House of Lords - European Union - Twenty-Fifth Report

Select Committee on European Union Twenty-Fifth Report

CHAPTER 2: AN EVALUATION OF THE NEW CFP LEGISLATION

8. In January 2003, Regulation 3760/92, often referred to as the basic CFP Regulation, was replaced by a new Regulation on conservation and sustainable exploitation of fisheries resource, Regulation 2371/2002.[12] The new Regulation is more comprehensive than its predecessor, covering a large range of issues dealt with under the CFP and setting broader objectives. In particular, it aims for sustainable exploitation, more long-term resource management and greater coherence with other EU policies. Three key areas of the EU fisheries policy are not dealt with by the new basic Regulation, namely: structural policy, markets and international policy.

Box 3

The main elements of the new basic Regulation
A stronger commitment to the protection of the marine environment.
Stocks falling below safe biological limits will be managed by recovery programmes, others by multi-annual management plans. The Council is discussing recovery plans for Cod and Northern Hake, which are a template for the likely format of plans for other stocks.
A simpler fleet policy that puts responsibility for matching fishing capacity to fishing possibilities with the Member States.
Current provisions restricting access to the 6-12 mile zone around the coasts of Member States to fishing vessels that have traditionally fished there have been renewed to 2012. Access to the 06 mile zone remains restricted to fishermen from the Member States.
Other access restrictions such as the "Shetland Box" (which limits the number of vessels fishing for white fish around Shetland) will be reviewed by the Commission in 2003. The Council will decide on any amendments to existing arrangements by the end of 2004.
Fishing quotas will continue to be shared out according to historic entitlements. This principle is called "relative stability". According to Fisheries Minister Elliot Morley, the UK fought hard to keep this principle at the centre of the CFP.[13]
Spain, Portugal and Finland have the right to fish for non-quota species in the North Sea from 1 January 2003.
Measures have been introduced to create more equitable CFP enforcement. The Council will legislate on a uniform system of penalties for infringing the rules of the CFP. Member States have increased powers to inspect the vessels of other Member States fishing in their waters, and also to inspect vessels from their fleet fishing in the waters of other Member States.
Regional Advisory Councils (RACs) will be established. They will be able to make recommendations to the Commission about the implementation of the CFP in their areas.

PROTECTION OF THE MARINE ENVIRONMENT

9. One of the key changes enshrined in the new Regulation is the adoption of a stronger commitment to the protection of the marine environment as a fundamental objective of the CFP. Application of the precautionary approach to management is laid down in the objectives, together with sustainable exploitation, minimisation of the impacts of fishing on the marine ecosystem, and progressive implementation of an ecosystem-based approach to management. The new basic Regulation thus provides a clear legal basis for future measures intended to reduce the negative impacts of fishing on the marine environment. As a result, environmental interest groups have expressed cautious optimism to the Committee that the new Regulation will be more effective than previous ones in achieving sustainable development in the fisheries.[14]

10. We welcome the stronger commitment in the new basic Regulation to protection of the marine environment. We would nonetheless like to make the following observations.

11. It is still not at all clear what an ecosystem-based approach to management will involve in practice.[15] Even the proposals of environmental organisations tend to focus on monitoring and evaluating ecosystem-level impacts (for example by studies of non-target indicator species), and do not address the question of what action should be taken as a consequence. For the North Sea, for example, we need to understand the ecosystem well enough to predict with reasonable confidence the consequences on the major fish stocks of culling large numbers of seals (or not doing so), and of fishing more or less than 1 million tonnes of sand eels per year. We also need to consider competition between species (for food and habitat) and interactions between juvenile fish as well as predation by adults. In all of this the science is very difficult. Much work has been done, but much further work is still required in understanding marine ecosystems, before it will be possible to make such predictions, or to incorporate them in management advice. Existing international research programmes in this area coordinated by the International Council for the Exploration of the Sea (ICES) need to be enhanced, and such work could and should be given a much higher priority, compared with routine stock assessments. This is long-term research, and while the results may not be available for some time yet, it needs to be carried out with much more urgency than it has been hitherto.

