Under the new regime of the seas, the world community has willed to the coastal countries the bulk of living marine resources in the waters off their shores. In the manner of any father who has willed his wealth to his sons but who feels that they have a tendency to be profligate, it is stipulated in the will how the inheritance is to be used. Specifically, to pursue the analogy, the father has made it incumbent on every one of his heirs to preserve the capital he has passed on to him and to manage it so that he and his brothers will derive maximum net benefits from its use. Thus, he seeks not only to secure his sons' future but also to prompt them to shoulder family responsibilities which he, himself, under the open-sea regime, had never been able to effectively discharge. While each son does acquire good title to his legacy, he is, in a way, expected to use it as if he were holding it in trust for the entire family.
Specific conventions of the new Law of the Sea outline how the individual coastal country is to go about in fulfilling the expectations placed in it by the world community, as follows:
(1) Preservation of the capital that has been left by the world community to the coastal countries is to be accomplished by setting ceilings (TACs - total allowable catches) on annual take. Under the Law of the Sea, discretionary powers are conferred upon the coastal country including the right to unilaterally determine allowable catches. The Law recognizes thereby that living marine resources are a gift of nature that must not be squandered by selfish action of one generation.
The relevant convention of the Law does not refer to the basis on which TACs are to be determined. In principle, TACs might be set for a species on a nation-wide basis or for a specific ocean area. Area ceilings might apply, where considered appropriate, to groups of species or even to the entire biomass. Questions arise on not only what is to be protected but also on the basis on which individual areas are to be delineated (e.g. because of notable differences in abundance, to account for patterns in the fishing effort, etc.). Special problems arise in connection with the determination of TACs for unstable resources; account also must be taken of seasonal fluctuations in abundance and migratory characteristics.
The relevant convention does not express itself on any of the above points.It does, however, specify that the task of setting the TACs is to be entrusted to expert hands by calling for resort to the‘ best scientific evidence available.’ The latter definition is broad enough to include consultations with experts on market and producer (i.e. experts in fields other than science) questions, since these, too, should be expected to have some influence on TAC setting. The last word, to be sure, should be that of the fisheries scientist, since the intent of the Law is to conserve fishery resources.
(2) In the interest of obtaining maximum net benefits from employment of the capital the coastal country has inherited, the convention exhorts it to promote the objective of ‘optimum utilization of the living resources.’
Again, the convention is silent on what is to constitute optimum utilization. The individual coastal country has to decide this for itself. In principle, the country is free to use the entire capital (i.e. to harvest the TAC) itself. If it, however, finds that it ‘does not have the capacity’ to do this, it shall, the convention stipulates, through agreements or other arrangements, give other countries ‘access to the surplus.’
As the TACs aim to prevent overfishing, the optimum utilization stipulation, one might say, tries to prevent underemployment of the inherited capital, on the theory that the only acceptable global objective of fisheries development will be, as long as the global food supply gap has not been bridged, maximization of the total fish protein produced. (This global aim has, of course, not been chosen in ignorance of the fact that, for individual countries, money income, employment and other considerations may be at times of greater importance than fish protein food.)
To live up to its obligation to ensure optimum utilization, the coastal country has, first of all, to make an assessment of its ‘capacity’ to employ the new capital at its disposal. A realistic assessment of this capacity may be difficult to arrive at: ‘the eyes may be bigger than the stomach’ if the country is eager to outcompete its brothers in the world community by using excessive amounts of development resources (excessive in the sense that their opportunity cost may be extraordinarily high) to put, itself, the entire inheritance to work. Again, a less ambitious coastal country or one which has more important interests in other sectors, may be reluctant to work the capital and may prefer to let others do the investing, contenting itself with a rental income paid by the countries to which it has granted access to the resources.
Neither of the two cases leads to optimum utilization. Employment of ‘excessive’ quantities of inputs will keep net benefits below what is obtainable with more judicious employment of development resources. Leaving exploitation to other countries, on the other hand, might bring countries into the fishery whose operations, because of distances from home bases, are likely to be less remunerative than operations by the more advantageously situated coastal country which has granted access.
There is no assurance that a surplus (i.e. the quantity in excess of what a country is capable of harvesting itself) will actually be harvested, even if the existence of such a surplus is given adequate international publicity. The resources in question may simply not be of sufficient commercial interest to foreigners for them to try to take advantages of opportunities to gain access. Lack of interest may be attributable to the low commercial value of the fishery resources or to temporary market conditions discouraging expansion of the fishing effort. The stipulations of the convention, therefore, do not provide any guarantee that a total allowable catch will be fished.
(3) In addition to decisions imposed by the TAC and optimum utilization stipulations on how much to invest and how much rental income to collect from other countries to which an opportunity has been given to use its capital, the coastal country has to face other issues more indirectly connected with Law of the Sea provisions. The very size of its inheritance, the vastly larger quantitives of fishery resources available to it as the result of extension of jurisdiction, are likely to have an impact on existing operations, i.e. operations conducted before receipt of the world community's legacy. The new wealth will provide new stimulus and reveal new opportunities. At the same time, however, it may also have negative consequences as, for instance, when industrial fisheries expansion and operations of joint ventures, which have been licensed to fish in the expanded zone, interfere with plans for small-scale fisheries development. Almost certainly, therefore, the coastal country will, at some point, find it necessary to re-appraise its objectives and to take measures to adjust programmes to the new situation created by limits extension.
In the following section, an attempt will be made to discuss considerations that may be expected to affect decision-making by coastal countries in the African region on issues arising as a consequence of the institution of EEZs. To recapitulate, these issues relate to :
preservation and management of the resources wealth left to it by the world community under the new regime;
investment decisions connected with the exploitation of the new wealth;
grant of access to the surplus and compensation to be collected for the same from other countries; and
adjustment in sectoral programmes made necessary as the result of the changed scope of operations.
