FAO Fisheries Ministerial Meeting, Rome (10 March 99)
Opening Statement by Hon John Luxton NZ Minister of Food, Fibre, Biosecurity and Border Control
New Zealand fully supports the Code of Conduct for Responsible Fisheries and urges member nations to implement its provisions as soon as possible. While New Zealand has not yet formally implemented the Code, most of its principles already exist in New Zealand law. In some cases, even higher standards apply.
It is no exaggeration to say that the world's fisheries are in a state of crisis. In 1993 the FAO estimated that more than 69 percent of the world's marine stocks, for which data are available, were either fully exploited, over exploited, depleted, or very slowly recovering from overfishing.
The core of the problem? Many fisheries are open access resources. The inevitable consequence-over-exploitation of the resource and over-capacity in the fishing fleet.
New Zealand's response to this problem was to create property rights. Only those with a right to the resource may fish it. A system based on property rights creates strong incentives on those that own access rights, to maximise profit from their fishing activity. Such an approach provides appropriate economic incentives to fishers as well as providing for effective protection of the fisheries' sustainability.
The most advanced form of fisheries property right so far developed is the individual transferable quota, or ITQ.
New Zealand's quota management system or QMS is based upon ITQs. It has been in place for the major commercial fisheries since 1986. At its heart are two types of catch limits: the total allowable catch, TAC, and the total allowable commercial catch, TACC. The Total Allowable Catch is set on the basis of stock assessments. These assessments are updated annually based on the most recent fisheries research results. Modelling provides an assessment of the status of the stock in relation to the biomass level that will support the maximum sustainable yield. The Total Allowable Commercial Catch is then set for each particular fishing year, making allowance for recreational and Maori customary fishing interests. We are now considering giving increasing responsibility to the stakeholders for the management and operation of the Quota Management System through a process of devolution.
The Quota Management System is widely supported by the New Zealand fishing industry. In general it has been very successful.
The value of industry production grew 80% between 1986 and 1995 and employment in the sector increased by 26%. The increase in employment is interesting as economic theory often suggests that job losses are associated with the introduction of ITQs.
In New Zealand ITQs are expressed as a proportion of a catch limit that will support the maximum sustainable yield.
Here again, performance has been good.
Of the New Zealand fish stocks with known status, 85% are above, at, or very close to the biomass that supports maximum sustainable yield. Rebuilding strategies are in place for the remaining 15% stocks.
As New Zealand looks towards its management of fisheries in the future, priority is being given to the implementation of the Fisheries Act 1996 and in particular the overriding objective of, "achieving sustainable fisheries in a healthy aquatic environment". Three key issues are being addressed in this regard. They are:
- Extension of rights-based management: Increased responsibility is being achieved by providing stakeholders with secure rights to the resource. When secure rights are provided in a rights-based system, users are given the incentive to take a long-term interest in the viability of the resources and invest in fisheries enhancement. In order to achieve this objective, expansion of the rights-based management principles is currently being considered to include more species within the QMS and to include non-commercial interests such Maori customary, and recreational use.
- Increased devolution to stakeholders: One of the underpinnings the New Zealand's fisheries management strategy is that stakeholders must be involved in setting the goals for fisheries management. The principle behind this action is that increased participation of stakeholders in the government decision making process will result in greater awareness of fisheries management issues and increase stakeholders' responsibility for management decisions.
- Internalisation of costs: New Zealand has introduced a cost recovery policy, where fishers face the full costs of their fishing activities. Internalisation of management and environmental costs contributes to efficient resource use and allocation by creating incentives for fishers to modify their behaviour to lower overall costs.
International resource management developments
New Zealand is committed to the responsible conservation and management of living marine resources on the high seas. We encourage member economies to ratify the United Nations Implementation Agreement Relating to Straddling Fish Stocks and Highly Migratory Fish Stocks (UNIA). We also invite member economies to co-operate to establish or strengthen regional fisheries conservation and management organisations or arrangements, including those concerned with the harvesting of discrete, high seas fish stocks.
