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Research for PECH Committee – Common Fisheries Policy and BREXIT - Trade and economic related issues

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Abstract and Figures

The aim of this study is to present a description of the bilateral trade between the UK and the EU-27 in different possible scenarios, based on relevant case-studies. Also the study describes the main markets of fish and fisheries products and economic-related issues. It provides an economic analysis of the expected consequences of Brexit.
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DIRECTORATE-GENERAL FOR INTERNAL POLICIES
Policy Department for Structural and Cohesion Policies
FISHERIES
Research for PECH Committee -
Common Fisheries Policy and BREXIT -
Trade and economic related issues
STUDY
Abstract
The aim of this study is to present a description of the bilateral trade
between the UK and the EU-27 in different possible scenarios, based on
relevant case-studies. Also the study describes the main markets of fish
and fisheries products and economic-related issues. It provides an
economic analysis of the expected consequences of Brexit.
IP/B/PECH/IC/2017-033 May 2017
PE 585.913 EN
This document was requested by the European Parliament's Committee on Fisheries.
AUTHORS
University of Brest: Bertrand LE GALLIC
Fishor Ltd: Simon MARDLE
Sakana Consultant: Sébastien METZ
ABOUT THE PUBLISHER
To contact the Policy Department or to subscribe to updates on our work for the PECH
Committee please write to: Poldep-cohesion@ep.europa.eu
Manuscript completed in May 2017
© European Union, 2017
Please use the following reference to cite this study:
Le Gallic, B, Mardle, S & Metz, S 2017, Research for PECH Committee Common Fisheries
Policy and BREXIT - Trade and economic related issues, European Parliament, Policy
Department for Structural and Cohesion Policies, Brussels
Please use the following reference for in-text citations:
Le Gallic, Mardle & Metz (2017)
DISCLAIMER
The opinions expressed in this document are the sole responsibility of the author and do not
necessarily represent the official position of the European Parliament.
Reproduction and translation for non-commercial purposes are authorized, provided the source
is acknowledged and the publisher is given prior notice and sent a copy.
Common Fisheries Policy and BREXIT - Trade and economic related issues
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CONTENTS
LIST OF ABBREVIATIONS 49
LIST OF TABLES 51
LIST OF FIGURES 53
EXECUTIVE SUMMARY 55
GENERAL INFORMATION 57
1. OVERVIEW OF THE CURRENT SITUATION 61
1.1 Production 62
1.1.1 Quantities 62
1.1.2 Values 63
1.1.3 Aquaculture 66
1.2 Ownership of the producing companies 67
1.2.1 Catching sector 67
1.2.2 Aquaculture 67
1.3 Trade 68
1.3.1 General overview and main species traded 69
1.3.2 Main trade partners 69
1.3.3 Trade with EU-27 countries 74
1.3.4. Trade with northern European countries and the rest of the world 77
1.4 Main Markets 80
1.4.1 Salmon 80
1.4.2 Cod 81
1.4.3 Tuna 83
1.4.4 Scallops 84
1.4.5 Mackerel 86
2. POTENTIAL CONSEQUENCES EXPECTED ON TRADE AFTER BREXIT 89
2.1 Static comparative analysis: Applying WTO tariffs to imports and import flows
between the UK and EU-27 89
2.1.1 UK imports from EU-27 90
2.1.2 UK Export EU-27 imports 92
2.2 Discussion 1: Possible changes in trade flows 94
2.2.1 UK 94
2.2.2 EU-27 95
2.3 Discussion 2: Full nationalisation of the UK waters 96
2.4 Discussion 3: The impact on raw material 97
CONCLUDING REMARKS 99
REFERENCES 100
ANNEX 1. Trade Flows by continents 101
ANNEX 2. UK Trade (Imports and Exports) by trading partner and
main species 103
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Common Fisheries Policy and BREXIT - Trade and economic related issues
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LIST OF ABBREVIATIONS
AER
Annual Economic Report
ATQ
Autonomous tariff quotas
CFP
Common Fisheries Policy
CMO
Common market organisation
EEZ
Exclusive Economic Zome
EFTA
European Free Trade Association
EEA
European Economic Area
EUFA
European Fisheries Alliance
EUMOFA
European Market Observatory for Fisherie and Aquaculture Products
FIDES
Fishery Data Exchange System
FAO
Food and Agriculture Organisation
GATT
General Agreement on Tariffs and Trade
GBP
Great Britain Pound
FAO
Food and Agriculture Organisation of the United Nations
FQA
Fixed Quota Allocation
MFN
Most Favoured Nation
MMO
Marine Management Organisation
MS
Member States
NASF
North Atlantic Seafood Forum
nei
Not elsewhere indicated
STECF
Scientific, Technical and Economic Committee for Fisheries
SUCCESS
Strategic Use of Competitiveness towards Consolidating the Economic
Sustainability of the European Seafood sector
WTO
World Trade Organisation
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Common Fisheries Policy and BREXIT - Trade and economic related issues
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LIST OF TABLES
Table 1
Total weight of landings in UK zonal waters (in tonnes) 62
Table 2
Total value of landings in UK zonal waters (in Euros) 64
Table 3
Landings EU fleets from UK EEZ (2015) 65
Table 4
Relative importance of UK waters to EU-27 Member States 65
Table 5
Proportion of landing value in UK zonal waters (in percentage) 66
Table 6
Imports into the UK from Intra-EU and Extra-EU (by proportion) 70
Table 7
Imports of fish and fish preparation into the UK (in EUROS), 2015 72
Table 8
Exports from the UK to Intra-EU and Extra-EU (by proportion) 73
Table 9
Exports of fish and fish preparation from the UK (in EUROS), 2015 74
Table 10
Trade value of fish and fish preparation with non-EU countries 78
Table 11
Trade value of fish and fish preparation with North European countries 79
Table 12
Summary of UK cod imports, exports and landings in 2015 83
Table 13
UK tuna trade summary in 20142 84
Table 14
Summary of imports by preservation type 91
Table 15
Summary of exports by preservation type 92
Table 16
Total UK consumption estimates 95
Table 17
Import value of fish (& preparations) into the UK by exporting country, 2014 103
Table 18
Export value of fish (& preparations) from the UK by importing country, 2014 104
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Common Fisheries Policy and BREXIT - Trade and economic related issues
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LIST OF FIGURES
Figure 1
The economic surplus (Source : Wikipédia) 60
Figure 2
The impact of tariff trade barrier 60
Figure 3
Total weight of landings of EU-27 by species (in tonnes) 63
Figure 4
Average landings price inside and outside UK waters by Member State 64
Figure 5
Total value of landings of EU-27 by species (in tonnes) 66
Figure 6
Share of the production for the top 5 salmon producers in UK in 2015 68
Figure 7
UK imports and exports by key species: 2014 69
Figure 8
Main UK import partners in 2016 (by value) 70
Figure 9
Top 10 countries for UK imports by type of fish in 2015 71
Figure 10
Total value of UK imports by preservation type (2014-16 average) 72
Figure 11
Main UK exports partners in 2016 (by value) 73
Figure 12
Top 10 countries for UK exports by type of fish in 2015 74
Figure 13
Total value by presentation type for exports (by value) 75
Figure 14
Total value by species and presentation type for exports (by value) 76
Figure 15
20 most important countries for UK exports of salmon in 2015 81
Figure 16
Consumption of cod in the EU in 2016 (in euros) 82
Figure 17
Exports of cod to ALL countries, top 7 indicated (>1m EUR in 2016) 82
Figure 18
The UK king scallops value-chain 85
Figure 19
French import scallops and other pectinidae (year 2013) 86
Figure 20
15 most important countries for UK exports of mackerel in 2015 87
Figure 21
Histogram of total value of IMPORTS by MFN tariff band 90
Figure 22
Total value of imports by product type (in euros) 90
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Figure 23
Total value of imports by preservation type (2014-16 average value) 91
Figure 24
Histogram of total value of exports by MFN tariff band 92
Figure 25
Total value of exports by preservation type (2014-16 average value) 93
Figure 26
Post austerity GB retail species consumption 94
Figure 27
Processing value by preservation type in 2014 (by euros) 95
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EXECUTIVE SUMMARY
Background
The UK exit from the European Union will affect resources and fisheries in two geographical
have an impact on the free
access of fishery products to the EU market.
The fundamental principle of the Common Fisheries Policy is the free and equal access of
access to British
waters for European vessels would have socio-economic consequences for the EU fisheries
sector.
The main expected consequences of Brexit (British exit of the EU) in relation with trade and
related economic issues will be the impact on:
the trade on fish and fisheries products;
the leaving of the Customs Union.
Aim
The aim of this study is to present a description of the bilateral trade between the UK and
the EU-27 in different possible scenarios, based on relevant case-studies. Also the study
will describe the main markets of fish and fisheries products and economic-related issues. It
will provide an analysis of the expected consequences of Brexit.
General context
With a cumulative total of over 140 USD billion, fisheries and aquaculture products is one of
the most traded food product in the world (FAO, 2015), before key products such as coffee,
sugar or cereals (FAOSAT, 201440). FAO (2016) estimates that about 78 percent of seafood
products are exposed to international trade competition.
Whereas some changes occur with the development of new demand in emerging countries,
such as China, the structure of trade flows is mostly oriented from developing to developed
ones, the main seafood markets remaining the European Union, United States and Japan, where
imports respectively reaching in 2013 2641, 19 and 15 USD billion. These three countries are
net importers, meaning that the consumption depends to some extent on imports. The level of
dependency is estimated at around 54 % and 60 % for Japan and the United States respectively
(FAO, 2014), while the level of dependency of the EU keeps on progressing, now reaching
around 70% in value (the net ratio of self-sufficiency
exports, being around 45%; EC, 2014).
The organization of the trade flow in the seafood sector is particularly complex, with some fish
crossing several frontiers before arriving on the consumer plate (see Annex 1). This is
partly due to the international division of the productive process, with a fish produced in
a country A being first exported to a country B to be processed (e.g. filleted or peeled), and
then re-exported to a country C to be processed (e.g. prepared meal), and then re-exported to
a country D to be consumed. For this reason, a country like Germany is one of the larger
importers of (processed) seafood products in the EU, whereas the German production sector
(fisheries and aquaculture) is fairly limited.
40 https://faostat3.fao.org
41 23 % of the world imports ; without counting intra-EU trade
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Brexit on seafood trade
In this context, the consequences of Brexit on seafood trade might be complex and not easy to
fully assess. In particular, different groups of economic agents along the value-chain need to
be considered, from the producers (fishing and aquaculture companies), the wholesalers, the
processers and the consumers. Also, as international trade might be subject to tariffs, the
for other economic
activities, international fish trade depends on the following factors:
The place of the production (i.e. UK or EU-27 waters for fishing)
The place of landing (today, catches from EU-27 vessels or EU-27 owned UK vessels can
be directly landed EU-27 ports; this can be modified by a change in fishing opportunities
The trade regime in place (free trade or not)
The place of processing, which not only depends on the trade regime, but also on
macroeconomic factors
Study methodology
The methodology used comprises a two-fold approach:
Provision of a general overview about the current situation, based on the collection of
available production and trade data, as well from selected recent publications on this
topic:
o In particular, the study describes the current monetary value of catches from EU
vessels within UK-EEZ compared to UK catches in EU waters. In addition,
information related to aquaculture production is provided, as this sector might also
be affected by the Brexit.
o When possible, information related to the ownership of the producing companies
will be provided, in particular with respect to the EU-27 investments in the fishery
industry in the UK.
o The study also describes the monetary value of UK fish exports, as well as the trade
balance with EU-27 and EFTA countries.
o Mostly based on case studies, the main markets of raw material and processed
goods for the UK and the EU are described (supply, demand and trade), as well as
the supply to the EU-27 and potential trade alternatives.
