STATUS QUO BIAS AND CONSERVATION POLICY REFORM: THE CASE OF THE COMMON FISHERIES POLICY REFORM OF...
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STATUS QUO BIAS AND CONSERVATION POLICY REFORM: THE CASE OF THE COMMON FISHERIES
POLICY REFORM OF 2002
Matthew Oakes BergerThursday 26 August 2010
Master's thesis forMSc European Political Economy
The London School of Economics and Political ScienceThe European Institute
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Table of Contents
1. Introduction……………………………………………………………………………………………………….3
1.1 Puzzle and hypothesis……………………………………………………………...……………………………41.2 Methodology………………………………………………………………………….……………………………4
2. Theoretical background……………………………………………………………..………………………….6
2.1 Status quo bias in policy reform……………………………………………………….……………………..62.2 Status quo bias in EU negotiations………………………………………………………...
………………….72.3 Some general fisheries policy background…………………………………………………….
……………8
3. Status quo biases in EU fisheries policy…………………………………………………………...……...12
3.1 Legal and historical background of the CFP…………………………………………………….………...12
3.2 A model of CFP decision-making…………………………………………………………………………….143.3 Establishing its
ineffectiveness……………………………………………………………………………….163.4 Explaining the persistence of this
ineffectiveness……………………………………………………..….17
4. Case study: The 2002reform………………………………………………………………………………...….20
4.1 Partially overcoming a status quobias………………………………………………………………………20
4.1.1 Overcoming: the cases of funds and policy introduction………………………………...……………20
4.1.2 But only partially: the cases of TACs………………………………………………………………...…….22
4.2 Explaining thebreakthrough………………………………………………………………………………..…24
4.2.1 Rule Changes………………………………………………………………………………………………..….24
4.2.2 ExternalChanges……………………………………………………………………………………………...26
4.2.3 Iteratedgames…………………………………………………………………………………………….....…27
4.3 A qualitative comparative analysis of previousreforms…………………………………………..…..…28
4.4 Case study conclusions…………………………………………………………………………………...……31
5. Discussion……………………………………………………………………………………………………..……32
5.1 Effects of the LisbonTreaty……………………………………………………………………………………32
5.2 Effects of future accessions…………………………………………………………………………..……….32
5.3 The 2012 reforms…………………………………………………………………………………………...……33
5.5 Conclusion………………………………………………………………………………………………..……....34
Works cited…………………………………………………………………………………………………….……..35
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1. Introduction
The E.U's Common Fisheries Policy is a fascinating puzzle of a policy
problem where domestic politics, theories of integration, history, environmental
regulation and game theory all come together in a perfect storm that has
resulted in one of the most vilified of community policies. But the CFP means
well. Originally, it was needed to prevent conflict over a resource whose
finiteness was becoming more and more apparent. Since then, it has become a
tool to ensure the sustainability of both fish stocks and the fishing industry that
depends on them.
Its success at conserving either of these entities has been negligible.
When looked at in the broader context of international fisheries policies
generally, the difficulty of the policy's task is clear: The FAO says that 80 percent
of the world's fish stocks for which data is available are fully or overexploited
(FAO 2009: 34). The European Commission estimates that 88 percent of EU
stocks are overfished (Commission 2009b: 7). Clearly, the CFP is not doing well
even by the low standards of transnational fisheries regimes.
The scheduled reforms of the policy have done little to change this. In fact,
reforms have repeatedly reiterated the existing and suboptimal policy outcomes
of the CFP, policy outcomes that have satisfied virtually none of the
stakeholders. This paper contends that this is due to the nasty and pernicious
status quo policy bias that adheres in the CFP. But this leads immediately to
another question: How can this status quo bias be overcome?
In fact, it was partially overcome in 2002, as several of the most harmful
aspects of the policy – particularly in terms of the objective of conserving the fish
stocks on which the industry depends – were done away with or significantly
modified and several new priorities introduced. The reform was far from
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comprehensive and it has become clear in the years since it was agreed that a
significant and detrimental status quo bias still remains in many areas, but the
reforms that did take place indicate that the CFP and other often-criticized but
rarely reformed policies – such as the Common Agricultural Policy – are not
doomed to forever reiterating a suboptimal policy status quo.
1.1 Puzzle and hypothesis
The puzzle ultimately addressed in this paper, then, is how, despite a
terrible track record, have status quo biases been at least partially overcome in
the case of CFP and under what conditions can significant reforms to the CFP and
other conservation-related policies occur?
My proposed answer to this question, which will be presented and
evaluated in this paper, is that there is a deep status quo bias in CFP decision-
making that has had quantifiable effects on policy outcomes and that still exists
today, but that changes in changes in voting rules, changes in the external
policymaking environment, and an iterated game that eventually leads to an
awareness of the suboptimal outcomes resulting from acting based on short-
term interests have led to reforms being taken on some – though only some –
aspects of the policy and it is conceivable that such conditions could lead to
further reform.
This question has been discussed in the literature before, but what I add to
the discussion is the case study of the 2002 reforms and, significantly, the
contention that they at least somewhat went against the accepted narrative that
significant CFP reform is impossible.
To make this case the paper will be structured thus: First it will place itself
and its arguments in the theoretical context of other analyses that have been
done on status quo biases affecting policy reforms in the EU. In section 3 it will
look at the legal and political landscape of the CFP in order to assess the extent
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allowing for the 2002 reform are in fact necessary conditions, though necessarily
sufficient conditions, for CFP reform generally.
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2. Theoretical background
2.1 Status quo bias in policy reform
A preference for a status quo that is both economically inefficient and
surprisingly difficult to dislodge has long been identified as a partial cause of
suboptimal policies. It is a fairly intuitive idea – decisions will disproportionately
favor the status quo when the status quo is an option or tend to at least
approximate that status quo option as closely as possible, even when other, new
options would clearly be the better choices. Samuelson and Zeckhauser (1988)
found that this bias occurs in individual decision making, to the point that the
bias is "substantial in important real decisions" (p. 7). Later, Fernandez and
Rodrik (1991) applied the idea in answering the question of why governments
often fail to adopt policies that would be economically efficiency-enhancing. They
found that a status quo bias emerged from an inability to pinpoint who would
gain and lose from possible reforms – and thus an inability to see that a majority
of players would gain.