It goes without saying that the individual country's response to the above challenges depends on ends and means identified in its sectoral plan.
While the examples below reflect, in part, conditions which recently prevailed in some coastal developing countries of the region, certain assumptions have been made, and problems introduced, for illustrative purposes only.
The discussion of the examples does not aim to offer recommendations for dealing with specific planning situations but merely seeks to highlight a number of general considerations that should be taken into account in formulating programmes under assumed conditions. An attempt will be made to flag changes in objectives and strategies occasioned following the institution of EEZs.
5.2.1 Country ‘A’
Off the coast of Country ‘A’ well within its new EEZ, there are some of the world's richest and most valuable fish stocks. The country is sparsely settled and has a preponderantly nomadic population that is only now learning to eat fish. With the exception of some tribal groups living along short stretches of its long coastline, there is no marine fishing tradition. As of late, a start has been made with the training of fishermen. Supplies, parts and other material development resources have to be imported.
Some twenty years ago, overseas interests established a sizeable fisheries complex at one of the principal ports of the country. The complex soon found itself in economic difficulties, among other reasons, because of the reluctance of foreign fishermen to land supplies in the port, with preference being given to landing catches in large, well-established fishing ports in neighbouring countries. Some long-distance vessels operating in the waters off Country ‘A’ even transported their catches directly to their home ports overseas.
Country ‘A’s principal objective in the fisheries sector is to maximize state revenue from fisheries. The sector, it is generally thought, offers the best opportunity to derive funds needed for building up other branches of the economy. Although part of the revenue from fisheries would be reinvested in development of the sector, the larger contribution would be destined to creating a general infrastructure which has been lacking to date. Secondary objectives of fisheries development are creation of jobs and earnings in fishing and fish processing and development of the interior market for fish.
The strategy the country relied on to date to accomplish its major objective has aimed at keeping the existing fishing complex supplied with fish. The long-term goal has been go gain complete control of fish processing and export activities to ensure that the entire revenue from the resources taken off its coast will revert to the country. A portion of the prospective revenues was to be used for support of programmes designed to benefit fishermen and national markets.
Keeping in the fishing complex supplied could, in theory, have been accomplished through expansion of the country's as yet very small industrial fishing operations. Lack of development resources and experience, however, precluded such a course of action. Also, in the past decade or so, the resource situation off Country ‘A’s coast had deteriorated, largely as a consequence of lack of control on the fishing effort of long-distance fleets, to such an extent that further investments in fishing were considered as unpromising. As the country gained jurisdiction over extended limits, it decided rather than to give emphasis to the build-up of a national fleet to conclude agreements with other government and private companies under which fishing rights were to be granted for user fees. When the agreements ultimately failed to achieve their intended objective of increasing delivery of supplies to the fishing complex, the government shifted to a policy of entering joint-venture arrangements with foreign interests.
After this policy had been in effect for some time, the Government decided to seek the advice of planning experts to review the same and to provide answers, in particular to the following questions:
how to manage and develop the country's new fisheries wealth most effectively to achieve its basic aims in the sector;
how to reach a rational basis for sharing the development task between itself and foreign countries (including, first of all, those countries which had traditionally fished the waters off its shores);
what tools and programmes to employ in implementing the strategies chosen for these purposes; and
how to bring the various programmes in its sectoral plan into harmony with each other, reflecting the order of priorities the country had assigned to individual objectives.
The mission of experts who visited the country in this connection concluded that, in view of the alarming state of the fishery resources, first priority had to be given to assessing allowable catches and reducing the fishing effort until it would harmonize with the catch ceilings. For certain pelagic fish species, which were taken together by the fishermen, and which had the same market use, they thought that a combined TAC might be set, while for cephalopods and demersal fish separate TACs had to be established. A reduction of the fishing effort through regulation, it was thought further, should achieve not only the desired impact on resource recovery but could be an effective means of eliminating some of the less efficient operations and/or for promoting a change in the relative proportions in which national and foreign interests participated in the fishery. In the longer run, it was thought, government policy might be to effect a decrease in the participation of foreign interests by not issuing new - or renewing old - licences to them and by assigning new licences to nationals of the country only. In the shorter run, a basic management requirement might be to include, in joint-venture agreements, ceilings on the number of fishing vessels to be employed.
Fulfilment of the country's desire to take full charge of all aspects of fisheries development, the experts felt, was not possible in the short run. Development resources, including manpower, management and material inputs, were still inadequate for support of accelerated larger-scale development. Directing scarce development resources to back-up the essentially uneconomic nature of the fishery complex would be like throwing good money after bad money. Nor should joint ventures be obligated to deliver to high-cost plants, the production of which has to complete in international markets. If the joint ventures were to be expected to dispose of their catches to the plants at concessional prices, they would not be able to provide services in other spheres, which they were committed to provide under the joint-venture agreements.
Under the optimal utilization stipulation of the new Law of the Sea, a more gradual build-up of national operations would appear appropriate, a build-up that proceeds at a pace corresponding to the country's acquisition of the wherewithal and experience for development. Hastening the pace by employing foreigners to crew vessels, purchasing equipment with high-cost loan funds, etc., would be uneconomical and create an unsound foundation for a new industry.
Available expertise, too, might be a decisive factor in choosing between alternatively employable tools for implementing strategies. A policy favouring joint-venture agreements, for example, would achieve the desired effects only if the developing coastal country had the management expertise to write and enforce detailed and well thought-through agreements that did not lend themselves to ambiguous interpretation. Extension of national jurisdiction, of course, had, in principle at least, greatly enhanced the coastal country's bargaining and enforcement powers vis-a-vis joint ventures, a factor not to be forgotten in considering the employment of this development tool.
