ACFA - IUU Fishing and the exploitation of FoC97

IUU Fishing and the exploitation IUU Fishing and the exploitation of Flags of Convenienceof Flags of Convenience

Duncan CopelandDuncan CopelandEnvironmental Justice FoundationEnvironmental Justice Foundation

www.ejfoundation.orgwww.ejfoundation.org

What are Flags of Convenience What are Flags of Convenience (FoC)? (FoC)?

• ‘‘Where beneficial ownership and control of a vessel is found to lie Where beneficial ownership and control of a vessel is found to lie elsewhere than the country of the flag the vessel is flying’elsewhere than the country of the flag the vessel is flying’ (ITF) – genuine (ITF) – genuine link link

• In general FoC State operate ‘open’ registries, allowing foreign ownership; In general FoC State operate ‘open’ registries, allowing foreign ownership; make a business of selling their flagsmake a business of selling their flags

• Around 44 countries recognised by various bodies (FAO, ITF etc) as FoC. Around 44 countries recognised by various bodies (FAO, ITF etc) as FoC. Some countries particularly significant to fisheries:Some countries particularly significant to fisheries:– Panama, Honduras, Cambodia, St. Vincent Panama, Honduras, Cambodia, St. Vincent – New registers are emerging, including Tanzania and TogoNew registers are emerging, including Tanzania and Togo

• Relatively quick, easy and cheap to acquire – can often be done online or Relatively quick, easy and cheap to acquire – can often be done online or by fax, take as little as 24 hoursby fax, take as little as 24 hours

• FoC used extensively by maritime sector, mostly merchant marineFoC used extensively by maritime sector, mostly merchant marine

• Fishing vessels (including support vessels) constitute only between 7-15% Fishing vessels (including support vessels) constitute only between 7-15% of totalof total

Flag of Convenience StatesFlag of Convenience States

How Flags of Convenience How Flags of Convenience facilitate IUU fishingfacilitate IUU fishing

• Reduce operating costs (licences, Reduce operating costs (licences, insurance, taxes, VMS, safety, labour insurance, taxes, VMS, safety, labour laws)laws)

• Hide beneficial ownership (often Hide beneficial ownership (often advertised by FoC register)advertised by FoC register)

• Avoid prosecution Avoid prosecution • ‘‘Flag Hopping’Flag Hopping’• Undermine RFMOs (often not party to Undermine RFMOs (often not party to

agreements)agreements)

Legal FrameworkLegal Framework

• UNCLOS (159 ratifications), UNFSA (76), UNCLOS (159 ratifications), UNFSA (76), ‘Compliance Agreement’ (39) all binding‘Compliance Agreement’ (39) all binding

• Code of Conduct for Responsible Fisheries and Code of Conduct for Responsible Fisheries and IPOA-IUU - voluntaryIPOA-IUU - voluntary

• Key component is that the Flag State is Key component is that the Flag State is responsible for vessels in its registryresponsible for vessels in its registry

• Requirement of Requirement of genuine linkgenuine link between vessel and between vessel and Flag State – BUT this has never been defined Flag State – BUT this has never been defined and is left to States to interpretand is left to States to interpret

FoC vs FoNCFoC vs FoNC

• Flags of Non-ComplianceFlags of Non-Compliance• Do not have an open registry but are notorious for failing Do not have an open registry but are notorious for failing

to enforce responsibilities in regards to IUUto enforce responsibilities in regards to IUU• China, South Korea, Taiwan, historically some EU StatesChina, South Korea, Taiwan, historically some EU States

Why FoC States fail to fulfil Flag Why FoC States fail to fulfil Flag State ResponsibilitiesState Responsibilities

• Either Either unableunable or or unwillingunwilling• Many FoC registries are developing States, with little Many FoC registries are developing States, with little

capacity to control DWFVcapacity to control DWFV• Open Registries viewed as source of Govt. revenueOpen Registries viewed as source of Govt. revenue• Many registries run by private companies that have Many registries run by private companies that have

vested interest in flagging as many vessels as possible vested interest in flagging as many vessels as possible (sometimes not transparent with Flag State) (sometimes not transparent with Flag State)

Do FoC States benefit financially Do FoC States benefit financially from flagging fishing vessels?from flagging fishing vessels?

• Difficulty assessing revenue streams as total numbers of vessels Difficulty assessing revenue streams as total numbers of vessels not clearnot clear

• Fishing vessels on average 7-15% of total registered vesselsFishing vessels on average 7-15% of total registered vessels

• Average revenue of around US$2200/vesselAverage revenue of around US$2200/vessel

• All FoC registries combined accruing between US$3-4 million/yrAll FoC registries combined accruing between US$3-4 million/yr

• Compared to millions lost by individual states (e.g. Sierra Leone Compared to millions lost by individual states (e.g. Sierra Leone US$29/yr) and the US$10-23 billion lost to IUU globally.US$29/yr) and the US$10-23 billion lost to IUU globally.

Who Benefits?Who Benefits?

