[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 17.10.2007

SEC(2007) 1336

COMMISSION STAFF WORKING DOCUMENT

Accompanying document to the Proposal for a COUNCIL REGULATION establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing IMPACT ASSESSMENT

{COM(2007) 602 final}{SEC(2007) 1310}{SEC(2007) 1312}

Table of contents

Glossary 6

Executive summary 8

Section 1: Procedural issues and consultation 9

Section 2: Problem definition 10

1. Background 10

1.1. Definition 11

1.2. Impacts of IUU fishing 11

1.2.1. Environmental damages 11

1.2.2. Socio-economic consequences 12

1.2.3. IUU fishing undermines effort for better oceans governance 13

1.3. Scale of IUU fishing 14

1.4. The economics of IUU fishing 15

1.4.1. Economic incentives to engage in IUU fishing 15

1.4.2. Fighting IUU: the economics perspective 16

1.5. Drivers of IUU fishing 17

1.5.1. IUU fishing remains a profitable activity 17

1.5.2. No substantial hurdles for the IUU operators 18

2. Main challenges faced by the Community in its policy against IUU fishing 19

2.1. What has been achieved by the Community so far? 20

2.2. Examples of specific mechanisms implemented by third States against IUU fishing 22

2.3. Current challenges that the Community needs to face to curtail IUU fishing 23

Section 3: Objectives 27

Section 4: Policy options 28

Option 1: continue current policy and focus on implementation and enforcement of existing framework 28

Option 2: Focus on fishing activities outside the EC only 29

Option 3: Case by case approach, specific to stocks and areas subject to IUU fishing 31

Option 4: Undertake a new and comprehensive initiative, covering both Community and non Community waters 32

Section 5: Likely environmental, economic and social impacts of the different options 42

1. Continuation of current policy and focus on implementation and enforcement of existing framework 44

1.1. Impact on IUU fishing 44

1.2. Socio-economic impact 47

1.3. Environmental impact 47

2. Focus EC policy on fishing activities outside the Community 48

2.1. Impact on IUU fishing 48

2.2. Socio-economic impact 49

2.3. Environmental impact 49

3. Case by case approach, specific to species and areas subject to important IUU fishing 49

3.1. Impact on IUU fishing 49

3.2. Socio-economic impact 51

3.3. Environmental impact 53

4. Undertake a new and comprehensive initiative, covering both Community and non Community waters 54

4.1. Impact on IUU fishing 54

4.2. Socio-economic impacts 58

4.2.1. Economic impacts of Option 4 in the Community 58

4.2.2. Overall economic impacts of Option 4 on third countries 63

4.2.3. Specific economic impacts on processors/exporters and on fishermen from developing countries 64

4.2.4. Social impacts of Option 4 67

4.3. Environmental impact 68

4.4. Impact on the Community trade obligations and position 68

4.5. Impact on RFMOs and international position of the Community 69

4.6. Contribution to a simplification of the Community framework derived from the measures agreed by RFMOs 70

4.7. Administrative costs 70

Section 6: How do the options compare? 72

Section 7: How could future monitoring and evaluation be organised? 77

1. Trade measures 77

2. Measures for identification and sanction of vessels and States involved in IUU activities 77

2.1. Community action within RFMOs and towards developing States 77

2.2. EC measures 78

3. Compliance within EC waters and by EC nationals 78

4. overall assessment of the efficiency of the Regulation 79

1. Introduction 81

2. Consultation procedure 81

3. General observations 82

4. Summary of the responses to the public consultation by issue 83

4.1. Improve control of third country vessels and their catches accessing fishing ports of the European Community 83

4.2. Improve control of compliance of conservation and management measures by third country fishery products transported by other means than fishing vessels 83

4.3. Close the EU market to IUU fisheries products 84

4.4. Address IUU activities carried out by nationals from the European Community 85

4.5. Improve the legal means to ascertain IUU fishing activities 85

4.6. Introduce an efficient regime of penalties aiming to deter serious infringements to fisheries measures 86

4.7. Improve action against IUU fishing within Regional Fisheries Management Organisations 86

4.8. Support the policy and means of developing countries against IUU fishing 87

4.9. Increase synergies in the field of Monitoring, Control and Surveillance 88

5. new measures advanced by the respondents 88

6. Conclusions 89

6.1. Les coûts administratifs 90

6.1.1. Incidence des nouvelles tâches induites par la mesure 90

6.1.2. Etape 1 : identification et classification des obligations d’information 91

6.1.3. Etape 2 : Détermination des actions requises 91

6.1.4. Etape 3 : Classification en fonction de la source de la réglementation 92

6.1.5. Etape 4 : les groupes cibles 92

6.1.6. Etape 5 : Fréquence des actions 93

6.1.7. Etape 6 : Indication de facteurs de coûts pertinents 94

7. Coût de main d’œuvre 94

8. Nombre d’heures de travail rendu nécessaire par la mesure de certification 95

8.1.1. Conclusion : le coût administratif de la mesure 96

GLOSSARY

ACP African, Caribbean and Pacific countries

CCAMLR Commission for the Conservation of Antarctic Marine Living Resources

CDS Catch Documentation Scheme

CFP Common Fisheries Policy

COFI FAO Committee on Fisheries

EC European Commission

EEZ Exclusive Economic Zone

EU European Union

FAO Food and Agriculture Organisation of the United Nations

FOC Flag of Convenience

FPA Fisheries Partnership Agreements

GATT General Agreement on Tariffs and Trade

GDP Gross Domestic Product

GFCM General Fisheries Council for the Mediterranean

ICCAT International Commission for the Conservation of Atlantic Tunas

ILO International Labour Organisation

IOTC Indian Ocean Tuna Commission

IPOA-IUU International Plan of Action to prevent, deter and eliminate illegal, unreported and unregulated fishing

IUU Illegal, Unreported and Unregulated fishing

MCS Monitoring, Control and Surveillance

NAFO Northwest Atlantic Fisheries Organisation

NEAFC North East Atlantic Fisheries Commission

NGO Non-Governmental Organisation

OECD Organisation for Economic Co-operation and Development

RFMO Regional Fisheries Management Organisation

SEAFO Southeast Atlantic Fisheries Organisation

SIOFA Southern Indian Ocean Fisheries Arrangement

TAC Total Allowable Catch

UN United Nations

UNCLOS United Nations Convention on the Law of the Sea

UNFSA UN Fish Stocks (Straddling Stocks and Highly Migratory Species) Agreement

VMS Vessel Monitoring System

EXECUTIVE SUMMARY

This report presents possible options designed to improve the efficiency of the policy of the Community in order to curb Illegal, Unreported and Unregulated (IUU) fishing and minimise its environmental and socio-economic impacts.

The report highlights the important damages caused by IUU fishing on the marine environment and on the economic situation of the fishing industry (both within and outside the Community). It provides data on the scale of the problem and clarifies which drivers are encouraging operators to carry out IUU fishing.

The report summarizes the main results achieved so far by the Community in its policy against IUU fishing, since the adoption of its Action Plan on the matter in 2002. It sets out which are the current challenges that the Community needs to address to improve the efficiency of its action (prevent the importation into the Community of fisheries products stemming from IUU fishing; discourage fishing operators and States from supporting or engaging in IUU fishing, notably via the use of "Flags of non-compliance"; improve compliance with the rules of the Common Fisheries Policy within Community waters).

The report analyses the efficiency and impacts of four options for future action by the Community:

1. Continue the current policy and focus on implementation and enforcement of existing framework only, without tabling new regulatory proposals;

2. Focus on fishing activities outside the EC only (through international and RFMOs actions);

3. Pursue a case by case approach, specific to stocks and areas subject to important IUU fishing;

4. Develop a comprehensive package, comprising both regulatory measures and political principles guiding the EC policy, which would cover both EC and external waters, complete the current framework and ensure better compliance with applicable rules, as well as allow the EC to adopt unilateral ambitious measures when multilateral measures fall short of EC expectations.

The report suggests that the latest option would be the only one able to address effectively the current challenges of the Community to increase the efficiency of its action against IUU fishing. Its comprehensive scope would allow covering the current loopholes which affect the Community system and encourage the continuation of IUU fishing. This options supports far-reaching measures in all areas concerned (certification scheme for imports; possibility for the Community to implement unilateral measures towards States or fishing vessels engaging or supporting IUU fishing; approximation of maximum levels of sanctions in relation to serious infringements to CFP rules). This option would entail important changes and would not be exempt from some costs, notably related to the commercial dimension of the approach promoted. It appears however that the ambitious approach promoted via this option would be the only one commensurate with the scale of the problem.

SECTION 1: PROCEDURAL ISSUES AND CONSULTATION

This impact assessment report lays the ground for the legislative package to be proposed by the Commission to enhance the Community policy to fight against Illegal, Unreported and Unregulated (IUU) fishing. This package, which should comprise a Communication and a proposal for a Council Regulation, is part of the Commission Legislative and Work Programme for 2007.

Work on this impact assessment was kicked-off by setting up an Inter-Service Steering Group (ISG) in November 2006 mandated to carry out the analysis on possible fields of action and their respective measures. The ISG comprised representatives of Directorates General for Fisheries and Maritime Affairs, Trade, Health and Consumer Protection, Taxation and Customs Union, Development, Environment, Energy and Transport, EuropeAid, Justice, Freedom and Security, Legal Service and Secretariat General of the Commission.

