1. Why fight over fish?
The U.K. has some of Europe’s most fertile fishing zones, and its fleet hauls the EU’s second-largest catch annually. Fisheries were a sticking point in the U.K.’s initiative to join the bloc in the 1970s, and British fishermen have lamented that their sector was sacrificed during negotiations to meet other trade goals. In recent years, more than half of fish and shellfish caught within 200 miles of the U.K. coast was landed by other EU countries. The resolution of this fight could have implications for other sectors, notably banks.
2. How could this affect banks?
Fisheries are not being negotiated as a standalone industry: slides from the European Commission show that the EU wants to use the issue as a bargaining tool in the context of wider trade talks. Irish Deputy Prime Minister Leo Varadkar, who led the government until a grand coalition was formed in June, warns that without an accord on this issue, the U.K.’s financial services firms may not win the deal they want with the EU. Speaking to the BBC in January, Varadkar said: “You may have to make concessions in areas like fishing in order to get concessions from us in areas like financial services.”
3. How will this unfold?
In advance of Brexit coming into force at the end of this year, the U.K. is planning its departure from the EU’s Common Fisheries Policy, which means foreign boats will need to obtain fishing licenses and abide by British rules. The European Commission has cautioned that a post-Brexit U.K.-EU trade agreement must include a fisheries accord, and U.K. Prime Minister Boris Johnson pledged that Britain will maintain control of its waters. The bloc has signaled that it is prepared to back down from its demands to keep the same access to British fishing waters it enjoys today -- but it’s unlikely to make that concession until much closer to the October deadline for a deal. Barrie Deas, chief executive of the U.K.’s National Federation of Fishermen’s Organisations, said after a meeting with the U.K.’s Brexit Chief Negotiator David Frost that “there will be no sell-out. Fishing is an absolute priority for the U.K.”
4. How closely tied are the U.K. and EU?
Upwards of $1.5 billion is sold each way annually, according to Rabobank. U.K. waters supply the fish for Holland’s herring habit; consumers on the European mainland have an affinity for the salmon farmed off the shores of Scotland. If Europe curbs buying, the U.K. could also see a shellfish surplus. Perhaps more surprisingly, the Falkland Islands in the south Atlantic, which have British overseas territory status, are a major supplier of squid to southern Europe and it’s unclear how Brexit talks may affect those shipments.
5. What’s at stake?
Though the fishing industry isn’t vital to the U.K. -- representing just 0.1% of the British economy -- its long-term decline has contributed to the challenges facing coastal communities. The EU has accounted for at least 64% of the U.K.’s exports since 2010, according to data compiled by Rabobank. Though both sides have diversified trade with other countries, they’ll want to keep fish flowing across borders and avoid clashes between ships at sea, as occurred in the so-called cod wars waged by Britain and Iceland between the 1950s and 1970s.
6. How far has the U.K. industry declined?
The U.K. home fleet landed 948,000 tons of fish in 1970, shortly before the country joined the EU. By 2015, the year before the Brexit referendum, that had more than halved to 415,000 tons, according to government statistics. Over the same period the number of British fishermen dropped to 12,000 from 21,400. Indications are that fishing communities voted strongly for Brexit, expecting restrictions on boats from Europe to reinvigorate their business. British fishing associations say the government should emulate Norway, which annually negotiates access to its waters and bars boats from countries it doesn’t have a deal with.
7. Which EU countries are most affected?
Countries most closely involved in the EU’s fishing talks with the U.K. are Ireland, Spain, France, Belgium, the Netherlands, Germany, Denmark and Sweden. While EU rules have permitted all member nations to fish in each other’s waters, those are the states whose waters are closest to those of the U.K. or whose fishermen are most extensively around the U.K. coast. They have been pressing for the issue to form part of wider negotiations over the trade pact between the U.K. and EU, rather than being dealt with in isolation.
8. What’s the U.K. political backdrop?
Johnson’s Conservative Party received strong support in the December 2019 election from fishing communities who signed up to his “Get Brexit Done” message, from Milford Haven in western Wales to Brixham on the English Channel and eastward to the North Sea port of Grimsby, where a Tory candidate won for the first time since World War II. Johnson pledged after the election to “work flat-out” to keep their backing, adding to pressure to deliver a deal the fishing industry will be able to welcome. Johnson repeatedly told Scottish voters he would protect their fishing industry, taking back control of its waters and contrasting that stance with the pro-EU policies of Nicola Sturgeon’s Scottish National Party.
9. What about Ireland?
Ireland’s fishing fleets make about 34% of their catch in British waters. Not only does Ireland risk losing some of its access to such important fishing grounds, it also faces greater competition in its own waters from EU vessels. Former Irish Agriculture, Food and Marine Minister Michael Creed is on record saying its fishing industry “would be decimated if we don’t get the proper outcome from Brexit; it would be calamitous.” Ireland is playing a pivotal role in the wider talks between the U.K. and EU over a future trade deal, reflecting its close trading links with both sides, but it has a particular stake in the outcome of the fishing negotiations.
©2020 Bloomberg L.P.
August 01, 2020 at 03:50AM
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