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REVENUES AND OTHER ECONOMIC BENEFITS


Background
Levels of benefits and methods of deriving them

Background

34. The paper considered under this Agenda Item was:

AC/13: Coastal State Requirements for Foreign Fishing, by Gerald Moore (Legal Office, FAO) (in draft form, to be published as FAO Legislative Study No. 21 - Rev. 1)

35. In introducing the paper Mr. Moore indicated that it was a revision of an earlier survey of coastal State conditions for access by foreign fishing States and that future up-dating is intended. He also described the series of regional fisheries legislation compendia being published by FAO. The paper and the compendium are not attached to this report but are available from FAO.

Discussion

36. The Consultation considered that the survey of coastal State requirements for foreign fishing is very useful both to coastal States and to foreign fishing States and should, if possible, be kept up-to-date and republished on a periodic, perhaps annual, basis. A number of suggestions were made for improving the survey, including the arrangement of entries on a regional basis and an indication of the date on which the entry for each State had been made or verified.

37. In introducing the pattern of the fees being charged throughout the world, Mr. Moore noted the wide variation in the level of fees and the way in which they were expressed. In general he noted that for the South Pacific, lump sum payments were popular although there was recently a move towards the setting of fees on a per-vessel trip basis. Fees in the Latin American region tended to be based on a per-vessel trip basis, using net vessel tonnage as a measure of fishing effort, while in West Africa most fees tended to be based on fishing effort measured in gross vessel tonnage or horse power. This difference reflects the different natures of the dominant fisheries concerned, tuna fisheries on the one hand and trawl fisheries on the other. For tuna fisheries in West Africa there was a new tendency for fees to be based on the amount or value of fish caught.

Levels of benefits and methods of deriving them

38. The papers considered under these items were:

AC/15: Foreign Access to EEZs and the Derivation of Coastal State Benefits: Methods and Techniques, by Prof. Gordon R. Munro

AC/19: Foreign Access Benefits in Fisheries, by Prof. John Gates

AC/7: A Study on Fees and Other Economic Benefits: Foreign Fishing Access to the Fisheries of Exclusive Economic Zones of the States Participating in the South Pacific Forum Fisheries Agency, by L.G. Clark

AC/3: Some Thoughts on the Effect of Trading Barriers on the Development of Fisheries in Some Coastal States, by J.S. Campbell

AC/6: Implementation of Agreements with Foreigners, by H. Djalal

39. Professor Munro introduced his paper on assessing techniques available to coastal States for the purpose of extracting direct benefits from distant-water fishing States (DWFS). The major points arising from the paper are as follows.

40. If one views DWFS participation in EEZ fisheries as a form of international trade, in which coastal States can be seen as importing harvesting/processing services of DWFS, then it is easy to make the case that in many instances it will be in the economic self interest of the coastal States to have DWFS fishing in their EEZs on a long-term basis. Hence it is essential that techniques be assessed in terms of their long run, as well as their short run impacts. One must be particularly concerned about the impact of the techniques upon the willingness of DWFS to re-invest in fleet capacity. In assessing the techniques there was found to be a clear trade-off between cost and difficulty of implementation, and the degree of risk imposed upon the DWFS. Difficulties of implementation have implications for the long-term viability of the regime; imposition of risk upon DWFS has implications for DWFS willingness to pay.

41. Professor Munro then introduced the paper of Professor John Gates on methods of extracting direct benefits from distant-water States. This paper was concerned primarily with the problem of measuring the possible benefits the coastal State can obtain.

42. He essentially suggested two methods: The first and simplest method is to make use of the market by putting out access rights to auction. This approach will not be successful, however, if the interested DWFS are few. One must then apply various statistical techniques to the available data to estimate the ability to pay of individual DWFS.