The data for this impact assessment was gathered following a diversified consultation process with the stakeholders as well as from external expertise. A wide consultation process was held between January and March 2007, on the basis of a public document tabled by the Commission services. Numerous meetings were organised and several written contributions received by the Commission as a result of this consultation. The issue was debated within an informal Council of Fisheries Ministers on 17 April 2007. In addition, the European Parliament passed a resolution on that matter on 15 February 2007[1]. The outcomes of the consultation process have been summarized in a Report annexed to the present document.

The Commission services made use of external expertise to support some of the elements relating to the present report. Two Specific Conventions were concluded within the framework contracts (respectively FISH/2003/02 and FISH/2006/20) in force between the Commission and the external consultancy firm Oceanic Development.

The Specific Convention no.36/2006 had as purpose to analyse the impact of trade measures envisaged in the IUU package under elaboration within the Commission. The specific Contract no.5 /2007 was assigned to provide other necessary external elements and input that could be used by the Commission in the final preparation of the impact assessment pertaining to the measures that might be part of the future proposals of the Commission against IUU fishing.

Certain parts of the present report (notably on the social impact of "option 4", the impact of this option on our trade relationships with third countries and the justification for proposing an approximation at Community level of the maximum levels of sanctions corresponding to serious infringements to the CFP) have been introduced or clarified to take into consideration the opinion delivered by the "Impact assessment Board" of the European Commission.

SECTION 2: PROBLEM DEFINITION

1. BACKGROUND

Illegal, unreported and unregulated (IUU) fishing is one of the most serious threats worldwide to the sustainability of fish stocks and to marine biodiversity. There is a large consensus within the international community on the recognition of the particular gravity of this problem and the imperious need to adopt appropriate measures to prevent, deter and eliminate it. This consensus has been expressed in various international instruments and most notably in the voluntary International Plan of Action on this matter adopted under the auspices of the FAO in 2001[2].

Since then, calls for strong actions against IUU fishing have intensified within the international community, be it within international arena (notably via the annual Resolutions by the General Assembly of the United Nations on sustainable fisheries[3], the 2005 Rome Declaration on IUU fishing at the Ministerial Meeting on Fisheries within the FAO in 2005, or the Declaration agreed Ministerial level at the St John's Conference on the Governance of High Seas fisheries and the UN Fish Agreement in 2005), or at regional level (notably within all the 13 Regional Fisheries Management Organisations to which the Community is party, or, notably, at the North Atlantic Fisheries Minister Conference in 2006 and within the ACP-EU Joint Parliamentary Assembly in 2006[4]).

The issue has been extensively documented, in particular by the OECD[5] as well as independent consultancy agencies[6]. Non Governmental Organisations have also produced numerous reports and studies on the various manifestations of IUU fishing in the world.

The international legal regime relating to the conservation and management of marine resources stems from various international binding instruments to which the Community is Party, and most notably the United Convention on the Law of the Sea[7], the Agreement to promote compliance with international conservation and management measures by fishing vessels on the high seas ("FAO Compliance Agreement")[8] , and the UN fish stocks agreement[9] . Those provisions set out the principle that all States have the duty to adopt appropriate measures to ensure sustainable management of marine resources and to cooperate with each other to this end. They notably spell out which are the obligations of a State towards fishing vessels flying its flag.

The Community adopted its own Plan of Action against IUU fishing in 2002 as part of the Common Fisheries Policy[10]. The Commission considers that, more than five years after this adoption, time has come to review the Community policy against IUU fishing and evaluate how it could be improved.

1.1. Definition

The only internationally agreed definition of "IUU fishing" is to be found in the IUU FAO Action Plan. In line with this definition, and for the sake of clarity, the Commission considers that the scope of the Community policy to deter, prevent and eliminate IUU fishing should cover:

- behaviours infringing applicable rules on the management and conservation of fisheries resources, occurring in waters subject or beyond the jurisdiction of a State;

- fishing activities carried out in an high seas area and subject to a Regional Fisheries Management Organisation (RFMO) by fishing vessels without flag or flying the flag of States not party to the RFMO and in a manner contravening with the rules issued by this organisation;

- and fishing activities carried out in an high seas area not subject to any conservation and management measures and conducted in a manner inconsistent with State responsibilities for the conservation of fisheries resources under international law.

1.2. Impacts of IUU fishing

The necessity for a strengthened Community action lies in the multiple detrimental impacts associated with IUU fishing.

1.2.1. Environmental damages

IUU fishing firstly results in disastrous environmental damages to marine biodiversity. The General Assembly of the United Nations recognises that " IUU fishing remains one of the greatest threats to marine ecosystems and continues to have serious and major implications for the conservation and management of ocean resources "[11].

It greatly damages sustainability of fisheries . This is the case in many fisheries where catches get un-or misreported to public authorities and contribute to overfishing. Those practices have negative short term consequences, but they also distort the scientific assessment of the stocks concerned and thereby undermine their future management, as the catch data used for reference do not reflect the reality of the fishery. Other widespread manifestations of IUU practices include fishing activities targeting juveniles, in contravention with rules on minimum sizes, or fishing during periods or in areas normally closed to let the stocks spawn. They jeopardize the renewal of fish stocks concerned and may put into question their survival.

According to the FAO, 25% of the marine fish stocks are overexploited, depleted or recovering from depletion. This proportion rises to 66% for high-seas and straddling fish stocks, which are particularly vulnerable to IUU fishing. For those stocks, IUU practices trigger dramatic consequences. This is for instance the case for blue fin tuna in the Mediterranean, where IUU fishing is estimated to reach such high levels that a perpetuation of those illegal practices would lead the stock on the brink of extinction. While some stocks are currently subject to particularly high level of IUU fishing, those practices impact the global state of fisheries and should be addressed as such.

The environmental consequences of IUU fishing go beyond damages to fish stocks. Those practices may also endanger marine ecosystems and habitats . Fishing with prohibited methods can notably result in a high proportion of unwanted species (fish species, but also seabirds or turtles for example) being discarded. This is the case for example for driftnet fishing. Fishing in protected areas may trigger irreversible damages to vulnerable marine ecosystems, like coral reefs.

1.2.2. Socio-economic consequences

IUU fishing does not only damage the marine environment. It also has serious socio-economic consequences. Estimates on illicit practices are by nature difficult to perform. The value of IUU fishing has been assessed to amount worldwide between 10 billion € a year[12]. By comparison, the value of landings by the Community fleet was worth 6,8 billion € in 2004[13].

This has an important impact on the Community fishing industry , which is subject to a comprehensive set of rules and has to face fierce competition from IUU operators disregarding any kind of obligations and active on the same fishing grounds or targeting the same final markets (ex. cod from Barents Sea). Community fishermen operating legally face unfair practices from IUU operators, which notably result in loss of market shares for the Community industry and decrease of market prices due to the sale of cheap products stemming from illegal operators.

The Community trade, processing and retail industry is also affected by IUU fishing. They face indeed competition from a limited number of firms deliberately engaged in the trade of IUU products. More generally, the difficulty to guarantee the legality of the fisheries products which they purchase may also harm their image among their trade partners and final consumers, who may see those firms as taking part in the laundering of fisheries products stemming from IUU fishing.

IUU fishing has also dramatic consequences for coastal communities in developing countries . Fish resources play a major role in food security and poverty alleviation for many of those populations. They constitute an important source of income for some countries, via the wealth generated through the supply of the local market or through exports (in some cases, income derived from exports of fisheries products constitutes a non negligible share of the total exports and an important source of foreign currencies). Coastal developing countries often lack the means and capacity necessary to manage and control properly maritime waters under their jurisdiction. Unscrupulous illegal operators take advantages of those weaknesses to carry out their activities without authorization from the coastal States and to plunder resources which are vital to local fishermen. This represents theft of fish resources, as well as a financial loss for the public authorities as those operators do not pay the fees which are legally due as a counterpart from the awarding of licences and fishing possibilities by coastal States. This may also result in job losses for legal fishermen facing competition from operators practicing illegal fishing, which has specific detrimental consequences in regions particularly dependent on fishing activities where there are few other employment alternatives.

Beyond the fishing sector itself, it is detrimental to the local processing and marketing sector, and notably to women who represent the largest share of employed persons in this field. The existence of important IUU fishing activities in coastal waters of a given country also dissuades economic actors from investing in its local fishing sector. This is a major problem for Sub Saharan African coastal countries, where losses resulting from IUU fishing have been assessed to reach 800 million € each year. The situation in West Africa is of special concern in that regard.

1.2.3. IUU fishing undermines effort for better oceans governance

Some firms practicing illegal fishing operate substandard vessels flying the flag of States which maintain a very poor level of social standards, or no standards at all, and where crews often coming from poor parts of the world and working far from their home country, must endure unacceptable living and working conditions. This undermines efforts for international progress on social standards for fishermen, notably those reflected in the new consolidated convention on work in the fishing sector adopted within the International Labour Organisation in June 2007.

IUU operators trading fisheries products also tend to circumvent applicable Community rules for imports pertaining to health and hygiene standards or to the origins of fisheries products.

For all those reasons, the continuation of illicit practices undermines the legitimacy among Community fishermen of the rules of the Common Fisheries Policy (CFP). Indeed, fishermen practising their activities legally are tempted to denounce the flaws of a regime which results in multiple obligations imposed on them, but which does not permit to stop illegal operators from developing their activities outside any kind of framework.

All those elements demonstrate that IUU fishing represents a major danger for the sustainability and future of common resources from the oceans and jeopardizes the very foundation of the European Community policy designed to ensure sustainable management of fisheries resources within and beyond Community waters and improve oceans governance.

1.3. Scale of IUU fishing

IUU activities are of a very complex nature and wide-world spread. Estimating the volume and value of catches of vessels infringing conservation and management measures is a very difficult exercise due to the clandestine nature of those activities. Some Regional Fisheries Management Organisations provided some estimation related to their fields of competence but those are empiric and partial estimations based on the occurrences in their specific areas.

Several studies have attempted to evaluate the magnitude of IUU fishing. When considering just high seas and the Exclusive Economic Zones (EEZs) of African countries, it is estimated that the sales from IUU fishing to be roughly 2 billion euros for a volume ranging from 1.5 to 2 million tons per year. When extrapolated to a global scale, estimated sales from IUU fishing could amount to some 10 billion euros per year or 19% of the worldwide reported value of catches from marine capture fisheries.

On the high seas, the most important catches from IUU fishing comprise shark species and small pelagic species, along with tuna and tuna-like species (Indian and Pacific Ocean), cod (Barents Sea) and cephalopods. Illegal catches on the high seas totalise a value at first sale of about 1 billion euros and almost 45% of this value stems from catches of tunas and tuna - like species (bigeye, yellowfin, albacore, and swordfish) and 20% from catches of demersal species (cod and redfish) from the North Atlantic.

The Exclusive Economic Zones (EEZs) of Sub-Sahara African countries are also subject to high level of IUU fishing. The main species targeted there, in large majority by foreign-flagged fishing vessels, are crustaceans (40 000 tons), tuna and tuna- like species, in particular on the coast of Atlantic and Indian Ocean (220 000 tons), and other fish species and shellfish (170 000 tons). In some countries (Somalia, Liberia, Guinea Conakry), the value of IUU fishing can represent more than 50% of the value of the total catches. It is assessed that the overall value of IUU fishing in those areas amounts to approximately 800 million €.

Cod and other demersal species form the principal species subject to IUU fishing in the EEZs of the North Atlantic and Baltic Sea (including in Community waters). They are estimated to reach approximately 45 000 tons per year, with an estimated value of 50 millions euros. Within Community waters, other stocks like Northern stock of European hake are considered to be subject to important illegal fishing (misreporting and non respect of minimum landing size).

Other stocks are affected by IUU fishing in other EEZs of coastal countries around the world. Assessments are difficult to perform as to their magnitude, and those activities have a less direct impact on the Community as fishing or trade entity.

Due to its appeal, the EC market attracts a substantial share of many products stemming from IUU fishing. Studies show that species such as tuna and cod are among the most concerned, as are all fish, shellfish and mollusc species with high commercial value fished in coastal zones of developing countries. On the whole, IUU fishing imports are estimated to be the equivalent of 9% of the tonnage imported into the EC (500,000 tons) and 10% of the value of the imports (1.1 billion euros). Seen from another angle, the EC market provides a commercial outlet for 10% of fish caught in violation of conservation and management measures.

1.4. The economics of IUU fishing[14]

1.4.1. Economic incentives to engage in IUU fishing

Incentives to engage in IUU fishing activities are economic by nature. They can be of two main, complementary, types: to earn higher revenues and/or to incur lower costs than otherwise would be the case if rules were observed.

1.4.1.1. Higher expected revenues

The premise is that everything else being equal, a vessel may engage in IUU fishing to catch more fish than it could have expected when complying with the rules.

This is one fundamental factor influencing IUU. It is normally the result of an imbalance between the vessel's fishing technical capabilities and fishing possibilities. In cases where some countries are committed to developing their own fishing fleets, the imbalance between fishing capacity and fishing possibilities decided within RFMOs may act as a powerful driver for these nations to tolerate IUU activities under their flags.

Two other factors further increase the likelihood that vessels, in particular those flying flags of convenience, will fish more than regular ones: the incompleteness of the international legal framework and the failure of some States to implement international obligations.

A related powerful driver of IUU fishing is the prospect of earning higher revenues than when complying with the rules. This driver is the more powerful the closer are the prices between regular and illegal catches of a given species and the higher the market price of a given species is.

1.4.1.2. Lower costs

As long as the overall costs of IUU fishing remain lower than those of regular fishing activities, there would be a net positive incentive to engage in IUU fishing.

Regarding operating/fixed fishing costs , on the one hand, IUU fishing is associated with poor labour, safety and hygienic conditions on board, with poor repair and maintenance and with deficient insurance coverage. On the other hand, IUU fishing is associated with additional steaming and, hence, fuel consumption. On balance , though, operating fishing costs are in general lower for IUU vessels than from regular vessels. The same applies to fixed (capital) costs of IUU fishing. Many IUU vessels are very old, more often than not transferred from fleets characterised by overcapacity.

Regarding IUU-specific costs, first IUU vessels need to invest in avoidance costs . These costs can take the form of costs associated with the early detection of MCS devices or costs resulting from activities intended to deceive control (manipulating VMS data, changing names, flags or the physical appearance of the vessel). Generally speaking, these costs will be lower for fishing on the high seas than for fishing in EEZs.

In addition, in order to convert IUU catches into revenues, it is necessary to circumvent reporting, labelling, fiscal or any other regulatory measures. In practice, they can do so by various means (misnaming catches, repackaging and re-labelling), but any of them will involve some extra costs.

Furthermore, IUU fishing can result in some moral/reputation costs . They can take the form of being outlawed from the fishing community or boycotted. These costs could become important as consumers are becoming more aware of conservation issues.

Finally, IUU-fishing vessels continuously face the risk of being caught and sanctioned , which depends on national MCS capabilities and on expected the level of sanctions.

In the EEZ of coastal countries , the probability of being caught depends on the enforcement capacity of the coastal state, the quality of MCS, the size of the fishing ground and whether or not fishing grounds are close to the high seas. Avoidance and circumvent costs are therefore expected to be higher than when engaging in IUU fishing on the high seas. However, IUU vessels will not pay access rights to the coastal state.

On balance, these factors should lead to expected revenues that should be lower than these resulting from engaging in IUU fishing on the high seas. However, the enforcement capabilities of coastal states are a crucial factor in that respect. It is not surprising that IUU fishing concentrates on the EEZ of some countries (in particular in Sub-Saharan Africa) which as a result of their political and/or economic situation or other factors are unable to exercise any meaningful control.

The continuation of IUU fishing supports the view that, on balance, IUU costs are lower.

1.4.2. Fighting IUU: the economics perspective

Curbing economic incentives for engaging into IUU fishing would require taking actions to (a) reduce the expected revenues from IUU fishing and (b) increase the expected costs of IUU fishing. Both actions are necessary to ensure success against IUU.

Other types of actions are also important: first these aim at improving the economic, social situation and prospects of countries where IUU fishing is known to be taking place. This could reduce the incentives to engage in IUU fishing, for instance by increasing the opportunity cost of labour and the fraud costs incurred by IUU operators. Second, actions intended to match fishing capabilities and possibilities. It has to be noted that actions within the latter category are costly (e.g. scrapping programmes) and require time to yield positive effects. Others, such as reducing or eliminating subsidies for vessel construction or modernisation could imply a significant political cost.

1.4.2.1. Reducing IUU revenues

The possible avenues to reduce the revenues of IUU fishing are limiting IUU catches, limiting IUU trade or increasing the value of legal catches.

As regards reducing catches , it is important to reduce the gaps and shortcomings of the current international legal framework, notably via the adhesion by all Flag States to international conventions on conservation and management of fisheries resources, an extension of the coverage of high seas areas by new RFMOs as well as a higher participation by interested States to existing RFMOs.

Further actions could be proposed, in particular those intended to increase MCS capabilities and cooperation between States to address the cross-border dimension of IUU fishing. This is of particular importance in coastal developing countries.

Trade measures intend to prevent IUU catches from entering regular markets. They could take different forms (certification schemes, import restrictions and/or embargoes of fish products from countries the flag of which is used by vessels involved in IUU fishing or where operators dealing with IUU fishing products are located). Regarding ways of increasing the value of regular catches, the central question is whether consumers are willing to pay a higher price for regular fish. Some evidence from the CCAMLR shows that this could be the case. Measures intended to educate and inform customers, such as labelling or certification schemes, are keys for success, although their proliferation could be counterproductive if they confuse customers.

1.4.2.2. Increasing IUU costs

A very important field of action is that of the expected sanctions , which depends on the probability of detection and on the level of sanctions. MCS capabilities have to be enhanced. Enforcement failures (either by insufficient material means, by dispersion of competences or both) favour IUU activities. Enhanced MCS capabilities will add to deterrence. Furthermore, enhanced MCS capabilities are also likely to increase avoidance costs.

Measures intended to (i) widen the risk incurred, in particular the extra-territorial application of domestic sanctions to fishing firms or individuals (in particular skippers or fishing masters working on IUU vessels), and (ii) making the trade of IUU fish illegal, so that processors and distributors are exposed to sanctions, are also important.

