GLOBALIZATION AND RIGHTS-BASED MANAGEMENT - Chairman: John Nocholls, Fisheries Western Australia, Perth

Property Rights as an Alternative to Subsidisation of Fishing and a Key to Eliminating International Seafood Trade Distortions - A. Macfarlane
A Proposal for Cost Recovery in the Alaska Individual Fishing Quota (IFQ) Fisheries - P.J. Smith and J.T. Sproul
South African Perspectives on Rights in Fishing and Implications for Resource Management - D.J. Bailey

Property Rights as an Alternative to Subsidisation of Fishing and a Key to Eliminating International Seafood Trade Distortions - A. Macfarlane

A. Macfarlane
New Zealand Seafood Industry Council Ltd
Private Bag 24-901, Wellington, New Zealand
<[email protected]>

1. BACKGROUND

The key issue facing capture fishing globally is achieving and maintaining optimal, sustainable exploitation of fisheries resources. Fishing is the only significant food producing sector left dependent on harvesting wild resources. Failure to secure sustainable management of fisheries resources ultimately calls into question the economic sustainability for fishing industries. Fish and fish products are the most widely traded food commodity grouping. Failure to secure sustainable resource management will affect the capacity of fishing nations to supply, and importing countries to obtain supplies, of fish products.

In most managed fisheries, management related risk is primarily borne by the manager - generally Governments. In the absence of clearly defined and allocated rights to access fisheries resources, the manager is faced with the need to deal with the consequences of decisions relating to resource availability or access.

The human reaction to exploitation of scarce resources in the absence of legally defensible access rights is to maximise individual exploitation to the extent possible. This has been well described in the literature (Gordon 1954). Resource abundance can be reduced to a scarcity as a result. This process is illustrated in Figure 1. In the case of fisheries, a renewable natural resource can, in the terms of Article XX(g) of the GATT 1947 Agreement, be turned into an exhaustible natural resource.

It is inevitable that once the technical capacity exists to exploit fisheries at their maximum sustainable yield levels, it is only be a matter of adding more capacity in the race for fish to start down the road towards overexploitation. Pulling a fishery back to sustainability will entail reducing harvests to levels which allow stocks to recover and then ensuring that catch levels are constrained to long term and optimally sustainable levels. Addressing the issue of biological sustainability can be relatively straight forward through setting and enforcing catch limits. However unless fishing effort is also constrained, the result will be economic failure of fishing businesses unable to achieve profitable catch levels.

Limiting access to fisheries can take many forms - including reducing the number of fishers permitted to be in a fishery or reducing the opportunity to fish by seasonal closure or limiting days-at-sea. Many have the disadvantage of failing to address the issue of developing technology or innovation which dissipate profits generated by rationing of access in the race to fish competitively and maximise catch.

When fisheries access is limited by number of participants and the total catch available to each participant, such access rights, if tradable, can enable individuals or communities to negotiate reduced catch levels to meet sustainable management imperatives. Thus, pressure on governments to provide subsidies can be reduced - indeed eliminated altogether - through the creation of tradable access rights with a capital value. This provides a built-in mechanism to provide financial compensation to those who choose to exit the fishery through trading of their rights to those who choose to stay. The value of the rights so traded will be a direct result of the profit available in the fishery. As with land, the experience in New Zealand’s comprehensive rights-based system is for the profit in a fishery to be directly reflected in lease and sales value of access rights to a fishery.

Governments find themselves under pressure from fishing communities and businesses to provide financial transfers to assist with reducing the allowable harvest levels required to achieve resource sustainability and, or, allow for stock recovery. Faced with the prospect of whole communities losing their means of economic livelihood, the political imperatives are obvious. Lack of individual or community property rights ensures that governments have few, if any, alternatives to providing direct financial assistance.