A variety of phenomena can contribute to a status quo bias, including risk
aversion and the endowment effect. Risk aversion does not do much to explain
the lack of CFP reform so it will not be discussed in this paper, but the
endowment effect plays a very important role in CFP decision making,
particularly when it comes to deciding how much a certain fish a certain country
can catch and how much structural funds will be allotted to a country's fishing
industry. The concept of the endowment effect was first developed by Thaler
(1980). It says that actors will generally be less reluctant to lose something they
already have than to gain something they do not. In the case of the Common
Fisheries Policy, many member states have over time come to look at the fishing
quotas and structural funds allotted them as endowments, thus making them
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less inclined to accept reductions in these numbers despite the long-term
benefits that would result.
Though status quo biases are widespread, it is the phenomena which
causes these biases that makes them interesting and observable. The EU has
provided particularly fertile ground for researching and explaining how status
quo biases originate and persist.
2.2 Status quo bias in EU negotiations
Negotiations are at the heart of the EU's operations, and these
negotiations take place in the context of a number of factors, all of which are
repeatedly influencing each other and thus continually shaping the complex and
interconnected setting in which the negotiations take place. These negotiations
are constrained not only by Commission preferences and member state
preferences (as represented on the Councils of Ministers) but by the institutional
setting created by previous configurations of preferences, by previous
negotiations and by their resulting policies. Following the definitions given by
new institutionalists like Hall and Taylor (1996) this institutional setting includes
the formal decision-making rules and more informal procedures that constrain
the negotiation game.
The actions of member states and, especially, of the Commission are, of
course, constrained by the preferences of (other) member states, as well.
Scharpf (1997) put forward the concept of an "actor-centered institutionalism"
where actors' interests are in many ways shaped by the institutions in which
they are acting. Thus both interests and institutions "matter" – and they matter
very much in the maintenance of status quo policies. This is in no small part due
to the path dependency (Pierson 1996) that permeates much of EU
policymaking. When negotiating a policy outcome, both the present policy
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configuration, past configurations and the effect the outcomes will have on
future configurations cast a "shadow" of influence over the negotiations (Friis
and Murphy 1999: 215). No negotiation begins with a blank slate on which the
intrinsically optimal policy can be agreed. The path dependency means that, for
better or worse, new policies arise out of old policies and the optimal policy
outcome is really just the optimal policy outcome within the particular
institutional and historical context in which the policymaking is taking place. The
large status quo bias arising from a policy-setting system so dependent on the
past is clear.
Tsebelis (1990) refers to negotiations taking place in this complex
environment as a nested game, and Payne (2000) has pointed out the nested-
game characteristics of CFP negotiations, as will be discussed in the following
section.
This paper thus fits into the EU negotiation literature by further defining
the conditions that lead to a status quo bias in these negotiations, the extent of
that bias and the conditions that may allow for reforms to occur. To do this it will
analyze a specific area of EU policy negotiations, the CFP, in which this anti-
reform bias is especially strong, and analyze it using mainly game-theory
terminology with an emphasis on the institutions constraining actors' choices.
A major study similar to this one has already been done on the EU's
Common Agricultural Policy (Pokrivcak et al. 2006), where conditions allowing a
status quo bias in EU policymaking were laid out. Taking into account the
somewhat shared legal background of the CFP and CAP – as well as the unique
problems the CFP presents – many of the ideas from that paper will be applied
to the CFP in this one. In their paper, Pokrivcak et al. set up a model of CAP
decision making and then use it to demonstrate under what conditions CAP
reform occurs as well as the influence of the Commission on that reform. They
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find that changes in the Council voting rules , particularly changes lowering the
threshold for the number of votes needed for passage, and changes exogenous
to CAP negotiations, such as international treaties and EU enlargement, are the
main conditions under which major reforms occur. In answering the question
what is the extent of a status quo bias in the CFP and (how) can it be overcome,
this paper tries to determine whether the same factors Pokrivcak et al. identified
as leading to CAP reform also hold true for CFP reform and, if so, to what extent?
This paper also differs from that previous work through the much greater
reliance on empirical evidence that is utilized here.
This paper, then, adds to the debate on CFP reform and, by extension
reform in the context of EU negotiations, by focusing on the empirical data
related to one case, by examining whether what has been said about the lack of
reform of the CFP still holds true today following the 2002 reform, and by arguing
that a status quo bias was partially overcome by those 2002 reforms.
2.3 Some general fisheries policy background
Before going further, a brief comment on fisheries policy generally and the
concepts that govern the field is necessary in order for the suboptimality of the
status quo CFP to be understood. A "fishery" is generally defined as a group of
vessels targeting a stock in a certain area with a certain type of gear. A "stock" is
the subpopulation of a species targeted by a fishery.
There are several recognized levels at which a stock may be fished. The
CFP generally aims to set levels at the maximum sustainable yield, BMSY, where B0
is the biomass untouched by any fishing activity. Fish stocks, like any population,
grow as a function of their present population, so that a large population this
year means an even larger one next year – but only to a point. With unchecked
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growth that population will reach a total so high that it hits its carrying capacity
and no longer has enough food or habitat to support for everyone; causing a
population to then reduce through natural causes. MSY occurs at the precipice,
where the rate of population growth is as large as it will get, as shown here
(Kahlilian et al. 2010: 1178):
Figure 2.1: Showing population growth as a function of total population size
Though the effectiveness of using MSY as a target for fishing exploitation levels
has been questioned since the late 1970s, it is still widely used today.
Other factors also need to be taken into consideration, including the sizeand age of the fish that are caught. This is usually regulated by setting a
minimum size for the mesh of fishing nets, thus allowing fish that are too small
(and thus likely too young to have spawned) to escape. These regulations also
sometimes work to allow non-target species (i.e. species caught as bycatch in
the process of catching a different species) to escape. These technical measures
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are also set by the CFP and their effectiveness varies across species and
fisheries.
