A four-year transition period to impose changes to help protect the country's reputation, which has been under scrutiny in the US and UK amid reports of abuse on some South Korean charters.
BUSINESSDESK: The New Zealand government's decision to force foreign fishing vessels to register under the local flag is the best option to protect the nation's reputation, which was under scrutiny in the US and UK amid reports of abuse on some South Korean charters.
The Ministry for Primary Industries backed a Cabinet decision imposing a four-year transition period where foreign fishing boats will have to fly New Zealand's flag as "the most durable option" and least likely to need more intervention in the future, MPI official Scott Gallacher says in the regulatory impact statement.
That lift in reputation will help strengthen New Zealand's position when negotiating on rules of origin in free trade agreements and labour issues in the Trans-Pacific Partnership regional agreement.
"Reflagging would set up better conditions for the fishing industry to continue operating in the long term in a socially and environmentally responsible manner," the RIS says. "Reflagging will provide the most certainty that New Zealand's international reputation is protected and not tarnished further through links to foreign flag States."
Foreign chartered vessels make up about $302 million of New Zealand's annual $1.53 billion seafood exports.
The shift will have "uncertain economic impacts" such as losing access to vessels, with a lower value attached to the annual catch entitlement (ACE), and increased operating costs may cause smaller domestic companies to become unprofitable.
The ministry says the annual $300 million cost touted by industry was a worst-case scenario and unlikely to occur as existing foreign chartered vessels in local waters are known to have reflagged in other jurisdictions.
If vessels were unwilling to adopt the New Zealand flag, it will "lower the value of some fish quota unless alternative vessels could be sourced", it says.
The ministry has been told Ukrainian vessels, with an annual catch value of $94 million, will not be permitted to reflag to another jurisdiction, and says anecdotal evidence suggests Japanese ships, with an annual catch value of $27 million, also will not be allowed to reflag.
Korean vessels, with a catch value of $158 million, may have to renegotiate their bank arrangements, while Dominican Republic vessels, with a catch value of $45 million, wwill not be prevented from reflagging.
Any excess capacity may have a disproportionate impact on Maori and iwi quota holders and the ministry is working with iwi leaders to minimise these risks, MPI says.
In May, Primary Industries Minister David Carter and Labour Minister Kate Wilkinson announced the initiative to put the ships under New Zealand labour and maritime law.
The decision went one step further than the recommendation of a ministerial inquiry headed by former Cabinet minister Paul Swain, which advised restricting registration to vessels on demise charter.
A demise charter is a ship leasing arrangement where the use of the entire vessel and all associated expenses pass from the owner to the lessee.