2. THE PROBLEM OF SUBSIDIES

Subsidies to fishing can be categorised into two general groups; (a) cost reduction and (b), revenue enhancing. Figure 2 illustrates the effect of cost reducing subsidies. Examples of cost reducing subsidies provided to fishing can include the provision of services such as discounted or free access to port and storage facilities and fuel subsidies. Such subsidies simply shift the cost/revenue equilibrium point to the right, i.e. to a level of higher fishing effort, and restore the prospect, if not the reality of profit. But unless access to the fishery is limited, the lure of unallocated profitability will see the profit dissipated in increased effort. In the absence of effective controls on catch, cost reducing subsidies also lead to increased total catch until costs again catch up with revenues. Or, there is a resource failure.

Figure 3 illustrates the effect of revenue enhancing subsidies. Examples include vessel construction subsidies and subsidies to shift effort to under-utilised fisheries. Enhancing revenues has the same effect as reducing costs and can lead to increased effort and increased catch until the point of cost/price equilibrium has been reached.

Figure 1: The simple fisheries model

(WTO Committee on Trade Environment WT/CTE/W/111 11 March 1999)

Coincidentally, Governments in those leading markets manage fisheries largely without property rights and are the leading providers of subsidies to their fish harvesting sectors. The catching sectors of the key import markets countries are not generally major suppliers to international trade. But, the subsidies they provide to their industries to overcome losses arising from reduced catches as TACs are reduced, or are provided as cash adjustment assistance to participants to exit the fisheries and thus reduce capacity, often are used to facilitate their entry in to other less fully utilised fisheries. Here, the problems are created anew. The subsidies also assist their beneficiaries to compete against imports in their domestic markets. In that way subsidies contribute to distorting the international trade in seafood products.

Table 1
Average global good subsidies
(Including trade barriers)

Product	Subsidy (%)
Wheat	48
Coarse grains	36
Rice	86
Oilseeds	24
Sugar	48
Beef and veal	35
Pork	22
Poultry	14
Lamb and mutton	45
Eggs	14
Fish	30-35

Figure 2: Effect of cost subsidies

(WTO op. cit.)

Much of the fish in international trade originates from developing countries and is produced without the aid of subsidies. While prices in international trade in fish and fish products are generally established at levels that reflect available supply and competitive demand, competing domestic supplies arising from subsidies adds to available supply and it must be anticipated that the clearing prices which result are reduced accordingly. Thus, returns to unsubsidised exporters are reduced accordingly.

The WTO’s Agreement on Subsidies and Countervailing Measures. Article 6, establishes grounds for determining the existence of serious prejudice to a Member and includes in Section 6.3 “the effect of a subsidy is to displace or impede the imports of a like product of another Member into the market of the subsidizing Member”. However there is no dispute case history based on this provision - yet.

Figure 3: Effect of price supports

(WTO op. cit.)

So called 'multi-functionality' is difficult sustain if both the biological capacity of fisheries and their economic worth are such that large coastal communities cannot sustain incomes equivalent to those obtainable in cities. Fewer fish and fewer people in fishing communities can still result in economic and biological sustainability, but it may well be different from the result that can be achieved through subsidies with the underlying motive of achieving or maintaining social or political objectives.

Figure 4: Major seafood importers (1977)

Source: FAO

Source: FAO

FAO 1999. FAO Yearbook Fishery Statistics Commodities Vol. 87 1997. Food and Agriculture Organisation of the United Nations, Rome

Gordon H.S. 1954. Economic Theory of a Common Property Resource: The Fishery, Journal of Political Economy 62:124 - 42.

Milazzo, M. 1998. Subsidies in World Fisheries: A Re-examination. World Bank Technical Paper n. 406, Fisheries Series. World Bank, Washington DC

WTO 1999. Committee on Trade and the Environment. On the Environmental Impact of Fisheries Subsidies: A short report by the Icelandic Ministry of Fisheries. WT/CTE/W/111, 11 March 1999. World Trade Organisation, Geneva.

WTO 1994. Agreement on Subsidies and Countervailing Measures Pp 264 - 314 The Results of the Uruguay Round of Multilateral Trade Negotiations, The Legal Texts, The GATT Secretariat, Geneva.

WTO 1994. General Agreement on Tariffs and Trade (GATT 1947) Pp 485 - 537 The Results of the Uruguay Round of Multilateral Trade Negotiations, The Legal Texts, The GATT Secretariat, Geneva.

A Proposal for Cost Recovery in the Alaska Individual Fishing Quota (IFQ) Fisheries - P.J. Smith and J.T. Sproul

P.J. Smith and J.T. Sproul
National Marine Fisheries Service
Alaska Region, P.O. Box 21668
Juneau, Alaska 99802, USA
<[email protected], [email protected]>

1. INTRODUCTION

Under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (MSA or Act), marine fisheries in the Exclusive Economic Zone of the United States are managed by the Secretary of Commerce (Secretary), with operational responsibility delegated to the National Marine Fisheries Service (NMFS). Amendments to the Act, adopted in 1996, direct the Secretary to implement Federal regulations to recover actual costs associated with the management and enforcement of limited access programmes in U.S. fisheries that are managed under Individual Fishing Quota (IFQ) programmes [MSA, 1996; §304(d)]. The Act also mandates the collection of fees from participants in the Bering Sea Community Development Quota (CDQ) programme; however, the programmatic design to do so has not yet been developed and will not be discussed here. The Act limits cost-recovery fees to three percent of the ex-vessel value of fish harvested under any such programmes, and further requires that the fees be collected at the time of landing, the time of filing a landing report or during the final quarter of the year during which the fish were landed.

It is not clear why the Congress chose to limit agency discretion in this way; some argue that it would have been much easier, less confusing, and administratively more efficient to simply adopt the “Canadian model” - a system whereby holders of Individual Vessel Quota (IVQ) pay their fees before their annual IVQ permit is issued. Fees are adjusted annually (depending to some extent on the annual Total Allowable Catch, or TAC) and the annual rate is anticipated to be sufficient to cover the administrative and enforcement costs of the programme. The 1999 “up-front” amount paid by Canadian IVQ holders is CA$ 0.20/lb of IVQ halibut allocations (Best 1999).

In addition to the direct cost recovery anticipated by the Act, the Secretary is authorized to reserve up to 25% of the fees collected for use in an IFQ loan programme to aid in financing the purchase of IFQ or quota share (QS) by “entry-level” fishermen and “fishermen who fish from small vessels.” The funds so reserved may then be assigned to the NMFS (Financial Services Division) under the Federal Credit Reform Act (FCRA) and “leveraged” (at a ratio of approximate 1:50) with funds loaned from the U.S. Treasury to capitalize the Federally-subsidized IFQ loan programme.

To implement the mandate in the Alaska halibut and sablefish Individual Fishing Quota (IFQ) programme, the NMFS is developing a Proposed Rule and will seek public comment before finalizing the cost-recovery programme. The proposal has not yet been published, and is therefore a “work in progress;” however, certain of its elements have been discussed in detail with members of the North Pacific Fishery Management Council (Council) and others, and are set out here.

2. BACKGROUND

The Alaska Region of the NMFS, through its Restricted Access Management (RAM) programme, administers the Alaska IFQ Programme. The IFQ programme is a limited access system authorized by section 303(b) of the Magnuson-Stevens Act and the Northern Pacific Halibut Act of 1982. The programme has been fully effective since its implementation in March 1995; regulations for the implementation of the programme can be found at 50 CFR part 679.

Approximately 5000 persons (individuals and companies) currently participate in the programme. As the following table shows, the IFQ system of managing access to the Alaska halibut and sablefish fisheries imposes additional costs on the public in an amount estimated at about US$ 2.8 million (Smith 2000).

Table 1
Estimated annual costs of managing and enforcing the Alaska halibut and sablefish IFQ programme in Alaska

Expense category	Estimated annual costs
Restricted access management and sustainable fisheries	1 400 000
Administrative appeals	200 000
Alaska Enforcement Division	1 200 000
Total	2 800 000

To date, there has been no requirement that industry pay any of these costs. However, the amendment to the Magnuson-Stevens Act noted above requires the government to recover most, if not all, of these costs directly from IFQ programme participants.

