sasamasasamaconsulting.com/en/pdf/reports_17.pdfthis report was written by shelley clarke of sasama...

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Traceability, legal provenance

& the EU IUU Regulation

Russian whitefish and salmon imported into the EU

from Russia via China

19 April 2013

FMP Consulting

Sasama consulting

Forward and Acknowledgments

This report was written by Shelley Clarke of Sasama Consulting and Gilles Hosch of FMP Consulting

in two phases: Phase 1 (April-June 2012) which focused on a review of the EU IUU Regulation and

interviews with UK-based seafood industry representatives; and Phase 2 (December 2012-

February 2013) which involved site visits and interviews in China and electronic interviews with

North American-based seafood industry and government representatives. The report represents

the combined product of both phases. Readers wishing to gain a brief overview of the study are

directed to the Executive Summary; a slightly more detailed treatment of the material can be

assimilated from the summaries following each main text section.

The publication of this report has been supported by the Stop Illegal Fishing Program (SIF). Much

of the information in this report is drawn from interviews with a large number of industry

representatives who contributed their knowledge and time to this project. While they shall remain

anonymous, their contributions were invaluable and are sincerely appreciated. Gunnar Album of

Trygg Mat provided helpful comments on the draft version of this report. Nevertheless, the

material and opinions presented here are the sole responsibility of the authors unless otherwise

cited. Special thanks are extended to Mr Fang Qing who coordinated and supported the China site

visits with intelligence, efficiency and good spirits throughout.

LIST OF ACRONYMS

ACP African, Caribbean and Pacific

AIPCE EU Fish Processors and Traders Association

ASMI Alaska Seafood Marketing Institute

BIP Border Inspection Post

CA-IUU Competent Authority – Illegal, Unreported and Unregulated Fishing

CAPPMA China Aquatic Products Processing and Marketing Association

CC Catch Certificate

CCA China Customs Administration

CIQ China Inspection and Quarantine Bureau

COOL Country of Origin Labelling

DG MARE Directorate-General for Maritime Affairs and Fisheries (European Union)

DG-SANCO Directorate-General for Health and Consumers (European Union)

EC European Commission

EEZ Exclusive Economic Zone

EU European Union

EU IUU Regulation Council Regulation (EC) No 1005/2008 establishing a Community system

to prevent, deter and eliminate illegal, unreported and unregulated fishing

FDA Food and Drug Administration (United States)

FWS Fish and Wildlife Service (United States)

GTIN Global Trade Item Number

HACCP Hazard Analysis and Critical Control Point

ICCAT International Commission for the Conservation of Atlantic Tunas

IMD Import Movement Document

IUU Illegal, Unreported and Unregulated

MCS Monitoring, control and surveillance

MSC Marine Stewardship Council

MOA Ministry of Agriculture (China)

NEAFC North East Atlantic Fisheries Commission

NFI National Fisheries Institute (United States)

NOAA National Oceanic and Atmospheric Administration (United States)

PPS Processing Plant Statement

QCVS Quantity Cancellation Verification System

RFM Responsible Fisheries Management

RFMO Regional Fisheries Management Organizations

RMBS Raw Material Balance Stock

TPM Trade Processing Manual

UK United Kingdom

US United States

USDA United States Department of Agriculture

USFDA United States Food and Drug Administration

WICC Weight in Catch Certificate

Executive Summary

This study explores issues associated with the traceability of large volumes of salmon and whitefish

originating in Russia (~25-30% of global totals), often processed in China, and exported to the EU

and other western markets. For the purposes of this analysis, traceability is defined as the ability to

document the legal provenance of fish through the entire supply chain. Examples were drawn from

trade flows originating in both western and eastern Russia and, where relevant, from other trade

flows and processing centres in developing countries.

National systems in the EU, the US and Canada were reviewed, and the implementation of the EU

IUU Regulation by China and Russia was discussed to describe the regulatory landscape for legal

provenance traceability. With regard to this particular type of traceability, the most far-reaching

and influential instrument is the EU IUU Regulation which requires catch certificates to accompany

all imports of fish products into the EU. Despite EC assertions that the scheme is working

effectively to eliminate IUU fish products from EU markets, analysis of the structure of the

regulation revealed three critical traceability gaps. Improper or ineffective implementation of the

regulation, and undetected document fraud, are expected to compound these shortcomings.

The first gap relates to the application of the catch certificate only to fish intended for export, rather

than the total catch i.e., catch certificates will be issued for exported consignments instead of

landings. This is particularly problematic in the case of Russian fish exported to China for

processing because the catch certificates are often issued after the fish leave Russian territory,

sometimes after they have been re-packed in Korean or Chinese bonded cold stores and even after

they have been imported by China. Since the EU IUU Regulation only tracks fish downstream of the

catch certificate issuance, these chain of custody gaps create opportunities for substitution of IUU

fish for legal product and weaken effective control of IUU fishing activities.

The second gap arises from the perfectly legal practice of splitting consignments, and photocopying

catch certificates, without recording the quantity of fish attached to copies covering split lots.

Although China’s CAPPMA has proactively implemented a system which can detect blatant overuse

of catch certificates, it relies on processors who share catch certificates to cooperate and not “race

to process” more than their share. Other processing countries without a system like China’s are

even more vulnerable to fraud. A further problem arises because processing yields are not

considered when checking quantities to be exported against amounts on incoming catch certificates.

As a result, extremely high processing yields can be used as an avenue for augmenting the exports

with uncertified fish.

The third gap pertains to the insufficient maintenance of batch integrity which results in a situation

in which the potential for substitution or co-mingling with illegal fish is high. Sanitary regulations

are expected to prevent mixing between batches but as there is no linkage between the EU IUU

Regulation and sanitary systems, there is no process for confirming that the fish covered by a catch

certificate at import is the same as the fish covered by the catch certificate at export. In China, such

overuse of catch certificates would, in theory, be prevented by the CAPPMA system but this system

would not detect double use of the same catch certificate covering consignments exported to both

EU and non-EU markets (e.g. a US buyer’s request for a catch certificate).

As it is likely that the EU IUU Regulation will continue to define the traceability landscape for the

flow of fish from Russia through China for some time, and as the EU is actively lobbying other major

markets such as the US and Japan to enact similar regulations, strengthening the EU IUU Regulation

would arguably have the greatest effect on improving traceability. For this reason, nine

recommendations for the EC were formulated to address critical traceability gaps. These

recommendations consist of a number of modifications to the EU IUU Regulation, as well as changes

to procedures and systems that do not require amending the regulation, which would close critical

gaps in traceability. By advocating practical but effective changes, the recommendations aim to

strike a balance between maximum traceability improvements, and the implications for costs,

compliance rates, and real or perceived barriers to free trade. In particular, four recommendations

could be implemented through expanding the terms of reference for the EU’s existing inspection

programmes and two recommendations call for using forms and systems which are already in place.

In addition, given the expected obstacles to expansion of the EU scheme to all of the world’s major

seafood markets, a set of functional criteria are provided to assist in benchmarking national or

industry-based legal provenance traceability systems. These criteria, which cover fishery

management, catch certification, catch quantity integrity, catch processing integrity and

transparency, are designed to provide a framework for identifying priority areas for improvement

as well as targets for harmonization efforts.

Overall this study concludes that while it is not appropriate to rely on the EU IUU Regulation as

currently written and implemented to deter IUU fishing, if this regulation can be strengthened in

several key areas it could form a useful basis for a global legal provenance traceability scheme.

Arguably the most important first step is to create a transparent process for releasing data

documenting the performance of the regulation thereby allowing an objective evaluation of

whether legal provenance traceability schemes are serving as effective tools in deterring IUU

fishing.

