JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Tuesday, 10 Feb 2004

Scrutiny of EU Proposals.

Chairman

I apologise to the two officials, Mr Denis Maher and Mr. James Lavelle, for the delay in reconvening and welcome them to the committee. The Sub-committee on European Scrutiny has put forward a number of proposals for the attention of the committee. Is it agreed to scrutinise COM (2003) 739? Agreed. Is it agreed to scrutinise COM (2003) 741? Agreed. No further scrutiny is required for COM (2003) 624. Is this agreed? Agreed. Is it agreed to note COM (2003) 611? Agreed. Is it agreed to note COM (2003) 641? Agreed. Is it agreed to note COM (2003) 762? Agreed.

The joint committee has agreed to examine further the following proposals: COM (2003) 609, a proposal for a Council regulation on the conclusion of the protocol modifying the fourth protocol laying down the conditions relating the fishing provided for in the agreement on fisheries between the European Economic Community on the one hand and the Government of Denmark and the local government of Greenland, on the other. On 4 February, the Clerk was advised by e-mail that COM (2003) 832, which is a proposal for a Council regulation opening and providing for the management of autonomous tariff quotas, ATQs, for certain fishery products for the period 2004-06 was categorised as of major significance by the Department of Communications, Marine and Natural Resources. In the light of the possible significant implications and the short timescale, I agree to have this proposal considered at today's joint committee meeting.

I again welcome Mr. Denis Maher and Mr. James Lavelle from the Department. The format will be a short presentation followed by a question and answer session. I must draw attention to the fact that members of the committee have absolute privilege, but the same privilege does not apply to witnesses who appear before it. It is generally accepted that witnesses have qualified privilege, but the committee cannot guarantee any level of privilege for witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official, either by name or in such a way as to make him or her identifiable.

Mr. James Lavelle

I will deal first with the Greenland proposal. My colleague, Denis Maher, will deal with the autonomous tariff quotas proposal. I have prepared a short slide and will try to get through it as quickly as possible. In shorthand, what the title of the proposal says is that the Commission has proposed a change in the existing Greenland agreement 2001-06. It is half way through its implementation and the idea is to change it. I will give some background to the proposal, the main elements, the sticking points and where we think the proposal is going to go in the weeks and months ahead.

Prior to 1979, Greenland was part of Denmark and consequently within the European Community. In 1979 it achieved home rule from Denmark. Three years later it voted in a referendum to secede from the European Community. In 1985, it formally withdrew and the fisheries agreement with the EC commenced at that time. This proposal must be looked at within that overall framework. There were always two elements to the EC's relationship with Greenland, from that point. There was the fisheries angle - which is essentially what is being dealt with here - and the broader development angle. The latter stipulated in the agreement as outlined how Greenland was to secede from the European Community. There was a wish on the EC's part to ensure that Greenland did not suffer in a developmental way. That was provided for as part of the overall picture.

There were four fisheries protocols to the agreement since 1985. These are 1985, 1990, 1995 and the current one, 2001. They each run for approximately five to six years. The current proposal is the fourth, as the committee will have seen from the title. It is essentially half way through its implementation. There was a clause in the protocol which required a mid-term review by the end of June last year.

Four issues were involved in the mid-term review and they are all linked. Concern was expressed by the EU Court of Auditors and also the European Parliament that the agreement and arrangements set in place in 1985 - and renewed a number of times since - were not sufficiently transparent. The fisheries angle or the amount paid for fishing opportunities was not clearly specified and there was concern over "paper fish", that is where the Community was paying for fish that existed on paper but not in the sea - essentially not catchable. One of the issues that has driven the EC's assessment of this agreement is a large-scale under-utilisation of quota. The committee will note that this was of the order of 21% in 2003.

Negotiations on the mid-term review were held between February and June last year. There was tentative agreement between the parties, the European Commission and the Greenland home rule government. This was signed in June last year and that is what is currently before the European institutions and the Council. We want to revise the protocol. The new protocol will run from the beginning of this year.

The key elements of the protocol include the elimination of "paper fish" in the new quotas. Blue whiting, some cod and a number of other species have been removed. The opportunities now in place should be more real than apparent as has been the case up to now. In response to the point made by the Court of Auditors a clear separation has been made between the amount of compensation payable for fish and the amount the EU gives to Greenland for developmental purposes.