Analysis of the consequences expected after Brexit, based on the most likely scenarios
to occur (business as usual; changes in the access regime for fish and fishery products;
change in the trade regime WTO rules). In particular, the study addresses the following
areas of interest in case of changes:
o Production in the UK:
the capacity to produce (fish and shellfish),
the capacity to market (fish and shellfish),
o Trade:
Static comparison of (current) trade flows under new tariffs, with a special
attention to the commodities involved (general vs species).
Based on case selected studies, in-depth analysis of the potential changes in
trade flows and/or in (production or consumption) prices (price-maker vs price-
taker).
Common Fisheries Policy and BREXIT - Trade and economic related issues
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GENERAL INFORMATION
KEY FINDINGS
British exit of the EU (Brexit) is likely to generate huge impacts both in terms wealth
creation AND distribution.
When considering the EU-27 is a whole, there is no clear winner / loser scenario (or
policy option). While Northern EU-27 MS are mostly exporting to the UK, Southern
EU-27 MS are mostly importers, with a mixed situation for some countries like
France.
The annual monetary value of EU-27 catches amounts to around EUR 524 million on
average for the period 2013-2015.
The EU-27 owned UK vessels caught at least 59,000 tons of various fish products in
2015.
While the UK is globally a net importer of fisheries and aquaculture products, the UK
seafood trade balance with EU-27 is positive.
Most of the UK exports are directed to the EU-27 markets (70%).
While in absolute terms, France is globally the most exposed country in case of
Brexit both due to its fishing activity in UK waters (in value, up to 30% of the whole
EU-27 production) and its trade profile42, other countries, such as The Netherlands,
Germany and Belgium, are relatively more dependent on UK-waters for their
fishing activities (in volume, up to 59% of the total Dutch landings and 52% of the
German catches are estimated to come from UK-waters (EUFA, 2017), while this
study shows that respectively 50% and 34% of the value generated by the Belgium
and Dutch fleets is coming from UK-waters).
The seafood products that are currently traded without any tax within the common
market might be subject to Tariff and Non-Tariff Barriers
Reducing the mobility of the labour might result in an increase in the labour costs,
and thus might decrease the competitiveness of UK fishing and processing
companies.
A UK exit from the common market might lead to a limitation in further EU-27
investments in the UK seafood sector. This might also result in the reinforcement
The UK and EU-27 public bodies might collect additional custom revenues if a
tariff duty is put in place.
Imposing a WTO tariff might result in a loss in both consumer and producer surplus,
depending on the species and market at stake.
Within the European Union, fisheries and aquaculture activities are regulated through the
Common Fisheries Policy (CFP) since 1983, further to the establishment of Economic Exclusive
42 See section 1.3.3.2, showing that France accounts up to 40% of the total UK seafood export to EU-27 markets,
depending of the year and the type of commodities.
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Zones (EEZ) in 1977 in the European Community waters (and more generally further to the
international recognition of EEZ in 1982 (UNCLOS). This means that the waters around the UK
became communal and accessible to vessels from other Member States (MS), providing that
some forms of access rights were prevailing (historical rights; TAC share under the principle of
relative stability; effort quotas etc).
In case of a Brexit, part of the waters surrounding t
control over its EEZ. Even if the UNCLOS rules regarding notably
straddling or shared stocks are expected to apply, this might change the rules for accessing
the fish resources evolving within the UK waters. In the extreme scenario, EU-27 fishing vessels
currently operating in UK waters could be prevented to continue fishing in UK waters.. The
potential redistribution of effort inside the EU-27 EEZ is not expected to compensate for the
loss of important fishing grounds. This would likely result in a direct loss of revenues for these
vessels, even though quota available may remain the same, but also in a reduction in raw
material available on some EU-27 markets. This study shows that the EU-27 vessels production
from the UK waters amounted to around 656,000 tons of fish on average during the period
2012-2014 (the spatial distributions of catches for 2015 are still provisional for some member
states). It also describes the main species and member states involved.
On another hand, under the current EU treaties, there is free movement of goods, people and
capital. In case of Brexit and in the event of the re-establishment of customs (or tariff trade
barriers) between the UK and EU-27, some important changes are likely to occur:
1. The seafood products that are currently traded without any tax within the
common market might be subject to some types of tax, which might be aligned to
the WTO rules. Furthermore, although more difficult to predict, some Non-Tariff
Measures (NTM)43 might also complicate the trade in seafood between the UK and EU-
27 in the future. The potential consequence of the re-establishment of tariff is
investigated in the Study.
2. Also, an important feature of WTO tariffs is that these tariffs not only vary between
species, but also depends on the level of processing / presentation type (tariff
escalation). This means that raw tuna imported from Seychelles might have a 0 %
tariff, while the same tuna canned in Seychelles will face a 20% tariff. So, in order to
estimate the impact of new trade measures, the presentation types considered in this
study are the following:
a. PS1: Fresh
b. PS2: Frozen
c. PS3: Dried Salted - Smoked
d. PS4: Prepared - Preserved
e. PS5: Unspecified
3. While currently, a lot of workers have gone to the UK from various EU MS (including
Eastern member states44 in the recent period), these flows might be limited in the future,
and in case of extreme scenarios, some workers might be asked to return to the EU-27.
This situation is likely to have more implications for the UK processing sector than for
the fishing sector, due to the respective share of workers from EU-27 MS in both sectors
(up to 79% of the workers (out of 15,453, Seafish Processing Survey) have been
reported in some case in the processing industry versus 8% of the 12,175 fishermen
(average 2012-14, MMO 2016) in the catching sector Keating (2017)). Reducing the
43 This might include the use of different standards or the obligation to go only through selected places for custom
clearance.
44 Only 2 EU member states (UK and Ireland) did not use the safeguard clause related to labor mobility.
Common Fisheries Policy and BREXIT - Trade and economic related issues
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mobility of the labour might result in an increase in the labour costs in the UK,
and thus might decrease the competitiveness of UK fishing and processing
companies. However, while such a development might have some impacts on trade,
these impacts are highly difficult to assess, and will not be addressed directly in this
study.
4. The free movement of capital currently enables EU-27 companies45 to invest in most of
the economic sector in the UK, including in fishing companies (vessels) and processing
companies. While such private investments might not be affected under WTO rules,
there might be some implications in the future, including through the limitations in
further investments in the seafood sector or the reinforcement of the so-
46, that might oblige foreign-owned vessels to land
a certain share of the production in the UK.
In order to identify the potential impacts of Brexit, this study builds on the concept of economic
surplus, which measures the total welfare of society. The total welfare is derived from two
related quantities (see Figure 1 below):
The Consumer surplus, which is the monetary gain obtained by consumers because
they are able to purchase a product for a price that is less than the highest price that
they would be willing to pay. In practice, this means that the lower the price of the
product, the highest the consumer surplus. Conversely, if the price increases due to the
establishment of a tariff duty, this will reduce the consumer surplus.
The Producer surplus, which is the amount that producers benefit by selling at a
market price that is higher than the least that they would be willing to sell for (also
named profit). In practice, this means that the higher the price of the product, the
highest the producer surplus.
In addition to (final) consumers and (primary) producers, two other types of economic agents
need to be considered:
The intermediate consumers (mostly processors), i.e. the firms that buy seafood
products as an intermediate good to process it into a final product. For this category of
agents, the higher the price of the product, the lower their surplus / profit (all things
consumer).
The State, which is collecting additional custom revenues in case when a tariff duty is
put in place.
In general, the likely impact of tariffs on the collective welfare of the society can be visualized
as follows in Figure 2, where the tariff is the difference between P2 and P1, S represents the
supply curve (from domestic producers) and D represents the domestic demand.
In such a case, and all things being equals47, imposing a tariff would result:
In a surplus transfer from the consumers to the producers (area 1)
In an increase in the government tariff revenue (area 3)
In a net welfare loss for the society (area 2 + area 4)
45 And by extension EFTA companies through the EEA agreement signed with the EU (see below the section dedicated
to the Salmon Aquaculture Sector).
46 According to the Merchant Act (1995; http://www.legislation.gov.uk/ukpga/1995/21), up to 50% of the production
of foreign-owned vessels could have for instance to land in UK ports.
47 Which means that the producer price remains unchanged
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Figure 1: The economic surplus
Source: Wikipédia
Figure 2: The impact of tariff trade barrier
Source: Economicshelp.org48
48 http://www.economicshelp.org/blog/glossary/tariffs/
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1. OVERVIEW OF THE CURRENT SITUATION
KEY FINDINGS
Production Side
The EU-27 vessels operating in the UK waters landed 656,000 tonnes of fish on average
2012-2014.
In volume, The Netherlands accounted for around 27% of the total EU-27 catches in
UK waters in 2015, before Denmark 25 % and France 16 % (with Ireland and Germany
at 13%).
In volume, during the period 2013-2015, the main species caught were on average
Mackerel (around 248,000 tonnes), Herring (133,000 tonnes), Sandeel nei (around
73,000 tonnes) and Blue-whiting (around 50,000 tonnes).
When considering the monetary value of EU-27 catches (EUR 524 million on average
for the period 2013-2015), the scene differs to some extent:
In value, France, accounting for around 30% of the monetary value generated by the
EU-27 fleet from the UK waters, becomes the main exposed country (EUR 157 million
yearly average over the period 2013-2015), before The Netherlands (EUR 99 million
yearly average over the period 2013-2015 and 21% of the EU-27 catches) and Ireland
(EUR 86 million yearly average over the period 2013-2015 and 17% of the EU-27 catches
-27 catches, with EUR 73 million).
In value, the most important species caught by the EU-27 fleet are Mackerel, Herring,
Sole, Hake and Norway Lobster.
During the same period, UK vessels operating in non-UK waters caught around
152,000 tonnes, worth a value of around EUR 192 million.
While this is difficult to address, a significant part of the FQA is detained by UK
vessels owned by EU-27 companies (the so-called - phenomenon);
this can reach up to 96% of the total FQA for some stocks in some areas (e.g. herring IVb;
IVc/VIId. While Dutch companies are mostly involved in the pelagic sector, some Spanish
companies are also involved on the demersal sector (e.g. through the possession of 35%
of the Megrim quota in area VII and VIII).
Trade Side
The UK is globally a net importer of fisheries and aquaculture products. But the UK
seafood trade balance with EU-27 is positive, with over EUR 1,322 million exports
versus EUR 1,215 million imports.
The main species traded are Salmon, cod, Tuna, Shrimps-like species and pelagic fish
(Mackerel, Herring). When taking into account the value of the species, Scallops and
Nephrops are also important.
While the main EU-27 suppliers to the UK market are mostly Northern countries (Germany,
Denmark and Sweden), the main EU-27 clients, except Ireland, are Southern countries
(France, Spain and Italy).
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France alone accounts for around 36% to 40 % of the UK exports to EU-27, depending on
the types of seafood products, before Spain and Ireland at 14%.
For some species, there is a clear intra-industry situation, with UK exporting high quality
products and importing low quality substitutes (e.g. lobster, scallops), with also some
seafood products being imported in the UK to be processed and re-export to EU-27
countries (e.g. whitefish).
1.1 Production
In order to evaluate the monetary value of the EU-27 catches in the UK waters, a two-step
methodology was followed:
1. Data was used from official databases FIDES (2017) contains the landings weight
of EU Member State fleet by ICES rectangle and AER STECF (2016) contains landings
price information (inferred from landings value and landings weight by species) by EU
Member State. A separate analysis was undertaken using GIS data (i.e. layers for
rectangles and UK zonal waters from MMO website) to calculate the percentage of an
ICES area by area inside UK zonal waters.
2. The estimates obtained were then compared to those presented in some other
recent studies on this topic (e.g. Norton and Hynes, 2016, Napier, 2016).
1.1.1 Quantities
In 2015, the EU-27 vessels operating in the UK waters caught around 630,000 tonnes of fish
(and around 654,000 tonnes on average for the period 2012-2014). The Netherlands
accounted for around 27% of the total EU-27 production by weight in UK waters, Denmark 25
% and France 16 % (just over Ireland and Germany at 12-13% - see Table 1).
Table 1: Total weight of landings in UK zonal waters (in tonnes)
Country 2010 2011 2012 2013 2014 2015
Belgium 8 961
9 073
11 531
10 782
11 278
11 417
Germany 30 215
40 714
47 769
80 829
70 697
81 908
Denmark 299 410
227 151
180 122
276 201
237 857
160 328
Spain 8 239
6 883
5 847
5 982
6 064
1 696
France
63 770
75 720
98 402
102 514
100 477
Ireland 63 147
83 577
79 531
89 471
104 721
78 045
Netherlands 61 720
80 785
110 124
130 219
152 887
168 831
Sweden 29 517
40 649
22 238
32 761
18 423
27 219
UK 349 672
467 868
469 956
494 567
575 391
537 665
Source: FIDES (2017)
These figures can be compared to those from the Scottish and the Irish studies (Norton
and Hynes, 2016; Napier, 2016), mentioning respectively 650,000 tons (Annual average
catches from 2012 to 2014) and 684,000 tons (2014 figure). So, while the various estimates
are of the same magnitude, the estimates presented in this study seem to be higher. As
described above, this appears due to a refined definition of where a proportion of
UK waters in/out of ICES rectangles is calculated using GIS data.
In terms of species caught by EU-27 vessels, the most important ones over the 2013-2015
period are (yearly average) Herring (247,000 tonnes), Mackerel (133,000 tonnes) and other
pelagic species (blue whiting and sandeels; 124,000 tonnes) see Figure 3.
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Figure 3: Total weight of landings of EU-27 by species (in tonnes)
Source: FIDES (2017)
1.1.2 Values
In 2015, the monetary value of the catches realised by the EU-27 vessels operating in the
UK waters was estimated to around EUR 482 million (and EUR 524 million for the years 2013-
2015). Landings volume and value in 2015 from UK waters is estimated to be less than 2014
by approx. 7% for UK and 9% for other EU countries, with 2011 landings even lower in each
case. This accounts for the higher 2012-14 estimated average. . France accounted for 30% of
the total EU-27 landings by value in UK waters, The Netherlands 22 % and Ireland 16 %
(just over Denmark at 14% - see Table 2).
These figures can be compared to those from the Scottish study49 (Norton and Hynes),
mentioning EUR 506 million (Annual average catches from 2012 to 2014 - £ 408 million). Here
again, while the various estimates are of the same magnitude, the estimates presented in this
study seems to be higher; for the same reason as above.
49 The Irish study is mentioning Table
2
-
50,000
100,000
150,000
200,000
250,000
300,000
Total WEIGHT of landings of EU-27 by species 2013-15 (>2k tonnes)
2013 2014 2015
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Table 2: Total value of landings in UK zonal waters (in Euros)
Country 2010 2011 2012 2013 2014 2015
Belgium 41 832
40 394
42 845
39 855
44 054
40 779
Germany 14 508
20 300
22 253
33 834
30 524
32 997
Denmark 81 284
57 208
61 967
78 215
77 928
65 076
Spain 20 063
17 055
15 553
15 754
16 063
5 057
France
114 598
111 030
170 398
152 270
146 584
Ireland 60 671
78 669
75 036
73 666
96 121
78 035
Netherlands 60 882
72 487
80 230
93 718
108 663
105 017
Sweden 6 520
8 667
7 122
7 272
4 676
6 703
UK 643 021
709 722
707 250
712 831
792 367
740 140
Source: FIDES (2017) for landings weights and STECF AER (2016) for prices
These figures can also be compared to the estimates provided by the European Fisheries
Alliance (EUFA), mentioning a total value for EU-27 catches in UK waters of EUR 625 million,
for a production of 686,700 tons. The differences with the estimates presented in this study
are assumed to be based on: (i) the definition of UK waters used and (ii) the prices applied. As
described above, zonal proportions by ICES rectangle are used in our estimations as well as
average landing prices by species. The EUFA study appears to use a different approach to
zoning and average landing prices by country. For France and Netherlands in particular this
results in higher estimated value by EUFA as average price is lower from catches in UK waters.
The resulting average prices (from all waters but by species) used here are presented in
Figure 4.
Figure 4: Average landings price inside and outside UK waters by Member State
Source: FIDES (2017) for landings weights and STECF AER (2016) for 2015 species prices
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Average price in UK waters Average price outside UK waters Average price
Common Fisheries Policy and BREXIT - Trade and economic related issues
65
Table 3: Landings EU fleets from UK EEZ (2015)
Source: EUFA, 2017
Interestingly, Table 4 below also shows the relative importance of UK waters for some
countries. For Belgium for instance, which accounts for 9% of the total EU-27 catches in the
UK waters (in value), the monetary value of catches coming from the UK-waters represent
50% of the total Belgium fishing activity (in value). In the same vein, the monetary value
of catches coming from the UK-waters represent 34% of the total Dutch fishing activity (in
value), although The Netherlands accounts for 21% of the total EU-27 catches in the UK-waters
(in value). This means that in relative (value) terms, Belgium, the Netherlands and Germany
are particularly exposed to a change in access to the resources evolving within UK waters
(see Chapter 2).
Table 4: Relative importance of UK waters to EU-27 Member States
EU-27 MS 2011 2012 2013 2014 2015
Belgium 59% 54% 49% 50% 50%
Germany 16% 19% 24% 22% 25%
Denmark 26% 26% 29% 28% 21%
Spain 5% 7% 5% 6% 2%
France 26% 25% 20% 18% 19%
Ireland 28% 22% 23% 31% 24%
Netherlands
28% 26% 30% 34% 34%
Sweden 22% 18% 19% 12% 15%
Source: FIDES (2017) for landings weights and STECF AER (2016) for prices
Based on these estimates and the total production of the UK and EU-27 fleet, it can be observed
that in value, the monetary value of the production realized by the EU-27 fleet in UK waters
represents 21% of the value of the total EU-27 fleet (versus around 80% of the production
of the UK fleet being realized in the UK waters) see Table 5.
Policy Department for Structural and Cohesion Policies
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Table 5: Proportion of landing value in UK zonal waters (in percentage)
2010 2011 2012 2013 2014 2015
Total UK 73% 83% 80% 82% 81% 80%
Total EU 20% 22% 23% 22% 23% 21%
Source: FIDES (2017) for landings weight and STECF AER (2016) for prices
In terms of species caught by EU-27 vessels, the most important ones over the 2013-2015
period are (yearly average) Mackerel (EUR 86 million), Herring (EUR 69 million), Sole (EUR
53 million), Hake (EUR 29 million) and Norway Lobster (EUR 28 million) - see Figure 5. This
means that within the different domestic fleets, some specific sub-fleets might be economically
more exposed than others (e.g. the pelagic fleet)
Figure 5: Total value of landings of EU-27 by species (in tonnes) from UK-waters
Source: FIDES (2017) for landings weight and STECF AER (2016) for prices
1.1.3 Aquaculture
While the issues at stake in the aquaculture sector differ from capture fisheries, they also need
to be considered for their potential impacts on trade. Aquaculture production in the UK is
dominated by Salmonids, with a total production of 179,397 tonnes of Atlantic Salmon in
2014, as well as 12,707 tonnes of Rainbow Trout and 20,023 tonnes of mussels (STECF AER,
2016; see also Scottish Government, 201550). This can be compared to the total production of
sea fisheries finfish and shellfish reported as 756,000 tonnes in 2014 (MMO, 2015).
50 http://www.gov.scot/Resource/0050/00505162.pdf
-
20,000
40,000
60,000
80,000
100,000
120,000
Total VALUE of landings of EU-27 by species 2013-15 (>3m EUR)
2013 2014 2015
Common Fisheries Policy and BREXIT - Trade and economic related issues
67
1.2 Ownership of the producing companies
1.2.1 Catching sector
Foreign ownership of UK registered fishing vessels has been documented since the late 70s
(see for example Hatcher & al 2002). In the mid-90s, some 160 vessels were owned by foreign
interest (mainly Spanish 66% and Dutch 33%). The number of foreign owned vessels seems
to have slightly decreased since then, with some 60 foreign owned vessels reported to be active
in 2014 (Vidal-Giraud, 2015). Most of these companies were allocated FQA units when the
system was implemented. According to the information gathered, Spanish and Dutch sectors
still hold significant investments in the UK sector, alongside Icelandic interests.
Seafood
). Compiling the number of units each company
holds may be misleading as each quota stock has a specific number of units which are not
Some POs are however composed almost entirely of these foreign owned vessels, allowing
tracking the initial quota allocation of each group of vessels:
North Atlantic Holdings Limited is a subsidiary of Cornelis Vrolijk, based in the
Netherland. It operates the Cornelius Vrolijk, a UK registered trawler with IJmuiden
(Netherlands) as home port according to the UK fleet register. The vessel is member of the
important share of the UK pelagic quotas: 98% of the Herring IVc/VIId (equivalent 5,300
tons in 2015), 13% of the North Sea Herring (8,410 tons in 2015), 11% of the West Coast
Mackerel (24,900 tons in 2015). It also owns some shares of flatfish quotas in the North
Sea (4% of plaice 1,098 tons in 2015, 5% of Sole, Turbot and Flounders respectively
46, 23 and 72 tons in 2015).
UK Fisheries Ltd is a subsidiary of Samherji HF (Iceland) and Parlevliet & Van Der
Plas B.V. (Netherlands). The company operates three large trawlers and is member of The
rganization. The company and the associated subsidiaries own all the
FQA units for the stocks in the Barents Sea (Cod I, II, Cod I IIb representing a total of
13,100 tons in 2015, Haddock I II 453 tons
of the North Sea Saithe quota; 2,641 tons in 2015).
