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THE OPERATION

OF THE

ECONOMIC LINK

LICENCE CONDITION

IN

1999

1.1 From 1 January 1999 British registered fishing vessels over 10 metres in overall length and landing 2 tonnes or more of quota stocks have had to demonstrate an economic link with fishing communities in this country. This report examines the operation of the new licence condition in its first year.

1.2 The licence condition was introduced to ensure that British coastal communities dependent on fisheries and related industries derived economic benefit from vessels fishing against UK quotas. Its introduction was the subject of extensive consultation with the Commission who confirmed in July 1998 that, in its view, the condition was compatible with Community law. In the same month Guidance Notes on the operation of the new requirements were sent to all licence holders.

2.1 There was almost full compliance with the economic link condition in 1999. Over 90% of the UK fleet complied by landing more then 50% of their quota catches into the UK. Additionally the condition has:-

• led to a 70% increase in the volume of quota stocks landed into UK ports by foreign-owned UK flagged vessels;
• led to a significant increase in the number of landings into western UK ports by Anglo-Spanish vessels, resulting in increased local expenditure of at least £3million; and
• secured over 700 tonnes of additional quota, including North Sea sole and nephrops, for use by the inshore fleet in the first 2 years of operation.

3.2 A vessel owner may demonstrate that his vessel has maintained an economic link with the UK by one of four options:

Option A: landing at least 50% by weight of the vessel’s catch of quota stocks into the UK, or

Option B: employing a crew of whom at least 50% are normally resident in a UK coastal area, or

Option C: incurring a given level of operating expenditure in the UK for goods and services provided in UK coastal areas, or

Option D: demonstrating an economic link by other means (including combinations of the above) providing sufficient benefit to populations dependent on fisheries and related industries.

Vessel owners may also rollover part of their economic link compliance to the following year.

3.3 Vessel owners have until 31 July each year to provide evidence of compliance in the previous year. Vessels failing to provide that evidence are liable to the withdrawal of their authority to fish for quota stocks and/or prosecution for breach of the licence condition.

4.1 Some 1,756 British registered fishing vessels landed more than 2 tonnes of quota stocks in 1999 and thus were required to demonstrate an economic link. We have looked at the evidence and satisfied ourselves that 1,737 of these vessels complied with the economic link requirement. This includes 24 where the rollover provision has been used to carry forward a shortfall in 1999 to be made good in 2000. Table 1 below shows how vessels complied.

Table 1 - Vessels complying with the economic link in 1999⁽¹⁾

including rollover cases (in brackets)

4.2 The remaining 19 cases concern vessels whose licence entitlements have subsequently been transferred to third parties. The Guidance Notes stipulate that the penalty for failure to comply with the economic link licence condition may be applied to a vessel to which the licence from a non-complying vessel is transferred. Since 1999, however, was the first year of operation, we have not exercised this sanction. Instead we have sought and obtained assurances from the purchasers of the relevant licence entitlements that they will comply with the economic link licence condition.

4.3 Two Anglo-Spanish vessels and 1 Anglo-Dutch vessel failed to comply with the economic link by 19, 12 and 16 percentage points respectively. This is outside the limit of 10 percentage points which the Guidance Notes say may be carried forward. Exceptionally we have given the three owners the opportunity of rolling forward their shortfall as there is a reasonable prospect of their achieving compliance in the year 2000.

4.4 Two of the Anglo-Dutch vessels are pelagic freezer trawlers which landed all their catch abroad and complied under Option B, the crewing option. Most of the remaining Anglo-Dutch vessels are based in two producer organisations, the North Sea FO and Fife PO. In 1999, we agreed an arrangement under Option D whereby an annual transfer of quota from those POs to the non-sector and under 10 metre fleet would go halfway towards compliance with the economic link for 26 vessels, with the other half to be met by more conventional means such as landings into the UK or the employment of UK resident crew. In the event, most of the vessels concerned failed to make up this other half and have instead agreed to make good the shortfall in 1999 by the transfer of further quota in 2000. A table setting out the total quantities of quota transferred by the Anglo-Dutch in 1999 and 2000 under these arrangements is set out at Annex 1. The value of these quota transfers at 1999 first hand selling prices for the landed fish is estimated at £1.9 million.

5.1 The economic link licence condition has not posed a problem for British-owned vessels, all of which were able to comply with the condition with no significant change to their previous pattern of activities. Most complied by landing at least 50% of their catches of quota stocks into the UK. A small number of distant water and pelagic vessels which traditionally land their catch abroad complied with Option B, the crewing option.

5.2 Two annexes attached to this report illustrate the impact of the condition in 1999 upon foreign-owned vessels:

• Annex 2 sets out the quantity, value and number of landings made by foreign-owned vessels into the UK and abroad from 1996, the year when such vessels were numerically at their peak, to 30 June 2000.
• Annex 3 details the total landings by Anglo-Spanish and Anglo-Dutch vessels of quota and non quota stocks into specific UK ports between 1996 and 1999.

5.3 As can be seen from Annex 2, the total number of landings into UK ports in 1999 by foreign-owned UK flagged vessels more than doubled, from 225 in 1998 to 477. This resulted in these vessels landing over 4,500 tonnes of quota stocks into UK ports in 1999, a 70% increase over landings in 1998. At the same time the number of foreign owned vessels on the UK register fell from 140 to 122. The activities of the different sectors of the fleet were, however, markedly different as discussed below.