Table of Contents

1. INTRODUCTION ............................................................................................................................................ 1

1.1. Background to the Study .......................................................................................................................... 1

1.2. Objectives of the Study ............................................................................................................................ 1

1.3. Definitions and Methods .......................................................................................................................... 2

1.3.1. Definition of Legal Provenance Traceability ............................................................................................... 2

1.3.2. Species Considered ..................................................................................................................................... 3

1.3.3. Information Sources ................................................................................................................................... 3

1.4. Description of the Trade Flows of Interest ............................................................................................... 4

2. EXISTING LEGAL PROVENANCE TRACEABILITY SYSTEMS FOR THE TRADE OF RUSSIAN

WHITEFISH AND SALMON THROUGH CHINA ............................................................................................... 8

2.1. Legal Provenance Traceability Systems of National Authorities ............................................................... 8

2.1.1. European Union .......................................................................................................................................... 8

2.1.2. United States ............................................................................................................................................ 12

2.1.3. Canada ...................................................................................................................................................... 15

2.1.4. China ......................................................................................................................................................... 16

2.1.5. Russia ........................................................................................................................................................ 23

2.2. Non-governmental Legal Provenance Traceability Systems ................................................................... 28

2.2.1. Global Non-governmental Legal Provenance Traceability Schemes ........................................................ 29

2.2.2. EU Non-governmental Legal Provenance Traceability Schemes .............................................................. 30

2.2.3. US Non-governmental Legal Provenance Traceability Schemes .............................................................. 31

2.2.4. Canadian Non-governmental Legal Provenance Traceability Schemes .................................................... 32

2.2.5. Summary ................................................................................................................................................... 32

3. ANALYSIS OF IMPLEMENTATION OF THE EU IUU REGULATION .............................................. 34

3.1. Introduction ........................................................................................................................................... 34

3.2. Creation of an Export Certification Scheme rather than a Catch Certification Scheme ........................... 34

3.2.1. Theoretical Analysis and Examples from other Trade Flows .................................................................... 34

3.2.2. Information on the Flow of Russian Whitefish and Salmon through China ............................................. 36

3.2.3. Summary ................................................................................................................................................... 37

3.3. Inadequate Document Security for Split Consignments ......................................................................... 38



3.3.3. Summary ................................................................................................................................................... 43

3.4. Insufficient Maintenance of Batch Integrity ........................................................................................... 44



3.4.3. Summary ................................................................................................................................................... 48

4. RECOMMENDATIONS FOR IMPROVING LEGAL PROVENANCE TRACEABILITY FOR

RUSSIAN WHITEFISH AND SALMON ............................................................................................................. 50

4.1. Recommendations for strengthening the EU IUU Regulation ................................................................. 51

4.1.1. The Rationale for Strengthening .............................................................................................................. 51

4.1.2. Specific Recommendations for Amendments to the EU IUU Regulation ................................................. 52

4.2. Functional Benchmarking of Existing Legal Provenance Traceability Schemes ....................................... 55

4.3. The Need for Electronic Traceability Systems ......................................................................................... 56

4.4. Summary of Recommendations ............................................................................................................. 57

5. REFERENCES ............................................................................................................................................... 59

1

1. Introduction

1.1. Background to the Study

The overarching goal of this study is to contribute to better traceability of whitefish and salmon

from Russia, through China, to consumer markets. Initially, the client intended for the study to

develop a voluntary best practice traceability standard that would be seen as practical, appealing

and affordable by industry. It was then hoped that major companies and associations such as

AIPCE (the European Fish Processors and Traders Association) might commit to implementing

some or all of the voluntary standard. However, European Union (EU)-based interview participants

in the first phase of this study were uniformly surprised by the suggestion that there was a need for

traceability standards beyond those required under the EU IUU Regulation and those that they

implement internally, e.g. purchasing from trusted suppliers. They also cited costs and regulatory

proliferation as reasons why they would not support a voluntary industry best practice standard.

For these reasons, the study was promptly re-focused around the objectives described below.

Rather than producing recommendations for a voluntary best practice traceability standard for

industry per se, the study now aims to provide useful background information and

recommendations for improvements on a variety of fronts. These could include amendments to the

EU IUU Regulation itself as well as identifying those systems which are the most critical targets for

harmonization and/or improvement efforts.

1.2. Objectives of the Study

This report addresses the following objectives:

Determine whether there are shortcomings in the traceability requirements of the EU IUU

Regulation which reduce its effectiveness in eliminating the products of IUU fishing from EU

markets;

Establish whether, in its implementation of the EU IUU Regulation or otherwise, China

remedies any of the traceability shortcomings identified;

Recommend changes within the existing framework of the EU IUU Regulation which would

improve its performance;

Assess whether other major seafood markets (i.e. the United States and Canada) have

traceability requirements which serve to eliminate the products of IUU fishing; and

Discuss the prospects for harmonizing fish provenance traceability requirements among

governments, and how this could best be progressed.

2

1.3. Definitions and Methods

1.3.1. Definition of Legal Provenance Traceability

Regulation EC 178/2002, the European Union’s (EU) food safety law, defines ‘traceability’ as the

“ability to trace and follow a food, feed, food-producing animal or substance intended to be, or

expected to be incorporated into a food or feed, through all stages of production, processing and

distribution” (EC 2002). In food sanitation and hygiene applications, where the primary

development of traceability concepts has occurred, traceability is often defined through “one up,

one down” tracking requirements for each link in the supply chain. Under such systems, if each link

upholds its responsibilities, any product can be traced back to its origin in the event of, for example,

a food contamination issue.

In the case of establishing the legal provenance of seafood, the unit of reference for determining

“traceability” must be the full supply chain, not particular links in that chain. In other words,

although a factory can validly state they maintain “full traceability”, they are most likely referring

only to matching the input of their factory to its output (i.e. “internal traceability”). In contrast,

establishing legal provenance requires full chain traceability back to the fishing vessel (i.e. “external

traceability”). In addition, it requires documentation that the catch of that fishing vessel was legal.

In accordance with accepted practices for sanitary traceability, it is not necessary for all of the

paperwork documenting the full chain of custody and the original legal provenance to accompany

the fish at every step. However, if the paperwork is not attached, the claim of legal provenance

must be supported by i) a system that is capable of assembling the necessary full chain traceability

documentation and ii) proof, through full chain traceability audits, that the system works in

practice. It is not necessary to maintain a 100% conformance result in every audit for the system to

be considered sound. For example, even the best systems may suffer from human error from time

to time. On the other hand, if the system in theory appears sound but the frequency of audits is

very low (or non-existent) and/or the conformance results are consistently very poor (or

unknown), legal provenance traceability cannot be assured.

This study is concerned specifically with fish that are illegal as a result of IUU fishing. It does not

consider fish which are legal at the point of harvest but are somehow implicated in illegal activities

between the time of landing and the time of consumption. Such illegal activities might include

smuggling of legally caught fish to escape customs duties, violations of sanitary standards and

protocols, or substitution of legally-caught Marine Stewardship Council (MSC) certified material

with legally-caught non-MSC certified material. While these activities are pertinent to the integrity

of full chain traceability systems, and are discussed where relevant, their elimination will not

eliminate IUU fishing and vice versa.

This study adopts the convention that whether a fish is legally caught is determined through

certification by the flag State of the fishing vessel catching it. This simple convention conforms to

international law and poses no particular dilemmas when considering the flow of fish from Russia

through China to western consumer markets. While the possibility of corruption leading to flag

3

State certification of illegally caught fish cannot be dismissed, corruption is broad issue that

undermines flag State integrity in numerous ways and is thus considered beyond the scope of this

study to address.

Finally, it is important to recognize that sustainably fished seafood is not the same thing as legally

fished seafood. There may be legal fisheries which do not have sustainable catches (e.g. depending

on which definition of “sustainable” is applied) and sustainable fisheries which might conceivably

have some illegal catches (e.g. through encroachment).

Based on these considerations, the following definition is applied in this study:

Legal provenance traceability is the demonstrated ability to verify through

the entire supply chain, i.e. from any given point back to the fishing vessel,

that all of the wild-caught fish materials contained in a seafood product were

harvested in compliance with all applicable national and international

fishing laws and regulations as certified by the flag State.

1.3.2. Species Considered

This study was asked to focus specifically on the flow of whitefish and salmon from Russia, through

China to markets in either the EU, the US or Canada. The scope of the analysis was considered to

include fishing grounds both in eastern Russia (whitefish and salmon) and western (whitefish only)

Russia. The species considered in this study are thus Atlantic cod (Gadus morhua), Pacific cod

(Gadus macrocephalus), Alaska pollock (Theragra chalcogramma), haddock (Melanogrammus

aeglefinus), sockeye salmon (Oncorhynchus nerka), pink salmon (O. gorbuscha), chum salmon (O.

keta), king salmon (O. tschawytscha), coho salmon (O. kisutch) and cherry salmon (O. masou)1.

1.3.3. Information Sources

Consideration of EU traceability systems for legal provenance was primarily in terms of the

requirements of EU IUU Council Regulation of 2008 (EC 1005/2008) and its application as studied

by Anon. (2010-2011), Hosch (2010a, 2010b, 2011a and 2011b) and Lutchman et al. (2011), with

additional information from recently published materials and interviews. US and Canadian

traceability systems for legal provenance were assessed primarily through interviews with seafood

industry and government representatives, with reference to published material where available.