The Wales and West Coast PO has been initiated in the 90s to host Anglo-Spanish
vessels operating mainly from La Coruña (Spain). With only a few vessels remaining, the
PO still holds significant shares of quotas: 35% of megrim in area VII and VIII (1,249 tons
in 2015), 17% of monkfish in area VII and VIII (1,356 tons), 12% of hake in area VI, VII
and VIII (1,121 tons)..
1.2.2 Aquaculture
The top five salmon companies (see Figure 6), representing close to 92% of the UK
production, are all owned by foreign companies. They are also all vertically integrated
(hatchery, production, processing, marketing)
Marine Harvest, a global player in the salmon sector, based in Norway. The group is
based in Bergen and is dual-listed on both the Oslo Stock Exchange and the New York
Stock Exchange.
the Scottish Salmon Company PLC is listed on the Oslo Stock Exchange;
Policy Department for Structural and Cohesion Policies
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68
Scottish seafarms is owned by SalMAr and Lerøy Seafood Group through Norskott
Havbruk AS, a 50/50 joint venture. SalMar and Lerøy Seafood Group are both Norwegian
based companies, both listed on the Oslo Stock Exchange.
Grieg Seafood is based in Bergen, Norway, and is listed on the Oslo Stock Exchange.
Cooke Aquaculture is based on the east coast of Canada and has recently entered the
Scottish sector by acquiring Meridian Salmon Farms Limited in 2014 (now Cooke
Aquaculture Scotland).
According to Foss (2017), the EEA agreement gives EFTA- citizens full freedom of establishment
in the EU seafood industry. As a result, the Brexit might have some impacts on EFTA-citizens
who own aquaculture (mostly Salmonids) and fishing vessels (mostly Icelandic companies).
Figure 6: Share of the production for the top 5 salmon producers in UK in 2015
Source: Marine Harvest. Source:
1.3 Trade
KEY FINDINGS
Approximately two thirds of imports to the UK are coming from Extra-EU
countries.
For Mackerel however, Denmark is accounting for half of the UK imports (in value)
While UK depends mostly on non EU-27 countries for its seafood imports, UK relies
primarily on EU-27 markets for its exports.
This section describes the trade profile of the UK, including the monetary value of UK fish
exports under the current situation. Also, the trade balance with EU-27 and EFTA countries is
provided in order to identify the product, species or commodities of interest for the main trade
partners. In order to put the UK trade profile into context, the EU-28 trade profile is also
described in section 1.3.4.
Marine Harvest
33%
The Scottish
Salmon Company
18%
Scottish
Seafarms
17%
Grieg Seafood
13%
Cooke
Aquaculture
11%
Others
8%
Common Fisheries Policy and BREXIT - Trade and economic related issues
69
1.3.1 General overview and main species traded
As indicated in Figure 7, the main traded species in volume are Salmon, Cod, Tuna,
Shrimps-liked species and pelagic fish (Mackerel; Herring). When taking into account the value
of the species, Scallops and Nephrops also need to be considered. Interestingly, for several
species, especially salmon and to a lesser extent Mackerel and Cod, the UK both imports and
exports a large quantity of products, revealing as intra-industry trade case.
Figure 7: UK imports and exports by key species: 2014
Source: MMO (2015) UK Sea Fisheries Statistics 2014 (see also http://www.seafish.org/research-economics/market-
insight/market-summary)
At the end of 2016, the total export of fisheries and aquaculture products reached 444,150
tonnes, worth a value of 1.512 billion GBP51. This is an 8.7% increase compared to the previous
year, especially due the increase in price in 2016 (+ 15.2%). At the same time, the total import
of fisheries and aquaculture products was around 717,600 tonnes, worth a value of 2.895 billion
GBP. The trade deficit in 2016 was then around 1.4 billion GBP. However, the trade fl ows are
very uneven across countries and species, as shown in Figure 7 for 2014.
1.3.2 Main trade partners
Imports
As indicated in Figure 8, and based on EUMOFA figures, most of the fish (two-thirds, see Table
6) used in the UK for processing or consumption is comes from outside the EU. However there
are significant intra-EU imports to the UK also (one third). The three main Extra-EU suppliers
in 2015 are Iceland (383 million EUR - mostly Cod and Haddock), Faroe Islands (276 million
EUR - mostly salmon52), China (228 million EUR - processed cod and pollack). The two main
Intra-EU suppliers in 2015, Germany (288 million EUR - cod and salmon) and Denmark (223
million EUR), are listed as important suppliers.
51 http://www.seafish.org/research-economics/market-insight/market-summary
52 although it is not certain that all the salmon imports are destined to the British market, as there may be a logistic
artefact, e.g. when fish exported to / landed in Scotland is just further re-exported; see the discussion below
Policy Department for Structural and Cohesion Policies
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70
As for Germany and Denmark, in addition to the imports of processed products (see below), it
could be noted that the UK is respectively the 3rd and 2nd client for the fishmeal industry
(EUMOFA, 2016)
Figure 8: Main UK import partners in 2016 (by value)
Source: EUMOFA (2017)
It is also worth noting that approximately two thirds of imports to the UK are from Extra-
EU countries (see Table 6). This means that some current UK imports from EU-27 states could
be further replaced by imports from other parts of the world (see Chapter 2).
Table 6: Imports into the UK from Intra-EU and Extra-EU (by proportion)
2010 2011 2012 2013 2014 2015 2016
Extra EU 65% 64% 64% 65% 67% 66% 65%
Intra EU 35% 36% 36% 35% 33% 34% 35%
Source: EUMOFA (2017)
A breakdown of imports by fish category is presented in Figure 9. Its shows that Iceland is by
far the largest supplier of UK, exporting mostly demersal species such as Cod and Haddock,
with China being listed as the second largest supplier based on Comext data (with some
demersal products, partly coming from European countries such as Norway, being imported
into China for fileting and re-export to UK). Based on Comext data, the Faroe Islands only
appears on the 6th rank of the main suppliers, due to the trade artefact mentioned above. A
further breakdown of UK published statistics by trading partner and main species is provided in
Annex 2.
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
EXTRA EU INTRA EU
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71
Figure 9: Top 10 countries for UK imports by type of fish in 2015
Source: Comext
To some extent, the Table 5 below also suggests that the share of imports from EU-27 could
even be considered as overestimated, as part of the EU-27 exports to UK are likely to be
secondary exports or re-exports. For instance, Salmon exports from Sweden mostly involve
Norwegian produced Salmon, with only (i) the custom clearance being made in Sweden or (ii)
some initial processing activities being located in Sweden. This means that Swedish seafood
producers will not be affected by any changes in trade flows, while other economic agents could
be (traders, transporters, and primary processors). The same applies e.g. to Germany, where
the processing sector is mostly involved in the exports to the UK by using raw material
originating from other places.
Also, the Table 5 shows that while the global dependency of the UK imports from EU-27 states
is limited to around 33%, this can vary when considering species separately. For Mackerel, the
EU-27 share reaches 84% of the total imports, with Denmark accounting for half of the UK
imports (in value term).
In 2015, the -2753, Table 7, the main suppliers being
Germany, Denmark and The Netherlands (France only accounting for 2% of the total UK
imports). The main single species involved were Salmon (
53 Tarazono (2017): UK imports from EU-27: 848.16 million £ (=2736*0.31)
0 50 100 150 200 250 300 350 400 450
Iceland
China
Germany
Denmark
Canada
Faroe Islands
Vietnam
Sweden
U.S.A.
Netherlands
Million euros
Top 10 countries for UK imports
Demersal Pelagic Shellfish Aquaculture Other
Policy Department for Structural and Cohesion Policies
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72
Table 7: Imports of fish and fish preparation into the UK (in EUROS), 2015
Values in million euros EU27
EFTA + Faroes
+ Greenland
Other
countries
Cod 114.7
313.5
167.5
Haddock 28.8
91.2
42.3
Salmon 231.0
148.7
78.8
Tuna 81.0
0.0
392.7
Mackerel 47.9
0.5
2.2
Other fish 446.5
80.4
310.2
Total Fish 949.8
634.2
993.7
Shrimps and Prawns 108.7
38.6
642.6
Lobsters 8.5
0.0
38.1
Other shellfish 55.3
1.9
110.5
Total shellfish 172.5
40.4
791.1
Total byproducts 92.5
47.1
50.7
Total all fish 1,214.9
721.7
1,835.4
Source: Comext
In terms of presentation, the UK is importing mostly prepared and preserved products
(46 % on average between 2014 and 2016), as well as other already processed goods (frozen
and salted/dried products accounting for 21%; see Figure 10). As a result, imports of fresh
products only account for 25% of total UK imports.
Figure 10: Total value of UK imports by preservation type (2014-16 average)
Source: EUMOFA (2017)
Exports
As for exports from the UK, the main clients in 2015 were France (534 million EUR), USA (246
million EUR), Ireland54 (228 million EUR) and Spain (195 million EUR). Out of the 9 most
important clients, 6 were EU countries, with France alone accounting for almost 25 % of the
total UK exports (see Figure 11 and Table 8).
54 Mostly due to similar consumption patterns
Common Fisheries Policy and BREXIT - Trade and economic related issues
73
Figure 11: Main UK exports partners in 2016 (by value)
Source: EUMOFA (2017)
In contrast to imports, the proportion of exports from the UK to intra-EU countries was two
thirds versus one third to extra-EU countries see Table 8Table 8. This means that while UK
depends mostly on non EU-27 countries for its seafood imports, UK relies primarily on EU-
27 markets for its exports.
Table 8: Exports from the UK to Intra-EU and Extra-EU (by proportion)
2010 2011 2012 2013 2014 2015 2016
Extra EU 23% 27% 29% 32% 35% 32% 30%
Intra EU 77% 73% 71% 68% 65% 68% 70%
Source: EUMOFA (2017)
In term of species, the UK is mostly exporting Salmon (GBP 626 million, especially to USA; see
Figure 10 ) and other Shellfish (GBP 322 million, mostly
Norwegian Lobsters, Scallops, Crabs, but also Welk). While a part of the Salmon exports is
probably based on prior UK Salmon imports, the bulk of the UK Shellfish exported to France,
Spain and Italy is coming from UK waters. This means that the UK economic agents have few
market alternatives for such species. A further breakdown of UK published statistics by trading
partner and main species is provided in Annex 2.
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
EXTRA EU INTRA EU
Policy Department for Structural and Cohesion Policies
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74
Figure 12: Top 10 countries for UK exports by type of fish in 2015
Source: Comext
1.3.3 Trade with EU-27 countries
As for the trade with EU-27 countries, to EU-27 markets
in 2015 (based on Comext data; see Table 9 below), the main clients being France (487 million
; 40% of the UK exports to the EU
. The main export flows, desegregated by species and countries, are also
presented in Table 8 (in bold, value expressed in GBP).
Table 9: Exports of fish and fish preparation from the UK (in EUROS), 2015
Values in million euros EU27 EFTA + Faroes
+ Greenland
Other
countries
Cod 63.4
0.1
5.3
Haddock 2.4
0.1
0.7
Salmon 302.7
4.0
367.4
Tuna 24.3
0.0
1.4
Mackerel 69.0
3.3
18.7
Other fish 281.0
3.7
72.5
Total Fish 742.8
11.3
466.1
Shrimps and Prawns 84.2
4.2
4.4
Lobsters 36.4
0.6
10.1
Other shellfish 378.5
0.5
69.9
Total shellfish 499.1
5.4
84.4
Total byproducts 80.5
41.4
10.8
Total all fish 1,322.4
58.0
561.3
Source: Comext Eurostat data.