There is the issue of the introduction of licence fees for vessel owners. Up to now vessel owners could enter in here and there were no licence fees. Essentially this proposal says that for every tonne of fish one takes out a licence fee of 3% will be paid.

The main species dealt with is redfish - 25,000 tonnes, Greenland halibut - 10,500 tonnes and shrimp - 9,675 tonnes. The latter is by far the most important for the Greenland economy. Fish accounts for more than 90% of the country's total exports and the main species is shrimp.

The main players are Germany, the United Kingdom and Denmark. This is based on relative stability, which is the established track record. If one fished there in the past, rights were generated that persist up to the present. There are no Irish participant vessels and we can return to that and explain why this is the case.

The overall level of compensation will not be changed as a result of this agreement and is approximately €43 million per annum. That is what the EU will pay to the Government of Greenland. It is extremely important for the Government's finances. Approximately 75% of this sum is for the fishing possibilities which Greenland gives to European Union vessels and the remaining 25% is for developmental and budgetary support for the Greenland fisheries sector.

We turn next to the question of current issues. The main difficulty comes from the Commission, which has proposed a mechanism whereby quotas which are only utilised by a particular country, mainly Germany, the UK and Denmark, could be allocated to other states and that the Commission could have a role in this allocation to other member states. This creates difficulties. It might seem an attractive proposition at first but the existing quota holders would be rather troubled by this. Quotas are jealously guarded. Recently, bilateral quota swops were agreed between Germany, which is the main stake-holder in these stocks, and other member states. These were agreed without any involvement by the Commission. To some extent, this will address the issue of under-utilisation for 2004.

Discussions are currently under way in Brussels and elsewhere to resolve the outstanding issues. There are two of these - the issue of what role, if any, the Commission should have in the reallocation of quotas in this case and the question of licence fees. In reality, this proposal has been delayed somewhat by some of the difficulties that I have mentioned. Perhaps it is the case that the licence fees may not be introduced as quickly as was implied in this proposal and that there may be some phasing arrangements. The opinion of the European Parliament is due in March and the issue of a compromise solution in May or June of this year is a likely timescale.

We would be interested to hear the views of the committee on how to proceed with this issue. Essentially, there are two schools of thought in the EU on it. At one level, there are the existing quota holders which may not want to fish in a given year. Then, there are countries which want access to the quotas instantaneously. We will seek some way forward between now and May or June. We hope and expect that the proposal will be adopted during the Irish Presidency.

Chairman

Thank you, Mr. Lavelle. We now move on to COM (2003) 832.

Mr. Denis Maher

Thank you, Chairman. I am here to address the issue of the proposal to establish a multi-annual regime for what are called autonomous tariff quotas - ATQs - for certain fishery products for the period 2004-06. An ATQ is a fixed annual quantity and therefore is a quota which may be imported into the European Union at a reduced import duty, or tariff rate. It is not to be confused with a fishery quota which is a fishing opportunity.

It can be accessed by any member state to import from third countries, therefore, it is autonomous. It is intended to overcome raw material supply shortages for the EU processing industry and these should be proven identifiable supply shortages.

Equally important in this context is what it is not. An ATQ is not intended as a source of cheap raw material to the detriment of EU producers, such as Irish fishermen. It is worth noting that some member states entered a list of desiderata at the start of this process, seeking what are essentially cheap raw materials to compete with EU and Irish produce for raw materials for processing. The ATQ system is not intended to achieve this.

This proposal provides for the opening of such ATQs, for fishery products, in each of the three years, 2004, 2005 and 2006. The annual period of applicability, that is, the number of months during which any member state can import any of the products, depends on the product type. On cod, for instance, given the shortage on the EU fishery land markets, it applies for the full twelve months. In other seasonal fisheries, it applies when there are supply shortages. It is a successor regime to the one which expired on 31 December 2003. That was a four year programme.

Prior to that programme, we had annual negotiations on such quotas and that led to difficulties with member states squabbling over the quantities. To bring some stability to the issue, the Commission, supported by the member states, decided that ATQs would be set on a multi-annual basis. This gives a reasonable period for review to see how they operate and look at supply shortages that emerge over a three year period.