The EU relies on a system of total allowable catch (TAC) for each fish
stock, set annually for most stocks, that is then divided up between the member
states before those states again divide it up between their fishers. Other
management measures, like individual transreable quotas (ITQs) exist and are in
use elsewhere. Unlike ITQs, though, TACs allow for the existence of a prisoners'
dilemma between fishers over whether to overexploit a stock for short-term gain
at the expense of the long-term survival of the fishery and the fishers who
depend on it, as illustrated in this table:
Figure 2.2: Prisoners' dilemma between individual fishers, with a Nashequilibrium at [Exploit, Exploit], from Payne (2000: 18)
TACs are particularly problematic when it comes to mixed-species fisheries, for
instance, since the quota for one species may run out before those of the species
around it, but it is difficult to catch one species without taking others as well. The
prospects for and history of introducing new management policies under the CFP
are discussed later.
This section was meant to show where in the debates on status quo bias
and the EU as a negotiation-based polity this paper's arguments will fit in, as well
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as to give some necessary background on how fisheries policy works generally
so that the case study of this paper will make sense.
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3. Status quo biases in EU fisheries policy
Before discussing how the CFP has been doomed to the maintenance of
suboptimal status quo policies, it is necessary to lay out the rules of the CFP
policy-setting game; that is, why it exists, how it is structured and how it works.
3.1 Legal and historical background of the CFP
The Treaty of Rome addressed the issues of fisheries only obliquely in
1957 – in Article 38, in the context of agriculture.1 It was not until over a decade
later that European governments began to see that a more comprehensive – and
separate – policy for fisheries would be needed. In part, this initial oversight can
be explained by the relative smallness of the issue to the original six member
states and that, in those days before coastal waters were divided into exclusive
economic zones, those countries' fleets caught most of their fish in distant
waters (Conceição-Heldt 2004: 22; Holden 1996: 17). The fact that fisheries
became a more important issue later on as countries like the U.K, Denmark and,
especially, Spain and Portugal acceded is the first indication of the influence
external changes have on shaking up the status quo of European fisheries policy.
Segments of that policy first began in 1970 with the establishment of a
common market for fish products, the first structural policy elements by which
funds were allocated for the modernization of vessels, and the decision that
fisherman from any member state were to have equal access to the waters of all
others. This equal access principle would have major repercussions for the future
of European fisheries policy. Then, in 1976, Iceland claimed the waters 200 miles
off its coast as its exclusive fishing territory. The EU soon followed suit, and the
management measures that this exclusive economic zone required eventually
led to the creation of the CFP in 1983.
1 Art. 38 (1) of TEC
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By then, the CFP had been given four areas in which to work: structural
policy2, the organization of a common market3, the ability to negotiate
agreements with third countries, and resource conservation and management4.
This fourth area was established in 1983 and, since it limits both the amount of
fish member states are allowed to catch and the number of boats that are
allowed to pursue those fish, has become the most controversial – for industry
and conservationists alike. This paper will deal only with the first and fourth of
these CFP pillars since they are the most easily quantifiable as well as the most
controversial and visible aspects of the policy.
Under the first pillar, the CFP sets aside structural funds for the fishing sector
and says, loosely, how they can be used, though member states typically have
the final say on the funds' ultimate destination. The fourth has several areas in
which decisions must be made: setting the total allowable catch (TAC) for each
species, dividing those TACs into particular quotas for each member state,
placing restrictions on the amount of effort (usually a measure of engine
strength or boat capacity) fishers can use to pursue those fish, regulating the
type of gears that can be used to catch them, and restricting certain areas to
certain fishing activities.
It should be noted that there is therefore both a production (creation) and
distribution (sharing) of value that takes place in the negotiations over TACs,
where the final TAC (the amount of a fish that is legally available) is the level of
production while the quotas are how that production will be distributed, as
illustrated below (Scharpf 1997: 120). This distribution relies on the principle of
relative stability , which was originally based on historic catches during the
reference period 1973-78, with some preference given to areas deemed
traditionally dependent on fishing activities. Since then it has continued to
2
Council Regulation 2908/833 Council Regulation 3796/814 Council Regulations 2057/82, 170/83 and 171/83
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allocate quotas according to a fixed key based on historic catches so that each
state gets the same proportion of a species' TAC each year. Thus, in order for a
state's catch to be increased the whole TAC must typically be increased (Payne
2000: 315). This is illustrated below; the anti-reform bias in such a system should
be clear and will be discussed in more depth later in this section.
Figure 3.1: The total production level is TACx (the TAC of a given fish
population for a given year) while the distribution level for country a (thequota of TACx allotted to country a) is Fa. Due the principal of relative stability,country a can only increase their quota by increasing every other country's
quota as well (i.e. increasing the TAC). Thus a movement from Fa to Fa'necessitates a movement from TACx to TACx'. (Loosely adapted from Scharpf
1997: 122)
Per Scharpf (1997), without acceptable distribution agreed to, countries
that feel squeezed by the status quo distribution levels, like the U.K., will argue
for less production (lower TACs) while countries who perceive themselves as
benefiting from the status quo distribution, like Spain, will always want higher
TACs (p. 121). "In other words," concludes Scharpf, "negotiated solutions will
reproduce the existing distribution of advantages and disadvantages" (p. 123).
This has been one factor leading to the loss of legitimacy of the CFP in the eyes
of many fishers, especially, in this case, those of Ireland and the U.K. (Symes and
Crean 1995; Payne 2000: 313).
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3.2 A model of CFP decision-making
TACs are the outcome of an annual dance of scientific advice,
recommendations and negotiations that has been aptly referred to as the "TAC
machine" (WWF 2007: 10; Schwach et al. 2007). This "machine" begins with data
collected by the International Council for the Exploration of the Sea (ICES). That
data is then prepared by the European Commission's Scientific, Technical and
Economic Committee for Fisheries (STEFC) for the use of the Commission and
other policymakers. Consultations are then held with stakeholders, the relevant
Commission agencies and the European Parliament before the Commission
issues a final proposal. That proposal then heads to the Council of agriculture
and fisheries ministers, where the final negotiations take place and the
Commission recommendations are adjusted as the ministers see fit. This process
is repeated every year, in December, in order to set the following year's TACs, as
well as its effort reductions. Structural fund decisions follow a similar path.
The Parliament has had only a consultative role to play, though it does have
indirect influence over the CFP through its powers over the budget (Markus
2009:21; Schweiger 2009: 83). It now has a broader role to play under the Lisbon
Treaty, though not in the setting of fishing opportunities like TACs. The
implications of the Lisbon Treaty are discussed in the last section of this paper.
As for interests, member states are driven primarily by short-term political
gain – or, according to Markus (2009), "ruthless promotion of their national
economic interests" – which for the most part usually amounts to advocating for
high rates of exploitation of fish stocks and levels of structural funds and, thus,
hopefully a better chance of getting re-elected (p.20). The Commission's
interests, on the other hand, are usually seen as furthering community
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integration and maintaining its powers as mediator between the member states
(Payne 2000: 309).
Following the actual setting of CFP policies, it is left for these rules to be
implemented and enforced. For most CFP measures, this role is left to the
member states, thus creating a prisoners' dilemma – to enforce or not – with
significant negative impacts of the efficacy of the policy measures. Of course,
the prospects for enforcing policies also influence the form that policy decisions
eventually take, meaning these aspects are implicit factors in the setting of
policies in the first place (Scharpf 1997: 118). The Commission has taken on a
greater policing role in recent years, as discussed in section 4.
3.3 Establishing its ineffectiveness
The policies resulting from this decision-making process have for the most
part failed to achieve the CFP's main objectives. In terms of conserving fish
stocks, the Commission has said that 88 percent of EU stocks are being fished at
rates that exceed their maximum sustainable yield. "This means that these fish
populations could increase and generate more economic output if they were left
for only a few years under less fishing pressure," it wrote in a 2009 green paper,
concluding that "European fisheries are eroding their own ecological and
economic basis" (Commission 2009b: 7).
Despite the accusations of some national fishers' organizations, this steep
decline is not due to the CFP; studies have shown it began long before, with the
onset of industrial fishing earlier last century (Thurstan et al. 2010). Still, the CFP
has so far been unable to stem this trend, and while conservation measures
appear to have been strengthened in 2002 and since, as will be discussed in the
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section 4, the CFP has a long history of failing to protect the long-term viability of
European fisheries.
In the case of TACs, the Commission generally takes the Council's objections
into account when drawing up its proposal so that the Commission-proposed TAC
levels are already higher than those recommended by the scientific advice and
those proposals are almost uniformly further increased by the Council (COM
2007:5; Karagiannakos 1996). The TACs agreed by the Council in the mid-1980s,
for instance, were on 20 percent higher than the recommendations of ICES.
They topped out at 40 percent higher near the turn of the century and averaged
32 percent higher in the pre-2003 years, according to the WWF (2007:11).
The ways in which the CFP fails to achieve its objectives, then, are not hard to
see: TACs set too high, a continued vast overcapacity of fishing capabilities
(vessels and other equipment relative to the amount of fish available to be
caught), a lack of credibility among fishers due to the inability of the CFP to
account for things like discarded bycatch of above-quota fish, and a lack of
enforcement by member states and even by the Commission (these are
discussed most comprehensively in Kahlilian et al. 2010).
3.4 Explaining the persistence of this ineffectiveness
But the EU has been unable to reform these aspects of the CFP. Why?
The first answer is interests: member states' short-term interests
dominate Council decision making to the detriment of the long-term, sustainable
management that is needed to ensure both the survival of fish populations and
of the fishing industry.
But interests are only half the answer. An institutional configuration in
which these short-term interests are allowed to dominate is certainly partly to
blame, but instead the institutions allow for the maintenance of an ineffective
CFP status quo. One way in which this can be seen is by applying Tsebelis'
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(1990) concept of the nested game to CFP reforms. This was done most
thoroughly by Payne (2000). Payne sets up CFP policymaking as a tug-of-war
between the member states (represented by the Council), which want no further
loss of sovereignty, and the Commission, which wants greater competence at the
EU level. He explains that the CFP's failures are due to the policy's existence
within "a 'nested' institutional setting that allows wider questions of institutional
competence to dominate conservation interests" (p.304). That is, member
states are more concerned with what CFP policy outcomes mean for other EU
policies than the CFP itself. As an example, the principal of equal access has
come under fire since it might perpetuate a tragedy of the commons problem
where one could easily be avoided by further privatizing the commons of the
seas into the hands of coastal states. Yet, since eroding this equal access
principle could be potentially seen as also eroding the non-discrimination policies
of the EU as a whole, it survives. Even if enough member states supported
overturning it, it would never be in the potential win-set of policy outcomes since
the Commission would never propose an option such as this that would go
against its own pro-integration interests (Payne 2000, 314). The same holds true
for the other aspects of the CFP, like relative stability – the status quo is
maintained because reforming it would have too great of a spillover effect on the
rest of the EU institutional arena.
Payne's observations, however are pre-2002 and he neglects to say why
the CFP is uniquely so affected by the nested game problem, as well as why
nested games would be more of a factor than the dominance of short-term
political interests or other explanations.
Conceição-Heldt (2004) argues that it is because the CFP negotiations
(games) are repeated over time that they take on a nested-game quality. "When
iterating the game shifts the focus from strategies within the game to strategies
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between linked games," he writes (p. 51; emphasis in original). He says this
emphasizes the fact that regulations are characterized by an advancement of
integration simultaneous with a conflict over distribution. These iterations also
emphasize the fact that, as was discussed in section 2 of this paper, EU
negotiations take place in the context of past, present and future decisions and
this creates a path dependency that makes EU decision making inherently biased
against innovative reforms. No negotiation can start with a fully clean slate, and
this is especially true of CFP negotiations where TACs are set every year and
every year's TACs literally set the parameters for the next year's. This can be
most directly seen in the rule that TACs should generally not be moved in either
direction by more than 20 percent (previously, 15 percent) from the previous
year's levels.
This paper sees the status quo bias, therefore, as the result of a number of
phenomena – not just a nested game. I would add firstly the influence of voting
rules and of the general decision-making process, as Pokrivcak et al. (2006)
discusses and which I use in section 4 to partly explain the partial CFP reforms
achieved in 2002.
