Culture, Tourism, Europe and External Affairs Committee

Meeting date: Thursday, February 11, 2021

Official Report 686KB pdf

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European Union-United Kingdom Trade and Co-operation Agreement

Welcome back. Our next agenda item is evidence on the EU-UK trade and co-operation agreement. I welcome the panel to the meeting. Elspeth Macdonald is chief executive officer of the Scottish Fishermen’s Federation, and Jimmy Buchan is chief executive officer of the Scottish Seafood Association. I thank our witnesses for their attendance, which is greatly appreciated by the committee.

We will move straight to questions. I will ask Elspeth Macdonald the first question. I understand from what you have told us in the past and from your written evidence that the Scottish Fishermen’s Federation had three main priorities in the Brexit negotiations: to control access to the UK’s exclusive economic zone; to secure a fairer share of quota allocations on the basis of zonal attachment; and to have the UK conduct annual negotiations with the EU on fishing opportunities as sovereign equals. How does the deal that was reached cover those areas, if at all?

Good morning. As you will have seen in my written evidence, the SFF feels that the deal that was reached between the EU and the UK, in so far as it relates to fishing, falls far short of those priorities. It certainly falls short of what the industry had aspired to and what it was possible to achieve, and it also falls short of the UK Government’s commitment to the industry, so it was extremely disappointing.

I will take the three priorities in turn, starting with control of access to our exclusive economic zone. The SFF had always been clear with Government ministers and officials that that was absolutely the key element. In my written evidence, I described that as

“the ace in the pack”.

Controlling your sovereign resources in terms of the fish in your EEZ is a fundamental principle of every independent coastal state. Of course, the UK is now an independent coastal state but, because of the arrangements that have been reached in the deal, we do not have the same ability to control those resources. In fact, as many people will understand, for the first five and a half years—what is referred to as “the adjustment period” in the treaty—we have no ability, essentially, to control the EU’s access to our waters. We can control the access of vessels from other countries, such as Norway and the Faroes, but vessels from the EU have full access to our waters for that period. Should we wish to change that in the future—if the UK decided at the end of the adjustment period to reduce or limit the EU’s access to our waters—there would be some potentially hefty sanctions and penalties for doing so. That is a fundamental failure, essentially, of the deal. It does not confer on the UK the full ability to control access to our waters without the penalties applying.

On quota shares, again the deal falls very far short of what industry and Government had been clear was a priority, which was securing better shares on the basis of something called zonal attachment, which is a science-based method that allocates quota shares based on where fish actually are and where they spend different stages of their lives. It is not just based on historical fishing opportunities. Zonal attachment is the basis of the agreement between the EU and Norway, for example, and we absolutely want it to be the basis of the new arrangement of shares between the UK and the EU. However, it is not, and the arrangement falls very badly short of what would have been achieved through zonal attachment. As I have set out in my evidence, for some of our white fish demersal species, in particular, we have a particularly bad outcome that will limit our fleet, certainly during the adjustment period, in a potentially significant and damaging way.

The third priority was to do with having annual negotiations on access and fishing opportunities. The deal delivers annual negotiations, which are happening as we speak—a bilateral negotiation on fisheries between the UK and the EU is currently going on. However, that bilateral negotiation cannot involve any element of access to waters for the period of adjustment, because that access is already given through the trade and co-operation agreement for the period of adjustment. The annual negotiations that are taking place are not the sort of negotiations that we had wanted to see, which would have been about agreeing access to each other’s waters for the year ahead, looking at the quota shares and other technical arrangements. The element of access is not part of the negotiations, and that is a hugely disappointing element of the deal and a missed opportunity.

10:30  

When Boris Johnson was in Scotland a couple of weeks ago, he said:

“Be in no doubt that over the medium term, and much more over the long term, the changes are very beneficial for Scottish fishing—a big increase in North Sea cod, in North Sea haddock, in just the next few years, a 25% increase in overall quota”.

Will those increases in North Sea cod and haddock, as well as the overall quota, take place, as the Prime Minister said?

The 25 per cent figure is misleading. We have made that point on a number of occasions since the deal was agreed. The uplift in quota does not amount to 25 per cent. That figure refers to the fact that what has been transferred to the UK from the EU is 25 per cent of the value of what the EU could have taken from UK waters, based on prices in 2019. That does not equate to a 25 per cent uplift in quota. I think that calculations show that the figure is actually somewhere in the region of 10 per cent.

You mentioned North Sea cod specifically. At face value, the annex on fisheries in the trade and co-operation agreement appears to give an uplift in the UK’s quota of North Sea cod. However, as I set out in my written evidence, the problem is that the baseline for that uplift did not take into account what the UK actually fished. Although the UK had a quota share for North Sea cod under the common fisheries policy, it was actually able to catch more fish than that share due to other mechanisms in the common fisheries policy. The baseline on which the uplifts in the Brexit agreement are based does not reflect the actual outturn; it reflects only what the starting point was. In effect, therefore, we will have fewer fishing opportunities for some of those species than we had previously. That is not the case for all species—for example, there is a significant uplift for mackerel, which is one of our very important commercial stocks—but, for some of the white fish stocks in the North Sea, the uplifts that the deal provides are poor and, in some cases, the deal will leave us worse off.

On the longer-term arrangement, I go back to my answer about access to waters. The deal makes provision for the UK to have a better settlement in future, because we could control access to our waters and limit or reduce the amount of access that the EU has to UK waters, or come to some other arrangement about that. That would allow us to leverage a better share. However, the deal also brings into play a suite of sanctions on the UK if we did that. Those sanctions could include sanctions on fishery products and compensatory measures that the EU could claim in relation to the economic and societal impact of a reduction in access to UK waters.