The analysis of China was focused on the re-processing trade as studied by Album (2009) and

Clarke (2009a and 2009b) and updated through interviews conducted both within and outside of

China. As there were no provisions made for Russian site visits or interviews, information on

1 It should be noted that most trade statistics and seafood industry figures are not species-specific and refer

only to common fish names (e.g. “cod”) or fish groups (“whitefish”). This report thus does not attempt to

discuss particular species unless the species name is given in the original source document.

4

Russia was limited to that contained in previous studies (Clarke 2007, Album 2009, Clarke 2009a

and Clarke 2009b), and interviews with staff of Russian non-governmental organizations and non-

Russian seafood industry representatives.

References to published material are included throughout the text as applicable. Information

sourced from interviews is not attributed to specific individuals or organizations in order to protect

confidentiality. A generalized list of the 32 individuals/organizations consulted for the study is as

follows:

Five UK-based seafood importers/distributors

One UK-based seafood industry association representative

One UK-based fish processor

One IUU fishing-related research specialist

Three China-based fish trade regulatory officials

One US-based fish traceability expert

Seven China-based fish processors

One EU/China-based processing supervisor

One China-based academic engaged in seafood research

Two EU-based traceability and IUU fishing researchers

One EU-based traceability expert

Four North American seafood importers/processors/distributors

Two Russian-based IUU fishing researchers

One China-based traceability auditor

One North American governmental authority

As introduced above, establishing legal provenance traceability requires both a robust system and

sufficient and appropriate audit evidence that the system functions effectively. As this study had no

authority or scope to audit any of the existing systems, it by necessity focused on analysing whether

they are robust in theory. While it also sought to gather information on audit results in the public

domain, little was found. In the case of the EU IUU Regulation, an independent assessment of its

performance and effectiveness was available through studies conducted by one of the authors

(Hosch 2010a, 2010b, 2011a & 2011b; Anon. 2010-2011). In addition, for the EU IUU Regulation

and other systems, interview respondents provided insights into the day-to-day practicalities of the

systems based on their own experience. However, the use of this information must be caveated by

recognition of its potentially subjective nature.

1.4. Description of the Trade Flows of Interest

Although the amount of Russian fish flowing through China for processing before entering EU, US

and Canadian markets is huge, not all Russian fish follow this path. In particular, Atlantic cod

destined for the salted fish markets of southern Europe or for processing into frozen fillets in

Eastern Europe will not pass through China and are not considered here. Conversely, part of the

flow of Russian fish through China to western markets is not readily identified because trade

5

statistics often record the country of export consignment rather than the country of origin. For

example, western Russian fish landed in Dutch ports are recorded in China’s import statistics as

imports from the Netherlands2, and Russian fish exported to China for processing are recorded in

EU import statistics as fish fillets originating in China3. With these caveats, this section presents a

brief overview of the best available data on whitefish and salmon catches in Russia, the processing

trade for these species in China, and the sources and quantities of these species in the destination

markets.

In 2010, western Russia produced 554,492 t of whitefish (7% of the global total) from the North

Atlantic and eastern Russia produced 1,735,861 t (23% of the global whitefish total) from the

Pacific (Fishstat 2012)4. In Russia, salmon is only produced in large quantities in the east with a

total catch for the North Pacific in 2010 of 248,949 t or 25% of the global total (Fishstat 2012).

A complex analysis of China and trading partner statistics for 2004-2007 estimated the quantities

of whitefish and salmon used by China’s processing industry, and the quantities of finished

products produced, by tallying import statistics from the EU, US and Japan (Box 1)5. This analysis

suggested that the majority of China’s processing industry’s whitefish and salmon raw material was

sourced from Russia and the majority of the products were destined for EU, and to a lesser extent

US, markets (Clarke 2009b).

2 The correct recording of this fish would be Country of Origin: Russia, Country of Consignment: Netherlands.

3 It is actually correct to label such fish as Country of Origin: China because under a 2004 rule the origin is

considered to be China whenever the value added increases by 40% or the 4-digit tariff code heading changes,

e.g. from 0303 for frozen fish to 0304 for frozen fillets (Lu 2006).

4 The FAO category “cod, haddock and hake” includes Alaska pollock.

5 This approach was necessary because until 2012 China’s export data did not make use of species-specific

commodity codes for processed fish fillets (GCB China Information 2013).

6

It is also important to examine whether recent trends have altered the destination markets’

dependence on China as characterized by this previous study. In the EU market the most popular

whitefish is still cod with 1,011,000 t supplied in 2011, 86% of it from imports but only 15% from

China (AIPCE 2012). The second-most popular whitefish is pollock with 100% of the 854,000 t

supplied by imports and 50% from China. For both species the figures for 2011 are consistent with

the previous three years. Although China is the EU’s largest supplier of whitefish (26%; 675,000 t

in 2011) most of China’s raw materials originate in other countries such as Norway, the US, Iceland

and Russia, each of which supplied at least 200,000 t directly to the EU in 2011 in addition to the

amount recorded in statistics as being from China. In contrast, the market for salmon in the EU is

dominated (>75%) by supplies from Norway. Total supply in 2011 was 937,000 t, and while much

of the market is composed of fresh (farmed) products, over half of all frozen salmon fillets supplied

to the EU (164,000 t) were wild Pacific salmon imported from China (83,000 t) (AIPCE 2012).

These AIPCE figures for 2011 suggest that China remains a convenient processing hub for whitefish

and salmon supplies from the Pacific, i.e. pollock and Pacific salmon, but the EU is less dependent on

China for cod and Atlantic salmon, which are often supplied by imports from countries closer to

home, than it is for pollock.

Box 1. From ‘Understanding China’s Fish Trade and Traceability Systems’ (Clarke 2009b):

For the years 2004-2007 it was estimated that China processed at least 450,000 t per year

(whole weight) of Alaska pollock and 236,000 t per year (whole weight) of cod (both Atlantic

and Pacific) which would account for at least 16-19% of the global total reported catch of these

species. In each year, 70-80% of China’s total fish processing trade was based on Alaska pollock

and cod, and 60-70% of China’s Alaska pollock and cod raw materials originated in Russia.

In the same period China was estimated to produce at least 39,000 t of salmon fillets per year

which would equate to at least 89,000 t per year (whole weight) and thus at least 9% of the

global total. Russia’s contribution to China’s raw material supply of salmon was usually

secondary to Japan’s and, in some years the United States’, ranging from 18-34% of total salmon

imports during the studied period.

In terms of export markets for whitefish and salmon from China, approximately 83% of China’s

processed fish fillets were exported to either the EU, the US or Japan. Of this amount, the EU

received approximately half of the cod and salmon (i.e. ~40% of the total cod and salmon

products produced) and approximately two-thirds of the pollock (i.e. ~ 55% of the total pollock

products produced). The US received approximately one-quarter to one-third of the cod and

pollock (~20-30% of the total cod and pollock products produced) and smaller amounts of the

China-processed salmon fillets. The Canadian market received only a small share of China’s

processed fish output and was not considered separately.

7

The only recent, available figures for the US market are trade statistics which do not quantify the

total supply (as the AIPCE figures do) and thus do not reflect the role of domestic supplies of

whitefish and salmon in meeting total demand. Import statistics (NOAA 2013a) can however

indicate the importance of China as a trading partner relative to other countries, and may in fact

account for some of the domestic supplies which are shipped to China for processing before

returning. In 2011, consistent with trends for the previous three years, the US imported from China

37,086 t of cod (71% of total cod imports); 71,752 t of pollock (96% of total pollock imports); and

39,297 t of salmon (16% of total salmon imports). The US therefore, like the EU, relies heavily on

China for its imported pollock and relies only slightly on China for its imported salmon. Unlike the

EU, the US imports most of its cod from China. It is noted that the US imports are at least an order

of magnitude less than the EU imports perhaps due to the EU’s particular affinity for cod and the

US’s much higher domestic production of this species.

The Canadian seafood trade with Russia and China is small compared to the EU and US markets

(Statistics Canada 2013). Species-specific codes for processed fish fillets were only implemented by

Canada in January 2012, but based on available data through November 2012 Canada imported

from China 2,327 t of cod fillets; 1,409 t of pollock fillets; and 2,145 t of salmon fillets which

represented 69%, 64% and 36%, respectively, of its total imports of these products. Therefore,

although the Canadian import quantities are an order of magnitude less than the US, and two orders

of magnitude less than the EU, the same patterns of a high reliance on China for imported cod and

pollock and only a slight reliance for imported salmon are observed.