43. Mr. Clark introduced his paper which drew largely on the access administration experience of the 16 States participating in the South Pacific Forum Fisheries Agency. The mix of benefits sought by those States largely reflected the sort of pattern which was developing in other regions. States with greater opportunities to mobilize resources for the development of their domestic industry had sought to direct gains from access to that end, while States for whom the constraints of capital and skills were more severe had generally sought to maximize direct financial benefits.

44. Various fee structures applied in the region covered by the South Pacific Forum Fisheries Agency. Most access agreements still involved lump sum fees which appeared to minimize implementation costs. Other agreements involved per vessel or per trip fees which were more attractive to foreign fishermen because of the greater flexibility they allowed, and appeared to provide for potentially greater fee receipts. The States in the South West Pacific had made a substantial effort to align or harmonize their national access arrangements, and recognized the possibility of joint fee systems as an attractive long-term option, although acknowledging the difficulties of reaching agreements.

45. In introducing paper AC/3, J.S. Campbell stressed the importance of access to markets for coastal States wishing to develop their own fisheries. In many cases access was impeded by a number of restrictions imposed by DWFS on the same fish to which those nations had or were seeking access. Such constraints on access to markets, examples of which were given in the paper, could be barriers to fisheries development. This could seriously affect the ability of coastal States to achieve optimum utilization and to extract maximum economic benefits from their fish resources.

46. The paper by Hasjin Djalal (AC/6) was not directly included. It provides a detail description of an arrangement between Indonesia and a DWFS based on the sharing of profits.

Discussion

47. During the discussion, there emerged several general points relating to all of the topics. There was general recognition that global fisheries are in a stage of transition resulting from the changed regime and other factors and that it is difficult, at this time, to sort out policies and actions based on immediate needs from those that might be based on longer-term needs.

48. Another general point that was made was that there are vastly different situations throughout the world and that this made it difficult to reach general conclusions. In this regard it was suggested that it would be useful to have a typology of the different kinds of fisheries, and different situations among the coastal States. Some of the differences included those between State-owned and privately-owned fleets; status of coastal State as a developed or developing economy; degree of under- or over- utilization of the stocks; differences in value of the species; etc. It was also noted that many States have far distant-water fisheries, middle-water fisheries and coastal fisheries. Such differences need to be kept in mind in the examination of access conditions.

49. There was general agreement that considerations of access arrangements should be guided by principles of optimum utilization of the resources and of reasonableness. In this regard it was recognized that coastal States, in exercising their jurisdiction over the resources in their EEZs, should not expect foreign fishermen to accept conditions and terms that did not allow the foreign fishermen to receive a satisfactory return on their operations.

50. The discussion also covered several specific topics which can be classified as follows, although it must be recognized that there is a high degree of inter-relationship among them: (1) concepts about the benefits that can be derived by coastal States; (2) techniques for deriving the benefits, (3) the outlook for future demand for access to EEZs, (4) identification of the bone fide interests of the distant-water and coastal States, and (5) the role for FAO.

Concepts about benefits

51. The participants expressed several different and, sometimes, contrasting concepts about the benefits that should accrue to coastal States. Some of the participants characterized the benefits in terms of "rents", that is, revenues reflecting the value of the resource rather than the average earnings of individual vessels. A suggestion was made that fees might vary with the degree to which the stock was over- or under-utilized.

52. It was noted that, in some cases where stocks are over-utilized, decreases in the amount of fishing effort would reduce total costs without any reduction (and after allowing for stock recovery, with possible increases) in total catch and total revenues. In these cases, fairly high fees could be charged. Reference was also made to an auction mechanism, which is being used in at least one country, as a means for extracting the rents.

53. Another view expressed was that coastal States might receive a fair return for access to their resources which should be based on the economic returns of the individual vessels. It was noted that many distant-water fishermen are operating at the margin and are incurring increasing costs in labour and fuel at such levels that they cannot afford to pay high fees for access.

54. As another concept, it was noted that some States base their fees on the costs incurred in administering the arrangements with foreign fishermen.