Other possible ways of increasing the operating costs of IUU vessels, are:

- Restrictions of the provision of goods and services to IUU vessels or flags;

- Port control measures intended to prohibit transhipments and/or landings;

- The ratification and implementation by flag States of international conventions regarding the working conditions of fishers (notably ILO conventions).

1.5. Drivers of IUU fishing

The most important drivers supporting the continuation of IUU fishing are briefly described below.

1.5.1. IUU fishing remains a profitable activity

Incentives to practice IUU fishing persist as long as it remains a profitable activity for the operators concerned.

- As already discussed in the previous section, operators practising IUU activities are able to maintain low operating costs and enjoy substantial benefits . The operating costs of the firms involved in illegal fishing are generally lower than those of average fishing firms operating legally, although the circumvention of control measures infers costs which should not be neglected. Costs resulting from social and tax charges can be reduced to a minimum or be inexistent for fleets carrying out IUU activities under cover of offshore companies or flags of convenience. Non respect of fisheries rules and trade of catches outside official channels also result in lower expenses. Finally, IUU operators are rarely penalized, and the sanctions they incur are usually not deterrent and can be perceived as any other operational costs. While operating costs are low, benefits expected from IUU activities are generally high, notably as illegal operators tend to target valuable species which command higher market prices (for example toothfish, blue fin tuna or cod).

- In some fisheries, the overcapacity of fishing fleets compared to the fishing possibilities available also generates illicit fishing activities, as some vessels tend to overpass the catch limits to which they are subject in order to maintain a level of catch ensuring their profitability.

In a context of steady increase in the consumption of fisheries products worldwide, the incentives for supplying illegal fisheries products to the final markets will remain high as long as operators are able to gain benefits out of their activities.

1.5.2. No substantial hurdles for the IUU operators

Profitability explains why the IUU fishing phenomenon persists. Another key element in the explanation of IUU fishing is how it persists. The continuation of IUU practices relies to a large extent on the easiness with which illegal operators are able to pursue their activities along the whole supply chain and escape any kinds of obligation or constraint which would hamper them to do so.

IUU operators firstly take advantage of the benefits they can gain from national systems of flag registration.

A large number of fishing vessels, in particular those operating outside Community waters, are registered in States which run open registers and are unwilling or unable to exercise a proper control over their fishing fleet as to the respect of conservation and management measures. Registration in those States hosting "flags of convenience" or "flags of non compliance" proves to be a very simple and inexpensive operation, which can be completed within some hours. Under the law of the sea, the duty to exert control over a vessel is primarily incumbent upon the Flag State. Whenever the Flag State does not discharge this duty, and in the absence of an internationally-agreed understanding of what the "genuine link" between a Flag State and fishing vessels flying its flag should consist of, there are only limited means to remedy illegal harvesting activities committed by such vessels. As a result, most of the vessels identified as committing IUU activities in different parts of the world are registered in States known for the absence of adequate control over their fishing fleet. Registration is often made under cover of offshore companies, often located in the Flag State. The beneficial owners of the operation have no or very limited contact with this State which renders their identification is difficult. Estimations have been provided according to which the number of fishing vessels over 24 meters flying flags of convenience amounts to approximately 1300 vessels, registered in a small number of countries (among them Panama, Sierra Leone, Cambodia, Vanuatu, Marshall Island, Mauritius, Bolivia, Equatorial Guinea, Honduras, Georgia, Bolivia, Belize, Togo…).

These problems are exacerbated by the insufficient cooperation at international level between States and international bodies in charge of control of fishing activities.

IUU fishing is by essence an international activity. IUU operators tend to exert their catching activities in fishing grounds where control activities are difficult to perform (notably remote high seas areas) or where control capacities of the competent public authorities are reduced (notably in the Exclusive Economic Zones of developing countries). To dissimulate their illegal origin, catches can then be transported along complex routes before reaching their final market, including transhipments at sea, landings in "ports of convenience" and processing in a country which is different from the Flag and the market States. Those activities can be qualified in some instances as cross-border organised crime, where the working methods and patterns are similar to other illegal activities, like drug or arm smuggling. In addition, the small probability of being penalized and the actual sanctions they sometimes incur can be seen as still insufficient to constitute an actual deterrent to engage in IUU fishing.

Cooperation at all levels (international, regional, Community and national) is of paramount importance in order to properly track and investigate those activities. It should encompass control at sea, monitoring of trade flows as well as port State measures. Despite some progress, the coexistence of scattered services in charge of various aspects of maritime surveillance and border control and the absence of sufficient exchange of information between control authorities have not allowed to put in place efficient mechanisms able to deter IUU operators from continuing their activities.

Illegal operators within Community waters also use the weakness of the control, inspection and enforcement system of Member States to develop their activities. The volume of fisheries products which are harvested in contravention of Community rules and then sold outside official channels on the Community market (so-called "black fish") can reach a very high proportion in some fisheries (for example cod in the Baltic Sea).

2. MAIN CHALLENGES FACED BY THE COMMUNITY IN ITS POLICY AGAINST IUU FISHING

The Community has one of the largest fishing fleets in the world, with approximately 90 000 fishing vessels with a global capacity of 6,7 million kW. Its landings amounted to approximately 5,7 million tons of fish worth 6,8 billion €[15] in 2004, which makes of the Community the third catching power in the world.

It is also the biggest market and the first importer for fisheries products. The Community market for fisheries products depends for 60% on imports. In particular, the processing industry within the Community relies heavily on imported products. As a result, the value of fisheries products imported into the Community rose to nearly 14 billion € in 2005[16], representing 40% of the total of importations of fisheries products worldwide. Due to the poor state of many fish stocks in Community waters and the rising demand for fisheries products, this dependency on imported products is deemed to increase in the coming years.

In addition, Community operators are believed to feature among those registering a large number of fishing vessels in States hosting flags of convenience.

Given its status of major fishing, Flag and Market power, and in line with its international commitments and its overall objective to improve management and avoid overexploitation of natural resources (as set out in the EU Sustainable development Strategy agreed at the European Council of June 2006), the Community has a specific responsibility in leading international efforts on the fight against IUU fishing.

2.1. What has been achieved by the Community so far?

The fight against IUU fishing has emerged relatively recently as one of the main priorities of the Community in its international fisheries policy.

Building on by its 2002 action plan[17] derived from the international plan of Action adopted by the FAO in 2001, the first objective of the Community policy against IUU fishing has been to establish international and regional norms designed to curtail those practices.

It is also fair to say that the fight against IUU fishing has been seen over the past years as an international problem rather than as an internal issue for the Community.

The main measures and initiatives adopted by the European Community against IUU fishing are briefly presented below.

At international level , the European Community has been fostering progress against IUU fishing in bodies in charge of fisheries and law of the sea (FAO, UN).

The European Community notably supports international discussions to define the genuine link between Flag States and their fishing fleets.

The EC was also actively involved in the work led by FAO to establish a model port State scheme endorsed in 2005, and has supported the initiative agreed by the Fisheries Committee ("COFI") of the FAO in 2007 to develop a new legally binding instrument based on this model port State scheme.

Fighting IUU fishing occurring on the high seas requires the development of a strategy at regional level. This has triggered important changes in the mandate of Regional Fisheries Management Organisations: while their initial purpose was mainly to determine and allocate in a fair and sustainable manner fishing possibilities in a given high sea area among their Parties, those RFMOs have been engaged for some years in the elaboration of a policy for control and inspection, which constitutes nowadays a growing part of their activities. In addition, the Community has actively contributed in the recent years to the setting up of new RFMOs in high seas areas which were not subject to any multilateral regulation (cf. SIOFA, SEAFO, South Pacific…). Here again, the willingness to prevent IUU fishing has been instrumental in the policy carried out by the Community.

Most measures in place to combat IUU fishing within RFMOs have been introduced at the initiative of the Community, or with its active support. Most RFMOs have now developed sets of rules against IUU fishing. They include inter alia:

- the establishment of control and inspection schemes,

- the obligation for vessels to be equipped with VMS,

- the registration of catches,

- the regulation of fishing gear,

- specific measures targeting non-Parties vessels present in the RFMO areas,

- the imposition of accompanying documents for certain species to certify compliance with conservation and management measures, without which no commercialization is possible,

- lists of vessels authorised to fish;

- lists of vessels identified as having engaged in IUU activities ("IUU vessels"), and which are subject to a large array of penalties (notably prohibition to land and be provided with services in the ports of the Parties to the Organisation),

- the adoption of port state control measures,

- trade measures towards States non complying with relevant measures,

- regulation of transhipments at sea….

These rules have been progressively been put in place over the past years or are in the process of establishment.

In relation to coastal developing countries, Fisheries Partnership Agreements provide an adequate framework to undertake actions to control unlawful fishing. An important part of the assistance for developing countries provided under those agreements is devoted to combating IUU fishing and strengthening control and surveillance methods. Joint initiatives with the countries concerned are under way, particularly in West Africa, East Africa, Southern Africa and the Pacific, to improve infrastructure, means of control and the legislative framework. These initiatives may also move forward on a regional basis, as reflected in the recent launching of a regional plan of action for the Indian Ocean.