By knitting together these figures from different studies, the importance of the trade flow of

whitefish and salmon from Russia to China and onward to their destination markets becomes

visible. To summarize, Russia hosts some of the world’s highest volume fisheries for these species,

China is the world’s largest fish processing centre for these species, and the EU and North American

markets – along with Japan - are the world’s largest consumer markets for these species.

Traceability gains within this trading system would therefore not only affect a major portion of the

global fish trade, propagation of these gains beyond whitefish and salmon in any of the jurisdictions

involved would also have great potential to reduce IUU fish products in trade.

8

2. Existing Legal Provenance Traceability Systems for the Trade of

Russian Whitefish and Salmon through China

This section introduces traceability requirements for legal provenance of fish products by national

governments and describes corporate traceability standards and practices applied by industry

associations or individual companies. It is useful to recall that while the legal provenance of fish

products is usually considered a matter for fisheries authorities, the handling of fish as food is

usually controlled by sanitary regulations, and the import and export of fish as commodities is

usually subject to customs regulations. Sanitary and customs-based systems (e.g. third country

establishment lists and certificates of origin) may reinforce legal provenance traceability but they

have different objectives and usually cannot meet the standards for legal provenance traceability on

their own (i.e. both full chain traceability and documentation that the catch was legal, see Section

1.3.1). The following sections focus mainly on those systems designed to ensure legal provenance

(e.g. the EU IUU Regulation), and only briefly discuss those systems which document or track other

attributes of fish products.

2.1. Legal Provenance Traceability Systems of National Authorities

2.1.1. European Union

The EU is currently the only national authority with a wide-ranging legal provenance traceability

requirement applicable to almost all wild-caught fish imports. Since the EU is the world’s largest

seafood market (AIPCE 2012), the EU’s IUU regulation has been widely implemented by exporting

countries across the world. Due to its reach, as well as the fact that it may in future serve as a

model for similar systems in other countries, review and analysis of the EU IUU regulation is a

central element of this study.

Implementation of the EU IUU Regulation

The EU IUU Council Regulation (EC 1005/2008) was adopted by the EU Parliament in 2008 and is

complemented by an implementing Commission Regulation (EC 1010/2009) which was published

shortly before the legislation entered into force on 1 January 2010 (EC 2008, EC 2009a). Both texts,

together or individually, are now commonly referred to as the “EU IUU Regulation”. The

centrepiece of the regulation is a requirement for flag State certification of marine fish harvested

from fishing vessels. This takes the form of a catch certificate (CC), issued by the competent

authority of the flag State, establishing that the quantities of fish shown on the CC (i.e. estimated

live weight, estimated landed weight and verified landed weight) were caught in accordance with

established rules and regulations in force in the area of operations. It is then intended that this CC

follows the fish, in any and all of its forms, to the point of inspection at an EU border. Although the

regulation provides models of full and simplified CCs, it does not prescribe what traceability,

monitoring and control regimes flag States should establish in order to ensure that CCs provide the

expected guarantees.

9

Two of the most critical provisions of the regulation are Article 12, which concerns fishing vessels

landing and exporting fish from their own shores (i.e. direct importation), and Article 14, which

establishes the procedures for “indirect importation of fishery products” (i.e. landing in a third

country before export to the EU). In the case of direct importation, Article 12 requires only that the

fish be accompanied by their CC(s). In the case of indirect importation, Article 14 requires that if

the fish are unprocessed they must be accompanied by the CC(s) and an official statement that the

fish did not undergo processing; if they are processed, the consignment must be accompanied by a

Processing Statement which clearly links the products to its original CC(s) and attaches copies of

those CC(s). It appears that no provision has been made in the regulation for situations in which

the fish pass through more than one country on their way to the EU (i.e. how to document the

imports prior to import to the EU).

Consistent interpretation of Articles 12 and 14 requires a clear definition of what the fish weights

shown on the CC represent, and how any adjustments to those weights should be documented.

Based on the fact that the CC refers to catches by specific fishing vessels, it might be assumed that

the “landed weight” shown on the CC should be the whole weight of the fish. However, in some

cases processing occurs onboard the fishing vessel (e.g. heading and gutting) and whole fish are not

landed. Furthermore, under Article 12, weight losses in fish undergoing shore-based processing in

the flag State of the fishing vessel need not be accounted for in separate documentation. Therefore,

when faced with a decision as to which “landed weight” to show on the CC to accompany a given

export consignment, the certifying non-EU country exporting to the EU could choose either the:

Whole weight of fish, if exporting from the fishing grounds without onboard processing;

Round weight of fish, if exporting from the fishing grounds with onboard processing; or

Processed weight of fish, if exporting from a factory located in the flag State of the fishing

vessel.

Under Article 12, each shipment would require only a CC with only “estimated live weight”,

“estimated landed weight” and “verified landed weight” shown. For these reasons, it is important to

understand that CC weights cannot be used as proxies for catch weights in fisheries management

without adjustment for any onboard or shore-based processing. In theory such adjustments are

possible, but in practice given the lack of annotation it may be difficult to ascertain what processing

has occurred and therefore which adjustments are appropriate.

In the case of indirect imports under Article 14, both CCs and an accompanying statement usually

referred to as a Processing Plant Statement (PPS, documenting whether the fish has or has not

undergone processing since the CC was issued) are required. While it may seem contradictory to

account for processing weight loss for indirect imports but not for direct imports, the key point is

that the regulation is designed to track the weight shown on CCs, not changes in the weight of the

fish as it undergoes processing.

Several months after the initial implementation of the EU IUU Regulation in January 2010, it

became clear that various countries issuing CCs had interpreted the requirements for showing fish

weights differently. Once this issue came to the attention of EU member States and the EC, the

10

Directorate-General for Maritime Affairs and Fisheries (DG MARE) issued the Weight in the Catch

Certificate (WICC) note to clarify the situation under Article 126. The WICC note states that the

“weight in the catch certificate ("Estimated live weight", "Estimated weight to be landed", "Verified

weight landed") should only cover the consignment to be exported to the EU and not the total catch

landed”. This guidance makes clear that the EU IUU Regulation requires an export certification

rather than a catch certification.

Some countries were apparently not content with this situation and approached the EC regarding

the need to provide additional information. In response, the EC issued a note in May 2011

explaining procedures for CCs in the case that fish are processed in the flag State before export to

the EU, i.e. Article 12 direct import with processing (EC 2011a). The format attached to the note

provides for information on the fishing vessel and its catch details including the total catch, the

catch processed from the total catch and the resulting weight of exported product. Although the

note indicates that Colombia, Ecuador, Uruguay and Vietnam will use this new format, no countries

are required to do so.

It should be noted that the EU thus made clear that the weight shown on the CC for export may be

only a subset of the total catch weight, it has also made clear that the consignment weight at import

need not match the weight shown on the CC. Other guidance provided in a “Handbook on Practical

Application of Council Regulation (EC) 1005/2008” states that “the weight [in the CC] is not

necessarily the weight of the imported product” (EC 2009b). This means that if the flag State issues a

CC for an exported consignment, and that consignment is split in a transit port before being

imported to the EU, the catch weight, the weight shown on the CC and the import consignment

weight may all be different.

As a general rule CCs for imported fish products must be lodged with EU border inspection posts

(BIPs) three working days prior to arrival. However, depending on the nature of the product (e.g.

live versus frozen) and the mode of transport, this timeframe may be shortened (NOAA 2010, EC

2009a). BIPs may choose to conduct detailed checks of these documents (i.e. “verifications”) on the

basis of several factors listed in the implementing regulation (EC 2009a). These verifications may

involve confirmation of quantities, species and/or whether CCs originate from IUU-listed fishing

vessels7. CCs and Processing Statements arriving at EU BIPs are not electronically recorded in a

central EU repository, therefore it is not possible for EU authorities to conduct mass balance

accounting of individual CCs (i.e. to determine if certified quantities have been over-used).

As explained above, the EU IUU Regulation does not define any standards against which a third

country’s implementation of the CC or PPS systems can be inspected. However, under Article 31, a

third country can be identified as a “non-cooperating third country if it fails to discharge the duties

6 The exact date of publication of the WICC note is unknown. It was posted on the EC IUU web page and was

couriered to EU Delegations worldwide for forwarding to national authorities sometime in mid-2010.