• Majority of companies exploiting Flags of Convenience East Asian Majority of companies exploiting Flags of Convenience East Asian and EU basedand EU based

• Taiwan, South Korean, Japan, ChinaTaiwan, South Korean, Japan, China• Spain (decrease 2005-2009); EU overall (increasing)Spain (decrease 2005-2009); EU overall (increasing)

• Increasingly FoC vessels being transferred to shell companies Increasingly FoC vessels being transferred to shell companies registered in FoC States registered in FoC States – e.g. Panama 220% increase 2005 - 2009e.g. Panama 220% increase 2005 - 2009

©FAO

Key EJF investigation findingsKey EJF investigation findings

ReefersReefers

• Provide logistical support to DWFV, and tranship at sea to transport to Provide logistical support to DWFV, and tranship at sea to transport to market – single reefer can support large numbers of vesselsmarket – single reefer can support large numbers of vessels

• Disproportionate number of reefers carry FoC registrationDisproportionate number of reefers carry FoC registration

• Almost all reefers documented as engaged in IUU in West Africa by EJF Almost all reefers documented as engaged in IUU in West Africa by EJF flying FoCflying FoC

• Key role played by reefers must be addressed as part of actionKey role played by reefers must be addressed as part of action

• Even ‘whitelisted’ reefers predominantly FoC – e.g ICCAT 86% of fish Even ‘whitelisted’ reefers predominantly FoC – e.g ICCAT 86% of fish carriers (150) fly FoC (though whitelisted carriers (150) fly FoC (though whitelisted does not necessarily preclude IUU activities does not necessarily preclude IUU activities e.g. Bluefin tuna)e.g. Bluefin tuna)

Crew Conditions

• FoC also allow owners to avoid labour and safety regulationsFoC also allow owners to avoid labour and safety regulations

• ITF considers fishing industry to have worst cases of abuse in ITF considers fishing industry to have worst cases of abuse in maritime sector, particularly IUU and FoC vesselsmaritime sector, particularly IUU and FoC vessels

• Incarceration, unsafe working conditions, verbal and physical abuse, Incarceration, unsafe working conditions, verbal and physical abuse, withholding of pay, extremely poor sanitary, food and living standards, travel documents confiscatedwithholding of pay, extremely poor sanitary, food and living standards, travel documents confiscated

• Poor safety has lead to vessel sinkings, deathsPoor safety has lead to vessel sinkings, deaths

• Worse cases meet ILO definitions of forced labourWorse cases meet ILO definitions of forced labour

• New EJF report and film ‘All at Sea – the abuse of human rights aboard illegal fishing vessels’New EJF report and film ‘All at Sea – the abuse of human rights aboard illegal fishing vessels’

Impacts on TradeImpacts on Trade

• FoC system provides unfair competition to legitimately FoC system provides unfair competition to legitimately flagged and operating vesselsflagged and operating vessels

• Compromises effectiveness and reputation of supply chain Compromises effectiveness and reputation of supply chain traceability systemstraceability systems

• Increases likelihood of illegal fish being stamped legal and Increases likelihood of illegal fish being stamped legal and entering EU marketentering EU market

• Overall impact on public perception and support for fisheriesOverall impact on public perception and support for fisheries

• Opportunity for industry to take it’s own steps to address Opportunity for industry to take it’s own steps to address issue? – refusal to deal with FoC vesselsissue? – refusal to deal with FoC vessels

Addressing Flags of Convenience in IUU FishingAddressing Flags of Convenience in IUU Fishing

European UnionEuropean Union

• Council Regulation (EC) No 1005/2008 establishing a Community system to prevent, Council Regulation (EC) No 1005/2008 establishing a Community system to prevent, deter, and eliminate illegal, unreported and unregulated fishingdeter, and eliminate illegal, unreported and unregulated fishing

• Chapter VI and VII – Non-cooperation Third Countries and MeasuresChapter VI and VII – Non-cooperation Third Countries and Measures– Identification of non-cooperating Third CountriesIdentification of non-cooperating Third Countries– Establishment of a list of non-cooperating Third CountriesEstablishment of a list of non-cooperating Third Countries– Essentially a trade sanction on importation of fishEssentially a trade sanction on importation of fish

• Closure of EU Member State FoC registries to fisheries (fishing and reefers) vesselsClosure of EU Member State FoC registries to fisheries (fishing and reefers) vessels

• Establishment of requirement that Member States are responsible for ALL vessels Establishment of requirement that Member States are responsible for ALL vessels under national ownership, no matter what flag (Taiwan example)under national ownership, no matter what flag (Taiwan example)

InternationalInternational

Need for international binding agreement (FAO) that ends the Need for international binding agreement (FAO) that ends the exploitation of FoC by IUU vesselsexploitation of FoC by IUU vessels

set out criteria and enforceable measures to ensure Flag States fulfil set out criteria and enforceable measures to ensure Flag States fulfil international responsibilitiesinternational responsibilities

Development of recognition of IUU fishing (including exploitation of Development of recognition of IUU fishing (including exploitation of FoC) as international organised crime (UNODC)FoC) as international organised crime (UNODC)

allow international investigation and prosecution of beneficial ownersallow international investigation and prosecution of beneficial owners

Actions to ensure that individual States (including EU Members) Actions to ensure that individual States (including EU Members) delist and close open registries to Fishing and Support Vesselsdelist and close open registries to Fishing and Support Vessels

Measures to prevent nationals from flagging fishing vessels to FoCMeasures to prevent nationals from flagging fishing vessels to FoC

Establishment of global record and fishing vessel identification systemEstablishment of global record and fishing vessel identification system