The benefits (if any) are still unclear

On June 23, UK citizens in a national referendum voted to leave the European Union. Such a move, if implemented, has global implications economically, geopolitically, even militarily. The vote caused stock markets to churn worldwide, while Fortune 500 corporations set strategic plans into motion and politicians alternately cheered and blamed.

 

But what about the seafood industry and markets? Here, the effects of “Brexit” are more long-term than simple plant closures and currency exchange-rate worries, real as those are. UK fisheries interests regarding EU membership centered mainly on the effectiveness of the EU Common Fisheries Policy (CFP) and therefore on the balance between fisheries sustainability and industry incomes.

 

The Common Fisheries Policy avoids conflicting national plans

The Common Fisheries Policy aims to ensure that EU fisheries are “environmentally, economically and socially sustainable.” The most important – and most controversial – CFP management tool is a set of annual limits on how much fish each member’s vessels can catch in EU waters. Most EU fishery resources are transnational:  they live in broad swathes of European waters that overlap national boundaries. Therefore, fishery managers argue that such resources are better managed with a cohesive Europe-wide management plan rather than many, possibly conflicting national plans. 

The problem is that many local fishermen resist being told by “Brussels” how much they can catch. And, there is considerable debate even among the “experts” about how effective the CFP has been in protecting long-term resource viability whilst ensuring adequate supplies of fish to the industry. Rules emanating from the European Commission on annual catch quotas, discards policy, and other issues have recently been reformed but a national view against a Europe-wide management programme still prevails in many regions.

Many, but not all, UK fishermen believe the CFP has gone too far in its efforts to protect stocks at the expense of fishermen. This view certainly is not limited to UK fisheries; it is near the heart of Europe-wide debate over the recently reformed CFP; “Brexit” is merely a symptom of a larger CFP challenge.  

Trade in fish and seafood in the UK by source, destination (£ '000) 
ImportsExports
2013 2014 2013 2014
Total EU 28 848,817 847,794 972,093 1,008,309
Total EFTA 396,149 401,418 18,453 15,276
Total rest of world 1,512,034 1,487,101 469,772 536,763
GRAND TOTAL 2,757,000 2,736,313 1,460,318 1,560,348
Source:  H.M. Revenue and Customs

 

How will UK fisheries be managed?

Britain’s exit from the EU means its fisheries allocations (total allowable catches of each major species) lie in the hands of UK fish managers rather than CFP administrators. It also means UK fishermen cannot fish in other nations’ waters, nor can other EU vessels fish in UK waters, until a future agreement on such access is negotiated. While both UK fishermen and the health of UK fish stocks could improve if UK fisheries were closed to outsiders, such a closure would make it difficult to negotiate access by UK fishermen in neighbouring nations’ waters, which until now have played an important part in UK harvesting activities. Perhaps an agreement such as that with the EU and Greenland – duty-free access for import from Greenland in exchange for EU harvesters’ access to Greenland waters— could be achieved. But this would approximate the pre-Brexit status quo, and it is not yet clear how UK fishery management could be a better alternative to the CFP.

 

Possible effects on producers and consumers

Brexit creates immediate uncertainty about UK fish supplies, which has some processors and distributors worried. Seafood industry concerns have already been raised in the media about possible trade barriers in the short run (i.e., before new trade agreements are negotiated) and fishery resource sustainability and thus supplies of harvested fish, in the longer run. Fish stocks can take many years to rebuild, so any improvement to stock abundance that a UK-centered management plan might create will take the same number of years to show results.

At least in the short run the effects of Brexit on UK seafood trade are mostly negative. Trade barriers such as tariffs on imports of UK seafood will rise. To reduce those barriers to its exports, the UK will have to negotiate with both non-EU countries –and with the EU itself to regain the tariff-free access UK exporters used to enjoy in many European, Canadian, African, Asian and other foreign markets that currently have trade agreements with the EU. The UK no longer is part of those agreements, all of which took many years to negotiate and would have to be redone for the UK.

Trade barriers such as import duties raise the price of exporters’ goods in foreign markets and lower the price received by those exporters (the difference being the import duty itself), making almost everybody worse off (except producers in the foreign country, who also see their prices go up).

The consumer impacts of the price changes are in reverse: consumers in the UK will tend to see more UK-produced seafood for sale as UK exports decline. Meanwhile, consumers in the EU will see less imported seafood imported from the UK and prices there may rise, depending on how easily UK seafood can be replaced by other suppliers’ products.

Trade fish and seafood in UK by fish species
  Imports Exports
Quantity ('000 tonnes)      Value (£ million) Quantity ('000 tonnes) Value (£ million)
2013    2014       2013 2014  2013 2014 2013 2014
Total fish 621,9     601,9       2,080,7 1,976,2  363,8 417,4 1,009,8 1,101,0
Total shellfish 117,5    118,8       676,3 760,1  88,3 81,8 450,5 459,3
Total fish and shellfish 739,4    720,6       2,757,0 2,736,3  452,1 499,1 1,460,3 1,560,3
GRAND TOTAL (inc. fish products) 821,5   805,0 2,864,6 2,842,5 484,4 543,4 1,511,1 1,622,5
Source:  H.M. Revenue and Customs

 

 

A lose-lose situation

The EU Common Fisheries Policy was created because national fisheries management plans weren’t working. There is no evidence that the forces leading to that national failure have disappeared or even diminished. Even if fishery management in the UK is reformed with Brexit, it will be years before improvements in stock abundance will be noticed. Coordination between UK fishery management and EU fishery management will be necessary to protect the long-term viability of fish stocks and, therefore, of the industry’s economic health.  The CFP principle that transnational fish stocks are best managed jointly, remains relevant to UK fisheries as well as the EU’s, after the UK’s exit from the EU.

Likewise, the trade barriers to UK exports that Brexit will create will take a long time to dismantle. It is not at all clear what benefits Brexit and a divided market bring to the UK and European seafood industries.

Roger Corey

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