What just happened?

“British fishing grounds are first and foremost for British boats.”[1] A flag-waving statement made by Britain who is holding the submission of detailed proposals to fishing rights to Brussels.[2]

What does this mean?

London has yet to make a detailed proposal with the EU for the continued access of European boats fishing in the UK waters. This is a critical issue that needs to be addressed in the coming weeks as the UK waters are recognised as a fertile fishing grounds for businesses, with French, Belgian and Dutch trawlers operating right up to the line 6 nautical miles from the English coast.[3] This is supported by figures reported in 2018, which states that the UK has exported 448,000 tonnes of fish.[4] With the fishing market valued at £784 million to the UK economy, according to the Office for National Statistics, it’s profit returns serve as a strategic scope for the UK, which the state can use to maximise its leverage in talks with the EU diplomats.[5]

According to the Financial Times, the EU aims to preserve existing rights for more than 70 types of fishes. Still, Britain wants to scrap the existing model put in place for dividing up quotas and prefers to have a similar agreement that the EU has with Norway, which leaves access to water up to annual negotiation.[6] This would create a significant shift in trading as pre-Brexit; fishing was governed by the EU Common Fisheries Policy, which allowed fishing fleet of every country to have full access to the waters of other EU members and catch the volume of fish from a specific stock. It follows, half of the English quota was transferred to foreign hands, resulting in foreign boats catching more than 700,000 tonnes of fish on an annual basis, according to Britain’s Marine Management Organisation.[7]

With both the UK and the EU having contrast position on the subject matter, amidst facing significant challenges from the recent coronavirus outbreak, both Britain and Brussels have only six months to negotiate a new relationship.[8] A lack of progress on dealing with such issues may force the UK to seek an extension to avoid a no-deal scenario.[9] But, “whenever a deadline was extended, the light at the end of the tunnel was replaced by more tunnel”.[10] Further extension that go beyond December this year may require Britain to pay £800 million on a monthly basis to the EU.[11] At LawMiracle, we believe that if a no-deal Brexit takes place, potential legal issues may arise from a competition law perspective on those coastal states relying on UK waters for fishing.

How does this affect the legal industry?

Failures to reach a deal may leave ports clogged and further disrupt supply chains at a time when many businesses are already facing enormous pressure from the outbreak.[12] A no-deal Brexit will significantly impact the ‘economic lifeblood of coastal communities’[13] and cause large scale losses on projects invested by coastal states ahead of the post-Brexit business. For example, Denmark’s $60 million Hanstholm fishing port which is set for completion in summer 2020. The motivation for such large-scale project was to attract business from “ British companies in the fishing or energy industry establishing European subsidiaries on our newly developed port areas to spearhead their operations in the northern parts of the EU”, said the CEO of Hanstholm port.[14] Law firms advising clients on such projects ahead of Brexit will have to change their strategy to accommodate losses for private investors and consortiums who saw the Hanstholm port as a way to establish a presence in the Danish Market and grow further influence in Europe.

With Britain exercising full jurisdiction over its maritime wealth, the British fishing industry will have the ability to set prices according to its liking and act as a monopoly in this sector. It follows some British businesses may carry out predatory pricing by selling highly demanded fishes such as Salmon and Scallops at a lower price than other European firms until their rival firms cannot compete and are forced to leave the market. Further impairing the fishing industry of other EU states.[15] If by chance, Britain agrees to delay the negotiation till the year 2021, this could hurt the position of London as a significant financial sector and the English commercial law as the preferred choice of law in contractual disputes. This is because businesses want certainty about new trading arrangements but will lose out on potentially lucrative investments or overall profits made if the delay pushes further into the future.[16]

Written by Amarjit Tark

Assessing Firms: #AkinGumpLLP #BakerMcKenzie #BryanCaveLeightonPaisnerLLP #DLAPiper #EvershedsSutherland(International)LLP #HerbertSmithFreehillsLLP #HoganLovellsInternationalLLP #GowlingWLG #MayerBrownInternationalLLP #Winston&StrawnLLP

References:

[1] Chris Morris, ‘Brexit: Is fishing the next big argument in the talks?’ (BBC, 8th February 2020)

[2] Peter Foster and Jim Brunsden, ‘Fishing rights threaten to stall Brexit talks’ (The Financial Times, 14th April 2020)

[3] Jims Brundens, Mure Dickie, Victor Mallet and Laura Hughes, ‘Brexit: why fishing threatens to derail EU-UK trade talks’ (The Financial Times, 28th January 2020)

[4] Chris Morris, ‘Brexit: Is fishing the next big argument in the talks?’ (BBC, 8th February 2020)

[5] Peter Foster and Jim Brunsden, ‘Fishing rights threaten to stall Brexit talks’ (The Financial Times, 14th April 2020)

[6] Peter Foster and Jim Brunsden, ‘Fishing rights threaten to stall Brexit talks’ (The Financial Times, 14th April 2020) and George Parker and Jim Brunsden, ‘Boris Johnson tells EU to shift Brexit stance’ (The Financial Times, 27th April 2020)

[7] Jims Brundens, Mure Dickie, Victor Mallet and Laura Hughes, ‘Brexit: why fishing threatens to derail EU-UK trade talks’ (The Financial Times, 28th January 2020)

[8] ‘Brexit Negotiations, ‘Why the government will not ask for a Brexit extension’ (The Economist, 18th April 2020)

[9] Peter Foster and Jim Brunsden, ‘Fishing rights threaten to stall Brexit talks’ (The Financial Times, 14th April 2020)

[10] Michael Goves statement in the House of Commons Committee in relation to the discussion of concluding Brexit talk with Brussels in George Parker and Jim Brunsden, ‘Boris Johnson tells EU to shift Brexit stance’ (The Financial Times, 27th April 2020)

[11] ‘Brexit Negotiations, ‘Why the government will not ask for a Brexit extension’ (The Economist, 18th April 2020)