 11 above). The Joint Nature Conservation Committee emphasised the need to consider technical conservation measures' economic impact on stakeholders in order to "get buy-in and address the potential for poor compliance and poor acceptance by stakeholders" (Q 265). But it also stressed the need to monitor how effective such measures are after they are introduced, cautioning that "we have not seen very many successes as yet". The JNCC went on to express its preference for "targets as opposed to micro-legislation, because if you give fishermen targets they are very resourceful, they will help achieve that and they will gain ownership of that technical conservation measure themselves" (Q 265).

MANAGEMENT RESPONSE TIMES

158. The Joint Nature Conservation Committee also drew our attention to what it perceived as a need for more responsive management. It noted that "the CFP at the moment has only got a number of timescales that one can take measures over: there is either the annual scale or the emergency scale" (Q 272). Dr Horwood of CEFAS observed that "things are an awful lot better than they were before they introduced in the new basic [CFP] regulation a power to introduce measures on an emergency basis, but it does seem that the system is still particularly sluggish", particularly when compared with the way animal diseases are handled (Q 12). The Sir Alister Hardy Foundation for Ocean Science pointed out that global warming could swiftly bring substantial changes, and therefore anticipated that management systems would need to adapt more rapidly than has occurred in the past (Memorandum, Para 6).

159. Dr Horwood and the JNCC also concurred on the desirability of introducing measures automatically in response to particular triggers. The JNCC offered the example of a bad (cold) winter from which it could be deduced that "the sole stock was going to be in bad shape", and suggested that measures to respond to that should be "built into a long-term management plan as part of the ecosystem approach" (QQ 272-273). Meanwhile Dr Horwood argued that "you would expect any business to manage itself with appropriate risk plans and risk management plans, and this just does not seem to be a culture in the management of fisheries, where it would seem that there are predictable types of emergencies" that are not provided for in legislation (Q 12). He suggested that "if you have already got a plan on the shelf which says, 'in the event of this, these are the actions that we will take', and there is some way of triggering this plan so it does not come as a huge surprise to everybody even though it has occurred every ten years for the last 100 years", emergency measures would be a lot easier to implement (Q 14).

COMMITTEE'S CONCLUSIONS

160. If the principle of relative stability is to underpin the CFP—as we believe it should—effort restrictions can only be used to complement TACs and quotas. However, we recognise that restrictions on fishing effort, rather than catches, appear to offer a more readily enforceable means of reducing fishing mortality. For this reason, we share the Commission's assessment that this tool has significant untapped potential.

161. We commend the decision to devolve effort allocation to Member States in the revised cod recovery plan, and strongly support the Commission's proposal to extend this approach to all other effort controls for 2009. In our view, this represents a promising route through which to incorporate a greater element of subsidiarity into the CFP, creating a multi-tiered management system.

162. Allocating effort at national or sub-national level may in turn create opportunities to tie other conservation tools—such as closures and selectivity measures—into the effort allocation process, thereby aligning fishermen's incentives with conservation goals. Indeed, by rewarding fishermen for complying with technical conservation measures that would otherwise place them at a competitive disadvantage, public authorities can help the industry to tackle a collective action problem. We commend the Scottish Executive for piloting a real-time closure scheme that incorporates all these considerations, and trust that its impact will be evaluated with a view to assessing whether more widespread use should be recommended.

163. We believe that long-term management plans offer scope to deliver improvements in the way quotas have been working. We envisage that multi-annual plans could incorporate multi-annual TACs for stocks whose biomass does not vary significantly from year to year. We have already indicated that the alignment of TACs for species of fish that are caught together is necessary. An element of risk management should also be built into management plans, providing for pre-planned, automatic adjustments in catch restrictions triggered by predictable emergencies.

Discards

164. Each year, between 10 and 60 per cent (depending on the fishery) of fish and other marine organisms caught in EC vessels' fishing gear are discarded (thrown back into the sea, usually dead—see Box 2 above).[33] Contrary to popular perception, however, the total tonnage of discarding has been going down quite dramatically over the last ten to fifteen years, not least as a result of declining source populations (RSPB Q 228). Research commissioned by DEFRA suggests that most discarding takes place for economic reasons, rather than as a result of the system of TACs and quotas (DEFRA Memorandum, Para 21). However, in individual instances where strong recruitment of a particular species has not been reflected in the relevant TAC (e.g. North Sea haddock in 2001, North Sea cod in 2007), this can be reversed.

165. Discarding evidently continues to pose a challenge for fisheries managers. In March 2007, the Commission published a Communication outlining a proposed policy to "reduce unwanted by-catches and eliminate discards in European fisheries" (COM 2007 136). The Commission has since announced its intention to come forward with an initial legislative proposal to decrease discards in two fisheries by October 2008. It then plans to proceed with regulations on other fisheries until its proposed policy is generally implemented (Commission Supplementary Memorandum, Q 9).

Witnesses' Views

REDUCING DISCARD LEVELS

166. Our witnesses identified a number of ways in which discard levels could be brought down. The Commission made clear that "the main measure to reduce discards is … to reduce exploitation", explaining that discarding of under-sized fish "is due to the fact that most fish stocks are overexploited", meaning that there are few large fish left in the sea. Landings for many stocks are consequently dominated by fish that have grown just above the minimum legal landing size, and in order to catch those fish, large amounts of smaller fish have to be caught and discarded (Commission Memorandum, Q 3).