55. Several coastal States conceive benefits in terms of the transfer of technology that would facilitate the development of their domestic fishing capacity. There was some discussion, in this regard, of joint ventures, but several participants commented that these were not always successful.

56. In some cases, information on fishery resources and on fishery opportunities was considered as a benefit to be obtained from foreign fishing. One participant cited the beneficial experience in his country of allowing foreign fishing on an exploratory basis as a prelude to a commercial arrangement. Other participants, however, found that the information provided by foreign fishermen was not always reliable.

57. The concept of reciprocity was also mentioned. Under this concept, States grant access to each other's zones. In one case, it was noted that two neighbouring States had created a common zone in which both could fish freely, though subject to certain quotas.

58. Providing access to foreign fishing vessels in exchange for access to the foreign countries' fish markets was also discussed.

59. Finally, several participants pointed out that access privileges were frequently governed by political rather than (or in addition to) economic considerations, and that these could lead to protectionist approaches severely constraining foreign access.

Techniques for deriving revenues

60. The various techniques for collecting revenues from foreign fishing operations (lump sum payments, fees per vessel or per vessel-trip, taxes on catch, etc.) were discussed. Different techniques are being used in different areas and for different kinds of fisheries. Several considerations were mentioned in the choice of technique to use.

61. One of these is the way in which the risks are shared. For example, if the risks are borne entirely or largely by the fishermen they will be willing to pay less than if the risks are shared with the coastal State.

62. Simplicity in administering the technique was also mentioned as important. In the case of the foreign State, one participant noted that lump sum payments, when the fee level is raised, were difficult for the distant-water State because of the difficulties of collecting fees from the fishermen. This participant expressed strong preference for a fee charged per vessel or, even more, for a fee per vessel-trip.

65. A contrary view was expressed by another participant from a coastal State who preferred the simplicity of a lump sum payment and who noted that this greatly reduced the costs of monitoring the operations.

64. Some participants expressed a preference for fees based on quantity of catch, with regard to highly migratory species, while others preferred fees based on effort.

65. Other participants also expressed the importance of simplicity and the necessity for adopting techniques that minimize the costs of compliance.

66. In connection with costs of implementation, although fees based on value of catch may be the most appropriate in certain conditions, it was noted that they tended to present problems of administration, particularly for developing coastal States, because of the difficulties of monitoring catch reports.

67. Different techniques may be desirable for different kinds of fisheries. For example, for fees based on effort, net register tonnage might be preferable for purse seiners since it is a fair indicator of carrying capacity, while gross tonnage or horse power might be better for trawlers.

Outlook for the future

68. There was a general feeling that most distant-water fleets would decline in the future and that the structure of foreign fishing in general would change. Several participants reported on measures being taken in their countries to limit or reduce the number of their vessels engaged in distant-water operations. These measures included reduction and withdrawal of subsidies, requirements that new vessels could only be licensed by retiring a much larger tonnage of old vessels, and by limiting construction of new vessels.

69. It was noted that there were factors other than the extension of jurisdiction leading to this decline, such as the rising costs of fuel and labour.

70. Mention was made that the increased difficulties encountered by distant-water fleets in certain States were leading to increases in imports and to increased development in aquaculture in order to maintain supplies of fish. However, one participant noted that in his country the change in conditions of supply was leading to a change in food habits.

71. It was anticipated by some participants that distant-water fishing would continue to shift away from some of the highly developed countries to mid-developed countries. In some situations this would occur through the use of capital investment from the highly developed countries. One participant noted that the shift to mid-developed countries might create some difficulties for coastal States because the new distant-water fishing countries tended to lack experience and extensive relationships with the coastal States. This could lead to difficulties in achieving harmonious relations.

