Assessing the impact of alternative fish trade agreements post-Brexit: research

The report presents findings from research examining the possible impacts of Brexit on Scottish and UK seafood industries.

Understanding the report

As with any form of modelling work, assumptions have to be made about possible policy changes, yet there is currently little information available about what those policy changes might be. The continued lack of agreement around the terms of a future relationship with the EU has not made it possible to conduct this modelling on anything but a range of theoretical scenarios; this means we are still some way from being able to test the potential impacts of practical proposals for the UK's exit from the EU. The four sets of scenarios used in the research modelling, therefore, are hypothetical constructs designed to demonstrate and test the sensitivities of seafood production and trade to any possible changes that could arise due to EU exit. They are not an exhaustive list of all possible scenarios. Some of them are more plausible than others. The sets of scenarios examined by the research can be summarised as follows:

  • Scenario 1 – Free trade with EU and rest of the world, and successful renegotiation of total allowable catch ( TAC) shares or fish quotas in the UK's favour (from other EU member states) based on zonal attachment principles. This is the least likely or plausible scenario. No state enjoys this level of free trade with all other countries. If the UK was to act as an independent member of the WTO, it could in the future negotiate free trade or preferential trade agreements with a range of key countries that import Scotland's seafood. Without such free trade or preferential trade agreements, the World Trade Organisation's "Most Favoured Nations" ( MFN) tariffs would be applied to any trade. Notwithstanding this, this scenario allows the research to explore market opportunities that might be realised outside the EU.

    Moreover, it is unlikely, in the immediate future, that the levels of UK fishing quotas will change. However, this scenario assumes, for analytical purposes, the maximum possible TAC shares or fish quotas for the UK, based on one interpretation of the zonal attachment principle. Achieving these larger fishing quotas will require negotiation with other states, who may not be willing to accept significant changes to TAC shares. The EU has already set out in its negotiating guidelines that if the UK wants to maintain tariff-free trade across all sectors of the economy, current ' TAC' (total allowable catch) shares or fishing quotas will have to apply.

    It should be also understood that that the zonal attachment principle may not necessarily be the optimum basis for such renegotiation nor indeed the preferred approach of the Scottish Government to any such renegotiation. Such decisions as to the basis upon which to base policy regarding future management of Scotland's fisheries are yet to be made. This scenario should thus be viewed as very optimistic, and if ever, is unlikely to be achieved on exit or in the short-term.

  • Scenario 2 – an EU-Norway European Economic Area ( EEA) type agreement and successful renegotiation of TAC or fish quotas in the UK's favour based on zonal attachment principle. It assumes tariffs on UKEU trade are similar to those in the current EU–Norway EEA agreement, as well as a modest increase in NTMs between the UK and the EU, and a reallocation of fishing quotas in the UK's favour (as in Scenario 1). It is equivalent to leaving the Common Fisheries Policy ( CFP) but staying in the European Single Market through EEA membership, and it most closely reflects the Scottish Government's stated position in the event that we leave the EU. Fisheries and seafood are treated differently under current EEA arrangements, and the UK would not benefit from zero tariffs on all seafood products. As in Scenario 1, the levels of UK fishing quotas in this scenario are highly optimistic.

  • Scenario 3 – No preferential trade agreement with the EU and successful renegotiation of TAC or fish quotas in the UK's favour based on zonal attachment principles. This scenario assumes WTO MFN tariffs apply on bilateral trade between the UK and the EU, together with a larger increase (compared to Scenario 2) in NTMs. This scenario assumes the UK continues to benefit from free trade agreements it enjoys currently as a member of the EU, although clearly this will need to be negotiated. Scenario 3 is slightly less optimistic than Scenario 2.

  • Scenario 4 – No preferential trade agreements with the EU and the rest of the world, and no increases in UK fishing quotas. This scenario assumes no trade deal with the EU and losing access to the free trade agreements that the UK currently enjoys as a member of the EU. This is the worst case scenario, and it broadly represents what is referred to commonly as a no-deal or a hard Brexit.

The research also provides an initial assessment of the potential wider economic impacts of EU exit, including the potential for changes to GVA and employment for Scotland's seafood supply chain.

The research examined the impact of the scenarios on output and trade for 10 seafood species of importance to the UK, based on their share in UK total landings, share in UK export values, importance to the Scottish fleet and potential for quota redistribution under zonal attachment. A successful renegotiation of TAC shares or quotas in UK's favour, based on zonal attachment principles, has potential to increase UK landings for the following quota species covered by the research: cod, haddock, hake, herring, mackerel, Nephrops and saithe. The renegotiation of quotas does not affect non-quota species ( e.g., scallops and crab) and aquaculture (farmed salmon, trout and shellfish).

The assumed increases in fish landings in the scenarios is based on a study by University of Aberdeen, which uses one interpretation of the zonal attachment principle. The research has not considered other options for quota allocation or interpretations of the zonal attachment principle. Again, it is important to note that the scenarios are not necessarily the preferred approach of the Scottish Government, which has yet to set out its policy on future management of Scotland's fisheries. The results from modelling these scenarios will be one of the elements used to inform that work.

The EU has said in its negotiating guidelines and consistently emphasised that "nothing is agreed until everything is agreed". There is, therefore, the prospect of a transition period commencing after March 2019 but this will not be confirmed until the full withdrawal agreement is reached later this year.

In reality there is unlikely to be any significant change in quota allocations in the short term. Indeed, achieving larger quotas for the UK fleet will take some time to negotiate. On leaving the EU, it might be possible to achieve some quota increases by swapping EU access to UK waters for inward quota transfers, but under current EU27 negotiating guidelines this would mean foregoing tariff free trade with the EU for all sectors of the economy. It is not clear if the UK Government is inclined to accept this trade-off.


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