0 100 200 300 400 500 600
France
U.S.A.
Irish Republic
Spain
Italy
China
Netherlands
Germany
Denmark
Norway
Milli oneur os
Top 10 countries for UK exports
Demersal Pelagic Shellfish Aquaculture O ther
Common Fisheries Policy and BREXIT - Trade and economic related issues
75
To some extent, the trade data is reported to be somehow underestimated in terms of
trade between the UK and European countries (EU and Northern Europe). A significant quantity
of fish caught in the North Sea by UK flagged vessels is landed outside the UK: mackerel and
haddock in Norway, Netherland and Denmark, cod in Norway and Germany, plaice in the
st sale happens in the UK as the fish is shipped
back by lorries (advanced base system). According to our information this should be the case
for most part of the cod and the haddock landed in Norway. But for other species, these
landings may not be reported in the trade statistics:
Mackerel, herring and other small pelagics are sold while the fishing vessels are
still at sea and delivered directly to the processing factories. Landings of these species
in Norway or in any EU27 country should be considered as an export of fresh fish from
UK. This represents on average 141 million euros of small pelagic exports between 2014
and 2016, with 107 million euros for the mackerel landings (compared to a total value
of export recorded of 91 million euros).
Plaice is caught in the North Sea by Anglo-Dutch vessels that are landing their catch
directly in the Netherlands. This accounts on average for some 15,800 tonnes of plaice
landed outside UK, for an average value of 20.8 million euros between 2014 and 2016
(almost entirely in the Netherlands). In comparison, exports of plaice recorded in the
trade databases represented some 850 thousand euros in 2015.
In terms of presentation, UK is exporting mostly fresh products (50 % on average
between 2014 and 2016). Among the processed goods, frozen products are the most imported
(28%), while prepared and preserved and salted/dried products only accounting for 16%)
see Figure 13.
Figure 13: Total value by presentation type for exports (by value)
Source: EUMOFA
Unsurprisingly, when considering the commodities, the 5 main exported products are either
fresh (Salmon, Scallops and Norway Lobster see Figure 1455) or frozen (Norway Lobster and
Mackerel). As the trade tariffs applied can differ across presentation and commodities, this
might have some important implications in the Brexit context (see Chapter 2).
55 With fresh Crabs and Lobsters being also ranked in the 10 most important commodities exports in value
Policy Department for Structural and Cohesion Policies
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76
Figure 14: Total value by species and presentation type for exports (by value)
Source: EUMOFA (2017)
All the above information leads to four important observations:
1. As for the trade balance between the UK and EU-27, the UK is a net exporter
(exporting more than importing);
2. Even if the aggregated figures suggest that the exports from the UK to the EU-27
markets (EUR 1.3 billions) and the UK imports from the EU-27 markets (EUR 1.2 billion)
are of similar magnitude (intra-industry trade, e.g. for Salmon and Cod), the
disaggregated analysis of the products shows that that the flows are indeed rather
mostly inter-industry oriented, with some specific species being imported and other
specific species being exported (e.g. high value, fresh shellfish.
3. The main EU-27 partners fully differ when considering trade, with Northern countries
being the greatest suppliers, while the Southern countries (plus Ireland) being the
most important clients.
4. For some products (e.g. Cod), the UK is exporting more than it is producing, which
means that part of the imports are used for processing and re-exports to EU-27 countries
(for Cod, around 30 million £ of landing and 46 million £ of exports).
Furthermore, for the biggest UK client (France), the situation strongly differs across
species: for some species, such as Salmon and pelagic species like Mackerel, the French and
EU-27 supply is not sufficient, and the French market (mostly processing) needs to secure raw
material from the UK. On the other hand, for products such as smoked Salmon, there might be
some competition (and so substitution) between UK exports and French products (e.g. smoked
Salmon and Trout). Last, despite the fact that France only accounts for 2% of the total56 UK
imports, there might be some market opportunities for several products or commodities, e.g.
Lobsters, Shrimps or preserved / canned products. This is why it is important to understand
the dynamic prevailing for some key markets (see below section 1.4).
56 And 8% of the UK imports from EU-27 countries; in value.
-
50.000.000
100.000.000
150.000.000
200.000.000
250.000.000
300.000.000
Products >25k EUR in value for EXPORTS
3 year average 2014-16
Common Fisheries Policy and BREXIT - Trade and economic related issues
77
1.3.4. Trade with northern European countries and the rest of the world
The seafood supply chains serving the British market are complex and follow several routes
between producing countries, processing countries and logistic hubs.
The EU market relies heavily on third countries to fulfil its internal demand, notably for products
such as salmon, shrimps or tuna. Over the period 2013-2013, the imports of seafood products
to the EU market represented close to 20.6 billion euros annually. UK was directly responsible
for 12% of these imports. Species that are more important for the UK internal market present
a higher share of imports associated with UK (cod, haddock, tuna, shrimps).
For some products, the trade routes are passing by other EU member states before reaching
the UK. It can result from intermediate or final processing being performed in other countries
It can also be due to logistic specificities, like containers arriving in the Netherlands from China
and other Asian countries or shipment of Norwegian salmon entering the single market by the
Swedish or Danish borders. If the custom clearance is sought at these borders, these products
are considered as intra-EU imports in the UK trade statistics, lowering the importance of UK
imports from third countries, the so- 57. This is notably the reason why
UK appears to import significant volumes of salmon from Sweden and Denmark, while a large
share of this salmon is farmed in Norway.
UK is responsible for 15% of the value exported by EU28 countries to third countries, with
exports of salmon accounting for 66% of the value exported by UK outside the EU.
The Rotterdam effect may also lower the importance of the UK exports to third countries, to
the benefit of Netherlands which appears to be the major destination for UK small pelagic
species (mackerel, herring) according to Comext data, while a large share of these products is
just transiting through the Dutch ports before reaching other European countries, but also
African markets.
In case of a strong Brexit, logistic arrangements are expected to be modified with seafood
shipment avoiding clearance in EU27 countries to reach more directly the UK. Intermediate
processing currently happening in EU27 countries could also be moved to minimise potential
tariffs but also to avoid delays/complications due to custom clearance at the UK-EU27 border.
57
International Merchandise Trade 5422.0 September Quarter 1998.
http://www.abs.gov.au/Ausstats/abs@.nsf/0/2cd22a84525a8071ca2569de002a3030/$FILE/SeptArt98.pdf
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Table 10: Trade value of fish and fish preparation with non-EU countries (value in
million EUROS average for 2013-2015)
Imports
by EU28
from third
countries
Direct
imports
by UK
from third
countries
Share of
the UK
imports
Exports to
third
countries
by EU28
Direct
exports to
third
countries
by UK
Share
of the
UK
exports
Cod 1,916
421
22%
169
5
3%
Pollack 644
60
9%
9
0
1%
Haddock 209
118
56%
10
1
8%
Salmon 3,945
264
7%
638
403
63%
Trout 673
43
6%
133
12
9%
Tuna 2,112
344
16%
557
2
0%
Mackerel 166
5
3%
304
49
16%
Other fish 4,302
362
8%
1,511
57
4%
Total Fish 13,967
1,616
12%
3,332
529
16%
Shrimps and Prawns 3,835
620
16%
310
5
2%
Scallops 237
19
8%
11
0
4%
Lobsters 226
26
12%
22
11
51%
Other shellfish 2,098
83
4%
311
60
19%
Total shellfish 6,396
748
12%
655
76
12%
Total byproducts 198
4
2%
140
4
3%
Total all fish 20,562
2,367
12%
4,126
610
15%
Source: Comext
At the European level, the EU28 have a huge seafood trade deficit with Northern European
countries (Norway, Iceland, Faroes Islands and Greenland), with total imports from these
countries close to 6.8 billion euros while exports represented only 229 million euros.
Direct UK imports represent 10% of the value imported by the EU28, although some of the
trade between the Northern countries is recorded as intra EU28 trade due intermediary steps
in the supply chains. As noted before, some of the Norwegian salmon arriving in the UK internal
market is recorded as imported from Sweden and Denmark. This is also the case for imports of
cod and haddock from Norway, that are sometimes processed in other countries (for example
important quantities of cod are processed in Asian countries).
In case of a strong Brexit, it is expected that products currently reaching the UK via other EU27
countries may be shipped directly from Norway to UK, although the logistic solutions may not
be currently available. This is notably the case for the Norwegian salmon which may not transit
via Sweden or Denmark.
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Table 11: Trade value of fish and fish preparation with North European countries
(value in million EUROS average for 2013-2015)
Import by
EU28
from
northern
countries
Import by
UK from
northern
countries
Share of
the UK
imports
Export to
northern
countries
by EU28
Export to
northern
countries
by UK
Share
of the
UK
exports
Cod 1,298
281
22%
12
0.3
2%
Haddock 143
80
56%
0
0.2
38%
Salmon 3,728
181
5%
10
0.0
1%
Trout 272
7
3%
2
0.0
1%
Mackerel 97
3
3%
46
3.3
7%
Herring 221
3
1%
15
0.0
0%
Other fish 606
71
12%
50
1.6
3%
Total Fish 6,365
626
10%
135
5.4
4%
Shrimps and Prawns
312
39
12%
79
0.7
1%
Other shellfish 50
2
3%
10
1.1
10%
Total shellfish 362
40
11%
89
1.8
2%
Total byproducts 44
2
4%
5
0.0
1%
Total all fish 6,771
668
10%
229
7.3
3%
Source: Comext
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1.4 Main Markets
KEY FINDINGS
The UK is the largest consumer of salmon products in absolute terms. The UK,
together with Spain and France are responsible for 71% of the total fresh consumption
value, with EUR 1,05 billion, EUR 502 million and EUR 376 million, respectively.
The UK salmon sector is highly concentrated, with five companies representing over
93% of the total production, all of them under foreign control.
The UK salmon production is part of a global salmon supply chain with important flows
on both sides: total imports represented close to EUR 459 million in 2015, with the
total exports reaching EUR 674 million.
USA and France account for close to 60% of the UK salmon export in quantities and
71% in value.
As for Cod, The UK ranked first in consumption (EUMOFA, 2017; Figure 16), with
over EUR 531 million, followed by France with EUR 349 million, Spain with EUR 216
million and Italy with EUR 143 million.
The UK and EU-27 countries rely on imports of cod to maintain supply. There is therefore
significant competition for cod between EU countries from Iceland and Norway in
particular.
The main EU-27 clients for UK exports of Tuna were respectively around Ireland
(16.7 million £), France (1,1 million £), Poland (973,000 £) and Denmark (960,000
£).
UK Tuna export to EU-27 depends on imports from third countries.
The UK production of scallops has been continuously growing and now reaches around
making UK one of the top producers in Europe.
The majority of UK scallop production is exported to France, Italy and Spain.