Technically, there could be a better settlement at the end of the adjustment period, should the Government of the day decide to take that path. However, we need to clearly understand what the consequences of taking that path would be. It is important that we spend time understanding the consequences of having a different arrangement in future because, if we are not able to have a different arrangement in future—if the penalties and sanctions are such that they are disproportionate to the benefit that would be gained or would be so severe that the UK would decide not do that—we are essentially trapped in another arrangement with the EU in perpetuity, in which we have a very disadvantaged deal on fisheries.

There is what I have described as a glimmer of light at the end of the tunnel of the adjustment period, and we now have to spend some considerable time and effort thinking about what could be done at that time and discussing with Government what its appetite and ambition are for the end of the adjustment period. There is much to do.

How likely is it that the Government will prioritise the fishing industry in the future, given that it has let you down so badly in the deal that has just been reached?

We have to bear in mind that the adjustment period is five and a half years and that there will be a general election before that point. Therefore, none of us knows who will be in power or what their priorities will be. That is another element that we have to take into account. The political landscape might look very different in 2026.

Do you feel betrayed by the Government?

We feel very badly let down. We feel that the Government made repeated commitments and promises to the industry and they were not met. There was a real opportunity to reset the dials on what had been an unfair settlement for the UK under the common fisheries policy and to right that wrong. Although there is a prospect of better days ahead at the end of the adjustment period, we have to understand the consequences of what has happened. Certainly, many at the quayside feel not optimistic and ambitious about the future but concerned about it.

I want to follow up on the answers to the previous question. It seems that the price for taking control of our own waters at the end of the five-and-a-half year period, which is the pinch point, would be greater tariffs. What would you do in that case? Would you consider alternative markets?

There is a trading partnership with the EU, and you would have to sacrifice that trading partnership for changes to the arrangements around access to waters—that is the deal that has been done. Over the past year or so, many people predicted that that would be the outcome, regardless of the promises that the Government made. Are alternative markets being explored, or do you see the EU continuing to be the key market?

The EU is certainly an important market for fish and shellfish from Scottish waters. During the period of negotiation before the deal was reached, we made the point many times that, obviously, the introduction of tariffs would apply in both directions—that is, if tariffs were to be applied by one party in relation to seafood exports, it is likely that the other party would look to do the same thing. There is actually a balance in trade in seafood between the EU and the UK—about £1 billion-worth of goods go in each direction.

There have been some difficulties since the beginning of the year with the export of products, which I think Jimmy Buchan will talk about later. However, it is important to remember that many businesses and jobs in the EU depend on these products coming from the UK and Scotland. We know that, although there are difficulties at the administration level and with the Commission and that there are many issues to resolve, there are many people in the business community—in Boulogne-sur-Mer, for example—who are as keen as we in the UK are to ensure that the supply of fish can continue to flow.

I also point to the example of Norway, which has a much more normalised coastal state arrangement with the EU than the UK now has. It has full control of access to its waters, and its annual negotiations with the EU are very much about what access the EU can have and the exchange of fishing opportunities. Norway pays tariffs for access to the EU market because it decided that that was worth doing to ensure that it had full control over its fishing waters. That model already exists.

You mentioned the European Commission and issues that have still to be resolved. Will you comment on the cross-border task force that has been established? What do you hope that its work will consist of? What do you hope that it will be able to achieve? Will you also comment on the UK Government compensation scheme that has been announced and whether it is targeting financial support at the right areas?

The task force has not met yet—I think that it is due to meet tomorrow for the first time. There have been many meetings since the turn of the year between the industry and the UK and Scottish Governments to identify, highlight and address the problems that have arisen with the change in trading status. It was inevitable that there would be different trading arrangements with the EU when the UK was no longer part of the customs union or the single market. The arrangements are significant in terms of the additional bureaucracy and systems that have been required.

As I said, there has been a lot of discussion between the industry and both Governments, which have both made good efforts to crack on and resolve, as far as they can, the issues that arise. The task force is a useful way to take some of the discussions into a focused arena in order to identify the key issues that need to be resolved, to work out what the priority should be and to work with the relevant Administrations to ensure that we can progress all that.

It is important that the task force is focused, does not get distracted by the wide range of things that might be happening and can crystallise the key issues that need to be addressed, and that, by having that focus with the Governments, it can identify where work needs to be done in order to make change.

On the compensation scheme, the UK Government announced, probably two weeks ago, that a compensation scheme would be available for the seafood sector. The detail of the £23 million scheme emerged only earlier this week. As I understand it, the guidance is essentially targeted at exporters. I therefore do not think that it will provide much support to the catching sector, part of which I represent. My members are unlikely to be able to claim anything through the scheme, despite the fact that many of them will have been affected by reduced prices at market and, indeed, by reduced fishing activity because the sector has had to try to manage landings of fish so that the market is not oversupplied when there are difficulties in moving the product out of the UK.

Although my membership and many others in the catching sector will have been indirectly affected, it does not look to me, from my reading of the guidance on the UK scheme, as though they will be eligible to apply for support. The Scottish Government has announced a scheme for seafood resilience, and around £6.5 million from that scheme is targeted at the shellfish sector—both wild catching of shellfish and shellfish aquaculture. The support will be welcome, because the shellfish industry has certainly been hit by the current problems. Of course, we are affected not only by the impact of the Brexit changes, but by the impact that Covid is still having on markets.

