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Towards sustainable fisheries subsidies: Entering a new round of reform under the Common Fisheries Policy
Marine Policy 34 (2010) 1117–1124
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Marine Policy journal homepage: www.elsevier.com/locate/marpol
Towards sustainable fisheries subsidies: Entering a new round of reform under the Common Fisheries Policy$ Till Markus Research Centre for European Environmental Law, University of Bremen, Bremen International Graduate School for Marine Sciences, GLOMAR, Universit¨ atsallee GW1, 28359 Bremen, Germany
a r t i c l e in fo
abstract
Article history: Received 15 October 2009 Received in revised form 19 March 2010 Accepted 20 March 2010
On 22 April 2009 the European Commission published its ‘Green Paper on the Reform of the Common Fisheries Policy’. The Green Paper points out a contradiction in policy, noting on one hand that public financial support to the Community’s fisheries sector is substantial, but on the other hand such support is often incompatible with other Common Fisheries Policy (CFP) objectives, particularly the need to reduce overcapacities. Providing an analytical framework to better understand the effects of subsidies as well as an overview of existing funding schemes under the CFP, this article aims at answering some of the questions posed by the European Commission within its Green Paper. Answers are based on two ideas: the exploitation of marine capture resources ultimately depends on the level of available fish stocks and that a large share of subsidies fuels the race to fish by inducing investment incentives for the fisheries sector. Policies that have ignored this tend to encourage inefficient and unsustainable fishing as well as the misallocation of public funds. Although support schemes under the CFP have changed in recent years, some problematic support schemes persist. A future reform will have to continue the course taken towards sustainable and efficient approaches to supporting the fisheries industry. & 2010 Elsevier Ltd. All rights reserved.
Keywords: Common Fisheries Policy Fisheries subsidies Green Paper Reform European fisheries fund Fleet overcapacities
1. Introduction Public aid to fisheries sectors has come under suspicion for having substantial negative impacts on living aquatic resources and the marine environment. Financial aid reduces fishing costs and thus, contributes to catching at inefficient and unsustainable levels. The European Community has a bad record of subsidy related problems in the fisheries sector including the creation and maintenance of large overcapacities in the catching and production sector. [1] In its recently published Green Paper on the Reform of the Common Fisheries Policy (CFP) [2], the Commission explicitly states that public financial support to the Community’s fisheries sector is substantial and that funding is often at odds with other CFP objectives, in particular the need to reduce overcapacities. In the Green Paper, the Commission poses several questions on how a future structural policy can avoid the negative side effects of subsidisation, while helping the industry to restructure, modernise, improve its long-term economic viability,
$ This study has partly been financed by the European Community (Sixth Framework Programme) project: ‘Integrating Multiple Demands on Coastal Zones with Emphasis on Aquatic Ecosystems and Fisheries, INCOFISH’ (Contract no.: PL 003739) as well as by the Bremen International Graduate School for Marine Sciences, which, again, is funded by the German Excellence Initiative. Tel.: + 49 421 218 3835; fax: + 49 421 218 7490. E-mail address: [email protected]
0308-597X/$ - see front matter & 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.marpol.2010.03.011
and avoid maintaining artificial overcapacities. This article will first establish an analytical framework to guide the reorientation of the public support regime under the CFP. It will then assess the overall structure of the CFP’s subsidies schemes. Finally, the Commission’s objectives and questions from the Green Paper will be considered and some comments and answers will be tried.
2. Economic and empirical analyses of negative effects of fisheries subsidies Public aid to fisheries is perceived as having several negative effects, such as distorting trade in fisheries products [3,4], creating or maintaining overcapacities in the production sector (which places pressure marine aquatic resources), and lowering retail prices and thus, increasing consumer demand for resources already under pressure [5–9]. In this study, the effects of subsidies on the exploitation of fisheries resources will be of primary relevance. From an economic perspective, the open access conflict, ‘tragedy of the commons’ or the ‘race to fish’, will be exacerbated by subsidisation in cases where there is no rights-based management system in place. In a perfect world, private investments in the fishing industry would pile up to the point at which revenues equal production costs (the point of Maximum Economic Yield) [10]. In practice, however, it has been found that open access also
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encourages further investments in the sector, creating overcapacity [11,12] (i.e., ‘the level at which fishing capacity in the fishery exceeds what is required for the desired level of catch’) [13]. This situation is further aggravated when public aid is granted to the sector, which alters cost-revenue structures by reducing production costs and investment risks [14,15]. Building up overcapacities, however, creates economic waste [16,17] and poses a major obstacle to the successful implementation of sustainable fisheries management objectives [18,19]. Thus, from a basic homo economicus perspective, all public support schemes, which reduce production costs, and thus, artificially increase revenues, have the potential to create incentives for fishers and processors to enter or remain in the business. Ultimately, this places increased pressure on fish stocks [20]. The end effects of subsidies largely depend on variables like the state of the existing management system, the type of fishery, the functioning of control and enforcement measures, the biological status of stocks as well as the socio-economic, political, and commercial context in which they are applied [21,22]. Where management and control systems work properly, subsidies should in theory cause no harm to fish resources. However, in practice it has proven difficult to manage and control the fishing pressure of overcapitalised fleets. Thus, fisheries subsidies tend to be particularly harmful to fish stocks and the marine environment where overcapacities already exist [13]. Like most OECD countries, the Community has not yet overcome its overcapitalisation problem. The Community also has major issues with dwindling fish stocks and controlling and enforcing its management rules [23]. There are some exceptions to the rule. Subsidies may not contribute to overfishing in instances where fish stocks are underutilised. It is also worth remembering that some types of aid programs are only regarded as potentially harmful to resources, such as where they are poorly implemented. Decommissioning schemes, for example, are notorious in this regard. Such programs will only make a positive impact when re-investments are severely restricted and capital-stuffing by the remaining operators is prevented. It is also important to note that some types of subsidies clearly reduce the pressure on fish stocks. These include investments for stock-enhancement and re-stocking programs, control and enforcement measures, research projects, environmental schemes (e.g., environmentally friendly fishing gear, artificial reefs, etc.), as well as aid buffering the social consequences of the restructuring of the sector (e.g., retraining or early retirement schemes). 3. The logic and limits of subsidising fisheries sectors In view of the potential effects of subsidies, promotion should first and foremost aim at adjusting consumption and production capacities to a size commensurate with sustainable exploitation limits. Thus, promotion should be viewed as an integral part of management policy.1 This approach is based on two observations: first, the exploitation of marine capture resources ultimately depends on the level of available fish stocks. To maintain sustainable exploitation, fish stocks cannot be continuously fished beyond sustainable limits. Thus, this level of exploitation must be the initial reference point for all other policy segments, and subsidisation in particular. Second, as described above, as long as there is no rights-based management system, a large share of subsidies fuels the race to fish by creating investment incentives that foster fishing at inefficient and unsustainable levels. 1 Drawing up subsidisation and management measures in isolation from each other can lead to a lack of coherence in fisheries policy as a whole [24–27].
Management policies must thus ensure that fish stocks are not continuously exploited beyond sustainable levels. Public aid measures must help to reduce production capacity in the industry to levels commensurate with stock availability (under the sustainable management regime). Ideally, the sector should be of a size where it can produce efficiently and where demand for fish products does not contribute to overexploitation2. Several components of an integrated approach to subsidisation and management of fisheries follow from these premises [30]. An integrated approach requires that coastal states take the following actions: First step:
Scientifically assess the quantity of marine capture resources
that can be taken from the seas (including their own resources as well as those of third countries and high seas waters). Adopt and implement effectively sustainable exploitation limits which take into account ecosystem requirements. Second step:
Assess the impact of the production sector on fish stocks,
identifying which segment of the production sector pressurises which stocks. Restructure the sector to reduce production overcapacities to levels commensurate with the production potential of fish stocks, i.e., sustainable exploitation limits. Third step:
Assess whether existing subsidisation schemes adjust
production capacity so that it is more in line with management objectives and conservation measures. Change promotion policies so that they accord with management objectives by progressively eliminating subsidies that contribute to the maintenance or build-up of unsustainable production powers.
4. Subsidisation under the CFP The Commission clearly states in its Green Paper that financial support to the fisheries sector is substantial, either through Community funds or national state aid and other support measures [31]. The following section will provide a clearer picture of existing funding sources, mechanisms, and amounts distributed to the fisheries sectors throughout the Community. 4.1. The European fisheries fund In June 2006, the Council adopted a new central Regulation: Council Regulation (EC) 1198/06 on the European Fisheries Fund (EFF Regulation), to govern the structural aspects of the CFP [32]. The Commission has also adopted Regulation (EC) 498/2007, which lays down detailed rules for the implementation for EFF Regulation [33]. Overall approximately h4305 million will be made available from 2007 to 2013 under the EFF. Projects eligible for assistance are categorised under so-called ‘Priority Axes’ [34]. Axes are listed 2 A similar argument with regards to the adjustment of the fleet size is proposed by the European Court of Auditors [28], see also [29].
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as follows:
Priority Axis 1: measures for the adaptation of the Community fishing fleet.
Priority Axis 2: aquaculture, inland fishing, processing, and marketing of fishery and aquaculture products.