France is by far the largest European outlet for scallops with between 130,000
and 180,000 tonnes consumed per year (in equivalent live weight).
UK is the larger producer of Mackerel in the EU with close to 50% of the quotas
allocated to Member States. More than half of the UK Mackerel production was
landed abroad in recent years.
Due to their relative importance from the information above, several markets are studied in
this section: Salmon, Cod, Tuna, Mackerel and Scallops.
1.4.1 Salmon
EUMOFA, 2016: SALMON The UK is the largest consumer of salmon products in absolute
terms. The UK, together with Spain and France are responsible for 71% of the total fresh
consumption value, with EUR 1,05 billion, EUR 502 million and EUR 376 million, respectively.
Since 2014, the consumption of salmon has increased in value and volume by 19% and 17%,
respectively.
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81
The UK salmon sector is highly concentrated, with five companies representing over 93% of
the total production, all of them under foreign control (four companies controlled by
Norwegian interests, one by Canadian interests). The UK salmon production is part of a global
salmon supply chain with important flows on both sides: total imports represented close to
EUR 459 million in 2015, with the total exports reaching EUR 674 million.
UK is importing salmon from northern Europe (Norway through Sweden and Denmark, but also
Faroes Islands, although those last imports may be due to Faroese companies using Scottish
ports as a hub for their salmon exports to other EU markets), but also North America to meet
the needs of its processing sectors (specific quality and price levels).
The UK salmon sector has positioned its product on several premium segments (Label Rouge,
PGI, organic production). USA and France account for close to 60% of the UK salmon export in
quantities and 71% in value. France is second market after USA. Most of the salmon exported
to France is dimmed to be fresh. While the WTO tariff is relatively low for unprocessed product
(2%), it can reach 13% for smoked product (tariff escalation, as def
; Brexit could thus amplify the drop observed in the salmon market in the
recent years, and lead to substitution with other species (e.g. trout)
Figure 15: 20 most important countries for UK exports of salmon in 2015 (values in
thousand euros)
Source: map based on Comext Eurostat data.
1.4.2 Cod
EUMOFA, 2016: Cod is responsible for most of the import value within groundfish at EUR 1,86
billion and 509.000 tonnes, cod accounted for 52% and 43%, respectively, of groundfish
imports in 2014. It originated mainly from Norway (37 %), Iceland (27 %) and Russia (16%).
While the value of Norwegian cod imports increased by a substantial 14% in 2013, its price
declined 2%. At Member State level, with the decreasing availability of haddock due to
plummeting quotas in the Barents Sea (from 400.000 tonnes in 2011 to 178.500 in 2014), cod
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has been adopted widely in the UK market, which saw large growth in imports of fresh and
frozen, head and gutted cod. In France, the wide availability of cod and especially of fresh cuts
Total household purchases of cod amounted to approximately EUR 1,4 billion in 2016. The UK
ranked first in consumption (EUMOFA, 2017; Figure 16), with over EUR 531 million, followed
by France with EUR 349 million, Spain with EUR 216 million and Italy with EUR 143 million.
From 2014-16, France increased cod consumption in value by 5% and Spain decreased
consumption of cod in value by -6%, and volume by -5% and -14% respectively. However,
the UK significantly increased by 6% and 8%, in value and weight respectively.
Figure 16: Consumption of cod in the EU in 2016 (in euros)
Source: EUMOFA (2017)
The UK and EU-27 countries rely on imports of cod to maintain supply. However, UK export in
the region of 15,000 tonnes to EU-27 countries (at a value of approx. 63m euros) (EUMOFA,
2017; Figure 17 and Table 10 below). This implies some added value through processing as
average landing price of cod in the UK is reported to be a little more than 2 euros per kg by UK
vessels in 2014. In fact landings by UK vessels are also indicated to be approx. 15,000 tonnes
(even if different products form). There is therefore significant competition for cod between
EU countries from Iceland and Norway in particular.
Figure 17: Exports of cod to ALL countries, top 7 indicated (>1m EUR in 2016)
Source: EUMOFA (2017)
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
Consumption of cod in 2016
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2014 2015 2016
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The UK profile for the Cod market can be summarised in the Table 12.
Table 12: Summary of UK cod imports, exports and landings in 2015
Source: Seafish (2016)
1.4.3 Tuna
According to the Seafish (2016), all the tuna from UK vessels were landed abroad in 2013 and
2014, especially in Spain58, with overall Tuna landings from UK vessels reaching 222 tonnes for
a value of 549,000 £. At the same time, the main EU-27 clients for UK exports of Tuna
were respectively around Ireland (16.7 million £), France (1,1 million £), Poland
(973,000 £) and Denmark (960,000 £). Here again, this means that part of the UK Tuna
export to EU-27 depends on imports from third countries (mostly Mauritius, Seychelles, Ghana
-27 countries/industries (see Table 13).
58 Mostly co-owned
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Table 13: UK tuna trade summary in 20142
1.4.4 Scallops
The production and processing companies being located
all over the world (catching or aquaculture sector), with China being by far the biggest producer,
before Japan (mostly aquaculture), USA (with over 200,000 tons) South America (mostly Chile,
Peru; approx. 75,000 tons) and the Canada (approx. 65,000 tons).
As for the UK production, it is continuously growing and now reaches around 28,000 tonnes,
the UK one of the top producers in Europe. As indicated by
estimated consumption in the UK the majority of UK scallop production is exported to
France, Italy and Spain (see Figure 18). As a result, there are few king scallop imports into
the supply chain. Those scallop imports that are reported are thought to be mostly species
other than Pecten maximus (e.g. scallop imports from the USA and Peru).
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Figure 18: The UK king scallops value-chain
Source: SUCCESS H2020 project with data from * STECF AER (2016) (2016); ^ James et al
(2011); est. (2016); **Anderson (2015)
Several reports reveal that France is by far the largest European outlet for scallops with
between 130,000 and 180,000 tonnes consumed per year (in equivalent live weight). Large
volumes of imported species enter the French market, to complement domestic landings of
Pecten maximus (see Scallop value chain in UK) and Aequipecten opercularis (a few hundred
tonnes per annum). Tree categories of commodities are available:
Live shell-on (mainly Pecten maximus), distributed in production regions and in large
urban centres,
Shucked meat, chilled or frozen, purchased by retailers, the catering and the
processing industry,
Preparations such as shucked meat in sauce (<20% to 60% meat, the rest being
sauce), sold chilled (Monfort, 2010)
The main imports by categories of commodities are summarised in Figure 19 below, where it
can be seen that 64 % of the fresh /chilled scallops imported to France are coming from the
UK (same magnitude as for frozen scallops). If other pectinidae (scallop-like species) are taken
into account, then it can be observed that they represent around 72% of the total French
imports (Live weight Equivalent).
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Figure 19: French import scallops and other pectinidae (year 2013)
Source: Douanes françaises, données, 2013. FranceAgriMer Foreign Trade
1.4.5 Mackerel
The UK is the larger producer of Mackerel in the EU with close to 50% of the quotas
allocated to Member States. In recent years, UK production represented also 20% of
the total Mackerel production in 2014-2015 (based on ICES Advice 2016, Book 9).
Mackerel is also the first species caught by UK vessels in quantity and value for more than 7
years. In recent years, it represented between 20% and 25% of the value landed by UK vessels
(DCF data for 2011-2015), for over 30% of the quantities landed in 2014-2015.
Mackerel is caught by a small group of 27 very efficient large pelagic trawlers (over 40 meters)
operating from North East Scotland ports (Peterhead, Fraserburgh and Lerwick). These vessels
sell an important share of their catch on a Norwegian online auction while still being at sea.
Once the auctioning process is completed, they steam to the port closest to the buyer, which
can be situated in the UK, but also in Norway, in Denmark or in the Netherlands. More than
half of the UK catch was landed abroad in recent years.
As noted before, the abroad landings are not integrated in the trade databases. Considering
them as exports implies that Norway is by far the first destination for the UK-caught mackerel
and not the 14th as the trade statistics would show. The top 3 countries, Norway, the
Netherlands and Denmark, represented 76% of the value exported in 2015, largely due to
landings by the UK vessels in their ports. Trade of mackerel to Russia was representing between
15 and 18 million EUR every year for the UK before the trade embargo. It should also be noted
that some of the exports to Netherlands are just transiting through Dutch ports and are not
destined to the national market.
Most of the Mackerel catch by EU vessels are concentrated in ICES areas 2a, 4a and 6a. PwC
Seafood recently evaluated that a strict reallocation of the catch of the 2011-2014 period to
each nation based on EEZ delineations would increase the potential catch of the UK fleet by
80,000 tonnes, compared to the 197,000 tonnes caught on average between 2011 and 2014.
Under this assumption, UK would hold close to 70% of the EU share of the mackerel TAC,
compared to 50% currently, reducing the available quota for other EU member states (mainly
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87
Ireland, Denmark, the Netherlands and France). The Brexit could also hinder British
vessels to continue to land in Netherland and Denmark and potentially in Norway if
specific agreements are not reached to allow this to happen. This would have a detrimental
effect on the processing sector in the Netherland and Denmark, and potentially in Norway too.
Figure 20: 15 most important countries for UK exports of mackerel in 2015
(values in thousand euros)
Source: map based on Comext Eurostat data.
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89
2. POTENTIAL CONSEQUENCES EXPECTED ON TRADE
AFTER BREXIT
KEY FINDINGS
The bulk of UK imports from EU-27 belongs to the category of processed products
(PS3 and PS4), which face a higher tariff rate than raw material (and mostly a 10% to
15 % tariff; tariff escalation).
If WTO tariffs were applied to the current trade flows, the UK average weighted import
tariff would be around 13%, generating EUR 169 million additional custom
revenues for the British Government.
The Prepared-Preserved category of products (PS4) would be the most affected, with
an additional tariff cost of around EUR 100 million.
As the UK exports to the EU-27 mostly belong to the category of fresh (PS1) and
frozen (PS2) products, the UK average weighted export tariff would be around 10.8%.
All things being equal, such a tariff will generate EUR 150 million additional custom
revenues for the EU-27 and a cost of a similar magnitude for the economic agents
along the value chain (consumers, traders, processers and/or fishing companies).
Depending on the type of products, the structure of the markets and the
consumption patterns, the impacts on economic agents might strongly differ.
When the markets need to secure the access to some rather non-substitutable products
(e.g. UK market for Cod or Southern Eu-27 markets for high quality, fresh products such
as Sole, Scallops, Norway Lobster), the additional tariff cost is likely to be passed
to the final consumer, resulting in a decrease in the consumer surplus.
Conversely, for highly competitive products (e.g. fresh Salmon, frozen or fileted
whitefish; etc.), the producers might need to reduce their production prices to
compensate for the additional tariff costs, which could result in a decrease in the
producer surplus.
2.1 Static comparative analysis: Applying WTO tariffs to imports
and import flows between the UK and EU-27
Currently, due to the free circulation of goods established by the Maastricht Treaty, there is
no duty / tax when a fish landed in the UK is exported to the EU-27 markets. If no agreement
is reached further to the Brexit on trade regime, the most likely scenario to occur would be the
application of WTO rules, as the UK is already a WTO member59. This means that any trade
flow could be subject to the application of WTO tariffs.
