NORWAY: special income tax deduction for fishermen

In a previous post i was referring to the special income tax deduction for fishermen (fisker skattfradrag, fiskerfragrag).

In Norway professional fishermen can deduct a certain sum from their taxable income. They can deduct up to 30% of their income up to a total amount of NOK 150,000.

It should be noted that the maximum amount has been raised twice in the two last years. The 2008 revised budget included an increase of this deduction from NOK 80,000 to NOK 115,000 i.e. an increase of 43.75 %. In 2009 this amount was again increased to 150,000, i.e. 30.4 % on a year basis. If we calculate the increase from 2007 to 2009, this tax deduction allowance has been by 87,5 %.

As mentioned in my previous post, the Norwegian Ministry of Finance has estimated that the total subsidy provided to the fishing industry by way of this measure amounts to NOK 284 million (USD 47.3 million) for the year 2009.

Here is a link to a government's webpage (in English) providing information abouts Norway's personal tax system.

http://www.regjeringen.no/en/dep/fin/Selected-topics/economic-policy/topics/The-personal-tax-code.html?id=418108

And here a link to a webpage from the Finance Ministry announcing the increase of the deduction for the year 2009.

http://www.regjeringen.no/nb/dep/fin/dok/regpubl/otprp/2008-2009/otprp-nr-1-2008-2009-/14.html?id=529127

NORWAY: economic support for shipping and fishing sectors

A couple of Norwegian sites have recently published a piece of news titled "Skipsfarten mottar 6,3 milliarder i næringsstøtte". Translated into English: "Shipping industry receives NOK 6.3 billion support (or subsidies)". The figure of NOK 6.3 billion corresponds to USD 1.05 billion or EUR 732 million.

This news relates to an estimate, prepared by the Norwegian Ministry of Finance, of all the subsidies received by the different economic sectors in Norway. Such exercise includes interesting information about the subsidies provided by the central government to the industry. it is carried out in the context of the yearly budget.

The figure quoted by the aforementioned websites concern the year 2008 and cover the transfers to the shipping industry (skipsfart) and the fishing fleet (Fiskeflåten).

For the fishing fleet the total amount of support for the year 2009 has been estimated at NOK 589 million (USD 93) and corresponds to the following items:

In the table appears an interesting item which, by the way, has not been discussed in this blog, i.e. the tax deductions for professional fishermen (fisker skattefradrag). I will discuss it in a separate post.

Here is the link to the document published in the Norges Fiskarlag website. The above table is the translation into English of the table appearing in the document.

http://www.fiskarlaget.no/index.php/Nyheter/Nyheter/Skipsfarten-mottar-6-3-milliarder-i-naeringsstoette.html

Here is also a link to Norway’s government information (in Norwegian) on the estimates of support to certain economic sectors. The information relates to the 2009 budget:

http://www.regjeringen.no/nb/dep/fin/dok/regpubl/stmeld/2008-2009/stmeld-nr-1-2008-2009-/6/3.html?id=529358

NEW ZEALAND: documentary on NZ fishing practices

A documentary titled “The Great New Zealand Fishing Scandal” is making a lot of noise in that great fishing nation.

The main theme of the documentary, made by the investigative journalist Guy Henderson, are the fishing practices by foreign vessels that are allowed to harvest fish in NZ waters on behalf of domestic companies.

According to the New Zealand press the documentary shows foreign factory vessels (with foreign crews) chartered by New Zealand companies to catch fish under the quota (e.g. of orange roughy) of the latter.

Some of the comments made in the aforementioned press echo a certain degree of discontent, as such practices can result in New Zealanders being deprived of jobs in the fishing industry. Furthermore the documentary seems to point to an alleged lack of control on the operations of these foreign vessels.

New Zealand’s Maritime Union has asked for a Parliamentary investigation on this matter.

At any rate, New Zealand is a strong competitor in international trade in fisheries products. The New Zealand government has always contended that it does not provide subsidies to its fishing industry. It is thus to the credit of private operators that they try to do their utmost to lower their cost to remain competitive in the international markets, including by hiring foreign vessels that are less expensive to operate than domestic vessels.