Priority Axis 3: measures of common interest. Priority Axis 4: sustainable development of fisheries areas. Priority Axis 5: technical assistance. Under the different axes, the following promotional instruments can be found: Priority Axis 1 concerns measures directed at fleet adjustment. Funds have been allocated to vessel owners or fishermen who need to adjust their fishing activities. To this end the EFF helps finance the permanent cessation of fishing activities by the scrapping of vessels, reassignment of vessels for non-fishing activities, and use for the creation of artificial reefs [35]. It also finances aid measures for the temporary cessation of fishing activities. Aid is provided for fishers who are affected by management measures that stall fishing activities [36] such as recovery plans [37] and emergency measures [38]. The Community also provides funding if fisheries agreements between the Community and third countries have not been renewed [39]. Funds are also made available for equipment and the modernisation of vessels of five years or older [40]. These may concern the improvement of safety on board, working conditions, hygiene, product quality, energy efficiency, and selectivity. Aid is granted subject to the condition that the ability of vessels to catch fish is not increased, particularly not above levels provided in Art. 12 of Regulation 2371/02. No aid will be granted for the construction of fishing vessels or for increase in fishholds [41]. The EFF may contribute to financing the replacement of one engine per vessel, but only subject to special restrictions [42]. Small-scale coastal fisheries are also promoted by modifying existing promotional measures of general applicability and participation rates to benefit small-scale coastal fisheries. In addition, the EFF may contribute to the financing of socioeconomic measures, including economic diversification, upgrading professional skills (in particular for young fishers), retraining in occupations outside sea fishing, early departure, and retirement. To counterbalance a demographic trend showing an increased average age of Community fishers, young fishermen can receive funds for the purchase of second-hand vessels. The EFF also intervenes in the aquaculture sector through measures laid down in ‘Priority Axis 2’, providing support for aqua-environmental, public health, and animal health measures as well as productive investment [43]. The EFF supports investments for the construction, extension, equipment, and modernisation of aquaculture production installations [44]. Funding is limited to enterprises which do not exceed a specified size (i.e., micro-, small-, and medium-sized enterprises, as well as enterprises with less than 740 employees or with a turnover of less than h200 million). Financial aid is also distributed for the use of environment-friendly aquaculture production methods (e.g., environment-friendly farming). Moreover, the EFF grants aid to mollusc farmers whose harvest is suspended due to the contamination of molluscs owing to the proliferation of toxinproducing plankton or the presence of plankton containing biotoxins [45]. Aid is also made available to control and eradicate aquaculture diseases, pursuant with Council Decisions (EEC) 424/90 on expenditure in the veterinary field. Support may be also granted for the build-up, modernisation, and maintenance of inland fishing activities. Finally, the EFF may grant support to process and market fisheries and aquaculture products [46].
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Under Priority Axis 3 on ‘measures of common interest’, aid is allocated for the support of measures of common interest, described as measures having a ‘broader scope than measures normally undertaken by private enterprises and which help to meet the objectives of the CFP [47]. The EFF can fund initiatives that are implemented with the active support of operators themselves or by organisations acting on behalf of the producers or other organisations recognised by the Member States. Measures of common interest, inter alia, aim to remove lost fishing gear or improve working conditions and safety [48]. Art. 38 lists three types of projects which can receive EFF support for the protection of aquatic fauna and flora: (1) the construction or installation of static or moveable facilities; (2) measures on the rehabilitation of inland waters; and (3) initiatives promoting the protection and enhancement of the environment in accordance with the NATURA 2000 guidelines on fishing activities. The EFF may also support investments in existing public or private fishing ports or landing sites, such as improving the conditions under which fisheries and aquaculture products are landed, processed, stored in the ports, and auctioned. The EFF may also support measures to implement a policy of quality and value enhancement, development of new markets or promotional campaign for fisheries and aquaculture products [49]. Pilot projects, which aim at acquiring and disseminating new technical knowledge, may also be supported [50]. The EFF may support the modification of fishing vessels for training and research purposes in the fisheries sector or for other activities outside fishing [51]. Priority Axis 4 is concerned with the ‘sustainable development of fisheries areas’. As a response to decreasing fish stocks, aid is given for the sustainable development and improvement of socioeconomic conditions in areas dependant on fisheries. Assistance is not limited to the fisheries sector: funds are available for environmental protection, enhancing inter-regional and transnational co-operation, and capacity building for the preparation of local development strategies. To increase stakeholder involvement, aid is distributed on a co-operative basis, so that local public and private partners from different sectors are also eligible for funding [52]. Priority Axis 5 on ‘technical assistance’ provides aid for the preparation and implementation of EFF programmes. Member States can opt to use up to 5% of their total EEF funding for the implementation of the operational programmes or the improvement of administrative capacities in fisheries areas, subject to the convergence objective. Such measures can include evaluations, expert reports, statistics and studies, information measures, build-up networks, promote co-operation throughout the Community, etc. The Commission may use up to 0.8% of its annual EFF funds towards implementing Regulation 1198/06.
4.2. Other community funding sources Promotional interventions are also carried out under the CFP’s market organisation. The market policy’s objectives are: stabilising the markets, guaranteeing and widening supplies, as well as increasing profitability of production [53]. To achieve this, market policy modifies the supply and demand mechanism by increasing prices by creating artificial scarcity [54]. Guide prices are set for products at the first stage of marketing, i.e., the sale of fish from fishers to wholesalers or retailers [54]. When fish prices fall below withdrawal prices, fish can be removed from the market by the producer organisations [55]. Producer organisations receive remuneration for certain amounts of their expenditures, only where they apply Community fixed withdrawal prices [56]. To keep waste to an absolute minimum, the Community has adopted a system of so-called ‘carry-over-aid’. According to Art. 23,
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processing and storing withdrawn products can be eligible for such aid. However, subsidies under the market organisation only constitute a minor fraction of public interventions. During the 1990s, payments ranged between h10.9 and h30.39 millions per year. The Community’s fisheries sector also receives further assistance from two other structural funds: the European Regional Development Fund (‘ERDF’) and the European Social Fund (‘ESF’). However, this funding and its effects can be characterised as indirect. The ERDF aims at reducing the disparities in socioeconomic development throughout the Community. Thus, financial transfers are made to less developed regions. Only a small share of the total budget is allocated to poor areas, which are highly dependant on fishing. For example, between 1994 and 1999 aid amounted to 96.89 million ecus. The ESF aims at adapting people’s occupational skills to the changing demands of the Community’s labour markets. Between 1994 and 1999, the ESF gave about 63.13 million ecus to the fisheries sector. The Community also finances access to the fishing zones of third countries in benefit of its distant-water fleet. For example, payments made directly to the third countries amounted up to over one billion euros between 1993 and 1997 [57]. Community funds are also given for research activities within the fisheries sector under its ‘research and technological development framework programmes’. The objective of the framework programme, covering the period from 1991 to 1994, for example, was to ‘establish harmony between the production of biological resources and the needs of consumers and the processing industry’. Between 1991 and 1998, under the third and fourth programmes, about 163 million ecus were made available for marine and aquaculture projects, and an additional 2.9 million ecus were spent on accompanying measures, as well as 7.9 million ecus for scholarships [58]. Community aid is also paid to Member States to support their control and monitoring efforts. Aid is granted for buying or modernising ships, aircrafts, and vehicles as well as other technical systems. The budget for the period from 1996 to 2000 was limited to 205 million ecus [59]. 4.3. State aid Member States also give financial aid to the fisheries sector. National transfers are comprised of three kinds of payments. First, Member States contribute their share to all Community projects that are co-financed. For example, national contributions to Community’s structural measures between 1994 and 1999 amounted to 1298 million ecus [60]. Second, Member States may also grant additional aid in compliance with the narrow requirements established in the Community rules on state aid, found in Art. 107 – 109 of the Treaty and the Commission’s ‘Guidelines for the Examination of State Aid to Fisheries and Aquaculture’ [61]. In 2004, the Commission adopted a de minimis regulation which established a ceiling of h3000 of aid per beneficiary per three-year period. In 2007, however, this ceiling was raised to h30,000. [62] The third category relates to Member States paying the costs of general services, such as management, control, and research costs. Only in 1997, these costs were about 472 million ecus [63].