72. For certain kinds of fisheries and situations, it was thought that developing coastal States would find it difficult to develop their own fish catching capabilities and that additional development opportunities could be found in new arrangements, for example, in processing of fish rather than in fish catching. However, it was also pointed out that for certain products, distant-water vessels from highly-experienced countries would still be necessary because of the necessity for processing on board and because of the high skills and high technology required to obtain a satisfactory product.

73. Although it was anticipated that there would be a decline in the distant-water fishing operations of several of the countries, it was noted that some countries would find considerable difficulties in the process of the decline. These occur, in part, because of the problems of changing institutions associated with distant-water fishing that have been built up over many years and, in part, because of social and economic dislocation occurring from the decline. A suggestion was made that the adjustment process could be ameliorated by allowing for a phasing-out period.

74. The question was raised as to whether the present distant-water States would re-invest in large distant-water vessels as natural attrition takes place. The possibility was mentioned that a large disinvestment in distant-water fleets could, in some circumstances, lead to a reduced demand for access to some zones and, thereby, reduce the options available to the coastal States for deriving benefits. This could lead to under-utilization of resources where the coastal States do not have sufficient capacity to harvest the stocks.

Interests of Coastal States and Distant Water Fishing States

75. No attempt was made to reach agreement among the participants on the relative importance or value of the different interests or the different parties. However, it was thought useful to identify some of the important interests of each of the parties that could be recognized as genuine, bone fide interests.

76. For distant-water States, the following interests, not necessarily in order of importance, were identified:

(a) Access to resources to ensure optimum utilization.

(b) Stability in arrangements with coastal States.

(c) Sufficient time to phase-out operations, where necessary, in a manner that reduces social and economic dislocation.

(d) Regulations by coastal States that permit efficient deployment of effort in space and time and that allow efficient harvesting operations.

(e) Reasonable levels of fees.

(f) Timeliness in setting and communicating allocations in order to permit effective mobilization of fishing effort.

(g) Fees based on actual catches and value of species.

(h) Sufficient uniformity in conditions set by coastal States which share stocks to permit effective deployment of fishing effort throughout zones.

(i) Simplicity in conditions and regulations.

77. For coastal States, the following interests, not necessarily in order of importance, were identified:

(a) Fees based on value of the resources within their zones.

(b) Assistance in the development of domestic capacity.

(c) Information on catches, markets, etc., that is reliable and in a form usable by coastal States for decision-making.

(d) Access to markets in the distant-water States.

(e) Protection of coastal State environment and ensurance of safety controls.

(f) Responsibility of flag States for ensuring compliance.

(g) Sharing in the costs of management by distant-water States.

(h) Fees in an easily collectable form

(i) Assistance in general economic and social development.

Role for FAO

78. Several suggestions were made for activities by FAO that would facilitate improvements in the relations between distant-water and coastal States. The following suggestions, not necessarily in order of importance, were made, in addition to those made under other agenda items:

(a) Assistance to developing coastal States in developing their capabilities to acquire information (both basic data and analysis of the data).

(b) Assistance to developing coastal States in improving the usefulness of the information to decision-makers. This should include careful identification of the kinds of information necessary for decision-making and ways for presenting the information in the most useful forms.

(c) Assistance to developing coastal States in improving their capability to formulate management regulations and in improving their capability to negotiate on access conditions.

(d) The provision of more information on the status of fishery stocks and of ways for achieving optimum utilization. The provision of advice, in response to requests on the assessment of stocks, in EEZs.

(e) The provision of information on markets for fishery products.

(f) Facilitating cooperation among States with common interests in particular fisheries. In some cases this refers to cooperation among neighbouring States sharing common stocks. But it was also suggested that FAO might facilitate cooperation, upon request, between coastal States and distant-water fishing States in certain situations.

(g) More active involvement by FAO in the work of non-FAO regional bodies, especially in the scientific and technical committees.

79. The Secretariat noted that FAO was already involved in several of the kinds of activities suggested. But it also noted that much could be done to improve these activities along the lines suggested and expressed its appreciation for the useful discussion.


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