The proposal discussed here was developed over a two-year period beginning in 1997. Staff from the NMFS Alaska Fisheries Science Center in Seattle and the Sustainable Fisheries Division in Juneau met on several occasions with the North Pacific Fishery Management Council (Council) and its committees, to address such issues as: Who should pay? How should payment be calculated? How should costs be calculated? How should the NMFS impose penalties for non-compliance? Where does the money go and what is done with it? and a variety of related questions. Taken together, the answers to these questions provide the framework for the proposed programme discussed herein.

3. PROGRAMME DESIGN

3.1 Who pays?

Under the IFQ programme, any IFQ permit holder who delivers IFQ halibut or sablefish must do so to a “Registered Buyer” (i.e. a processor or other buyer who holds a specific permit, issued by the NMFS, to purchase IFQ product). Because it is the transaction between the fisherman and the buyer that gives rise to the “ex-vessel” price of the fish (upon which the fee is to be premised), the payer under the programme could be either the IFQ permit holder or the buyer.

Some precedent exists for the buyer bearing the burden. The State of Alaska imposes a variety of taxes on the commercial fisheries it operates, including a “raw fish tax” (which is paid into the general fund of the state and relevant local governments), a marketing tax, and a salmon enhancement tax (Alaska statutes). All of these taxes are withheld by fish-buyers and paid annually to the State of Alaska’s Department of Revenue. In developing this plan, initial thinking was that the Registered Buyers would likely be the most logical payer, especially as many of them are the same entities that withhold and pay the State of Alaska taxes.

However, upon reflection it was determined that Registered Buyers would not be the appropriate payer under the cost-recovery programme. First, not all Registered Buyers have the management infrastructure necessary to maintain records and funds and pay them on an annual basis to the NMFS. Second, because anyone who applies for a Registered Buyer permit may receive one, it would be difficult to enforce sanctions against those who failed to comply with the terms of the programme. And finally, the Registered Buyers resisted the role of “tax collector” noting that it was the IFQ holders, and not the buyers, who were benefitting the most from the IFQ programme. Accordingly, a decision was made to require each person who used their annual IFQ permit to make the payment to the NMFS at season’s end.

3.2 Determining basis for payment

The Act requires that payment be based on the “ex vessel” price paid to fishermen for their catch. This mandate assumes that fishers are simply wholesalers of fish to a purchaser or processor, who then sells the fish at the retail level. However, a number of fishers are their own “buyers” and sell directly to the public from their vessels or after transporting their catch to a public market. In those cases, there is no distinction between the ex-vessel price and the wholesale price.

Accordingly, the decision was made to propose two separate approaches to determining just what the price should be. The first is the one envisioned in the Act; i.e. using the price paid to the fisherman (the “actual” price). The second option was a derived price calculated by the NMFS from reports submitted by Registered Buyers (the “standard” price). The standard price would be sensitive to species, time and area (port) of first sale and would be the “average” price paid to fishermen by buyers.

Those IFQ holders who bear the burden of calculating and paying the fee could either use the “standard” price compiled by the NMFS or they could base their fee on the actual prices they received from the sale of fish. If they choose the latter option, they would be required to keep appropriate documentation of their receipts to withstand any audits or other investigations by the NMFS.

3.3 Fee percent calculation

The Act envisions that the fees collected would be sufficient to cover the cost of managing and enforcing the halibut/sablefish IFQ programme. However, it also limits the percentage amount that can be collected to 3% of the total ex-vessel receipts and directs that 25% of the receipts be used for a different purpose (the loan programme). If the actual costs of management and enforcement are as reported (at $2.8 million), then it is apparent that, for the near term at least, the percentage charged will most likely remain somewhat below the maximum, or 3%. Simple arithmetic can be used to estimate the amount of fees that will be collected, as follows (estimates are based on projected 1999 harvest and estimated ex-vessel prices):

i. If the halibut harvest is 50 000 000lbs, and the ex-vessel value is ~$2.00/lb, the total ex-vessel value of the halibut IFQ fishery is $100 000 000

ii. If the sablefish harvest is 25 000 000lbs, and the ex-vessel value of sablefish is ~ $2.00/lb, the total ex-vessel value of the sablefish IFQ fishery is $50 000 000

iii. Three percent of $150 000 000 is $4 500 000 and

iv. After 25% ($1 125 000) is deducted for the loan programme, the balance ($3 375 000) is available to offset the actual costs of managing and enforcing the IFQ programme.

3.4 Billing and payment

As noted above, the responsibility for paying the fee to the NMFS will lie with the IFQ permit holder. To facilitate payment, the NMFS will annually compute (for each permit holder), the total landings of IFQ halibut or sablefish, apply the “standard price” calculation to the number and location of lbs landed, multiply the totals by 0.03 and present the permit holder with a report and a bill. The IFQ season currently ends in mid-November; it is expected that the billing can be completed and mailed by no later than 1 December of any given year.

When the report and billing is received the IFQ holder will have the option of paying the amount billed (i.e. the amount that is based on the standard price computed by the NMFS from information submitted by Registered Buyers) or paying the fee based on the permit holder’s “actual” receipts for fish sold.

Payment in full will be due to the NMFS by no later than 31 January of the year following the landings that cause the payment obligation to be incurred.

3.5 Underpayment, late payment, and non-payment

As IFQ permit holders who have landed fish against their IFQ permit, and who thereby have incurred an obligation to pay a fee under the cost recovery programme, will have until 31 January of the year following the landings that give rise to the obligation to make payment in full to the NMFS. The fisher has a choice: either pay the fee based on the “standard” price as computed by the NMFS from Registered Buyer reports, or pay the fee based on his/her actual receipts from the sale of fish.

If they choose the former, and pay in full, the obligation is met. However, if they choose to pay based on actual receipts, they bear the burden of demonstrating the veracity of the information provided and the accuracy of the calculations. It is anticipated that the NMFS will accept, without question, most such payments; however, some may vary so significantly from the payments that would have been due using the standard price calculations that the NMFS could make an inquiry. Further, the NMFS could randomly select certain returns for audit. In either case, the burden of demonstrating the validity of the payment would lie with the permit holder.

When the NMFS questions a payment, the payer would be so notified and given the opportunity to submit information and evidence in support of their position that sufficient payment had been made. In the case of those paying against “actual” receipts, the sort of evidence that would be expected would be contemporary records of fish sales that showed the time and place of sale, the amount sold and the total paid.

If, upon receipt of additional evidence from a permit holder, the NMFS still believes that insufficient payment has been made, an “Initial Administrative Determination” (IAD) to that effect would be produced. The IAD could be appealed to the NMFS Office of Administrative Appeals who would conduct an inquiry (perhaps ordering an evidentiary hearing) and produce a decision. The NMFS Regional Administrator would have 30 days during which to review the decision and could order its adoption, reverse it, or remand the matter for further work. Once a decision acceptable to the NMFS Regional Administrator had been produced, it would become the final agency action on the matter, subject only to further appeal through the US court system.

A permit holder who has incurred a fee obligation, but who does not file a return at all, would immediately receive an IAD from NMFS/RAM. If a permit holder does not respond, the appeal could result in a final agency action requiring payment.

During the pendency of any adverse administrative action (a determination that an insufficient fee, or no fee, has been filed, and that monies are due and owing to NMFS) on a fee obligation, any IFQ permit (including the underlying Quota Share from which the IFQ is derived) would be immediately designated non-transferable in the hands of the debtor; and the debtor would not be allowed to receive any additional Quota Share or IFQ by transfer. Once the matter was resolved, transferability would be restored; however, if the matter could not be administratively resolved, and a final agency action determines that payment is due, the use of any permit in the hands of the debtor would be suspended. If, after a period of 30 days, no payment had been received, the case could be referred within the Department of Commerce and subject to additional Federal collection procedures. In that event, continuing noncompliance with the fee requirement could lead to forfeiture of annual IFQ permits and/or permanent revocation of Quota Share.

4. LIMITED ACCESS SYSTEM ADMINISTRATIVE FUND

With the exception of the 25% of the fees that are diverted to support the IFQ loan programme, all fees collected from participants in the IFQ fisheries are to be deposited in the Limited Access System Administrative Fund (LASAF) established within the U.S. Treasury. Appropriations from that fund are intended to support the management and enforcement costs in the NMFS region from which they were collected. Additional deposits to the LASAF are expected to be derived from CDQ programme fees and, eventually, from payments to the Central Registry System for Limited Access System Permits established by the Act.

5. ANNUAL REPORTING

A final element in the proposed cost-recovery plan is the requirement that an Annual Report be prepared and distributed to IFQ programme participants and the general public. The Report would cover such items as the estimated total ex-vessel value of the fisheries (as derived from Registered Buyers reports), the numbers of participants paying fees, the amount of the fees, compliance with reporting and other fee collection requirements, and the use to which the fees were put (including a fully transparent budget for the actual cost of managing and enforcing the IFQ programme).

Although a decision on the question is yet to be made, it is envisioned that the required Report would be incorporated in the annual “IFQ Report to the Fleet” that is already prepared and distributed (and posted on the NMFS/Alaska Region Internet web site) each year.

6. CONCLUSION

Although the Magnuson-Stevens Act has long authorized NMFS to charge nominal fees for the issuance of permits [provided that “...the level of fees charged...shall not exceed the administrative costs incurred in issuing the permits...” -- MSA, Sec. 304(d)(1)], the inclusion of a specific fee for the IFQ programmes is an innovation that is yet to be tested. The programme described here is intended to meet the requirements of the law with respect to the level of fees that may be collected and the peculiar limitation on how that is to be accomplished further. It is intended to strike a proper balance between NMFS as the regulator and enforcer of tax collection (on the one hand) with the role of NMFS as a collaborator with industry in devising fisheries management programmes that are appropriate, responsive, and yet be acceptable to all participants. Although the regulatory framework for the programme is yet finalized, there are indications that, as a whole, the IFQ fleet is willing to pay the necessary price for the net benefits they experience from holding IFQ and fishing under the system.

In its important work, Sharing the Fish, Toward a National Policy on Individual Fishing Quotas, the National Research Council noted with approval that the Magnuson-Stevens Act now provides for a fee collection programme, but commented that “...in practice, the limit of 3% may well be too low for some IFQ programmes and should be increased...” Likewise, the NRC recommended: “The Magnuson-Stevens Act should be amended to authorize the capture of rent in excess of cost recovery.”

Whether this latter recommendation will become reality is, of course, unknown. However, successful implementation of the existing statute would be an appropriate first step toward the realization of the broader goal of eliminating pernicious national subsidies.

7. LITERATURE CITED

Best, G. 1999. Commissioner (Canada), International Pacific Halibut Commission, personal communication.

Federal Fisheries Investment Task Force 1999. Study of Federal Investment.

National Marine Fisheries Service 1996. Magnuson-Stevens Fishery Conservation and Management Act as amended through October 11, 1996. NOAA Technical Memorandum, NMFS-F/SPO-23, 121 pp.

National Research Council 1999. Sharing the Fish: Toward a national policy on individual fishing quotas. National Research Council. National Academy Press, Washington, D.C.

National Institute of Economic and Industry Research 1998. Subsidies to use of the natural resources. Commonwealth of Australia, Paragon Printers.

Smith, P.J. #. How “privatization” can result in more government - the Alaska halibut and sablefish experience.

