The Faroe Islands’ Response to EU Trade Restrictions on Atlanto-Scandian Herring

By: Nele Matz-Lück

PDF Version: The Faroe Islands’ Response to EU Trade Restrictions on Atlanto-Scandian Herring

Proceedings commented upon: European Union – Measures on
Atlanto-Scandian Herring

The Faroe Islands have initiated international proceedings in the World Trade Organization (WTO) against the European Union (EU) in response to trade restrictions on herring and mackerel and derivative products caught under Faroese authority and control. With Denmark acting on behalf of the Faroe Islands this is the first time that an EU member State has brought a case to WTO dispute settlement as a complainant. It is one of the particularities of the dispute that Denmark, as an EU member, has initiated this case against the EU on behalf of a self-governing entity, the Faroes, which is part of the Kingdom of Denmark but not a member of the EU.

Introduction: the Faroe Islands and the EU

The Faroe Islands consist of 18 tiny islands in the North Atlantic Ocean. The Islands are part of the Kingdom of Denmark “as a self-governing territory”. The country’s economy is heavily dependent upon the export of fisheries products. Since 1948 the Faroe Islands have enjoyed a significant degree of autonomy from Denmark under the home rule regime. According to the 1948 Home Rule Act, which serves as the legal basis of the relationship between the Faroe Islands and the rest of the Danish realm (see Jørgen Albæk Jensen,“Faroe Islands“, in: Rüdiger Wolfrum (ed.), Max Planck Encyclopedia of Public International Law, online-edition, last updated 2007, para. 3) and the supplementary 2005 Transfer of Subject Areas to the Faroese Authorities Act, only a few policy issues remain under Danish authority. While foreign policy is, in principle, exercised by Denmark for the Danish Realm as a whole in accordance with Article 19 of the Danish Constitution, the Faroe Islands, unlike Denmark, are not a member to the EU. Yet, the exercise of foreign policy by Denmark on behalf of the Faroe Islands as well as for Greenland has the effect that Denmark is party, for example, to international disputes or to potential boundary agreements for the self-governing territories. Only in matters transferred to the Faroese authorities do the Faroes enjoy the capacity to conclude international agreements in accordance with the Conclusion of International Agreements by the Faroese Home Rule Government Act.

Denmark became a member of the European Economic Community (EEC), the predecessor of today’s EU, in 1973. The Faroe Islands, however, decided against EEC membership. Since Denmark accepted the Faroese position, the Faroe Islands were excluded from the territorial scope of the treaty of accession between the EEC, Denmark, the UK and Ireland. In this respect the situation of the Faroe Islands differed from Greenland. Although the population of Greenland voted against EEC membership in a referendum at the time of Denmark’s accession, Greenland did not enjoy a comparable degree of autonomy in 1973. As a consequence, Greenland had to join the EEC as part of the Danish Realm and was only allowed to leave the EC in 1985 after the Greenlanders had achieved home rule and another referendum was held.

In accordance with Article 3, Protocol 2 to the Treaty of Accession of the United Kingdom, Ireland and Denmark, any legal relations between the Faroe Islands and the EU must be based upon international agreements. Obviously, as a non-member to the EU, the Faroe Islands are not subject to the EU’s common fisheries policy. Instead, relations between the EU and the Faroe Islands, as far as fisheries are concerned, are primarily governed by a Fisheries Agreement of 1977 (Agreement on fisheries between the European Economic Community, of the one part, and the Government of Denmark and the Home Government of the Faeroe Islands, of the other part, Official Journal, L 226, 29 August 1980, p. 12).

Management of the Atlanto-Scandian herring stock

The Atlanto-scandian herring stock is the world’s largest herring stock. Herring is a highly migratory species. Due to overexploitation in the past the Atlanto-scandian stock collapsed in the beginning of the 1970s. This resulted in the cessation of all fisheries between the early 1970s and the mid 1990s. Since the stock’s recovery the five parties in whose Exclusive Economic Zones (EEZ) the fish is found during its migration cycle consult on the sustainable management of Atlanto-scandian herring. In addition to the EU and the Faroe Islands, Iceland, Norway, and the Russian Federation are parties to this regular consultative process. Since 2007 the parties agree on an annual basis on the sharing of the total allowable catch (TAC) taking into account scientific advice on safe biological limits for fisheries for Atlanto-scandian herring and following the precautionary approach. The share assigned to the Faroe Islands, which has been agreed among the parties from 2007 until 2013 corresponds to 5.16 % of the total allowable catch (31,000 tonnes).

The Faroe Islands claim that migration patterns of the stock have changed and that the occurrence of Atlanto-scandian herring in its EEZ has increased. In the opinion of the Faroese authorities this should be reflected in an increased share of the TAC for the Faroe Islands. The other parties did not accept the Faroese position during the 2013 round of consultations. When the process failed, the remaining four parties agreed on the allocation of their shares recording their regret at what they perceived as a Faroese withdrawal from the consultations. In March 2013 the Fisheries Minister of the Faroe Islands announced the unilateral setting of a catch limit of 105,230 tonnes. This figure corresponds to an increase of the former share to 17% of the TAC.

