EN Official Journal of the European Union C 318/117

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council and the European Parliament on improving the economic situation in the fishing industry

COM(2006) 103 final

(2006/C 318/21)

On 9 March 2006, the European Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 11 July 2006. The rapporteur was Mr Sarró Iparraguirre.

At its 429th plenary session, held on 13 and 14 September 2006 (meeting of 14 September 2006), the European Economic and Social Committee adopted the following opinion by 120 votes to 16 and nine abstentions.

1. Conclusions and recommendations

1.1 Given the economic and social importance of the fishing industry to the European Union, which goes beyond its direct contribution to GDP (1), the EESC agrees with the Commission's diagnosis that the sector is in a state of economic crisis (2) and believes action is necessary to improve the situation. However, the EESC thinks that the measures proposed to rescue the sector are neither realistic nor sufficient. It considers the measures to be unrealistic because the vast majority of operators are SMEs or owners of one sole vessel, working in fishing grounds with limited resources, with very small crews, subject to stringent fishing management rules and with very little scope to take measures to restructure and ensure their short-term viability.

1.2 Moreover, without a new budget that is separate from the FIFG/EFF (3) arrangements, there is very little opportunity to put these new measures into practice. The EESC therefore thinks that this communication will have little practical impact for most enterprises.

1.3 Nevertheless, for those enterprises that are large enough to apply for rescue and restructuring aid, the EESC believes that the communication should: — provide for a budget separate from the FIFG/EFF option; — make rescue aid non-reimbursable and ensure it is implemented for more than six months; — ensure that the national schemes to be presented by the Member States are flexible and adaptable so as to provide enterprises applying with rapid access to the aid available.

1.4 In addition to rescue and restructuring aid for struggling firms, the Committee considers that a further series of measures should be taken in order to alleviate the serious effects that high fuel prices are having on fishing enterprises and their crews. Specifically, the EESC recommends that the Commission and the Council should approve the following action: a) increasing the level of de minimis aid to EUR 100 000 per enterprise; b) temporarily halting fishing activities in the event of ‘unforeseeable circumstances’, understood as the crisis provoked by high fuel prices; c) authorisation of aid to finance premiums for hedging fuel costs, as provided for in the agricultural sector; d) setting up a Community scrapping fund with a special budget, which would give priority to those fleet segments with the most problems and enable vessel owners who choose voluntarily to abandon fishing to do so in an acceptable way; e) provision of maximum support by both national and Community authorities, through RTDI aid (4), for projects presented by the fishing sector aimed at improving the energy efficiency of fishing, finding alternative or complementary energy sources to oil and developing Fishing Technology Platforms; f) efforts to change the mindset of fishermen with the aim of persuading them to become involved in selling fishery products, so as to increase the added value of those products; g) revising the fiscal provisions governing the inshore fishing fleet, in particular by introducing exemption from corporation tax on the proceeds of the first sale of fish products by wholesale franchise operators and a reduction in VAT on intermediary operations carried out by such wholesalers; h) entry of the deep-sea fleet which fishes outside Community waters into the second registers that exist in a number of Member States for the merchant fleet, amending the Community guidelines on state aids in the fishing sector.

2. Explanatory statement

2.1 Not only does the fishing industry supply a substantial proportion of the protein needed for human consumption, but it also makes an important contribution to the economic and social fabric of many coastal communities across the EU. According to the Commission (5), with 7 293 101 tonnes of fish (catches and farmed), the enlarged European Union (EU-25) accounts for 5 % of total world production of fisheries products, making it the second largest producer in the world after China. Furthermore, it has a fleet of just under 90 000 fishing vessels, generating 229 702 jobs.

2.2 The fishing sector is facing difficult adjustments caused by the decline in, and in some case exhaustion of, fish populations in most of its fishing grounds, and by unfavourable market conditions. According to the communication, the quotas allocated to vessels fishing in the west of Europe for the main demersal species (cod, haddock, whiting, saithe and hake) and benthic species (plaice, sole, anglerfish and nephrops) have been decreasing since the mid-1990s.

2.3 Although the reform of the CFP in 2002 launched a modernisation of fisheries management in the European Union with a view to sustainability, it also introduced measures, such as the recovery plans, which restrict catches and so radically reduce profits, a situation which will continue in the future.

