European and External Relations Committee

Meeting date: Thursday, February 7, 2013

Official Report 489KB pdf

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“Brussels Bulletin”

Welcome back. We will move swiftly on to agenda item 4, which is the “Brussels Bulletin”. As usual, Dr Ian Duncan will talk us through the bulletin, then questions will follow from colleagues.

There are four broad issues that I want to touch on briefly. I have also given members an additional paper, which was written by Fabian Zuleeg, the chief economist of the European Policy Centre, who spoke to the committee previously. That is a taste of a more thorough paper, which will be coming to the committee shortly, about the multi-annual financial framework negotiations. That is important; the title of Fabian Zuleeg’s paper gives it away—“Horse-trading Europe’s long-term future? Will infrastructure and research investment be sacrificed in the MFF negotiations?” It is worth reading the paper. The report states:

“France, as well as Mediterranean, Central and Eastern European countries benefiting from the traditionally large areas of EU spending, in particular the Common Agricultural Policy and the Cohesion/Structural Funds, demanded further protection of these areas. This form of negotiation turns the budget into a zero sum game—and something will have to give.”

The fear is that it will be the infrastructure and research part of the budget that has to give.

I will touch briefly on fisheries. I am sure that members will have read in the papers that the European Parliament’s fisheries committee yesterday reached agreement on its report into the common fisheries policy. There are a couple of big things to note. The report calls for a discard ban within three years, which will be important; a move away from the quota-allocation system towards the maximum sustainable yield approach; and a move towards regional management. It is important to note that that is only one side of the co-decision process; the council has yet to come back with what it wants to achieve. Without the detail, quite a few of those things seem slightly aspirational. For example, regional management is a great title, but the test will be how regional management is to be delivered.

I have provided in the bulletin clickable links that give the full timetable on each of the components of the CFP, so members can look at those, should they want to dig into the topics a bit further.

Mackerel is an issue that Hanzala Malik has been tracking for some time. There was a lot of interest in the press on the issue after the committee’s previous meeting. Members will have noticed in the bulletin that Richard Lochhead, the Cabinet Secretary for Rural Affairs and the Environment, has tried to progress the issue by calling for an international figure to step into the negotiations.

I will say a couple of things by way of background. I was in Brussels last week chatting to various people, and the reality seems to be that nothing will happen this year—that is the feeling among the people who are involved in the discussions. There are several reasons for that, including the fact that the upcoming Icelandic election will stop things progressing, and the Norwegian election at the back end of the year will also be a factor. As I said at the previous meeting—I want to be clear on this—there is a bigger issue around importing of Icelandic fish into the north-east of England; that is another angle on the matter. The imports are less into Scotland and more into the north-east of England. It is a problem.

At the moment, the Icelandic fisheries minister has imposed what he is terming a “unilateral” cut, and is matching the 15 per cent cut that the EU and Norway have previously agreed. Iceland will impose a 15 per cent cut in its own fishing but—this is why it is slightly meaningless—Iceland caught 2,000 tonnes of mackerel in 2011 and 146,000 tonnes in 2012, so a 15 per cent cut from 146,000 tonnes is not that significant a cut when, not so long ago, the total catch was only 2,000 tonnes. You can immediately see why there is a bigger issue about conservation, and why Marine Stewardship Council accreditation was lost; the stock is no longer safely being harvested within the limits that were set by the scientists.

Progress will be slow on the matter. That is not to say that we are not going to continue to push for more information from all the people from whom we need to get it, but that is the background from my trip to Brussels.

I find it ironic that Scottish fishermen and their families sacrificed much of their industry in trying to save those stocks but those stocks are now being gobbled up by others. There is a moral issue here. The European Union has a responsibility to safeguard our fish. We did what the EU asked us to do; now, it needs to do what we ask it to do, which is to protect our stocks. The committee must take action. We should speak to the cabinet secretary so that we can do more than just allow the European Union to let the issue roll on without end. On the political niceties, we will have to swallow our pride and deal with the issue. If that means upsetting people, so be it. We cannot afford such wholesale capture of those fish, considering that we made the sacrifice in the first instance.

You have summed up the problem perfectly. The sacrifices that people in the north-east made were great. A fully sustainable fishery was created out of those sacrifices, to the extent that it was accredited by an international body as being harvested according to the sustainability rules. Now, their good work is being undone, and that is a travesty. We can make more approaches to the Scottish Government, which is fully on board with this—there is no closed door there.

