James Wallace, CEO Fortuna Ltd., made the following comments regarding the European Union Council Regulation referred to Falkland Islands fishery exports to the EU. We welcome the publication today of Council Regulation (EU) 2021/1203 as regards autonomous union tariffs for certain fishery products (ATQ).
As 01 January 2021 an annual amount of 75,000 tons of Falklands squid (Patagonian squid) can be imported into the EU, for processing, with a 0% duty.
The agreement is back dated so the Falklands catch from the first season of 2021, currently in cold storage under customs bond in Spain, is included under the new terms, subject to rules governing the application process.
It is an important step for the Falklands following the imposition of Brexit tariffs. The new deal between the UK and the EU (the Trade and Cooperation Agreement of 01 Jan 2021) only covered fishery products emanating from the UK. This development under ATQ regulations is the first that covers product from UK overseas territories.
However, the agreement is limited to product that is destined for ‘industrial processing’ within the EU. Most of our company’s production of Falklands squid is sold wholesale in primary processed form to the food service sector or as ‘refreshed product’ through supermarket fish counters.
Unfortunately the squid destined for sale through these main channels is not by covered by ATQ regulations which are designed to help meet fish consumption needs and support Union production of fishery products.
We estimate that only around 20% is sold to EU processors for processing in the EU, where it is usually more expensive to process large quantities of squid than in third countries.
In this small and highly competitive sector it is the processors who import the product and take the risk of complying with the conditions, so much of the ATQ initial financial benefit will be for them.
So while we welcome it as an agreement that will primarily benefit one of our customer segments - the European Union processing industry -it is not a replacement of the quota-free-access that the Falklands enjoyed on all its fishery products prior to Brexit.
Previously our EU customers were able to import both species of squid caught in Falklands waters (Illex as well as Loligo) and the various species of finfish, under a long term suspended tariffs agreement.
Given that the EU processing sector is only home to around 20% of our annual production of Falklands Loligo squid the EU processing market is therefore limited to around 15,000t of the 75,000t average annual catch.
It is difficult to see the 75,000t ATQ cap being fully utilized, based on current sales trends.
Our hopes for ATQ as a solution to Brexit tariffs rest on further discussions with the EU to widen the definition of ‘processing’ so that ATQ regulations can apply to squid destined for the other more significant market segments such as food service and retail.
James Wallace, CEO, Fortuna Ltd