Brexit comes out on top: What does this mean for seafood?

Published on Friday, June 24, 2016    

The United Kingdom has voted to leave the EU, becoming the first country to leave the bloc since its formation.

More than 33.5 million British people voted (a 72 percent turnout), with 17.4 million voting for Leave and 16.1 million for Remain. However, the Leave vote does not mean the country immediately ceases to be a member of the 28-nation bloc. That process will take up to two years.

Nevertheless, with the United Kingdom voting to leave 52 percent to 48 percent, Prime Minister David Cameron promptly announced his resignation. Cameron had urged the country to vote to stay in the EU, but Remain’s defeat now means he will leave the job by October. His eventual replacement will have to carry out departure negotiations with the EU and invoke Article 50 of the Lisbon Treaty.

Unsurprisingly, the Brexit has brought considerable uncertainty and market reaction in the United Kingdom, but also throughout the world. What is clear is that many industries are set for considerable volatility. The seafood sector will be particularly affected by the vote, although it’s far too soon to speculate whether or not it will benefit in the long-term.

In the run-up to the referendum, U.K. Fisheries Minister George Eustice made no secret of his desire to see the country break from the bloc, saying it would ensure greater long-term security for the fishing industry and allow it to flourish, mainly by giving it a significantly fairer say in quota and fisheries access deals.

Eustice believed an exit would rid the sector of many ineffective constraints handed down by the European Commission and also bring improved catch packages in many important fisheries by giving the United Kingdom a seat at the negotiation table rather than being reliant upon an EU negotiator to deliver a good deal.

The minister also reckoned that departure would provide the United Kingdom with the opportunity to re-establish national control for 200 nautical miles or the median line, putting the country in a strong position to address the issue of relative stability and argue for a better share of quota allocations in many fish stocks.

In the past, he has cited “unfair allocations” in the Celtic Sea cod fishery where the U.K. allocation was just 800 metric tons (MT) compared to 5,500 MT for France, and France also being allowed to catch three times as much sole in the Eastern Channel compared to U.K. fishermen.

Eustice has previously stated that certain policies would remain in place should the Brexit vote win. For example, the country would still target maximum sustainable yield (MSY), it would continue trying to end the practice of discarding through the Landing Obligation, and it would still participate in international negotiations.

While the fishing industry may be better off, there will be considerable uncertainty about the country’s seafood exports and imports.

A large proportion of the country’s domestic catch is exported because it achieves a higher value in foreign markets. Annually, these exports equate to around 500,000 MT worth around GBP 1.5 billion. The main markets are France and the United States, followed by Spain, the Irish Republic, Italy, China, the Netherlands and Germany.

At the same time, approximately 70 percent of the seafood value that enters the U.K. supply chain is imported from abroad or landed by foreign ships. These imports amount to around 650,000 MT worth GBP 2.5 billion.

Because all EU member states have access to the single market, there are no tariffs, quotas or taxes on trade and the free movement of goods, services, capital and people. The United Kingdom now needs to negotiate a raft of new trade deals.

Indeed, the Bank of England Governor, Mark Carney, said following the referendum result that it would take some time for the United Kingdom to establish new relationships with Europe and the rest of the world.

Some market and economic volatility can be expected as this process unfolds, he said.