167. The Scottish Executive indicated that it was putting the emphasis on looking for "ways we can incentivise fishermen to avoid catching the [discarded] fish in the first place" (Scottish Executive, Q 473). The Scottish Fishermen's Federation also proposed that the aim should be to avoid fish that ought not to be caught, for example through real time closures, "if you can work out where they are going to be", and through gear selectivity "where that is possible" (SFF, Q 147). The UK Government warned that there was no single solution that would address all causes of discarding, but went on to list a number of partial measures that could be considered (DEFRA Memorandum, Para 22).

168. The Commission explained that "in the past, more selective fishing gear and fishing practices were promoted through direct regulation of the legal design of fishing gear." Its assessment, however, was that "this has led to increasingly detailed and unenforceable regulation similar to what one would have if speed in traffic were regulated by specification of legal car designs and not by speed limits." The Commission is therefore proposing to move towards "results-based management" with respect to discards (Commission Supplementary Memorandum, Q 9). It envisages that this would be based on a process whereby "maximum allowed by-catch limits (MABL) are established for each fishery, accompanied by a plan for annual reductions until these limits are achieved." The intention would be to engage the industry in devising these plans, allowing the Commission and the Council to withdraw from detailed micro-management. Member States would be invited to use EFF funds to support adaptations that may become necessary. The Commission anticipates that the monitoring and control of such a scheme would require "both some observer coverage and comparisons of landings across vessels with and without observer coverage", so as to gauge the level of discarding that may be taking place at sea (Commission Supplementary Memorandum, Q 9).

169. This outcome-oriented approach to reducing discards attracted support from a number of witnesses (e.g. RSPB, Q 218; DEFRA Memorandum, Para 22). The National Federation of Fishermen's Organisations took the view that "moving away from highly prescriptive rules … that create perverse results … has to be one of our objectives" (Q 193). Like the Commission, it envisaged a "fishery by fishery" solution, in which the industry took ownership of the goals to be achieved, as in its proposed Cod Avoidance Plans (Q 188). It accepted that there would "have to be an element of an observer programme" or CCTV to monitor results and indicated that vessel operators would be willing to accept that (Q 188).

BANNING DISCARDS

170. The Commission indicated that in the longer term, it would aim to "move to a system where it is mandatory to keep fish on board", i.e. to introduce a discard ban (Commission Memorandum, Q 3; Supplementary Memorandum, Q 9). It recognised that within a TAC-based system founded on the principle of relative stability, "you would not be allowed to sell this fish above your basic quota on the market". It therefore envisaged that vessels would be "required to land [by-catch] but it would basically be confiscated", providing "a strong driver to avoid catching it because there are costs involved in keeping fish on board which you are not paid for" (Q 595).

171. Among our witnesses, support for this long-term objective was more hesitant. The RSPB indicated that it would like to see trials—on a fishery-by-fishery basis—of a discard ban (Q 222). It emphasised that "we are not looking for 100 per cent perfection"—instead, the aim would be to leave it to fishermen to use their ingenuity to bring down discard rates progressively. A discard ban could also be beneficial to the extent that it would "create a level playing field across all the vessels and all the Member States" (Q 223). The RSPB anticipated that such a ban would need to be underpinned by "a degree of enforcement", based on observer programmes, and that incentives would need to be put in place to induce fishermen to land fish of low marketable value (Q 224). In the RSPB's view, landed by-catch would have to count against the TAC, as "they are all dead fish, they are all lost from the population", but it expected that this element would be "one of the most contentious issues", generating "a huge amount of resistance" (Q 227).

172. Dr Joe Horwood, Chief Fisheries Science Adviser to the UK Government, also welcomed the proposal for a discard ban, describing it as "extremely helpful in that it will scare people into deciding they must really do something about the issue." But he expressed reservations about the prospect of requiring vessels to land all of their by-catch, warning that he "would not want to see markets developed for small fish" (Q 27). The Joint Nature Conservation Committee also qualified its support, explaining that "discard bans could work in the right place at the right time", but warning that its members were not persuaded of the merits of "a complete discard ban across the piece" (Q 276).

173. The Scottish Fishermen's Federation was not persuaded of the merits of landing all by-catch, suggesting that it would be "better to put it back into the ecosystem, where it becomes an easy meal for a natural predator" than to "take it ashore and make fishmeal out of it or do something else that really has no commercial basis". Indeed it suggested that "a small amount of discarding is almost inevitable" (Q 147).

174. Most of our witnesses were simply not persuaded that a discard ban could be enforced. The Scottish Executive conceded that "it might just about be feasible if there were a clean fishery and a single jurisdiction", but anticipated that in a mixed fishery with multiple jurisdictions, a discard ban would "throw up a lot of issues" (Q 470). Foremost among them, it suggested, was the "very important implication for enforcement … that fishermen have no incentive to obey this discard ban." Fisheries economist Aaron Hatcher also anticipated that the enforcement of a ban could prove challenging, and emphasised that "it is hard enough to enforce controls on what is actually landed in port. To enforce controls on what fishermen do at sea is extremely difficult" (Q 62). The JNCC pointed to anecdotal evidence from elsewhere showing that discard bans are "terribly difficult to enforce", and also expressed concern that if a discard ban were to be introduced and ignored, it would effectively mean "losing that information, that data on catch is lost to the system. That makes it very hard, in what is already a difficult system to analyse scientifically" (Q 276).