The prospects which extension of national jurisdiction had opened up for Country “A” included the opportunity of diversifying the country's economy through vastly increased revenues from fees paid for fishing rights. On the liability side, expansion of industrial-type fishing by joint ventures and new national operations was believed to have unavoidably unfavourable consequences on small-scale fisheries development. In Country “A” small-scale fisheries were of local character and of comparatively modest scope. Programmes to assist this segment of the industry and protect it from interference by industrial operations should, nevertheless, be initiated without delay, the experts believed, not only for social considerations but also because small-scale fisheries provided a pool for selecting candidates for training fishermen in industrial fishing operations. Because of the comparatively small number of people involved, such programmes would constitute only a minor drain on revenues and, ultimately, pay-off handsomely in social cost/benefits terms.
A reorientation from other development tools toward greater emphasis on granting access rights for fee arrangements required a strengthening of the country's capacity to control the activities of foreign operations. Trained and incorruptible staff was needed to handle negotiations and supervise agreements, and increased amounts had to be budgeted for surveillance activities.
5.2.2 Country “B”
Country “B” has a very large market for fish which has been the main source of animal protein in the diet of its population. In the past, gaps in supply were covered by landings of inexpensive foreign fish by long-distance fishing fleets, dried fish imports from mostly hard-currency countries, and production of vessels working under charter arrangements for Country “B”.
Since the waters off Country “B” are not particularly rich, it gained comparatively little from the extension of jurisdiction. However, at the time of the proclamation of its EEZ, a review of planning objectives and procedures was ordered, with the object of streamlining existing policies. The principal conclusions of this review were:
for the foreseeable future, a continuation of fishery imports, possibly even in growing quantities in view of the country's high rate of population increase and the limitations on development of national fisheries, was considered a necessity;
a decision was made to overhaul import policy to achieve a reduction in the substantial drain of foreign exchange;
imports of dried fish from hard-currency countries were to be replaced by imports of dried products from developing countries in the African region which traditionally had surpluses for trade;
agreements with those countries were to include, wherever feasible, provisions for delivery of goods and services by Country “B” in exchange for dried fish supplies imported;
the costly charter operations were to be discontinued;
frozen fish landings (produced from catches taken off the shores of other countries in the region whose waters were richer than those of Country “B”) were to be gradually reduced and, in due time, altogether barred. The irregularity and unpredictability of these supplies had often been blamed for upsetting market conditions. Also, the low prices at which these landings were usually disposed of had had a negative impact on efforts to take advantage of whatever opportunities existed to the development of national fisheries;
an effort was to be made to use domestic sources for materials since the country had made considerable progress in ship-building and related activities making reliance on foreign sources for parts and replacements no longer a necessity;
in the period before national fishing capacity would reach TAC limits, foreign requests for access to surplusses were not expected. Non-utilization, for some years, of a part of the catch potential would be less costly in the long run than uneconomic expansion;
as national fishing operations were expanding, possibilities of commercial exploitation of species, which had been of no interest to long-distance fleets because of lack of demand for the same in their home markets, were to be investigated;
by preparing products of special appeal to national markets, substantial new supplies for consumption might become available;
programmes were outlined to increase productivity in small-scale fisheries;
expansion of aquaculture and inland fisheries operations was recommended;
institution of controls on imports and elimination of frozen landings by long-distance vessels would make it possible to rationalize distribution and market facilities and operations, with corresponding savings that could be applied to strenthening and expanding the markets for fish.
5.2.3 Country “C”
Country “C” has sizeable resources of pelagic fish off its shores which, to date, have been exploited exclusively for reduction purposes, with virtually the entire quantity of meal and oil being destined for overseas export markets in developed and centrally planned countries. The country also has valuable shrimp fisheries which, traditionally, have brought, in strategic foreign exchange earnings.
Assessment of sectoral policies after extension of jurisdiction resulted in recommendations aiming at:
reform of the resource management system in both the pelagic and the shrimp fisheries;
development of inexpensive products for human consumption from pelagic resources and reorientation of utilization from fish meal production for export toward distribution of products for human consumption in national markets; and
institution of measures to protect the interests of small-scale fisheries along certain parts of the coast against interference from other operations.
The following was given as the rationale for the proposed changes in policy orientation:
overall income from the raw material fishery had been declining for some time, in consequence of both the “unstable” character as evidenced by diminished abundance of the resource and of overfishing, which was blamed on the lack of effective controls on entry into the fishery;
a large part of the benefits from raw material fishing had been accruing to foreign interests which controlled the profitable overseas market outlets, had made money (hard currency earnings) from the sale of equipment for sea and land installations for Country “C”, and were paid (in hard currency) for expert advice they provided to domestic interests;
fish consumption which was relatively high in coastal areas in protein-starved areas at some distance from the coast was low;
small-scale fisheries along part of the coastline were the only source of livelihood for small-scale operators. The operations of the latter were threatened by industrial fishing which interfered with their fishing and often disrupted conditions in local markets. Restructuring and reorienting the operations of industrial fisheries, it was thought, would, in time, lessen the pressure on small-scale fisheries. Until such time as this was achieved, adoption of interim measures to protect small-scale fisheries interests seemed indicated.
Country “C” decided to cope with the twin problems of threatened collapse of raw material fisheries and limited national participation in extraction of benefits by discontinuing fishing rights in its EEZ for fishing for raw material by foreigners. Conditions for the issue and renewal of licences to nationals of the country, too, were made considerably more stringent, with a review of the policy being scheduled to take place after establishment of TAC ceilings.
Experiments with the production of dried fish, in a form preferred by consumers in national markets, from the fishmeal raw material resources have had promising results and eventual mass distribution appears within the realm of the possible. Training, distribution and market improvement and consumer education programmes were planned to support accomplishement of the objective of expanding national markets for fish, special emphasis being given to inland areas with nutritional problems.