7 The EU’s latest IUU vessel list, published on 19 December 2012, contains 69 vessels (EC 2012a).

11

incumbent upon it under international law as flag, port, coastal or market State, to take action to

prevent, deter and eliminate IUU fishing”. Such identification could then lead to loss of market

access. The EC’s DG MARE fielded several inspection missions in 2011-2012 aiming to verify

implementation of the regulation and in November 2012 the EU released a notification naming

Belize, Cambodia, Fiji, Guinea, Panama, Sri Lanka, Togo and Vanuatu as possible non-cooperating

third countries with respect to the EU IUU Regulation (EC 2012b). The notification is preliminary in

nature and under Article 32 of the EU IUU Regulation, the EU shall grant each country “adequate

time to answer the notification and a reasonable time to remedy the situation”.

Implementation of Other Requirements relevant to Legal Provenance Traceability

While the EU IUU Regulation provides the most direct and comprehensive mechanism to ensure the

legal provenance of fish imported to the EU, there are also numerous sanitary and customs

regulations which apply but are not discussed in detail here. Traceability was recently

strengthened by a new EU regulation ((EU) 931/2011) implemented in July 2012 (EC 2012c). This

regulation codifies the requirement to track processed products through means of a unique lot

identification number, a procedure already generally in use under the internationally-agreed

HACCP (Hazard Analysis and Critical Control Points) food production safety system (Barinova

2012). In addition, the new regulation mandates full chain traceability from catch to the point of

retail sale, and requires that the production date be included in the traceability data. All

traceability data must be able to be produced on request but as with many systems the frequency of

audits is not specified. Interview respondents indicated that some problems have reportedly arisen

from variable interpretation of the production date requirements: some EU member States

consider this is the catch date whereas others consider that it should be the date that the product

was processed. In some cases, this confusion has been addressed by providing both dates (if

different)8.

Summary

The EU IUU Regulation is the most widely implemented governmental scheme aimed at legal

provenance traceability for fish. Since its initial implementation in January 2010 a number of

guidance notes have been issued to explain and refine its requirements. This has clarified that the

weight shown on the catch certificate should be the weight of the exported consignment rather than

the landed weight, therefore it is clear that the scheme requires an export certification rather than a

catch certification. The regulation does not define any standards against which a third country’s

implementation of the certification system can be audited but it does provide for identification of

“non-cooperating third countries” on the basis of failure to take action against IUU fishing. New EU

8 It should be noted that in contrast to EU sanitary traceability regulations, the EU IUU Regulation does not

require the routine provision of basic traceability information in the form of pack labelling. Some interview

respondents reported hearing of some EU member States requiring CC numbers to be printed on packaging

but no such requirements could be confirmed in this study (see Barinova 2012).

12

food safety traceability regulations introduced in July 2012 include requirements to track products

but do not link explicitly with the catch certificates required under the EU IUU Regulation.

2.1.2. United States

The following discussion describes both the US’s role in issuing CCs for fish raw materials

processed in China and destined for EU markets as well as other components of US fish traceability

systems. This limited review of US practices is provided as a basis for comparison to systems in the

EU, Canada, China and Russia, and given the focus of this report on Russian fish, it does not cover

the flow of US fish to China for processing. Statements attributed to the US National Oceanic and

Atmospheric Administration (NOAA) in the following text derive from responses to questions

submitted in January 2013.


Reports that the EU has lobbied the US and Japan to join in a global scheme to combat IUU fishing

(AIPCE 2011, Speltz 2011) suggest that the EU hopes for these countries to create a system similar

to its own for verifying the legality of most types of imported fish. At present, the US has not

established a similar scheme although it implements the EU IUU Regulation for i) catches by US-

flagged vessels which are directly or indirectly imported to the EU, and ii) fish materials produced

in US plants for export to the EU9. The EU is the largest direct export market for US seafood (26% of

the total); in addition, a significant amount of US seafood exports to other countries, including China

(13% of the total), may be indirectly imported to the EU after processing (Hansen et al. 2010).

In accordance with the EU’s guidance in the WICC, the US issues CCs for fish destined for EU

markets by consignment quantity not by catch quantity. NOAA indicates that most consignments

are made up of more than one fishing vessel’s catch. NOAA received permission from the EU to use

its own format for the CC (NOAA 2010, EC 2010) and this format omits many of the fishing vessel

details specified in the EU IUU Regulation’s format (e.g. vessel name and number, license number,

master’s name, etc). While this is consistent with a system operated to certify exports, it provides

no detail on the fishing activities themselves other than the catch date and area (FAO statistical

area). The US also issues PPSs (referred to by the US as Annex IV documents) for fish caught by

foreign-flagged vessels and processed in the US. When issuing these Annex IV documents, NOAA

indicates that it conducts traceability audits on a sub-sample of applications using risk management

principles.

9 Note that according to several interview respondents Japan does not issue catch certificates. One interview

respondent reported that Japan claims it has been granted an exemption from issuing catch certificates by the

EU. EUROSTAT (http://ec.europa.eu/Eurostat) data nevertheless indicates small quantities of processed

(0304) and unprocessed (0303) fish imported to the EU from Japan in both 2010 and 2011 (2012 data not yet

available). Other interview respondents suggested that Russian fish without CCs are being sold to Japanese

buyers.

http://ec.europa.eu/Eurostat

13

The US implementation of the EU IUU regulation is also noteworthy for its electronic operation

(Hansen et al. 2010). While this provides a number of efficiency advantages for applicants, it also

allows for NOAA to maintain an electronic record of all CCs and Annex IV documents which

presumably facilitates responses to verifications. NOAA reportedly receives verification requests

from the EU every day, either through the electronic portal which is publicly accessible online10, or

by email. NOAA believes that hosting an online verification system has helped to curb isolated

incidents of certificate tampering by foreign buyers, processors or re-exporters. The portal posts a

disclaimer stating that “not all certificates can be validated (sic)...through this the site” and two US-

issued CCs obtained during the course of this study could not be verified using the portal. Interview

respondents in China reported that they also frequently fail to obtain verification via the portal11,

and that the use of English common names on the portal, rather than the scientific names required

on the CC, complicates verification.


In addition to implementing the EU IUU Regulation, the US has a wide range of its own seafood

import restrictions managed under several government authorities. A large number of these are

based on food safety concerns; for example, FDA has identified approximately 700 Chinese

companies that must meet additional requirements to export certain seafood products to the US.

Seafood restrictions which are based to some extent on the conditions surrounding the provenance

of the material include, inter alia:

Shrimp imports must originate from a country certified by the US Department of State as

meeting sea turtle protection requirements, or if from a non-certified country, a

government official of the harvesting nation must certify the shrimp was caught without

harming sea turtles;

Some tuna imports labelled “dolphin safe” must be accompanied by prescribed tuna

tracking forms;

Most imports of tuna and certain fish imports from Italy (identified as a Large Scale High

Seas Driftnet nation) must be accompanied by a Fisheries Certificate of Origin (NOAA Form

370);

Some tunas and billfishes under Regional Fisheries Management Organization (RFMO)

catch documentation systems require catch or statistical documents (e.g. the International

Commission for the Conservation of Atlantic Tunas (ICCAT) Catch Documentation Scheme

for Atlantic bluefin tuna);

There is a pre-approval system for import of Patagonian toothfish;

There is a ban on imports of Atlantic billfishes;

There are size-limit based restrictions on imports of two species of lobster; and

10 https://certificate.seafoodinspection.nmfs.noaa.gov/certificateValidation/searchCertificatePage.hm

11 The site recently posted a note reading “not available for PRC certificates until March 1, 2013”.

https://certificate.seafoodinspection.nmfs.noaa.gov/certificateValidation/searchCertificatePage.hm

14

Imports of a number of species listed by CITES or the US Endangered Species Act are either

prohibited or restricted.

The existence of this large number of specific restrictions on the provenance of imported seafood

reveals that the US has taken a much more specific, and what it calls risk-based, approach than the

sweeping controls of the EU IUU Regulation.

Complementing the specific import restrictions described above, the US’s Lacey Act serves as a

powerful and broad spectrum deterrent for trade in the products of illegal fishing (Ortiz 2005).

This legislation requires refusal of entry to any fish (or wildlife or plant products) which have been

taken, possessed, transported or sold prior to importation in violation of any (foreign) national or

international laws. As traders may be prosecuted for importing the illegal product regardless of

documentation or whether the trader knew the product was illegal, the Lacey Act effectively creates

a strong incentive for due diligence regarding legal provenance.