175. As well as sharing other witnesses' concerns about the implications of a discard ban for control, the French government was uncomfortable with the impact such a ban could have on relative stability (Q 734). The German government pointed out that "if you have a complete discard ban and you have an obligation to land anything that is fished then it is very difficult to work with quotas" (Q 696).

176. The evidence we heard from the Norwegian government, however, suggested that some of these difficulties could in principle be overcome. Norway operates a discard ban under which fishermen are obliged to land their by-catch in return for a small amount of financial compensation designed to cover landing costs (Q 820). Compensation is granted in order to provide fishermen with an incentive to land their by-catch rather than discard it, but it is set at a level low enough to ensure that they will not derive a profit from doing so.

177. Norway also manages to reconcile its discard ban with a quota system. Paul Oma, Fisheries Counsellor for the Norwegian government, explained that before quota is allocated to vessels, the authorities reduce the amount of quota to be distributed by the amount of by-catch they expected to be landed. When fish are landed for which the fisherman had no quota, it is then automatically deducted from the Norwegian quota (Q 820).

178. Norwegian officials did concede, however, that they devote "huge resources" to control at sea (Q 820). Norway thus disposes of 20 to 25 large inspection vessels, a number of smaller inspection vessels, and a force of 50 to 60 inspectors (Q 836). Infringements are prosecuted, and fines and administrative sanctions can be imposed (Q 833). The Norwegian authorities have also introduced flanking measures designed to assist in enforcing the discard ban. For example, areas deemed to be susceptible to discarding in trial hauls—e.g. because the percentage of juveniles in the catch is too high—can be closed temporarily or permanently by the authorities (QQ 820, 823).

Committee's Conclusions

179. Estimated discard levels of up to 60 per cent speak for themselves: discards pose a pressing challenge for fisheries managers. We urge EU Member States to work towards eliminating discards, and support the incremental approach that the Commission has mapped out, based on maximum allowed by-catch limits and fishery-specific strategies for achieving them. We again see scope for a division of labour whereby targets are set centrally and stakeholders in each fishery are left to devise their own methods of reaching them, subject to vetting and monitoring from the centre.

180. We support the principle of a discard ban and therefore firmly endorse the Commission's aim of progressively reducing maximum allowed by-catch limits to zero.[34] However, we recommend that if by-catches are to be confiscated in order to protect the principle of relative stability, financial compensation should be made available to cover stowing and landing costs. Without such compensation, fishermen's incentives would in our view be misaligned, posing a serious challenge for those charged with enforcing a discard ban.

181. The Norwegian experience leads us to conclude that flanking measures designed to prevent situations in which fishermen are tempted to discard would be critical to the successful implementation and enforcement of a discard ban. This could include closures, as in Norway, but should also encompass mechanisms allowing fishermen to buy additional quota to cover their catches—an issue that is addressed in more detail in the next section. Where this is not possible (for example where a low TAC leads to shortages of a particular quota), the feasibility of introducing convertible quota schemes—whereby fishermen are allowed to convert quota for one species and use it to land another—merits consideration. We recognise that such a system would put pressure on relative stability, but anticipate that a carefully calibrated exchange rate could contain the volume of quota converted.

Rights-based Management

182. Fisheries economist Aaron Hatcher pointed out to us that the flexibility of a management system is of critical importance to reducing discards: "the more flexible the system is to help the fishermen balance their catches and quotas, the less incentive there is for fishermen to throw fish overboard because they do not have quota for it" (Q 61). The flexibility he describes could come from the permanent transfer of quota entitlements, or from temporary leasing or exchange of a given year's quota.

183. Under the CFP, the distribution of fishing opportunities among national fishing interests—and the regulation of their subsequent exchange—is a Member State competence. In the UK, fishermen and producers' organisations arrange quota exchanges and lease quota from one another—but see the legal position outlined in Box 13 below. In addition, DEFRA organises international quota swaps with other Member States, which result in exchanges of quota for different species to meet the in-year needs of the catch sector in different countries (DEFRA Memorandum, Para 18). Trade in quotas among Member States is restricted to temporary, in-year transfers because permanent transfers of quota entitlements across Member States would be inconsistent with the principle of relative stability.

BOX 13

Quota Management in the UK

National quotas obtained by the UK following December Council meetings are allocated to groups of vessels and producers' organisations on the basis of FQA (Fixed Quota Allocation) units. These are based on vessels' historic catches during a fixed reference period. Once allocated to a vessel, quotas are a permission to catch quota stocks. In a statement issued in October 2001 UK Fisheries Administrations insisted that formally, fishermen do not have property rights over FQA units or quota. This means that at present, the de-facto trade in quotas and quota entitlements that takes place in the UK is not formally endorsed by the UK authorities. The Scottish Executive is currently consulting Scottish stakeholders on proposals to grant user rights ("stewardship rights") on a long-term basis, but not in perpetuity.

