I thank the committee for the opportunity to discuss the recent proposals from the European Commission with regard to fisheries, a sector of the economy that is uniquely exposed to the negative implications from a no-deal or disorderly Brexit. Under the transition period as set down in the withdrawal agreement agreed between the UK Government and the EU, there would be no change to the current situation in respect of fishing during the transition period, up to the end of 2020. The Government's position is that it hopes that a no-deal scenario can still be avoided and that the withdrawal agreement with the United Kingdom can be concluded, but it must also be prepared for all possibilities.
On 30 March 2019, if the UK leaves the European Union without agreement, it also automatically leaves the Common Fisheries Policy, CFP. The UK will then become a third country or coastal state in its own right under the UN Convention on the Law of the Sea, UNCLOS. The UK would, if it so chose, be able to immediately close its waters to EU vessels. This would mean that the status quo in which Irish vessels can freely fish in many areas of the UK exclusive economic zone, EEZ, and vice versa, could be altered immediately. On the issue of access to waters, there has been no clear unequivocal message from the UK Government. The Secretary of State, Mr. Gove, made a remark last October that could be interpreted as meaning that the status quo on both access and quota would continue for 2019 even in the event of a no-deal Brexit. However, much has changed since October. The UK Government's guidance note on the fisheries sector and preparing for EU exit, published on 1 March 2019, states that "access to waters will change if the UK leaves the EU without a deal" and that "non UK vessels will no longer have the automatic right to fish in UK waters". While the position on access is not clear, the possibility that all EU vessels and hence all Irish vessels would be excluded from the UK zone in the event of a no-deal Brexit is certainly one possible scenario.
In the context of that possible scenario, the Commission has put forward two separate technical proposals relating to fisheries. Under the European Maritime and Fisheries Fund, EMFF, it is possible at present, under certain limited circumstances, to provide temporary financial aid to vessels for the cessation of fishing activities for a period of time. The purpose of the Commission proposal is to amend the EU regulation for the EMFF to widen those circumstances to cover vessels that would be significantly impacted due to their exclusion from UK waters. There are limits to how much fishing effort could be redirected from UK waters to EU waters for many reasons, including the sustainability of fish stocks, the cost effectiveness for vessels and quality of catches. The aid under the EMFF would be available for a maximum of nine months over the period to the end of 2020. The EU Commission position is that the funds would have to be found from within the existing member states EMFF envelope.
This loosening of the rules around temporary cessation and financial aid is a limited measure that, while welcome in the event that it might have to be availed of, would not address all the issues that would arise from loss of access to UK waters. Perhaps most importantly, it provides the legal framework in which to provide possible tie-up aid to affected fishing vessels. The Minister, Deputy Creed, has made it clear that, in the event that a tie up-measure is required, it will be essential to ensure a co-ordinated and balanced application of a scheme to individual fisheries, across the fleets of the member states involved. Ireland is working closely and intensively with the other member states most concerned and with the European Commission's DG Mare to identify the potential impacts for fishing that would arise from displacement of fishing activity in the event of a no-deal Brexit.
The second proposal from the EU Commission is similarly about ensuring that there is a legal basis to allow EU vessels to operate in the waters of a third country in the absence of a formal agreement between the EU and that third country. That second proposal also provides for the possibility of current quota swapping arrangements between EU member states and the UK to continue in the absence of an agreement.
This proposal does not mean that there will be ongoing reciprocal access after 29 March. It merely provides the legal basis for it to happen should the UK be willing to grant such reciprocal access in a no-deal situation. As to the timing on the adoption of the two proposals, they are proceeding on a fast-track procedure through the Council and the European Parliament. A plenary European Parliament vote is scheduled for 13 March and it is expected that the Council's final endorsement will happen around 18 or 19 March so that they are legally in place before 29 March.
The impact of the loss of access for the Irish fleet is the critical issue. Ireland, France, Denmark, Germany, Belgium and the Netherlands all take, on average, between 30% and 45% of their landings by volume and between 18.5% and 50% by value from the UK waters. Of the UK's total landings, only 15% by volume are caught outside the UK's EEZ. On average, 34% of Irish landings by volume and value came from inside the UK’s EEZ. Ireland catches a proportion of all our main commercial quotas across 30-plus stocks in UK waters and in some cases, for example mackerel, which is our largest fishery, well over 60% of the quota is taken from UK waters. The most immediate impact of loss of access would be for our whitefish and prawn fisheries. This is because our pelagic fisheries, in particular mackerel, would not be immediately affected in 2019 as our fleet has largely caught the available quota in the early part of the year. This situation of concentration of fishing in a small period could, however, have adverse impacts on our processing companies later on.
