reLAKSation 254. Callander McDowell
Waiting game: Norwegian submissions to the European Court of First Instance are a bit like buses; you wait for ages then two come along together! IntraFish reports that two cases relating to the salmon dumping issue are now awaiting resolution by the European Court of First Instance. The law firm Schjodt represents Fjord Seafood and Alasker Fjordbruk whilst Trond S. Paulsen represents the salmon project including companies belonging to both the Norwegian Seafood Federation and the Norwegian Seafood Association.
It’s always puzzled us that the Norwegian industry has never tried taking the issue of salmon dumping to this Court before now. We are in no doubt that both cases should be resolved in favour of the Norwegians but whilst we know that there is a case to answer, we are not convinced that either of these two cases are it. We feel that both law firms have circled around the central issue and instead have focused on more trivial matters. We don’t think that any of these will be sufficiently powerful to persuade the Court to rule against the European Commission.
The European Commission has handled more than one dumping case before now without being challenged in the arena of the Court of First Instance. We know that the European Commission has made errors in this case but we don’t think that these errors apply to the issues raised in these petitions
It is reported that the law firm Schjodt for example have questioned why the dumping case was allowed to proceed when the complainants represented less than 25% of European farms. This issue has been discussed many times and it is clear that it is within WTO guidelines. Equally, we are sure that the EU are aware of the rules when setting the MIP on fillets and not otherwise as Trond S Paulsen suggests.
Salmon dumping has been disputed by Norway for well over a decade. If there really was a case to answer based on the claims made by these law companies, why have they not been raised in previous cases?
It is suggested that it might take over a year, if not longer, to bring these cases to judgment. We wouldn't be surprised if the MIP issue is resolved long before the Court of First Instances reaches its conclusion.
Progress?: The Scottish Executive claims that Scotland’s aquaculture industry is making encouraging progress towards delivering targets set out in the Strategic Framework according to the Shetland Marine News. The Executive have just published an update on the framework setting out key achievements which have already been met.
Aquaculture Minister Rhona Brankin said that the executive’s aim was to help create a sustainable, diverse and competitive industry. However, we, at Callander McDowell, are still not convinced that this framework will achieve anything of the sort. We believe that the framework represents a missed opportunity in terms of helping farmers grow their businesses in an increasingly competitive market. This was because, as we have argued previously, much of the framework was formed by a Ministerial Working Group most of whose members came from outside the aquaculture industry and were in pursuit of their own individual and separate agendas. It is not surprising that the aquaculture industry is left with little expectation as to the benefit of this framework
The original Strategic Framework document set out four guiding principles one of which was economic. The aim was to achieve an internationally competitive and economically viable aquaculture industry, maximizing the value to the Scottish economy of the aquaculture industry and its products in terms of jobs and investment. In its latest update, the Scottish Executive claim some notable successes, however, none seem to relate to these original economic principles.
The update includes details of four projects set out by the Strategic Framework which are worth further consideration. The one which we have discussed previously was intended to investigate the comparative costs of aquaculture production through an independent study of the regulatory costs on aquaculture business in Scotland. This was mainly motivated by continued complaints from salmon producers that they were being placed at a commercial disadvantage against producers, especially those from Norway. As there was no official industry data on production costs, it was impossible to prove whether such claims were true or not. The original intention was that the study should be completed by November 2003, but it was not until June 2005 that KPMG were commissioned to carry out this study. The original timetable had allowed six months for the study to be completed but six months since the project was commissioned has long since passed. According to the update, the first phase of the project was due for completion by spring 2006 which has also long since passed. It seems very odd that whilst this update has only just been published (21st July), the Scottish Executive have not commented if the project was completed or if not, when it is expected. They simply state. “Stage 1 expected to be completed by spring 2006.” The update indicates that the full study is expected by summer 2006 which is, of course now. This appears unlikely as Stage 2 of the project is only planned to go ahead dependent on the findings of Stage 1. No doubt, debate as to whether the full study will be completed will continue for some months yet. This is because rumours within the industry suggest that the findings of stage 1 have not supported claims that Scottish farmers are disadvantaged by high production costs. Instead stage 1 of the study has supposedly found that there is little difference between production costs in Scotland and Norway. No doubt, whilst the dumping cases continue at the WTO and at the European Court of First Instance, there will be little incentive to publish the results of this study.
A second objective of the Strategic Framework’s economic principles was for the Federation of Scottish Aquaculture Producers to prepare a plan to encourage investment into the Scottish aquaculture industry. The original framework document did not include a timetable for this proposal. The latest update records that whilst initial discussions did take place, the main project has been postponed until the comparative cost study has been completed!
One of the two other projects involves the development of an export action plan. This was completed in March 2004 and focused on the Italian and French markets. It is difficult to assess whether these plans have been a success since the salmon industry has not released exports figures for some years. The recent Ernst & Young study looking at trends in the salmon industry concludes that the majority of salmon produced in Scotland is consumed in the UK, therefore is not exported. Certainly, our own observations of the French retail sector suggest that Scottish salmon is difficult to find.
The final project which we will refer to is that aimed at adding value through the development of branded products and associated quality standards. This was intended to optimise the potential for, and premium from, differentiated products based on geographic origin and quality attributes. This latest update reports that a project funded through FIFG focuses on the promotion of salmon as part of a healthy diet. We, at Callander McDowell, have failed to understand how promotion of ‘Scottish’ salmon relates to either geographic origin or product quality. The fact is that omega 3 fatty acids can be found in a variety of oily fish and other foods and it doesn’t have to be of Scottish origin to provide such health benefits. We are not surprised that this project ended up missing the original target because the past experience of the salmon industry with regard to promoting products based on both geographic origin and product quality has not been a success as witnessed by the failure of the Tartan Quality Mark to make any impact with consumers. An earlier success of this objective was the award of PGI (Protected Geographic Indication) status to Scottish farmed salmon in the spring of 2004. How this has helped to promote Scottish salmon remains a complete mystery as we have never seen any reference to it in any marketplace we have looked.
The Scottish Executive claims that the original 55 priorities set out in the Framework have been increased to 62 of which 36 have been completed, 1 delayed (costs) and the remainder ongoing. They add that some of these original priorities have proved to be over ambitious or more complex to implement than first envisaged and thus have been revised.
Perhaps, with an agenda focused on farmers first, all of the original strategy might have been much more realistic as well as feasible?