The aim of the proposal by the Commission is reduced or zero tariff rates for certain key species to ensure an adequate supply of fish for the EU's fish processing industry. These quotas will allow user industries to plan the supply they need without disrupting the revenues of EU producers, such as fishermen.

There are implications for Ireland. It is important from Ireland's perspective that the quantities of reduced tariff products are set at a level which will not materially affect Irish and other EU producers, primary processing companies and fishermen in Ireland. Ireland's main interest in this proposal is herring and ensuring that the quantities set and the period of applicability do not disadvantage Irish fishermen. We call this principle "Community preference". It is where the landings of EU fishermen have preference on the market where the supplies are plentiful. The only opportunity to give preference to non-EU production is where there are genuine, identified supply shortages.

Initially, the Commission propose a roll-over of the previous regime. This includes 20,000 tonnes of herring, at a zero % duty for the period of November and December of each year. The proposal was discussed at fishery and trade groups throughout 2003. On 4 February this year, at COREPER, a compromise was tabled maintaining the herring quantity at 20,000 tonnes but allowing imports to begin in October of each year rather than restricted to the November and December period. As a compromise, Ireland could accept this.

However, there are difficulties between Italy and Spain over tuna and these have not been resolved.

The proposal will go to the Agriculture and Fisheries Council on 24 February. We do not expect that the herring issue will be reopened. The main players there, Ireland and Denmark, have more or less agreed to the compromise. The Italian requests for the increase of tuna loins in the ATQ from 4,000 to 12,000 tonnes will be raised at Council. Spain is steadfastly resisting this increase and has requested a study by the Commission of tuna loin supply in recent years and for the future. The Council will deal with the item as a false B point, and allowing for the discussions on the Italy-Spain issue, it is likely to be resolved then.

Chairman

Will salmon be allowed under the ATQ?

Mr. Maher

No. Salmon has never been included in this system of ATQs. Salmon is mostly a farmed product and there are difficulties with the UK industry, largely based in Scotland. Our industry was also in serious difficulty recently due to the alleged breach of agreements by the global players in this market, namely, Norway, Chile, and, to a lesser extent, the Faroes. In recent days the UK has called on the Commission, with our support, for a salmon safeguard which will effectively result in duty being imposed on salmon coming from these countries.

Chairman

Does that include Chile and other countries?

Mr. Maher

Yes, salmon coming from Chile, Norway and the Faroes into the EU.

Chairman

Are there any real fish involved in these quota swaps, or are they all paper fish?

Mr. Lavelle

No, there are real fish. The main ones are shrimp. Cod was the mainstay species up to several years ago and as in so many other places, cod stocks in the north east Atlantic seem to be in some trouble generally. There is also some capelin and other species but it would not be true to say they are all paper fish.

Chairman

Are the swaps with other member states or with Ireland?

Mr. Lavelle

We participated in this process last year and secured a swap of 500 tonnes of redfish. We also participated in some discussions this year. The Irish fishing fleet does not have the kind of vessels that can fish in these waters because there are very special requirements. We raise and discuss with Irish fishermen several possible opportunities, not necessarily from a swapping or quota exchange perspective. For example, under this agreement generally, we look at issues such as experimental fisheries, including a species called snow crab which must be cooked on board but there are particular freezing requirements such as icebreaking facilities necessary to operate in these waters. Irish fishermen tend to operate further south.

Chairman

Does Greenland have any rights to fish in Irish waters?

Mr. Maher

No.

Chairman

Does it have rights to fish in any EU waters?

Mr. Maher

No. It is not that kind of agreement. There is no exchange. In some of the EU fisheries agreements, notably with Norway, and the Faroes, being the two most germane to Ireland, there are reciprocal access arrangements but not with Greenland.

Deputy O’Donovan

Herring, as I understand it, is a restricted species of fish. Does this apply to mackerel? For example, an issue arising in my constituency in the south west is that there are occasions when a substantial tonnage of mackerel is caught, as happened last year. This is worrying because on the one hand, the fishermen in the south and west are restricted to 7,000 tonnes, about which there is argument over how to work - pardon the pun - the miracle of the loaves and fishes. On the other hand, it is worrying that there is a substantial tonnage some years. This may apply here.