5. Positive developments and persistent deficits Subsidisation policies under the CFP have undergone important changes in 2002 and 2007 [64]. In the course of the 2002 reform, aid for the construction of vessels was to be phased out by the end of 2004. Support for the modernisation of fishing
vessels from then on was only granted for improvements in safety, working conditions, hygiene, and product quality, and only on the condition that such aid did not increase catch capacity. Additional support was granted to vessel owners who were affected by recovery plans. Funding to permanent transfer of vessels to third countries was also phased out, ending in 2004 [64]. Since the beginning of 2007, the European Fisheries Fund (EFF) replaced the Financial Instrument for Fisheries Guidance (FIFG).3 It supports permanent fleet exits (scrapping, reassignment, etc.) and continues to refuse aid for the construction of vessels and increase in fishholds on fishing vessels. Another important development is the promotion of local development strategies in areas heavily dependant on fisheries. It is particularly noteworthy that these strategies are set up and implemented by local stakeholders themselves. Moreover, the EFF provides funding for aquaculture development, measures of common interest as well as technical assistance. It also grants preferential funding conditions to small-scale fisheries. For all Priority Axes, EFF measures increasingly aim at environmental protection. Under Priority Axis 1, support is granted for equipment which has a smaller impact on non-commercial species, marine ecosystems, and the sea bed [65]. Priority Axis 2 supports aquaenvironmental measures to reduce the negative impact of the processing sector [66]. Under Priority Axis 3, the EFF supports measures that contribute to collective actions contributing to improved resource management, promote selective fishing methods or gears, the recovery of lost fishing gear from the sea beds, as well as measures to protect aquatic fauna and flora [67]. The EFF also provides funding for fisheries products obtained using lowimpact methods and eco-labelling schemes [68]. Priority Axis 4 supports eco-tourism and environmental protection [69]. Where the EEF finances environmentally friendly aquaculture projects or measures, which protect the aquatic fauna and flora, it must take into account the requirements of NATURA 2000 areas [70]. Finally, the EFF provides funding for networking and information exchange among organisations promoting equal opportunities for men and women and other stakeholders.4 Women are also eligible for special aid towards business training [71]. Some problems, however, remain. First, the Commission notes correctly that there is only little conditionality between the EFFRegulation and the way Member States actually spend the available fisheries funds. Member States decide in their operational programs who will ultimately receive money for which purposes. Given the Commission’s weak influence with regards to the design of national operational programmes, it remains somewhat difficult to align promotion schemes to the EFF objectives. Funds are also distributed based on regional convergence criteria (75% are earmarked for convergence objective regions). However, these criteria can interfere with the rational approach to structural management as described above, i.e., basing allocation on management requirements and structural deficits of the relevant part of the sector. Moreover, during the 3 Pertinent FIFG measures were laid down in four new regulations. ‘Council Regulation (EEC) No. 2052/88 on the tasks of the structural funds and their effectiveness and on the coordination of their activities among themselves and with the operations of the European Investment Bank and other existing financial instruments’, OJ 1988 No. L185/9; ‘Council Regulation (EEC) 4253/88 laying down provisions for implementing Regulation 2052/88 [y]’, OJ 1988 No. L374/1; ‘Council Regulation (EEC) No 2080/93 laying down provisions for implementing Regulation (EEC) No. 2052/88 as regards the financial instruments of fisheries guidance’, OJ 1993 No. L193/1; ‘Council Regulation (EC) No. 3699/93 laying down the criteria and arrangements regarding Community structural assistance in the fisheries and aquaculture sector and the processing and marketing of products’, OJ 1993 No. L346/1. 4 Art. 37(k) of Regulation 1198/06. The promotion of equality between men and women is introduced in Art. 11 and mentioned in Art. 8 of Regulation 1198/06; see also reason 13, ibid.
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negotiations leading towards the adoption of the EFF, a ‘pro subsidy group’ of Member States called for a reuptake of subsidy schemes that may harm resources.5 They argued in favour of subsidies for the modernisation of the fleet, despite the fact that this type of aid had been phased out with the 2002 reforms [73]. In the end, Member States agreed to grant some aid for engine replacements, subject to the condition that vessels ability to catch fish is not enhanced. It must be noted that even when these subsidies do not increase fishing capacity, they do create an incentive to remain in an overcapitalised business. Given the ineffective control mechanisms under the CFP, such subsidies could, in fact, lead to an increase in fishing capacity [74]. Furthermore, the Community continues to subsidise fishing ports, landing sites and shelters and promotional campaigns for fisheries products. The processing industry also receives substantial support. All these subsidies reduce the costs of fishing as well as processing costs, resulting in increased fishing and overall demand for fish. Finally, while Community aid for the most harmful purposes has been phased out, in 2007, the ceiling for unnoticed state aid was upgraded to h30,000, giving Member States the permission to increase their own subsidisation [62]. The EFF also provides aid for the temporary adjustment of fleet parts that target the most exploited stocks by giving aid to fishers affected by recovery plans (up to 24 months), emergency measures (up to 6 months), natural disasters (6 months), and effort adjustment plans (8 months). Where fisheries agreements between the Community and third countries have not been renewed, aid may be granted up to 12 months. With regards to aid granted in the course of recovery plans, emergency measures and effort adjustment plans, it could be argued the EFF supports the effectiveness of the management policy. However, from an economic perspective such financial grants substantially reduce investment risks for fishers, and thus, lower the chance that they will leave the overcapitalised sector and stop fishing overexploited stocks. Moreover, it has happened before in the history of the CFP that fish stocks would not recover during temporary cessation phases [75–77]. Where exploited stocks in Community and third countries waters are in a good condition, the granting of support in response to natural disasters or to the non-renewal of access agreements seems to be a legitimate policy objective. In practice, however, many of these stocks are not in good condition [78,79].
6. Commenting the Commission’s reform proposals The Commission’s Green Paper lays down several objectives and asks a number of questions on how these aims can best be realised. These will be considered in the following section. 6.1. Objectives According to the Commission, the ‘next reform will have to ensure that structural deficiencies of the industry are addressed while ensuring safeguards against any unwanted side effects, it should promote and facilitate the restructuring and modernisation of the European industry, help it improve its long-term economic viability, and avoid artificially maintaining overcapacity [31]’. The Commission basically refers to the core objectives of the Community’s structural policy from 1970 onwards, namely, the promotion of a harmonious and balanced development of the 5 The Council had failed to reach an agreement twice (June 2005 and May 2006) until finally a regulation was adopted on 19 June 2006; see Council of the European Union Press Release [72].
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industry and encourage rational use of marine aquatic resources [80]. 6.2. Commission’s questions and some answers 6.2.1. Question 1 What should be the top priorities for future public financial support and why? What changes can the sector not manage to bring about on its own and therefore require public financial support? Public support must in no way contribute to eroding fisheries management. Any fishing activity depends on the level of available fish stocks. Where overcapacities lead to overfishing, as is the case in Community waters, fishing can neither be carried out at sustainable levels nor at efficient levels. A large amount of public money also has to be spent to pay for control and enforcement actions. Where subsidies increase or maintain overcapacities in the production sector, public money is basically financing inefficiencies in the fisheries sector and the burdening of the marine environment. The fisheries sector may receive funding for all purposes which do not increase or maintain production powers at level that are incommensurable with the available fish stocks. This excludes all subsidies which reduce regular production costs and investments risks. Accordingly, payments should only be made available for management services, to buffer the social consequences of restructuring sectors, for environment-friendly gear and projects, increasing safety, scientific support, as well as for promoting equal opportunities. 6.2.2. Question 2 How can we change the focus of EU financial resources to promote innovation and adaptation to new policies and circumstances? Does any new policy area require funding? Should public financial support be focused on specific transitions such as eliminating discards in the fishing industry? A crisis driven change is forcing the CFP and the Community’s environmental policy to revise its exploitation and conservation strategies. Stocks are heavily overfished and marine ecosystems are increasingly pressured by land-based pollution, sea traffic, global warming, loss of biodiversity, acidification of the seas, etc [81]. The CFP has to overcome sectoral politics and try to approach fisheries policy by taking into account the global challenges to the marine environment. Fishing does not happen in isolation from other pressures on the seas. The newly adopted Marine Strategy Framework Directive (MSFD) is one cornerstone of a reorientation of the CFP. Structural policies support and should carry on to support this process of reorientation. To this end, it must continue to support innovation and sector adaptation to allow for the decrease in fishing opportunities. Therefore, the EFF should continue to provide funds for the scrapping of vessels, re-education programs, restructuring and research projects, which support the adaptation strategies of fishing sectors. Part of the adaptation strategies would be to support the sector adaptation because of a possible revised discard policy. 6.2.3. Question 3 How can a synergy and coherence of possible CFP funds with other EUs and national instruments be ensured? The first point to remember with regards to synergy and coherence with other funding instruments is that fisheries funds should not be allocated on the basis of regional convergence criteria. As stated above, this can interfere with the rational approach to structural management. EEF funding should be based solely on the need to adjust the fleet to the available resources.
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Regional promotion should be carried out through the ESF or the ERDF and should only relate to projects outside the fisheries sector. Second, greater transparency at the national and Community levels is necessary. All national and Community funding that can possibly affect the fisheries sector, either directly or indirectly, should be monitored and made public. Third, states should have less discretion to provide subsidies under the rules on state aid. Fourth, the process of simplifying the regulatory framework of the structural policy should be continued.6 This would, again, increase transparency. 6.2.4. Question 4 How can a synergy between the pillars of a future CFP be achieved? Should public assistance be conditional on Member States’ achieving policy objectives? Sustainable and efficient exploitation (as determined by ecosystem requirements) should be the basic reference point for all CFP pillars. Structural, market, and external policies should be integrated into a sustainable and efficient management policy. Any subsidy or market intervention, which erodes management efforts, should be avoided. This approach should also apply to external and market policies. Overfishing should not be externalised through access agreements and trade policies [83]. To guarantee Member States’ co-operation in all of the CFP’s policy segments, the Commission should have the ability to impose effective sanctions, such as the right to freeze financial assistance where states falsely implement management rules [84,85].