In the event of exclusion from UK waters, Irish vessels would lose access to parts of the important nephrops, or prawn, grounds in the Irish Sea and to the important smalls grounds situated off Milford Haven. It would also lose access to the parts of the Celtic Sea that come within the UK zone with important fishing grounds for mixed demersal species such as cod, haddock, whiting, monkfish, megrim and hake. The fleet would fully lose access to the fishing grounds around Rockall and off the west coast of Scotland. A major knock-on effect of loss of access by Irish and other Union vessels in the event of a disorderly Brexit is the likely increase in activity in the fishing grounds in the waters around Ireland. The concern here is an increase in pressure on fish stocks in particular fishing grounds leading to an increase in fish mortality there. This could, in turn, threaten the long-term sustainability of those stocks resulting in lower quotas going forward. In that context, the temporary tie-up of vessels may be required to protect the long-term sustainability of the stocks upon which our fleets rely. The Minister, Deputy Creed, has made it clear that if there has to be any temporary cessation, its use must be proportionate across the EU fleets fishing in the shared fisheries. It cannot be the case that in shared fisheries, the vessels of one member state are tied up while the vessels of another continues to fish without restriction. The Minister has made it clear that there must be a level playing field for all those impacted by loss of access to UK waters.
I turn to preparedness. The Irish response will continue to be within the overall EU 27 context and, in particular, the group of eight member states directly impacted for fisheries. The Minister met fisheries Commissioner Vella on 18 February to discuss these issues and the ongoing work of ensuring a co-ordinated response at EU level. There have been a number of other meetings at official level with the group of eight member states and the Commission and that work is ongoing too. Displacement of other EU fleets into the limited remaining fishing grounds in western waters must be planned for and measures must be taken to ensure that we have orderly activity within sustainable levels. Meetings between the group of eight member states and the Commission are focused on ensuring there will be an EU co-ordination mechanism on the actual application of any temporary cessation. Work is ongoing on identifying the fleets and stocks most vulnerable to a disorderly Brexit and exploring possible mitigation arrangements within temporary cessation schemes.
At national level, the Minster has continued to work closely with industry representatives. The most recent meeting was on 25 February in Clonakilty where the Minister and industry representatives had a full exchange on the evolving situation on Brexit. Within the Department and the marine agencies, there has been intensive work to prepare for all possible scenarios. The State is providing advice and information on importing and exporting issues in a situation of a no-deal Brexit. The Sea-Fisheries Protection Authority is holding a number of information events for traders and information notices are available on its website. Notices are also being published on the websites of our Department and of the Department of Foreign Affairs and Trade. BIM, Bord Bia and Enterprise Ireland are continuing to work with seafood companies to help them to deal with Brexit, seeking to make them more competitive and diversify market exposure. Support is also given to upskill teams.
I turn to the readiness of the seafood processing sector for Brexit. In total, there are 163 seafood processing companies operating in Ireland. Of these, 53% generate less than €1 million in annual revenue while 32% generate revenues of between €1 million and €10 million. The remaining 15% of companies have annual revenues greater than €10 million. Exports of seafood from Ireland in 2017 totalled 314,000 tonnes worth €666 million. The EU is the main market for these exports, particularly in the shellfish, salmonid and whitefish seafood categories. The UK market is significant and was worth €86 million in 2017, with a volume of 44,000 tonnes. BIM have been working extensively with the sector to determine the extent of the potential impact and to offer advice on readiness for Brexit. There remains a high level of uncertainty as to the landscape for businesses post Brexit. While some of the seafood processing companies are prepared to a high degree for Brexit, the majority are prepared to a limited extent and some are unprepared. BIM, Enterprise Ireland and Bord Bia will continue to work with these companies to strengthen all aspect of their preparations.
In a trade context, the seafood sector shares many of the concerns of other sectors with regard to currency fluctuations, tariffs and the landbridge. There are, however, a number of additional issues for seafood. A no-deal Brexit will mean that Irish importers and exports of seafood products to and from the UK will require additional certificates on top of those required for products of animal origin under sanitary and phytosanitary rules. All seafood imported into the EU from a third country, which the UK will be after it leaves the Union, must have a catch certificate. The UK is a significant market, representing 14% of exports for Irish seafood, but it is not our most important one. While the landbridge is a significant issue for many exporters, it is especially worrying for seafood exporters given the perishability of their product. On average, we export 26,000 tonnes of seafood via the landbridge each year. Having to go by sea directly to continental Europe would add 12 hours to the journey. Again, these are issues on which we are working closely with the sector and the relevant state agencies.
A no-deal Brexit, which is not the desired outcome, would have a severe impact on the Irish seafood sector as whole. Loss of access to UK waters is the most immediate large scale threat to the seafood industry. We have a clear and agreed strategy in place at EU level that future fisheries arrangements with the UK can only be agreed within the context of the overall economic relationship. That has not changed throughout the Brexit negotiation process and will remain the case in a no-deal situation. Specifically on fisheries, the agreed overarching priority has been and remains to maintain existing levels of access to waters and resources to provide continuity and certainty to our catching and processing sectors. In the short term, EU emergency aid may be required in a worst-case scenario to allow us to tie up a proportionate part of the EU fleets in highly impacted fisheries. This can and will only happen in an agreed and co-ordinated way thus sending, again, the clear message that the EU 27 are working as one in fisheries to deliver on the EU priority to maintain the status quo in terms of access and quotas.