For the sake of protocol and politeness, we should check what other committees are doing. I think that a bit of work is being done in this regard.

Members indicated agreement.

On Hanzala Malik’s point, with which I absolutely agree, surely the difficulty is that the sanctions would hit our demersal fishermen and processors—the white-fish processors—very hard as they depend on so much white fish coming in from Iceland and the Faroes. If we have a ban, we will be cutting off our nose to spite our face.

With all due respect, I am not saying what we should suggest to the Government; I am suggesting only that we need to address the matter. It is a question of what measures our Government deems fit and proper. That is the line I would take. We should not necessarily go down the ban route.

That is absolutely right. Imports of white fish are important to the UK and are processed primarily in the north of England. Most fish fingers are made from cod from Icelandic waters, I imagine, although I do not know for certain. The principal export of Iceland is fish and fish-related products. The second export is raw aluminium. Its balance of exports is 40 per cent fish and 30 per cent aluminium.

I have one more question. I am sorry to bang on about this. You spoke about the discard ban, which everybody has been asking for, except Scottish fishermen, who do not want a complete discard ban, do they?

I think that Scottish fishermen are fearful that a ban that was not implemented well would have perverse and unintended consequences. As members know well, Scottish fishermen have gone far in that direction and have worked to demonstrate their efforts through use of on-board cameras and real-time recording. They want to ensure that the discard ban is right and functional rather than its just being adopted in order to get the headlines. I do not think that they are in any way against the ban. They, too, see the wrongness of discards, but they want to ensure that the ban does not just lead to a quick headline or is unworkable.

I presume that there must be a market for what will be kept that has not been kept in the past.

Yes. If a zero-discards policy is imposed, all that is harvested from the sea must be landed and something done with it. That calls into question what market would be used. Much would not be processed through the domestic consumption market but would go to other parts of the fish processing and fishmeal markets and so forth. The issue must be resolved.

The hope is that fishermen would, by the imposition of such a ban, be discouraged from harvesting too much. As you can imagine, that is difficult because a net is put in the water—it is not as if fish are being picked out of a tree—and fishermen must rely on their skills and cannot be certain what they will pull out of the water. There are challenges. Members will be aware that the discards figure in some fisheries is about 25 per cent of the fish that are taken from the sea. Those fish return to the water dead.

I hope that the committee is fully supportive of Richard Lochhead, the Cabinet Secretary for Rural Affairs and the Environment, in his long attempts to press the case for the Scottish fishing industry not only in Europe, but with the UK Government.

Why are we in this position? Is there any scientific basis to justify one side of the argument against the other? On the face of it, it seems ridiculous for Iceland to go, in a year, from catching 2,000 tonnes to catching 146,000 tonnes, which it would no doubt say it could justify on the basis of evidence. Where is the scientific evidence? Is there no common framework in Europe to establish the scientific evidence to formulate a sustainable policy with our partners in Iceland.

I imagine that somebody could write a small book in answer to that. I will roughly sketch out the position. Is there science to support what Iceland is doing? No. However, Iceland would contend that its science supports its position. Whose science is bigger depends on your persuasion.

The big difference is that, in the past, because there were no or few mackerel in Iceland’s water, Iceland was entirely indifferent to the stock and therefore did not sign up to the agreement at the time, which would have meant that it was a major player in the allocation. The agreement is governed through the United Nations Convention on the Law of the Sea, which sets out the negotiation structure.

What seems to have happened between about 2010 and today is that the migrating patterns of mackerel have shifted. Previously, there were almost no fish in Iceland’s waters, whereas now they are in those waters for a part of their migration cycle. Iceland’s argument is that something has changed and therefore something must be done to address that to its benefit. You can see Iceland’s logic, which is that fish are now in its waters. The bigger issue, of course, is that when the fish are in its waters, they are not at their best. That poorer-quality mackerel is being harvested in great quantities, the markets are being flooded and prices are being undercut. There are lots of tangles and issues.

There is no doubt that there is no science to support that level of take from the sea and the actions of the Icelandic fishermen or Government. The fear is that the stock could collapse in a short time.

You referred to the Cabinet Secretary for Rural Affairs and the Environment’s request for a mediator to intervene. Is that progressing? Is there a basis for putting scientific evidence at the heart of mediation in order to persuade both parties to agree?

