Trade organizations in the E.U. are pushing for the bloc to continue allowing Russian-caught fish into the region as negotiations on autonomous tariff quota (ATQ) regulations for 2024 and 2025 continue to roll along.
Europe’s ATQ regulations allow a certain quantity of a product to enter the E.U. at a reduced or suspended tariff rate for select fishery products.. In relation to the ATQ talks, the E.U. Fish Processors and Traders Association and the European Federation of National Organizations of Importers and Exporters of Fish – collectively known as the AIPCE-CEP – have written to both the European Commission and the European Council to press for continued access to Russian-caught fish.
The AIPCE-CEP’s letter states that E.U. supplies of certain fishery products currently depend on imports from third countries, and the ATQ system continues to be the primary trade instrument for securing those supplies for many E.U. companies. Moreover, it raises concerns over the Commission’s proposal to narrow the scope of species and products that qualify, namely to the detriment of fisheries products coming from Russia.
The letter, jointly written by AIPCE President Guus Pastoor and CEP President Yobana Bermudez on 10 October, states the association fully acknowledges “the complex political context” surrounding the ongoing negotiations on the next cycle of the regulation, “especially in light of Russian aggression in Ukraine.”
Even though some calls for ATQ reform revolve around leveling the playing field for European producers, the letter also stressed the E.U. market’s high dependency on imports of Russian fish – both as a raw material for direct processing in the E.U. and as a supply source for intermediate processing in other third countries, such as China, prior to value-added operations conducted by member states.
“It is worth noting that the Commission made a deliberate decision to exclude basic food products from the initial sanctions for various reasons,” they wrote, drawing a comparison to the necessity of Russian-origin seafood. “This decision was motivated by food security concerns and the impact that sanctions would have on inflation rates, cost of food products for end consumers – especially for households with lower incomes – and the overall cost of living.”
The pair also pointed out that the council previously recognized the “substantial dependency” of several industrial sectors on raw materials originating from Russia and that some of these products have consequently escaped sanctioning.
“While we fully comprehend the reasoning behind the Commission’s proposal, we must emphasize that any transition to alternative raw materials in any supply chain will take time and will affect the ability of the sector to access essential products,” they wrote. If such a change were to occur against the AIPCE-CEP’s wishes, they said, that implementation should be gradual to mitigate market distortions and to prevent a lack of available, affordable seafood for consumers.
“If the proposal regarding Russian fish is accepted, we urge for a transition period of one year to enable the value chain to adjust to the significant market impact and its consequences. This could be done with a provision that exempts Russian fish from sanctions until 1 January 2025,” they said.
The letter also requests that the seafood industry remains “actively consulted” when introducing any new species or raw materials into the supply chain that would result from tariffs on Russian-origin products; effective communication would ensure the supply chain is well-prepared to manufacture and bring new products to the market efficiently, the pair said.
The AIPCE-CEP’s recent release of its annual finfish study further emphasized the importance of the ATQ system on the E.U. supply chain and the consequences that could stem from drastic changes.
The 2023 version of the study determined that the E.U.’s wild-caught and aquaculture sectors alone can neither meet the demand of the processing industry nor E.U. consumers, with many of the species consumed in the bloc coming from external sources. The study, therefore, argues that continued access to global fisheries without unnecessary barriers is essential if the processing industry is to remain viable and food security is to remain stable.
The analysis found that E.U. consumers had access to just under 12.1 million metric tons (MT) of seafood last year, representing a year-over-year decrease of more than 266,000 MT. It also determined that net E.U. domestic supply of seafood for human consumption fell to less than 3.24 million MT, down from 3.39 million MT in 2021, while imports from third countries slipped to just under 8.9 million MT.
At the same time, the bloc exported just 2.24 million MT of products, resulting in net consumption of less than 9.9 million MT, a decrease of 169,000 MT compared with 2021.
AIPCE-CEP’s preliminary estimates for 2023 anticipate that total E.U. seafood supply will bounce back to almost 12.2 million MT, with its domestic supply for human consumption dropping to less than 3.17 million MT, its imports climbing to 9 million MT, and net consumption rising to just under 10.07 million MT.
That could change, though, with disruptions to the supply chain.
“2022 saw its end with cold stores stocked with expensive seafood, with [the] arrival of cheaper supplies at the beginning of 2023,” the report states. “In Europe, sales started to slow down, and customers moved from expensive fish to cheaper species or meat and poultry. The high-priced seafood in the cold stores was sold below the cost price or with minimal margins to stay competitive. This had a negative impact on the financial results among most companies in the E.U. for the year 2023.”
Meanwhile, E.U. processors and traders have continued to face strong headwinds, the report said. The consequences of the Covid-19 pandemic continue to impact markets, the U.K.’s post-Brexit border regime is still not yet fully operational, and Russia’s invasion of Ukraine continues to disrupt supply chains.
Increased input costs, together with general inflation, are pushing consumers toward cheaper sources of protein, and companies engaged in fish processing and marketing are suffering competitive disadvantages under limited state aid. From AIPCE-CEP’s perspective, these compounding factors together with additional unnecessary disruptions to the seafood supply chain, which the group believes changes to the ATQ system would elicit, would leave the E.U. in an extremely precarious position.
Photo courtesy of the Global Shrimp Forum