184. Rights-based management refers to any formalised system of allocating fishing rights. In February 2007, the European Commission published a Communication on rights-based management (RBM) tools in fisheries (COM 2007/73). It has since commissioned a study surveying the RBM tools currently applied in the EU, with results expected by the last quarter of 2008. Legislative action is not envisaged, except insofar as the Commission plans to "consider RBM in the context of the forthcoming CFP reform" due in 2012. (Commission Supplementary Memorandum, Q 10)

Witnesses' Views

ALLOCATING FISHING RIGHTS

185. Fisheries economist Aaron Hatcher of CEMARE began by pointing out to us that all management is rights-based: "You have a right to fish at all if you have a licence; you have a right to a fixed amount of fish if you have a fixed quota." He went on to emphasise that "as soon as you start managing fisheries, you are introducing rights, and the flip-side of that is that you are denying rights to others" (Q 100). Mr Hatcher explained that under the present system, "the way in which the initial distribution of rights to fish has been made is basically to give the rights to those already in the industry in proportion to some indicator of their involvement in the fishery, usually their track record or catch history". He pointed out that "once those rights have been given away in that way, then the economic value of the fishery has been parcelled up and handed from the public to the fishing industry", and to that extent, the "profit [or resource rent] that can be earned from the fishery has been given away into private hands" (Q 103).

186. Mr Hatcher noted that this "is not the way we approach things with other natural resources, oil or gas, for example, where exploitation rights are generally either leased off or subject to royalties". In those cases, it is usual for state, on behalf of the public, to try to capture some of that resource rent for the public good—a normative issue that is "not on the EU list of things to be thought about", Mr Hatcher observed, referring to the fact that in the EU, the fishing industry does not lease fishing rights from the authorities, nor does it pay royalties in return for the right to exploit a public resource (Q 103).

187. However, the Commission did draw our attention to the thus far overlooked option of linking "longer term access rights closely to responsibilities", making access to fisheries "contingent on a demonstration from the industry that the exploitation of public resources takes place within the standards set by society", (Commission Memorandum, Q 11). According to the Commission, this would "reverse the burden of proof" relative to the present situation, in which it is up to the authorities to collect evidence to show that exploitation rules have not been respected.

TRANSFERABILITY OF FISHING RIGHTS

188. In its Communication on RBM tools, the Commission pointed out that in theory, any barriers to free trade of rights such as quotas will lead to a situation where the allocation of quota will not be optimal in economic terms.[35] Aaron Hatcher explained that "the likelihood that a fixed quota or set of fixed quotas is going to match exactly what a vessel needs in order to operate profitably and efficiently is very small; but by making quotas tradeable, the fishermen themselves can decide how much quota they need in order to operate in the way they want to operate" (Q 63). The development of a market for fishing rights may also facilitate enforcement, by incentivising quota-holders to take an interest in compliance (Q 84).

189. However, other witnesses raised a number of concerns about the potential impact of allowing fishing rights to be traded freely. The German government was hesitant about what it regarded as the privatization of a public resource: "marine biological resources are for the public good and therefore their use should only be based on rights to harvest them under special conditions and limitations, and not be considered a property right" (Jürgen Weis, Q 713). It was also concerned that such a system could lead to "an undesirable degree of concentration" of rights, potentially even "in the hands of individuals or companies that are not actively involved in fishing", with adverse consequences for communities which depend on fisheries or artisanal fisheries (Q 714). For this reason, the French government was firmly opposed to a system of individual transferable quotas, insisting that "we do not want to have a private market for quotas", and pointing to experience from other countries suggesting that "the final result is a concentration of fishing rights within a minority, which is something we do not want to happen in France" (Sujiro Seam, Q 751).

190. In its Communication, the Commission noted that RBM systems can be designed to deter concentrations beyond a certain threshold.[36] Aaron Hatcher explained that "most ITQ systems do constrain tradeability to some extent", for example "there are usually limits on how much quota of any particular stock can be owned by one company, there may be restrictions on tradeability within certain geographical zones, and there are various ways that social concerns have been built into quota management systems" (Q 106). Elspeth Attwool MEP drew our attention to the community transferable quotas system operating in the Shetland Islands, which in her view merits closer investigation (Q 671). Meanwhile the New Zealand government, which introduced an Individual Transferable Quota (ITQ) system in 1986, reported that its fishing industry "continues to be made up of a small number of large fishing companies plus many small scale companies and individual fishers" (Memorandum, Para 13)

191. The New Zealand government also noted that the introduction of its ITQ system had led to a substantial reduction in the number of fishing vessels in its fleet (Memorandum, Para 13). In its Communication on RBM tools, the Commission explained that the economic efficiency of fishing businesses is expected to improve where rights are tradeable because the least profitable vessels are likely to sell their quotas to more profitable vessels and exit the fleet.[37] The Swedish government explained that while it had previously shared some of the concerns raised by the French and German governments, it had been swayed by the prospect of harnessing this feature of RBM systems to its advantage. In particular, it had come to the recognition that "using the fisheries funds and the public money we have in the Community is not enough to decrease the fishing fleet to a sustainable level." The Swedish government was therefore now considering whether some of the required capacity reductions could also be financed by the market by introducing rights-based management systems. The aim would be to "turn over the resource to the fishermen and allow them to decide whether they want to try to stay in the market or sell it for a reasonable price" (Q 801). The German government conceded that a tradeable quota system might have positive effects on the reduction of fleet capacity in many Member States, as well as facilitating control, and consequently explained that it had yet to formulate its overall verdict (Q 714).