12. Meanwhile, there is an urgent need to incorporate the precautionary approach into management procedures much more effectively. Management targets should be set at precautionary levels, allowing for the possibility of stock collapse through recruitment failure. We consider that the precautionary approach means managing European fisheries on the basis of probable outcomes, rather than certainty (which is unattainable). Target levels of fishing mortality should be set on the basis of the balance of probability of potential stock collapse (i.e. using criteria comparable to the levels of proof required in civil law), rather than the more exacting test of "beyond reasonable doubt" (the criterion required by criminal law, and the sort of confidence level normally required by scientific convention), since by the time such confidence is achieved it is usually too late for effective remedial action.

LONG-TERM MANAGEMENT

13. Among the measures adopted in the new Regulation in order to achieve conservation and sustainability are provisions for the adoption of recovery plans for stocks which are already over-fished, and long-term management plans for other stocks. Both aim to introduce a much needed long-term approach to resource management, even though the final provisions are rather weaker than the Commission's original proposals. A good (and very simple) example of this approach is the management procedure for the Icelandic cod stock, which states that the total allowable catch (TAC) each year is just 25 per cent of the assessed spawning stock biomass (SSB), which is believed to be a sustainable level of exploitation.

14. This may of course be compared with the recent level of exploitation on North Sea cod (i.e. landings in excess of 150 per cent of SSB since the mid-1970s).[16] The benefits of such a low level of exploitation in terms of security of recruitment, and stability of catches, are well-known, and also well exemplified by the major EU pelagic stocks (e.g. North Sea herring and Western mackerel) which are also subject to much lower levels of exploitation.

15. The objective of recovery plans, such as those adopted (albeit with limited success) for the Irish Sea cod and whiting stocks in recent years, is to increase the likelihood that stocks recover to within safe biological limits within a reasonable time, and a time-frame must be specified as part of the plan. To date, the main instrument has been the annual process of setting TACs in December for the coming year (see Box 4), invariably at or above the highest possible levels considered as feasible options by ICES.[17] Temporary measures to assist the recovery of cod stocks were adopted by the Council in December 2002 and have been in place since 1 February 2003.[18] The final content of individual recovery plans will depend crucially on the Council's ability to agree on measures proposed by the Commission, even if these in future have originated in a Regional Advisory Council. The fatal weakness of the new legislation is that no deadlines are set for when recovery plans must be established. Without firm deadlines, the negotiations could continue for a very long time, as is indeed suggested by the still on-going negotiations over cod and hake recovery plans.

Box 4

Calendar of measures taken so far to assist recovery of cod stocks
December 1999: the Council adopts reduced total allowable catches for Irish Sea cod and requests emergency protection measures for this area.
February 2000: the Commission puts in place emergency measures for spawning cod in the Irish Sea through the establishment of a protected area from mid-February to end of April.
December 2000: TACs for cod are reduced to the lowest ever levels for 2001.
February 2001, 2002 and 2003: the Commission re-establishes the 10-week protected area in the Irish Sea.
March-June 2001: the Commission develops new technical measures for cod, including closures during spawning time and a move to 110 mm, then 120 mm, mesh size for trawling for cod.
December 2001: the Commission proposes a long-term recovery package for cod and Northern hake. This proposal was not adopted by the Council.
December 2002: the Council adopts interim measures for cod including low fishing opportunities and, for the first time, limits on fishing effort to stave off a moratorium on the cod fisheries concerned. The Council asks the Commission to submit a proposal for a definitive recovery plan.
May 2003: the Commission tables a proposal for the recovery of cod stocks.

16. We are dismayed that, as we complete this Report, no firm recovery plans for key stocks, in particular cod and hake, are yet in place, despite having been first suggested by the Commission over a year ago. At the beginning of April 2003 the Commission promised a "definitive cod recovery plan" in a "few weeks' time".[19] This envisaged adoption by the Council no earlier than September 2003. We regard this as quite unacceptable and, although the Commission's new proposals have just recently emerged, urge the Government to press for the establishment of appropriate recovery plans as a matter of extreme urgency.

17. For stocks within safe biological limits, management plans may be set up. The requirements for the use and the content of these plans as adopted are much more vague than the original proposal to introduce multi-annual management plans for all commercial stocks. Management plans are to be adopted by the Council, if necessary, to keep stocks within safe biological limits. Like the recovery plans, they are required to take interactions between different stocks and fisheries into account.