South African Perspectives on Rights in Fishing and Implications for Resource Management - D.J. Bailey

D.J. Bailey
Bato Star Fishing (Pty) Ltd, Consultative Advisory Forum
P O Box 7251, Roggebaaai, Cape Town, 8012 South Africa
<[email protected]>

1. INTRODUCTION

Our policy development processes in fisheries management are necessary focused on our own domestic situation. It is, however, important to ensure that we keep up with developments in this area in the rest of the world. I am confident that we are on the right track with our policies, which may need some more definition in some instances, but our biggest challenge lies in achieving an equitable distribution of rights and successful implementation of a rights-based culture.

This paper presents a brief history and an objective perspective of the South African position regarding access rights at this point in time. This perspective is derived primarily from the outcome of policy consultations with stakeholders through the Fisheries Policy Development Committee (FPDC), the subsequent Government Policy White Paper and our new Marine Living Resources Act which came into effect in September 1998, just over a year ago.

The question of the nature of fishing rights is very pertinent to the South African situation at this time. We are currently in the process of restructuring our rights allocation regime and it is envisaged that long-term rights will be allocated over the next few years. This should bring about the conditions required for the South African industry to maintain their reputation for quality products and stability of supply into the global markets.

Our fisheries policy are based on the objectives of EQUITY, SUSTAINABILITY and STABILITY. It is important for the future of our fisheries that the nature of the rights and the outcome of the allocation process make a significant contribution to these policy objectives. Equity refers to the need to achieve an ownership profile in the industry which is representative of the South African population. Sustainability refers to the need to manage our resources responsibly for long-term benefit. Stability expresses the need for a stable industry in terms of resource levels and security of rights.

2. THE CONTEXT IN SOUTH AFRICA

It is necessary to reflect on the question of rights in the South African context. South Africa is a country where for a long time emphasis was placed on the differences between people of various racial groups through the policy of apartheid. While the proponents of apartheid tried to find philosophical justification for their policies, it came down to denial of basic rights to black South Africans. Fifty years of apartheid led to our current situation where the political, economic and social differences between groups are largely demarcated along racial lines.

An end to this madness was signalled by the radical change of direction by the ruling National Party in 1990 in the unbanning of all political parties and the release of political prisoners. There had, however, never been a level playing field for all races in South Africa. From the days of colonialism and slavery, the indigenous black people of South Africa were dispossessed, cheated and confined to a second class role in South African society. Our leaders were either forced into exile, imprisoned or killed by the regime. Some of the more high profile legislative and institutional arrangements were as follows:

i. 1913 Land Act - confined over 80% of the population to 13% of the land

ii. the Group Areas Act defined the areas where black people could live and operate businesses and resulted in thousands of people being forcibly removed from their homes

iii. labour preference areas and Pass Laws restricted the free movement of black people

iv. labour laws entrenched a system of job reservation by defining certain jobs for ‘whites only’ and

v. each racial group had its own education department with huge disparities in resource allocation between the departments.

This was where we found ourselves in April 1994 after our first democratic elections. It is clear, even after our second democratic elections earlier this year that we will have to work hard to sustain the ‘miracle’ which brought about a democratic political dispensation to ensure the normalisation of our racialised social and economic situation and the alleviation of poverty. Soon after it came to power, the new African National Congress government tabled the Reconstruction and Development Programme (RDP) to address the country’s social and economic problems through the upliftment of previously marginalised groups. The RDP clearly envisaged addressing areas of unequal economic opportunities such as access to government contracts and the allocation of concessions including access to marine resources.

The RDP has been superseded by a new economic policy, but the basic objectives of the RDP, to normalise the distribution of economic opportunities, still guides government thinking on issues such as access to marine resources. In addition to this, our overall industrial policy strongly advocates the promotion of small and medium enterprises to serve as the engine of employment and economic growth through a more vibrant competitive environment.

The biggest challenge these policies are meant to address is the high level of unemployment in South Africa, estimated at over 30%, and the low levels of economic growth over the last few years. Again it is the largely unskilled black population which suffers the highest levels of unemployment. With a lack of alternative employment opportunities in coastal communities, the fishing industry is seen as a last resort by many people.