Moreover, there is an endowment effect that has skewed the possible win
set in favor of the status quo by influencing member states' interests. The
principal of relative stability has given member states the impression that they
have a right to a certain number of fish and this has made them less willing to
accept reductions in that number, despite the long-term benefits that would
result. The relative stability that encourages this endowment effect, as illustrated
in figures 3.1 and 3.2, is thus inherently status quo-biased (Markus 2009: 77).
Despite all this, though, in 2002 the status quo maintenance was partly –
though only partly – upset, as will be demonstrated in section 4.
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In this section, then, we established the extent of a status quo bias in CFP
decision making and the factors arrayed against significant reform of the CFP,
including, inter alia, the lack of movement and lack of heeding scientific advice
in the setting of TACs and public aid, the lack of innovative policies or removal of
damaging policies, an endowment effect, and the ways in which all these factors
interact. Taken together these factors might be seen as forming a critical case
of status quo bias, where the status quo bias goes so deep as to make the CFP a
prime example of the phenomenon; that is, if the CFP can even partially
overcome a status quo bias, most any other policy area should be able to do the
same. Demonstrating the fulfillment of these critical case criteria more than
qualitatively is beyond the scope of this paper, but we will try to demonstrate at
least the first part of this proposition – that the CFP can overcome its deep status
quo bias – in the next section.
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4. Case study: The 2002 reform
This section will try to answer the question of to what extent were
significant reforms of the CFP taken as part of the 2002 reforms and what were
the factors either allowing or preventing those reforms. It will then use a
qualitative comparative analysis to determine whether those factors correlate
with other reforms of the CFP. Put more simply, it will try to prove that something
(overcoming the status quo bias established in the previous section) happened
and why it happened when it did.
4.1 Partially overcoming a status quo bias
4.1.1 Overcoming: the cases of funds and policy introduction
Like the previous reforms, in 1983 and 1992, the 2002 reform provides the
legal basis for subsequent decision making under the CFP; it is the CFP. The 2002
reform is widely seen as the first fundamental revision of the CFP since its
creation in 1983, but the degree of reform varies between aspects of the policy.
Possibly the most significant area of reform was in the allotment and
distribution of public funds. These subsidies, in fact, are generally regarded as
the main issue addressed in the 2002 reform (Markus 2009: 198; Schweiger
2009: 92). Markus (2009) goes as far as to say that "substantive changes were
introduced by all [structural] regulations adopted in the course of the reform" (p.
198). An entry-exit scheme5
that generally required entry of new capacity to be
replaced with withdrawal of capacity replaced the previous Multi-Annual
Guidance Programme, which was widely recognized as having failed to achieve
its objective of reductions in fishing fleet size. And aid for constructing new
vessels would stop after 2004.6 Other changes allocating increased funds for the
retraining fishers and increasing the scrapping of vessels were also adopted.
5 Arts. 11-14 of Council Regulation 2371/20026 Regulation Council 2369/2002
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The effects of these measures have been far from ideal, but they have had
some effect, as demonstrated in these graphs:
Figure 4.1: Levels of public funding for activities that increase (top row) and
decrease (bottom row) fishing capacity, based on data provided by the
Commission to the website Fishsubsidy.org, run by the U.K. nonprofit EU
Transparency and the Danish investigative journalism partnership Kaas and
Mulvad (Fishsubsidy.org 2010)
The activities in the top two graphs have the potential to increase capacity
and thus harm the viability of fish stocks and profitability of the fishing industry
long-term. As the graphs show, both of these activities saw increases leading up
to the 2002 reform but a steady decrease since that time. The activities in the
bottom two graphs would potentially lead to reductions in fleets and, thus, in
capacity. They both show an – albeit slight – increase since the 2002 reform.
These measures resulted in an overall capacity reduction of the EU fleet by
approximately 197,000 gross tonnage and 720,000 kilowatts between 2003 and
2007, a net reduction of approximately 11 percent in tonnage, despite the
accession of 10 countries in 2004 (COM 2008: 6).
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There has also been increased reliance on other conservation measures,
like effort reductions7 and "a progressive implementation of an eco-system-
based approach to fisheries management"8. In terms of conservation measures,
the multi-annual plans9 that were adopted symbolized a shift from short-term
measures to long-term management plans, thus overturning the dominance of
short-term interests that had characterized decisions previously. Multi-annual
plans would institute pre-set rules for deciding catch and conservation levels so
that the annual horse-trading of TAC-setting negotiations in the Council would be
avoided. Many, including Beddington et al. (2007), see rules like these as
necessary for sustainable fishery management. In 2003, the EU saw the first
long-term plans begin, for northern hake and some cod, including those in the
North Sea (Commision 2009a: 15). Setting up these management plans has been
an ongoing process since 2002, with mixed results (WWF 2007: 21- 32), but the
fact that the initiative to set these up was taken in the first place is enough to
demonstrate that the status quo system of annual TACs can be upset if the right
conditions exist and that new, more effective conservation policies can be
introduced.
All this partially upends Payne's (2000) contention that the political
advantages of TACs mean that "the Community is unlikely to increase its
reliance on other conservation instruments" (p. 316). In fact, the Commission
had hoped for an even greater movement away from the "TAC machine" system
to one based more on multi-annual plans, the catch limits for which would
eventually be set solely by the Commission (Schweiger 2009: 95). But this
proposal, which would have ceded more power to the Commission, largely failed,
which is where Payne and others are still correct.
7
Art. 4 (2) (f) of Council Regulation 2371/20028 Art. 2 (1) of Council Regulation 2371/20029 Art. 5 of Council Regulation 2371/2002
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4.1.2 But only partially: the cases of TACs
The status quo policy configuration therefore still obtains in many aspects
of the post-2002 CFP and particularly in the conservation aspects. The fact that
after the reforms TACs are still set a level too high to be able to maintain
sustainable levels of fishing, for instance, has been shown in numerous studies
(COM 2007; WWF 2007; Kahlilian 2010) and in this table:
200
3
200
4
200
5
200
6
200
7
Average percentage higher
than the advised catch
42% 48% 57% 47% 43%
Figure 4.2: Showing that TACs since 2002 still deviate significantly, onaverage, from the scientifically advised catch (COM 2009b)
The policies of equal access and relative stability, so detrimental to effective
conservation of the resources, were also left unchanged.10
But the Commission seems to have made reforming the subsidy aspect,
not the TAC aspect, of the CFP its focus in 2002. As Schweiger (2009) notes, it is
quite possible the Commission's strategy was to use the 2002 reforms as "the
first step in a complete overhaul of the CFP" in which a reduction in overcapacity
was seen as both more achievable and more beneficial for bringing fishing to
sustainable levels than was a revision of the quota system (p. 97).
Thus, we could say that the status quo bias that has marked CFP reforms
was overcome-able in some policy areas, like structural funding and the
introduction of some conservation measures, but not yet in others, such the TAC
system and the principles of relative stability and equal access that underlie it.
Indeed, it has been argued that a system based on TACs, and especially due to
10 Art. 17-19 and 20 (1) of Reg. 2371/02
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its interconnectedness with the principal of relative stability, is inherently biased
toward the status quo policy configurations (Markus 2009: 77).
Even in terms of structural policies, though, the 2002 reform has had
mixed results. The Commission has said that "while EU fishing capacity overall is
declining, the reduction is coming too slowly (on average, an annual reduction of
2-3% over the last 15 years) for it to have any substantial impact on fishing
pressure and thus alleviate the poor state of many EU fish stocks, in particular
demersal [living on or near the ocean bottom] stocks" (Commission 2009a: 19).
This, it says, is largely because "technological creep" runs at a parallel rate of
about 2 to 4 percent annually, "thus effectively cancelling out any nominal
reduction" (p. 19). Others have noted the indirect subsidies, such as tax
exemptions for fuel, that have also helped maintain this "vicious circle" of
overcapacity and overfishing (Kahlilian et al. 2010: 1180).
But at least some progress has been made, which is a feat in itself when
up against an intractable bias of the interests and institutions toward the status
quo. The hurdle of overcoming at least the initial bias against reform of policies
on structural funds has been crossed, and maybe, to invert the nested game
logic, that will lead to a snowballing of new reforms in 2012 and after.
Many – many – papers have examined why the reforms have come up
short of their goals, but this one is focusing on what they did achieve: marginal
shifts in the policy that are impressive in their own right given the deep-seated
status quo bias that exists in the CFP. There are three primary factors we can see
as allowing those shifts to occur.
4.2 Explaining the breakthrough
4.2.1 Rule Changes
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As Pokrivcak et al. (2000) have demonstrated in the case of the Common
Agricultural Policy, changes in decision-making rules, and particularly a shift from
unanimity to a qualified majority or majority being required for passage, can be
instrumental in decreasing a status quo bias. The case of the 2002 CFP reform
shows that rule changes have the same effect for the CFP, and are even
instrumental in allowing it to overcome that bias. The case of reforms to the
structural funds areas illustrates this.
The shift from unanimity to qualified majority voting on the Council had
continued during the 1990s, and, as Schweiger (2009) notes, the agreements to
phase out public aid11 discussed above marked the first time that a major CFP
revision had been adopted with a qualified majority, rather than unanimously
(p.94). This allowed the disagreement of some countries that wanted more
stringent reductions in fleet capacity (Sweden and Germany) to not doom the
compromise agreed by the other countries. This also, it should be noted, allowed
countries like Sweden and Germany, as well as the U.K. and the Netherlands, to
try harder for the more stringent measures (and larger reforms) without fear that
this tactic would mean a stalemate that ends up preserving the status quo.
Relying on Pokrivcak et al.'s models and Schweiger's description of the
member states' policy preferences, then, the shift from non-agreement (and thus
status quo) to agreement on reform can be demonstrated in this graph:
11 Council Regulation 2369/2002
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Figure 4.3: Rough mapping of the interplay between member state preferencesand voting rules, based on Pokrivcak et al.'s spatial depictions of the effect of
voting rules on CAP reform (pp. 572-7).
In this graph, the possibility of a policy outcome is plotted according to the
preferences of member states, as represented on the X axis, and the voting rule
needed to approve that outcome, as represented on the Y axis. In order for a
policy to pass it must fall outside the gray triangle, so that at a simple majority
any reform would be approved, while at unanimity none would. The fact that the
approved policy (represented by a vertical line) here is so far to the right on the
X axis indicates the significance of the reform, since those countries to the right
are in favor of significant reform (i.e. a movement away from a structural policy
dominated by subsidies for vessel modernization and construction).
This is only a rough model, of course, as member states preferences would
not be this uniform. The ranking of member state preferences here is based on
indications of those preferences as given in Schweiger (2009: 93-4). The exact
accuracy of this ranking is not as relevant as the fact certain countries, the self-
described "Amis de la Pêche" (Spain through Finland on this graph) are on one
side and certain other countries (the Netherlands through Germany) are on the
other side as well as the fact that Sweden and Germany voted against the
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package (and thus are outside the agreed policy), while the U.K. and the
Netherlands were persuaded to consent.
4.2.2 External Changes
As Pokrivcak et al. (2000) also showed, external changes between decision
periods may affect actors' preferences and the outcomes of the decisions. Prior
to the 2002 reforms, there were several major changes to the policymaking
environment exogenous of the actual policymaking process.
First was the accession of Austria, Sweden and Finland in 1995. But since
Austria is landlocked, Finland has only a small and local fishing fleet, and Sweden
already had a third-country country agreement12 to fish in EC waters, this event
did not rock the CFP boat too much.
In 2002, however, the EU committed to the Johannesburg Declaration
which resulted from the World Summit on Sustainable Declaration. Under this
agreement, it agreed to "maintain or restore stocks to levels that can produce
the maximum sustainable yield with the aim of achieving these goals for
depleted stocks on an urgent basis and where possible not later than 2015" (U.N.
2002: para. 31(A)). The Rio Declaration had included a similar goal in 1992, but
without the deadline Johannesburg established. Prior to this international commitment a European-wide commitment was
made in 2000 as part of the Lisbon Agenda: to make the EU “the most dynamic
and competitive knowledge-based economy in the world capable of sustainable
economic growth with more and better jobs and greater social cohesion, and
respect for the environment" (Council 2000). The environmental aspect of this
strategy would have likely factored into member states preferences as they
decided how best to reform the CFP – as well as the CAP, which also underwent a
significant reform in 2002. Thus several exogenous shifts in the policymaking12 Agreement on fisheries between the Community and Sweden, OJ 1980 L226/2
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environment had placed sustainability high on the EU agenda just as CFP
negotiations were occurring.