I understood that shrimp and prawns and other shellfish were non-quota species. Am I mistaken? What is the reference to shrimp here? There has been significant research in this country recently through BIM and the scientific research unit in Galway into identifying non-quota species in mid-Atlantic, including the blue fin tuna. Does that have any connection with this kind of protocol or proposal, or is it an unrelated matter? Perhaps I am missing the point and, if so, I will stand corrected.

Mr. Maher

The question about the mackerel is pertinent. At the outset of this negotiation some of the Nordic member states were avidly pursuing an ATQ for mackerel of some 50,000 tonnes. We firmly resisted that on the basis of Community principle. Our own fishermen were landing mackerel and the prognosis for the mackerel industry was generally positive, so we considered and the Commission eventually agreed that there was no justifiable reason to open an ATQ because there was no identifiable supply shortage. It would disadvantage our fishermen in particular, in the south west and north east, for pelagic species if we were to open quantities of duty free imports whereby large processing concerns in some northern member states could disregard our Community product and buy cheaper material from third countries. Ireland has traditionally and consistently resisted a mackerel ATQ although this year it was a tougher fight than usual.

Deputy O’Donovan

Is Mr. Maher referring to Norway and Greenland as countries outside the EU?

Mr. Maher

No, there are large processing industries in some of the Nordic member states such as Denmark. Ours is a largely primary processing industry and we export that primary processed product to other countries for onward processing. Our concern in this issue has always been that our product, as Community product, should have preference in our market and that is the principle we have defended consistently for several years.

Mr. Lavelle

Shrimp is the main species which the Greenland authorities transfer to EU fishing vessels. Here we call shrimp and prawn nephrops. They are all the same thing. Nephrops is a quota species in EU waters. The Deputy spoke of the drive for many years - it is not an unrelated issue - to diversify into non-quota species, in particular bluefin tuna. Bluefin tuna is an allocated species. While there is an increasing incidence in waters off Ireland, it remains an allocated stock. That is based on the track record, established in the Mediterranean Sea, which is much further south than its current location.

With regard to the issue of non-quota species in the west and mid Atlantic ridge, even in the context of this agreement there are various experimental fisheries elements of which the Department and BIM regularly discuss with industry representatives. We share all of this material and the potential fishing possibilities that arise under these agreements. In most cases, however, the fishing possibilities available under these type of agreements are already allocated between member states. If one looks at the former political architecture of Greenland and the Faroe Islands linked to Denmark, one can see where various established rights would have been created. It is not a question of an "open sesame" to access new fishing possibilities. Some may exist and we do not rule them out.

Deputy O’Donovan

I referred to bluefin tuna and orange roughly, but there are other species. Has the Department identified up to a dozen species from which Ireland, through negotiation in last two tranches involving the Minister, gained a stranglehold on some of those quotas? Have we staked a claim on some of these quotas because of our experimental fishing and expertise?

Mr. Lavelle

The reality is that in terms of securing fishing opportunities, the issue of historical rights and track record has always been a fundamental in establishing those rights. The extent to which certain vessels and fishing fleets can access these new opportunities is important in terms of the new opportunities mentioned for deep sea species. This arose from pioneering work by certain fishing vessels in these new fisheries from the mid 1990s. That enables us to source these possibilities with some reasonable prospects for success

Chairman

I take it there are two schools of thought. One is to preserve the existing quota holders and the second comes down in favour of new entrants. Which one does the Department support? How can the committee support the Department in what it wants to do?

Mr. Lavelle

The Commission has indicated that it is reflecting further on this proposal and we are still awaiting its findings. These may emerge in the next few weeks and we have not settled our minds. We know that Article 3 is the most fundamental one to be dealt with. However, the Commission is likely to refine this proposal. Until then——

Chairman

This committee will support whatever stance the Department takes and this will be reflected in our response. I thank the Department officials for their informative presentation and I apologise for the disruption in today's proceedings. I thank committee members for attending. As some of the other members are committed to other meetings it will be difficult to convene again. Is it agreed therefore that the committee will report on COM (2003)609 and COM (2003)832? Agreed.

The joint committee adjourned at 7.15 p.m. sine die.