However, I want to make it clear that it is not only the shellfish sector that has been affected. Our white-fish fleet has also been significantly affected by a volatile marketplace and volatile prices in the market. As I said, the fleet is having to limit its fishing activity to ensure that the market is not oversupplied. Although the seafood resilience scheme is welcome, I make it clear that the Scottish Government might need to look beyond the shellfish sector to the white-fish sector, too.

10:45  

Will Jimmy Buchan comment on the task force and the compensation scheme?

[Inaudible.]—members. I thank the committee for allowing me to give evidence.

The task force has not met yet, but there are a number of key issues that I will need to raise with it. It must be completely focused on actions that are deliverable. Time will tell on how successful that will be.

The way in which the compensation scheme has been issued has been badly handled. There has been no direct dialogue with the industry. It is okay to launch such schemes; £23 million is a lot of money, but the industry has haemorrhaged a lot of money. There are key concerns about eligibility regarding who can apply and on what grounds they can apply. There are many unanswered questions, and many businesses will be angry and upset about the fact that, although they have made financial losses, they cannot apply for the scheme as it is written at the moment.

This question is directed at Jimmy Buchan. Four years ago, on 17 January 2017, I led a members’ business debate on the Scottish Fishermen’s Federation’s sea of opportunity campaign. One of the things that I said in my speech in that debate seems to have been ruinously optimistic. I said:

“Even the worst-case scenario should leave us able to sell into the EU”.—[Official Report, 17 January 2017; c 82.]

Of course, we now find that, in the shellfish sector, there is an absolute ban on certain of our valuable products, which are important for many small communities around the coasts of Scotland. In addition, in practice, although there are—[Inaudible.]

What steps would the seafood folk you represent like to be taken—that can be taken under the agreement that has been reached—that might offer relief from the substantial difficulties that the industry is facing in exporting to the EU?

There are probably a number of things that can be done. The Governments of Scotland and the UK need to sit down with their counterparts in the EU, because we must find a slicker, smoother and faster route to market. I know that people will be critical of that, but all things are possible. We need a willingness on both sides, from which better outcomes can flow.

The deal that we have falls far short of any aspiration of anyone in the seafood trade, whether catcher, processor or logistics operator—I will not hide from that. It is the worst-case scenario, in which businesses are struggling to get seafood to market. However, we are where we are, and we must work through the issue case by case and item by item. We must look at what needs to be put in place to improve the situation and get things back to some sort of normality, bearing in mind that we have a new normal—that is, consideration needs to be given to whether the Government can give assistance with the cost of the export health certificates and the paperwork trail. All those things cost money. If we are talking about an extra £200 per consignment, even a small company that has five consignments a day will be looking at an extra cost of £1,000, which will have to come out of the bottom line of the business.

Small businesses have been hit really badly in that regard. We must look at having a system that compensates for that loss or we will lose those businesses. That might encourage more small traders to start trading again, because part of the reason why we are where we are is that cost is part of the blockage. That applies not only to the cost of the paperwork, but to the profitability of a deal.

There are many things that we can do. I have suggested a number of times that we should be looking at having a Scottish customs clearing house. That would mean that the products would be cleared in Scotland, so that seafood, which is a perishable good, could flow far faster into Europe, because it would not be subject to border controls.

In relation to political will, that is far beyond where I am allowed to negotiate. All that I can do is make suggestions in trying to solve our issues.

That is interesting—particularly your point about a Scottish customs clearing house. The Irish had American immigration officers based at Dublin airport to support free passage into the United States, so there is a model for that. If we had, in particular, French customs officials or people authorised by the French customs service in Peterhead and other important centres—[Inaudible.]—in the distribution centres—[Inaudible.]—that would be helpful.

You mentioned that both Governments should sit down with the EU, but, given that the UK Government has been extremely resistant to allowing the Scottish Government into the process and, indeed, is barring the Scottish ministers from the task force that will meet tomorrow, do you think that the Scottish Government should take steps on an unofficial basis because that is the only way that it can directly approach the EU and have appropriate discussions?

It is not for me to say what we should do officially or unofficially. I represent the industry only. That is a decision that you, the politicians, must make, so I am afraid that I decline to answer that directly. However, it is my understanding that the chair of the new task force has spoken to one of your colleagues, the fisheries minister for Scotland. I would encourage him to be very much part of the task force, because we have to solve the issue together—I cannot emphasise that enough.

I would not want to go to that meeting with one side and then find that it is working against the other Government. Both Governments have to sit around the table with stakeholders. That is my focus at the moment; it has to be a joint approach. We need to strip the politics out of this. I know that the issue is highly politicised but, at the end of the day, we must remember that this is about people’s livelihoods and their jobs, and about our rural economies. I cannot emphasise enough that the issues can be solved but there must be a willingness on all sides, including among the suppliers.

I know that Fergus Ewing has always had a good personal and practical working relationship with his UK opposite number, so I have never thought that there were barriers of that kind. Indeed, Jimmy Buchan and I have historically represented different political traditions, but that has never stopped us talking and working together, so we know that it can be done and we will both nod to that.

In my final question, I will pick up that issue with Elspeth Macdonald. Jimmy Buchan has made it clear that the Scottish Government should be represented by ministers at tomorrow’s task force meeting. It appears that that will not be the case, although I know that the Scottish ministers have been consulted, to some degree. Do you, too, feel that it would be helpful for the maximum number of people who have influence over outcomes to be sitting in the room, discussing the difficulties that we all acknowledge exist?

You will forgive me if I am not fully up to date—I have been on leave for a few days this week and have not entirely caught up with all my emails. My understanding is that the Scottish Government is, indeed, being invited to join the task force. That is my expectation with regard to the meeting that I believe is scheduled for tomorrow. That is the current situation as I understand it. If that is not the most up-to-date position, it is possibly because I am not up to date with—[Inaudible.]—my email trails.