The cabinet secretary made that request at the fisheries council last week. There is recognition that something must be done to break the logjam. The slight concern relates to other domestic issues; for example, the election in Iceland will mean that nothing will happen before the election because no one will come forward and take any hits or make any moves in that direction.

The claim is that Iceland has acted to create, in a sense, a background. It is almost as though it has harvested a titanic fishery as much as possible in order to be able to say that it can cut that amount by 50 per cent and show that it has made a big sacrifice, but still have more than it had before.

The Norwegian election will slow things down, too, because its politicians do not want to be seen to be giving anything away before an election. To some extent, politics in other parts of the north-east Atlantic will intervene with a swift solution. Richard Lochhead’s intervention was sound and sure, and there is no doubt that what he proposed would help, but solutions may unfortunately hang on elections elsewhere.

10:45

I will be brief, because my questions have largely been dealt with. Further to what Willie Coffey said, I remind Hanzala Malik of the good efforts that Richard Lochhead has made, but when it comes to getting tough at state-to-state level, that is obviously the role of the UK, and there is a limit to how much our cabinet secretary can do.

I have a question about domestic politics in Iceland. Post the election, are any of the Icelandic political parties likely to give ground on the issue? I accept that that is a matter of speculation.

It is a challenge. The major industry of Iceland is fish and every aspect of fish, so it is woven through every one of the political parties to be defenders of the fishing industry. Iceland would argue that the policy that it has adopted—certainly with regard to its white-fish industry—has been better than the CFP. The CFP has not been a success, as everyone happily concedes. It is extremely hard for the Icelandic fishermen to agree to follow the EU’s rules when they have not been that successful to date. Curiously enough, the mackerel fishery is the exception to that—it is sustainably managed.

No Icelandic party will give any ground before the election. It is to be hoped that, after the election, Iceland will accept a significant cut to what is a titanic fishery. According to the original agreement, its share of the fishery is marginal. It would like to have about 17 per cent of the fishery. To bring that about, primarily Scottish and Norwegian fishermen would have to sacrifice their entitlement. Progress will be more difficult this year because all the quotas have been allocated. For matters to progress, quota would have to be withdrawn from people, thereby slightly gumming up the works. That is not to say that such things cannot be done; it is just that it will be a challenge to do them.

Will you go through the rest of the bulletin?

I put in quite a bit of information on the common agricultural policy. Members will be pleased to hear that more than 7,000 amendments have been proposed to the original document, which is quite a significant number.

There are a couple of issues to which I draw the committee’s attention. A 25 per cent bonus on direct payments to farmers who are under 40 has been recommended, which is aimed at encouraging younger people to come into farming. That will be quite important. In addition, adjustments have been proposed to the way in which subsidies are given to larger farms.

An important development that often gets lost in discussion of the CAP is the move towards equity between the new member states in the east of Europe and the existing member states, which will mean that the existing member states—to France’s frustration—will get less money and the new member states will get more. That has gone through. I included the statistic that in countries such as Latvia, farmers get 33 per cent of the EU average, so they get the fuzzy end of the lolly in comparison with those countries in the west that are better at negotiating.

Another small point to note relates to the transposition of EU law. We often get information from the Scottish Government about how well the Scottish and UK Governments are doing in transposing EU law. The Scottish Government is very good at that, but the Government in Northern Ireland has dropped the ball slightly with regard to the implementation of the provisions of the EU electricity and gas market rules. The bulletin gives an idea of what happens when a country does that. The European Court of Justice will be requested by the Commission

“to impose a daily penalty payment of €148,177.92 on the UK”.

The UK will have to pay that and will claim it back from Northern Ireland. That is a reminder that if a country does not transpose EU law, it ends up sacrificing a lot of money per day.

I am happy to take questions on any of those bits and pieces.

The negotiations on the EU budget are happening now. Do you have any intelligence on how they are progressing?

They are literally happening now—there is a meeting today. There is a lot of speculation about what the budget will look like. The reality is that ground will have to be given. There is a tension between those who are net contributors to the budget and those who are net recipients. As members will appreciate—I pointed this out—there is some concern that the things that we think are important, such as infrastructure projects, connecting Europe and the horizon 2020 project, could all be sacrificed as member states solidify their support for the CAP. France is determined that the CAP should not fall. If the CAP—which accounts for about 40 per cent of the budget—does not fall and the budget is capped or reduced, something will have to give. The fear is that what will give is funding for things that one might contend—although the French might disagree—that the EU could most do with investing in.