EU Trade Restrictions on Faroese Herring and Mackerel

The EU claims that the Faroese Islands, after setting a unilateral catch limit, have been conducting unsustainable fisheries for Atlanto-Scandian herring in 2013. This justifies proportional trade measures to restore fishing at sustainable measures. The position of the Faroe Islands is that they have been acting in accordance with their international obligations including those on the TAC and the agreed long-term management plan for the fish stock and that the EU sanctions violate international law.

The EU implemented coercive economic measures against the Faroe Islands in August 2013 by Commission Implementing Regulation (EU) No 793/2013 (Official Journal of the European Union, L 223, 21 August 2013, p. 1) which asserts that with regard to Atlanto-Scandian herring stock the “Faroe Islands shall be identified as a country allowing non-sustainable fishing” (Article 4 of the Implementing Regulation). The measures consist primarily of import bans of herring and mackerel and derivative products from the Faroe Islands. At the same time, the EU prohibited the landing of herring and mackerel and relevant products from Faroese fisheries in EU ports to prevent their entry into the EU as well as transhipment processes. The prohibition addresses vessels flying the flag of the Faroe Islands as well as other vessels engaged in the transport of the relevant fish or fishery products when the herring and mackerel catches were authorised by Faroese administration.

Although the primary dispute over sustainable catch levels concerns the Atlanto-scandian herring stock, the EU measures likewise include Northeast Atlantic mackerel and products derived therefrom. The reasons for the inclusion of mackerel is further explained in para. 23 of the preamble to the Implementing Regulation: mackerel is considered an associated species. In the opinion of the EU the effectiveness of the trade restrictions of herring would be undermined, if catches and exports of mackerel remained unrestricted because fisheries for Notheast Altlantic mackerel in the Faroese EEZ would necessarily result in large catches of herring.

WTO proceedings

Denmark, including the Faroe Islands, has been a member to the WTO since 1 January 1995 as is the EU. Denmark has to act on behalf of the Faroe Islands in bringing disputes for alleged violations of Faroese rights under the WTO agreements.

On 4 November 2013 Denmark in respect of the Faroe Islands requested consultations under WTO dispute settlement regulations. Consultations are the formal beginning of dispute settlement. When consultations held on 12 December 2013 did not lead to a mutually satisfactory solution, Denmark further requested the establishment of a WTO panel on 8 January 2014 (Request for the Establishment of a Panel, WT/DS469/2). While the EU was able to block this request at the meeting of the Dispute Settlement Body on 22 January 2014, information published by the WTO on its website announced the composition of a panel for the dispute on 26 February 2014.

The Faroe Islands claim that the relevant EU trade restrictions are inconsistent with Articles I:1, V:2 and  XI:2 of the GATT, respectively the most-favoured nation treatment, the freedom of transit and the prohibition of quantitative restrictions on imports.

Most likely the EU will rely upon Article XX (g) GATT and, potentially, Article XX (b) GATT to justify restrictive trade measures against the Faroe Islands. Subject to further conditions set by the so-called “chapeau” of Article XX, GATT members can invoke exceptions from the prohibitions on trade restrictions, if sanctions serve to conserve natural resource or are necessary to protect animal health. While it has been clarified in prior WTO panel decisions that fish stocks constitute “exhaustible natural resources” in the sense of Article XX (g), other GATT issues are more difficult to determine. Questions which will have to be assessed by the panel include the nexus between the resource and the State adopting trade measures as well as the relationship between the measure and the conservation objective. Moreover, WTO dispute settlement decisions have required members to make restrictions effective in conjunction with domestic measures on production or consumption. Whether the EU measures meet these requirements and the further requirements of the chapeau will be subject to detailed investigation by the panel. The case has the potential to make a substantive contribution the WTO’s body of “environmental” decisions.

Possible arbitration under the LOSC

The request for WTO consultations explicitly reserves all rights under the UN Convention on the Law of the Sea (LOSC) and shall be deemed without prejudice to all legal actions that Denmark has taken or may take in the future on behalf of the Faroe Islands under the dispute settlement mechanisms of the LOSC (Request for Consultations, WT/DS469/1). The LOSC regulates the degree to which coastal States can enact domestic standards on EEZ fisheries. Indeed, at least parts of the dispute are said to have been referred to an arbitral tribunal to be established in accordance with the LOSC already in August 2013. As of today, however, arbitrators have not been appointed and no further information on the legal existence of such a dispute or the state of affairs can be obtained from the International Tribunal for the Law of the Sea.

This post may be cited as: Nele Matz-Lück, “The Faroe Islands’ Response to EU Trade Restrictions on Atlanto-Scandian Herring” (March 5, 2014), on-line:’-Response-to-EU-Trade-Restrictions-on-Atlanto-Scandian-Herring.pdf

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This entry was posted in Arbitration, Countermeasures, Fisheries, Shared fish stocks, Trade law, WTO dispute settlement. Bookmark the permalink.

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