Through the European Development Fund (EDF), the European Community provides assistance for a range of fisheries initiatives both at national and regional levels, notably with a view to combating IUU fishing. The EC is currently financing about 15 fisheries initiatives in ACP countries, mostly under the 8th and 9th EDF (programming periods 1997-2002 and 2002-2007 respectively), with a total financial envelope of roughly 170 million €. Monitoring, Control and Surveillance features as one of the key theme under this program.

At EU level , an important set of rules has been established since 1993 already, instituting a system of control, inspection and enforcement of fisheries rules[18]. Its scope extends to Community waters as well as to Community operators and it aims at ensuring compliance with the rules of the Common Fishery Policy. Implementing those provisions fall within the competence of Member States. The duties of Member States in respect of fishing vessels flying their flags, as well as in respect of other fishing vessels acting within Community waters, are clearly spelt out within this regulatory framework.

Insofar as this system is designed to deter and sanction illegal fishing activities, it should be seen as participating to the efforts of the Community to curtail IUU fishing, despite the fact that this terminology has often been used in the past to qualify "external" fishing practices. Over the past years, the policy of the Community in this field has notably consisted in pressing Member States to fulfil their obligations for implementing international and European Community law provisions[19]. The European Community legislation has also been reinforced to establish the responsibility of the beneficiaries of infringements (responsibility of nationals, regardless of the flag under which the vessels concerned operate).

2.2. Examples of specific mechanisms implemented by third States against IUU fishing

In addition to their contribution to international solutions against IUU fishing, some of the most important fisheries partners of the Community have developed their own tools to prevent those activities. This section provides for a brief description of some of those tools, as they might constitute useful precedents for the Community.

In the United States , the domestic legislation entitles the authorities to take severe sanctions against operators importing into the US territory fisheries products harvested in violation to the rules of a foreign country. According to the Lacey Act[20], " it is unlawful for any person (…)to import, export, transport, sell, receive, acquire, or purchase (…) any fish or wildlife taken, possessed, transported, or sold in violation of any law or regulation of any State or in violation of any foreign law ". On this basis, operators importing fisheries products caught in violation of rules of third countries or RFMOs have been sentenced to very heavy fines and imprisonment terms.

The new US legislative framework on the conservation and management of fisheries[21] requires that the US authorities identify those fishing nations whose vessels are engaged in IUU fishing and put in place adequate procedures to certify whether those nations have taken adequate corrective actions to address the problem. On the basis of this certification exercise, the US authorities are entitled to adopt import prohibitions and other measures towards those nations which are not positively certified.

In Canada , specific rules are in place with regard to the access of foreign fishing vessels to Canadian waters and ports[22]. Access is authorized only for those vessels which have been awarded licences to this end by the Canadian authorities. The licences are granted to foreign fishing vessels (1) flying the Flag of States which are considered as fulfilling their general obligations as Flag State under international law and (2) which, among other criteria, carry out their activities in accordance with the relevant norms on conservation and management of fisheries resources. If those conditions are not met, no licence is granted, and the vessels considered shall not be entitled to access Canadian waters and ports.

In Norway , on the basis of a domestic legislation, the authorities operate their own "black list" and "IUU list" of fishing vessels. Fishing vessels are listed when it has been demonstrated that they have been carrying out IUU fishing or have been alleged to do so. Depending on the kind of listing, the vessels concerned are subject to a set of measures designed to restrict their action (prohibition to sail in Norwegian waters, to access Norwegian ports, to be registered under Norwegian flag…) or increase scrutiny over their activities (systematic inspection in ports).

2.3. Current challenges that the Community needs to face to curtail IUU fishing

During the last decade, the main focus of the Community action against IUU fishing has been the setting up and consolidation of norms and bodies mainly dedicated to the monitoring, control and surveillance of activities occurring at sea. At this stage, such action was necessary in order to establish the first mechanisms designed to address IUU fishing at international level.

A screening of the current situation has shown that it is now necessary to develop a new approach to the IUU problem.

This assessment is notably based on the following considerations:

- The international commitments of the Community against IUU fishing require the adoption of additional measures in different fields (notably to implement the instruments agreed within the FAO and the UN);

- Various events have demonstrated the deficiencies of the current system in some areas, notably the difficulty to exert an adequate control over the legality of fisheries products imported into the Community;

- The outcome of the consultation launched by the Commission in January 2007 shows a general support for the idea that the Community should step up its action against IUU fishing. Most of the contributions also encourage the Commission to initiate new proposals in all the fields of action identified in the "consultation paper";

- Numerous measures against IUU fishing have been adopted within RFMOs; such measures vary from one organisation to the other, notably with respect to their scope and their degree of sophistication. As a result, different measures are incorporated into the Community legislation, whose application depends on the areas and species covered. This is source of confusion for Community operators and control authorities, and reflects a lack of consistency and efficiency. To remedy this situation, a generalization throughout the Community of the most advanced measures adopted within RFMOs could be envisaged;

- External studies commissioned by the Commission have also confirmed that serious weaknesses undermine some aspects of the current approach of the Community against IUU fishing.

On the substance, there is a widespread recognition that a new approach should aim to complete the existing framework, improve its efficiency and place the focus on the need for better enforcement and compliance with the measures agreed at international and Community levels to deter, prevent and eliminate IUU fishing.

More precisely, this assessment relies on the following findings:

- the vulnerability of the Community market to the importation of fisheries products which have been illegally caught has been illustrated at several occasions. The current Community legislation lays down the requirements that foreign-flagged vessels must follow in order to be entitled to land fishing products in Community ports (prior notification, data on the origins of the catches…). Its scope is however limited to direct landings of fisheries products in fishing ports, which represent only about 2% of the total amounts of fishing products imported into the Community[23]. Various examples have also shown that this legislation contains loopholes, including the cases of foreign-flagged fishing vessels landing their products into Community ports without being subject to a proper control as to their legality. Suspicions have arisen that those products may stem from illegal fishing, but the current legal framework does not allow performing adequate checks in that regard. A recent report by the inspection services from the Commission has concluded that the current framework is not even implemented in a satisfactory manner by national authorities. It should be underlined that the legislation applying to landings of catches by Community fishing vessels is much more complete than the legislation covering landings and imports into the Community of fisheries products caught by foreign-flagged vessels. Under the relevant legislation applying to Community fishing vessels[24], information on the quantity of catches, the location of the fishing grounds, the gear used and the period considered are collected by the master and transmitted to the control authorities, through various documents (log book during operation at sea, landing declaration handed over to the Port authorities, and sales note transmitted to the buyer of the catches). All Community fishing vessels over 15 meters also have an obligation to have a VMS system on board, which provides information on their location. This system allows national authorities to check if catches from Community fishing vessels have been harvested in conformity with the rules in place. Under the current regime, this can not be said for landing and imports of fisheries products caught by foreign-flagged vessels. Taking account of all modes of transport, it is being assessed that approximately 500000 tons worth 1,1 billion € fisheries products caught illegally by foreign-flagged fishing vessels end up on the Community market every year. This easiness to use the Community market as outlet for fisheries products caught illegally represents a clear incentive for the operators concerned to continue their practices. This issue has been recognised widely in the consultation process. The Community fishing industry complains about the massive arrival on the Community market of imported products stemming from IUU fishing which drives prices down. The Community processing and retail sectors depend to a large extent for their supply on imported products; they are not satisfied with the current situation, under which they suffer from a lack of clear rules which would guarantee that imported products have been harvested legally, and they are sometimes blamed for allegedly laundering illegal products. Problems have also arisen due to the presence in Community ports of foreign vessels listed as IUU by RFMOs, as well as to the fact that the status for those vessels depends on the regime put in place in the various RFMOs, and is not regulated in a consistent way all over the EU territory. As a Market and Port public entity, the Community needs to adopt the necessary measures to avoid that IUU fishing is encouraged via the arrival of illegal products into its territory.

- Despite improvements in the international legislation, the situation is still worrying in high seas areas and in waters of developing countries where IUU fishing remains a very serious problem. As explained above in section 2, one of the main reasons for this continuation lies in the fact that a large number of fishing vessels carrying out IUU fishing are registered in States which do not exert an adequate control over their fishing fleet. Operators opt for those registers in order to disregard rules for the conservation and management of fisheries resources without being subject to prosecution or sanction by their Flag State. They are qualified as "Flags of non compliance". A limited number of measures have been enacted at regional level, within RFMOs, to counteract this problem. Black lists of vessels have been adopted in most RFMOs. The possibility to implement specific trade measures against States identified as non-cooperative by the Parties is also foreseen in some of those bodies. Such measures represent valuable steps in the right direction, but they have been only seldom used, notably because of the decision-making process of RFMOs, which rely on consensus and annual meeting. In addition, in waters under the jurisdiction of developing States, operators responsible for IUU fishing benefit from the lack of appropriate control capacities from the competent national authorities. Devising solutions which would be efficient enough to curb the activities of those vessels and address the complacency of those States towards IUU fishing is a major challenge for the Community policy against IUU fishing.