Management of the shrimp fishery was to be overhauled to bring about a reduction of overfishing and to restore, through encouraging proper attention to hygiene and quality standards, the erstwhile high reputation of the country's shrimp products in export markets.
Programmes proposed for the support of small-scale fisheries included a variety of measures providing, inter alia, for the supply, at concessional prices, of boats and gear improvements in local markets, and better surveillance of industrial-type operations to minimize interference with small-scale operations.
5.2.4 Country “D”
Country “D” has a diversified economy including a fisheries sector which, to date, has been of importance chiefly as an earner of foreign exchange in export markets. The current national plan has set the following as the country's major objectives in sectoral developments:
increasing the contribution of fisheries to the solution of nutritional problems;
improving the balance of payments;
creating employment and bettering social conditions of marine fishermen.
As a result of the limits extension, Country “D” gained control over the exploitation of sizeable resources of pelagic fish which, to date, had been exploited by foreign fleets, a growing number of national industrial-size fishing units, and joint ventures with national and overseas participation.
Development of the national fleet had not proceeded without sacrifices, since costs of raw material and expertises, including for the engagement of key crew members, had to be paid in hard currency. Inadequacies in land installations for processing and export operations accounted, in part, for the fact that Country “D” was not fully competitive in themarkets for its principal export products. Joint-venture operations had not entirely fulfilled hopes that had been placed in them at the time they were formed, since domestic partners lacked the technical and commercial know-how for playing an effective part in their management, and since state guarantees had proven to be inadequate for covering bankruptcy risks.
Since resource exploitation was considered to be still below (although not much below) estimated TAC figures, the planners' main task, after institution of the EEZ, was to decide on how to achieve an optimum equilibrium between the foreign and the national fishing effort. To this end, they had to evaluate immediate financial benefits obtainable from fees paid by the foreigners for fishing rights against the long-term advantages that might accrue to the country's economy as a result of a larger-scale development of the national fishing effort.
Four possibilities for deriving greater benefits from the exploitation of fisheries were considered:
continuation of a policy of the subsidized and unrestricted build-up of the national fleet;
reduction of the fishing effort of both the national and foreign fleets in order to achieve an optimal overall level of exploitation;
reduction of foreign fishing accompanied by expansion of national fishing up to a level that would ensure maximum net benefits for the country.
The last-listed option was believed to be the only one that would allow the country to extract long-term benefits from the exploitation of its fisheries resources, provided further development of the national fleet was kept under constant control. Efforts to promote expansion of national fishing operations, a restructuring of operations at sea and on land were contemplated to ensure that the industry would remain competitive in international markets and to open up new domestic markets for fishery products.
The above-suggested strategies, if implemented with due attention to geographic and population characteristics, it was thought, would help also in the achievement of the third major objective of the sectoral plan, viz creation of jobs and improvement of social conditions in small-scale fisheries.
5.2.5 Country “E”
Drought conditions persistent over a number of years and resultant mass starvation have created an emergency that has thwarted implementation of fisheries plans. In the short run, procurement of food supplies must be given an overriding priority. Food bought with income from non-agricultural exports is supplementing large-scale aid shipments but the food supply gap continues, with thousands of people dying every day.
Although the waters off Country “E” are not very rich in fishery resources, the country wants to convert, as rapidly, as possible, whatever wealth the new Law of the Sea has brought under its control into food supplies.
Plans had originally been made for an orderly build-up of national fishing operations and strict control of whatever foreign operations were to be authorized in waters under the country's jurisdiction. The pace of growth of national fishing was - and would continue to be in the short run - rather slow, because of lack of industrial-scale fishing experience and fishing craft. The only way of accomplishing the immediate objective was for Country “E” to relax controls on foreign fishing but making it obligatory on foreigners authorized to fish to land a part of their catches in national ports. To induce foreign interests to enter the country's EEZ, special concessions were to be incorporated into bilateral agreements and joint-venture contracts. All such arrangements, however, were to be made only for the short term, inasmuch as in the long run the country hoped to be able to reverse policies and to encourage once more development of national fishing operations.
Inviting foreign fishermen and removing restrictions on the fishing effort carry with them risks for the resource even if the policy is to be in effect for a limited number of years only. Country “E”, however, feels that under existing circumstances, it has little choice in the matter. Placing a part of its material resources at risk is being justified in terms of the great need to save human lives.
5.2.6 Country “F”
Country “F” has a marine fishery of comparatively modest size, the catches being taken by small-scale operators with craft that are, for the most part, unmotorized. Inland fisheries in lakes, dams, reservoirs, swamps and rivers provide the bulk of the country's fish production which is destined almost exclusively for the home market.
Marine fisheries catches, it is estimated, theoretically might be increased by 50% but lack of facilities and equipment make it unlikely that an expansion of this dimension could be attained within the foreseeable future. The character of marine resources is such that little likelihood exists of attracting foreign joint-venture partners.
Extension of fishing limits to 200 miles, it was believed, might open up opportunities for launching a fishery for tuna and other high-value pelagic species which could be exploited under joint-venture arrangements and might make a contribution to foreign exchange earnings.
In recent years, the tools which coastal developing countries have at their disposition for complying with the spirit of, and to take advantage of, opportunities offered under the new Law of the Sea have been examined by groups of experts. A condensed version of their conclusions is reproduced below.
5.3.1 Management tools (FAO, 1983)
Without management, resources can be threatened, the amount and stability of fish supplies reduced, and countries can fail to achieve the considerable economic and social benefits that can come from healthy fishing industries and fishing communities. At the same time, all management, in the sense of one form or another of government intervention, has some costs which tend to increase with the amount and complexity of the intervention. There must, therefore, be a favourable balance between the costs and benefits of any proposed management. This balance will very with the state of development of the country and of the specific fishery. There may even be some cases where conditions (e.g. small size of the fishery, and difficulties of intervention) may mean that a management decision by the Government not to attempt to regulate fishing effort would be justifiable.