NATIONAL AND INTERNATIONAL TRANSFERS

192. Trading of fishing rights could in principle take place either within Member States or both within and across Member States. The Spanish government reported that it had experience of using tradeable rights in several fisheries, with good results, for example in its swordfish fisheries (Q 613). It consequently supports transferable rights at a national level and is "open to discussion" about transferability across Member States (QQ 613-615). Aaron Hatcher pointed out that under the current provisions of the CFP, it is up to each Member State to manage national quotas as it sees fit, and that some—such as the Netherlands—have chosen to rely on an Individual Transferable Quota system (Q 114). He noted that in the UK, "the quota management system was never set up as a tradeable quota system, but the fishermen, if you like, have voted with their feet, or their wallets, and tradeability has developed despite the design of the system, rather than as a consequence" (Q 57). Barrie Deas, Chief Executive of the NFFO, took the view that the UK had "gone quite far down the road of quota trading, not in a particularly planned way … it developed inadvertently". He acknowledged that "it plays an important part", and judged that "on the whole the industry, with the exception of the under-ten sectors, is content with the arrangements that are there" (Q 183).

193. By contrast, there is no provision in the Common Fisheries Policy for international trade in quota. Member States instead rely on bilateral agreements to exchange quota in-year. The French government emphasised that the exchange of quotas between Member States is "an important element to allow flexibility in the system" and "something we are very much in favour of" (Q 751). The Scottish Fishermen's Federation was very concerned that this system should not mutate into an EU-wide quota trading system, where rights were transferred permanently rather than leased temporarily, thus unravelling the principle of relative stability. It cautioned that "a glance at the map of the UK industry and particularly the Scots industry" shows that "we have got what everybody else wants". It consequently anticipated that a change to internationally tradeable quotas "would change the character of the European fishing industry" and transfer ownership "straight to identifiable other Member States" (Q 167).

194. In practice, however, it is already the case that under EU law, UK-based fishing businesses—and in practice, their fishing rights—can be bought by individuals or businesses in other EU Member States, subject to certain conditions (see Box 14 below on the Factortame case). The National Federation of Fishermen's Organisations told us that while it had in the past pushed for measures to restrict so-called "quota-hoppers", it now takes "an entirely different view", and considers that EU fishing quotas are "an open market" (Q 202). By contrast to the Scottish Fishermen's Federation, its assessment was that while Anglo-Dutch and Anglo-Spanish businesses had bought quota for the stocks of interest to them "you do not see either the Dutch or the Anglo-Spanish pushing further and further" (Q 202).

BOX 14

The Factortame Case

The Merchant Shipping Act 1988 and Merchant Shipping (Registration of Fishing Vessels) Regulations 1988 had the effect of ensuring that fishing vessels could only be registered as British (and thereby obtain the right to fish against British quotas) if a series of conditions were met: the vessel had to be managed, and its operations directed from the UK; and its owner(s), as well as anyone chartering, managing or operating the vessel, had to be either a British citizen resident and domiciled in the UK, or a UK-registered company whose principal place of business was the UK, and whose shareholders and directors were 75 per cent British.

Factortame Limited was a UK-registered company whose fishing vessels were registered as British before the 1988 legislation. Its directors were all Spanish nationals resident and domiciled in Spain, and its vessels therefore stood to lose their UK registration. The company brought a court case against the UK Government arguing that the Act contravened EC law, specifically: the right not to be discriminated against on the ground of nationality, the right of individuals and companies to establish themselves in business anywhere in the EU, and the right to participate in the capital of companies based in another Member State.

On 25 July 1991, the European Court of Justice ruled that the nationality requirements in the Merchant Shipping Act 1988 were discriminatory, contrary to the freedom of establishment provided for in the EC Treaty, and therefore violated Community law. It recognised the UK Government's right to introduce conditions ensuring that a "real economic link" existed between the UK and a UK-registered vessel, but insisted that such conditions had to concern only the management and direction of operations of the vessel. As a result of the ruling, the UK Government reformulated the criteria for registration, framing them in terms of economic benefits to fisheries-dependent coastal communities in the UK.

Committee's Conclusions

195. To the extent that it allows fishermen to acquire the rights they need to run an efficient operation; prompts quota holders to take an interest in compliance; and promotes the right-sizing of fleet capacity through voluntary mechanisms, the trading of fishing rights is clearly beneficial. For these reasons, we regard further moves towards rights-based management at a national level as highly desirable.[38] We note that this is a Member State competence, and does not require modification of the provisions of the CFP.

196. In the UK, a de-facto trade in fishing rights appears to have emerged through a piecemeal process that has been tolerated but not endorsed by the UK Fisheries Administrations.[39] The result is that the opportunity to link fishing rights to responsibilities—as advocated by the Commission—has not arisen. We believe that the in-year trade in fishing rights among UK quota holders should be recognised by the UK authorities. A control system based on penalty points, under which rights are temporarily suspended and eventually withdrawn in response to infringements (see Paragraph 108 above), could serve to couple rights and responsibilities in the manner envisaged by the Commission.

197. Permanent transfers of quota entitlements across Member States as well as within them would not be compatible with the principle of relative stability. For that reason, the prevailing practice of in-year leasing of quota between Member States must continue. Member States should nevertheless seek to develop more effective ways of managing such in-year swaps, so as to ensure that the discarding of unavoidable by-catch is minimised.

Governance

198. The Commission has announced that in agreement with the current French Presidency of the EU, it intends to launch a debate on the future of the Common Fisheries Policy. An informal discussion between Ministers will take place in September 2008, and the Commission's services have started work on a mid-term evaluation of the reformed CFP (Commission Supplementary Memorandum, Q 11).