We also have a Constitution which, while recognising that certain imbalances need to be addressed, guarantees the rights of all South Africans. Important for fisheries management is the constitutional right to administrative justice. This constitutional provision will underpin a strong rights-based culture in our fisheries.

3. RIGHTS IN SOUTH AFRICA'S FISHERIES

The situation sketched in this brief background is clearly reflected in the pattern of quota distribution in the fishing industry in 1994:

Fishery	TAC (tonnes)	Number of quota holders	% of TAC held by 3 largest
Hake	148 300	31	80
W C Rock Lobster	1 500	99	30
S C Rock Lobster	427 (Tails)	6	82
Abalone	615	12	75
Pilchard	105 000	47	40
Anchovy	70 000	30	80
Sole	872	10	71

TAC: Total Allowable Catch.

This is the situation which the FPDC, tasked with developing a national fisheries policy, was faced with when it started looking at policy initiatives for the transformation and management of the industry in December 1994, some seven months after our first democratic elections. The FPDC represented all stakeholders, i.e. government, industry representatives from the various fishing sectors, labour, recreational fishers, conservationists and coastal community representation through various regional Fishing Forums. The FPDC reached broad consensus on the important issues of transformation and the nature of fishing rights and published a final report after two and a half years of deliberations and negotiation.

It was clear that in terms of commercial fishing the major obstacle would be to achieve a more equitable distribution of fishing rights, a distribution that would more fairly reflect the demographics of South Africa and would be broadly accepted by stakeholders. This would be the initial allocation which many of the speakers at the FishRights99 Mini Course and Core Conference acknowledged as the necessary condition for the introduction of a more advanced ITQ system.

As the FPDC had strong representation from the existing industry as well as aspirant new entrants, its recommendations on the nature of the fishing right is a good yardstick of industry’s views on the matter. The FPDC did not deal extensively with the characteristics of Security and Exclusivity as these were to a large degree entrenched in the existing quota rights. Rights emerging from a legitimate transformation process should also offer enhanced Security and Exclusivity. The FPDC recommended that rights should be transferable, subject to:

i. an initial payment on allocation and
ii. an initial moratorium on transfers to new entrants.

Apart from the initial payment for the right the FPDC also recommended annual tax and rental payments. The FPDC recommended that all users, including recreational fishers, should pay for the privilege of access in order to support sound management of marine resources. It further recommended that there should be a cap on both the maximum number of participants in the different sectors as well as the maximum allocation held by any one quota holder (30% of TAC)¹.

¹ This allocation was made by the Diemont Commission as it became known. Its full title was: Commission of Inquiry into the Allocation of Quotas for the Exploitation of Living Marine Resources on a Firm Basis, and it was chaired by Judge Diemont, appointed in 1985.

In recognition of the plight of impoverished coastal communities the FPDC recommended further investigation into ways of incorporating rights for unemployed coastal people and for providing immediate poverty relief. The Act makes provision for the granting of a subsistence fishing right to the unemployed and poor. This is a new fishing sector and an extensive consultation process has been launched to ensure the proper functioning and management of this sector. Unlike recreational fishers, subsistence licence holders will be allowed to sell their catch.

The nature of the fishing right as it stands now makes it difficult for small and medium enterprises (SME’s) to obtain finance as the banks are not prepared to accept the right as collateral. The FPDC did make reference to a dedicated development finance institution for the fishing industry. There are some development finance institutions and government credit guarantee schemes operating at the moment and I believe that these institutions will be able to extend their focus to the fishing industry to resolve the question of finance for SME’s in the fishing industry.

With this fairly prolonged policy development process behind us everybody seems to be reasonably happy with the right as defined in the Act. This could be because the primary focus at this stage is on the allocation process, which is the major cause of uncertainty in the industry. The negative consequences of this uncertainty are a lack of compliance and weak stakeholder participation in resource management processes. Our current challenge is thus to stabilise our stakeholder base through the finalisation of the allocation process, building of strong co-management structures and entrenching a strong rights-based culture through our economic contribution to South Africa as an equitable, sustainable and stable industry.