The objectives of fisheries management could be placed in three groups - maintaining the resources, economic performance, and equity (of social needs). These could be used as criteria in judging the performance of different management schemes, but in addition the transaction costs (costs of research, administration and enforcement) should also be taken into account. That is, the cost of achieving the mix of objectives (cost/benefits) is an integral part of the iterative process of setting and refining objectives. It is recognized that quantification of benefits is sometimes difficult. But it is essential to the decisions on amount, methods and complexity of regulation.
The manager has an array of tools available to him - catch quotas, closed areas, gear restrictions, etc. In most cases an appropriate mix of these tools is needed.
Flexibility in management is important. The manager should be able to adjust the regulations quickly in response to new information, e.g. to close an area for a time when the proportion of juvenile fish in that area is particularly high. The legal and administrative framework for management should be such as to allow such flexibility.
Historically, indirect methods such as closed areas and mesh controls have often been the first to be applied to a fishery. In some circumstances, especially when they can ensure protection of the fish until they have spawned at least once, they can by themselves achieve adequate protection of the resource. Additional measures may be needed for economic or social reasons, though some indirect measures (e.g. closure of coastal belts, mesh size of trawls) can also be of assistance. In other circumstances (e.g. single-species trawl fisheries) mesh regulation or closed areas can make major contributions to improved management. Although there are some fisheries where these measures may be of less help, where applicable, they can be generally understood and accepted by the fishermen; therefore, they are valuable and can be enforced relatively easily.
Multi-national fisheries present special problems. Indirect methods such as a minimum mesh can be applied to all participants, but application of direct methods requires some decision on allocation between countries. It is believed that this would have to be done in terms of catch, e.g. allocation of national shares in a TAC. However, countries still have a wide choice of methods (catch quotas, effort limitation) to ensure that their catches stay within their national allocation.
Partly because of their historical importance in international fisheries, control by catch limits (TACs) have received particular attention. With some exceptions (e.g. short-lived highly variable species). TACs can, in principle, solve the conservation problem for single species. However, the fishery fleets may still possess capacity far in excess of that needed to harvest the sustainable yield. The resultant political and social pressures can put the conservation objectives at risk. Good statistics are essential for applying TACs - this limits their value in developing countries. Enforcement, and the necessary regular scientific monitoring involved in TACs, can be expensive. They are also of limited value in multi-species fisheries.
Economic and social problems may be reduced if national TACs (or shares in the multi-national TACs) are allocated to groups of fishermen within the country, though considerable control problems will remain. This allocation may be considered a form of property right.
Direct control over the number of fishing vessels through limited entry or licensing appears to offer the best chance of solving the problems of over-capacity. In principle, this approach should also solve the conservation problems. In the long run, however, the true impact on the stock can reach excessive levels through improvements in the size and efficiency of the individual vessels. This effect is also economically undesirable because of the large capital expenses that may be involved. Licence limitation should always include controls on the effective fishing capacity of the individual licensed vessel (e.g. on tonnage or horsepower). Even so, there will usually be some technological improvements. To deal with this, the management authority needs, in the long run, to be able to reduce the number of licensed vessels (or their combined tonnage). For some stocks, e.g. shoaling pelagic species, there can be a more serious short-to medium-term threat through the ability of the fleet to concentrate on the remaining schools of a dwindling resource.
Licence limitation or limited entry may be easier and involve less disruption if they are introduced when a fishery is still growing, rather than when over-capacity and over- exploitation is already a problem. It is difficult to achieve an immediate reduction in the amount of fishing by these measures, and the immediate effect of introducing or threatening to introduce these measures may actually be to increase effort. Introduced early, however, they can put a lid on expansion - though without care this can easily be over-shot. There are also practical objections to early measures, for example, governments do not like spending money to solve problems that will not arise for some years yet. The greatest value of licence limitation, at least in developed fisheries, may be as an adjunct to catch quotas.
Money measures - financial support, including subsidies, direct taxes, or tax structures (e.g. depreciation rates) can be useful strategic tools to guide the decisions (by fishermen, fishing companies or investors) in desired ways. They can be misused - financial supports usually are being kept on too long. They are also slow in having an effect, so are of no use as tactical weapons; also they can often not be used when management is most needed. Few politicians will increase taxes on an industry that is deep in trouble, even if that trouble comes from over-capacity. Subsidies should be avoided where possible. Where forms of financial support can make useful contributions, e.g. in stimulating the growth of fishing on an underutilized stock, they should be kept on only for a strictly limited period. Taxes would be most useful in the final phases of successful management to funnel off “excessive” profits, and should mainly be used to cover management costs.
Property rights can take many forms - individual catch quotas,TURFs, etc. They have a number of advantages. When fishermen consider the fish stock as their property, they will adopt a more positive attitude to conservation and management measures. Enforcement is usually easier and cheaper. The product can often be brought ashore in better condition, and over a longer season, to the benefit of the consumer. Property rights, in one form or another, are considered to be among the more promising approaches to fishery management, especially in developing countries densely inhabited by artisanal fishermen.
5.3.2 Foreign participation (Christy, 1986)
The provisions of the Law of the Sea relating to access to surplus obligate the coastal state to grant foreign states the right to fish the portion of TACs which it is not capable of harvesting itself. The issue facing coastal states is to decide on the form, or combination of forms, of foreign participation most to their advantage. Basically the choice is among three options, access licensing arrangements with foreign fishing fleets, joint ventures and “going it alone” albeit with the assistance of contracted technical and management expertise. The options are not mutually exclusive. But the weight to be accorded to each will depend primarily on the social and economic situation and development objectives of each individual country.