I tried to find an official reaction to the documentary but without success. I would very much welcome if readers can provide me with information on a reaction from New Zealand’s authorities, or from NZ companies, to the documentary.

By the way, this documentary reminds me of a number of articles, back in 2006, about criticism by Maoris on proposal by the government to regulate the salaries paid in these foreign chartered vessels.

Here a few links on the contents of the documentary.

http://www.munz.org.nz/index.php/2009/08/05/inquiry-into-fishing-industry-needed/

http://www.documentarychannel.co.nz/synopsis?show=fd818130-8b17-4065-9f0e-42154b6248d3

http://www.scoop.co.nz/stories/PO0907/S00133.htm

http://www.scoop.co.nz/stories/PO0908/S00055.htm

http://newzealandconservative.blogspot.com/2009/08/new-zealands-third-world-fisheries.html

An interview (in MP3 format) with the maker of the documentary can be found here.

http://www.wammo.co.nz/2009/08/03/the-great-nz-fishing-scandal/

Information on NZ’s legislation concerning treatment of foreign chartered vessel crews can be found here:

http://www.immigration.govt.nz/community/stream/employ/employingtemporaryworkers/whatisrequired/nonzworkers/specialfields/foreignfishingcrews.htm

Here is a link to an article published in the “Australia and New Zealand Maritime Law Journal” Vol 23, No 1 (2009) titled “Modern Day Slavery: Employment Conditions For Foreign Fishing Crews In New Zealand Waters” written by Jennifer Ann Devlin.

https://maritimejournal.murdoch.edu.au/index.php/maritimejournal/article/view/82

And here is a link on Maori’s criticism to setting foreign crew wages at the same level as NZ‘s ones

http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=104952

NORWAY: Minimum Price for cod under serious strain

Almost a month ago I wrote a post on the Norwegian Minimum Prices for selected fish species. Cod is one the species covered by this system.

This year prices for cod products sold at retail outlets have been rather low. Salted cod, very popular in Portugal as “bacalhau”, has been one of those products that have experienced very low prices during late 2008 and throughout 2009. Most of the “bacalhau” marketed in Portugal has, as main ingredient, salted dried codfish, usually from Norway (Bacalhau da Noruega).

The fishermen’s Sales Organisation, having the monopoly of sales in a large area in Norway, the “Norges Råfisklaget”, did set the price of the raw material at levels that put the processing companies (drying and salting cod) between the hammer and the anvil as retail prices in the main export markets (e.g. the EU) did not recover to the expected levels.

In actual fact a number of processing companies in Norway had purchased cod at a rather high price and build up substantial stocks as no buyers were found in the export markets.

Some Norwegian websites specialised in fish and fish trade, such as www.fiskeribladetfiskaren.no (in Norwegian), have been publishing news on this subject. I was astonished by the numerous comments posted by readers (fishermen and processors). As you can imagine fishermen, in their comments, defended the minimum prices while buyers (processors) appeared to be against the system.

The situation of some of the processors seems so desperate, at least in the Northern part of Norway, that some have asked the government to provide help, in the same way fishermen have been helped because of the financial crisis.

My reading is that such system of Minimum Prices can only work in a market where competition from imported product can be suppressed by means of, for example, a “tariff wall”. The products sold through the Minimum Prices are not intended for the final consumers but rather subject to further processing and export outside Norway. There, in the real (export) markets, Norwegian cod will have to compete with produce from Iceland and Russia. It will also face competition from other fish species, such as pangasius or tilapia.

As a final comment I would like to add that some in Norway, in particular the Association of Fish Buyers” (Fiskekjøpernes Forening) are opposing an increase of 20% in catch quotas for cod next year, as requested by the Federation of Owners of Fishing Vessels (Fiskebåtredernes Forbund). The Fish Buyers fear that such an increase will further contribute to the low prices of cod in Norway’s export markets.