their livelihood by small-scale fishing [90]. Their vessels are relatively immobile, operating primarily within the 12 nm zone off the coast [91]. Thus, they are particularly vulnerable to changes in catch abundance and competition from large-scale vessels and other interest groups claiming access to the narrow coastal strips. Alternative opportunities for employment in Community coastal regions are often limited [92]. Compared to other interested parties (including large-scale fisheries), smallscale fishers are often poorly organised and their interests are politically marginalized [93]. Given their use of less destructive fishing practices and the high quality of their products, smallscale fisheries have the potential to make a strong contribution to the Community fishing industry [94,95]. Since there are clear differences between small-scale and large-scale fisheries, differential treatment under the CFP’s structural policy should be continued. As described above, the EFF currently promotes small-scale coastal fisheries. Art. 26(2) of Regulation 1198/06 sets out special participation rates for this sector: where the EFF provides financial aid for investments on-board fishing vessels and selectivity under Art. 25, private participation rates in investments may be reduced by 20%. Art. 26(3) also allows the EFF to finance socioeconomic measures established in Art. 27 in favour of small-scale coastal fishing. According to Art. 26(4), the EFF may contribute to the payment of premiums for fishers and owners of fishing vessels involved in small-scale coastal fishing in order to:
improve management and control of access conditions to 6.2.5. Question 5 How can EU financial resources be developed to provide the flexibility needed to respond swiftly when a crisis occurs? The EFF currently provides aid measures in several cases of unforeseen circumstances. Aid is provided for fishers who are affected by the temporary cessation of fishing activities, imposed by the Community or Member States when taking emergency measures [86,87]. Up to three months of aid is also made available to firms facing economic difficulties during the period of replacement of engines [88]. Finally, aid may be granted for up to 6 months in the event of natural disasters or where fisheries are closed by Member States for public health reasons or exceptional occurrences [89]. In addition to these instruments, the Community should consider providing aid for other unforeseen purposes. To speed up the procedures and to provide quick assistance in a crisis, Member States or Producer Organisations should have the ability to allocate immediate financial help. Member States or producer organisations could decide based on certain specified criteria whether they want to distribute funds or not. In these cases Member States should co-finance assistance somewhere within the range of 25–50%. Where authorities have legitimately assigned the financial aid, they should be reimbursed under the EFF. 6.2.6. Question 6 Should public financial support apply equally to all sectors (small and large scale)? Should the European Fisheries Fund continue to distinguish between convergence and non-convergence regions? There are a large number of small-scale vessels in the Community’s fishing fleet. It has been estimated that in 2007 about 81% of all Community vessels were less than 12 m long and approximately 100,000 of a total of 209,000 fishermen earned 6 The EFF replaced a complex and non-transparent set of several regulations governing CFP structural policies, see [82].
certain areas;
promote the organisation of the production, processing, and marketing chain of fisheries products;
encourage voluntary steps to reduce fishing effort for the conservation of resources;
encourage the use of technological innovations [y] that do not increase fishing effort; and
improve professional skills and safety training. According to Art. 25(1), the EFF may help to finance equipment and the modernisation of vessels of five years or older. Aid is granted subject to the condition that the ability of vessels to catch fish is not increased, particularly not above levels provided in Art. 12 of Regulation 2371/02. Aid for the replacement of engine is distributed, subject to the following scheme [42] Art. 25(3) of the EFF also favours small-scale vessels over larger vessels with regards to financing new engines. Aid will be granted provided that the new engine has the same or less power than the old one. (Larger vessels only receive aid, provided that the new engine has at least 20% less power than the old one.) Finally, regarding the question of whether fisheries funds should be allocated on regional convergence criteria, distribution based on regional convergence criteria can interfere with the rational approach to structural management introduced above. If certain regions should receive special promotion, this could be done through the ESF or the ERDF. Given that most small-scale fishers seem to face similar problems and challenges throughout the entire Community, it would be inappropriate to treat them differently. 6.2.7. Question 7 Should indirect support such as services related to fisheries management (access, research, control) continue to be provided free to all sectors of the industry? Though some research programmes might be directed at reducing production costs, the funding of management services in general is not estimated to harm resources [96]. It is more a
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question of whom society perceives as the main beneficiary of fisheries management. Is it a service mainly provided in the public interest to provide fish products to individuals or is it primarily the industry that benefits? Although management services constitute a major share of the overall costs of fisheries sectors, approximately 36% in OECD states, most countries do not require their industries to pay for services like access, research, and control measures. Nevertheless, countries like Canada, USA, and New Zealand do recover at least some parts of the costs from industry [96,97]. Given rising production costs, imposing user charges for access or management services would eventually provide some incentive to reduce fishing. These types of charges are increasingly perceived as an effective instrument for reducing pressure on burdened resources [98]. However, both options are equally viable, given the legitimate interest in providing fisheries resources to people and that refraining from claiming fees for fisheries management does not contribute to overfishing. 6.2.8. Question 8 Should permanent fisheries subsidies be phased out, maintaining, on a temporary basis, only those aimed at alleviating the social impacts of the restructuring of the sector? No subsidies should be provided for purposes that reduce production costs, and thus, increase production power and erode efficient and sustainable management policies. Therefore, only selected payments should be made for purposes such as management services, improving safety, working conditions, hygiene, and product quality (under the condition that they do not increase catch capacity), permanent fleet exits (scrapping, reassignment, etc.) until the fleet reaches a size commensurate with a sustainable and efficient fisheries management. Besides, funds should be made available for social and environmental purposes such as adaptation strategies (retraining, early retirement, ecotourism, development of local adaptation strategies, etc.), environment-friendly aquaculture projects. Given their distinct character and importance for coastal regions, small-scale fisheries could be favoured in the restructuring process and within maintained support schemes. Finally, in light of the changing availability of supplies, market instabilities, and their small size, market interventions could be maintained in order to give the fishing industry planning security.
7. Conclusion The two underlying ideas of this article are that the exploitation of marine capture resources ultimately depends on the level of available fish stocks and that a large share of subsidies fuels the race to fish by inducing investment incentives for the fisheries sector. Policies that have ignored this tend to encourage inefficient and unsustainable fishing as well as the misallocation of public funds. Although support schemes under the CFP have changed in recent years, some problematic support schemes persist. Future reforms will have to continue the course taken towards sustainable and efficient approaches to supporting the fisheries industry. Based on this approach it has been tried to answer some of the most urgent questions concerning the CFP reform process.
Acknowledgements The author would like to thank Anna-Maria Hubert and Dennis-Kenji Kipker. Errors remain the entire responsibility of the author.
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[23] European Court of Auditors. Special Report 7/2007 on the control, inspection and sanction systems relating to the rules on conservation of Community fisheries resources. OJ 2007 No C317/I. [24] Song Y-H. The Common Fisheries Policy of the European Union: restructuring of the fishing fleet and the financial instrument for fisheries guidance. The International Journal of Marine and Coastal Law 1998;13:537–77. [25] European Court of Auditors. Special Report No. 3/93 concerning the implementation of the measures for the restructuring, modernisation and adaptation of the capacities of fishing fleets in the Community together with the Commission’s replies. OJ 1994 No. C2/1: paras. 1.18.–1.23. [26] Schrank WE. Introducing fisheries subsidies—FAO fisheries technical paper. Rome: FAO Information Division; 2003. 32 et seq. [27] OECD. Contrib Title: Transition to responsible fisheries—government financial transfers and resource sustainability: case studies. Paris: OECD Publishing; 2000. p. 6–226. [28] European Court of Auditors. Special Report No. 3/93 concerning the implementation of the measures for the restructuring, modernisation and adaptation of the capacities of fishing fleets in the Community together with the Commission’s replies. OJ 1994 No. C2/1: para. 1.22. [29] Gre´boval D. The international plan of action for the management of fishing capacity: retrospect and prospect. In: Nordquist M, Moore JN, editors. Current fisheries issues and the food and agriculture organisation of the United Nations. The Hague: Centre for Oceans Law and Policy, University of Virginia School of Law; 2000. p. 569.
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[30] Markus T. Contrib Title: European Fisheries Law—from promotion to management. Groningen: Europa Law Publishing; 2009. p. 231–3. [31] European Commission. Green Paper—Reform of the Common Fisheries Policy. COM(2009) 163 final: 21. [32] OJ 2006 No. L223/1. Replacing Regulations 1263/99; 2792/99; 366/2001; The EFF-Regulation is complemented by Regulation 744/2008 and Regulation 861/2006. [33] OJ 2007 No. L120/1. [34] Art. 3(i) of Regulation 1198/06. [35] Art. 23(1) of Regulation 1198/06. [36] Art. 24 of Regulation 1198/06. [37] Arts. 24(1)(i), 22(3) and 21(a)(i) of Regulation 1198/06. [38] Arts. 24(1)(ii) and Art. 21(a)(ii) of Regulation 1198/06. [39] Arts. 24(1)(iv) and 22 (a)(iii) of Regulation 1198/06. [40] Art. 25(1) of Regulation 1198/06. [41] Art. 25(2) of Regulation 1198/06. [42] Art. 25(3) of Regulation 1198/06. [43] Art. 28 Regulation 1198/06. [44] Art. 29 of Regulation 1198/06. [45] Art. 31 of Regulation 1198/06. [46] Art. 34(1) of Regulation 1198/06. [47] Art. 36 of Regulation 1198/06. [48] Art. 37 of Regulation 1198/06. [49] Art. 40 of Regulation 1198/06. [50] Art. 41 of Regulation 1198/06. [51] Art. 42 of Regulation 1198/06. [52] Art. 45 of Regulation 1198/06. [53] Regarding market stability, see Reasons (4), (11) and (27); regarding increasing profitability, see Reason (6) and Arts. 2 and 3; regarding increasing the variety of supply, see Reason (8) of Regulation 104/2000. [54] Churchill RR. EEC fisheries law. Dordrecht: Martinus Nijhoff Publishers; 1987. p. 233. [55] Arts. 17 and 21 of Regulation 104/00. [56] Art. 21(1)(a) of Regulation 104/00. [57] IFREMER. Evaluation of the fisheries agreements concluded by the European Community. European Contract No. 97/S 240-152919; 1999; available online at: /http://ec.europa.eu/fisheries/S: 15. [58] OECD. Transition to responsible fisheries—government financial transfers and resource sustainability: case studies. Paris: OECD Publishing; 2000. p. 50–2. [59] OECD. Transition to responsible fisheries—government financial transfers and resource sustainability: case studies. Paris: OECD Publishing; 2000. p. 52–4. [60] OECD. Transition to responsible fisheries—government financial transfers and resource sustainability: case studies. Paris: OECD Publishing; 2000. 56. [61] OJ 2004 No. C229/5; Churchill RR, Owen D. The EC Common Fisheries Policy. New York: Oxford University Press; 2010. p. 543–54. [62] See Art. 3(2) of Commission Regulation (EC) 875/2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the fisheries sector and amending Regulation 1860/2004, OJ 2007 No. L193/6. [63] OECD. Transition to responsible fisheries—government financial transfers and resource sustainability: case studies. Paris: OECD Publishing; 2000. p. 58. [64] Markus T. European Fisheries Law—from promotion to management. Groningen: Europa Law Publishing; 2009. p. 198–202. [65] Art. 25(6)(c)–(d), (7)–(8) of Regulation 1198/06. [66] Arts. 30(2)(a–c) and 35(1)(d) of Regulation 1198/06. [67] Arts. 37 and 38 of Regulation 1198/06. [68] Arts. 40(3)(d),(f) of Regulation 1198/06. [69] Arts. 43(2)(c), 44 (1)(b), and (f) of Regulation 1198/06.
