Opinion of the  European Economic and Social Committee on Joint enterprises in the fisheries sector: current state of play and future prospects
Date: 2005-12-14
Institutions: European Economic and Social Committee
Subjects: ESC opinion, common fisheries policy, fishing industry, mixed-ownership company

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Official Journal of the European Union

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Opinion of the ‘European Economic and Social Committee on Joint enterprises in the fisheries
sector: current state of play and future prospects’

(2006/C 65/09)

On 14 July 2005, the European Economic and Social Committee decided to draw up an opinion, under
Rule 29(2) of its Rules of Procedure, on Joint enterprises in the fisheries sector: current state of play and future
prospects.

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 9 November 2005. The rapporteur was
Mr Sarró Iparraguirre.

At its 422nd plenary session, held on 14 and 15 December 2005 (meeting of 14 December), the European
Economic and Social Committee adopted the following opinion nem. con. with 122 votes in favour and
ten abstentions.

1. Introduction

1.4
Clearly, with the reform of the CFP, the idea of joint
enterprises as a structural policy instrument has become a
thing of the past. However, it is also clear that, currently, this
reform has resulted in the quasi-total absence of legislation
specific to joint enterprises within the context of the EU's own,
political powers.

1.1
The Common Fisheries Policy (CFP) first envisaged using
joint enterprises as a structural policy instrument in Regulation
3944/90, defining them as ‘a company incorporated under private
law comprising one or more Community shipowners and one or more
partners from a third country with which the Community maintains
relations, associated under a joint enterprise agreement set up for the
purpose of exploiting and, where appropriate, using the fishery
resources of waters falling within the sovereignty and/or jurisdiction of
such third country, primary consideration being given to the supply of
the Community market’ (1). During the 1990s, the CFP evolved
significantly, and the term ‘Blue Europe’ became widely used.
This has become topical once again, in a context of broader
debate on the establishment of a Common Maritime Policy.

1.2
As the CFP evolved, the abovementioned concept of
joint enterprises was not reviewed: they were defined exclu-
sively as an alternative fisheries structural policy instrument to
the scrapping or final export of vessels, as illustrated by the
relevant articles in the Regulations mentioned in point 2.1.2. of
this opinion. Therefore, the applicable legislation focused only
on financial control.

However,

1.3
joint enterprises are more than just a struc-
tural policy instrument: they are a means to achieve a series of
objectives that are clearly set out in the various EU texts and
rules, from market supply to cooperation policy, employment
and regional development policies, promotion of responsible
fishing, EU intervention in the various regional fishery organi-
sations (RFOs) and, more generally, the presence of capital and
skilled workers from Member States in sustainable investment
projects in various countries and markets.

(1) Article 21(a) of Regulation 3944/90.

requested of

in the opinions

it by the
1.5 Moreover,
Commission, the Committee has always stressed the need to
bring joint enterprises in the fisheries sector into line with the
new Common Fisheries Policy: this was emphasised in the
EESC's opinion on the proposal for a Council Regulation on
the implementation of the CFP reform (2), and reiterated in its
opinion on the European Fisheries Fund (3) with regard to the
for a Council Regulation on the Fund (4). The
proposal
Commissioner for Fisheries was publicly informed of this need
during his visit to the EESC's NAT Section on 16 June 2005,
and he agreed to take the issue into consideration.

1.6
This opinion aims to further develop the position of the
European Economic and Social Committee, putting forward
arguments in favour of a new approach to the role of joint
enterprises and, therefore, the rules governing them, based on
official documents and the facts contained in them.

if

It

is likely that,

the proposed new approach is
1.7
adopted, efforts will need to be made to ensure that these
enterprises are fully accepted, as they constitute a unique
feature of international trade and provide the EU with a specific
line of action in international relations.

(2) OJ C 85 of 8.4.2003.
(3) OJ C 267 of 27.10.2005 (points 3.5.1.1.2.1. and 5.5(2)).
(4) COM(2004) 497 final -2004/0169 (CNS).

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2. General comments

2.1 Establishment of joint enterprises in EU law

the Green Paper, should have led to a specific discussion on the
importance of joint enterprises in the fisheries sector, with a
broader scope than that reflected in the official documents (13)
at the time.