Will the Norwegian government give in to the pressure of the Fish Buyers and provide subsidies to the processing sector?

WTO : defining "small scale" or artisanal fisheries – a chimera and a contentious issue ?

In my previous post I reproduced the questions that the Chair of the negotiating group on Rules has put to WTO Delegates on the treatment that should be given to developing countries as regards new rules on fisheries subsidies.

In one of these questions, namely the second one, the Chair asks whether:

“For developing Members other than LDCs, is it appropriate and consistent with the mandate that S&D exceptions be broadest and subject to the fewest conditions for subsidies to the smallest-scale, closest to shore, and least commercial fishing operations, with exceptions becoming progressively narrower and subject to more conditions as the subsidized operations become larger-scale, further from shore, and more commercial?”

The Chair of the negotiating group, in his first draft text (WTO document TN/RL/W/213 of 23 November 2007), did already provide an answer to this question. Actually the draft agreement, taking as basis different submissions (proposals) from WTO Members, contains in Article III a number of exceptions to subsidy prohibitions for developing countries. This Article also includes a “definition” of artisanal or small-scale fisheries.

As mentioned in the title of the post, trying to find a definition of “small scale fisheries” that would satisfy everybody seems an unrealisable dream. In addition to being an unrealisable dream the quest for such a unique definition can be become a very contentious issue, especially if the possibility of giving subsidies to the fishing industry depends on such definition.

Readers will find hereunder a short bibliography on the subject of defining artisanal or small-scale fisheries:

[Berkes and Etc2002]BERKES, F. AND ETC 2002. Managing Small-Scale Fisheries: Alternative Directions and Methods. International Development Research Centre, Canada.

[Charles1989]CHARLES, A. T. 1989. Small-scale fisheries in North America: research perspectives. In La Recherche face à la pêche artisanale, Symp. Int. ORSTOM-IFREMER, Montpellier, France, pp. 3–7.

[Hauck2008]HAUCK, M. 2008. Rethinking small-scale fisheries compliance. Marine Policy 32:635–642.

[Pitcher2001]PITCHER, T. 2001. Rapfish: a rapid appraisal technique to evaluate the sustainability status of fisheries. Fisheries Research 49:255–270.

[Salas et al.2007]SALAS, S., CHUENPAGDEE, R., SEIJO, J. C., AND CHARLES, A. 2007. Challenges in the assessment and management of small-scale fisheries in Latin America and the Caribbean. Fisheries Research 87:5–16.

[Schorr2005]SCHORR, D. 2005. Artisanal fishing: Promoting poverty reduction and community development through new WTO rules on fisheries subsidies. Technical report, UNEP.

[Schorr2009]SCHORR, D. 2009. The WTO fishery subsidies negotiations: Update and introductory briefing for new delegates (fisheries subsidies and the WTO: key issues).

[Schumann and Macinko2007]SCHUMANN, S. AND MACINKO, S. 2007. Subsistence in coastal fisheries policy: What’s in a word? Marine Policy 31:706–718.

[Secretariat2005]SECRETARIAT, W. T. O. 2005. Definitions related to artisanal, small-scale and subsistence fishing (TN/RL/W/197 of 24/11/05).

[Sumaila et al.2001]SUMAILA, U. R., LIU, Y., AND TYEDMERS, P. 2001. Small versus large-scale fishing operations in the North Atlantic. Fisheries Centre Research Reports 9:28.

[Therkildsen2007]THERKILDSEN, N. 2007. Small- versus large-scale fishing operations in New England, USA. Fisheries Research 83:285–296.

WTO: Special and Differential Treatment for Developing Countries (SD&T)

I copy hereunder the questions that the Chair of the WTO's Negotiating Group on Rules, Ambassador Guillermo Valles Galmes of Uruguay, did put to Delegations on whether developing countries should be exempted from new rules (especially prohibitions) on fisheries subsidies.