[70] Arts. 30(2)(d), (4)(d), and 38 (2)(c) of Regulation 1198/06. [71] Art. 44(2) of Regulation 1198/06. [72] Council of the European Union. Press Release. 19 June 2006; No. 10302/06 (Presse 178): 17. [73] European Commission. Proposal COM(2004) 497 final on the European Fisheries Fund: 1–86. [74] European Court of Auditors. Special Report 7/2007 on the control, inspection and sanction systems relating to the rules on conservation of Community fisheries resources. OJ 2007 No C317/I: para. 119. [75] Holden M. The Common Fisheries Policy. Oxford: Wiley Blackwell; 1996. p. 16–33. [76] Markus T. European Fisheries Law—from promotion to management. Groningen: Europa Law Publishing; 2009. p. 146–226. [77] Churchill RR. EEC Fisheries Law. Dordrecht: Martinus Nijhoff Publishers; 1987. p. 208. [78] FAO. State of world fisheries and aquaculture. Rome: FAO Fisheries and Aquaculture Department; 2008. [79] Kaczynski VM, Fluharty DL. European policies in West Africa: who benefits from fisheries agreements?Marine Policy 2002;26:75–93. [80] Art. 1(1) of Regulation 2141/70 and Art. 4 of Regulation 1198/2006. [81] European Environmental Agency. Europe’s environment—the fourth assessment. Copenhagen: EEA Publication; 2007. p. 207–50. [82] Markus T. European Fisheries Law—from promotion to management. Groningen: Europa Law Publishing; 2009. p. 203. [83] With regards to overfishing in third countries waters, see, for example, Mwikya SM. Fisheries access agreements: trade and development issues. Geneva: International Trade and Sustainable Development Series Issue Paper No. 2; 2006. [84] European Commission. Commission staff working document SEC(2008) 2760 accompanying the proposal for a Council Regulation establishing a Community control system for ensuring compliance with the rules of the Common Fisheries Policy: 12, 25. [85] European Court of Auditors. Special Report 7/2007 on the control, inspection and sanction systems relating to the rules on conservation of Community fisheries resources. OJ 2007 No C317/I: para. 133. [86] Arts. 7 and 8 of Regulation 2371/02. [87] Arts. 24(1)(ii) and 21(a)(ii) of Regulation 1198/06; Arts. 24(1)(iii) and 21(a)(ii) of Regulation 1198/06. [88] Arts. 24(1)(vi) and 21(f) of Regulation 1198/06. [89] Art. 24(1)(vii) of Regulation 1198/06. [90] Salz P, Buisman E, Smit J, de Vos B. Employment in the fisheries sector: current situation. Brussels: European Commission; 2006. p. 15. [91] IFREMER. Small-scale coastal fisheries in Europe. Brussels: European Commission; 2007. p. 21. [92] European Commission. Commission Communication COM(2001) 135 final Green Paper on the future of the Common Fisheries Policy: 24. p 31–3. ¨ [93] COFAD. Die kustenfischerei in niedersachsen—stand und perspektiven (kurzfassung). Tutzing: COFAD GmbH; 2004. p. 11–2. [94] IFREMER. Small-scale coastal fisheries in Europe. Brussels: European Commission; 2007. p. 6–7. [95] European Commission. Commission Communication COM(2001) 135 final Green Paper on the future of the Common Fisheries Policy: 32–33. [96] Porter G. Analysing the resource impact of fisheries subsidies—a matrix approach. Nairobi: UNEP; 2004. p. 21–2. [97] Ludicello S, Weber M, Wieland R. Fish, markets and fishermen—the economics of overfishing. London: Islandpress; 1999. p. 89–161. [98] German Advisory Council on Global Change. Charging the use of the global commons. Berlin: WBGU; 2002. p. 2.
Contents lists available at ScienceDirect
Marine Policy journal homepage: www.elsevier.com/locate/marpol
Towards sustainable fisheries subsidies: Entering a new round of reform under the Common Fisheries Policy$ Till Markus Research Centre for European Environmental Law, University of Bremen, Bremen International Graduate School for Marine Sciences, GLOMAR, Universit¨ atsallee GW1, 28359 Bremen, Germany
a r t i c l e in fo
abstract
Article history: Received 15 October 2009 Received in revised form 19 March 2010 Accepted 20 March 2010
On 22 April 2009 the European Commission published its ‘Green Paper on the Reform of the Common Fisheries Policy’. The Green Paper points out a contradiction in policy, noting on one hand that public financial support to the Community’s fisheries sector is substantial, but on the other hand such support is often incompatible with other Common Fisheries Policy (CFP) objectives, particularly the need to reduce overcapacities. Providing an analytical framework to better understand the effects of subsidies as well as an overview of existing funding schemes under the CFP, this article aims at answering some of the questions posed by the European Commission within its Green Paper. Answers are based on two ideas: the exploitation of marine capture resources ultimately depends on the level of available fish stocks and that a large share of subsidies fuels the race to fish by inducing investment incentives for the fisheries sector. Policies that have ignored this tend to encourage inefficient and unsustainable fishing as well as the misallocation of public funds. Although support schemes under the CFP have changed in recent years, some problematic support schemes persist. A future reform will have to continue the course taken towards sustainable and efficient approaches to supporting the fisheries industry. & 2010 Elsevier Ltd. All rights reserved.
Keywords: Common Fisheries Policy Fisheries subsidies Green Paper Reform European fisheries fund Fleet overcapacities
1. Introduction Public aid to fisheries sectors has come under suspicion for having substantial negative impacts on living aquatic resources and the marine environment. Financial aid reduces fishing costs and thus, contributes to catching at inefficient and unsustainable levels. The European Community has a bad record of subsidy related problems in the fisheries sector including the creation and maintenance of large overcapacities in the catching and production sector. [1] In its recently published Green Paper on the Reform of the Common Fisheries Policy (CFP) [2], the Commission explicitly states that public financial support to the Community’s fisheries sector is substantial and that funding is often at odds with other CFP objectives, in particular the need to reduce overcapacities. In the Green Paper, the Commission poses several questions on how a future structural policy can avoid the negative side effects of subsidisation, while helping the industry to restructure, modernise, improve its long-term economic viability,
$ This study has partly been financed by the European Community (Sixth Framework Programme) project: ‘Integrating Multiple Demands on Coastal Zones with Emphasis on Aquatic Ecosystems and Fisheries, INCOFISH’ (Contract no.: PL 003739) as well as by the Bremen International Graduate School for Marine Sciences, which, again, is funded by the German Excellence Initiative. Tel.: + 49 421 218 3835; fax: + 49 421 218 7490. E-mail address: [email protected]
0308-597X/$ - see front matter & 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.marpol.2010.03.011
and avoid maintaining artificial overcapacities. This article will first establish an analytical framework to guide the reorientation of the public support regime under the CFP. It will then assess the overall structure of the CFP’s subsidies schemes. Finally, the Commission’s objectives and questions from the Green Paper will be considered and some comments and answers will be tried.
2. Economic and empirical analyses of negative effects of fisheries subsidies Public aid to fisheries is perceived as having several negative effects, such as distorting trade in fisheries products [3,4], creating or maintaining overcapacities in the production sector (which places pressure marine aquatic resources), and lowering retail prices and thus, increasing consumer demand for resources already under pressure [5–9]. In this study, the effects of subsidies on the exploitation of fisheries resources will be of primary relevance. From an economic perspective, the open access conflict, ‘tragedy of the commons’ or the ‘race to fish’, will be exacerbated by subsidisation in cases where there is no rights-based management system in place. In a perfect world, private investments in the fishing industry would pile up to the point at which revenues equal production costs (the point of Maximum Economic Yield) [10]. In practice, however, it has been found that open access also
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encourages further investments in the sector, creating overcapacity [11,12] (i.e., ‘the level at which fishing capacity in the fishery exceeds what is required for the desired level of catch’) [13]. This situation is further aggravated when public aid is granted to the sector, which alters cost-revenue structures by reducing production costs and investment risks [14,15]. Building up overcapacities, however, creates economic waste [16,17] and poses a major obstacle to the successful implementation of sustainable fisheries management objectives [18,19]. Thus, from a basic homo economicus perspective, all public support schemes, which reduce production costs, and thus, artificially increase revenues, have the potential to create incentives for fishers and processors to enter or remain in the business. Ultimately, this places increased pressure on fish stocks [20]. The end effects of subsidies largely depend on variables like the state of the existing management system, the type of fishery, the functioning of control and enforcement measures, the biological status of stocks as well as the socio-economic, political, and commercial context in which they are applied [21,22]. Where management and control systems work properly, subsidies should in theory cause no harm to fish resources. However, in practice it has proven difficult to manage and control the fishing pressure of overcapitalised fleets. Thus, fisheries subsidies tend to be particularly harmful to fish stocks and the marine environment where overcapacities already exist [13]. Like most OECD countries, the Community has not yet overcome its overcapitalisation problem. The Community also has major issues with dwindling fish stocks and controlling and enforcing its management rules [23]. There are some exceptions to the rule. Subsidies may not contribute to overfishing in instances where fish stocks are underutilised. It is also worth remembering that some types of aid programs are only regarded as potentially harmful to resources, such as where they are poorly implemented. Decommissioning schemes, for example, are notorious in this regard. Such programs will only make a positive impact when re-investments are severely restricted and capital-stuffing by the remaining operators is prevented. It is also important to note that some types of subsidies clearly reduce the pressure on fish stocks. These include investments for stock-enhancement and re-stocking programs, control and enforcement measures, research projects, environmental schemes (e.g., environmentally friendly fishing gear, artificial reefs, etc.), as well as aid buffering the social consequences of the restructuring of the sector (e.g., retraining or early retirement schemes). 3. The logic and limits of subsidising fisheries sectors In view of the potential effects of subsidies, promotion should first and foremost aim at adjusting consumption and production capacities to a size commensurate with sustainable exploitation limits. Thus, promotion should be viewed as an integral part of management policy.1 This approach is based on two observations: first, the exploitation of marine capture resources ultimately depends on the level of available fish stocks. To maintain sustainable exploitation, fish stocks cannot be continuously fished beyond sustainable limits. Thus, this level of exploitation must be the initial reference point for all other policy segments, and subsidisation in particular. Second, as described above, as long as there is no rights-based management system, a large share of subsidies fuels the race to fish by creating investment incentives that foster fishing at inefficient and unsustainable levels. 1 Drawing up subsidisation and management measures in isolation from each other can lead to a lack of coherence in fisheries policy as a whole [24–27].