Witnesses' Views

DECENTRALISING THE CFP

199. Among the most scathing diagnoses of the CFP we heard in the course of our inquiry was that offered by the Scottish Executive, which described it as a "discredited policy" that is "top-down, prescriptive, one-size-fits-all, whether it is Shetland or the Bay of Biscay" (Q 445). The Scottish Fishermen's Federation's also regarded the CFP as "badly over-centralised and top-down" (Q 120). The National Federation of Fishermen's Organisations likened it to an "Eastern European pre-the Wall set of institutions" (Q 171).

200. These same witnesses argued that the level of micro-management required of the Commission under the present framework was stretching its capacity to the limit. The NFFO noted that "DG Fisheries does a good job in extremely difficult circumstances, it is not a huge number of people and yet … they have got responsibility for fisheries over 40 degrees of latitude and very different kinds of fisheries" (Q 172). The SFF took the view that over-centralisation "presents an almost impossible job for the Commission and it manifests itself in difficulties and problems for a number of fisheries" (Q 120). The Scottish Executive's assessment was that "you get bad decisions because the Commission does not have the capacity to get it right in each of these places and it does not have the capacity to focus on different seas" (Q 445). The result, it argued, was that "you often get no decision because it does not have the capacity to look at the different areas or to change decisions which were taken a long time ago."

201. We consequently heard repeated calls for greater decentralisation of fisheries management under the CFP. The Scottish Fishermen's Federation indicated that it would wish to see "a regionalisation of decision-making, with the strategic decisions being taken centrally", and the decision-making process moved "as far as that is sensibly possible, to the stakeholder level". While goal-setting should continue to take place centrally, incentivisation and penalisation should rest with a decision-maker who has a straight dialogue with the relevant fishery, argued Bertie Armstrong, the SFF's Chief Executive (Q 142). He cited effort control under the Cod Recovery Plan as an illustration of what the SFF had in mind (Q 120). The NFFO agreed that the "principle of moving in that direction is a sound one." Chief Executive Barrie Deas recognised that there would be "a lot of work to do on the practicalities", but pointed out that the "system that we have now" had been given enough time to work (Q 175).

202. Nor were calls for greater decentralisation limited to the fishing industry. The UK Government favours "a more regional approach to decision-making with less micro-management from Brussels and more discretion to manage at regional level within an overall EU framework" (DEFRA Memorandum, Para 52). The Joint Nature Conservation Committee took the view that politicians should only be looking at "the balance of how much risk … you want to place your fish stock at, how much damage would you allow the environment to take." Once you have got that broad view, it argued, "then the expression of that in technical and in management terms" should not require politicians' involvement (Q 300).

REPATRIATING THE CFP

203. The Scottish Executive was among the most radical proponents of change. In the short term, it was looking for "a common approach across Europe rather than a common policy", a "strategic direction" or "series of outcomes which they trust nation states to get on and deliver because it is in our interest to have flourishing fishing" (Q 456). In the medium and longer term, however, it was seeking "something that gives the nations around the North Sea, the nations with an interest in the West of Scotland fishery, primacy in terms of deciding the right policy for that area." Its verdict was that "the Common Fisheries Policy does not deliver that and that is why we want to withdraw and why we have made that the priority of our European policy" (Q 444).

204. The Scottish Seafood Processors' Federation also advocated withdrawal from the CFP, judging that "Scotland deserves a chance to manage its own fishery after the destruction that the Common Fisheries Policy has put on Scotland" (Q 937). The Fishermen's Association Ltd. favoured the "restoration of national control" over fisheries within the UK's exclusive economic zone (Q 842). It pointed out that the CFP currently includes a derogation[40] from the principle of non-discrimination and equal access enshrined in EU treaties, and suggested that it would be "naïve to believe that other Member States are going to be content for all time to allow a discriminatory principle to override EU law of equal access to the common resource" (Fishermen's Association Ltd. Memorandum, p 261).

205. Elspeth Attwooll MEP expressed reservations about these positions, pointing out that "it is difficult to imagine having relative stability and historic fishing rights and holding those dear and saying that that is consonant with re-nationalisation, because if you look at the pure geography of the United Kingdom and the waters which we effectively share with other people and where, if the line were drawn, our fishers would then be fishing in other people's waters, I cannot see that as the way forward" (Q 675). Meanwhile the Commission has indicated that a modification of the EC Treaty would be required to allow one Member State not to be subject to Common Fisheries Policy rules, and that any such modification would require the unanimous agreement of all Member States.[41]

THE COMMISSION'S VISION

206. The Commission appears to be ready to respond to calls for greater decentralisation of policy-making. It anticipated that if the Lisbon Treaty were to enter into force, and co-decision between the European Parliament and the Council of Ministers with respect to fisheries policy consequently became the norm, it would become "impossible in practice to continue with a setup where both strategic decisions and decisions regarding very detailed implementation issues are taken at the political level." It therefore recognised that it "may be necessary to move towards a setup where more technical implementation decisions are left to lower levels, within principles established in co-decision." It also accepted that its resources were stretched, indicating that there were "limits to how far the services of the Commission can continue to be involved in implementation on as detailed a level as has been the case in the past" (Commission Supplementary Memorandum, Q 11).