The questions are part of the very long questionnaire (titled “FISHERIES SUBSIDIES – ROADMAP FOR DISCUSSIONS) that Mr Valles submitted to WTO Members on 19 December 2008, together with the new negotiating texts on anti-dumping and horizontal subsidies disciplines. The WTO reference (or "symbol") is TN/RL/W/236:

15. Participants are asked to reflect in detail on the following questions:

(a) Do participants support an essentially full carve-out from the disciplines for LDCs?

(b) For developing Members other than LDCs, is it appropriate and consistent with the mandate that S&D exceptions be broadest and subject to the fewest conditions for subsidies to the smallest-scale, closest to shore, and least commercial fishing operations, with exceptions becoming progressively narrower and subject to more conditions as the subsidized operations become larger-scale, further from shore, and more commercial?

• (i) If so, how could such different types, scales and/or geographic areas of operations be defined and differentiated?
• (ii) How would the resulting categories relate to the mandate to discipline subsidies that contribute to overcapacity or overfishing?
• (iii) What types of conditionalities would apply, to which categories?

(c) Are there other bases on which fisheries operations of developing Members could be categorized for the purpose of S&D exceptions, which would provide the necessary flexibility to developing Members without contributing to overcapacity or overfishing?

(d) If no other dividing lines among types, scales and/or geographic areas of operations can be identified, would all non-LDC developing Members receive the same S&D treatment in respect of their fisheries subsidies to all types, scales and geographic areas of fisheries operations?

• (i) In such a situation, what should the exceptions be, and to what conditions should they be subject?
• (ii) If all non-LDC developing Members were fully exempted from eventual prohibitions on, for example, subsidies for vessel construction/modification, and operating costs, how could it be ensured that such subsidies would not contribute to overcapacity or overfishing?
• (iii) On what other basis could S&D treatment be structured?

(e) Should some or all exemptions for developing Members be conditional on fisheries management?

• (i) If so, which exemptions should be subject to such conditionality?
• (ii) What sort of fisheries management conditionalities should these be and how could their effectiveness at preventing overcapacity and overfishing be ensured? Would self-certification that management was effective be sufficient?

(f) If S&D exceptions were not conditioned on fisheries management, what other conditions should there be, if any, and how would those operate to prevent the subsidies from contributing to overcapacity or overfishing?

(g) What is the appropriate role for technical assistance for developing Members to implement new disciplines?

• (i) How can effective technical assistance for the implementation of management conditionalities be ensured while not indirectly making more resources available to subsidize?
• (ii) How can developing Members' needs and donor Member's capabilities be reconciled in a way that contributes most efficiently to fulfilling the mandate?
  

Comments and/or answers to the above questions are very much welcome !!

Here is the official WTO announcement of the release of the Chair's document:

http://www.wto.org/english/news_e/news08_e/rules_19dec08_e.htm

And here is the link to an article on the ICTSD's website commenting the "Roadmap":

http://ictsd.net/i/news/biores/38538/

AUSTRALIA: Rock Lobster fishermen ask for subsidies

The Australian Rock Lobster fishery is well managed one and has received the MSC certification. It concerns mainly the Australian State of Western Australia (WA) and is a valuable source of income, mainly because of exports, for WA fishermen.

Though this year scientist have recommended to slash the quota to 5,000 tonnes, well below the long term quota of 11,000 tonnes

The cut in quota is so big that many frock lobster fishermen could be forced out of business. This is why Western Australia’s Fisheries Minister, Mr Norman Moore, is seeking relief for this embattled fishery. Mr Moore is discussing with his Federal counterpart, Fisheries Minister Tony Burke.

It seems that Mr Burke is ready to work with Mr Moore to ascertain whether federal funds, AUD 150,000 (USD 125,000) under the Exit with Dignity Scheme, could be spent to allow some fishermen to leave the industry.

Interesting to note in this issue is that the Federal Minister’s website includes an interview on this subject with Richard Hudson, Australian Broadcasting Corporation (ABC) Rural on 9 August 2009, Mr Burke.