2.1.1
Joint enterprises were incorporated into Community
Law under Council Regulation (EEC) No 3944/90 of 20
December 1990 amending Regulation (EEC) No 4028/86, as a
means to reduce the fishing capacity of the Community fleet
and supply the Community market, taking account of the scar-
city of resources in Community waters and the ban preventing
access to the exclusive economic zones of third countries. The
approach was fourfold, aiming to eliminate over-capacity, guar-
antee supply, partially maintain employment and realise poli-
tical and trade agreements with third countries (5). In order to
implement
these measures, Commission Regulation No
1956/1991 was adopted (6).

Instrument

2.1.2 With the adoption of Council Regulations
(EEC)
2080/93 (7) and 3699/93 (8), the financing of joint enterprises
was integrated into the Financial
for Fisheries
Guidance (FIFG). In accordance with the subsidiarity principle,
Member States were responsible for selecting, managing and
monitoring projects, as well as paying subsidies. These were
initially equal to those payable for scrapping or export, and
eventually came to represent 80 % of the premium available for
scrapping the vessel. A Community shipowner could therefore
legitimately consider that the difference in subsidy between the
scrapping premium and the premium for export to joint enter-
prises is due to the maintenance of a favourable relationship
between the EU and the new joint enterprise receiving the
vessel(s) from the shipowner. These principles were maintained
by Council Regulation 2468/98 of 3 November 1998 (9)
repealing Regulation 3699/93,
and Council Regulation
2792/1999 of 17 December 1999 (10), although it is worth
noting that the latter simplified the concept of the joint enter-
prise, defining it as ‘a commercial enterprise with one or more part-
ners who are nationals of the third country in which the vessel
is
registered’ (11).

2.2 Background

2.2.1
The Green Paper on the future of the Common Fish-
eries Policy (12) acknowledged the excess capacity of the Com-
munity fleet, along with the globalisation of the fisheries sector
and the legitimate aspiration of many developing countries to
expand their own fishing industries. These three points, paired
with the high capital injection that fisheries investments require
(fleets, ports, refrigeration, plants, etc.), also acknowledged by

(5) Study on joint enterprises in the context of structural aids in the
sector, COFREPECHE 16.6.2000 (http://europa.eu.int/

fisheries
comm/fisheries/doc_et_publ/liste_publi/bilansm.pdf).

(6) Commission Regulation (EEC) No 1956/91 of 21 June 1991 laying
down detailed rules for the application of Council Regulation (EEC)
No 4028/86 as regards measures to encourage the creation of joint
enterprises – Official Journal L 181 of 8.7.1991, pp 1- 28.

(7) OJ L 193, 31.07.93, p. 1.
(8) OJ L 346, 31.12.93, p. 1.
(9) OJ L 312, 20.11.98, p. 19.
(10) OJ L 337, 30.12.99, p. 10.
(11) Council Regulation

Article.8.1(2).

2792/1999

(12) COM(2001) 135 final of 20.03.2001.

2.2.1.1
Joint enterprises are a means for the EU to partici-
pate and invest in the development of the fishing sector in
developing countries, leading to the formation or growth of a
fully-fledged economic sector. Supplying these enterprises with
fishing vessels is not only beneficial to fishing activity per se,
but also boosts other sectors such as ports, services (repairs,
engineering, provisioning, consignment, transhipment, loading
and unloading, crew services, travel, etc.), effective maintaining
of the refrigeration chain (required by EU food safety rules,
through investment in costly refrigeration equipment), compli-
ance with health regulations in the food sector and, lastly, the
establishment of processing industries.

2.2.1.1.1
As well as maintaining high-quality European jobs
among the senior and middle-ranking crew of many vessels,
joint enterprises make it possible to create many jobs on the
vessels and in the service companies that grow up around
them. Such employment could provide local fishermen with
decent (as regards working conditions and income) job oppor-
tunities, their only other option being a traditional
job in a
small-scale and often inefficient fishing sector, which can be
damaging for local resources due to the scarcity or lack of
systems for monitoring, conservation, marketing, etc.

The creation of

local wealth and the export of
2.2.1.2
catches (whether locally processed or not) make it possible, in
turn, to create international value chains in which the benefits
are more fairly distributed; the gross domestic product and per
capita income generated by the sector
in the beneficiary
country can be increased exponentially, gradually creating an
industrialised fishing sector where there used only to be a
coastal fishing sector with inadequate health standards and an
unsound commercial base.