It is quite possible that I am behind the curve as well, but my understanding is that only Scottish Government officials have been invited and that ministers are not invited. I—[Inaudible.]—particularly given the good working relationships that exist between the responsible ministers north and south of the border. It is not as though one would be introducing two bulls who were going to charge at each other in the room; there would be common cause among the ministers.

I will leave it there and let the next person in.

My first question is for Elspeth Macdonald. You indicated the reduced fishing activity and the volatile markets for white fish. We know that fish prices in Peterhead, for example, have fallen by up to 80 per cent. Can you indicate the number of boats that are landing catches in Denmark? That was referred to last month; I would like to know whether there are still high levels of landings in Denmark and what those levels might be.

I do not have the detailed numbers at my fingertips, but I understand that some Scottish boats are still landing in Denmark. It is important that we recognise that, given the fishing patterns at this time of year, it would not be unusual for some vessels to land there. Some vessels did so during part of January, and I believe that that is continuing to some extent.

That option is not open to everybody—it would tend to be the larger vessels that do it, and it would be vessels fishing in the North Sea rather than on the west of Scotland. It would be a very long and expensive trip from there. That obviously has an impact. There is a cost to the vessel, including additional fuel costs in making the journey there and back. However, some vessels will have taken the decision that that is a price worth paying for a more stable market at Hanstholm in comparison with the situation at home. There will be an impact on our home ports, of course. If the fish is being landed in Denmark instead of in Lerwick or Peterhead, that will have an impact on businesses in those places. That is the current situation.

Thank you for that. I was also going to mention factors such as the weather at this time of year. Landing in Denmark is not unusual, but I wanted to get an idea of the difference between previous years and this year.

I will turn to Jimmy Buchan. You referred to the cost to small producers in particular, and the process of getting products from Scotland to the EU market. Where, exactly, do you see the flashpoints?

It seems to be an ever-changing picture. Originally, the problems were at the hubs. We have sorted out quite a lot of those problems, and we are moving fish much more smoothly now, in week 5 or 6, than we were on day 5 or 6. The industry has progressed quite significantly. The larger operators, which stay away from groupage, are managing to send whole lorry-loads. There is a difference between the bigger companies that have the resources and the wherewithal to send full loads, and the smaller operators, which depend on groupage and hubs.

The issues seem to flare up at different points. There are still some reports coming back about issues at the border control posts, including their being slow and whether the stamp ink on the paperwork is the correct colour. I have called for there to be an industry standard across Scotland, the UK and the EU, so that we are all singing off the same hymn sheet. One border control post can accept the paperwork, but, at another post, the signature flashes up as being in the wrong colour of ink. That needs to be ironed out. Such anomalies are causing problems. There is a lack of confidence in putting more fish into the system because people do not know whether the product that they have bought will reach the market.

The obstructions are at the border. Therefore, we must ensure that the control posts can cope with any increase in volume and that the fish do not get stuck. I suggest that we should look at having a Scottish customs clearing house, so that seafood, which is a perishable and time-limited product, can be approved, signed off and sealed in Scotland and go right through to Boulogne-sur-Mer and into the rest of Europe. That would help to protect the thousands of jobs that depend on the seafood industry and help businesses to operate fairly. There are lots of things that we can do, but they are not a quick fix.

I will pick up and expand on a couple of points that have just been made. Last night, the Rural, Economy and Connectivity Committee took evidence from representatives of the seafood sector and a number of other key areas, including hauliers. Jimmy Buchan mentioned some of the blockages, including that caused by different coloured inks. Perhaps that is to do with some of the border staff in other countries being inexperienced—I think that France and Holland were highlighted as examples in that regard.

There is also the issue of regulations not being followed in Europe. The requirements of some regulations are simple, but they are not being in followed in part. That has been a real issue, although some of the witnesses at yesterday’s meeting seemed to express some positivity that it was being addressed.

There are still concerns about the level of paperwork that requires to be completed, and there is a call for e-certificates and the like. Andrew Charles flagged up in that meeting that, for some of the smaller producers, the paperwork and the certificates are expensive. Do you support there being a cap on the cost of the required paperwork and e-certificates to make things more viable for some of the smaller producers? Would that be a positive approach to take? Perhaps Jimmy Buchan could respond to that first.

I have been calling for that. We need to get everybody back to their normal practice of exporting, regardless of size or scale. As I said in response to an earlier question, one of the prohibitions is the sheer cost for small operators. We have to find a solution that allows the small operators to trade but that is, at the same time, fair and equal across the trading spectrum. You cannot have one side of the industry getting financial aid to help them compete in the same market. Whatever the solution might be, the system must be fair and allow everyone to trade.

Given where we are right now, if we do not do something, we will lose small traders. As we all know, everyone in the economy counts. We should not let market forces take their toll. The Government needs to act fast. I have been calling for that, and I still take that view.

What is Elspeth Macdonald’s opinion?

I do not really have anything to add to Jimmy Buchan’s points—he set matters out well.

My understanding is that the Scottish ministers and officials have been invited to be part of the task force, although the Scottish Government has expressed concern that they have not been asked to co-chair it. Is it your hope that Fergus Ewing and other Scottish ministers will be involved in the task force and attend its meetings?

It would be hugely beneficial for them to be involved. As Jimmy Buchan said, we want to take the politics out of this. This is not about politics; it is about trying to resolve issues, make it easier for our businesses to continue to operate and make the systems work better. That is in everybody’s interest. Fergus Ewing has been very vocal in raising the issues with the UK Government through the EU exit operations—XO—committee and he has been actively involved in talking to the industry directly. He has a good understanding of the issues that the industry faces and it would be very beneficial for him to be involved in the task force.