Under the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006,

NOAA must produce a biennial report to Congress identifying States whose vessels have engaged in

IUU fishing. Unless the identified States are certified by NOAA to have taken appropriate corrective

actions, their fishing vessels will be refused entry to US ports and fisheries products may be subject

to import prohibitions. In 2009, NOAA identified six States, all of which were subsequently certified.

In 2011, NOAA again identified six States (two previously identified and four new), and again all

were subsequently certified. In January 2013, ten States (Colombia, Ecuador, Ghana, Italy, Mexico,

Panama, Korea, Spain, Tanzania and Venezuela) were identified. Bilateral consultations on

corrective actions are expected to begin shortly (NOAA 2012, 2013b).

Currently the most newsworthy issue regarding fish traceability in the US is the controversy

surrounding mislabelling (Abelson and Daley 2012). While the Food and Drug Administration

(FDA) publishes guidance on what it considers acceptable market names for seafood12, and has

rules prohibiting false or misleading labels or packaging (21 CFR 101.18), States are now

considering new regulations to strengthen penalties for mislabelling. While these concerns and

measures to address them may lead to greater demands for some forms of traceability (i.e.

documenting the species), it is not known whether further provisions for legal provenance

traceability will be imposed (Abelson 2013, Schott 2012).

Three other important pieces of legislation in the US are relevant to seafood traceability, but not

specifically to legal provenance traceability. The first of these is the US Bioterrorism Act of 2002

which requires maintenance of one-up, one-down contact information and product data by

producers, distributors and importers for the food they handle. Some small operators, including

fishing vessels, are exempt from the regulation’s recordkeeping requirements but subject to its

12

http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/Seafood/ucm1

13260.htm

http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/Seafood/ucm113260.htm

http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/Seafood/ucm113260.htm

15

record access requirements (Petersen and Green 2004). The US Bioterrorism Act also sets prior

notice requirements for seafood and other food imports based on mode of transport (USFDA

2011a). Second, the US enacted the Food Safety Modernization Act in 2011 to provide further

domestic and imported food safety controls and oversight provisions (USFDA 2011b). New

regulations under this Act are not yet developed but are not expected to impose any stricter

controls on traceability than are already in place under the Bioterrorism Act (NFI 2011 and

interview information). Finally, fish as well as a list of other products require labelling with the

country of origin and the method of production under regulations administered by the United

States Department of Agriculture (USDA). While the latest country of origin labelling (COOL)

regulations exempt processed products, imported processed fish products still require COOL under

the Tariff Act of 1930. Importers, suppliers and retailers are required to maintain one-up, one-

down documentation for one year (USDA 2009).

Summary

The US implements the EU IUU Regulation for catches of US-flagged vessels exported to the EU and

for fish caught by foreign vessels processed in the US and exported to the EU. US catch certificates

utilise a special format devised by the US and approved by the EU which omits vessel details and

license numbers. The US also hosts an online verification system for US-issued catch certificates. In

addition to implementing the EU IUU Regulation, the US has systems for certifying imports for

several high risk species and fisheries. These systems, as well as others including the Lacey Act

prohibiting trade in illegally-obtained wildlife products, incentivise traceability for imported fish.

Like the EU, the US also has a mechanism to list countries for non-cooperation regarding certain

types of IUU fishing.

2.1.3. Canada

A brief review of Canada’s legal provenance traceability systems is included here as a contrast to

the other ‘western’ seafood markets of the EU and the US.


Canada implements the EU IUU Regulation by providing CCs for fish caught by Canadian-flagged

vessels through an electronic system available online (DFO 2013a). CCs can be issued within two

hours for fresh products and within 48 hours for processed products. The format for the CC used

by Canada was agreed with the EU and contains the vessel name, registration number, fishing

master’s name and license number. Features of the CC which may be unique to Canada include a

prohibition on copying (stamped “Certificate – Do Not Copy”) and a requirement to include only

one vessel per CC13. Information on how Canada implements applications for and issuance of PPSs

(or Annex IV documents) could not be located.

13 http://www.dfo-mpo.gc.ca/fm-gp/ccp-pcc/publications/news-bull-050511-eng.htm

http://www.dfo-mpo.gc.ca/fm-gp/ccp-pcc/publications/news-bull-050511-eng.htm

16


Development of seafood traceability systems in Canada has proceeded under a number of disparate

regulations and lacks a strong and consistent framework (Petersen and Green 2004, Magera and

Beaton 2009). Canada requires that seafood be labelled with the common name of the species and

the country of origin (CFIA 2012a) but most other fish-specific traceability systems required by the

Canadian government appear to be applicable to farmed products only (DFO 2013b). One known

exception is Canada’s implementation of the ICCAT Catch Documentation Scheme and tagging

programme for Atlantic bluefin tuna (DFO 2013c).

The Canadian Food Inspection Agency is responsible for regulating fish processing. With the

passage of the Safe Food for Canadians Act in November 2012, this agency is empowered to develop

new traceability regulations primarily aimed at food safety but possibly with some ancillary

benefits for legal provenance traceability (CFIA 2012b).

Interview respondents with knowledge of seafood traceability in Canada suggested that Canada’s

system is less integrated than that of the US because its seafood safety and fisheries certification

systems are administered by different agencies. One seafood industry representative familiar with

both countries characterised the US and Canadian systems as similar in terms of traceability

requirements, but suggested that Canada is slightly stricter with regard to food safety standards

particularly in terms of antibiotic residues.

Summary

Canada implements the EU IUU Regulation by issuing CCs through an electronic system. CCs issued

by Canada contain details of the fishing vessel and master and are stamped “Do Not Copy”. This

suggests that Canada has recognized the problems inherent in split consignments and circulating

copies of CCs, and that it has developed its own mechanism to curtail this loophole. The only other

known wild-caught fish import restrictions relate to Canada’s implementation of the ICCAT Catch

Documentation Scheme for Atlantic bluefin tuna. With the recent passage of a new law, Canada

appears to be in the process of strengthening its traceability requirements. Although aimed

primary at food safety, such new requirements could also facilitate legal provenance traceability.

2.1.4. China

In keeping with the theme of this report on legal provenance traceability of Russian fish processed

in China, this section focuses on China’s oversight of its fish processing industry with regard to its

implementation of Article 14 and the issuance of PPSs under the EU IUU Regulation. Reference to

China’s other food safety and tariff traceability systems is made to illustrate the potential for these

systems to reinforce implementation of the EU IUU Regulation.


China notified the EU on 1 January 2010 that its competent authority under the EU IUU regulation is

the Ministry of Agriculture (MOA). MOA entrusts responsibility for issuing CCs (for nearshore and

17

offshore fisheries) and PPSs to the China Aquatic Products Processing and Marketing Association

(CAPPMA) which describes itself as a non-profit organization directed by the MOA (CAPPMA 2013).

Although CAPPMA was established nearly 20 years ago, it only recently became well-known

nationally and internationally due to its role under the EU IUU regulation. CAPPMA devotes

approximately six full-time, Beijing-based employees to work arising from the EU IUU Regulation

and partially funds these staff through application fees for CCs and PPSs. CCs for distant water

fishing operations are issued by the China Distant Water Fishery Association, a new government-

sanctioned, non-profit organization composed of fishing industry members (Zhu 2012).

Between CAPPMA and the China Distant Water Fishery Association, China issued ~10,000 CCs in

2012 covering nearly 180,000 t of landings and 113,000 t of exported product. Approximately 80%

of the CCs were issued by CAPPMA. In compliance with the EU’s WICC, and because CCs are usually

applied for and issued after processing, all of China’s CCs show the weight of fish exported, rather

than the catch weight. CAPPMA staff indicated that applications for CCs within three months of

landing can be accommodated, and such applications can be processed within one to three weeks.

CAPPMA’s PPS application form requests all the information shown on the EU IUU Regulation’s pro

forma CC. Before issuing the CC, CAPPMA reportedly checks that the information provided is

correct; that the vessel is authorized to fish; and that the fish species occurs in Chinese waters.

CAPPMA reports that most of the CCs cover monkfish, shrimp or small squids exported directly to

the EU.