5.4 In response to the licence condition Anglo-Spanish vessels landed more of their catches into the UK in 1999. The number of landings into the UK increased from 114 to 435. The effect of this on the quantities of fish landed is set out in Table 2 below.

Table 2 - volumes of fish landed in the uk by anglo-Spanish fleet, 1998 & 1999

Overall, this group of vessels landed 52% of their catches into the UK. This trend seems to be continuing with a slightly higher percentage (55%) of recorded quota stocks being landed into the UK in the first six months of 2000.

5.5 Most of the fish landed into the UK was transported over land to markets in Spain. Nevertheless the increased landings generated additional economic activity through, for example, the purchase of fuel, ice and other provisions and services and the payment of port dues. The additional 320 landings are estimated to have resulted in an increase of at least £3million in expenditure in the UK by these vessels. The principal ports which benefited from this increased activity were Milford Haven (249 landings, up from 93 in 1998), Lochinver (80 landings, up from 17) and Fleetwood (44 landings, up from zero). The figures for these and other ports are set out in more detail in Annex 3.

5.6 The condition has had a more limited impact on the activities of Anglo-Dutch vessels. The two pelagic vessels, in common with British-owned pelagic vessels, landed all their catches abroad and complied with Option B by employing a comparatively high number of UK resident crew.

5.7 The whitefish vessels also landed virtually all of their catches of quota stocks abroad, landing only 212 tonnes into the UK, less than 1% of their total whitefish quota stock landings. This represented a significant fall from the 934 tonnes landed in the UK in 1998. This may have been due in part to the replacement of the old visiting condition in licences, which required vessels to demonstrate an economic link by making 4 visits to a UK port every 6 months. It did not require vessels to land fish each time they visited but vessels sometimes did so for convenience. The new compliance visiting condition only requires vessels to make one port visit every six months (see paragraph 6 below) and so may have reduced the incentive for Anglo-Dutch vessels to land their catches here. The effects of this, however, are offset by the value to indigenous fishermen of the quota which Anglo-Dutch interests have made available for re-distribution, in order to fulfil the economic link requirement.

5.8 Anglo-Dutch whitefish vessel owners are understood to be reluctant to land fish into the UK because they can obtain better prices in Holland. The development of electronic auction facilities linked to the Dutch markets may overcome this. Nor has there been any discernible increase in the employment of UK crew aboard these vessels. Owners’ representatives have said their clients are willing to employ such crew but find a shortage of suitably qualified personnel.

5.9 Of the remaining 6 foreign-owned vessels on the UK register 3 are Anglo-Irish and 3 Anglo-Icelandic. The Irish-owned vessels have essentially the same fishing pattern as the Anglo-Dutch vessels and made no landings into the UK at all in 1999. All complied by employing UK resident crew and are likely to maintain this pattern.

5.10 There was a significant fall in both the overall volume and percentage of quota stocks landed in the UK by the 3 Anglo-Icelandic vessels in 1999, down from 531 tonnes (77%) in 1998 to 337 (25%). This was due largely to the sale of a fourth vessel which had previously landed more regularly than the others into this country. These are large vessels which employ a comparatively high number of UK resident crew and all complied with Option B.

6.1 Vessels which land less than half their catch of quota stocks into the UK under Option A are required to make at least one visit to a UK port every 6 months for control purposes. Of the 118 vessels affected, 35 failed to make one or both of the required port visits. Fisheries Departments are writing to the owners of these vessels reminding them of their obligations under this licence condition and pointing out that action may be taken against vessels failing to comply in future.

7.1 As can be seen from Annex 2, the total number of foreign-owned vessels on the UK register fell from 140 at the beginning of 1999 to 122 at the end of 1999 and to 115 by June 2000. This was due almost entirely to a fall by 21 in the number of Anglo-Spanish vessels. There is no evidence to suggest that this fall is directly attributable to the introduction of the economic link licence condition. It is part of the general and continuing contraction in the number of vessels in the UK offshore fishing fleet which has been evident for a number of years as a result of fleet rationalisation.

7.2 It should be noted that changes in vessel numbers do not necessarily equate directly to changes in fishing effort or quota availability. Even if a vessel is removed from the register, it is still possible under the quota management rules in the UK for the group to which it belonged to retain access to the quota derived from its licence through quota swap arrangements.

8.1 The economic link condition has been associated with significant changes in its first year of operation. The increase in landings into the UK by the Spanish-owned sector is encouraging and, if sustained, could lead to spin off benefits through an increase in the purchase of goods and services at UK ports. Although the condition has had little direct impact on the operation of Dutch-owned vessels, the contribution of quota, notably North Sea sole and nephrops, has been helpful in maintaining fisheries opportunities for the inshore fleets in the UK. The development of electronic clock auctions at East Coast ports may encourage Anglo Dutch vessels to increase their levels of landings and expenditure in the UK.

Ministry of Agriculture, Fisheries and Food November 2000

Scottish Executive Rural Affairs Department

National Assembly of Wales Agriculture Department

Department of Agriculture and Rural Development for Northern Ireland

Quota transferred to the indigenous fleet by the Anglo-Dutch sector in connection with compliance with the economic link licence condition

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