The European Fishing industry faces immense challenges in economical, ecological and social respects. In an effort to support a respective transitioning of the sector, the European Union and its Member States grant subsidies to the fishing industry. As over 72 per cent of the assessed EU fish stocks are overfished and 22 per cent fall outside of safe biological limits (European Commission, 2010m), one of the main outcomes that is needed as a result of this transition is to bring the fishing capacity in line with the sustainable yield of stocks.
Subsides in the fisheries sector may have several negative effects such as creating or maintaining overcapacities or lowering retail prices, thereby increasing additional consumer demand for resources that are already under pressure. From a purely economic point of view, support schemes artificially increase potential revenue. Ultimately, subsidies may create incentives for unprofitable fleets to remain in business or to increase their fishing efforts, resulting in overcapacity and leading to an overexploitation of the resources (Sumaila and Pauly eds., 2007). The extent to which fisheries subsidies cause environmentally harmful effects depends on variables like the state of the existing management system, the type of fishery, the way in which it functions and control and enforcement measures as well as the biological status of stocks (Markus, 2010).
In the case of the European Union, it remains a challenge to align the respective management and control systems in such a way that fisheries subsidies do not cause harm to fish resources. The support schemes under the Common Fisheries Policy (CFP) have changed in recent years, reflecting the EU Sustainable Development Strategy from May 2001. A variety of subsidies have been eliminated, such as the construction of new vessels, and funds have been redirected to programs aimed at reducing fleet capacity, but the overall fishing capacity has not been sufficiently reduced to date (‘Baltic Sea 2020’, 2009).
On 22 April 2009, the European Commission published a Green Paper “Reform of the Common Fisheries Policy”. The paper illustrates how the substantial public financial support for the fisheries sector is often incompatible with, and even contradictory to other Common Fisheries Policy (CFP) objectives, particularly the need to reduce overcapacities (European Commission, 2009c). In addition, a recent evaluation of the European Fisheries Fund’s (Council Regulation (EC) No 1198/2006) predecessor, the Financial Instrument for Fisheries Guidance (FIFG 2000-2006), demonstrated that Member States generally failed to use environmental or social criteria to guide their decisions on where to allocate subsidies. As a consequence, EU fisheries subsidies continued to maintain and even increase fishing overcapacity in a number of fisheries (Cappell et al., 2010).
Overview of fisheries subsidies in the European Union
The total value of fisheries subsidies in the European Union is unknown. There are several reasons for this, including that subsidies come from a variety of sources, different definitions of subsidies are applied36 and serious issues remain with transparency aspects and non- compliance with reporting requirements.37 A recent study estimates that subsidies in the European Union account for about 46 per cent of the landed value of fisheries (Sumaila and Pauly eds., 2007).
In a number of EU Member States the cost to their national budget of managing and subsidising fisheries now surpasses the economic value of the catches (European Commission, 2008b).
The European Fisheries Fund (EFF) is the main structural funding instrument of the European Union in the fisheries sector. The EFF's total budget is about €4.3 billion for the seven-year period from 2007-2013.
In addition, the fisheries sector profits from:
- Support to access the fishing zones of third countries;
- Community aid to support the controlling and monitoring efforts of the Member States;
- The EU tax exemption on fuel used by vessels.
- Support received through other structural funds such as the European Regional Development Fund (ERDF) and the European Social Fund (ESF) with the aim of reducing socio-economic disparities;
- Rescue and restructuring aid such as the emergency aid package to tackle the fuel crisis, the partial allocation of vessel decommissioning aid to firms that switch to smaller, more energy-efficient vessels, temporary reductions in employee contributions to social security payments and emergency aid for the temporary suspension of fishing activities;
- Funds granted for research activities; and
- State aid, above and below the de minimis aid level.
Conclusions and recommendations
The potential future impacts of subsidies will depend on the state of fish stocks, the type of management regime and on the degree of success at enforcing rules (OECD, 2010). The EU did not succeed in aligning these factors and, consequently, a gap remains between the official sustainability objectives of the CFP and the results actually achieved.
Currently, no viable mechanism exists to assess the correspondence between fishing capacity and fishing opportunity. In the absence of reliable information (e.g. between specific species recovery plans and fleet adaptation to the kind required) (Lutchman et al., 2009), it remains likely that European fisheries subsidies will continue to have harmful effects.
As the problem of too many boats chasing too few fish persists, a proactive approach should be taken to guide the funds in the desired direction. Subsidies that are likely to have negative effects in the absence of a reliable regulatory regime should be curbed and phased out.
Subsidies that directly contribute to the recovery of stocks and their environment should be supported. Additional efforts in this direction seem necessary as Member States have shown a clear preference in the past for allocating funds to potentially harmful projects, such as towards fleet adaption and modernisation rather than nature conservation (Lutchman et al., 2009).
Necessary steps to ensure that public funds contribute to a sustainable fisheries industry include:
The improvement of the regulatory regime by:
- increasing transparency and consistently implementing measures such as the European transparency initiative (European Commission, 2006b; 2007h);
- making the access of Member States to structural funds dependent on the fulfilment of their reporting requirements, especially annual reporting obligations, in an effort to achieve a sustainable balance between fishing capacity and fishing opportunities;
- strengthening conditionality aspects between receiving subsidies and achieving the objectives of the CFP. Non-compliance with the CFP rules should have an effect on the availability of funds. Operators who have been convicted of fraud or IUU practices should face financial sanctions and be excluded from receiving future funding; and
- requiring that any spending under a future financial instrument for the EU fisheries transparently outlines the extent to which the subsidy helps to achieve the objectives of the CFP.
- Development of a monitoring and control regime of fisheries;
- Scientific research for stock assessments;
- Reduction of impacts on marine habitats and ecosystems;
- Research and training in the use of environmentally friendly fishing techniques or aquaculture activities; and
- Retraining fishermen for alternative employment opportunities.
- Contributions to operating costs, processing activities or price support;
- Decreasing aid for individual fishing operations and vessel modification;
- Payments for fishing access in third country waters which contribute to overfishing as well as political havoc and armed conflict;39 and
- Phasing out fuel subsidies.