Assessing the impact of alternative fish trade agreements post-Brexit: research

Introduction

Scotland's Place in Europe: People, Jobs and Investment, published in January 2018, presents results from Scottish Government analysis of the potential impact of Brexit on Scotland. The analysis examined the long-term impacts of Brexit by comparing potential future scenarios for trade arrangements (all characterised by less economic integration with the EU) to the status quo where the UK is a member of the EU. The results from the economic analysis, presented in Table 1, show that loss of full EU membership will have negative impacts on the performance of Scotland's economy.

Table 1 – Headline Macroeconomic Indicators by 2030 relative to a baseline of full EU Membership

Analysis produced for the Scottish Parliament by the Fraser of Allander Institute ( FAI) also suggests comparable negative impacts on the Scottish economy. The FAI analysis shows that failure to agree a preferential trade deal with the EU would, after 10 years, result in:

• GDP that is over 5% (£8 billion in 2015-16 terms) lower than would otherwise be the case;
• real wages that are 7% lower, equivalent to a reduction of around £2,000 per year; and
• number of people employed in Scotland that is 3% lower (around 80,000 jobs).

The Scottish Government is keen to understand how these impacts may vary across different parts of the economy, including Scotland's seafood industries.

Scotland's seafood industries – comprising offshore and inshore fishing fleets, aquaculture and onshore fish processing – are important to Scotland. Overall they account for a relatively small part of Scotland's economy – 0.17% of Scotland's gross value added ( GVA) in relation to the catching industry and 0.6% of GVA for seafood industries overall, in 2015. That still means, however, that they contributed £733 million in GVA and 14,500 in jobs to the economy in 2015. They are a significant driver for the rural economy in certain localities, often in more remote parts of Scotland. They also do much to contribute to the vibrancy of our coastal communities. Figure 1 shows the distribution of GVA and employment across seafood industries. It shows that fish processing, an onshore activity, creates most value and supports the most employment among seafood industries, with sea fisheries currently contributing the least value to GVA.

Figure 1. Distribution of GVA and Employment for the Seafood Industries, 2015

The Scottish Government's vision is for sustainable and productive seafood industries which help manage our resources to meet the long-term needs of people, communities and our environment. This requires a future in which all our seafood industries are supported to harness available opportunities to grow sustainably and inclusively – through access to growing markets both at home and abroad, access to labour and skills, adequate financial support to sustain investment, and through maintaining close relationships with other nations to ensure sustainability of shared natural resources and to meet international obligations.

The research, conducted by ABPmer, Interanalysis and Vivid Economics, examines the possible impacts of EU exit on seafood industries, using a range of hypothetical scenarios reflecting changes in three drivers of international trade in seafood: tariffs; non-tariff measures ( NTMs) – such as rules of origin and health certification requirements; and production levels as determined by fishing quotas for wild capture fisheries. These are expected to be some, but not all, of the main sources of impacts that could arise from EU exit.

The research has not looked at potential impacts of other drivers for the economic performance of seafood industries, like access to non- UK EEA labour and the grant funding currently available from the European Maritime an Fisheries Fund [ EMFF]. Scotland's seafood processing industry relies on non- UK EEA workers for 58% of its labour force (rising to 70% in some areas such as Grampian). The processing industry has already expressed concern that loss of non- UK EEA workers would affect the survival of some businesses. With regard to the EMFF, over the period 2014-2020 Scottish seafood industries and coastal communities will receive up to £150 million in EMFF grant funding and associated match funding.

The loss of funding and/or ready access to labour is likely to result in significant negative impacts on the performance of Scotland's seafood industries, although to varying degrees.