18. Examples of excellent practice in establishing long-term approaches to management can be found in Iceland, Australia, New Zealand and South Africa, where simple "control rules" for operational use have been adopted after extensive simulation studies of both the stock dynamics (including the possibility of recruitment failure) and the effects of both natural fluctuations and observational errors on the whole assessment process. The adoption of such procedures in the EU has unfortunately been prevented by the retention of a system in which horse-trading over TACs and catch quotas is an integral part of the process.

19. The December 2002 Council regrettably did not even agree to delegate responsibility for annual implementation of the recovery and management plans, including setting the catch limits, to the Commission. This was intended to put an end to the annual horse-trading over fishing quotas, which now looks likely to continue, unless the same effect can be achieved by the changes to the operational process of establishing and updating conservation measures which will be required to incorporate Regional Advisory Councils (see paragraphs 45-49 below) into the process.

20. We strongly endorse the development of recovery and management plans, based on the precautionary and ecosystem-based approaches to the maximum extent possible. Such plans involve politically sensitive choices, and will therefore presumably need to be adopted by the Council of Ministers (or a body reporting directly to it). They should however have continuing validity, and therefore need to be prepared or revised only periodically (say every 5 years). They should most certainly not be revisited every year. Such longer-term plans can provide a major tool for depoliticising the routine process of fisheries management, and will moreover set the major constraints within which Regional Advisory Councils will operate to find effective means to implement them.

EFFORT CONTROL

21. The Commission's original proposals envisaged much more extensive use in the future of direct controls on fishing effort (e.g. days at sea), rather than catch quotas which have been the most important conservation measures under the CFP until now. It is now widely recognised that there are severe problems with management by TACs and catch quotas, and that there would be substantial advantages in control of fishing effort.

22. Briefly, the problems with management by catch quotas (including individual transferable quotas or ITQs) are that they require:

· High quality scientific assessments of the state of the stocks, so that TACs can be set accurately, allowing for natural fluctuations in recruitment and stock size;

· Excellent monitoring and recording at the ports of the quantities and origin of landings (in effect a complete census of landings is required); and

· High levels of enforcement activity (inspections) at the ports and at sea.

23. Unless these requirements are met, TACs and quotas will fail to achieve their objective of controlling the level of exploitation, and will be evaded by mis-reporting of the quantities, species or origin of catches, by illegal and unrecorded landings ("black fish"), and by discarding of over-quota and by-catch species. Regrettably, experience has shown that these conditions are not met sufficiently well in European waters, and all the problems mentioned have become endemic. The problems are especially severe for so-called precautionary TACs, which are set on the basis of recent average catches, in the absence of adequate scientific stock assessments. Their effects are generally counter-productive (because they restrain fishing unnecessarily if and when stock sizes are growing, and fail to restrict fishing and so protect stocks when they are declining). Unfortunately the majority of the TACs set under the CFP are of this nature, because scientific assessments which are accurate enough for effective control by TAC (stock size accurate to within 10 per cent, say) are very difficult and very expensive to carry out.

24. All of these problems would be considerably reduced if fishing effort were controlled directly, because:

· It is much easier (and cheaper) to enforce restrictions on fishing effort (expressed in rough and ready units such as days at sea), especially if there is extensive use of satellite monitoring;

· Controls on fishing effort translate roughly but directly into restrictions on the percentage of the stocks which are caught, and so "track" natural fluctuations of stock size automatically, without the need for precise scientific assessments; they also eliminate the problems that apply to precautionary TACs (see Box 5);

· There is in principle no need for catch controls as well as effort controls, so all fish caught may be landed, eliminating the discard problem.