WTO tariffs have been negotiated since the establishment of the GATT, in 1947. One of the key
WTO concepts is that of the Most Favoured Nation (MFN), which basically means that a country
has to apply the same trade regime to all the WTO members. As a result, the current applied
tariffs are the MFN ones (and not the original ones). The MFN tariffs used in this Study are the
ones available on the EUMOFA and DG TRADE databases.
59
between the WTO and the EU.
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Last, as indicated above, the nature of the trade flows differ from the UK perspective (mostly
import of processed goods and export of fresh / frozen goods) and the EU-27 perspective
(export of processed goods and imports of unprocessed goods).
2.1.1 UK imports from EU-27
As indicated in the Figure 21 showing the range of MFN tariff applied to UK imports from the
EU-27, the bulk of UK imports faces a 10 to 15 % tariff.
Figure 21: Histogram of total value of IMPORTS by MFN tariff band
Source: EUMOFA (2017)
Unsurprisingly, with the exception of fresh salmon, most of the main products imported (trade
flow over 25,000 euros) belong to the PS3 and PS4 categories of the presentation type.
Figure 22: Total value of imports by product type (in euros)
Source: EUMOFA (2017)
As reflected in Table 14 below showing the trade flows by preservation type, the average
weighed import tariff is thus around 13 %, ranging from 7% for Fresh products to 17%
for prepared preserved products. The difference between free and tariff based trade can also
be illustrated on the Figure 26.
-
200.000.000
400.000.000
600.000.000
800.000.000
0-5% 5-10% 10-15% 15-20% 20-25%
Histogram of total value of IMPORTS by
MFN tariff band
-
20.000.000
40.000.000
60.000.000
80.000.000
100.000.000
120.000.000
140.000.000
160.000.000
180.000.000
200.000.000
Products >25k EUR in value for IMPORTS
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Table 14: Summary of imports by preservation type
Preservation type
3 year
average
(2014-16)
Total value
incl MFN tariff
Estimated
MFN tariff
average
MFN rate
PS1 Fresh 337 079 595
360 861 052
23 781 457
7.1%
PS2 Frozen 205 457 085
228 788 883
23 331 798
11.4%
PS3 Dried-Salted-
Smoked 61 734 880
70 642 825
8 907 945
14.4%
PS4 Prepared-Preserved 611 332 972
713 489 810
102 156 838
16.7%
PS5 Unspecified 102 568 793
113 137 122
10 568 329
10.3%
TOTAL 1 318 173 325
1 486 919 692
168 746 367
12.8%
Source: EUMOFA (2017)
Figure 23: Total value of imports by preservation type (2014-16 average value)
Source: EUMOFA (2017)
The PS4 category is clearly the most impacted, with an additional cost of over EUR 100
million.
This result has several key implications for the UK society:
The UK Government (HMRC) will collect an additional EUR 169 million tax
revenue from this new trade barrier
All things being equal, the costs of the imported products are likely to increase by 13%
(see discussion below);
o If the additional cost is passed to the final consumer at the end of the value chain,
this will generate a decrease of the consumer surplus, which measures the
consumer welfare (see General Information section)
o In case the consumers are not willing to pay more for the imported goods, then the
additional cost might be absorbed by the economic agents along the value-chain
(mostly traders and processors intermediate consumption), which will result in a
decrease in their profit margin.
o Conversely, the competitiveness of the British fisheries and aquaculture
producers compared to foreign exporters is expected to increase, although most
of the imported products not really compete on the UK domestic market (mostly
salmon and cod)
-
100.000.000
200.000.000
300.000.000
400.000.000
500.000.000
600.000.000
700.000.000
800.000.000
Total value by preservation type for IMPORTS
3 year average 2014-16 Total value incl MFN tariff
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o According to the mainstream economic theory (see also the General Information
section), the new tariff is expected to result in a decrease in the social welfare of
the society.
2.1.2 UK Export EU-27 imports
As for the UK export to EU-27, the situation is more balanced, with 3 of the top five export
products being fresh (salmon, scallops and Norway Lobsters; see above Figure 14). As a result,
21% of the trade flows are facing a tariff inferior to 5%, and 17% of the products exported are
facing a 5% to 10% tariff (Figure 24Figure 24 below).
Figure 24: Histogram of total value of exports by MFN tariff band
Source: EUMOFA (2017)
Due to tariff escalation, the average UK weighed export tariff is around 10,8 %, thus lower
than the import one. Based on the current trade flows, the EU-27 is expected to collect
around EUR 150 million custom revenues (see Table 15 and Figure 25). This is likely to
impact especially the frozen products, accounting for around a third of the custom revenues,
and to lesser extent fresh products, due to the high importance of the trade flow.
Table 15: Summary of exports by preservation type
Preservation type
3 year
average
(2014-16)
Total value
incl MFN tariff
Estimated
MFN tariff
average
MFN rate
PS1 Fresh 689 254 292
744 200 330
54 946 038
8.0%
PS2 Frozen 384 150 232
436 380 034
52 229 802
13.6%
PS3 Dried-Salted-
Smoked 55 874 170
63 325 736
7 451 566
13.3%
PS4 Prepared-
Preserved 161 354 173
187 531 129
26 176 956
16.2%
PS5 Unspecified 85 423 107
93 723 059
8 299 952
9.7%
TOTAL 1 376 055 974
1 525 160 288
149 104 314
10.8%
Source: EUMOFA (2017)
-
100.000.000
200.000.000
300.000.000
400.000.000
500.000.000
600.000.000
0-5% 5-10% 10-15% 15-20% 20-25%
Histogram of total value of EXPORTS by MFN tariff
band
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As for the UK exports, the following impacts are expected:
The cost of the UK exported products is likely increase.
The final EU-27 consumers are expected to suffer a decrease in the welfare, with a
reduction in their profit margin, at least for some products (see the discussion below).
The relative competitiveness of UK producers will be reduced, which could favour
some of the EU-27 producers (e.g. in the salmonids sector).
Figure 25: Total value of exports by preservation type (2014-16 average value)
Source: EUMOFA (2017)
Box: who is expected to bear the cost of the trade barrier?
Further to the establishment of trade measures, there might be at least three possibilities
about the way the tariff will affect the economic agents
-taker or price-maker):
(i) The first case concerns the fact that the EU market really wants the products from UK,
and thus will pay for any increase in price due to tariffs (e.g. in the case of no or little
substitutes): this will probably apply to scallops (especially Fresh during the spring /
summer time, when fishing is closed in France), Norway Lobsters, Lobsters, and other
similar high value products (such as Monkfish for instance, which is highly appreciated in
France and Spain). However, even in this case, there might be some limits in the price the
final consumer is willing to pay. The price increase will have then to be supported by
other economic agents. It is observed that the landing prices of some high value species
(e.g. scallops) are typically lower in the UK than in other EU countries (e.g. France) which
may help markets harmonise in some cases.
(ii) In case the EU market might not be willing to pay for the additional cost (e.g. in the
case where substitute products exist from other places, including EFTA countries), British
exporters might need to lower the nominal prices to compensate for the tariff. If this would
occur, the UK fishing companies might need to lower the ex-vessel price to remain
competitive)
(iii) In the case the tariff impact would be too hard on the UK fishing and trading companies,
the UK exporters might need to find alternative markets (e.g. when a demand could exist
for a price close to the initial one, and in any case when the price difference is lower than
the tariff.
-
100.000.000
200.000.000
300.000.000
400.000.000
500.000.000
600.000.000
700.000.000
800.000.000
Total value by preservation type for EXPORTS
3 year average 2014-16 Total value incl MFN tariff
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2.2 Discussion 1: Possible changes in trade flows
As mentioned above, a change in tariff and in the price of the final product may result in a
change in the structure of the international trade flows. However, an increase in the
price of the product might modify the demand for this good. When economic agents really need
to access to a good, they might be willing to pay a higher costs (see below). This is why in this
section, some key elements of the UK and EU-27 demand patterns are provided.
2.2.1 UK
In short, among the species of interest for this study, the UK final consumption demand is
particularly strong for Salmon, Tuna, Cod, Pollock, Haddock and cold water prawns.
Also, the demand for intermediate consumption (processing) is high for Salmonids
and Whitefish (incl. Cod and Haddock) products (see Figure 26, Table 16 and Figure 27
below)
Figure 26: Post austerity GB retail species consumption
Source: Seafish, 2015 - Seafood Information Fact Sheet: Seafood Consumption
For these categories or seafood products, it can be expected that the final demander (consumer
or processing firms) would agree to pay for an additional cost generated by new tariff. For
other species however, as the demand is fairly lower, it can be expected that the final
demander will not accept to pay for an additional cost, which means that either the cost
will be supported by EU-27 producers (decrease in the price net of the duty) or that the quantity
imported will be reduced (which will also result in a loss of consumer surplus).
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Table 16: Total UK consumption estimates
Source: Seafish, 2015 - Seafood Information Fact Sheet: Seafood Consumption
Figure 27: Processing value by preservation type in 2014 (by euros)
Source: EUMOFA, 2017
2.2.2 EU-27
As mentioned in the Background section, the EU market is currently one of the three main
seafood markets in the world. Even in the case of Brexit, this means that the demand for
imported products will still stay high, including when products are coming from the UK. Two
types of demand can be considered here. The first one relates to the demand for fresh
products (currently with an import of EUR 689 million from the UK), either for further
processing or for final consumption (especially in France, Spain, Italy). As the WTO tariff
duties are the lowest for this category of products, such trade flows are likely to remain
unchanged. On the other hand, the EU-27 imports of products belonging to the PS3 (Dried-
Salted-Smoked; EUR 56 million from UK) and the PS4 categories (Prepared-preserved; EUR161
million from UK) might be modified, as part of the UK processing factories are indeed depending
-
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
Processing whitefish (>100m EUR)
Prepared or preserved fish
Frozen whole fish
Frozen fish fillets
Fresh or chilled fish fillets
Fish fillets (dried, salted, brine)
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on imports (including from EU-27 countries), and could technically be relocated to any place
not facing the new WTO duties (including EU-27 and EFTA countries).
2.3 Discussion 2: Full nationalisation of the UK waters
This scenario is based on the following assumption: all the former EU-27 catches in the UK
waters are realised by UK vessels and landed in UK ports. This means that the UK fishing
industry will produce an additional 630,000 tonnes, worth around EUR 470 million
As a matter of fact, such an assumption is highly questionable, especially in the short term,
at least due to two reasons:
(a) The first one is related to the capacity of the UK companies to catch such additional
quantities, both for fish and shellfish species, as well as the capacity of backward agents
(auctions, processors).
(b) The second one is related to the capacity to market (fish and shellfish), as such an
increase in the production is likely to result in a (ex-vessel) price decrease.
As for the consequences on trade, two different situations could be identified, based on the
concentrated. For the species for which a domestic demand exists (e.g. Cod, Haddock,
Shrimp60), an increase in the UK production and landing is expected to (at least partly) result
in a drop in the imports (substitution between national production and imports). For the species
for which the domestic demand is limited, an increase in the UK production and landing is
expected to result (at least partly) in an increase in the UK exports.