2.4 Together with the normal, ongoing increase in operating costs and the dramatic rise in fuel costs, this has resulted in many vessels being run at a considerable loss.

2.5 The Commission communication lists the reasons that have combined to put a large part of the Community fleet in this economic position and suggests ways of addressing it.

3. Background

3.1 Among the reasons, the Commission communication identifies two obvious factors: — Decreasing income — Rising costs.

3.1.1 Decreasing income is due to: — Stagnating market prices: — increasing share of fish imports — development of aquaculture — concentration of sales in big distribution chains — Lower fishing yields: — intense fishing of certain fish populations — insufficient reduction of fleet capacity.

3.1.2 The operating costs of vessels, which normally increase from year to year, have risen very fast since 2003 owing to the rise in fuel costs. This affects all fishing fleets, but especially bottom trawlers, which are by far the largest segment of the Community fishing fleet, and whose net operating results are negative.

4. General comments

4.1 Solutions proposed by the Commission to ease the current economic difficulties of the fishing industry include: — in the short term, measures to rescue and restructure fishing enterprises capable of regaining profitability through structural changes; — in the long term, ensuring that the fishing industry can adapt to the new situation marked by higher fuel prices.

4.1.1 Short-term rescue and restructuring

4.1.1.1 In order to rescue and restructure fishing enterprises which are on the point of bankruptcy or in financial difficulties, the Commission provides for existing instruments and the existing state aid framework to be used, on the basis of Community guidelines governing state aid for rescuing and restructuring firms in difficulty (6) and the guidelines for the examination of state aid to fisheries and aquaculture (7). Furthermore, it provides for some exceptions, which extend beyond these Directives (see points 4.1.1.5 and 4.1.1.6).

4.1.1.2 Such rescue aid may take the form of a reimbursable loan or guarantee lasting not more than six months. The purpose of such aid is to enable businesses to adapt to the new fuel price situation, especially in the case of vessels using towed gear and targeting demersal stocks. Where the rescue aid is followed by approval of a restructuring plan, it can be repaid with the funds received by the firm in the form of restructuring aid.

4.1.1.3 The EESC considers that for rescue aid to be really effective it should be non-refundable as opposed to a reimbursable loan. This would give added value to rescue aid, making it potentially more attractive to businesses. Otherwise, a straightforward repayable loan could be obtained from any credit institution, without the need for authorisation from the European Commission.

4.1.1.4 Aid for further restructuring of fishing enterprises to restore economic viability will often imply investment to adapt fishing vessels. The guidelines governing state aids in the fishing sector set out the rules on aid for modernisation and equipment of fishing vessels in accordance with the rules laid down in the Financial Instrument for Fisheries Guidance (FIFG) (8). The conditions for granting national aid for these purposes are therefore the same as those applicable to Community aid under the FIFG Regulation (9).

4.1.1.5 In exceptional cases, the Commission may authorise national aid for certain types of modernisation which are not covered by the FIFG Regulation, if it is aimed at restructuring fishing enterprises as part of national rescue and restructuring schemes. Before granting authorisation, the Commission will assess these national schemes on the basis of the Community guidelines, provided the restructuring of the firms is based on realistic economic assumptions in the present context, taking into account the state and possible evolution of targeted stocks and ensuring the profitability of firms based on a reduction in operating costs without increasing current overall fishing effort and capacity.

4.1.1.6 Exceptional authorisation by the Commission of state aids under national rescue and restructuring schemes will be for the following investments: a) a first change of fishing gear resulting in a less fuel-intensive fishing method, b) purchase of equipment to improve fuel efficiency (e.g. econometers), c) one replacement of the engine provided that, 1. for vessels under 12 metres in overall length and not using towed gear, the new engine has the same power as the old one or less, 2. for all other vessels up to 24 metres in overall length, the new engine has at least 20 % less power than the old one, 3. for trawlers of more than 24 metres in overall length, the new engine has at least 20 % less power than the old one and the vessel changes to a less fuel-intensive fishing method.

4.1.1.7 In national schemes approving a restructuring plan for enterprises operating a number of vessels of over 12 metres in length, the Commission could accept that the reduction in engine power referred to in 4.1.1.6 (c)(3) could apply ‘globally’ at the level of the enterprise and that the decommissioning of a vessel without public aid could be also be counted against the required reduction rate.