It is a task force—it has a job to do. Brand Scotland is at the heart of this, and it is critical that the minister who represents Scottish interests is at that table. I do not know whether that is a popular view, but I am saying it now. The fisheries minister, who represents the industry, needs to be at the table, because this is not about politics; it is about action and delivery. The task force will not get on its feet if we cannot strip out the politics, get round the table and get us going. People’s jobs and livelihoods are at risk.

I want to make a point that is not in response to Mr Halcro Johnston’s question. There have been reports of an 80 per cent drop in the value of fish. We need to remember that there is a pandemic, but, last week in Peterhead, fish was £1.20 more expensive—per kilo—than it cost in the same period last year. Although we are saying that fish has dropped in price, the picture is variable and its value goes up and down. That is to do with supply and demand. I needed to put that point across, because although 80 per cent sounds like a huge drop, in the same week last year fish was £1 less expensive than it was last week.

Thanks, Jimmy—that is really helpful.

One of the points that was raised yesterday was that areas such as groupage have improved. DFDS, which is a major haulier, was talking about that, and was able to guarantee next-day delivery, albeit with slightly extended timescales. We have seen huge issues since the beginning of January, but it has steadily got better. Would you both acknowledge that, although there is still a way to go in transport and exporting, things have improved considerably since the beginning of January?

Definitely. As I said, we are in a much better position in week 5 or 6 than we were on day 5 or 6, but we are a long way off being able to scale up what would be our normal export logistics. There is much work to be done.

A number of companies out there still need some help. They are small businesses and this is a huge change in their operational practices. I know what it is to operate a small business. You are so busy in the business that the administration can be quite cumbersome and overpowering, and simple mistakes can be made.

That leads me to another issue that I would like to raise at this point. We have to achieve a 100 per cent pass rate in every single paper that is presented. We are all human, and we all make errors, with the best will in the world. Until we get some understanding that simple errors are acceptable, we will be under a regime in which the flow of goods is restricted unless the pass rate is 100 per cent. Common sense has to prevail. I am finding the situation very difficult, because it is humans who are behind businesses and we all make simple errors—it might just be a keystroke or a digit, but it is so important. The industry is struggling a wee bit with that.

Does Elspeth Macdonald want to comment?

Jimmy Buchan has more detail on that from his membership on the ground than I have. However, my sense is that, although things are better now than they were in the first two weeks of January, there is still a long way to go. As Jimmy said, we are not yet at full export volumes or capacity. I was at a meeting yesterday at which Donna Fordyce of Seafood Scotland pointed out that we are not that far away from Easter—although it might not feel like that, as I sit here in Deeside looking out at a foot of snow on the ground. Easter is a particularly busy spell for seafood exporters, so we are only six, seven or eight weeks away from needing export capacity to be much greater and systems to be working much more efficiently.

There is no complacency. There is a lot of work for the task force to do. Thank you.

I will bring in Kenneth Gibson next.

We seem to have lost Kenneth. Does Ross Greer want to come in? I am sorry to spring that on you, Ross.

Yes, I can do that, convener. My questions relate to the ones that Jamie Halcro Johnston asked, so this is a convenient moment to ask them.

Over the past few weeks, since the start of the year, we have heard reports about the impact on the road haulage industry and its challenges in getting to mainland Europe, which have led the sector to make changes. There have been reports of lorries travelling empty to mainland Europe when they have been going to collect a consignment to bring back here, so they have not been taking goods from the UK to Europe. Obviously that is having an impact on UK producers who want to export. What discussions have the witnesses had with the road haulage industry recently? What impact has there been on producers in your sectors? We have heard about lorries getting stuck and consignments of seafood, in particular, being spoiled before they could be exported.

Thanks for that question—I presume that it was for me. I have been engaging with the three main hubs in the central belt—Mesguen, O’Toole Transport and DFDS. To be fair, there are a lot of commercial sensitivities, so the companies are limited in what they want to share with me. However, they are engaging, not daily but certainly weekly, and we are working through my members’ problems. Things are flagged up that we can take away and discuss with our members, to try to speed up the system. However, the companies have not shared with us the commercial issues that result in lorries being empty or full.

Are producers finding it harder to get hauliers that are willing to take their loads, or is that not having an impact at your end of the process?

When it comes to transport logistics, there was enough there prior to the UK leaving the EU. The infrastructure is still there.

Confidence and the speed of the system, which are needed to scale up, are restricting things, rather than the logistics having moved elsewhere. Business is business, and logistics will respond to demand, but logistics can only respond to demand if the flow either way works effectively. Lorries may be trapped on one side, but we need them to return to pick up the next consignment. The speed of outward and inward journeys is critical, and that is why we have to get border control posts flowing faster, slicker and smoother, from the producer right through.

11:15  

The other questions that I was going to ask were covered by Jamie Halcro Johnston and relate to the quirky admin issues, such as the colour of ink that is used. Unless anyone has anything to add on that topic, that is all from me.

I welcome our panel of witnesses and thank the convener. I hope that I do not cover ground that I inadvertently missed while I was disconnected. Looking at this as a layperson, I see that, because of all the difficulties that we had in the first few weeks, the Governments north and south of the border have struggled to provide support for the industry. I am sure that that support was very welcome.

We can argue about quotas, but it will be a major issue if fewer people are buying fish and there is a loss of markets in the short and long terms. What is the industry looking for from both Governments as assistance in trying to reclaim markets that might be lost once the issues that we face are minimised—if, indeed, they can be minimised?