Box 5

Total Allowable Catches (TACs) and other conservation measures
The tonnage of fish of any stock caught is approximately proportional to the product of the exploitable stock biomass and the level of exploitation (which is usually expressed as the fishing mortality rate). This last is in turn, for demersal fish, approximately proportional to the total fishing effort (allowing for the fishing power of the vessels involved). Thus levels of fishing effort or mortality can be translated as necessary into catch/biomass ratios, and vice versa. A long-term control rule based on a catch/biomass ratio (such as that used by Iceland) does not therefore require that operational regulation of the fishery must be based on the use of TACs and quotas. In fact, it is the (all roughly equivalent) levels of fishing effort, fishing mortality or catch/biomass ratios which are the usual goals of direct conservation measures, and which have staying power. It is moreover the translation of these into absolute levels of catches, through scientific assessments of the absolute stock biomass (in tonnes), every year, and which is required only for management by TACs and quotas, which is difficult, demanding of scientific manpower, and therefore very expensive. Annual TACs need to track the natural short-term fluctuations of stock size, whereas the other measures do not. Working with management based on TACs and quotas has put the scientists on what has aptly been called the "TAC treadmill", to the great detriment of the really more important scientific studies of the ecosystem interactions (competitive and predator/prey relationships) and the factors determining recruitment, both the ubiquitous natural fluctuations, and the long-term stock size dependence which can and does lead to stock collapses.

25. Against this, it must be accepted that effort controls which can be enforced effectively (i.e. at the levels of days at sea) are rough and ready in terms of the fishing mortality so generated, and they do not permit fine tuning on a stock-by-stock basis, which is in principle possible with TACs. However, if carefully designed, adequately enforced effort limitations, disaggregated by vessel size, fishing gear, fishing area and time of year, would almost certainly be more effective than a widely evaded system of TACs and quotas. Effort limits can also easily be allocated to individual vessels, and so become property rights which establish individual ownership of access to the resource (not ownership of the resource itself), thus capturing most of the economic benefits of Individual Transferable Quotas (see paragraph 57 et seq).

26. Effort controls have historically not been used extensively as part of the CFP, because it is difficult to equate effort of different types, and so establish a fair allocation between countries and groups of fishermen. However, once these initial allocations have been established, this is no longer a problem since any adjustments of allowable effort levels can be made on a pro rata basis. In this case the fishing effort allocations of all participants in a given fishery (as defined by fishing area and gear) may be adjusted upwards or (more usually) downwards by the same proportion, thus preserving "relative stability".[20]

27. There is a further significant problem insofar as effort restrictions will allow progressively higher fishing mortality over time because of increases in fishing power through improvements in efficiency ("technology creep"), so provision needs to be made at the outset for some form of progressive claw-back of effort in the future, but this need not be a major problem.

28. Overall, it is difficult to escape the conclusion that control of fishing effort would be a better instrument—although blunt—for implementation of the CFP than TACs and quotas, and is probably the best such instrument available. We therefore regret that the Council did not agree to implement a properly engineered system of effort controls. Instead an ad hoc system was devised over-hastily, with (in its fine details) many damaging and illogical derogations and special exceptions, which seem to us to have been determined more by political expediency than by the need to conserve fish stocks. There is a danger that the Council's decisions will serve to discredit effort control as a valid and useful conservation measure rather than contributing to the recovery of the stocks. This would be a serious retrograde step.

29. Adoption of fishing effort as the primary object of conservation measures would in fact also remove the need to set TACs and quotas annually, eliminating at a stroke the worst problems of what has been described as the "Brussels bottleneck", i.e. the December Council meeting. It is therefore extremely well adapted to a new regime in which most of the operational management decisions are de facto devolved to Regional Advisory Councils (see paragraphs 45-49). The target levels of fishing mortality (and thus, by simple arithmetic, the reductions or increases of fishing effort required in the medium term) would of course still need to be decided periodically, but this would be as part of the longer-term strategic planning process, of which Council approval would still be required for the foreseeable future.

30. Direct conservation measures (such as control of fishing effort), coupled with appropriate technical measures (mesh size limits, closed areas, closed seasons etc), must be introduced. We urge the Government to press the Commission, and to argue in Council, for the implementation as a matter of urgency of a properly designed and well-considered system of effort control, to work alongside TACs and quotas wherever possible, but especially where precautionary TACs are in force.