In addition to its responsibility for issuing CCs, CAPPMA handles an extremely large volume of

paperwork associated with requests for PPSs from China’s fish processing industry. In 2012

CAPPMA issued 17,352 PPSs for 362,600 t of exported material originating from CCs issued by

competent authorities from inter alia the US (3,785 PPSs), eastern Russia (1,612 PPSs), western

Russia (1,138 PPSs), Norway (897 PPSs), Greenland (647 PPSs), New Zealand (366 PPSs), Canada

(217 PPSs) and the UK (134 PPSs)14. According to CAPPMA, approximately 10% of applications

submitted for PPSs are rejected but usually this is due to simple mistakes which are subsequently

corrected in successful applications. CAPPMA sources also stated that only about ten applications

per year are not approved and not re-submitted.

Similar to the procedure for checking applications for CCs, CAPPMA checks that the information

provided on the PPS application form (which is based on the EU IUU regulation’s PPS pro forma) is

correct. CAPPMA does not, however, check or question the authenticity of attached CC(s) as it has

been informed by both the EU and Russia that it has no competency to query these documents. The

main tool used by CAPPMA in checking PPS applications is the Quantity Cancellation Verification

System (QCVS). This system, which was proactively developed by CAPPMA and is not required by

the EU, lists each CC that has been submitted in support of a PPS application and progressively

subtracts amounts of processed material from the total weight shown (Box 2).

14 Only those competent authorities’ CCs for which more than 100 PPSs were issued by CAPPMA in 2012 are

listed.

18

In addition to recording the amount of material used from each supporting CC, the QCVS shows the

processed product weight (Box 2). Although this would allow a rough calculation of a yield rate for

each consignment15, CAPPMA states it does not use this information when evaluating the PPS

applications.

According to CAPPMA, the EU has conducted two inspection missions to China. One mission

focused on document control by CAPPMA in Beijing and involved checking whether the quantities

shown on PPSs were larger than those shown on the CCs. The other mission visited some of China’s

major fishing ports. Also according to CAPPMA, in 2012, the EU reportedly conducted 28

verifications of the over 25,000 certificates and statements issued by China in compliance with the

EU IUU Regulation.


In addition to the system established by CAPPMA in response to the EU IUU’s Regulation, China has

two other highly developed traceability systems designed for food safety and tariff purposes. These

systems, which are implemented by the China Inspection and Quarantine Bureau (CIQ) and the

China Customs Administration (CCA) respectively, track imported fish raw material batch by batch

through processing to export. A previous study (Clarke 2009b) concluded that China’s traceability

system for the fish processing trade represents international best practice.

15 Some processed product weights may include additives, glazing or even packaging weights. If uncorrected,

this will introduce uncertainty into yield calculations but would not prevent yield ratios being used as gross

checks.

BOX 2. If CAPPMA receives a PPS application for a consignment

processed from:

a) 20 t of material from CC #101 (total weight 55 t) and

b) 10 t of material from CC#102 (total weight 18 t),

two rows will be entered into the QCVS spreadsheet. One row will show

20 t subtracted from 55 t certified by CC #101 leaving 35 t to be

processed, and the other row will show 10 t subtracted 18 t certified by

CC #102 leaving 8 t to be processed. If the processing operation achieves

a yield of 50% the processed product weight shown on the PPS for this

consignment would be 15 t (i.e. (20 t + 10 t) x 0.5).

19

The food safety and hygiene traceability system, administered by CIQ, requires that imported fish

for processing be accompanied by a Health Certificates. These documents are primarily concerned

with sanitary issues, and do not always contain information on the exact area of catch, vessel

identification numbers and form of the fish. CIQ requires that each shipment of imported raw

material be assigned a unique raw material batch number, and that there be no mixing of material

from different batches during processing. Each time part of a raw material batch is used for

processing it is given a production lot number. When material is exported, the export application

lists the original raw material batch and the import application numbers. In theory, these

identification numbers allow traceback to the Health Certificate issued by the source country of the

fish (Figure 1). Upon receipt of the export application form, CIQ will inspect the processed fish and

if the goods are acceptable an export Health Certificate will be issued (Clarke 2009b). CIQ, or the

China Council for the Promotion of International Trade, will also issue a Certificate of Origin for any

fish for which the value added through processing has increased by ≥40% or the 4-digit tariff code

heading has changed (e.g. frozen fish 0303 to fillet 0304; Clarke 2009b).

CCA administers another traceability system focused on tracking quantities of imported raw

materials and exported finished products for tariff purposes. Before any raw material is imported

for processing the processor must apply to CCA to open a Trade Processing Manual (TPM). The

quantity in any one TPM is limited to 100,000 t but may comprise more than one imported

consignment. CCA prefers that different species be listed in separate TPMs but does not allow a

single consignment to be split into several TPMs. Several different product specifications can be

listed in a single TPM and must be documented with purchase orders for the imported and

exported material. Once the TPM is approved the processor has one year to process the material.

CCA will audit the TPM by applying standard yields by species and by product, and may conduct

onsite factory audits.

20

Figure 1. Food safety and tariff-based systems for tracking imports and re-exports of fish in China.

Documents issued by the China government are shown in bold; documents issued by foreign

authorities are shown in italics. Explicit linkages are drawn with solid arrows; implicit linkages

are drawn with dashed arrows (from Clarke 2009b).

Several changes are underway by CCA with regard to managing fish imports and exports for tariff

purposes. In January 2012 China, along with Russia, implemented a species-specific commodity

code for pollock. This change will in theory make it easier to monitor the mass balance of trade

between the two countries. CCA is also reported to have decreased tariffs on four types of fish

including halibut, plaice, cod and herring; other proposals for reduced tariffs on pollock, salmon,

hairtail and coldwater shrimp are also reportedly under consideration. The effect of lower tariffs

will likely be to increase the attractiveness of selling these species on the domestic market.

Finally, CCA, MOA and industry are reportedly cooperating to update the minimum yield standards

used to regulate whether all materials imported for the purpose of processing are subsequently re-

exported. Currently yield standards consist of published standards for cod, pollock and yellowfin

sole (Appendices 1 & 2) and ad hoc standards for other species which are proposed by processors

and approved by CCA whenever a new TPM is opened. Published standards undergo industry

consultation every two to three years and require wide-scale industry consensus before being

implemented. Interview respondents reported that there is currently a gradual shift away from ad

21

hoc standards toward published standards. As will be shown in later discussions, having an

accurate grasp of the range of expected yields is essential not only for tracking raw materials for

customs purposes but also for ensuring certified legal quantities of material are not supplemented

with undocumented material.

IUU, Food Safety and Customs Systems Integration

One option for China when considering how to implement the EU IUU Regulation would have been

to integrate the CC and PPS certificates and checks into the food safety-based traceability system

administered by CIQ. This type of integration would attach the CC documentation to the lot

numbers required by CIQ and then use the lot numbers to track all re-exported material back to the

CC. Practically, this linkage could be achieved by either checking and attaching the CC at the time of

import (Figure 2, “A”) or at the time of export (Figure 2, “B”). However, these approaches are not

without problems. If a procedure were established to check the CC at import, this would imply that

either the destination market must be declared at the time of import (i.e. so that the requirement

for a CC is established or waived) or that as a default all imported material is required to have a CC.

As interview respondents indicated that it is often not known which country will receive the

product when the material is imported, it is likely that this type of approach would require CCs for

all imports. An alternative of linking the CC to the food safety traceability system only at export (i.e.

once the EU is identified as the product’s final destination) would focus attention on checking only

those CCs that are attached to shipments ultimately bound for the EU. However, this type of system

runs the risk that the destination may be unknown or may change, or that a problem with the CC is

discovered at a late stage (i.e. export) at which point financial losses associated with shipment

rejection or delays may be severe.

22

Figure 2. Two ways in which EU IUU Regulation catch certificates could be linked to China’s existing

traceability system for imported fish for processing.

In the end, China decided not to link the CC and PPS certificate systems to the existing food safety

traceability system at all16. The EU IUU Regulations’ PPS pro forma (Annex IV) shows the export

Health Certificate number (see Figure 1) but this is simply provided by the exporter to CAPPMA

after CIQ assigns the number. Although CAPPMA records the export Health Certificate number in

the QCVS as a unique identifier for each PPS application, there is no actual linkage between the two

export approval processes. Furthermore, CAPPMA staff report having no contact whatsoever with

either national or provincial CIQ or CCA staff. This is unfortunate from the perspective of

16 One interview respondent described the following sequence of approvals for importing and exporting fish

for processing in China: apply for a TPM from CCA and receive an import registration number; start the

import application with CIQ; lodge an import application with CCA; undergo a CIQ inspection (10-20 days)

and if passed obtain a Certificate of Conformity (Import) and the material is released for processing; register

the products for export (includes a Guarantee Letter stating that all regulations have been followed, declare

all additives, etc.); obtain a Certificate of Conformity (Export) from CIQ; apply to CAPPMA for the PPS; load

the container under CIQ’s supervision; and obtain export approval from CCA and close the TPM.