4.1.1.8 This principle could also be acceptable in the form of national schemes authorising a restructuring plan presented by a group of small and medium-sized enterprises (SMEs). In such cases, the profitability of some members of the group could be improved by action, such as decommissioning, taken by others.

4.1.1.9 During the temporary cessation of activities needed to carry out the approved investment, companies may apply for the relevant state aid, provided this is requested under the rescue and restructuring schemes.

4.1.1.10 Any other public aid, including Community aid, granted to a company in difficulty will have to be taken into account in the overall assessment of the restructuring plans and the long-term viability.

4.1.1.11 The Member States have two years from the date of publication of the present communication within which to notify the Commission of national rescue and restructuring aid schemes and, where appropriate, individual plans in the case of bigger enterprises. As soon as the Commission gives its approval, the Member States have two years within which to issue the administrative decisions on the restructuring plans.

4.1.1.12 Given that the current economic difficulties hit vessels using towed gear in particular, the Commission considers that such restructuring aid should primarily target trawlers.

4.1.1.13 As regards direct operating aid, in the current situation of high fuel prices the Commission rejects any public intervention to compensate for this increase in costs, since this would be incompatible with the Treaty.

4.1.1.14 As an alternative, the Commission could accept a guarantee scheme, as requested by the fishing industry, whereby money paid in by the industry in favourable times could be repaid as compensation in the event of sudden increases in the fuel price. The Commission could approve such a scheme only if it were to provide guarantees of reimbursement of all public aid under commercial conditions.

4.1.1.15 While it agrees with the Commission's diagnosis that the Community fishing industry is in a state of economic crisis, the EESC believes that the measures proposed to rescue the sector are neither realistic nor sufficient. It considers the measures to be unrealistic because the vast majority of operators are SMEs or owners of one sole vessel, working in fishing grounds with limited resources, with very small crews, subject to stringent fishing management rules and with very little scope to take measures to restructure and ensure their short-term viability. Moreover, without a new budget that is separate from the FIFG/EFF arrangements, there is very little opportunity to put these new measures into practice. The EESC therefore thinks that this communication will have little practical impact for most enterprises.

4.1.1.16 Nevertheless, for those enterprises that are large enough to apply for rescue and restructuring aid, the EESC believes that the communication should: — provide for a budget separate from the FIFG/EFF option; — make rescue aid non-reimbursable and ensure it is implemented for more than six months; — ensure that the national schemes to be presented by the Member States are flexible and adaptable so as to provide enterprises applying with rapid access to the aid available.

4.1.1.17 The EESC would remind the Commission that applying a de minimis aid rule could be an effective short-term measure. The Committee nevertheless considers the ceiling provided for under current legislation (EUR 3 000 per company over three years) to be very low and not appropriate to the actual situation, especially given that other EU sectors, with the exception of agriculture, have a ceiling of EUR 100 000. The Committee therefore feels there is an urgent need to revise the rules governing de minimis aid for fishing, increasing the aid ceiling to EUR 100 000 in line with other sectors. This point was made by the EESC in its opinion on the State aid action plan — Less and better targeted state aid: a roadmap for state aid reform 2005-2009 (10).

4.1.1.18 Another measure that could be very helpful for enterprises and crews would be to consider the grave economic situation of the fishing sector as an ‘unforeseeable circumstance’ within the meaning of Article 16 of the FIFG Regulation, which allows compensation to be granted to fishermen and vessel owners for temporary cessation of activities in such situations.

4.1.1.19 With the aim of adapting the capacity of fishing vessels more quickly to the state of fish stocks, the Committee suggests that in the short term the Commission should set up a Community scrapping fund with a special budget, to be used on a mandatory and exclusive basis by the Member States for companies that ask for their vessels to be scrapped. This fund could give priority to those fleet segments with the most problems.

4.1.1.20 The Committee also thinks that in the short term the Commission should revise the guidelines on state aids for fishing to allow special registers of fishing vessels to be drawn up in the Member States, which would make it possible to improve the competitiveness of the deep-sea fishing fleet operating outside Community waters, as happened in the 1990s with the merchant fleet.