5.3.2.1 Access agreements
Four basic types of agreements concluded following coastal state extensions of jurisdictions have been identified (Carroz and Savini, 1978). These are, firstly, agreements providing for the phasing out of foreign fishing operations over a period of time in favour of the expansion of local fisheries, secondly, agreements granting reciprocal fishing rights to the vessel of each country in the waters of the other, thirdly, agreements for commercial licensing of foreign fishing operations against payment of fees or other economic benefits and, fourthly, framework agreements for the establishment of joint-venture enterprises. The fourth type, framework agreements for joint-venture enterprises, while of growing importance in many parts of the world, is of limited application in some areas and in particular among small island states, which are characterized by the lack of private sector enterprises suitable as viable local partners for bona fide joint ventures.
The conclusion of intergovernmental agreements is not a prerequisite for the licensing of foreign fishing. This can always be done by direct licensing of individual boats under national legislation without any framework agreement. However, framework access agreements with governments or semi-official bodies representing distant-water fishing interests have become more prevalent after the recent extensions of jurisdiction for the following reasons. In the first place, they accord some form of official recognition to the jurisdictional claims of the coastal state. Secondly, and relatedly, they enable the coastal state to put some responsibility for compliance control onto the flag state not only in respect of vessels authorized to fish under the agreement but also in respect of unauthorized vessels. Thirdly, and again relatedly, a harmonized network of bilateral access agreements may form an essential basis for regional cooperation in surveillance and enforcement. Fourthly, they allow for implementation of the concept of allocation of surplus under the draft convention, which is esentially a concept of interstate obligations. Fifthly, they provide a suitable vehicle for the transfer of benefits to the coastal state other than purely cash payments, such as research, training and the development financing of physical infrastructural facilities in the coastal state. While most access arrangements may be based on bilateral agreements, any study of access conditions must include an analysis of national legislation, which is still the legal basis for most of the detailed control provisions.
The kinds of conditions that a coastal state may establish for access are listed in Article 62 of the Law of the Sea. These include licensing, the payment of fees, conservation measures, requirements concerning the collection of statistics, landing of catch, joint ventures and other cooperative arrangements, and enforcement measures. Tables describing access licence conditions for foreign fishing adopted in state practice, so far as they are known, are set out in the document “Coastal state requirements for foreign fishing” (Moore, 1985).
Length of agreements. In general licensing arrangements, in contrast, for example, to reciprocal fishing agreements or framework agreements for joint ventures, tend to be short term. Where no longer-term access agreements are negotiated, they are subject to redetermination of substantive factors, such as quota allocations and fees payable on an annual basis. Examples would be the agreement between Australia and Japan of 1979 and 1980, and between New Zealand and Japan in 1979.
Allocation of quotas. Although limitations are almost invariably placed on the amount of fishing allowed under access agreements, the methods of establishing these limitations vary. In coastal states possessing more sophisticated and effective means of control, allocations may be expressed in terms of the amount of catch allowed. While this, at least in theory, allows for greater and more finally tuned control over the management of the resources, this method, unless very closely controlled, can have unforeseen and unfortunate side-effects, notably in providing an in-built incentive to under-reporting of catches. In other access agreements the limitations may be expressed in terms of the number and size of vessels allowed to fish, whether or not subject to an overall catch quota or limitation on fishing days.
Levels of fees. Methods of determining fees also vary considerably. In general countries possessing sophisticated methods of monitoring and control, such as the USA, tend to express fees in terms of a direct percentage of the actual total catch. Again the same considerations regarding incentives to under-report catches mentioned in connection with methods of allocating quotas also apply to methods of assessing the levels of fees. Where monitoring and compliance control systems are more basic, it may be easier to collect fees based on a percentage of the estimated or allowable catch, or on an estimation of the catching capacity of the authorized operations. This latter method may entail fees based on the number of vessels licensed, and the length of vessels, the size class, or the gross or net register tonnage.
In some cases the consideration for fishing rights may be expressed partly or wholly in terms of non-cash contributions. In Guinea, for example, a percentage of the catch must be paid over in kind, while in earlier agreements negotiated by Mauritania, foreign fishing operators were required to construct infrastructure facilities as part of the access fee. Ultimately the method of determining fees will depend, not only on the level of sophistication of the monitoring and control mechanisms of the coastal states, but also on its own development objectives and the power of its negotiating position.
In view of the disparity in the methods of calculating or expressing access fees, it is not easy to compare the levels of these fees.
Statistics collection. Most access arrangements provide for the reporting of catch and effort statistics. Sometimes the detailed reporting requirements may be spelled out in the access agreements. More usually they are specified in the fisheries regulations or the license conditions.
Protection of local fisheries. An increasing number of access arrangements provide for the protection of local fisheries, either through the reserving of coastal belts or archipelagic waters for local operations, or through the reservation of certain species for local operations.
Compliance control. Many bilateral access agreements now include provisions placing responsibility specifically on the flag state for ensuring compliance by vessels flying its flag with the terms of the agreement (see, e.g., agreements between Marshall Islands and Japan of 1981 and between New Zealand and Japan of 1978). Of particular interest also are provisions to be found in some agreements and in national legislation concerning requirements to maintain local agents or national representatives, and the posting of bonds to guarantee performance of obligations under the agreement or licence, as well as provisions concerning observers, and vessel entry, departure and reporting requirements.
Possibilities for regional cooperation
The subject of access arrangements in areas such as West Africa, the South Pacific and, to a lesser extent, the Caribbean, offers numerous and important possibilities for regional cooperation. Regional cooperation and coordination of approaches may be desirable both in order to improve the negotiating position of individual states vis-a-vis the limited number of foreign fishing countries operating in these areas and in order to avoid the potential diverting effect that a non-harmonized approach may have with respect to foreign fishing effort on shared or interrelated stocks. Possible areas of cooperation include:
exchange of information on access conditions;
harmonization of access conditions, and
Surveillance and enforcement.
