5. ARRANGEMENTS WITH FOREIGN STATES

In working out arrangement with foreign fishermen, coastal states take into consideration a wide range of economic and non-economic values. In some cases, the values are fairly clear - such as the desire to extract economic revenues from the foreigners or the desire to develop domestic capacity through joint ventures or training programmes. In other cases, however, the values are quite difficult to define and cannot be readily measured. For example, a coastal state may make a fishery arrangement with a foreign country not because of the direct benefits it may get from the use of the fisheries but because of the benefits it may seek in non-fishery matters, including such intangible values as good-will. Or, conversely, a state may reject an economically advantageous arrangement with a particular foreign country for political reasons that have no relationship to fishery resources.

Fig. - Main fishing areas for sardines

Source: FAO 1978b, Fig. 1

Three different types of arrangements and approaches made by some of the coastal states are discussed below. One of these is the Mauritanian arrangement with foreign countries governing the use of freezer trawlers whose efforts are concentrated mostly on the cephalopod resources. This arrangement concentrates primarily on the extraction of economic revenues from the foreigners, although it also seeks aid in the development of domestic fishing and processing capacity. The second arrangement is between Morocco and Spain with regard to the use of sardine resources. In this arrangement, a primary element is the protection of the resource and the interests of the domestic sardine fishermen. The third approach is that followed by Senegal in which the major objective is the development of domestic capacity to harvest and process the resources.

It should be noted that these are examples of different approaches. No attempt has been made to provide a comprehensive discussion of all of the varied arrangements, nor of all the benefits that coastal states are extracting from foreign fishermen. For example, Senegal receives fairly sizeable additional benefits from foreign fishermen, not so much because of the fishery resources within its zone but rather because of the port facilities at Dakar which foreigners use for the supply and repair of their vessels. It is estimated that Mauritania extracts benefits amounting to US$ 23 million or more per year from foreign fishing companies in exchange for rights of access to the Mauritania fishing zone. Under the agreements with Mauritania, foreign fishing vessels pay a licence fee per gross ton of vessel, are required to employ Mauritanians as crew members, and are required to land certain tonnages of fish for processing in Mauritania.

Licence fees provide the most direct and largest source of revenue. For Spanish freezer trawlers, the licence fee is reported to be about US$ 150 per gross ton of vessel (Bravo de Laguna, 1979). For Japanese vessels, it is about US$ 200 per gross ton (Koba, 1979). Korean vessels reportedly pay the same basic fee as the Japanese, but in addition, because they do not land any of their catch in Mauritania, must pay an extra US$ 400 per gross ton (Koba, 1979). The total gross tonnage of these vessels has been estimated in Table 6, based on data from Yamamoto and Ansa-Emmim. On the basis of the total vessel tonnage and the reported fees, the vessels of these countries have paid Mauritania about US$ 17 million per year in licence fees.

Mauritania also requires the foreign vessels to employ Mauritanians as crew members. Apparently each vessel is required to employ five Mauritanians, although in the case of the small Spanish vessels, only two are required to be on board and the other three receive scholarships from the Spanish vessel owners for training in fishing. The salary level is reported to be about US$ 400-500 per man-month. In addition, food and clothing costs come to about US$ 4.75 per man per day for food and US$ 15 per man every six months for clothing (Koba, 1979). Assuming 300 days or 10 months at sea, wages and maintenance costs would come to about US$ 5 500 per man, or US$ 27 500 per vessel. As noted in Table 7, this comes to an additional US$ 6 million. Thus the total amount of costs borne by foreign vessels for rights of access to the Mauritanian zone amounts to about US$ 23 million.

This is probably a conservative estimate because the vessels from Japan and Spain incur additional costs in meeting the requirement to land fish in Nouadhibou. In the case of Japan, it was reported that the Japanese ice trawlers received Y 70 400 per t of cuttlefish and Y 63 400 per t of octopus (Koba, 1979). After processing in Nouadhibou, these were sold back to the Japanese at Y 185 600 and Y 204 800 respectively. If it is assumed that the total costs of processing, including labor, materials, insurance, storage, and return on capital, amount to about Y 50 000 per t, there are considerable profits extracted in Mauritania. These would come to about Y 65 200 per t of cuttlefish and Y 91 400 per t of octopus. Spanish and Japanese fishing companies are required to land an amount equal to 80 percent of the total gross tonnage of vessels that are licenced to fish. Since, in the case of Japanese vessels, the required landings would be about 7 500 t of cephalopods, the total profits extracted would amount to between US$ 2.4 and US$ 3.4 million for Japan alone. The processing plant is a joint venture between Mauritania and the Japanese companies, so that some of this profit may be returned to Japan. However, that portion which is not returned should be considered as an additional cost of access. For both the Japanese and Spanish companies, this could equal several million dollars. And finally, it can be noted that Mauritania collects additional revenues in terms of the fines it has levied on foreign vessels for violations of mesh regulations.

Table 6

NUMBER AND TONNAGE OF FREEZER TRAWLERS REPORTEDLY LICENSED TO FISH IN MAURITANIAN ZONE (as of the end of 1978)

Country	No. of vessels	Popular size (GRT)	Total tonnage
Spain	115	200	23 000
Japan	22	500	11 000
Korea	54	350	18 900
Total	191		52 900

Source: Yamamoto and Ansa-Emmim, 1979b.

Table 7

ESTIMATED COSTS OF ACCESS TO MAURITANIAN ZONE: LICENSE FEES AND CREW COSTS

Costs through license fees
Country	License fees (US$/GT)	Total GT	License fees (US$ million)
Spain	150	23 000	3.45
Japan	200	11 000	2.20
Korea	600	18 900	11.34
Total			16.99
Costs for Mauritanian crew wages & maintenance
Country	Number of vessels	Crew costs US$/vessel	Total crew costs (US$ million)
Spain	115	27 500	3.16
Japan	431	27 500	1.18
Korea	54	27 500	1.49
Total			5.83

¹ This includes the 21 ice trawlers based in Nouadhibou for the purpose of meeting the required landings.

Source: See text.

By way of illustration, it is estimated that the requirements for hiring Mauritanians as crew members lead to costs on the order US$ 6 million to the foreign vessel owners. The foreigners may not feel that the labor received is equal to the costs. This may be due to a variety of factors, not the least of which is the language barrier. Depending upon how they value the Mauritanian crew members, they may be willing to pay additional licence fees of as much as US$ 6 million in order to avoid the hiring of local crews. Thus, Mauritania can be considered as foregoing, or giving up, this amount of economic revenue in exchange for the training experience acquired by its nationals.

The evaluation of this benefit should take account not only of the value of the training experience to the overall national interests of Mauritania, but also the way in which the benefits are distributed. Revenue collected through licence fees presumably go to the general treasury, with perhaps some funds allocated for fishery development and management. The training experience, however, would be of value to the individual selected for training. This is not to say that one pattern of distribution is better or worse than another pattern, but simply that a change in the system will have a distributive effect that should be taken into consideration. Similar comments can be made about the requirement for landings and domestic processing of certain quantities of the catch by the foreign vessels.

As discussed in the previous section, the hypothetical economic rents that might be available in the cephalopod fishery are extremely high, and likely to be significantly greater than the US$ 23 million currently being extracted. Although the amount that could actually be extracted cannot now be determined, because of the inadequacy of the information, it should be noted that the extraction of rents is an effective way of reducing the amount of overfishing and of improving the economic efficiency of the industry as a whole. Where too many vessels are in competition with each other, as in this case, the amount of effort can be reduced either directly by limiting the number of vessels or indirectly by increasing the costs of fishing. If the former course is followed, those vessels that acquire the privilege to fish will acquire a privilege of value. If this value is not extracted by the coastal state, it will accrue to the vessel owners in the form of higher catches per unit of effort and higher economic returns.

If the coastal state follows the former course and raises the licence fees (or adopts more costly requirements for crew training, landings, etc.), the amount of fishing effort will decrease because fewer vessel owners will be willing to pay the additonal costs. With the decrease in fishing effort, those remaining in the industry will achieve higher catches per unit of effort, covering the costs to them of the higher fees. The benefits would be taken by the coastal state rather than by the foreigners.

In the case of the cephalopod fishery, the present information indicates that Mauritania and Morocco could increase the amount of benefits they extract from the foreigners (by raising licence fees, imposing taxes on catch, or other means) and, at the same time, reduce the amount of overcapitalization as well as increase the annual yields from the stocks. Although this would lead to hardships for the foreign vessel owners, the hardships would be transitional. After the process of adjustment, the fishery would be operating with greater economic efficiency, producing satisfactory returns to the fishermen remaining in the industry and producing greater benefits to the coastal states.

In the arrangement between Spain and Morocco, a limit of 80 000 t has been placed on the Spanish catch of sardines. In addition, there is a provision that at the end of five years, 50 percent of the Spanish sardine vessels should be owned by Moroccans. At the end of five years also, 80 percent of the crews should be Moroccan nationals. The Spanish vessel owners pay no direct economic revenues to Morocco in the form of taxes or fees.

Although it is clear that the costs to the Spanish vessel owners of gaining access to 80 000 t of sardines per year for the next five years are quite high, it is very difficult to estimate the amount of those costs. The limit on catch represents about a 40 percent decline in current levels of catch by the Spanish vessels, which has been about 135 000 t. This would indicate a 40 percent decline in gross revenues, but not necessarily in net revenues. The Spanish government has placed a limit on the total capacity of the sardine fleet, currently made up of 41 vessels. If all vessels continue to fish in the same manner and at the same catch rate, the usual nine month season (May to February), would presumably decline by about 40 percent and run from May to October of November. With the shortening of the season, some of the costs would be reduced so that, on this basis, the reduction in net revenues would be less than 40 percent.

However where a total quota such as this is adopted, there is a tendency for each vessel to fish more intensively and to increase its catching power so that it can get as great a share of the total before the quota is reached and the season closes. Thus, even though there is a limit on the total capacity of the Spanish fleet, it can be expected that the vessel owners would increase their investments in gear and equipment which can raise their catching power. This might include larger nets, greater horsepower, more refined electronic gear, etc. To the extent that they are effective in this, it would mean even a shorter season than May to October or November and an increase, rather than a reduction in costs. On this basis, the reduction in net revenues might be greater than 40 percent.

The requirement that half of the Spanish fleet be transferred to Morocco at the end of five years also has a mixed effect on the costs to Spain. The loss of the vessels obviously constitutes a fairly high cost. If the vessels are valued at about US$ 500 000 apiece, the transfer of 20 vessels would cost the Spanish fishermen something on the order of US$ 10 million for five years, or roughly US$ 2 million per year. Bur even without the transfer requirement, some of these vessels would probably have been removed from the fleet because of decreased earnings due to the limit on catch. In either case, the Spanish fleet, as a whole, will incur a significant loss.

However, those vessels that are fortunate enough to remain in the fishery, are likely to experience net gains. On a purely simplistic basis, if the catch is reduced 40 percent and the number of vessels is reduced 50 percent (at the end of five years), the average catch of the remaining vessels will increase by 20 percent per vessel.

These various factors and forces make it very difficult to determine the net costs to Spain of the arrangement with Morocco for the sardine fishery. It is even more difficult to estimate the economic value of the benefits to Morocco. One of these benefits is likely to be an increase in the amount of total catch by the Moroccan vessels. This will depend, in part, upon the degree to which the Moroccan vessels and Spanish vessels transferred are able to increase their catches in Zone B. Catches in Zone A, where the Moroccans have traditionally fished, have fallen off dramatically in the past few years. This is apparently due to a shift in the location of the stock from Zone A to Zone B (FAO, 1979b). Thus, if Morocco is to take advantage of the decrease in Spanish catch, the Moroccan effort in Zone B will have to increase to a large extent.

However, even if the Moroccan vessels are successful in shifting their effort and in increasing their total catch, this is not likely to produce an increase in catch per unit of effort. The transfer of vessels from Spain to Morocco does not reduce the total amount of fishing effort in the combined fleets. Indeed, it is possible that it might even be detrimental to the Moroccan fishermen. If the vessels that are transferred from Spain to Morocco start fishing in Zone A, they will add to the excessive effort presently being invested in this zone and reduce further the catches per unit of effort. It will also reduce the amount of fishing effort in Zone B, thereby permitting the Spanish vessels that use this zone to increase their catches per unit of effort. Thus, some attempt should be made either to reduce the total amount of fishing effort or to ensure that effort is distributed appropriately between the two zones.

In estimating net benefits to Morocco, consideration must also be given to the costs of enforcing the arrangement with Spain. The imposition of a quota on catch requires the ability to monitor the catches taken by the Spanish vessels on, at least, a monthly basis and to prohibit fishing after the quota has been reached. These are not necessarily difficult tasks, but there are certain costs associated with their implementation that must be considered in evaluating the net benefits.

With regard to the distribution of the benefits, the Moroccan approach produces direct and indirect benefits to the fishing industry, but no direct revenues to the general treasury. Contributions to the national economy will occur if the industry is able to make efficient use of its new opportunities.

In the case of Senegal, the arrangements with foreigners have generally been made for the primary purpose of developing the Senegalese capacity to harvest and process the fishery resources within its zone. Senegal has established several joint ventures with foreign companies. It has also adopted a number of arrangements with foreign countries which produce several kinds of benefits to the Senegalese economy. These arrangements generally require the foreign vessels to pay a fixed fee and to land their catch, or a portion of their catch, in Senegal for domestic processing. In addition, the foreign governments must generally) provide low cost loans or grants-in-aid.

The licence fees are fixed by law and apply to all vessels whether flying the Senegalese or foreign flags¹. The schedule of fees is shown below:

¹ "Actes officiels sénégalais. Au journal officiel du Sénégal du 2 octobre 1976... décrets du 24 juillet 1976".

These kinds of arrangements are too complicated to permit a ready evaluation of the costs incurred by the foreign fishermen in gaining access to Senegalese waters. For example, the net cost to the foreign country of making a low cost loan depends not only upon the difference between the agreed and the commercial rates of interest but also upon the benefits to the foreign economy of the sales of its gear and equipment that are made under the loan.

Similarly, the benefits to Senegal are also difficult to evaluate in economic terms. Senegal has a fairly well developed fishing and fish processing industry, so that the loans for gear and equipment and the grants-in-aid can probably be used effectively to enhance these industries. However, to the extent that Senegal wishes to permit some foreign fishing to continue, the approach may impede the maximization of net benefits that can be extracted from the foreign fishermen. The approach tends to restrict the market for access rights to a few countries. That is, some governments, such as those of Japan and Korea, may find it difficult to provide low cost loans or grants-in-aid specifically for the purpose of gaining access rights for their fishermen. Thus, even though the Japanese or Korean fishermen may be willing to pay more than the fishermen of other countries for access to a particular stock, they cannot readily do so except in the form of joint ventures. Furthermore, if the loans require Senegal to purchase gear and equipment from the lending country, this may be at higher cost than if the purchases were made in other countries.