I said earlier that people in Europe want our product—they want to eat it and businesses want to process and sell it. I hope that before too long, restaurants and hospitality will reopen and people will want to eat out again and enjoy our great produce. The market is there.

It has been difficult to get product to market, and the markets have been depressed because of the impact of Covid. We had discussions not dissimilar to this one some months ago, when we first felt the impact of Covid.

It is about what the Governments and the industry can do, politically and collaboratively, to ensure that we maintain markets. Jimmy Buchan spoke about brand Scotland. We have to ensure that we use the vehicles of Governments and industry’s own effort to make continuing to get product to market as streamlined as possible. The market exists and it wants the product, so let us collaboratively make every effort that we can to meet that demand.

I spoke earlier about the handcuffs that the Brexit deal has put on the catching sector. However, I also want to point out that there are some upsides. The deal gives the UK regulatory autonomy in fisheries management, which we feel is a benefit. In the short and long terms, we need to consider how we manage our fisheries and support our industries in doing that. I hope that the Parliament will have an important role in that. Fisheries management is a devolved matter, and the Fisheries Act 2020—which was passed with the legislative consent of the Scottish Parliament—gives very significant powers of fisheries management to the devolved Administrations.

There is much that we can do to take the industry away from some of the very prescriptive, inflexible, top-down and heavy rules of the common fisheries policy, and move us to much more flexible, innovative and adaptable legislation in order to ensure that we can manage our fisheries better. Although we are rightly fixated and focused on the immediate problems and headline issues, we must not lose sight of the fact that we are now an independent coastal state. We might have on handcuffs in terms of access and quota, but we are not handcuffed in the same way in relation to our regulatory economy and the ability to do things differently in UK waters. That is something very important in which the Parliament will have a key role to play.

Thank you very much for that. I am pleased about the optimism for the sector.

Mr Buchan, I want to ask about costs and competitiveness. Elspeth just talked about the reduction in regulatory oversight. That might not be the correct term; it might be that there will be a different regulatory regime. What are we looking at in terms of the overall impact on the sector? On the effects on fishing, for those who get through the first few months, will the impact be neutral, in effect? Will the sector be, for example, 5 per cent worse off in respect of its marketplace position? I realise that that is difficult to quantify, but where are we in our ability to compete in markets? If there is a negative differential, are you looking to Government to fill that gap or just for industry to become leaner and meaner?

In the deal that we have now, there is an imbalance in trading arrangements such that the EU is still enjoying the full benefits that existed pre-Brexit. The EU has erected no tariffs and no controls; businesses just load the product on and send it to the UK. We, obviously, have had to adhere to a new system since 1 January. Until we get nearer that situation, you might find that there is not willingness to sit down and discuss it. However, if the EU importers were finding the same arrangements that we are as exporters, I think that there would very quickly be unrest; or, if not unrest, a lot of voices being raised. Then there would be more willingness to discuss the issue more openly. That is one point that I would like to make.

With regard to the future, the industry does not want to have to be too dependent on money from Government. The Government has quite a lot of the keys; it has to unlock the doors. The industry is ready and willing to look at any market opportunity, and the Government holds some of the keys to the doors. Unless they are unlocked and things are made easier for the industry, we will have problems.

One issue that I would like to see being discussed is some sort of alignment of standards. Our bivalves are now unacceptable to the EU, but they were okay to go there in December. The water has not changed; it has happened because of political interference. Governments need to strip that out and realise that we are trading nations. We do not have to be politically aligned, but we are still trading nations and will benefit from trade in both directions. As long as there are restrictions, industry, businesses and people will suffer from the outcomes. It is all about political will and giving the industry the ability and the tools to do the job that it wants to do.

I completely agree with that. I am sure that the industry wants as little to do with Government as possible and to just get on with the job that fishermen and others in the industry want to do.

It is difficult, though. The British Government is, in effect, not putting up barriers, so there is not much incentive for the EU to lower its barriers, given that it is getting all the advantages and none of the disadvantages from the situation. That is a particular difficulty.

Do you fear that the transitional agreement will, de facto, become permanent? We are talking about five years, but do you think that things might never really move forward, or are you confident that the arrangements will, ultimately, deliver for fishing communities?

I am not close enough to senior politicians—those in Government or even anyone involved in negotiation—to be able to answer that. That is a question that can periodically be raised, but we are not in a good position right now. However, we must never give up; we must keep working. With willing partners, we can resolve a lot of our issues and have some sort of “new normal”—those are the words that I would have to use. We are on a completely new trading platform.

As I said, when things change for the other side, we might find that a keener and more eager counterpart will come back to the table, saying, “This isn’t working for us, either. How can we make it better?” At the end of the day, we are trading nations, as I keep saying.

Politics gets in the middle of it all, and we have to deal with that, but the politicians are the ones who can unlock the doors. As Elspeth Macdonald said earlier, however, we do not even know what Government will be in power five and a half years from now, so it is a difficult prediction to make—one that I would not even care to make.

Yes—I appreciate that. Elspeth Macdonald said it, too. Just before Elspeth responds, I note that the Hague preference has been lost, which will have an estimated cost of £9 million to the industry. How can that be made up and the money replaced?

Your original question was about a risk of finding that the situation and adjustment period become permanent. That is absolutely a concern; it is a real worry. More than that, it is a matter of existential anxiety for the industry that the arrangements for the adjustment period might become permanent. That is why we need to do the work now within the industry, and with the Governments north and south of the border, to understand the impacts of a change to the arrangements. As Jimmy Buchan and I have both said, none of us can predict what the political landscape will look like, but we can at least understand what the impact of changing the current access arrangements would look like.