- The problems set out above result from the activities of foreign-flagged fleets committed outside community waters, and IUU fishing is often assimilated to those practices. The definition of IUU fishing agreed by the FAO encompasses however also illegal activities occurring in the EEZ of coastal States. This requires that the state of the implementation of the rules of the CFP within the Community is also taken into account as part of the assessment of the impact of IUU fishing on the Community. The current Community framework provides for a comprehensive system of control, inspection and enforcement of fisheries rules applying within Community waters and to Community operators. The Community is however deeply affected by illegal fishing taking place within Community waters and/or carried out by Community operators . This has been acknowledged again recently by the Commission which has stated that " compliance with key rules of the CFP remains poor in many fisheries "[25]. Noticeable examples include the cod fishery in the Baltic Sea, with important levels of catches going underreported, or the fishery for the Northern stock of European hake, where landing of undersized fish is still a considerable problem in many Member States. Reaching a higher degree of compliance within Community waters and by Community operators shall constitute a major task for the Community in its efforts to step up its policy against IUU fishing. This is a necessity to avoid that the rules and principles of the CFP designed to conserve and manage fish stocks are put in jeopardy, as well as for the credibility of the international action of the Community against IUU fishing.

From the elements described above, it results that the main challenges which the Community has to face in its policy against IUU fishing are the following: How to prevent the importation of IUU products from 3rd countries into the Community market? This should be considered as the main challenge for the Community, given the shortcomings of the current Community system against IUU fishing in that respect. How to enact more efficient measures for identification and sanction of vessels and States engaged in or supporting IUU activities in the high seas or in waters of developing countries? How to improve the level of compliance with the rules of the Common Fishery Policy within EC waters and/or by EC operators? Those three challenges can be considered as constituting the main problems caused by IUU fishing to the Community, and for which an adequate strategy needs to be devised. |

- SECTION 3: OBJECTIVES

General Objective

The general objective of the Community is to review and enhance its contribution to the fight against IUU fishing in order to increase the efficiency of action against this international plague and its environmental, economic and social consequences.

This objective should result in improved management of fisheries resources, and should be seen within the general aim of the Common Fisheries Policy to " ensure exploitation of living aquatic resources that provides sustainable economic, environmental and social conditions [26]" and, more generally, as contributing to the Sustainable Development Strategy agreed by the European Council in June 2006 via its focus on the protection of natural resources. It is also in line with the objectives set out at the World Summit on Sustainable Development in 2002 regarding fisheries management[27].

Striving for better ocean governance is also one of the main principles guiding the current reflections on a future Maritime Policy for the Community.

Specific objectives

In line with section 2, pursuing this general objective implies that the following specific goals are attained:

- Reduce the vulnerability of the Community market to imports of fisheries products stemming from IUU fishing so that only products legally harvested are imported into the Community;

- Improve mechanisms designed to identify and sanction vessels and States engaged in or supporting IUU fishing in the high seas and/or in the waters of developing countries;

- Increase compliance with the rules of the Common Fisheries Policy with a view to adequately sanctioning illegal fishing carried by Community operators within or beyond Community waters.

It is critical that the strategy by the Community is comprehensive and cover all the facets of the IUU problem and all activities along the supply chain (from the net to the plate). Against this background, the Community policy should aim to fulfil all the specific objectives identified below according to a coherent approach, as leaving aside one of them would result in major gaps remaining in place and jeopardizing the whole approach.

For all those three specific objectives, the Community should be guided by its overarching approach consisting in a full implementation of its existing international commitments against IUU fishing and a consolidation of its action at international, regional and Community levels on this matter.

SECTION 4: POLICY OPTIONS

The policy options which should underpin the future Community policy against IUU fishing should be assessed against their relevance in respect of achieving the objectives identified in section 3.

The following different policy options will be considered:

- Continue current policy and focus on implementation and enforcement of existing framework only, without tabling new regulatory proposals;

- Focus on fishing activities outside the EC only, through action at international level and within Regional Fisheries Management Organisations;

- Develop a policy based on a case by case approach, which would be adapted to the specific features of the various fish species and areas subject to important levels of IUU fishing;

- Undertake a new and comprehensive initiative, covering both Community and non Community waters, relying on clear political principles and regulatory measures, which would the complete the current framework and ensure better compliance with applicable rules, as well as allow the EC to adopt unilateral ambitious measures when multilateral measures fall short of EC expectations.

OPTION 1: CONTINUE CURRENT POLICY AND FOCUS ON IMPLEMENTATION AND ENFORCEMENT OF EXISTING FRAMEWORK

The starting point for this option lies in the observation that the continuation of illegal fishing by Community operators depends to a large extent to the deficient application of the current Community system for control, inspection and enforcement of the rules of the CFP.

Within the Community regime, the implementation of those rules falls within the competence of Member States. They have to establish appropriate mechanisms and adopt action guaranteeing that operators from the fishing sector abide by the rules agreed at Community level. In numerous occasions, the Commission has raised serious concerns as to the lack of sufficient measures by Member States for this purpose and the low priority given to improving the situation[28].

While situations differ from one Member State to another, a global assessment denotes the persistence of major shortcomings. The resulting need for action has been highlighted by the European Parliament in its Resolution adopted on 15 February 2007, which states that the EP " reiterates its conviction that a crucial and obvious first step for the European Union to take is, first, to fully implement the existing provisions of the CFP and other relevant Community legislation in an effective, fair and rigorous manner, in order to reduce unreported and illegal fishing by Community vessels and in Community waters "[29].

Instead of launching new regulatory initiatives, which might just face the same implementation deficit as previous regulations and not be properly applied, the Community should give priority to an improvement of the implementation of the current framework.

The Commission could make a better and more frequent use of its own powers under its responsibility to ensure that Member States control, inspect and enforce adequately the rules in place.

Better regulation and good governance in the CFP decision-making process should also help improving the culture of compliance among fishing operators with regard to the implementation of measures affecting their activities.

Finally, this option could also rely on the best practices developed by the sector itself to contribute to the combat against IUU fishing, notably by Community operators involved in the importation of fisheries products investing in the establishment of their own certification schemes designed to avoid purchasing and selling fisheries products stemming from IUU fishing.

Technical aspects could be solved via a minimalist regulatory initiative. This would allow updating elements pertaining to control, inspection and enforcement in Community waters which for their majority date back from 1993.

Under this option, the Community should in the first place enhance the implementation of the current framework designed to address illegal fishing and use all existing means to this end.

OPTION 2: FOCUS ON FISHING ACTIVITIES OUTSIDE THE EC ONLY

IUU fishing affects all oceans and many stocks.

Important fish stocks (notably tuna species) subject to high level of IUU fishing are composed of migratory species which spend a large part of their life on the high seas.

The accession to high sea fishing grounds by new fleets and the development of new technology for fishing practices have contributed to increase fishing effort in all parts of the oceans. International fish trade has also considerably increased over the past decades. It is not uncommon for catches from a fishing vessel flying the flag of a State A to be transhipped to another vessel with the flag of a State B, landed and processed in country C, re-embarked on a container ship flying the flag of a State D, before eventually reaching its final destination on the market of a State E.

Operators carrying out IUU fishing are taking advantage of this increased globalisation of fishing activities.

There is general consensus on the international dimension of IUU fishing, and on the fact that an effective response to the problem must be given at international level.

On its own, the Community is unable to address all the features of IUU fishing, notably when it comes to fishing activities occurring outside Member State's jurisdiction (non Community fishing vessels on the high seas or in waters of developing countries). The only way to regulate those areas and deter IUU practices there is via multilateral efforts.

Multilateral instruments dedicated to ensure sustainable management of fisheries resources are in place, both at global (FAO in particular) and regional (various RFMOs) levels. They have developed over the past decade policies and instruments designed to combat IUU fishing. Together with some of its international partners, the Community was a pioneer in prompting those bodies to make of the fight against IUU fishing one of their main fields of activity.

Discussions at global level within FAO focus currently on the need to improve and generalize the instruments and practices of Port State to tackle IUU fishing. To this end, Parties to this body have agreed to work on the text of a future international binding convention covering Port State control.

Other negotiations have been engaged as to the content of what should the "genuine link" between a vessel and its Flag State consist of. This is instrumental with a view to deterring the practices of some States to register fishing vessels over which they do not exert any control, and which are carrying out IUU fishing in total impunity.

Multilateral cooperation and exchange of information are also of particular importance to enhance Monitoring, Control and Surveillance (MCS) capabilities and efficiency of national administrations in charge of the fight against IUU fishing. To this end, projects are under development within the international MCS Network.

The Community is an important actor in those international negotiations, and should intensify its efforts to reach multilateral solutions to the problems caused by IUU fishing.

The same can be said at regional level within RFMOs. Those organisations are the best able to regulate fishing activities in high seas areas, which escape any national jurisdiction. Bringing together coastal States and long distant fishing nations with an interest in the area, their decisions constitute the single binding framework applying to the area considered. While their first purpose was mainly to allocate fishing possibilities between its members, RFMOs now devote an increasing amount of efforts to the establishment of an array of measures designed to combat IUU fishing. As a member of the vast majority of RFMOs, the Community should continue to push for the implementation of ambitious schemes against IUU fishing in those bodies.

Under this option, the priority should be for the Community to continue and strengthen its action to promote multilateral effective answers to the damages generated by IUU fishing.

OPTION 3 : CASE BY CASE APPROACH, SPECIFIC TO STOCKS AND AREAS SUBJECT TO IUU FISHING

IUU fishing is a world-wide problem. Yet it does not have the same intensity everywhere. It is clear that some fish stocks are subject to illegal harvesting at a larger scale and intensity than others. Current indications point out that, for example, blue fin tuna in the Mediterranean, cod in the Barents Sea or in the Baltic Sea, red fish outside the Icelandic EEZ, toothfish in the Antarctic feature as some of the stocks particularly hit by IUU fishing.

