EU membership could open Icelandic fisheries to foreign control

Icelandic control over its marine resources would be at serious risk if the country joined the European Union, according to an analysis by the Federation of Icelandic Fishing Vessel Owners, published by mbl.is.

The analysis says that experience from other European countries shows that national fishing quotas do not guarantee domestic ownership or control over how quotas are used. EU 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 an Icelandic company even if ownership, decision-making power and financial benefits moved abroad, the analysis says.

Foreign ownership of Iceland’s fishing industry is currently heavily restricted, and most of the sector’s value is created in Iceland through domestic processing. Those safeguards would be weakened by EU membership because the restrictions now in force could not remain unchanged.

Limited investment

Iceland currently has special permission under the European Economic Area agreement to maintain restrictions on foreign investment in fisheries. Under Icelandic law, only Icelandic companies under Icelandic control may conduct fishing within the country’s economic zone. Foreign parties may not hold more than a 25 per cent stake in those companies.

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

The analysis says permanent exemptions from the EU internal market’s basic rules are rare and mainly concern specific regions, 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 companies can gain access to another country’s quota by registering vessels, establishing companies or buying fishing businesses 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 conditions incompatible with the basic principles of EU law in the Factortame cases.

The federation says EU rules significantly limit member states’ ability to ensure that fishing operations have 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 catches in the country.

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

Foreign control is not limited to the United Kingdom. Swedish fishing companies have gained control of Danish fishing quotas, according to the analysis.