As I think I said in my opening remarks, there is a risk that, if we are not able to make changes to the current arrangements, we will find ourselves trapped in another long-standing disadvantageous relationship with the EU on fisheries. We might, indeed, now be an independent coastal state, which we were not when we were a member of the EU and were constrained by the CFP, but without changes we would be a coastal state with our hands tied behind our back. We would simply not have the same normalised relationship with the EU on fisheries that Norway and the Faroes have, for example.

On your specific question about the Hague preference, we knew that we would lose the mechanisms of international quota swaps and the Hague preference from the common fisheries policy when the UK was no longer in the CFP, and that is why it was so important to ensure that the baseline for the quota uplifts included the mechanisms. That is what the Government failed to secure.

The treaty makes provision for international exchanges between the two parties. Bilateral discussions between the UK and the EU on fisheries arrangements for 2021 have been happening. It will not be possible to add access to those discussions, because that has already been conceded through the treaty, but there is an opportunity for the UK and the EU to exchange what we call fishing opportunities—to make some changes in quotas for the year ahead. The UK has been clear that that will be a priority for us.

There is an opportunity to do that through the annual rounds of negotiations that will happen, but there will be other opportunities for international exchanges between the parties during the year. That mechanism, which has not yet been established, will be overseen by the specialised committee on fisheries, which is one of the new bodies that must be set up through the requirements of the treaty.

11:30  

We need to establish those new mechanisms quickly, because it is now a priority that we are able to bridge the gaps between our new shares and what we would have been able to secure through swaps and the Hague preference mechanisms. There is provision; we now need to ensure that the mechanisms are prioritised and can be put in place as quickly as possible.

Quite a few of my questions have been answered, but I would like to follow up on the discussions about regulatory autonomy under the trade and co-operation agreement, which will enable the introduction of a new fisheries management system. Elspeth Macdonald said that that will allow us to move away from some of the impractical and inflexible regulations in the CFP, and that there are significant devolved powers in that area. Will you highlight some of the specifics that you or the sector could look for in the arrangement of a more bespoke fisheries management system for Scotland, as well as for the rest of the UK?

An example that comes immediately to mind is the common fisheries policy landing obligation, which was essentially a political mechanism—or a political fix, if you like—that was put in place to address a real practical fisheries management problem that related to discarding of fish. Nobody wants to discard fish, but in practical terms it is unavoidable in some cases, particularly in the mixed fisheries in our demersal fisheries in the North Sea. The EU’s landing obligation was very much a political fix to a practical problem. We need a practical solution to a practical problem rather than a political solution. The regulatory autonomy that we now have in the UK through the agreement and the powers in the Fisheries Act 2020 will enable us to look at how, in the future, we will address the issue of discards in the UK and Scotland.

We have already started a dialogue on that with Marine Scotland, which published a strategy document just before Christmas that set out its ideas and thinking about the future of fisheries management. [Interruption.] I am sorry if you can hear a background noise—it is my puppy squeezing a squeaky toy. Ideas in that document set the framework for how we can move forward on some issues.

The industry does not want to discard fish any more than other people want the industry to discard fish, but we have to recognise that that is a practical problem, and that we need to find a better of way of addressing it that allows us to take discards into account when we are doing scientific analyses of stock assessments, for example.

That is one example of how we can find better solutions to practical problems. Those solutions can be determined based on our own specific circumstances, rather than on compromises that are made to try to address the circumstances of many different countries.

That sounds reasonably optimistic regarding some of the benefits that we can look forward to in fisheries management.

Will changes to the fisheries management system benefit Jimmy Buchan’s members directly or more the catching side of the sector?

That is definitely one for the catching sector. However, remember that we are an integrated supply chain, so any benefits or disadvantages that affect the catching sector will have an impact on the onshore side of things. For example, Elspeth Macdonald highlighted earlier that, in some cases, our white-fish catchers will have fewer fish, or fishing opportunities, this year. That will have a direct impact on my members, who cannot simply tie up. They have staff to pay and business rates to adhere to, and all the things that come with normal business. If a business has less raw material, that has a significant impact on its operations.

That kind of knock-on effect creates the huge problems that we are struggling with—not only in exporting, but in fish processing in general. That is why I would call for some infrastructure investment to improve innovation, certainly to improve efficiencies, and to modernise our factories and get them up to date so that we can compete not only domestically in the UK, and in the EU, but globally.

There are opportunities, and we have to look to the future and be, dare I say, adventurous. Although we have huge problems at the moment, we must never stop being outward looking or looking out for the best interests of everyone in the supply chain.

We are up against the clock, but I appreciate those very helpful replies. Convener, I know that we are running against time a bit, so I hand over to you.

Thank you very much, Dean. Christine Grahame is our last questioner.

I am a real tail-end Charlie here, and an absolute greenhorn about the fishery business—much more so even than my colleague Kenneth Gibson.

I have listened for ages, and I agree—I wish that politics was not in this. However, we came out of the EU in order to take back control of the fishing and to get rid of a lot of red tape and, as far as I can see, none of that has happened.

The note that I am looking at says that it takes 71 pages of paperwork to export one lorry of fish. Jimmy Buchan explained that a tiny wee mistake in one of the bits of paper makes everything go down the tubes. I am also reading that 76 per cent of all seafood exports from Scotland went to the EU and were worth £703 million a year. That is a big chunk of our economy.

I am also looking at a quote from Mr Buchan:

“these are not minor impediments to trade. The industry in Scotland has basically ground to a halt and businesses that employ hundreds of people in communities around our coastline are losing money. In some cases, they are close to going under.”