Against this background, it would seem appropriate for the Community to promote measures targeting the most important manifestations of IUU fishing. For each fishery, a specific analysis of the characteristics of IUU fishing would be performed, and tailor-made solutions would have then to be devised.

It should not result in uniform application of similar rules which may be excessively burdensome for fishing industry and administrations.

This variety would be reflected in the different manners according to which the Community is affected via the various manifestations of IUU fishing. IUU fishing does not call for the same Community action in all circumstances; this depends notably on whether the Community is directly affected when illegal fishing occurs within Member State's waters or indirectly affected as a market for fisheries products caught illegally beyond those waters. It also depends on which degree the Community is concerned by those practices.

Different approaches should be devised depending on whether the Community has direct jurisdiction over the offenders or if the Community intends to act against IUU fishing occurring outside areas under its jurisdiction. In both situations, focus should be placed on the identification of fisheries subject to particularly high levels of IUU fishing and the implementation of specific measures to remedy their problems. The nature and types of action to be promoted would however have to be different.

As far as illegal fishing occurring within Community waters or by Community operators outside those waters is concerned, the Community has direct means to act for a better enforcement of rules in place. Those activities fall under the respective competences of the Community or Member States as Flag States or coastal States. For those stocks identified as being subject to important illegal activities, specific monitoring and control measures could be put in place by the Community (for example more stringent catch reporting procedures than within the normal Community framework, increased inspection rate for vessels involved in the fisheries concerned…).

Member States should monitor in priority the implementation of those rules using all legal instruments at their disposal to this end, and the Commission would also pay particular attention to their correct enforcement by national authorities. Under the current situation, stocks concerned by this approach should include cod in the Baltic Sea or the Northern hake stock. Depending on the evolution of illegal fishing practices, new stocks could become subject to this particular scrutiny.

The Community on its own is not in a position to directly halt illegal fishing activities occurring outside its jurisdiction .

The Community acts within RFMOs to achieve that aim. As outlined in paragraph 2, this is necessary but insufficient. The main difficulty would still be the impossibility to adopt and implement stringent measures towards vessels flying flags of non compliance.

As a complement to its policy within RFMOs, the Community, acting as Market State, may also use various instruments to prevent products stemming from IUU fishing from reaching its territory. One of them is the establishment of certification systems which would apply to stocks subject to intense IUU fishing, on the model of the one covering toothfish under the CCAMLR, as well as those existing and under development in RFMOs competent for regulating tuna stocks (notably ICCAT). Under such schemes, all consignments of fisheries products from a given stock should be accompanied by a certificate guaranteeing their legality; without such certificates, trade of such products is prohibited. Building upon those precedents, the Community could decide on the establishment of certification schemes covering imports of fisheries products stemming from certain stocks. The stocks should be selected according to a combination of two criteria: the importance of the volume of importation of products from this stock for the Community, and the suspected high degree of IUU fishing affecting it. This could for instance be applied to cod from the Barents Sea or tuna stocks (insofar as they are not covered by existing schemes developed under the auspices of RFMOs). Such schemes could be extended to new stocks if their situation warrants it.

OPTION 4 : UNDERTAKE A NEW AND COMPREHENSIVE INITIATIVE, COVERING BOTH COMMUNITY AND NON COMMUNITY WATERS

This option relies on the fundamental principle that an efficient strategy against IUU fishing should cover all the facets of the problem, along the whole supply chain, at international, regional and Community levels. If one link of the chain is not covered, this loophole is used by illegal operators and the whole system is undermined.

All the objectives identified in section 3 of this report should be addressed via adequate measures, and according to a coherent approach.

The first objective relates to the need to reduce the vulnerability of the Community market to imports of fisheries products stemming from IUU fishing so that only products legally harvested are imported into the Community.

To this end, the Community should use instruments at its disposal as trade entity. They should allow prohibiting or at least discouraging the importation into the Community of fisheries products caught in contravention of applicable norms. The compatibility of such measures with WTO requirements would have to be ensured.

Two alternative approaches could theoretically be followed in that respect:

5. the bilateral trade agreements of the Community with its international partners could include a clause allowing preferential market access for imports of fisheries products subject to the compliance of the third country with agreed conservation measures. This approach would however raise substantial difficulties. It could be read as establishing a preferential treatment to the benefits of countries respecting international conservation and management rules, while other countries would not be granted this advantage but still continue to be entitled to export their products into the Community. This would actually not solve the problem of the Community linked to the arrival on its territory of fisheries products stemming from IUU fishing. Moreover, most of the major partners of the Community for fisheries trade, as well as many developing countries, already enjoy preferential treatments for access to the Community market. The impact of the measure would then be limited to a small number of third States, and not be comprehensive. Finally, the procedure would require a change in existing agreements or an inclusion of a specific clause in forthcoming trade agreements, which would take a long time. It would also imply that illegal fishing activities will contribute to the EC budget through the payment of the customs duties. For those reasons , this approach does not seem suitable to reach the objective of the Community to close its doors to the importation of fisheries products stemming from IUU fishing, and will not be analysed further in the present report;

6. another approach would consist in declaring illegal under Community law the importation of fisheries products stemming from IUU fishing, and, as a complement, making the imports of fisheries products into the Community conditional upon the certification by the Flag State of the vessel which caught the products that they stem from non-IUU fishing . Fishing vessels are indeed placed under the primary jurisdiction of their Flag State. It is therefore incumbent on Flag States to ensure that their fishing fleet carries out its activities in accordance with the relevant rules on conservations and management of fisheries resources.

Approaches based on the certification of the legality of catches have been developed by some RFMOs. The scope of such measures is however limited to some stocks (for example toothfish in the CCAMLR, or tuna species for tuna RFMOs, where such schemes are under development). Within the NEAFC, new measures have entered into force on 1st May 2007, which oblige fishing vessels wishing to land in the port of another Party to obtain a guarantee by its Flag State that catches on board are legal. The scope of those measures covers a delimited area (North East Atlantic), certain types of products (frozen products) and transport means (fishing vessels and vessels used for processing or transhipment operations).

The Community has been initiating or supporting those measures within RFMOs, and will continue to promote their adoption and generalisation. This will however not be achievable on a short term basis. In addition, this multilateral approach will not be suitable for stocks under the jurisdiction of third States, which are sometimes heavily exploited by foreign vessels practicing IUU fishing (for example in some Sub-Saharan African coastal States).

Against this background, the Community could consider the establishment of its own certification scheme, applying to all imports of fisheries products into its territory. Under this scheme, each consignment of fisheries products imported into the Community would have to be accompanied by such certificates. Those documents, based on the model existing for some stocks in some RFMOs, would gather all information relevant for defining the legality of the fisheries products concerned. The presence and exactitude of the certificate would be checked by the authorities of the Member States at the moment of the entry into the Community of the products concerned. If there are no certificates or if they are not complete or found to be invalid, the entry would be refused.

To be efficient and comprehensive, the certification scheme should encompass all importations of products stemming from marine capture fisheries, including processing products. This notably implies that third countries where fish is processed before being exported into the Community are able to guarantee that the products processed stem from legal fishing, even when the vessel which harvested the catches flies the flag of another country. All means of transportation should be covered (fishing ports, but also maritime ports and airports notably). To a certain extent, this certification scheme would rely on an approach similar to the system on health requirements which apply to all products imported into the Community[30].

In case of doubts on the validity of catch documents, the third countries concerned (flag states countries of processing or transit) would be requested to cooperate in their verifications.

To assist control authorities from Member States in their tasks, an alert system could be set up, designed to inform them about the doubts pertaining to the compliance with conservation measures by products which could be exported to the EC. Similar mechanisms applying to imports currently exist in the sanitary field as well as within the context of preferential tariff arrangements[31].

To complete those trade measures, specific provisions could apply to transhipments at sea and access to Community ports.

When operated at sea (in particular on the high seas), transhipment operations generally escape any kind of proper control by public authorities as to the legality of the catches and the activities of the vessels concerned. Transhipments at seas therefore constitute a privileged manner for operators involved in IUU fishing to dissimulate their catches and render their tracking difficult. With a view to ensuring a better monitoring of the supply chain and closing such loopholes, the Community should continue to press for the adoption of tighter regulation of transhipments at sea, which could include a total ban of those practices. To show its commitments to adopt stringent measures in that respect, the Community could already, in parallel to international progress on the issue, propose initiative on that matter which would apply to Community fishing vessels wherever they operate.

A generalization of stringent measures prohibiting access by vessels listed as IUU by RFMOs to Community ports, or authorizing access on the condition that their catches are confiscated should also be put in place in an harmonized manner across the Community.

The second objective consists in improving mechanisms designed to identify and sanction vessels and States engaged in or supporting IUU fishing on the high seas and/or in the waters of developing countries .

Increase monitoring and surveillance of those areas and sanction adequately vessels responsible for IUU fishing and States hosting their flags should be the two pillars of Community action to attain this objective.

- The first step in that direction consists in a consolidation and intensification of the Community policy against IUU fishing at multilateral and bilateral levels.