Management policies must thus ensure that fish stocks are not continuously exploited beyond sustainable levels. Public aid measures must help to reduce production capacity in the industry to levels commensurate with stock availability (under the sustainable management regime). Ideally, the sector should be of a size where it can produce efficiently and where demand for fish products does not contribute to overexploitation2. Several components of an integrated approach to subsidisation and management of fisheries follow from these premises [30]. An integrated approach requires that coastal states take the following actions: First step:
Scientifically assess the quantity of marine capture resources
that can be taken from the seas (including their own resources as well as those of third countries and high seas waters). Adopt and implement effectively sustainable exploitation limits which take into account ecosystem requirements. Second step:
Assess the impact of the production sector on fish stocks,
identifying which segment of the production sector pressurises which stocks. Restructure the sector to reduce production overcapacities to levels commensurate with the production potential of fish stocks, i.e., sustainable exploitation limits. Third step:
Assess whether existing subsidisation schemes adjust
production capacity so that it is more in line with management objectives and conservation measures. Change promotion policies so that they accord with management objectives by progressively eliminating subsidies that contribute to the maintenance or build-up of unsustainable production powers.
4. Subsidisation under the CFP The Commission clearly states in its Green Paper that financial support to the fisheries sector is substantial, either through Community funds or national state aid and other support measures [31]. The following section will provide a clearer picture of existing funding sources, mechanisms, and amounts distributed to the fisheries sectors throughout the Community. 4.1. The European fisheries fund In June 2006, the Council adopted a new central Regulation: Council Regulation (EC) 1198/06 on the European Fisheries Fund (EFF Regulation), to govern the structural aspects of the CFP [32]. The Commission has also adopted Regulation (EC) 498/2007, which lays down detailed rules for the implementation for EFF Regulation [33]. Overall approximately h4305 million will be made available from 2007 to 2013 under the EFF. Projects eligible for assistance are categorised under so-called ‘Priority Axes’ [34]. Axes are listed 2 A similar argument with regards to the adjustment of the fleet size is proposed by the European Court of Auditors [28], see also [29].
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as follows:
Priority Axis 1: measures for the adaptation of the Community fishing fleet.
Priority Axis 2: aquaculture, inland fishing, processing, and marketing of fishery and aquaculture products.
Priority Axis 3: measures of common interest. Priority Axis 4: sustainable development of fisheries areas. Priority Axis 5: technical assistance. Under the different axes, the following promotional instruments can be found: Priority Axis 1 concerns measures directed at fleet adjustment. Funds have been allocated to vessel owners or fishermen who need to adjust their fishing activities. To this end the EFF helps finance the permanent cessation of fishing activities by the scrapping of vessels, reassignment of vessels for non-fishing activities, and use for the creation of artificial reefs [35]. It also finances aid measures for the temporary cessation of fishing activities. Aid is provided for fishers who are affected by management measures that stall fishing activities [36] such as recovery plans [37] and emergency measures [38]. The Community also provides funding if fisheries agreements between the Community and third countries have not been renewed [39]. Funds are also made available for equipment and the modernisation of vessels of five years or older [40]. These may concern the improvement of safety on board, working conditions, hygiene, product quality, energy efficiency, and selectivity. Aid is granted subject to the condition that the ability of vessels to catch fish is not increased, particularly not above levels provided in Art. 12 of Regulation 2371/02. No aid will be granted for the construction of fishing vessels or for increase in fishholds [41]. The EFF may contribute to financing the replacement of one engine per vessel, but only subject to special restrictions [42]. Small-scale coastal fisheries are also promoted by modifying existing promotional measures of general applicability and participation rates to benefit small-scale coastal fisheries. In addition, the EFF may contribute to the financing of socioeconomic measures, including economic diversification, upgrading professional skills (in particular for young fishers), retraining in occupations outside sea fishing, early departure, and retirement. To counterbalance a demographic trend showing an increased average age of Community fishers, young fishermen can receive funds for the purchase of second-hand vessels. The EFF also intervenes in the aquaculture sector through measures laid down in ‘Priority Axis 2’, providing support for aqua-environmental, public health, and animal health measures as well as productive investment [43]. The EFF supports investments for the construction, extension, equipment, and modernisation of aquaculture production installations [44]. Funding is limited to enterprises which do not exceed a specified size (i.e., micro-, small-, and medium-sized enterprises, as well as enterprises with less than 740 employees or with a turnover of less than h200 million). Financial aid is also distributed for the use of environment-friendly aquaculture production methods (e.g., environment-friendly farming). Moreover, the EFF grants aid to mollusc farmers whose harvest is suspended due to the contamination of molluscs owing to the proliferation of toxinproducing plankton or the presence of plankton containing biotoxins [45]. Aid is also made available to control and eradicate aquaculture diseases, pursuant with Council Decisions (EEC) 424/90 on expenditure in the veterinary field. Support may be also granted for the build-up, modernisation, and maintenance of inland fishing activities. Finally, the EFF may grant support to process and market fisheries and aquaculture products [46].
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Under Priority Axis 3 on ‘measures of common interest’, aid is allocated for the support of measures of common interest, described as measures having a ‘broader scope than measures normally undertaken by private enterprises and which help to meet the objectives of the CFP [47]. The EFF can fund initiatives that are implemented with the active support of operators themselves or by organisations acting on behalf of the producers or other organisations recognised by the Member States. Measures of common interest, inter alia, aim to remove lost fishing gear or improve working conditions and safety [48]. Art. 38 lists three types of projects which can receive EFF support for the protection of aquatic fauna and flora: (1) the construction or installation of static or moveable facilities; (2) measures on the rehabilitation of inland waters; and (3) initiatives promoting the protection and enhancement of the environment in accordance with the NATURA 2000 guidelines on fishing activities. The EFF may also support investments in existing public or private fishing ports or landing sites, such as improving the conditions under which fisheries and aquaculture products are landed, processed, stored in the ports, and auctioned. The EFF may also support measures to implement a policy of quality and value enhancement, development of new markets or promotional campaign for fisheries and aquaculture products [49]. Pilot projects, which aim at acquiring and disseminating new technical knowledge, may also be supported [50]. The EFF may support the modification of fishing vessels for training and research purposes in the fisheries sector or for other activities outside fishing [51]. Priority Axis 4 is concerned with the ‘sustainable development of fisheries areas’. As a response to decreasing fish stocks, aid is given for the sustainable development and improvement of socioeconomic conditions in areas dependant on fisheries. Assistance is not limited to the fisheries sector: funds are available for environmental protection, enhancing inter-regional and transnational co-operation, and capacity building for the preparation of local development strategies. To increase stakeholder involvement, aid is distributed on a co-operative basis, so that local public and private partners from different sectors are also eligible for funding [52]. Priority Axis 5 on ‘technical assistance’ provides aid for the preparation and implementation of EFF programmes. Member States can opt to use up to 5% of their total EEF funding for the implementation of the operational programmes or the improvement of administrative capacities in fisheries areas, subject to the convergence objective. Such measures can include evaluations, expert reports, statistics and studies, information measures, build-up networks, promote co-operation throughout the Community, etc. The Commission may use up to 0.8% of its annual EFF funds towards implementing Regulation 1198/06.