Pokrivcak et al. point out that policy preferences should not necessarily
change if nothing changes them. These external changes could be one factor in
shifting those preferences. Even if these external changes were not enough to
bring a shift from the status quo policy, when combined with voting-rule changes
they certainly influenced the policymaking environment and caused member
states to consider how they would look internationally. The greater awareness of
conservation partly brought on by these events might be best represented by an
iterated game model.
4.2.3 Iterated games
The fact that a prisoners' dilemma exists in instances of overfishing is
evident. As in any tragedy of the commons, if player A does not use up the
resource, she runs the risk that player B will. Thus, in fishing, if, say, the Spain
does not overexploit a given fish stock, it runs the risk that the U.K. will. But if
this game is repeated over frequent interactions between Spain and the U.K. and
both continue to choose "defect" (overexploit), eventually they both lose
because no fish remain for either of them. More significantly, though, long before
that eventuality occurs both players will see steep drop-offs in the profitability –
and thus employment figures, etc. – of those overexploiting components of their
respective fishing industries, assuming they are not being kept afloat by
distorting subsidies.
Over some number of iterations of this PD game, then, the long-term
consequences of the players' defection choices will become apparent. It is
plausible that the moment at which this occurred for many EU fisheries was
between the 1992 and 2002 CFP reforms. Scientific and information advances
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would have reached the point that information on the state of both stocks and
fishers was widely available while fishing technology would have continued to
make overexploitation an even easier choice. This realization of the costs of a
reciprocal defection strategy would have likely led to a shift in member state
preferences toward more sustainable levels of exploitation of fish stocks, as
indicated by their positions at the Council – what Hegland and Raakjaer (2008:
152), cited in Markus (2009:240), call a "crisis driven change" in the Council
decision making in favor of conservation ("cooperate”). Thus we see the
emergence of a reciprocal cooperation strategy, à la Axelrod (1984). As
Schweiger (2009) points out, even the typically Euro-skeptic U.K. was okay with
ceding some sovereignty to Brussels in order to achieve a stronger conservation
regime in 2002, seeing as it has likely been hurt the worst by the repeated
"defection" choices of countries like Spain which have a large presence in waters
traditionally fished by British fleets (p. 98). The U.K. was joined by several other
countries in choosing "cooperate" (conserve) during the 2002 negotiations, thus
creating what Axelrod calls a "cluster of nice strategies" (p. 68). Axelrod sees
such clusters as leading to cooperation, and the success of these clusters can be
so great that it makes up for the exploitation still being done by the defectors.
Based on the evidence from the 2002 reform process, it appears that an
awareness of the dire economic and ecological state of EU fisheries led some
players to start to choose to "cooperate". And, per Axelrod's logic, once one
player chooses to cooperate, the optimal strategy is for every player to copy that
"cooperate" in a tit-for-tat strategy that will ultimately achieve the optimal
outcome for everyone involved. Whether that optimal outcome will be achieved
remains to be seen, but the CFP at least got a little closer to it in 2002 and the
years since.
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4.3 A qualitative comparative analysis of previous reforms
In order to determine whether these conditions – voting-rule changes,
external changes and iterated games – are crucial for CFP reform generally, it is
necessary to compare the 2002 reforms with previous CFP reforms. Minor
reforms of the policy occur all the time and it would not be feasible to include
them all in analysis. Instead, we will focus on the scheduled, comprehensive
reforms that take place every ten years, starting with the formation of the CFP
out of the existing Community fisheries policies in 1983.
In the truth table below, we can see the relative correlation of different
conditions with the eventual policy outcomes of each reform. Since Boolean 0
and 1 rankings would not work with conditions as amorphous as these, the table
is based on Ragin's (2000) concept of fuzzy-set qualitative comparative analysis.
Rather than using the traditional 0.1 to 0.9 relative rankings, though, I have used
a 1 to 4 scale where 1 indicates a "minor" presence and 4 indicates a
"significant" presence. This is simply because, again, of the difficulty involved in
identifying the presence of these conditions to the degree that such a ranking
would require. All this has made the table even more fuzzy, to be sure, but it has
avoided the arguably even worse methodological trap of saying with certainty
something one cannot actually know with certainty.
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Figure 4.4: Truth table showing the extent of three conditions and theircorrelation with the extent of CFP reforms
An explanation of the rankings given is in order. Leading up to the 1983
reform, voting rules were not much changed from the way they had been when
earlier fisheries decisions were taken by the Community. Plenty of external
changes had occurred over the past decade, though, including the accessions of
Ireland, Denmark and the United Kingdom and the aborted accession of Norway.
The continued evolution of the U.N. Convention on the Law of the Sea as well as
the expansion of exclusive economic zones in the 1970s also fit into the category
and have major effects on EU fisheries policy. Conservation awareness as it
relates to the CFP is generally regarded as being low during this time as the
policy was mainly meant to shore up the fishing industry (i.e. "promotion" of the
industry, not "management" of it) (Markus 2009: 234; Holden 1996: 21). This
was reflected in the reforms taken, namely plenty of funding for expanding
capacity and very few conservation measures13, though since at least
13 Council Regulation 170/83
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conservation measures were agreed to for the very first time a ranking of 2 is
given (Markus 2009: 234).
As for conditions leading up to the 1992 reforms, there were again few
changes in the voting procedures, major external changes – especially the
accession of Spain and Portugal in 1986 – and a growing conservation
awareness, though only within a segment of the population and certainly not
amongst most fishers. These correlate with a similar policy outcome as in 1983:
greater improvement and expansion of conservation measures but also
substantial increases in the amount of aid going to vessel construction and
modernization, particularly for the Iberian fleets14 (Markus 2009: 237; Churchill
and Owen 2010: 11-4).
As detailed in this section, the 2002 reforms featured significant new
voting procedures; some, though limited, external changes; and a seemingly
significant amount of conservation awareness resulting in a greater willingness
to "cooperate" rather than "defect" in the iterated prisoners' dilemma of fishing
in common waters. These resulted in another marginal – though only marginal –
improvement in conservation measures and a fairly substantial reform of the
structural aid measures.