TACKLING OVERCAPACITY

31. One of the most fundamental and enduring problems of the Common Fisheries Policy has been the failure to tackle chronic overcapacity of the EU fleet, made worse by "technology creep". This should have been tackled through the four successive Multi-Annual Guidance Programmes (MAGPs) established between 1983 and 2002, but it has not been effectively tackled through these or by any other means. As new technology makes fishing vessels ever more efficient, the capacity of the fleet should be reduced to maintain a balance between fishing capacity and the quantities of fish that can safely be taken out of the sea by fishing. Within the CFP the MAGPs were intended to achieve this aim by setting, for each coastal Member State, maximum levels of fishing capacity by groups of vessels. However, MAGPs failed to meet expectations and proved cumbersome to manage. This is why MAGP IV, which ended in December 2002, has been replaced in the new Regulation by what is intended to be a simpler scheme.

32. National fleet references have been established, thus bringing responsibility for matching capacity with resources back to the Member States. These national fleet references are based on objectives under MAGP IV (1997-2002) and are accompanied by an entry-exit ratio of 1 to 1 for vessels up to 100 gross tonne (GT), and 1.35 GT withdrawn for 1 GT introduced, for vessels between 100 and 400 GT. Publicly funded exits cannot be replaced. These provisions are intended to lead to a gradual downward revision of the reference levels as capacity is removed from fleets using public aid.

33. The only requirement for Member States actually to reduce overall capacity is in Article 13 (2): this only applies if public aid for fleet renewal is granted, and is for a relatively small reduction of 3 per cent over two years. The 1.35 GT withdrawal for 1 GT introduced for vessels between 100 and 400 GT, intended to counteract "technology creep", was roundly condemned by most of our witnesses as wholly ineffectual.[21] The failure of the EU institutions to deal effectively with this serious and persistent problem is in our view further evidence of the lack of any real political will to address the major problems of fisheries management in Europe.

34. The fleet reference levels apply to Member States' fleets as a whole. In the future more specific fishing effort limitations would result from fishing mortality targets under the multi-annual management plans, which would lead to further withdrawal of vessels.

35. Most of our witnesses agreed that the new Regulation does not effectively tackle over-capacity. The Regulation relies on Member State implementation and the content of future management plans and therefore the political will of the Council. Another opportunity to legislate for a serious downsizing of the European fleet has been missed. We urge the Government to press the fundamental need for capacity reduction, as well as effective measures to deal with "technology creep", in future negotiations over recovery and management plans.

CONTROL AND ENFORCEMENT

36. The problems associated with the control and enforcement of CFP Regulations are two-fold. Firstly, insufficient enforcement activity results in continued high levels of "black fish"[22] landings. In the case of Scotland, the Committee was given to understand that at least 10 per cent of the catch continues to be landed illegally.[23]

37. Secondly, fishermen working in European waters face different levels of control and enforcement depending on the national authorities in charge. There is a widespread belief that enforcement standards are variable and often prejudiced in favour of Member States' own nationals. This lack of equity undermines the credibility of the CFP and thus the likelihood of compliance.

38. In its May 2002 proposals, the Commission set out a number of new provisions regarding evaluation and inspection. Many of these suggestions were, however, rejected by the Council in December. The resulting articles on control and enforcement in the new Regulation have strengthened and to some extent simplified the previous provisions, but they retain the basic principles and thus remain largely ineffective.

39. We welcome the measure to strengthen satellite vessel monitoring by extending its reach to vessels over 18 metres overall from 1 January 2004 and to vessels over 15 metres from 1 January 2005. Indeed, now that satellite position fixing systems such as GPS are ubiquitous and inexpensive, the pace of adoption is surprisingly slow. There seems to be no substantial reason why satellite monitoring should not be extended to all licensed fishing vessels in the next five years or so. Similarly we consider that the technology now exists for direct electronic reporting of the records of fishing activity on board to be made obligatory in the near future.

40. In a world of stiff competition for resources, the Scottish Fisheries Protection Agency assured this Committee, during informal discussions in Aberdeen, of the importance of satellite monitoring and electronic tracking for its control and enforcement activities. The potential for the elimination of evasion and abuse of the regulations by these means is considerable. In this context we were impressed by the approach taken by the Scottish Fisheries Protection Agency. We welcome the extended use of satellite and electronic tracking provided for in the new Regulation, which is likely to prove extremely valuable to national enforcement authorities. We urge the Government to pursue its extension to all licensed fishing vessels over 10m in length by 2005 or very soon thereafter as a high priority.