4.2. Other community funding sources Promotional interventions are also carried out under the CFP’s market organisation. The market policy’s objectives are: stabilising the markets, guaranteeing and widening supplies, as well as increasing profitability of production [53]. To achieve this, market policy modifies the supply and demand mechanism by increasing prices by creating artificial scarcity [54]. Guide prices are set for products at the first stage of marketing, i.e., the sale of fish from fishers to wholesalers or retailers [54]. When fish prices fall below withdrawal prices, fish can be removed from the market by the producer organisations [55]. Producer organisations receive remuneration for certain amounts of their expenditures, only where they apply Community fixed withdrawal prices [56]. To keep waste to an absolute minimum, the Community has adopted a system of so-called ‘carry-over-aid’. According to Art. 23,
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processing and storing withdrawn products can be eligible for such aid. However, subsidies under the market organisation only constitute a minor fraction of public interventions. During the 1990s, payments ranged between h10.9 and h30.39 millions per year. The Community’s fisheries sector also receives further assistance from two other structural funds: the European Regional Development Fund (‘ERDF’) and the European Social Fund (‘ESF’). However, this funding and its effects can be characterised as indirect. The ERDF aims at reducing the disparities in socioeconomic development throughout the Community. Thus, financial transfers are made to less developed regions. Only a small share of the total budget is allocated to poor areas, which are highly dependant on fishing. For example, between 1994 and 1999 aid amounted to 96.89 million ecus. The ESF aims at adapting people’s occupational skills to the changing demands of the Community’s labour markets. Between 1994 and 1999, the ESF gave about 63.13 million ecus to the fisheries sector. The Community also finances access to the fishing zones of third countries in benefit of its distant-water fleet. For example, payments made directly to the third countries amounted up to over one billion euros between 1993 and 1997 [57]. Community funds are also given for research activities within the fisheries sector under its ‘research and technological development framework programmes’. The objective of the framework programme, covering the period from 1991 to 1994, for example, was to ‘establish harmony between the production of biological resources and the needs of consumers and the processing industry’. Between 1991 and 1998, under the third and fourth programmes, about 163 million ecus were made available for marine and aquaculture projects, and an additional 2.9 million ecus were spent on accompanying measures, as well as 7.9 million ecus for scholarships [58]. Community aid is also paid to Member States to support their control and monitoring efforts. Aid is granted for buying or modernising ships, aircrafts, and vehicles as well as other technical systems. The budget for the period from 1996 to 2000 was limited to 205 million ecus [59]. 4.3. State aid Member States also give financial aid to the fisheries sector. National transfers are comprised of three kinds of payments. First, Member States contribute their share to all Community projects that are co-financed. For example, national contributions to Community’s structural measures between 1994 and 1999 amounted to 1298 million ecus [60]. Second, Member States may also grant additional aid in compliance with the narrow requirements established in the Community rules on state aid, found in Art. 107 – 109 of the Treaty and the Commission’s ‘Guidelines for the Examination of State Aid to Fisheries and Aquaculture’ [61]. In 2004, the Commission adopted a de minimis regulation which established a ceiling of h3000 of aid per beneficiary per three-year period. In 2007, however, this ceiling was raised to h30,000. [62] The third category relates to Member States paying the costs of general services, such as management, control, and research costs. Only in 1997, these costs were about 472 million ecus [63].
5. Positive developments and persistent deficits Subsidisation policies under the CFP have undergone important changes in 2002 and 2007 [64]. In the course of the 2002 reform, aid for the construction of vessels was to be phased out by the end of 2004. Support for the modernisation of fishing
vessels from then on was only granted for improvements in safety, working conditions, hygiene, and product quality, and only on the condition that such aid did not increase catch capacity. Additional support was granted to vessel owners who were affected by recovery plans. Funding to permanent transfer of vessels to third countries was also phased out, ending in 2004 [64]. Since the beginning of 2007, the European Fisheries Fund (EFF) replaced the Financial Instrument for Fisheries Guidance (FIFG).3 It supports permanent fleet exits (scrapping, reassignment, etc.) and continues to refuse aid for the construction of vessels and increase in fishholds on fishing vessels. Another important development is the promotion of local development strategies in areas heavily dependant on fisheries. It is particularly noteworthy that these strategies are set up and implemented by local stakeholders themselves. Moreover, the EFF provides funding for aquaculture development, measures of common interest as well as technical assistance. It also grants preferential funding conditions to small-scale fisheries. For all Priority Axes, EFF measures increasingly aim at environmental protection. Under Priority Axis 1, support is granted for equipment which has a smaller impact on non-commercial species, marine ecosystems, and the sea bed [65]. Priority Axis 2 supports aquaenvironmental measures to reduce the negative impact of the processing sector [66]. Under Priority Axis 3, the EFF supports measures that contribute to collective actions contributing to improved resource management, promote selective fishing methods or gears, the recovery of lost fishing gear from the sea beds, as well as measures to protect aquatic fauna and flora [67]. The EFF also provides funding for fisheries products obtained using lowimpact methods and eco-labelling schemes [68]. Priority Axis 4 supports eco-tourism and environmental protection [69]. Where the EEF finances environmentally friendly aquaculture projects or measures, which protect the aquatic fauna and flora, it must take into account the requirements of NATURA 2000 areas [70]. Finally, the EFF provides funding for networking and information exchange among organisations promoting equal opportunities for men and women and other stakeholders.4 Women are also eligible for special aid towards business training [71]. Some problems, however, remain. First, the Commission notes correctly that there is only little conditionality between the EFFRegulation and the way Member States actually spend the available fisheries funds. Member States decide in their operational programs who will ultimately receive money for which purposes. Given the Commission’s weak influence with regards to the design of national operational programmes, it remains somewhat difficult to align promotion schemes to the EFF objectives. Funds are also distributed based on regional convergence criteria (75% are earmarked for convergence objective regions). However, these criteria can interfere with the rational approach to structural management as described above, i.e., basing allocation on management requirements and structural deficits of the relevant part of the sector. Moreover, during the 3 Pertinent FIFG measures were laid down in four new regulations. ‘Council Regulation (EEC) No. 2052/88 on the tasks of the structural funds and their effectiveness and on the coordination of their activities among themselves and with the operations of the European Investment Bank and other existing financial instruments’, OJ 1988 No. L185/9; ‘Council Regulation (EEC) 4253/88 laying down provisions for implementing Regulation 2052/88 [y]’, OJ 1988 No. L374/1; ‘Council Regulation (EEC) No 2080/93 laying down provisions for implementing Regulation (EEC) No. 2052/88 as regards the financial instruments of fisheries guidance’, OJ 1993 No. L193/1; ‘Council Regulation (EC) No. 3699/93 laying down the criteria and arrangements regarding Community structural assistance in the fisheries and aquaculture sector and the processing and marketing of products’, OJ 1993 No. L346/1. 4 Art. 37(k) of Regulation 1198/06. The promotion of equality between men and women is introduced in Art. 11 and mentioned in Art. 8 of Regulation 1198/06; see also reason 13, ibid.
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negotiations leading towards the adoption of the EFF, a ‘pro subsidy group’ of Member States called for a reuptake of subsidy schemes that may harm resources.5 They argued in favour of subsidies for the modernisation of the fleet, despite the fact that this type of aid had been phased out with the 2002 reforms [73]. In the end, Member States agreed to grant some aid for engine replacements, subject to the condition that vessels ability to catch fish is not enhanced. It must be noted that even when these subsidies do not increase fishing capacity, they do create an incentive to remain in an overcapitalised business. Given the ineffective control mechanisms under the CFP, such subsidies could, in fact, lead to an increase in fishing capacity [74]. Furthermore, the Community continues to subsidise fishing ports, landing sites and shelters and promotional campaigns for fisheries products. The processing industry also receives substantial support. All these subsidies reduce the costs of fishing as well as processing costs, resulting in increased fishing and overall demand for fish. Finally, while Community aid for the most harmful purposes has been phased out, in 2007, the ceiling for unnoticed state aid was upgraded to h30,000, giving Member States the permission to increase their own subsidisation [62]. The EFF also provides aid for the temporary adjustment of fleet parts that target the most exploited stocks by giving aid to fishers affected by recovery plans (up to 24 months), emergency measures (up to 6 months), natural disasters (6 months), and effort adjustment plans (8 months). Where fisheries agreements between the Community and third countries have not been renewed, aid may be granted up to 12 months. With regards to aid granted in the course of recovery plans, emergency measures and effort adjustment plans, it could be argued the EFF supports the effectiveness of the management policy. However, from an economic perspective such financial grants substantially reduce investment risks for fishers, and thus, lower the chance that they will leave the overcapitalised sector and stop fishing overexploited stocks. Moreover, it has happened before in the history of the CFP that fish stocks would not recover during temporary cessation phases [75–77]. Where exploited stocks in Community and third countries waters are in a good condition, the granting of support in response to natural disasters or to the non-renewal of access agreements seems to be a legitimate policy objective. In practice, however, many of these stocks are not in good condition [78,79].
6. Commenting the Commission’s reform proposals The Commission’s Green Paper lays down several objectives and asks a number of questions on how these aims can best be realised. These will be considered in the following section. 6.1. Objectives According to the Commission, the ‘next reform will have to ensure that structural deficiencies of the industry are addressed while ensuring safeguards against any unwanted side effects, it should promote and facilitate the restructuring and modernisation of the European industry, help it improve its long-term economic viability, and avoid artificially maintaining overcapacity [31]’. The Commission basically refers to the core objectives of the Community’s structural policy from 1970 onwards, namely, the promotion of a harmonious and balanced development of the 5 The Council had failed to reach an agreement twice (June 2005 and May 2006) until finally a regulation was adopted on 19 June 2006; see Council of the European Union Press Release [72].
