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
Date: 2006-09-14
Institutions: European Economic and Social Committee
Subjects: common fisheries policy, economic and social cohesion, economic development, fishery management, fishing industry

23.12.2006

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 imple-

mented 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) Gross Domestic Product.
(2) COM(2006) 103 final, 09.03.2006.
(3) Financial Instrument for Fisheries Guidance/European Fisheries Fund.

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 ‘unfore-
seeable 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 accep-
table way;

e) provision of maximum support by both national and Com-
through RTDI
munity authorities,
for projects
presented by the fishing sector aimed at
improving the
energy efficiency of fishing, finding alternative or comple-
mentary energy sources to oil and developing Fishing Tech-
nology Platforms;

aid (4),

f) efforts to change the mindset of fishermen with the aim of
persuading them to become involved in selling fishery
products,
those
products;

to increase the added value of

so as

(4) Research, technology, development and innovation.

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g) revising the fiscal provisions governing the inshore fishing
fleet, in particular by introducing exemption from corpora-
tion 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 Com-
munity 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 popula-
its fishing grounds, and by unfavourable
tions in most of
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.

Although the reform of the CFP in 2002 launched a
2.3
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,
identifies two obvious factors:

the Commission communication

— 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

Solutions proposed by the Commission to ease the

4.1
current economic difficulties of the fishing industry include:

— in the short term, measures to rescue and restructure fishing
enterprises capable of regaining profitability through struc-
tural 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 Com-
munity guidelines governing state aid for rescuing and restruc-
turing firms in difficulty (6) and the guidelines for the examina-
tion of state aid to fisheries and aquaculture (7). Furthermore, it
provides for some exceptions, which extend beyond these Direc-
tives (see points 4.1.1.5 and 4.1.1.6).

(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.

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Such rescue aid may take the form of a reimbursable
4.1.1.2
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 reimbur-
sable loan. This would give added value to rescue aid, making it
potentially more attractive to businesses. Otherwise, a straight-
forward repayable loan could be obtained from any credit insti-
tution, without the need for authorisation from the European
Commission.

Aid for further restructuring of fishing enterprises to
4.1.1.4
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
for Fisheries Guidance (FIFG) (8). The
Financial
conditions for granting national aid for these purposes are
therefore the same as those applicable to Community aid under
the FIFG Regulation (9).

Instrument

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,

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.

Any other public aid,

including Community aid,
4.1.1.10
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.

The Member States have two years from the date of
4.1.1.11
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
its
approval, the Member States have two years within which to
issue the administrative decisions on the restructuring plans.

the Commission gives

soon as

b) purchase of equipment to improve fuel efficiency (e.g. econo-

meters),

(8) Council Regulation (EC) No. 1263/1999 of 12.06.1999.
(9) Council Regulation (EC) No. 2792/1999 of 17.12.1999.

Given that

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

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

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).

4.1.1.14
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.

Another measure that could be very helpful

4.1.1.18
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.

4.1.1.15 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.

Nevertheless,

for those enterprises that are large
4.1.1.16
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 imple-

mented 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.

4.1.1.19 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 oper-
ating outside Community waters, as happened in the 1990s
with the merchant fleet.

As

for

regards

scheme

the guarantee

4.1.1.21
sudden
increases in fuel prices, the Committee considers this to be
another type of aid that could help keep fishing vessels in opera-
tion 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
the Commission
should allow the Member States to partly or totally cover the
cost of premiums for any futures contracts concluded by busi-
nesses in the sector to guarantee a maximum fuel price over a
fixed period of time, by analogy with the agricultural sector.

that

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
increasing the aid
rules governing de minimis aid for fishing,

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.

(10) OJ C 65, 17.3.2006.

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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 environmen-

tally friendly fishing methods.

The Committee believes that all

these long-term
4.1.2.2
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
ideas are called for once the
sustainable yield, new practical
plans for re-establishing and managing the most
threatened
populations have been realised.

The EESC fully supports the Commission's efforts to
4.1.2.3
the Common Fisheries Policy are
ensure that
the rules of
correctly applied across
the
the Union.
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.

reiterates

that

It

The EESC urges the Commission to step up its fight
4.1.2.4
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.

Brussels, 14 September 2006.

The Committee believes it is necessary to evaluate the
4.1.2.5
organisation of the fish market, as proposed by the Commis-
sion, 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 impor-
tant
they should therefore be
supported. To achieve this, the EESC believes that the Commis-
sion and the Member States should concentrate their efforts on
changing the mindset of fishermen with respect to these issues.

role to play here and that

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 commu-
nication. In particular the Committee believes it is necessary to
investigate renewable energy production, especially the develop-
ment 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.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND