Chapter 8: Fisheries and trade
International trade in fish
145.Trade in fish and seafood is a global industry: the UK exports up-to 80% of its catches to other countries, and imports the vast majority of the fish that are processed or consumed within the UK, either from the EU or from countries with whom the EU has agreed preferential trade relations.253 Though the UK’s future trade relationship with the EU is outside the scope of this report, in this chapter we briefly outline the importance of market access to the fisheries sector.254
The importance of trade with the EU
146.As Ms Curtis told us, “we export the majority of what we catch in UK vessels and we import the majority of what we eat in the UK”.255 Defra confirmed that, of the 666,000 tonnes of fish the UK produced in 2014, some 499,000 tonnes were exported to EU and non-EU countries, leaving 166,000 tonnes for domestic consumption. This domestic production consists of 451,000 tonnes of fish landed by UK vessels into UK ports,256 and 215,000 tonnes of fish produced by UK aquaculture producers.257 Measured by volume, 66% of the exports went to the European Union—equal to 49% of the domestic production of fish that year.258 At the same time the UK imported some 721,000 tonnes of fish, 32% of which came from the European Union.259 The vast majority of witnesses therefore agreed that preferential or tariff-free access to the Single Market for fish products was essential.260
Table 1: Exports of fish to the EU and non-EU countries by species, 2014
Species |
Volume (tonnes) |
Value |
||||
EU |
Non-EU |
Total |
EU |
Non-EU |
Total |
|
|
Cod |
14,268 |
1,210 |
15,478 |
£49m |
£4m |
£52m |
|
Herring |
45,335 |
18,127 |
63,462 |
£27m |
£14m |
£41m |
|
Mackerel |
66,728 |
53,615 |
120,343 |
£67m |
£62m |
£128m |
|
Saithe |
4,744 |
3 |
4,747 |
£9m |
<£0.5m |
£9m |
|
Salmon |
54,564 |
70,282 |
124,846 |
£268m |
£358m |
£626m |
|
Sardines |
3,079 |
866 |
3,945 |
£4m |
£3m |
£7m |
|
Other finfish |
67,529 |
17,021 |
84,549 |
£190m |
£48m |
£238m |
|
Crabs |
13,450 |
2,075 |
15,525 |
£47m |
£10m |
£57m |
|
Mussels |
4,773 |
38 |
4,811 |
£5m |
<£0.5m |
£5m |
|
Shrimps and prawns |
13,095 |
372 |
13,468 |
£73m |
£2m |
£75m |
|
Other shellfish |
40,103 |
7,871 |
47,974 |
£271m |
£51m |
£322m |
|
Total |
327,668 |
171,479 |
499,148 |
£1,008m |
£552m |
£1,560m |
Source: Written evidence from Defra (FBR0001)
Table 2: Imports of fish from the EU and non-EU countries by species, 2014
Species |
Volume (tonnes) |
Value (£ million) |
||||
EU |
Non-EU |
Total |
EU |
Non-EU |
Total |
|
|
Cod |
23,602 |
92,800 |
116,401 |
£82m |
£328m |
£410m |
|
Haddock |
10,617 |
25,264 |
35,882 |
£24m |
£87m |
£111m |
|
Mackerel |
24,302 |
7,721 |
32,022 |
£46m |
£7m |
£53m |
|
Salmon |
33,418 |
44,894 |
78,311 |
£169m |
£224m |
£393m |
|
Sardines |
4,148 |
8,758 |
12,906 |
£15m |
£19m |
£34m |
|
Tuna |
12,253 |
79,522 |
91,775 |
£51m |
£236m |
£287m |
|
Other finfish |
95,961 |
138,591 |
234,552 |
£303m |
£385m |
£688m |
|
Mussels |
2,695 |
3,287 |
5,982 |
£7m |
£9m |
£15m |
|
Shrimps and prawns |
13,797 |
68,534 |
82,331 |
£94m |
£500m |
£594m |
|
Other shellfish |
10,789 |
19,653 |
30,442 |
£57m |
£94m |
£151m |
|
Total |
231,582 |
489,022 |
720,605 |
£848m |
£1,889m |
£2,736m |
Source: Written evidence from Defra (FBR0001)
147.Trade is important not only for the catching sector. The SIA told us that the UK fish processing industry, which directly employed some 14,305 people and had a turnover of £4.2 billion in 2014, depended on imports from third countries such as Norway, Iceland, USA, Russia and Canada.261 They noted that for major species like cod, imports were essential because the EU TACs on these stocks could not meet demand: “Even on the most optimistic assumptions about stock recovery or future UK quota shares, there will still be a substantial shortfall in terms of current market needs.”262
148.The EU operates a triennial system of Autonomous Tariff Quotas, which allow specified quantities of key species to enter the EU at reduced, or sometimes zero, tariffs. SIA told us the UK was a key beneficiary of this system, and that the seafood industry relied on these affordable imports. They therefore argued that a “future relationship with the EU must maintain existing market access and our ability to import zero or reduced tariff supplies from both EU and non-EU countries”.263
149.Mr Landmark told us that Norwegian salmon producers faced substantial tariffs in the EU.264 This could be particularly problematic for Scottish aquaculture: Mr Ewing noted that the Single Market and trade unimpeded by regulatory barriers was crucial to aquaculture producers.265
150.Trade in fish and seafood is essential to the wider seafood industry, which relies heavily on importing raw goods at reduced or zero tariffs for domestic consumption, and on exporting domestic catches and production. Any disruptions to the current trading patterns could have profound effects on both the catching and processing sectors.
