EU membership could open Icelandic fishing to foreign control

Icelandic control over its marine resources could be seriously threatened if the country joins the European Union, according to an analysis by the Federation of Icelandic Fishing Vessel Owners, published by mbl.is.

Experience from other European countries shows that national quotas do not guarantee domestic ownership or control over their use. The analysis says European Union rules significantly limit countries’ ability to prevent quota hopping, while foreign fishing companies have gained control of fishing rights by buying companies and establishing subsidiaries.

Icelandic fishing quotas could therefore remain registered to Icelandic companies even if ownership, decision-making power and profits moved abroad, the analysis says.

Foreign ownership in Iceland’s fishing industry is currently heavily restricted, and most of the sector’s added value is generated in Iceland through domestic processing. Those safeguards would weaken if Iceland joined the EU, as the current restrictions could not remain unchanged.

Limited foreign investment

Iceland currently has a special exemption under the European Economic Area Agreement allowing it to maintain restrictions on foreign investment in fishing. Under Icelandic law, only Icelandic companies under Icelandic control may operate fishing activities within the country’s economic zone. Foreign entities may not hold more than a 25% ownership stake in those companies.

Unless other arrangements were made, EU membership would open Icelandic fishing to foreign control. Iceland’s current authority under the EEA Agreement to impose such restrictions would lapse upon accession, according to the analysis.

The analysis says permanent exemptions from the EU’s internal-market rules are rare and mainly concern specific territories, real estate or cultural characteristics. It says there appears to be no precedent for permanently exempting an entire industry from those rules in a comparable way.

Access through quota hopping

Foreign entities can gain access to another country’s quota by registering vessels, establishing companies or buying fishing companies in another EU member state. Such quota hopping can transfer the benefits of a national quota to parties with little or no genuine connection to the country concerned.

The analysis says the United Kingdom tried to prevent quota hopping through rules on the nationality and residence of fishing-vessel owners, operators, leaseholders and managers. However, the European Court of Justice found those requirements incompatible with fundamental EU legal principles in the Factortame cases.

The federation says EU rules significantly restrict member states’ ability to ensure that fishing operations maintain economic ties to the country concerned. In general, countries may not require owners to have a particular nationality or residence, exclude control by a foreign parent company, or require vessels to land their catch in the country.

In 2019, foreign companies held about 20% of the United Kingdom’s national quota. Foreign vessels also caught about half of the fish landed in British waters between 2012 and 2016, both because of quota hopping and agreements on the reciprocal use of shared fish stocks.