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industry and encourage rational use of marine aquatic resources [80]. 6.2. Commission’s questions and some answers 6.2.1. Question 1 What should be the top priorities for future public financial support and why? What changes can the sector not manage to bring about on its own and therefore require public financial support? Public support must in no way contribute to eroding fisheries management. Any fishing activity depends on the level of available fish stocks. Where overcapacities lead to overfishing, as is the case in Community waters, fishing can neither be carried out at sustainable levels nor at efficient levels. A large amount of public money also has to be spent to pay for control and enforcement actions. Where subsidies increase or maintain overcapacities in the production sector, public money is basically financing inefficiencies in the fisheries sector and the burdening of the marine environment. The fisheries sector may receive funding for all purposes which do not increase or maintain production powers at level that are incommensurable with the available fish stocks. This excludes all subsidies which reduce regular production costs and investments risks. Accordingly, payments should only be made available for management services, to buffer the social consequences of restructuring sectors, for environment-friendly gear and projects, increasing safety, scientific support, as well as for promoting equal opportunities. 6.2.2. Question 2 How can we change the focus of EU financial resources to promote innovation and adaptation to new policies and circumstances? Does any new policy area require funding? Should public financial support be focused on specific transitions such as eliminating discards in the fishing industry? A crisis driven change is forcing the CFP and the Community’s environmental policy to revise its exploitation and conservation strategies. Stocks are heavily overfished and marine ecosystems are increasingly pressured by land-based pollution, sea traffic, global warming, loss of biodiversity, acidification of the seas, etc [81]. The CFP has to overcome sectoral politics and try to approach fisheries policy by taking into account the global challenges to the marine environment. Fishing does not happen in isolation from other pressures on the seas. The newly adopted Marine Strategy Framework Directive (MSFD) is one cornerstone of a reorientation of the CFP. Structural policies support and should carry on to support this process of reorientation. To this end, it must continue to support innovation and sector adaptation to allow for the decrease in fishing opportunities. Therefore, the EFF should continue to provide funds for the scrapping of vessels, re-education programs, restructuring and research projects, which support the adaptation strategies of fishing sectors. Part of the adaptation strategies would be to support the sector adaptation because of a possible revised discard policy. 6.2.3. Question 3 How can a synergy and coherence of possible CFP funds with other EUs and national instruments be ensured? The first point to remember with regards to synergy and coherence with other funding instruments is that fisheries funds should not be allocated on the basis of regional convergence criteria. As stated above, this can interfere with the rational approach to structural management. EEF funding should be based solely on the need to adjust the fleet to the available resources.
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Regional promotion should be carried out through the ESF or the ERDF and should only relate to projects outside the fisheries sector. Second, greater transparency at the national and Community levels is necessary. All national and Community funding that can possibly affect the fisheries sector, either directly or indirectly, should be monitored and made public. Third, states should have less discretion to provide subsidies under the rules on state aid. Fourth, the process of simplifying the regulatory framework of the structural policy should be continued.6 This would, again, increase transparency. 6.2.4. Question 4 How can a synergy between the pillars of a future CFP be achieved? Should public assistance be conditional on Member States’ achieving policy objectives? Sustainable and efficient exploitation (as determined by ecosystem requirements) should be the basic reference point for all CFP pillars. Structural, market, and external policies should be integrated into a sustainable and efficient management policy. Any subsidy or market intervention, which erodes management efforts, should be avoided. This approach should also apply to external and market policies. Overfishing should not be externalised through access agreements and trade policies [83]. To guarantee Member States’ co-operation in all of the CFP’s policy segments, the Commission should have the ability to impose effective sanctions, such as the right to freeze financial assistance where states falsely implement management rules [84,85].
their livelihood by small-scale fishing [90]. Their vessels are relatively immobile, operating primarily within the 12 nm zone off the coast [91]. Thus, they are particularly vulnerable to changes in catch abundance and competition from large-scale vessels and other interest groups claiming access to the narrow coastal strips. Alternative opportunities for employment in Community coastal regions are often limited [92]. Compared to other interested parties (including large-scale fisheries), smallscale fishers are often poorly organised and their interests are politically marginalized [93]. Given their use of less destructive fishing practices and the high quality of their products, smallscale fisheries have the potential to make a strong contribution to the Community fishing industry [94,95]. Since there are clear differences between small-scale and large-scale fisheries, differential treatment under the CFP’s structural policy should be continued. As described above, the EFF currently promotes small-scale coastal fisheries. Art. 26(2) of Regulation 1198/06 sets out special participation rates for this sector: where the EFF provides financial aid for investments on-board fishing vessels and selectivity under Art. 25, private participation rates in investments may be reduced by 20%. Art. 26(3) also allows the EFF to finance socioeconomic measures established in Art. 27 in favour of small-scale coastal fishing. According to Art. 26(4), the EFF may contribute to the payment of premiums for fishers and owners of fishing vessels involved in small-scale coastal fishing in order to:
improve management and control of access conditions to 6.2.5. Question 5 How can EU financial resources be developed to provide the flexibility needed to respond swiftly when a crisis occurs? The EFF currently provides aid measures in several cases of unforeseen circumstances. Aid is provided for fishers who are affected by the temporary cessation of fishing activities, imposed by the Community or Member States when taking emergency measures [86,87]. Up to three months of aid is also made available to firms facing economic difficulties during the period of replacement of engines [88]. Finally, aid may be granted for up to 6 months in the event of natural disasters or where fisheries are closed by Member States for public health reasons or exceptional occurrences [89]. In addition to these instruments, the Community should consider providing aid for other unforeseen purposes. To speed up the procedures and to provide quick assistance in a crisis, Member States or Producer Organisations should have the ability to allocate immediate financial help. Member States or producer organisations could decide based on certain specified criteria whether they want to distribute funds or not. In these cases Member States should co-finance assistance somewhere within the range of 25–50%. Where authorities have legitimately assigned the financial aid, they should be reimbursed under the EFF. 6.2.6. Question 6 Should public financial support apply equally to all sectors (small and large scale)? Should the European Fisheries Fund continue to distinguish between convergence and non-convergence regions? There are a large number of small-scale vessels in the Community’s fishing fleet. It has been estimated that in 2007 about 81% of all Community vessels were less than 12 m long and approximately 100,000 of a total of 209,000 fishermen earned 6 The EFF replaced a complex and non-transparent set of several regulations governing CFP structural policies, see [82].
certain areas;
promote the organisation of the production, processing, and marketing chain of fisheries products;
encourage voluntary steps to reduce fishing effort for the conservation of resources;
encourage the use of technological innovations [y] that do not increase fishing effort; and
improve professional skills and safety training. According to Art. 25(1), the EFF may help to finance equipment and the modernisation of vessels of five years or older. Aid is granted subject to the condition that the ability of vessels to catch fish is not increased, particularly not above levels provided in Art. 12 of Regulation 2371/02. Aid for the replacement of engine is distributed, subject to the following scheme [42] Art. 25(3) of the EFF also favours small-scale vessels over larger vessels with regards to financing new engines. Aid will be granted provided that the new engine has the same or less power than the old one. (Larger vessels only receive aid, provided that the new engine has at least 20% less power than the old one.) Finally, regarding the question of whether fisheries funds should be allocated on regional convergence criteria, distribution based on regional convergence criteria can interfere with the rational approach to structural management introduced above. If certain regions should receive special promotion, this could be done through the ESF or the ERDF. Given that most small-scale fishers seem to face similar problems and challenges throughout the entire Community, it would be inappropriate to treat them differently. 6.2.7. Question 7 Should indirect support such as services related to fisheries management (access, research, control) continue to be provided free to all sectors of the industry? Though some research programmes might be directed at reducing production costs, the funding of management services in general is not estimated to harm resources [96]. It is more a
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question of whom society perceives as the main beneficiary of fisheries management. Is it a service mainly provided in the public interest to provide fish products to individuals or is it primarily the industry that benefits? Although management services constitute a major share of the overall costs of fisheries sectors, approximately 36% in OECD states, most countries do not require their industries to pay for services like access, research, and control measures. Nevertheless, countries like Canada, USA, and New Zealand do recover at least some parts of the costs from industry [96,97]. Given rising production costs, imposing user charges for access or management services would eventually provide some incentive to reduce fishing. These types of charges are increasingly perceived as an effective instrument for reducing pressure on burdened resources [98]. However, both options are equally viable, given the legitimate interest in providing fisheries resources to people and that refraining from claiming fees for fisheries management does not contribute to overfishing. 6.2.8. Question 8 Should permanent fisheries subsidies be phased out, maintaining, on a temporary basis, only those aimed at alleviating the social impacts of the restructuring of the sector? No subsidies should be provided for purposes that reduce production costs, and thus, increase production power and erode efficient and sustainable management policies. Therefore, only selected payments should be made for purposes such as management services, improving safety, working conditions, hygiene, and product quality (under the condition that they do not increase catch capacity), permanent fleet exits (scrapping, reassignment, etc.) until the fleet reaches a size commensurate with a sustainable and efficient fisheries management. Besides, funds should be made available for social and environmental purposes such as adaptation strategies (retraining, early retirement, ecotourism, development of local adaptation strategies, etc.), environment-friendly aquaculture projects. Given their distinct character and importance for coastal regions, small-scale fisheries could be favoured in the restructuring process and within maintained support schemes. Finally, in light of the changing availability of supplies, market instabilities, and their small size, market interventions could be maintained in order to give the fishing industry planning security.
7. Conclusion The two underlying ideas of this article are that the exploitation of marine capture resources ultimately depends on the level of available fish stocks and that a large share of subsidies fuels the race to fish by inducing investment incentives for the fisheries sector. Policies that have ignored this tend to encourage inefficient and unsustainable fishing as well as the misallocation of public funds. Although support schemes under the CFP have changed in recent years, some problematic support schemes persist. Future reforms will have to continue the course taken towards sustainable and efficient approaches to supporting the fisheries industry. Based on this approach it has been tried to answer some of the most urgent questions concerning the CFP reform process.
Acknowledgements The author would like to thank Anna-Maria Hubert and Dennis-Kenji Kipker. Errors remain the entire responsibility of the author.
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