41. On the broader principle of uniform enforcement across the EU, the new legislation continues to uphold the basic principle that Member States have primary responsibility of enforcement in waters under their jurisdiction. Co-operation among Member States has been reinforced by giving Member States the right to control vessels flying their flags throughout Community waters, except in the 12-mile zone of another Member State. In order to reduce disparities in the level of sanctions applied by the Member States, a common catalogue of sanctions for serious infringements has been established by the Council. Nonetheless, some Member States can still essentially continue to trade "social peace" for "flexibility in the controls",[24] and so perpetuate discriminatory processes.

42. In our earlier report we argued that so long as enforcement remained a national responsibility there would continue to be universal criticism of the lack of uniformity of enforcement measures through the Community. Member States must eventually accept that an equitable system can only be achieved by allowing a greater degree of monitoring and "peer review" of enforcement activities by the Commission and by other Member States.

43. We welcome the more detailed proposals which the Commission has promised, "by the end of 2003", for a Community Fisheries Control Agency.[25] The proposed Agency, to be established by mid-2004, would pool national means of inspection and surveillance in relation to fisheries and manage them within a Community framework. Pooling of means would include the operation of multi-national inspection teams in both Community and international waters.[26]

44. We are encouraged by the Council's acceptance of the need to strengthen co-operation between Member States but believe that a common inspection authority, as envisaged in the Commission's "Roadmap", will eventually be required to achieve an equitable system.

GOVERNANCE

45. The latter part of the new basic Regulation contains some important provisions on governance, notably the concept of Regional Advisory Councils (RACs). A RAC will:

(a) cover a sea area under the jurisdiction of at least two Member States;

(b) be established by the Council;

(c) provide advice to the Commission and the Member States on fisheries management in a given area—this can be in response to consultation by the Commission or on its own initiative;

(d) be composed of all parties with an interest in fisheries management in a given sea area or fishing zone, including the fishing industry, environmental and consumer interests, regional and national authorities and the Commission.

More detailed arrangements for RACs are expected to be set out in separate legislation.

46. Our witnesses were unanimous in the support for the concept of RACs, and considered its inclusion as perhaps the most positive aspect of the reform of the CFP.[27] Regional management is widely seen as crucial to solving some of the fundamental problems of the CFP, especially by eliminating the "Brussels bottleneck" (the yearly horse-trading on catch limits) and by bringing fishermen into the heart of the management system.

47. Our witnesses expressed the hope that the establishment of RACs will allow the Council to focus on medium to long-term strategy rather than bog it down in yearly and highly political negotiations over TACs and quotas. The RACs in turn would have a technical management role. Similarly, it is hoped that RACs will be the key to establishing an attitude of ownership of and responsibility for the fisheries among all stakeholders through peer group pressure.[28] As experience in Australia, New Zealand and the US has shown, depoliticising fisheries management has been a key factor in achieving more sustainable fishing practice.[29] Depoliticising the management system in Europe would "help enormously".[30]

48. There is much work to be done, however, before the proposed RACs can come to fulfil such ambitions. Key considerations in the establishment of the RACs will be:

· Rules of Engagement

It is crucial that the advice of the RACs is accepted and implemented by the Council, except in exceptional circumstances. This means that the RACs have to employ the management tools authorised by the Council, and not attempt to reinvent the CFP. Conversely, the circumstances under which the RACs' advice would be rejected by the Council really would have to be exceptional.

· Terms of Reference

For the moment, it is right that the role of the regional councils should be to advise rather than to manage. In a fisheries management system as complicated as that of the EU, it will take time to establish and run these Councils; meanwhile responsibility should remain with Fisheries Ministers.[31] In the more detailed legislation to come, a possible form of words might be: "To advise on the most appropriate management measures needed to achieve the medium and long-term strategic goals set by the Council of Ministers [in . . .] consistent with the provisions of Council Regulation [. . .]".