In the interview Mr Burke appears to be willing to listen to Western Australia demands for federal subsidies, though he points to the fact that this is not a federally (Commonwealth) managed fishery and therefore, he has no control over it. Mr Burke explains that, because the funds could be used for the buy back of fishing licenses, he should have something to say as regards the management of the fishery at issue. Buybacks are in fact a fisheries management decision.

Here are some links with news on the lobster crisis in Western Australia:

Rock lobster fishers ‘left to flounder’ (The West Australian, 27 July 2009)

http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=158196

Negotiations on the way for rock lobster payouts (The West Australian, 4 August 2009)

http://www.thewest.com.au/default.aspx?MenuID=146&ContentID=159997

Lobster fisher payouts a 'cop out' (ABC, 5 August 2009)

http://www.abc.net.au/news/stories/2009/08/05/2646813.htm

And here the link to the interview with the Federal Fisheries Minister

http://www.maff.gov.au/transcripts/transcripts/2009/august/tony_burke_-_interview_with_richard_hudson,_abc_rural

NORWAY: government agency's capital injection into Lofotproduct AS

Ms Kristin Harlvorsen, the Norwegian Finance Minister, attended in May 2009 a ceremony to launch the construction of new plant for Lofotproduct AS, a fish processing company, in Vestvågøy (Lofoten).

The construction of this plant is possible thanks to a capital injection of NOK 110 million (USD 18.1 mllion) from SIVA, ”The Industrial Development Corporation” of Norway is the governmental corporation and national instrument founded in 1968. This government agency is managed by the Trade and Industry Department.

Here is a press release from SIVA (in Norwegian) with the news:

http://www.siva.no/sivabas/nyheter.nsf/viewLUPnySIVAtrb/EE331EEBA198EB7DC12575C20021D173?opendocument

And here a lnk to SIVA’s presentation webpage in English:

http://www.siva.no/sivabas/nyheter.nsf/nysivano/English%20summary

NORWAY: loan from government agency to ailing cod farming company

Sponfish ASA, a company active in cod farming in North Norway, obtained in June 2009 a loan amounting to NOK 40 million (USD 6.6 million) from Innovation Norway. The loan has first instalment of NOK 11 million is payable in January of 2011 and the balance, NOK 30 million, in October 2012.

Sponfish ASA has experienced, like other cod farming companies in Norway, serious financial difficulties in the past months.

Innovation Norway (Innovasjon Norge in Norwegian) is a state owned company that “promotes nationwide industrial development profitable to both the business economy and Norway’s national economy, and helps release the potential of different districts and regions by contributing towards innovation, internationalisation and promotion.”

Here is the link to a webpage (in Norwegian) of Sponfish ASA announcing the loan:

http://www.sponfish.no/Sponfish+ASA+sikrer+finansiering+fra+Innovasjon+Norge.9UFRzU0T.ips

The financial report for the first quarter of 2009 can be dwonloaded from this page:

http://www.sponfish.no/Rapport+for+1.+kvartal+2009.9UFRzU1U.ips

And here a link to a webpage in English presenting Innovation Norway:

http://www.innovasjonnorge.no/system/Global-toppmeny/English/

NEW ZEALAND: more questions and answers from NZ's WTO Trade Policy Review

Here is another question from the European Union to New Zealand.

The question touches upon New Zealand's restrictions on foreign investment in the fisheries sector and the criteria used to allow for such investment.

(the references to paragraphs relate to the Report prepared by the WTO Secretariat (WTO document WT/TPR/S/216 of 6 May 2009). The answers can be found in the Record of Meeting which took place on 10 and 12 June 2009 (WTO document WT/TPR/M/216/Add.1).

Q49 In paragraph 24 it is mentioned that "Fishing quotas and ACE may only be held by nationals of New Zealand or by majority-owned domestic companies; permission may be granted, under certain circumstances, by the Minister of Fisheries and the Minister of Finance, for an overseas person to hold a fishing quota in New Zealand (Chapter II(5))." Footnote 76 of Chapter II (page 32) mentions increased export receipts for New Zealand exporters among the factors for determining whether overseas investment in fishing quota is in the national interest. However the Fisheries Act 1996 in 4: Quota management system, 57.(4).(b) (C) mentions "the development of new export markets or increased export" as a factor for determining whether foreign investment is in the national interest. Does this imply that New Zealand would allow purchase of fishing quota by an overseas investor in exchange for trade concessions (e.g. import duty reductions) by the country to which the foreign investor belongs?