Joint enterprises have been required to prioritise the
2.2.1.3
supply of European markets: this guarantees the existence and
maintenance of investments in the fishing sector made by ship-
owners and industrial partners, Member States and the EU itself
(through subsidies), and makes it possible to supply a Com-
is in deficit, as fish consumption is
munity market
increasing as a result of recommendations by scientific and
public bodies encouraging Europeans to eat a healthy and
varied diet. Furthermore, this supply must strictly obey EU
food laws.

that

of

17 December

1999,

(13) See Communication from the Commission on an integrated frame-
work for fisheries partnership agreements with third countries,
COM(2002) 637 final, 23.12.2002, page 7 and footnote no 15.

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2.2.1.4
The activity of joint enterprises in fishing-dependent
areas of the EU enables employment levels to be maintained in
the sector, by keeping companies' central,
technical and
the supporting
commercial offices operational
industry also generates jobs, both directly, when large vessels
return to their home port
in Europe for their four-yearly
repairs, and indirectly, as chains of know-how are created with
the local service industries mentioned above.

in Europe;

2.2.1.5
Joint enterprises enable the EU to obtain effective
data for monitoring and tracking catches in third-country and
international waters, by maintaining legal
ties with fishing
enterprises in their areas of origin. This enables the EU to exer-
cise effective leadership within the competent Regional Fish-
eries Organisations created or governed under the auspices of
the Food and Agriculture Organisation (FAO), the competent
UN body in the field (14). This is because, for the purpose of
financial control by the Commission, the Member States and
the Court of Auditors, joint enterprises must submit half-yearly
data on their catches to the Member States.

2.2.1.6
Joint enterprises also allow EU fishing interests to be
maintained in international waters and fishing grounds, with
standards guaranteed by EU regulatory requirements
for
responsible fishing, conservation and management of resources,
safety on board vessels, monitoring, food chain safety, etc. This
would prevent or minimise the harmful effects of
foreign
fishing fleets which do not promote the development of the
third country's fisheries or industry, do not guarantee the stan-
dards governing fishing catches for the EU market, and do not
enable resources to be monitored responsibly.

Lastly, joint enterprises enable the EU to make an
2.2.1.7
effective,
local
lasting contribution to the development of
fishing industries in countries with which fisheries agreements
have been reached and where there are joint enterprises or
national companies controlled by European shipowners. The
fishing industry has generated profits both in third countries
and in the EU overall, by enabling the continuous supply of
marine products.

2.2.2
None of the above points was mentioned — not even
indirectly — in point 3.9 of the abovementioned Green Paper
on the International dimension of the CFP (15) or in point 5.8
on External relations (16). Joint enterprises in the fisheries sector
are not mentioned at all as a valid means of implementing the
principles of the fisheries policy proposed by the Green Paper,
despite having been endorsed until 2002 by the extensive Com-
munity rules in the field, as amply illustrated in this opinion.

(14) http://www.fao.org/fi/default.asp
(15) p. 19.
(16) pp. 38-42.

2.2.3
The quasi-total disappearance of joint enterprises from
the new CFP is illustrated by the fact that the last report
requested by the Commission and containing exhaustive data
on the issue dates back to 2001 and does not specify vessels
assigned to joint enterprises (17). Prior to this, there had been
another specific report,
the Study on joint enterprises in the
context of structural aids in the fisheries sector, dated 16 June 2000.
These studies indicate that there are currently 300 joint enter-
prises accounting for over 600 vessels in all. These enterprises
have remained outside the framework of Community fisheries
rules, in a legal vacuum. They simply become foreign compa-
nies in which EU partners are involved, with a commitment to
information regularly;
prioritise EU supply and to transmit
their only protection is that provided by bilateral treaties for
the mutual protection of
investments between the source
Member State and the beneficiary third country.

2.3 Current state of play

abovementioned Green Paper,

During the work which led to the definitive draft of
2.3.1
the
two regulations were
approved: Council Regulation (EC) No 1263/1999 of 21 June
1999 on the Financial Instrument for Fisheries Guidance (18)
and Council Regulation (EC) No 2792/1999 of 17 December
1999 laying down the detailed rules and arrangements
regarding Community structural assistance in the fisheries
sector (19). These Regulations maintained the validity, within the
FIFG, of joint enterprises in the fisheries sector until the end of
their term, i.e. 31 December 2006.