· Size and Process

If all stakeholders are to be represented on the RACs, some of these bodies will be very large indeed. In the case of the North Sea there could be over 100 industry representatives alone. We therefore consider a two tier structure most practicable.[32] Annual "open forums" of all representatives would meet to debate issues and elect, but not mandate, an Executive Committee of say 9 industry representatives, 6 managers, 3 scientists, 3 economists, 3 environmental and 3 consumer representatives (a total of 27, which is probably still too many). The Executive Committee members could have (say) 3-5 year terms of office, to promote a medium-term perspective, and could meet quarterly, preferably under the leadership of an independent chair. Relationships with local, regional and national government need to be carefully thought out.

49. We are encouraged by the inclusion of provisions for Regional Advisory Councils in the new basic CFP Regulation. It is of vital importance that these Councils be established as a matter of considerable urgency.

THE FINANCIAL INSTRUMENT FOR FISHERIES GUIDANCE

50. The main EU level assistance programme for the fisheries sector is the Financial Instrument for Fisheries Guidance (FIFG), which provides funding over a seven year period, currently 2000-2006 (see Box 6 for summary).[33] The most criticised aspect of the FIFG has been the funding earmarked for fleet renewal and modernisation.[34] Providing funding for new construction at the same time as other budget lines are earmarked for vessel scrapping is counter-productive and wasteful of the EU's resources—a point which has been made on repeated occasions by this and other Parliamentary committees.[35] Reform of the FIFG, as part of the so-called "Agenda 2000" process, led to some rationalisation of the funding. Nevertheless, FIFG continued to offer support for fleet renewal and modernisation projects.

51. We therefore welcomed the Commission's proposal in May 2002 to restrict public aid severely for investment in fishing vessels.[36] We also welcomed the proposed new €32 million emergency scrapping fund, allowing Member States to offer additional money to vessel owners severely affected by effort reductions. As the Commission's "Measures to counter the social, economic and regional consequences of fleet restructuring", published in November 2002, emphasised, major adjustment of the FIFG is not possible since it is tied to the general seven-year cyclical negotiations of the Structural Funds.[37] There is obviously a basic difficulty in reforming the FIFG when its funding is based on an entirely different cycle of negotiations, but that has to be lived with. The FIFG represents only a small part of the Funds as a whole; nevertheless, if the financing of new construction and modernisation could be ended, some €611 million would be freed up.

52. The proposal to cut modernisation aid fell victim to the sort of compromises necessary to secure overall agreement; FIFG became "the final sticking point" in the negotiations.[38] The new legislation (Regulation 2369/2002), will continue to support construction of new vessels until the end of 2004. The Minister thought the 2004 limit was "no mean achievement" given that the "Friends of Fisheries" had a blocking minority in the Council.[39] It does mean that Member States can potentially use up all the aid allocated under these new headings for the period 2000-2006. It is deeply regrettable that the Commission's proposals for terminating aid for new construction were weakened at the December 2002 Council. We deplore the fact that funds will continue to available for this purpose until the end of 2004. We regard this as further evidence of the continuing lack of political will by the majority of the Council of Ministers to support genuine reform of the CFP.

Box 6

FIFG legislation
Aid for the renewal of fishing vessels is being phased out but will continue to be available for two more years (up to the end of 2004) for vessels under 400 GT. It will be restricted to Member States which have met their overall MAGP IV capacity targets (which ended in December 2002) and its allocation will have to comply with the overall entry/exit ratios agreed. The Member States which have not met the objectives set in MAGP IV will be subject to infringement procedures.
Aid for modernisation of fishing vessels will only be available for vessels that are at least 5 years old to improve safety, product quality or working conditions, switch to more selective fishing techniques or to equip vessels with the VMS (Vessel Monitoring Systems). When the modernisation is to improve safety, product quality or working conditions, an increase in tonnage will be possible but only for improvements on the vessel's superstructure (over the main deck). However, such modernisation must not increase the ability of the vessel to catch fish. EU aid will be restricted to Member States which have met their overall capacity targets set under MAGP IV.
A €32 million "scrapping fund" has been established, to help Member States achieve additional reductions in fishing effort required under recovery plans. Vessels whose fishing effort has to be reduced by 25 per cent or more as a consequence of a recovery plan will be eligible for aid from this fund; premiums will be 20 per cent higher than those available for decommissioning under FIFG.