At multilateral level , the Community should pursue its action for the development and implementation of control and inspection schemes covering high seas areas subject to the competence of RFMOs. In addition, the recent approach by those bodies consisting in identifying and listing vessels carrying out IUU fishing should also be intensified. The same logic should apply to the identification of States supporting IUU fishing, which has resulted in the application of trade sanctions against some of them in only one RFMO (ICCAT) so far.

The Community should also support international progress towards better social standards on board all fishing vessels. More specifically, it should promote a rapid and large ratification of the new consolidated international labour convention on work in the fishing sector adopted by the International Labour Organisation in June 2007. The Convention establishes minimum standards for working and living conditions on board ships and introduces enforcement and inspection mechanisms. In line with the communication on the contribution of the EU on promoting decent work for all in the world of 24 Mai 2006 and the Council Conclusions of 1 December 2006 on decent work, the Commission intends to explore ways to facilitate the speedy ratification and implementation of this Convention by EU Member states.

A similar approach should be promoted in relation to international instruments on safety for fishermen and fishing vessels. This is in particular the case for the 1993 Torremolinos Protocol of the International Convention for the safety of fishing vessels, which has so far been ratified by an insufficient number of countries to enter into force.

In relation with coastal developing States , the Community should also make use of all instruments at its disposal to contribute to improve management and control of their maritime waters. In that context, at bilateral level, the mutation from purely fisheries access agreements to Fisheries Partnership Agreements (FPAs), initiated in 2004, should be confirmed. An important part of those FPAs is dedicated to the support and financing by the Community of measures precisely designed to ameliorate the management and control of fishing activities accruing in the Economic Exclusive Zones of our Partner countries.

Within its development policy, the Community also attaches a great importance to this aspect. To render this strategy more efficient, the Community has recently engaged a shift towards a regional approach, implying all coastal States concerned to put in place a coherent strategy in areas known for their vulnerability to IUU fishing. A first step has been recently achieved in the South-West Indian Ocean, where a Regional Plan for Surveillance of fishing activities has been agreed in January 2007 gathering the Community and five coastal and island States, supported by Community financing of MCS actions for an amount of 7 Million € over three years. An extension of such regional schemes to new areas should be promoted in the future. The future Economic Partnership Agreements under negotiation between the Community and different ACP regions could also be used as a framework for developing and funding action against IUU fishing.

- The second step would be based on a generalisation, at Community level, of the most advanced measures adopted within RFMOs against IUU fishing. RFMOs have all developed policy and instruments dedicated to the combat IUU fishing . Yet, this has been according to the proper agenda and priorities of each of those bodies. Being Party to a large number of those organisations, the Community is bound to implement all their decisions (which cover different areas), but is also able to assess their different degree of efficiency and ambition on the various items covered. As far as possible, the Community should continue to press for a harmonized approach amongst RFMOs in their fight against IUU fishing. Without waiting for such convergence to be achieved, the Community should generalize the implementation of the most advanced action agreed within RFMOs on control, inspection and enforcement as far as Community operators are concerned. This would provide for simpler rules for them and for national administrations as there would only be a single set of measures to consider. This should also provide for better efficiency in action against IUU fishing.

Measures concerned by such generalisation could notably include provisions adopted within CCAMLR on prosecution and sanction of "nationals" of Parties supporting or engaged in IUU fishing outside the territory of their Flag States, or provisions adopted within ICCAT on the sightings of vessels infringing the rules by vessels from Parties to the organisation.

- Finally, the Community should consider the adoption of unilateral action to overcome the problems faced by the international community in identifying and sanctioning properly vessels and States engaged in or supporting IUU fishing . While progress realised within RFMOs to list IUU vessels and adopt measures against their Flag States should be supported, the Community also considers that it is under its responsibility to enact unilateral measures when there are clear and objectives elements demonstrating that those efforts fall short of effectively addressing the problem created by Flag States unwilling or unable to exert an adequate control over their fishing fleet. The behaviour of such States is a major reason for the persistence of IUU fishing, and the decision-making process within RFMOs, relying on consensus by all Parties and annual meeting, sometimes hinder them to enact efficient measures targeting those States or vessels flying their flag. The diplomatic demarches engaged by the Community in respect of States hosting flags of fishing vessels suspected or confirmed to have carried out IUU fishing usually result in limited outcomes.

Under the current situation, the number of vessels listed as IUU by RFMOs is rather limited compared to the overall activity of vessels suspected of carrying out IUU fishing. In 2007, it amounted to 121 vessels within the main RFMOs[32] to which the Community is a Party, less than 10% of the estimated overall number of fishing vessels flying a flag of convenience. In addition, those vessels-based lists established by RFMOs by nature do not cover vessels active outside areas covered by those Organisations (for example in the EEZ of third countries off the West African coast).On the model of what is being done by some of our international partners (notably Norway), the Community should put in place mechanisms for the identification and subsequent application of penalty measures in respect of "IUU vessels" , which would complement lists drawn up by RFMOs. The rights of the operators should be guaranteed through a contradictory procedure with its Flag State, the criteria for the listing should be clear, objective and transparent, and the de-listing process when the criteria are not met any longer should also be foreseen.

As to measures directed towards States hosting "flags of non compliance" , their adoption is only foreseen in very few RFMOs, and they have been under-used so far anyway. Addressing those shortcomings, the Community should build itself a transparent and fair mechanism to identify those States which place themselves outside the international legality and thereby facilitate IUU practices, and to apply appropriate measures to encourage them to ensure compliance by their vessels with management and conservation rules. The procedure for adopting those measures should comply with all the requirements laid down under the GATT agreement, notably prior hearing of the authorities of the third State concerned and full motivation.

The listing by the Community should be based on a combination of criteria, including:

- the status of a State as Party or not to the international instruments dedicated to the conservation and management of fisheries resources,

- it participation to RFMOs and its willingness to apply the rules agreed by those organisations

- its track record and current practices in relation to manifestations of IUU fishing, and notably its cooperation with the Community in the investigation and follow up given to such activities, as well as whether effective enforcement measures have been adopted against operators responsible for IUU fishing activities,

- the history, nature, circumstances, extent and gravity of IUU fishing activities carried out by vessels flying the Flag of the State considered, by its nationals or by vessels operating in its waters or using its ports, or involving the importation into its market of fisheries products stemming from IUU fishing .

The measures should also be proportionate and not introduce arbitrary or unjustifiable discrimination between countries or disguised restrictions on international trade. Such measures should include trade measures (including import bans) as well as restrictions for Community operators to engage in commercial relations pertaining to fishing activities with operators from the third State concerned. A procedure for the de-listing of the States concerned should also be put in place, once they are able to demonstrate that they are fulfilling their international obligations with respect to IUU fishing.

The relevance of using trade-related measures towards States failing to comply with their international obligations for the conservation and management of fisheries resources has been highlighted, albeit usually within a multilateral context, by the UN General Assembly, notably in its latest Resolution on sustainable fisheries, which " requests States and relevant international bodies to develop, in accordance with international law, more effective measures to trace fish and fishery products to enable importing States to identify fish or fishery products caught in a manner that undermines international conservation and management measures agreed in accordance with international law (…) ". This should also be considered against point 10 of the declaration drawn up at a Ministerial Conference held in 2005 in St John’s (Canada): “We recognize that States, REIOs or entities that are neither members of RFMO/As nor have agreed to apply their conservation and management measures shall not have access to the fisheries resources to which those measures apply and any catches of such fishery resources should be denied market access in accordance with international law ” .

The European Parliament also "c onsiders that the Commission should include the following actions in its proposal to be adopted in EU law: the legal origin of fish must be demonstrated before it is allowed to be offloaded in EU ports or imported into the EU; such proof must include, for both landings from fishing vessels and transhipments:

- in the case of fish products from waters regulated by an RFMO, documents establishing that the fish products to be landed have been caught in accordance with the rules of that RFMO and that the quotas allocated to the contracting party under whose flag the vessel is sailing have been respected;

- in the case of fish products caught in the exclusive economic zones of third countries, documentation establishing that the vessel is authorised to fish or is in possession of a fishing licence for those waters and for the species to be landed [33]"

The third objective would aim at addressing the lack of compliance with the rules of the CFP by Community operators within or beyond Community waters.

- As outlined in option 1, one key aspect is the improvement of the policy carried out by the Community and the strengthening of the means devoted by Member States to the enforcement of Community rules. This should be the first step to improve compliance by Community operators within or beyond Community waters.

- A second, complementary step would be to promote at Community level the approximation of sanctions corresponding to serious infringements against the rules of the CFP perpetuated by Community operators.

Sanctions in place within the Community vary to a great extent across Member State s. Furthermore their levels are often too low to ensure the loss by violators of the financial benefits gained from their illegal activities.

This can be deducted from the various provisions on penalties corresponding to serious infringements in force in the Member States. An examination of the existing legislation in 10 Member States[34] (Belgium, Denmark, Spain, France, Ireland, Italy, Netherlands, Portugal, United Kingdom) reveals that the maximum levels for such penalties vary between 6000€ and 300 000€ (bearing in mind the fact that, in some countries, judges are free to decide on fines exceeding maximum levels in the most serious cases, and there may be no maximum set out in the legislation in some other Member States).

Accompanying sanctions may also be pronounced in addition to fines (essentially confiscation of the catches or gear, and withdrawal of fishing licences). In the legislation of some Member States, the level of fines may be linked to the value of illegal catches. In som