2.3.2
However, since 31 December 2004, joint enterprises
have been practically eliminated from the EU's fisheries struc-
tural policy, by dint of Council Regulation (EC) No 2369/2002
of 20 December 2002 amending Regulation (EC) No
2792/1999 laying down the detailed rules and arrangements
regarding Community structural assistance in the fisheries
sector (20). Joint enterprises continue to fall under EU law inas-
much as they must fulfil the rules that are applicable when
they are established, but they lack a specific medium- and long-
term regulatory framework.

2.3.3
The justification for removing aid to joint enterprises
in the fisheries sector and doing away with almost all legislative
references to them is found in recital 5 of the abovementioned
regulation, whereby the FIFG is required to concentrate on
reducing capacity by scrapping vessels. The reduction of fishing
capacity is only one of the many Community policy objectives
for which joint enterprises have proved useful and could
continue to be so, as explained below.

(17) ‘European Distant Water Fishing Fleet’ some principles and some
data, April 2001, available in French and English on the website of
the Commission's Directorate-General for Fisheries.

(18) OJ L 161 of 26.06.99, p. 1.
(19) OJ L 337 of 30.12.99, p. 10.
(20) OJ L 258, 31.12.02, p. 49.

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3. Specific comments

Need to maintain a specific policy for joint enterprises

3.1
in the fisheries sector in the context of the CFP

3.1.1
Although they have been removed from current legis-
lation, joint enterprises in the fisheries sector play an economic
role that is particularly appropriate in a globalised economy,
allowing for savings to be made on costs (which are usually
lower in the destination country than the Member State), and
promoting technology transfer, the creation and distribution of
added value, access to resources and market supply.

Furthermore,

3.1.2
joint enterprises make it possible to
partially maintain sea- and land-based employment in fishing-
dependent areas of the EU; they also help generate new, more
skilled jobs in the third countries in which they operate,
including the training and up-skilling of workers in the destina-
tion country.

this period. The unnecessary removal of

Joint enterprises were incorporated into Community
3.1.3
law within the fisheries structural policy in 1990 (i.e. fifteen
instrument
years ago), and have proven to be a useful
throughout
these
enterprises from the new CFP sponsored by the Commission
and from the legislation in force since 1 January 2005, will
lead to the loss of Community support for a valid instrument
of economic cooperation between the EU and third — often
developing — countries, and could constitute a breach of the
principle of trust that should govern relations between Euro-
pean operators and the EU institutions.

3.1.4
Joint enterprises could and should be considered as a
specific aspect of multilateral or bilateral cooperation treaties
with third countries; concrete rules should be laid down that
take their particular features into consideration, from the point
of view of both fishing per se and the promotion and protec-
tion of European external
labour, tax,
etc.

investments, customs,

Brussels, 14 December 2005.

3.1.5
Although joint enterprises could, under the current
legislation, fall within the scope of ‘partnership agreements’, no
significant practical results have hitherto been observed. There
is therefore a need for a regulation that coordinates the dispa-
rate responsibilities within the Commission (Directorates-
General for Development, Cooperation and Fisheries), and clari-
fies how employers and other stakeholders should act within
the framework of such agreements or other instruments, so
that these practical results can be achieved.

4. Conclusion

The Committee recommends that, as part of the work
4.1
underway to revise the Common Fisheries Policy and in line
with the Council's conclusions of 19 July 2004 (21), joint enter-
prises, which are no longer a tool for the structural regulation
of
fleet capacities and an alternative to scrapping vessels,
should be defined as a means to supply markets and take inte-
grated sectoral action, which is available to the EU in the
framework of its own powers and under its global and regional
agreements and bilateral treaties, so as to implement EU fish-
eries policies properly, in line with the principles of the FAO
and the WTO, taking due care to ensure that there is no
increase in fishing capacity that could lead to overfishing.

4.2

The Committee believes that:

The Commission should carry out a detailed, up-to-
4.2.1
date assessment of the current situation and potential of joint
enterprises in the fisheries sector, and should disclose its
conclusions to the other EU institutions and the sectors
concerned.

Current Community law should include rules and
4.2.2
mechanisms that will give legal security to joint enterprises
within a specific stable, long-term framework for action, in the
context of bilateral or multilateral agreements with non-EU
the
countries,
activity and its benefits in terms of management of fisheries
resources, market supply,
job creation in fishing-dependent
areas, creation of added value, cooperation and international
trade.

the particular nature of

taking into account

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(21) See document 11234/2/04 Rev 2 (Presse 221) available at http://

www.consilium.eu.int./