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

Conclusions

Studies such as this one help develop our shared understanding of the potential risks and challenges arising from leaving the EU for key parts of Scotland's economy. It contributes to our growing evidence base and enables us to undertake a more rounded assessment of the impacts of EU exit.

The research shows that there are potentially benefits to our seafood industries from leaving the EU, that would arise from leaving the CFP and renegotiating higher quotas for shared fish stocks. But we know that achieving that in the short term is highly unlikely. And any such benefits seem likely to come at the expense of tariff free trade for some seafood businesses. Hence, this research confirms the Scottish Government's position on remaining in the European Single Market and a Customs Union with the EU, while being out of the CFP. This would be the best outcome for Scotland's seafood industries if the UK were to leave the EU, allowing us to minimise the impacts of tariffs and NTMs, while providing flexibility over the long-term to negotiate inward quota transfers through the existing annual coastal states process.

The research also shows that there is a balance to be struck between increasing TAC shares or fishing quota and getting tariff free trade with the EU. It also shows broadly, that the benefits of increased quotas to the seafood industries reduce with increasing tariff and NTMs. That clearly has a detrimental impact on key parts of those industries, including aquaculture and fish processing.

We should also not lose sight of other threats that EU exit poses to the Scottish seafood industries. Previous reports estimate that non- UK EEA workers account for 58% of the labour force in the seafood processing industry. Leaving the European Single Market, and losing freedom of movement, is expected to have significant negative impacts on the seafood processing industry and the wider supply chain.

The loss of non- UK EEA labour and its impact on competitiveness of the fish processing industry will lower the benefits of any potential increases in fish quotas. This is further specific evidence for the fishing industry to support the Scottish Government's policy, which we first set out in December 2016 that the UK should remain within the European Single Market and a Customs Union with the EU. Remaining in the European Single Market and a Customs Union with the EU does not only preserve the benefits of frictionless trade with the EU, it gives our industries continued access to non- UK EEA labour that would come with continued freedom of movement.

Moreover, the current EMFF programme, together with associated match funding, is set to provide £150 million in grant funding to Scotland's marine sectors and coastal communities over the period 2014 to 2020. While the research has not examined the impact of losing access to this funding, the Scottish Government would like to ensure support for all seafood industries to continue to realise their full growth potential.

The Scottish Government is currently considering how best to take forward the future management of Scotland's fisheries and seafood industries, if the UK leaves the EU. The findings from this scenario modelling suggest that the future prosperity of Scotland's seafood industries depends largely on the right exit scenario being negotiated by the UK Government. Given the findings of this research, it is clear that the Scottish Government's least worst outcome is also potentially the most beneficial for our seafood industries. But they also show that the wrong exit scenario could be potentially significantly harmful to those industries.