207. The Commission declared itself willing to contemplate a regional management model provided that it was "part of a setup" comprising "clear objectives and principles decided in co-decision" as well as "Community standards for implementation" determined by the Commission. Implementation decisions could then be delegated to Member States, who would "need to organise themselves on a regional level", but outcomes would have to be "subject to control" against centrally-determined standards and objectives (Commission Memorandum, Q 11). Indeed the Commission appeared to have already made the first step in this direction by reorganizing its services into three regional directorates covering the Western Atlantic, the North Sea plus the Baltic and the Mediterranean and Black Sea (Q 582).

208. A number of benefits might flow from the establishment of a hierarchy of management decisions and a clear demarcation of responsibilities, the Commission suggested. A clearer division of labour could "help to keep the policy better on track in the long term because lower level decisions will be accountable to decisions about principles taken at a higher level". A contrast was drawn with the present setup, "where the competence for strategy and tactics are at the same level", and it is consequently "possible for the Council to decide on a management plan in one Council meeting, and then deviate from it in another Council meeting where the fishing opportunities for next year are decided" (Supplementary Memorandum, Q 11).

209. The Commission also noted that the proposed division of labour "already exists today as regards control and enforcement", which is the responsibility of Member States, subject to Community control. A clearer hierarchy of decisions could even form the basis "for more effective control and enforcement", because Community-level standards against which performance can be measured would be required (Supplementary Memorandum, Q 11).

210. Most importantly, however, the Commission saw an opportunity to bring about a "reversal of the burden of proof" through a results-based management system. It envisaged that under such a framework, rights and responsibilities would be coupled, thereby motivating the industry to support the objectives of the policy, and turning incentives around from the present setup "where it pays to be irresponsible" (Commission Memorandum, Q 11—see also Para 187 above).

STAKEHOLDERS' RESERVATIONS

211. However, we detected stiff resistance in key quarters to the prospect of incorporating a greater regional dimension in the CFP. The Spanish government for example conceded that "it is true that the specific circumstances of each region and coastal area to which the CFP is applied must be taken into consideration", but insisted that this did "not mean that we will have to resort to a regional approach." It took the view that "a regional management model could endanger the CFP's foundations and principles" and argued that it would therefore be necessary to search for "general and universal implementation models, leaving the regional approach and management for specific cases". The regional model should the exception, "and not the general rule" (Spanish government Memorandum, p 11). It envisaged, for example, that a revised Regulation on technical conservation measures should be "of a horizontal nature", and should "refer to all sea areas and fishing zones" (Memorandum, p 183).

212. The Swedish government was also uneasy at the prospect of decentralising gear definitions and restrictions. Fisheries Counsellor Robin Rosenkranz told us that if one considered how selectivity measures could be "used, misused, abused, et cetera", it was likely that devolving decisions on these measures would "create even more problems". For example, if two Member States allowed different types of gear but each claimed that their chosen gear was very selective, "then we need an independent scientist to compare these measurements and, speaking of the control, this poor control agent who will have to look at 20 or 30 different gear [types]" (Q 797). He consequently concluded that his government would say "yes to decentralising, but looking at it on a case-by-case basis, because if not we will have a lot of difficulties." He too cited effort allocation under the revised Cod Recovery Plan as a positive example of decentralisation (Q 797).

213. Meanwhile the French government declared itself "favourable to subsidiarity[42] where it is possible but we are cautious with the coherence and equity of the system" (Q 744). Fisheries Counsellor Sujiro Seam explained that France is "very much in favour of a regional approach or even a fisheries approach where it is relevant, meaning that we have to take account of the specificities of the regions or the fisheries." It has argued, for example, that a common fishing mortality target is not equally relevant to all the areas involved in the revised Cod Recovery Plan. However, "on some issues of principle we consider that the common approach should be preserved at the Community level, for example, for controls." France would not tolerate uneven enforcement, he suggested, and would therefore defend a regional approach "for some issues", but "for some other elements we are very much in favour of consistency across the board" (Q 745).

214. The German government largely echoed these views, indicating that regionalisation "may be good for some examples but primarily we support the primacy of the CFP, of common competence for a fisheries policy" (Q 698). Fisheries Counsellor Jürgen Weis argued that "the problem is not defining nice objectives and telling the Member States or the RACs or whatever organisation to try and reach them." Instead, the problem lay with "the implementation of the policy and that is where we have the problems, in implementing the controls". "That is why we would not like to give too many responsibilities to the RACs or to the Member States or to regions too soon", Mr Weis explained (Q 700).

215. On this point, the UK Government was in agreement with its fellow Member States, noting that "a more regional management model could and should be appropriate and feasible, but it is essential that this remains within an overall EU framework to ensure things like consistency of control and enforcement standards and consistency of monitoring and data gathering" (DEFRA Memorandum, Para 52, italics in original).

216. The UK fishing industry too expressed concern that introducing a greater degree of subsidiarity might exacerbate enforcement problems. Barrie Deas, Chief Executive of the NFFO, explained that the "idea of responsibility and a less prescriptive system is very attractive but the big question is who goes to jail when it all goes wrong" (Q 174). The Scottish Fishermen's Federation warned that even in the more devolved management system it was calling for, "some action really must be available centrally, otherwise the system will fall apart" (Q 146).