4.1.1.21 As regards the guarantee scheme for sudden increases in fuel prices, the Committee considers this to be another type of aid that could help keep fishing vessels in operation in the current difficult climate. It therefore supports the system, though in the present economic situation it thinks it is very unlikely to be applied on the terms required by the Commission. The Committee thinks that the Commission should allow the Member States to partly or totally cover the cost of premiums for any futures contracts concluded by businesses in the sector to guarantee a maximum fuel price over a fixed period of time, by analogy with the agricultural sector.

4.1.1.22 The Committee also feels it would be appropriate to revise the fiscal regime for the inshore fishing fleet, authorising exemption from corporation tax on the proceeds of the first sale of fish products by wholesale franchise operators and a reduction in value-added tax on intermediary operations carried out by such wholesalers.

4.1.2 Longer-term measures and initiatives

4.1.2.1 In the long term the fishing sector's prospects will only be good if fish populations recover and sustainable fishing is practised. In this context, the communication proposes the following measures: a) improving fisheries management b) better compliance with fisheries management rules c) organisation and operation of fish markets d) promoting research on fuel-efficient and more environmentally friendly fishing methods.

4.1.2.2 The Committee believes that all these long-term measures are already envisaged in the new CFP. However, it would ask the Commission to note that in order to achieve a system of fisheries management that provides the maximum sustainable yield, new practical ideas are called for once the plans for re-establishing and managing the most threatened populations have been realised.

4.1.2.3 The EESC fully supports the Commission's efforts to ensure that the rules of the Common Fisheries Policy are correctly applied across the Union. It reiterates that the Commission must cooperate fully with the European Fisheries Control Agency, in accordance with its intention stated in the communication, and that it must give the agency sufficient staff and funding to carry out the vital task that has been entrusted to it.

4.1.2.4 The EESC urges the Commission to step up its fight against illegal, undeclared and unregulated fishing; one decisive countermeasure is to close the Community market to such catches, since this is the principal destination of illegal fishing. The Committee considers banning transhipments on the high seas to be another effective measure against this type of fishing.

4.1.2.5 The Committee believes it is necessary to evaluate the organisation of the fish market, as proposed by the Commission, with a view to improving financial returns, using new tools, enhancing the marketing of fish and fishery products, and enabling producers to improve added value on those products at first sale and become involved in the marketing process. The Committee thinks that producer organisations have an important role to play here and that they should therefore be supported. To achieve this, the EESC believes that the Commission and the Member States should concentrate their efforts on changing the mindset of fishermen with respect to these issues.

4.1.2.6 The EESC supports the Commission's idea of drawing up a code of conduct on fish trade in the European Union and its promotion of eco-labelling, once the debate on this issue — on which the Committee recently issued an opinion — has been concluded.

4.1.2.7 The Committee believes the final long-term measure proposed in the communication (promoting research on fuel-efficient and more environment-friendly fishing methods) to be crucial. It hopes here that the financing commitments set out by the Commission will be met and that maximum support will be provided for projects presented by organisations representing the fishing sector, as well as for the development of Fishing Technology Platforms.

4.1.2.8 The EESC considers that in view of the current fuel price situation, which seems irreversible, it is crucially important to conduct research in all of the areas proposed in the communication. In particular the Committee believes it is necessary to investigate renewable energy production, especially the development and practical application of new types of biofuels and improvement of energy efficiency. It calls for financial support from the European Commission and the Member States for projects presented by organisations in the fishing sector.

Brussels, 14 September 2006. The President of the European Economic and Social Committee Anne-Marie SIGMUND

(1) Gross Domestic Product.

(2) COM(2006) 103 final, 09.03.2006.

(3) Financial Instrument for Fisheries Guidance/European Fisheries Fund.

(4) Research, technology, development and innovation.

(5) Facts and figures on the CFP — basic data on the Common Fisheries Policy. 2006 edition, European Commission.

(6) OJ C 244 of 01.10.2004.

(7) OJ C 229 of 14.09.2004.

(8) Council Regulation (EC) No. 1263/1999 of 12.06.1999.

(9) Council Regulation (EC) No. 2792/1999 of 17.12.1999.

(10) OJ C 65, 17.3.2006.