5.3.2.2 Joint ventures
A second option open to a coastal state is to promote the establishment of joint ventures with foreign partners as a way of obtaining the capital, expertise and market access necessary for the development of local fisheries.
The option of joint-venture development has a great deal of attraction, offering the prospect of speedy development of local fisheries, the transfer of technology and eventual self-sufficiency. While it is true that a joint venture can be a means of attaining rapid development of a local fisheries industry, there is an equally large factor of risk involved.
One of the first policy decisions facing a government intent on promoting joint ventures in fisheries is whether it, as Government, should become involved as a party in the joint venture. In many small island states in the region, where the private fisheries sector may be insufficient or even non-existent, the Government may have little choice but to become so involved. In such cases it would seem that the difficulties and risks facing joint ventures are amplified.
What then are these risks and difficulties? Firstly, they may be characterized as an inherent difference in objectives, particularly where the Government is involved as a party. The foreign partner on the one hand will be motivated by his interest in making a profit out of his operations at one stage or another, and/or by his interest in obtaining access to the fish resources. The Government on the other hand may be torn between its interest in maintaining a profitable venture, and its essential interest, as Government, in developing a local industry, promoting the rapid transfer of technology and management expertise and managing the resources for the benefit of all. That this natural divergence of objectives, each valid on its own terms, can create tensions and potential conflicts in the running of a joint-venture operation has been borne out by the experience of a large number of countries. The difficulties caused by differences in objectives may be exacerbated by differences in culture, values and languages. Mutual trust and confidence is perhaps the single most important factor in the success or failure of any joint venture, and such trust and confidence is that much more difficult to reach where there is no common heritage, values and inherent understanding.
A further difficulty facing an international joint venture lies in the risk of financial manipulation inherent in any such arrangements. Transnational corporations, who are the natural partners to international joint ventures in view of their capital, expertise and marketing access, are used to viewing their operations as a whole and to taking their profits at the most advantageous point in their vertically and horizontally integrated operations. Where joint ventures are concerned, which by definition require profit sharing, the tendency is inevitable for the transnational to try to take its profits where possible from wholly owned members of the corporate family through such techniques as affiliated company transactions and transfer pricing. Loans may be taken from related banking corporations at high rates of interest, for example, or goods or services provided to the joint venture by transnational affiliated companies at inflated prices, or products sold to affiliated companies at below market prices. Faced with the need for constant monitoring of such tendencies, a potential Government partner may be wise in accepting a counsel of caution.
Where the host Government does not envisage taking an equity position in fisheries joint ventures, it must still formulate its own policy respecting the part which it expects joint ventures to play in its fisheries scene, the areas in which joint ventures are to be welcomed and the conditions on which they are to be welcomed.
Experience with joint ventures in fisheries has been mixed. Where they have succeeded, they have contributed substantially to the development of fisheries in the host country. But they have still required a substantial effort on the part of the local partner and host government to monitor the actions of the joint venture. Regional cooperation may be desirable in the dissemination of information on the terms of joint ventures, the problems encountered in their operation and the supply of information on market prices and services and equipment costs necessary for the proper monitoring of joint-venture operations.
5.3.2.3 Going it alone
The third major policy option for a coastal state is to concentrate on the development of its local fisheries seeking the necessary capital and expertise through multilateral and bilateral assistance. Where the private sector is inadequate to provide the necessary impetus for development, many countries have resorted to the establishment of public corporations entrusted with the task of spearheading investment in new areas of fisheries or with providing fish for local markets or processing industries. In either case, the problem remains of seeking technical and management expertise, through management contracts and marketing contracts or through the recruitment of experienced management personnel.
An increasing number of public corporations have been set up for carrying out commercial activities following the extension of national jurisdiction. By and large, the experience with public corporations in fisheries has not been a successful one. Although it is not always easy to identify the main reasons for failure, the following are a few typical factors.
Inexperienced commercial management. Very often top management of public corporations tend to be chosen from the ranks of the civil service rather than from people having direct commercial experience, and particularly experience in fleet management and other sectors of the fisheries industry. Management can be contracted from outside. But if it is contracted from a transnational fisheries company, the expertise is expensive, and unlikely to be highly motivated unless reimbursed on a profit-sharing or even equity-sharing basis. Management expertise contracted from outside the established firms may be successful, but will always represent a certain gamble and will be lacking in the kind of technical information and marketing support services that can be offered by an established firm. From the point of view of fleet management expertise, some assistance can be obtained through the use of chartered vessels on a short-term basis.
Non-clarity of objectives. Sometimes the establishers of a public corporation and its top management are not clear on the objectives of the corporation and the standards by which its achievement should be measured. In particular, even if a corporation is established with a primary purpose of achieving commercial success, for example, in order to spearhead private sector investment in a new field, there may very often be a tendency to throw in other objectives in almost new field, there may very often be a tendency to throw objectives such as the socio-economic development of small-scale fisheries, or promotion and regulation of marketing. It is suspected that the most chances of success lie with a public corporation that has clear and streamlined objectives, and does not try to operate as a cross between a commercial company and a fisheries development authority.
Inflexible procedures and staffing. One tendency in a public corporation is to recruit staff almost exclusively from the ranks of the civil service and to apply civil service salary schemes and employment terms. In one instance noted, for example, crew members of vessels operated by a public corporation could only be paid at fixed lower civil service salary scales without the possibility of sharing in the catch. In fact no form of incentive or bonus payments for increased catches could be operated under this form of constraint. Similar inflexible procedures may apply to operational matters, including purchases, sales and other disbursements, that make quick and effective commercial operations impossible.