In order to clarify this issue, the current catches realised by EU-27 vessels were described in
The Chapter 1, indicating that Herring, Mackerel and other pelagic species are clearly of high
importance in terms of quantities (Figure 5). Regarding the point (a) above, this could question
the possibility of the UK fleet to produce an additional 400,000 tonnes per year, at least in the
very short term.
The situation differs when considering the other species which are important in values, such
as Sole, Norway Lobster and Hake for instance, as the associated quantities are rather low.
Due to the consumption patterns in UK and EU-27, it is likely that these species will be exported
from the UK to some EU-27 markets (mostly France, Spain and Italy), then increasing the
current export flow. The following species could but especially concerned by this phenomenon
(in EUR million euros 2014 figure: Sole (50 million, mostly to France, as well as 7 million
lemon sole), Norway Lobster (30 million), Hake (30 million, Megrims nei (13 million), Scallops
(11 million)
The next question is about the trade regime to be applied to these potential new trade flows.
In case a free trade agreement is negotiated after the Brexit, there will be no or little
implication, at least in the short term. If WTO tariffs are applied, all or part of the EUR 500
million new exports could face the average weighed tariff calculated above (10.8 %).
60 And Mackerel to some extent
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2.4 Discussion 3: The impact on raw material
The impacts regarding the availability of raw material for the seafood / food processing sector
are not easy to estimate, depending on the possible scenarios described above. However, some
general trends can be identified:
1. A decrease in the catching possibilities of the EU-27 fleet might reduce the quantity of
raw material available for EU-27 markets, even if a share of the additional catches by
the UK fleet are likely to be exported to EU-27 markets. Some studies estimate a
potential loss of raw material for the EU-27 industry of around 7% of the total supply
(Salz, 2017; EUFA, 2017).
2. In case of the application of WTO tariffs, part of the raw material imported from the UK
market is likely to cost more.
3. The quantities (and costs) of raw material originating from third countries might also be
affected, due to the Autonomous tariff quotas regulation, which enable EU importers to
pay less tariff than otherwise expected under the WTO rules (see Box below).
Box: Autonomous tariff quotas (ATQ)
According to the European Commission (https://ec.europa.eu/fisheries/commission-proposes-
autonomous-tariff-quotas-certain-fish-and-fish-products_en), the ATQ regulation covers a
certain number of fisheries products for which, for a limited volume (but up to 50,000 tons per
year e.g. for Alaska Pollock), the duty has been suspended or reduced (and for a limited period
of time61). Duty and volume are specific to each product. In principle, ATQs are only granted
to products that are imported to be further processed within the EU. The objective of such a
policy is to provide the EU processing industry with raw and semi-raw materials. For the current
period 2016-2018, the ATQ regulation covers up to 770,500 tons of fish products per year62.
In the context of the Brexit, the ATQs regulation might have some implications:
In principle, the quotas agreed on by the European Commission are based on the needs
from the processing industry of the different EU MS. However, in practice, there is no official
system similar to the relative stability one, with a certain share of the ATQ dedicated to a
given country.
This implies that for the time being, it is not clear to know which are the MS markets
benefiting the most of ATQs.
In case of Brexit, this also means that the UK might need to negotiate bilaterally ATQs with
other WTO members.
However, as indicated above, the UK imports a large quantity of seafood products not only for
final consumption, but also for processing. This is clearly the case for products like Tuna, Cod
and Salmon, but it can also apply for other products such as Alaska Pollock. If the access to
the raw material and /or the Common Market is more costly or more complicated due to Tariff
and Non-Tariff Barriers, some of the globalised companies currently established in the UK could
observed a decrease in their competitiveness, which can also have some impacts on the flow
of raw material.
61 The current list of products being established from 1 January 2016 to 31 December 2018
62 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32015R2265&from=EN
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99
CONCLUDING REMARKS
The aim of this study is to present a description of (i) the production of fish from UK waters
and (ii) bilateral trade between the UK and the EU-27 in different possible scenarios, based on
relevant case-studies to understand the expected consequences of Brexit.
Unless a status quo arrangement is agreed, that follows the fundamental principles of the
Common Fisheries Policy as well as other EU treaties (e.g. free movement of goods, people and
capital), Brexit is likely to impact the current economic balance of fishing, undertaken in the
UK and other EU Member States EEZs, and trade of fisheries products between the UK and
other Member States.
The majority of key stocks to EU-27 countries are under TAC (Figure 5), exceptions are species
like king scallops, crabs, lobsters, squid and John Dory. Management of shared stocks under
TACs would no doubt continue. Mackerel and Herring are the two largest stocks in value to EU-
27 and are already subjects of other international agreements (e.g. Norway etc) as
transboundary stocks. The potential redistribution of effort inside the EU-27 EEZ is not expected
to compensate for the loss of important fishing grounds. This would likely result in a direct loss
of revenues for these vessels, even though quota available may remain the same. This would
also result in a reduction in raw material available on some EU-27 markets. Up to 70% of UK
exports are Intra-EU out of a total estimated export value to the UK of approximately 2 billion
Euros (MMO, 2015) versus UK landings value of approx 1 billion Euros.
It is estimated that fishing in the UK EEZ by the UK in 2014 created approximately 700 million
Euros of landings value in 2015 versus 500 million Euros for other EU Member States (Table
2). The other EU Member States vary in their activity in UK EEZ, from 50% landings value for
Belgium to between 20-25% landings value for Denmark, Germany, Netherlands and France
(Table 4). The country with greatest exposure in terms of value from fishing and trade is France.
Not only will Brexit impact sea fisheries, it will reduce aquaculture produced seafood in the EU
as the UK is estimated to create 21% of total income from aquaculture (AER STECF Aquaculture
Economics, 2015), mostly salmon. More generally, demand for seafood in UK and EU-27
markets from UK waters, especially in the short term, is not likely to change much. However
depending on the type of product exported to the EU (i.e. fresh or processed) it will affect
producer and consumer prices accordingly, which might be somewhat in line with tariffs
imposed. For example, the estimated average UK weighted import tariff is 13% and the export
tariff is 11%% in the static analysis above (see section 2.1).
This study highlights some of the difficulties in estimating what might happen but has attempted
to make the economics clearer of the UK and EU-27 seafood sectors, particularly with regard
to the scale and interactions between UK and EU-27.
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REFERENCES
AER STECF (2016) The 2016 Annual Economic Report on the EU Fishing Fleet. JRC
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area, nationality & species. NAFC Marine Centre. University of the Highlands and Islands
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Seafish (2015). Seafood industry factsheet. February 2015. (online document).
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Common Fisheries Policy and BREXIT - Trade and economic related issues
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ANNEX 1: TRADE FLOWS BY CONTINENTS
Source: FAO, 2016
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Source: FAO, 2016
... xxii Regarding mackerel, the vast majority of catches taken by the EU occurs within the UK EEZ (Doering et al. [2017]). According to a recent study by Le Gallic et al. [2017], if the UK prohibits the EU fleet from accessing fishing stocks within its EEZ, it will cause great loss of revenues for these vessels. Even if the EU redistributes quotas inside its EEZ, it is unlikely that it will compensate for the loss of such important fishing grounds. ...
... xxii Regarding mackerel, the vast majority of catches taken by the EU occurs within the UK EEZ (Doering et al. [2017]). According to a recent study by Le Gallic et al. [2017], if the UK prohibits the EU fleet from accessing fishing stocks within its EEZ, it will cause great loss of revenues for these vessels. Even if the EU redistributes quotas inside its EEZ, it is unlikely that it will compensate for the loss of such important fishing grounds. ...
Article
The partition function approach is applied to study coalition formation in the Northeast Atlantic mackerel fishery in the presence of externalities. Atlantic mackerel is mainly exploited by the European Union (EU), the United Kingdom (UK), Norway, the Faroe Islands and Iceland. Two games are considered. First, a four-player game where the UK is still a member of the EU. Second, a five-player game where the UK is no longer a member of the union. Each game is modeled in two stages. In the first stage, players form coalitions following a predefined set of rules. In the second stage, given the coalition structure that has been formed, each coalition chooses the economic strategy that maximizes its own net present value of the fishery, given the behavior of the other coalitions. The game is solved using backward induction to obtain the set of Nash equilibria coalition structures in pure strategies, if any. We find that the current management regime is among the stable coalition structures in all eight scenarios of the four-player game but in only one case of the five-player game. In addition, stability in the five-player game is sensitive to the growth function applied and the magnitude of the stock elasticity parameter.
Article
The UK fishing sector has been under the spotlight since the beginning of the Brexit debate. Political commentators claimed that up to 90 per cent of British fishers supported Brexit as they considered the UK was disadvantaged compared to other EU Member States. Their main grudge is about the equal access that all Member States have had to all EU waters – with the exception of territorial waters, up to 12 nautical miles from the coast – since the formal inception of the Common Fisheries Policy (CFP) in 1983. Combined with what they perceive to be an unbalanced allocation of fishing quotas, this legal framework is thought by the UK fishing industry to be the main reason for the poor management of EU fisheries, which could be terminated following Brexit thus regaining the UK's status as an independent coastal state. The key issue addressed in this article is the possible reallocation of fishing opportunities within British waters. It outlines the current allocation system and summarises the views of major stakeholders. This is complex as historical fishing rights may or may not be acknowledged but it remains that the UK fishing industry needs access to EU markets and EU labour to bring the fish to value. © 2018 Agricultural Economics Society and European Association of Agricultural Economists (EAAE)
Seafood industry integration in the EU
  • European Parliament
European Parliament (2016), Seafood industry integration in the EU
Presentation at the Safeguarding access to UK waters: what (hard) Brexit means for EU fishing fleets and jobs Roundtable
  • European Eufa
  • Fisheries Alliance
EUFA, European Fisheries Alliance (2017). Presentation at the Safeguarding access to UK waters: what (hard) Brexit means for EU fishing fleets and jobs Roundtable; 22 nd March 2017. European Parliament.
  • A Hatcher
  • J Frere
  • S Pascoe
Hatcher A, Frere J, Pascoe S, Robinson K. (2002)ownership of UK fishing vessels. Marine Policy 26 ; 1 11
Union on Scotland, Wales & Gibraltar. Study for the European Parliament
  • M Keating
Keating M. (2017), Union on Scotland, Wales & Gibraltar. Study for the European Parliament. PE 583 118.
Assessment of the effects of Brexit on Irish and EU fisheries in the NE Atlantic
  • D Norton
  • S Hynes
Norton D. and Hynes S. (2016), Assessment of the effects of Brexit on Irish and EU fisheries in the NE Atlantic. SEMRU Research note.
area, nationality & species
  • I R Napier
Napier I.R. (2016), area, nationality & species. NAFC Marine Centre. University of the Highlands and Islands
Socio-economic impact of Brexit on the EU-27 seafood sector
  • P Salz
Salz P. (2017) Socio-economic impact of Brexit on the EU-27 seafood sector. Framian.
Seafood industry factsheet
  • Seafish
Seafish (2015). Seafood industry factsheet. February 2015. (online document).
Brexit and Fisheries. Plain sailing or stormy waters? communication at the NASF Conference 9 th
  • E Terazono
Terazono E. (2017) Brexit and Fisheries. Plain sailing or stormy waters? communication at the NASF Conference 9 th March 2017.