The other challenge to world fisheries concerns the trade distortions that currently exist in the world seafood market. And more importantly the contribution that these distortions make to the problem of over-capacity and over utilisation in world fisheries
The FAO estimates that some 30-40% of current fishing capacity needs to be retired before the seafood sector is in equilibrium internationally.
Trade distortions have been a significant factor contributing to this problem. They provide the inappropriate incentives that lead to the build up of fishing capacity, over-capitalisation and over-exploitation of fish stocks.
I am pleased to note that at its meeting in February 1999, the FAO Committee on Fisheries adopted the International Plan of Action for Management of Fishing Capacity. This plan will provide a useful framework to balance fishing capacity with resource sustainability objectives.
A recent study by the OECD Fisheries Committee pointed to fisheries management failure as a reason for fleet over-capacity. But, in doing so, the Committee noted that incentives for increased participation in the fisheries sector, particularly the use of inappropriate assistance measures, have made the problem worse.
Fishing industry subsidies are widespread and go to fishers, vessel builders and vessel owners. Economic theory suggests that this form of trade distortion generally encourages the expansion of fishing fleet capacity. By providing additional revenue or reducing costs, the returns from fisheries are inflated beyond normal economic levels of exploitation. The inflated return from fisheries encourages new participants and expansion of fishing effort. These effects are exacerbated in situations where there are ineffective conservation and management measures.
FAO's Fisheries Department paints a sobering picture of the quantum of subsidies provided to the world's fishing fleets.
The FAO has estimated that in 1988 the global value of the industrial fishing fleet was US $320 billion and the operating cost of the fleet for the year was US $92 billion. With an assumed rate of return on capital of 10 per cent, that is US $32 billion, and total revenue from fishing of US $70 billion, a deficit of US $54 billion would have been sustained. This figure indicates the magnitude of industrial subsidies paid worldwide to industrial fishing fleets.
While FAO's methodology has been criticised as an oversimplification of the situation, even if the figures are only approximations, they are still substantial.
Some countries argue that there is no link between subsidies and over-capacity. New Zealand believes that this is a difficult argument to maintain. It is difficult to understand how the artificial inflation of fishers returns does not affect their level of activity and so, the health of the marine environment
Fishing industry subsidies encourage the use of fisheries resources above normal economic rates of exploitation. Inflated returns encourage excess capacity and overfishing, particularly in poorly managed fisheries. This activity has implications for the supply of fish to consumers and processors. These supply distortions place downward pressures on world seafood prices.
These depressed prices affect the ability of developing countries to achieve economic returns from their fisheries resources.
In addition to competition from subsidised industries, developing countries face tariff escalation at the border. Tariff escalation is often used to protect domestic seafood processing industries. Combined with the effects of subsidised competition, this form of tariff structure denies developing countries the opportunity to realise economic returns which would afford them the opportunity to enable sustainable development of their fisheries resources. Also, by depressing economic returns, these trade distortions can compromise the ability of developing countries to provide infrastructure to ensure sustainable development.
It is sometimes argued that there are subsidies that have beneficial environmental. We are, currently sceptical of these claims and have still to see evidence supporting the success of any so-called "good subsidises".
To summarise, while it is important to consider the role that responsible trade has in the overall issue of fisheries management, New Zealand considers that it is fundamental to consider the current distortions in trade that are contributing to the problems we face in the world's fisheries.
Increasing mechanisms for responsible trade, such as control and identification of fish in markets, standardisation of minimum landing sizes etc, will not in themselves resolve the fundamental problem of over capacity and over utilisation of the world's fisheries.
While subsidisation and trade distorting practices continue to exist these will encourage the use of fisheries resources above normal economic rates of exploitation. The inflated returns that result will in-turn encourage excess capacity and overfishing, particularly in poorly managed fisheries, and despite all our best intentions we will be no further ahead in dealing with the problem of over-fishing.