Working capital. One problem that seems almost universally to plague public corporations operating in fisheries in developing countries appears to be the lack of provision of adequate working capital. Although the necessary processing plants, vessels and other facilities and equipment may be transferred to the public corporation at its outset, seldom is this accompanied by adequate amounts of working capital. As payments from foreign product sales usually involve some delays, this can and often does create serious cash-flow problems.
Structure of the corporation. While many public corporations are set up under separate statutes, a more commercial “legal environment” can often be created by establishing the corporation as a normal company under the local companies legislation, albeit with shares wholly owned by the Government. The advantage is one of subjecting the corporation to the normal commercial rules of accountability and threat of bankruptcy.
Where a policy of stimulating the growth of the private sector in fisheries is chosen in preference to the development of public sector operations, one mechanism increasingly being used is the establishment of Fisheries Development Authorities. While legally and organizationally Development Authorities may be indistinguishable from commercial public corporations, they are in their nature and objectives different types of organizations. The task of a development authority should be, it is submitted, to stimulate the private sector through the location and financing of spearheading of otherwise critical projects rather than actual involvement in the commercial running of such projects. In this sense the development authority falls half way between the fisheries administration proper, on the one hand, whose task is properly to formulate overall fisheries policy and to manage and regulate fisheries, and the public commercial corporation on the other. The type of legal and organizational structure required for a development authority should reflect this situation, with the authority being accorded the administrative and disbursement flexibility required for its task while retaining overall policy control in Government hands. Less administrative and financial flexibility is, of course, required than for fully commercial operations.
5.3.2.4 Choosing among the policy options
Given the policy options outlined above, how does one choose among them? The options are not by any means mutually exclusive. In many, if not all cases, the chosen national policy will be a combination of all three approaches. The nature of the political economy will be the deciding factor in each country. But still one can look at each of the options objectively and indicate certain advantages of each.
Going it alone, but calling on financial and technical assistance from outside where needed, presents the distinct advantage of giving the coastal state complete control over its own development and resources and admits of less dislocation from the presence of foreign partners and, in that sense, allows less chance of being “taken for a ride”. On the other hand, the approach does suffer from certain disadvantages. In the first place the development of local fisheries is a slow and complicated process. It is a process that can be spurred by a correctly conceived and applied system of incentives in a market economy where an adequate private sector exists. But the speed of development will depend on the competence and experience of the private sector.
Where a competent and interested private sector does not exist, a substitute can be made through the establishment of a public corporation to carry out commercial fisheries promotions, to spearhead investment and to provide fish for local markets or processing facilities. But still one is left with the same problem of the need for contracting technical and management expertise. such expertise is not easy to find and, where a management contract is involved, the situation may present similar problems to joint ventures. In any case, to be really effective, management must be totally committed to the enterprise, which usually means having a share in it, whether through equity participation of through profit-sharing arrangement.
Commercial access licensing arrangements on the one hand have the advantage of providing a known and steady income which comes off the top of the operation (i.e. is not susceptible to financial manipulation through hidden profit taking) and is not subject to commercial risks. It is a rent paid directly to the coastal state government and can be used for development or other purposes at the Government's discretion. Commercial licensing arrangements have the added advantage that they can be set up quickly, the terms can be renegotiated relatively easily and frequently, and they can be discontinued when necessary. They can also, if proper catch reporting systems are in force, provide essential information on the resources available for fisheries development, through the only real trial - commercial fishing. Local development provisions can be built into commercial access licensing arrangements, through training and technology transfer requirements, the employment of local crew members on licensed vessels and requirements, such as local landing and processing of catch, designed to spur the development of local processing industries or the supply of protein to local markets.
On the other hand, access licensing arrangements present the disadvantage that they do not lead directly to the development of national fisheries, where this is a primary objective of the coastal state government, and in this sense may be seen more as an interim measure or supplementary measure. It may be unsatisfactory to rely on such arrangements as a long term and sole approach.
The third option - the establishment of joint-venture enterprises can be a means of attaining rapid development of local fisheries and the processing industry and of providing technical and management expertise and transfer of technology. It can also give the host country greater control over the development of its natural resources and national resource-based industries. These are big and important advantages. But, as noted before, the risk factors involved are equally great and certainly greater than those involved in straight access licensing. In short, both the stakes and the potential rewards of joint ventures as a means of fisheries development are high. But if a coastal state government is going to gamble, it needs to have some realistic assessment of the chances of success. While it is not easy to identify the factors likely to contribute to the success of a joint venture, the following are suggested as a tentative list:
As for any potentially successful commercial enterprise, there must be viable resources and markets.
The foreign partner must have the necessary experience, technology and management skills in the subject area of the joint venture and there must be an adequate source of financing where lacking in the host country.
There must be a minimum of mutual trust and confidence between the parties or at least the basis for such trust and confidence. In part this means that the host government must have a clear idea of its own objectives and what it wants out of the joint venture as well as an appreciation of the legitimate objectives and interests of the investing party.
From the host government's point of view, particularly where a policy is envisaged of promoting joint ventures in the private sector as a nucleus for national development, the local partner must be a real partner able to absorb management expertise and technology and to take an increasingly active part in the joint enterprise. The joint venture will need to be a real joint venture, in which both parties share in the risks and profits and in which both parties seek to develop their joint enterprise as an independent unit, rather than as a mere facade for getting around the rules on foreign fishing.
The host country needs to have the necessary infrastructure and services allowing for real joint-venture operations, in the sense of port facilities, power, transport facilities, etc.
The local partner and the host government must have the necessary sophistication and control mechanisms to check on and control the operations of the foreign partner, to monitor, for example, market prices of products, equipment and services and to ensure that dealings arranged by the foreign partners are fair and. The problems of joint ventures do not end with a successful negotiation; they lie more in the proper management and development of the joint-venture operations and in their monitoring and control. If neither the local partner nor the host Government has this capability then a policy of promoting joint ventures should be approached with caution.