Adding up the results of this fuzzy-set QCA would seem to indicate that
voting-rule changes hold the most potential for overcoming a status quo bias and
instituting significant reforms, while external changes, when the sole significant
factor, hold the least. The fact that voting rules changes are so powerful in
overcoming the status quo indicates that the status quo bias may originate
mainly from institutions. Changes in the voting rules change those institutions
and thus open a more direct path to reform.
4.4 Case study conclusions14 Council Regulation 3760/92
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This section described how the status quo bias that was established in the
preceding section was partially overcome in the 2002 reforms, identified the
conditions that led to that bias being overcome and detailed the extent of the
status quo bias that still exists today. It found a perfect storm of events both
external and, in the case of voting rules, very much internal to the policymaking
process prior to the 2002 reforms and that these led to both a convergence of
interests and the institutional environment in which those interests could be
somewhat fulfilled.
To explain this overcoming of a status quo bias, we tried to find whether
Pokrivcak et al.'s (2000) conclusions applied to the CFP, and found they do, but
that Axelrod's (1984) model of overcoming a prisoner's dilemma likely also
played a role in modifying the interests of a sufficient numbers of players.
Maybe most significantly the policies that were introduced in 2002
increased the competence of the Commission, thus overcoming the nested
game-based aspects of the status quo bias that Payne (2000) observed and
creating a new institutional environment in which reform is now actually more
possible – and likely to become even more possible in the future.
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5. Discussion
This section will conclude the paper by analyzing the results of these conclusions
for the CFP today and the EU generally.
5.1 Effects of the Lisbon Treaty
When the scope and details of the next CFP reform are agreed, in 2012, it
will be in accordance with the decision-making rules laid out in the Lisbon Treaty.
These rules feature some substantial changes to the current process. Most
notably, the treaty requires co-decision, under which the European Parliament
will have an expanded say in many CFP matters, though not in the case of
"measures on fixing prices, levies, aid and quantitative limitations and on the
fixing and allocation of fishing opportunities,"15 which will still be set by the
Council following a proposal by the Commission.
The effect these expanded Parliamentary powers will have is not yet clear.
Lequesne (2004: 40) and Steel (1998: 40) have pointed out how the EP has
historically been primarily a mouthpiece for their countries and the fishing
industry, which, Markus (2009) says, makes it a "weak promoter of sustainability
under the CFP" (p. 22). But Lequesne also notes that the EP has hosted expert
debates on specialized, scientific topics, and that the populist rhetoric about the
historical plight of the fisherman that characterizes debates in national
parliaments "produces no effect in a transnational assembly that has no
reference to a common history". Moreover, environmental NGOs do and will
continue to lobby MEPs, as well (Lequesne 2004: 41).
5.2 Effects of future accessions
Since 2002, the EU has almost doubled in size, but none of those new
member states presented much to upset the current configuration and operation15 Art. 43 (3) of the Treaty of Lisbon
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of the CFP, mainly because they either had small fishing fleets, fleets that stayed
in their own coastal waters or previous access agreements with the EU (Churchill
and Owen 2010: 21-2). In addition to the prospect of a Turkish accession, which
would both significantly increase the EU's total marine catch and expand the
union's presence in the Black Sea, an Icelandic accession presents the most
potential for rocking the current CFP status quo.
As its accession negotiations began this summer, fisheries issues seemed
to be looming over the whole process, much as they have during Norway's three
aborted accession tries. The island country has said that since fishing makes up
nearly half its economy it has no intention of signing up for the CFP, which would
open its exclusive economic zone to other EU fishing fleets and to the CFP's
largely ineffective management schemes (BBC 2010). But some EU member
states have accused it of overstepping the international regulations that manage
which and how much of certain fish it can catch (Recalde 2010). Of course,
Iceland's practice of whaling – albeit only for subsistence – is banned in the EU
and will also figure into the talks.
5.3 The 2012 reforms
The time since the 2002 reforms – and even in the past couple years – has
therefore been eventful one with plenty of potential implications for the future of
the CFP. In terms of decision-making rule changes, the Lisbon Treaty will have
some effect, though what exactly is not yet clear. And, in terms of external
changes, the much larger EU will mean a much different layout for the
negotiating game. On the iteration of the common-resource prisoner's dilemma
game, conservation awareness has only continued to grow, as has awareness of
the CFP's failures in its conservation and fisher-support goals.
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Moreover, a number of further reforms have been taken since 2002, which
is perhaps an indication of the full extent of the 2002 reform. That is, the 2002
reform, perhaps not only somewhat shifted the CFP status quo policy
configuration but, more significantly, accelerated a spillover process that has
shifted – and is continuing to shift – the institutional framework in which CFP
decisions are made. It would be reasonable to expect these shifts to bring further
reforms of the policy going forward.
5.5 Conclusion
In this paper, the reasons for the widely-acknowledged failure of the EU's
Common Fisheries Policy to maintain the fish stocks – and thus the long-term
viability of its fishing industry – were assessed. It was found that a status quo
bias in which unsustainable levels for quotas and structural funds are reiterated
in reforms is the main cause. The paper also found, however, that this bias was
overcome – if slightly – in the 2002 reform. It found several conditions that
allowed for this unexpected reform, including changes external to the
policymaking environment, such as EU accessions or international treaties;
changes to the rules of CFP decision-making; and overcoming of a prisoners'
dilemma game.
The weight of the paper's conclusions should not be overstated, though,
as a more extensive analysis of the conditions allowing for CFP reform can and
should be done. But this paper brought several new findings into the discussion,
which I will leave to others to expand upon or refute.
This paper's findings on how changes in the factors leading to a status quo
bias – including a prisoners' dilemma, dominance of short-term interests, strict
voting rules, etc. – led to an overcoming of that harmful bias should also be
relevant to similar fields with similar policy tools, including subsidies and
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restrictions on the use of finite resources – such as the Common Agricultural
Policy or environmental regulations.
In the face of a perfect storm of interests and institutions lining up against
reform, it is impressive that even small reforms to the CFP have occurred, and
this paper tried to present plausible explanations for why they did when they did
and why they may again in the CFP or other EU policy realms.
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