A future trading relationship with the EU
151.As an EU Member State, the UK exports and imports fish and seafood products tariff free within the Single Market.266 Upon withdrawal the trading relations will change. The Government stated, in the run-up to the referendum, that trade in fish and seafood products is usually excluded from free trade agreements.267
152.Defra suggested that the UK could negotiate a trade deal with the EU, which would grant preferential or tariff-free trade terms on exports of fish to the EU, while still complying with WTO rules. If such a deal were not completed, the UK would be subject to the EU’s Most Favoured Nation tariff lines, which under WTO rules apply to all countries that do not have preferential trade agreements with the EU. These tariffs on fish products range from 0% for some fresh products to 25% for highly processed products. For the top five fish products exported from the UK to the EU, the tariff lines for non-preferential trade ranged from 2% on Atlantic salmon to 20% on frozen mackerel in 2014.268 Equally, the EU would face tariffs on exporting to the UK at a level agreed between the UK and the WTO. Defra argued that “such an arrangement is unlikely to be attractive to the EU”.
153.Norwegian and Icelandic witnesses told us that their countries, which are both members of the European Economic Area, and thus for most purposes part of the Single Market, were nevertheless subject to tariffs on certain fish and fish products. Mr Landmark told us that while the EEA agreement allowed Norway to export white fish products tariff-free,269 import quotas and tariffs ranging from 2–25% were applied to other valuable species.270 He added that, despite the preferential EEA-relations with the EU, “both the tariffs and the export quotas to the EU market on those products are still a serious obstacle to trade”.271
154.Similarly, Mr Thorgeirsson told us that trade in fish between Iceland and the EU was partly regulated through the EEA agreement and a free trade agreement. This meant that while some fish were exported to the EU tariff-free, the majority was subject to 2–5% tariffs. A few species, such as herring and whole mackerel, were subject to 18–20% tariffs.272
155.Defra told us that “The tariffs the EU would implement on UK fish exports would depend on whether and what kind of bilateral trade deal the UK agrees with the EU after leaving the EU.”273 The Department suggested that a trade deal could include preferential or tariff-free trade terms on fish exports to the EU, though this would of course be a matter for negotiations.
156.Mr Armstrong, in contrast, told us the SFF was “less nervous about market access than some”. He continued: “Markets are markets and people have things to sell that other people want.”274 This view was shared by Fishing for Leave: “If there is such a high level of exports then prime British seafood is obviously in demand and that demand from the consumers will remain whether we are signed up to a political project or not.”275
Complying with standards
157.As we noted in chapter 4, catches made by EU vessels must adhere to certain standards in order to sell into the EU market. The WWF told us that such standards provided consumer assurances about the quality and integrity of UK fish, and should continue to do so after Brexit.276 Compliance with import standards is also essential for vessels that land their catches directly into EU ports, though the continuation of this practice will be subject to negotiation with the EU.277
158.Trade with the EU in fish products will be a key factor to the future success of the UK fishing industry and fish processors. We therefore urge that the fish sector should be included in the Government’s consideration of priorities for a future trading relationship with the EU.
International markets
159.Fishing for Leave challenged the “apocalyptic assumption” that if the EU imposed unfavourable trading terms for fish and seafood from the UK, the domestic fishing industry would necessarily suffer. Instead, they argued that domestic supplies could “diversify into the hungry global markets as others already do or be channelled into domestic demand”.278
160.The NEF and the SIA disagreed, arguing that, despite numerous campaigns in the UK, consumers had not been willing to change their taste to match the catches made by the UK fleet.279 This meant that it would be difficult to substitute domestic demand for exports to the EU. The NEF added that even if such a change did happen, it would impose significant costs on the existing supply chains.280
161.As for third countries, the total volume of fish exported to non-EU countries in 2014 was some 171,479 tonnes.281 Such trade is often subject to tariffs and special arrangements, which complicate trade negotiations.282
162.The EU has negotiated free trade agreements with four of the 15 largest non-EU export countries for UK fish, South Korea, Switzerland, Ukraine and Norway. Such exports are subject to preferential import terms in South Korea and Ukraine, while Defra told us that Norway offered tariff-free access for imports of fish products from all WTO members. Switzerland applies the same tariffs for imports of fisheries products from all WTO and EU members, though for many products this is set at zero. Once the UK withdraws from the EU, however, it will cease to be party to free trade agreements negotiated by the EU with third countries.283
163.The Minister told us that his department was assessing what access the UK should seek for agricultural and fisheries products to the EU market, as well as considering potential third markets.284 He noted that the UK traded fish products globally with countries such as China and Nigeria, as well as with the EU. The evidence submitted by Defra shows that the EU is the most important export market for fish products, but that non-EU countries such as Norway, Iceland, the Faroe Islands and China supply the vast majority of imports into the UK.