That is a big, big problem.

How on earth will the UK, having just agreed a treaty in which, it seems to me, all the aces in the pack are in the hands of the other European countries, get you a better arrangement over the next five years? I have huge concerns about that, because I cannot see what cards the UK has to play.

Secondly, while this mess is going on for you—I have huge sympathy—what will your competitors do? Surely they will see a gap in the market, and I know that Spanish fishermen and whoever will start jumping in and taking your trade.

I appreciate that you want to take the politics out of it. I am talking about not party politics, but politics across nations. I really cannot see how, in a practical way, you will get it much better over the next five years, albeit that you might tweak it a bit. Please tell me that I am wrong. [Interruption.]

Mr Buchan, come on. You are the man—

Yes, absolutely. I am just waiting for the lead.

You are a man of the sea. You are hands-on. I like you. Let me hear from you.

I cannot disagree with what you said. You have highlighted the situation splendidly from your point of view. From my point of view, politics has very much been involved. In the past four years, there have been many opportunities for things to be done differently, but politics from every angle opposed that. Everybody was against everything that anyone wanted to do.

In my opinion, we have ended up with the worst of the worst of the worst. As I said, there were many opportunities. Right from the get-go, we could have got in the room and got out of Europe while staying in the single market and the customs union. That option was on the table, but it was rejected. I cannot take the blame for what has happened politically, because I am only one person who represents one industry.

You are absolutely right that the position does not look good, but both Governments—I keep emphasising that—should get back in the room and start to work collectively with our EU counterparts to find new, palatable trading arrangements. That is a big ask.

I emphasise that, in the next few weeks, there will come a point when the EU will have to export to us as well. We are a huge nation, and we are as important to the EU as it is important to us. There has to be some sort of reciprocal agreement that will improve the situation. I know that that looks like a big ask, but I am a greater believer that good things can happen if there is willingness on all sides. However, if we keep opposing ourselves and tearing ourselves apart politically, we will finish up in the wilderness, with everyone dissatisfied with everything that we have done.

Before the deal was concluded, my membership in the catching sector was clear that getting a good deal on fisheries could be a demonstrable benefit of leaving the common fisheries policy. The UK Government has not secured a good deal on fishing, so that benefit has not been delivered. It might be delivered down the road, after the five-and-a-half-year adjustment period, but, as I have said, there is not a straightforward solution. There is a lot that we need to do in considering what that world would look like and what it would mean.

Having regulatory autonomy in our own waters is beneficial and a big step forward, and we must ensure that we take advantage of that. The industry is very supportive of having that autonomy. It is interesting to note that, although the UK industry is not happy about the fisheries agreement overall, much of the EU industry is not happy about it and does not feel that it is a good deal, either.

I have learned a lot from listening to the witnesses. A lot of these matters are very technical and detailed. I hear what Ms Macdonald has said. My concern is that, over the five years—or even immediately—our competitor fishing nations will take over. In the meantime, as the Scottish onshore and processing market sinks, with goods being sold in Denmark and so on, those nations will take over. Once markets are lost, they are lost and cannot be reclaimed. I am sorry to be so downbeat, but that is my take on the situation, as someone who represents those in the rural economy—although there is no fishing in my patch, except for salmon. I thank the witnesses for their very interesting evidence.

I do not know whether the witnesses are aware of the Financial Times story that ran six hours ago about Brussels rejecting UK requests to overturn an export ban on live shellfish. The article states:

“European Commission officials told the Financial Times that Brussels would not grant the UK a special export health licence for the trade in ‘live bivalve molluscs’”.

Does Jimmy Buchan want to come in on that?

11:45  

That is news to me. I have not had a chance to read the papers yet, because I had to get in to set up for this evidence session.

As I have said, there is political to-ing and fro-ing back and forth, but nothing is cast in stone. The situation is difficult and there are businesses that will be badly affected by it. That issue concerning the export of live shellfish was certainly not on my radar, but we are where we are, and we must get Government to intervene and help in the short term. However, our industry is not here to get Government handouts; it is here to provide work and wealth for the communities that it serves and to pay taxes to benefit all of the rural community and the wider economy.

Sure. You have both expressed optimism—you have hope—that we can get things sorted out and get on to a better footing. If that were to happen—I know that it is a big “if”—would you be able to get back the markets in the EU that you have lost?

I think that Scottish seafood is world class and I am a huge ambassador for it, but I think that there is much more that we can do in our homeland—Scotland, specifically—and in the wider UK. We are in the middle of a pandemic, and I think that we should be doing much more to promote the benefits of eating seafood. We could do much more in schools to educate tomorrow’s mothers and fathers so that they know that eating fish is not only good for them but has huge wider benefits. There is much more that we could be doing, but we sometimes become too focused on one thing. We have lost our near market, and I have been extremely passionate in arguing that we should be doing much more to promote and sell fish to our home nation, albeit that we must still have a keen eye on our export market.

It is difficult to get back a market that has been lost. However, I stand by the view that, geographically, we are well placed on the globe, given the fish and the seas that we have. Fishermen have done a huge amount on sustainability in the past 10 to 20 years, and if we keep that programme going, we will have great seafood for years and years to come. Politicians have a part to play, but business has a bigger part.

Did you want to come back in, Elspeth, or are you okay?

No. I am fine, thank you.

We are just over time, so I thank Ms Macdonald and Mr Buchan for giving evidence today. I know that you had to clock on quite early because we had the session with the cabinet secretary first. It was a long session, and I really appreciate your patience—thank you very much.

That concludes the public part of this morning’s meeting.

11:48 Meeting continued in private until 12:27.