217. But perhaps the most pessimistic note was struck by Robin Rosenkranz, Fisheries Counsellor for the Swedish government, who explained that in discussions with his colleagues on a personal basis, "there is quite high awareness of the difficulties with the CFP", there is "quite high knowledge of what is wrong". However, "when you raise it to ministerial level, things become a bit different" (Q 765). "I am not saying we have created a monster", he warned, "but we have created something which is very difficult to change" (Q 768).

Committee's Conclusions

218. The 2002 reform of the Common Fisheries Policy did not tackle what many stakeholders—and this Committee—regard as the over-centralised and stiflingly prescriptive legislative process through which fisheries are managed in the EU. We recognise that the clamour for a "level playing field" from Member States and stakeholders alike may over time have prompted policy-makers to micro-manage in ever greater detail. It is clear, however, that this approach has failed and should now be abandoned.

219. We were encouraged to hear that the Commission is ready to contemplate a move towards results-based management incorporating a greater degree of subsidiarity. We note, however, that competing visions are on offer as to what this may entail in practice: witnesses were divided, for example, on whether a uniform approach to technical conservation measures—some of the most prescriptive legislation drafted under the CFP—continues to be necessary.

220. The division of labour we envisage is one where strategic decisions—on target mortality rates, for example, or maximum sustainable yield—continue to be taken centrally in Brussels, while decisions relating to delivery and implementation—determining how targets are to be reached—are delegated to regional forums. These should be organised to reflect the level at which outcomes can be measured, allowing local decision-makers to be held accountable by auditors at national and EU level. Based on these principles, technical conservation measures should not require uniform imposition.

221. Central monitoring of outcomes, backed by sanctions for poor performance, will be essential to the proper functioning of a more decentralised management system. We note the risk that a regional management model such as we have described might exacerbate enforcement problems. However, we believe that a double-tiered system of penalties, based on the suspension or withdrawal of fishing rights at individual level, and the imposition of fines on Member States who fail to deliver centrally-agreed outcomes, could hardly be less effective than the present, discredited control and enforcement regime.

222. During the course of our inquiry, we heard forceful arguments in favour of withdrawing from the CFP. We do not regard this as a credible policy option. Unilateral withdrawal from the CFP is incompatible with membership of the EU. As indicated by the Commission, a negotiated withdrawal from the CFP would require unanimous agreement from all Member States to amend the EC Treaty, and subsequent ratification by all Member States of the amended Treaty. In our view, this likelihood is not within the realm of practical policy. We consequently consider that withdrawal from the CFP is not only a false panacea, but a dangerous distraction from the more important task of reforming the policy.

From 2002 to 2012: Reforming the CFP

223. The Common Fisheries Policy clearly remains in need of major reform, having failed to deliver sustainable fisheries—whether from a biological or an economic point of view. The Commission itself, backed by the Court of Auditors, recognises that the 2002 reform of the CFP has not succeeded in addressing longstanding deficiencies such as persistent overcapacity in the fishing fleets of the Member States, poor compliance, and uneven enforcement. Over-centralization and a top-down management approach have served to alienate stakeholders and thus further undermined the policy.

224. On the most critical indicator—the state of fish stocks in Community waters, on which the livelihoods of the EU fishing industry ultimately depend—the 2002 reform of the Common Fisheries Policy has failed to turn the tide. Our analysis suggests that Member States' reluctance to trim national fishing fleets to a size commensurate with the fishing opportunities available—or even to allow market forces to do so—remains the root cause of failure in this respect. Fleet over-capacity prompts fisheries ministers to resist the conservation measures prescribed by scientific advice, and creates powerful economic incentives for illegal activity on the part of the fishing industry. Both serve to perpetuate a vicious cycle in which dwindling fish stocks are at risk of being in ever greater disproportion to the size of the fleet.

225. Looking forward, we believe that urgent action is necessary to break out of this spiral. We urge Member States to resist calls for subsidies to offset fishing vessels' rising operating costs. The increase in the cost of diesel fuel is not a temporary phenomenon, indicating that state aid would only offer temporary relief to the industry, and that taxpayer-funded grants would consequently serve no ultimate purpose. Public aid should instead be channelled into attractive decommissioning schemes and into the economic diversification of fisheries-dependent coastal communities, so as to facilitate voluntary exits from national fleets, and promote the development of alternative employment opportunities. In the absence of such action, we hold out little hope that a new control and enforcement regime will deliver radical improvements.

226. We believe that there is a very strong case for moving towards a much greater degree of decentralised fisheries management, whereby strategic objectives set centrally are delivered through methods devised at a regional level. We envisage that this would promote both better management, adapted to regional circumstances, and better compliance, through the ex-ante influence of local stakeholders on the regulatory instruments selected. We regard the establishment of the Regional Advisory Councils as a promising step in this direction, and as the most welcome development to arise out of the 2002 reform of the Common Fisheries Policy.

227. We believe that the core objective of the Common Fisheries Policy should be to bring fishing capacity and fishing opportunities into balance, for which fisheries managers will need a toolkit of measures at their disposal: TACs, quotas, effort controls, and technical conservation measures, including closures. In our view, progress in achieving this balance is dependent upon a fundamental change of emphasis in management style: rather than attempting to micro-manage the implementation of the CFP's provisions from the centre, the Council and the Commission should learn to work more closely with regional management bodies, who should take the lead in devising strategies for delivering the desired outcomes. In our view, this should be the agenda driving the next reform of Common Fisheries Policy, due in 2012.