The committee will get a full report on that at the next meeting. I have given a taster, because I knew that I would not have picked up enough information to give you a full rundown of the issue this week.

I imagine that the cap on payments to enormous farms, which receive huge subsidies, will save an enormous amount of money. As far as you know, will that money go back into the CAP pot?

The top-level figure is set in the multi-annual financial framework discussions. After that, the allocations are sorted out. If less money is spent on one aspect of farming, the money will remain in the overall allocation for farming, so it can be spent on different areas.

An important point for a lot of hill farmers is that

“The report determined that farms with under 10 hectares of arable land should be exempt”

from the greening policies. That will affect a lot of Scotland.

You will remember that, when CAP was discussed earlier, the big move was to make it a very green CAP. However, it seemed that doing so would impose restrictions and rules that would have created a lot of bureaucracy for very small farmers, who do not have the capacity, time or effort for that.

It seems as though Europe has listened for once.

It does—absolutely.

I will discuss plan bee. I understand that only about 1 per cent of all the pesticides that are used in Scotland are neonicotinoids—I hope that I have pronounced that right. How likely is the expert committee to agree on a ban—I understand that there is still a divergence of opinion—that the Commission can bring into action by 1 July? Is that still contentious or is it likely to go through?

I think that the measure will go through. You are right that the use of such pesticides is limited in Scotland, but they are big in England. There is no doubt that the UK Government is lukewarm about pushing the measure forward. However, it is recognised more widely across Europe that bees are an integral part of the farming world, so something needs to be done, and a body of research suggests that a link exists.

Because the proposal is going to an expert group, it is proceeding in a different way, so it does not have to go through all the hoops that would normally apply to legislation. There is every possibility that a ban could be adopted by the summer, which would be in time for the bee season.

On gender balance, we should recognise that the published figures show that the percentage of women on boards of publicly listed companies has risen from 13.7 per cent in January 2012 to 15.8 per cent, which represents the highest year-on-year increase. I see that conversations about setting an objective of a 40 per cent minimum are on-going. We should recognise the slight rise but also recognise that the boards of 25 per cent of the EU’s largest companies still have no female representation. We should keep highlighting the issue.

Absolutely. You will recall from previous discussions that the desire to create a stronger legal base for progress was not warmly welcomed across the EU, so the push became far less strong. The highest year-on-year increase is commendable, but 15.8 per cent is not very high in comparison with the expectation of 40 per cent. The highest figure that has been achieved would need to be doubled to get to what is thought to be a sensible place to be. A lot of progress has yet to be made.

A lot of work has to be done.

Another point to recognise in the “Brussels Bulletin” is that Latvia has passed a law to adopt the euro. I applaud Latvia’s optimism and wish it well.

I do not want to dabble too much in Latvian domestic politics, but is the fact that Estonia has the euro a consideration?

Yes, it probably is a consideration. All the Baltic states planned to join broadly about the same time. Estonia made good progress before the financial crisis appeared on the horizon. At that point, the other Baltic states slowed down and reduced the energy with which they were pushing forward. Estonia was already within the euro zone. Latvia’s economy is now very successful and is showing significant growth, so the country feels ready to adopt a currency that will help it in the wider markets. You are right that there is a lot of intra-Baltic competition to push these things forward.

On that issue, does Croatia have the euro yet?

It is not in the EU yet.

Not yet, but it is committed to joining.

No—it is in the EU, but not the euro zone.

No, it is not. It joins the EU in July.

It joins on 1 July.

Croatia’s arrival in the EU is on 1 July, and it has made a commitment to join the euro.

It uses the euro, though.

Yes, in effect it does, but it is not formally a member.

But it does not use the euro at the moment.

It does. I have been to Croatia, and the euro is used extensively.

That is informal.

It still has its own currency.

It is not a member of the EU, but it uses the euro.

The Balkan states have unusual currencies.

A number of countries that are not in the euro zone use the euro.

So they use both?

Yes.

There are certainly some that use the dollar, although it may sound strange.

When I was in Montenegro last year, I could have used a number of currencies, and people were very receptive to them all.

Yes. The reality is that people want to use currencies that are worth something.

Yes—if it is a fully transferable currency such as the euro, the dollar or, dare I say it, sterling or the yen.

If that is everything on the “Brussels Bulletin”, are members content to pass it on to relevant committees for consideration and to highlight the point about fisheries to the Rural Affairs, Climate Change and Environment Committee?

Members indicated agreement.