Answer:

No. Trade concessions by the government of the country of a potential foreign investor would not be relevant to a determination by Ministers to allow the purchase of fishing quota by an overseas investor.

Well, if NZ's government confirms that it does not practice "access-to-markets for access-to-the-ressource", I will believe it, even if the legal texts suggest something else.

PHILIPPINES: fisheries agreement with Papua New Guinea

In a my post of 18/01/09 titled “Philippines: seeking to conclude fisheries agreements with Palau and PNG” I was referring to the exploratory talks that the Philippine officials where conducting with the aforementioned two countries, with a view of concluding fisheries agreements.

Late July 2009 a number of press articles have echoed the signature by the Phiippines and Papua New Guinea of a “fisheries cooperation agreement”.

I could not find the exact contents of the agreement on either government’s website though the press mentioned the that the agreements will cover the following areas:

• access to Philippino vessels to PNG’s Exclusive Economic Zone, “subject to certain conditions”.
  
• Philipines’ assistance to PNG in aquaculture development and in providing technical assistance in the development of production enhancement and post-harvest infrastructure facilities such as fish ports and auction-type fish markets.
  
• a mutual arrangement and recognition of the inspection protocols and procedures for the fishing/freezer vessels flying Papua New Guinea and Philippine flags and unloading catch in both countries and/or exporting to the European Union.
  

I deduct that the recently concluded interim Economic Partnership Agreement (EPA) between the EU and PNG has played a major role in the speed whereby the bilateral fisheries arrangements have been negotiated. Thanks to the interim EPA, PNG tuna canners will be allowed to use raw material harvested by non-EU vessels and export the processed product at zero duty to the EU.

I wonder whether one of the components of the agreement, i.e. the Philippines’ compensation package provided as “in kind” assistance to PNG fishing and aquaculture industries, could be branded as “tied development aid”.

Furthermore I am very curious to see how the EU sanitary and health authorities react to the third component, i.e. mutual recognition of inspection protocols and procedures as agreed between the Philippines and PNG.

Here the link to a press article about the fisheries agreement:

http://businessmirror.com.ph/home/economy/13625-rp-papua-new-guinea-sign-agreements-to-implement-fisheries-cooperation.html

Here is an official press release:

http://www.cagayandeoro.da.gov.ph/index.php?option=com_content&view=article&id=309:rp-png-signs-implementing-arrangements-on-fisheries-cooperation&catid=41:article&Itemid=18

And here an EU press release about the conclusion of the interim EPA with PNG

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/1210&type=HTML&aged=0&language=EN&guiLanguage=en

PHILIPPINES: subsidies for the tuna fleet

The Philippines’ government is actively helping the tuna industry to develop, and in particular its tuna fleet.

An example of such active policy is the soft loan granted by the Department of Agriculture to a General Santos tuna producer, JK Fish Trade, which is owned by Jeremy S. Kintanar.

The loan is without interest and for an amount of Philippine Pesos 15 million (312,000 USD). It is payable in seven years and is intended to make two additional hand-line tuna boats replete with 30 pakuras or smaller boats that hunt adult tuna stocks in the high seas.

The funds come from the Agricultural Competitiveness Enhancement Fund (ACEF). The ACEF ended in 2005 but was extended for another two years, which ended on December 2007. It was again extended for another seven years that started last June 11, 2008 until year 2015.

Projects proposals for consideration under the fund include post harvest facilities, livestock and poultry, banana, fish, and other agricultural crops.

Here is the link to the official press release of 6 July 2009:

http://www.pia.gov.ph/default.asp?m=12&fi=p090706.htm&no=68