164.Depending on the future trade relationship with the EU, the UK may be able to negotiate new preferential trading relations with non-EU countries, though such negotiations are likely to be complicated and time-consuming. It is uncertain whether new markets would be able to replace or compensate for current exports to the EU.
Policy linkage
165.Throughout this short inquiry, we were reminded that fisheries was only one of many policy areas that will be part of the Brexit negotiations and post-Brexit settlement with the EU, and that both sides to the negotiation could seek to link achievements in one policy area to concessions in others.285 Mr Armstrong told us: “The whole market issue will be decided at the macro-level, and I think we delude ourselves if we think that fishing will necessarily shape any part of that debate.”286
166.Even within the fisheries sector, there will, as we have already noted, be trade-offs. Fishing for Leave, for instance, argued that market access should not be prioritized above the negotiations of a new, improved settlement on access and quota shares.287 Professor Churchill made a similar linkage:
“The UK needs to think carefully about trying to maintain tariff-free access for fishery exports to the EU and not be surprised if the EU then tries to bargain increased access to UK waters for that, which is what happened with Norway in the past.”288
167.Mr Deas also told us that the negotiation of different access arrangements and the renegotiation of quota shares was likely to be balanced against achieving tariff-free access to the Single Market for fish products. This, he said, was “the raw reality: that we will have to find some sort of balance there”.289
168.Mr Landmark told us that trade and fisheries negotiations had been considered separate issues by the Norwegian government since the EEA agreement was made. But even in this case, we heard suggestions that both Norway and Greenland had been faced with requests for increased access to fishing opportunities in their EEZs in exchange for preferable or tariff-free access for fish exports.290
169.We also note the evidence of Mr Luis Gonzáles García, trade negotiator and Associate Member of Matrix Chambers, to the EU External Affairs and Internal Market Sub-Committees, that, from a technical trade negotiation point of view, it would be “a challenge” to negotiate a Free Trade Agreement between the UK and the EU that included market access for fish products and fishing opportunities.291
170.There is a likelihood that the Government may come under pressure to balance the negotiations over a future fisheries relationship, including quota shares and access arrangements, against the negotiations over trade in fish products with the EU.
254 We consider the options for the UK’s overall trade relationship with the EU after Brexit in European Union Committee, Brexit: the options for trade (5th Report, Session 2016–17, HL Paper 72)
256 Recent data shows that in 2015 UK vessels landed a total of 707,000 tonnes fish into both UK and non-UK ports. Some 291.871 tonnes were landed directly in non-UK ports. The main destinations abroad were Norway (133,733 tonnes), the Netherlands (72,114 tonnes), Denmark (38,578 tonnes) and Ireland (30,633 tonnes). Written evidence from Defra (FBR0001)
258 Written evidence from Defra (FBR0001); Defra notes that due to the complex nature of international fisheries supply chains these figures should be regarded as indicative.
259 Written evidence from Defra (FBR0001); Defra notes that due to the complex nature of international fisheries supply chains these figures should be regarded as indicative.
260 Written evidence from the IEEP (FBR0003), the NEF (FBR0007), WWF (FBR0010) and the SIA (FBR0008); Q 1 (Dr Bryce Stewart), Q 11 (Prof Robin Churchill) and Q 12 (Barrie Deas)
266 This includes catches landed directly into other EU ports.
267 HM Government, Alternatives to membership: possible models for the United Kingdom outside the European Union, (March 2016), p 6: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/504604/Alternatives_to_membership_-_possible_models_for_the_UK_outside_the_EU.pdf [accessed 7 December 2016]
271 The NEF estimated Norway pays tariffs on as much as 70% of its fish exports to the EU. Written evidence from the NEF (FBR0007)
282 Luis Gonzalez Garcia, ‘Brexit: challenges for the UK in negotiating an FTA with the EU’, Matrix Chambers (2 August 2016): https://www.matrixlaw.co.uk/resource/brexit-challenges-uk-negotiating-fta
-eu-trade-negotiators-perspective-luis-gonzalez-garcia/ [accessed 7 December 2016]