23

traceability since both CIQ and CCA maintain a presence in the provinces and sometimes even in

individual factories, whereas CAPPMA has thus far only visited the provinces in connection with

training sessions. During these training sessions CAPPMA staff reportedly informed processors and

exporters that they do not conduct cross-checking of records with CIQ’s food safety-based or CCA’s

yield-based traceability systems.

When the reason for operating the EU IUU Regulation system separately from the CIQ and CCA

systems was queried, CAPPMA staff identified several issues. The main reason cited was that since

catch certificates are a component of fisheries control, the China MOA (which coordinates with DG

MARE) rather China CIQ (which coordinates with DG SANCO) is the appropriate authority.

(Furthermore, as described above, there is no direct communication between CAPPMA and CIQ).

On a more operational level, CAPPMA suggested that if the CC is to be linked to either the food

safety or tariff-based systems, it would be required at import and since the CC is reportedly often

not received until after the fish are imported, this would not be practical. Also, CAPPMA stated it

would be problematic to impose different import procedures for material ultimately destined for

EU versus other markets, and likewise inefficient to require CCs at import for all materials

regardless of destination.

Summary

As one of the world’s largest fish processors, China implements international best practice

traceability system for food safety and tariff purposes. In terms of legal provenance traceability, the

food safety system administered by CIQ should ensure that there is no mixing of batches of raw

material, and the tariff system administered by CCA should ensure that processed yield rates are

reasonable. However, due to competitive government competencies, China’s implementation of the

EU IUU Regulation is handled by a separate organization (MOA which authorizes CAPPMA) and is

not integrated with existing and largely effective sanitary and customs systems. The large volume

of PPS applications processed by CAPPMA (i.e. > 17,000) in 2012 is checked by means of a Quantity

Cancellation Verification System (QCVS) to ensure that the exported amount under each CC does

not exceed the quantity shown on the CC. Aside from this oversight, CAPPMA operates from Beijing

and so does not maintain a presence in the fish processing areas of Qingdao or Dalian as do CIQ and

CCA.

2.1.5. Russia

This section describes Russia’s role as a producer of fish raw materials for processing in China and

export to the markets of the EU, US and Canada. Although there is some fish processing for export

within Russia this topic is not covered by this report.


As discussed above, information on traceability requirements was not gathered in Russia and was

primarily gleaned from published sources and interview respondents who often lacked direct

experience with Russian fisheries. The following information is thus associated with a somewhat

lower degree of certainty than the preceding descriptions of the other national authorities.

24

Article 20 of the EU IUU Regulation requires that all countries submit a notification to the EU

attesting that i) there are national arrangements for fisheries management and ii) that national

authorities are empowered to verify information in the CCs. CCs from Russia were not accepted by

EU authorities until approximately six weeks after the EU IUU Regulation entered into force (13

February 2010) because of delays in this notification process (EC 2011b). Interview respondents

report that since that time provision of CCs by Russia has generally been smooth.

When considering Russia’s implementation of the regulation it is necessary to first understand

important differences between Russia’s Atlantic and Pacific fisheries. Catches of fish in the

Exclusive Economic Zones (EEZs) of the Atlantic by Russian-flagged fishing vessels may be landed

in Russia; or, under the auspices of a Joint Commission which monitors both Russian and

Norwegian vessels wherever they fish, landed in a foreign port (i.e. not the home State of the fishing

vessel); or transhipped for landing in a foreign port. If the foreign port is an EU port, a CC is

required. Transhipment for landing in an EU port such as Velsen, the Netherlands, is a common

pathway and the steaming time from the fishing grounds to the EU port is slightly longer than the

ten days the Murmansk-based authorities are said to require for issuing a CC (for direct importation,

i.e. landing). In addition to the EU IUU Regulation, a NEAFC (North East Atlantic Fisheries

Commission) control scheme requires that any catch from a NEAFC member fishing within the EEZs

of NEAFC members or on the high seas, must be landed in a designated port. If the intended port is

a foreign port there must be confirmation from the foreign fishing vessel’s flag State to the port

State that the catch is legal prior to landing. These confirmation documents are placed on a secure

website for reference by all cooperating NEAFC port State authorities. Direct or transhipped

landings into EU ports from any Russian-flagged vessels fishing in the NEAFC Regulatory Area

would have to comply with both the NEAFC control scheme and the EU IUU Regulation.

In the Pacific, recently enacted Russian regulations require that all catches by the North Pacific

Russian whitefish and salmon fleets be landed in Russia before being exported. This requirement

does not preclude transhipment at sea but in such cases the transhipment vessel must land or

register the catch in a Russian port before proceeding to a foreign port17. In the case of export to

China for processing for the EU market, Russia issues CCs on request, at points ranging from the

time of landing in Russia, while the material is enroute to a buyer in China, or even once the

material has been imported to China and processing has begun.

As described above, most countries are complying with the EU’s WICC guidance and issuing CCs

based on the weight of exported product rather than the catch weight. Russia is also reportedly

moving slowly toward this practice, but as is discussed in Section 3.2, there is still a considerable

amount of variation in the number of CCs accompanying a consignment, the number of fishing

17 Although this appears to be the official situation, some examples of eastern Russian transhipment vessels

proceeding directly to foreign ports were mentioned during interviews conducted for this study. The

bilateral port State measures described in the following section may relate to this issue. Further study of this

issue in Russia is recommended.

25

vessels shown on each CC, and the proportion of the CC weight that is represented by the

consignment. None of the interview respondents for this study fully understood the complexities of

Russia’s CC issuance. Russian authorities stated in information provided to a Russian non-

governmental organization interviewed for this study that in 2012 Russia issued about 5000 CCs

covering 1.5 M t of fish; 80% by weight and 40% by number were issued by eastern Russian

authorities.

Many of those involved in China’s processing industry have to take the Russian CCs at face value as

there appears to be no online portal or other system maintained by Russian authorities where CC

holders can verify documents against a centralized repository of issued CCs. None of those

interviewed had experience with querying CCs directly with Russian government officials. In

response to inquiries by a Russian non-governmental organization interviewed for this study,

Russian authorities indicated that they have responded to several requests for verification from EU

authorities, including one instance in which the existence/authenticity of the queried CC could not

be verified.

Special Relationship with the Republic of Korea

A study of the trade in salmon from Kamchatka to East Asia described a long-standing relationship

between Russia and Korea based on Korea’s history of vessel and equipment servicing, low-cost

warehouse capacity, and advantageous trade and logistics systems (Clarke 2007). Interviews

conducted under this study confirmed that Korea is still a common transit point for fish from

Russian fishing grounds bound for Chinese processing plants. Information gathered under this

study suggests that Korean traders play a vital role in providing payment at the point of sale in

Russia and then providing the fish on credit to Chinese factories for processing. Korean companies

appear to specialize in operating under unique forms of cooperation amongst themselves which

give them more power to engage in these types of large-scale credit transactions. Although China’s

finance and trade systems have modernized considerably since Korea first began brokering fish

from Russia in the 1980s, Chinese trading companies appear to operate more independently and

with a greater spirit of competition and thus often have less financial clout. While two interview

respondents who are not directly involved in the industry considered that the influence of Korea is

diminishing, several other respondents who are actively buying and selling fish considered that

Korea continues to maintain its traditional role in the trade.

Most interview respondents indicated that it is the large trading companies (none of whom were

interviewed for this study) who decide whether fish is shipped via Korea. Some respondents also

stated that the likelihood of transiting through Korea depends on the species: pink salmon are said

to follow this route, whereas pollock is more likely to be shipped directly from Russia to China. The

reason for storing salmon raw materials in Korea was said to be related to the brief fishing season

(primarily June-August for Russian salmon), and a shortfall of storage capacity in both Russia and

China. The specific reference to pink salmon is likely due to the fact that pink salmon are the most

abundant salmon in the Pacific and comprise >90% of the Russian salmon catch (Augerot 2005). Of

the large trading companies that were identified by name, most appear to maintain a low public

profile as only a few could be located in subsequent internet searches. Although they may all trade

26

fish through Korea, they were based in a number of countries in addition to Korea including China,

Hong Kong, Japan, and the US. The role of these large trading companies as fish brokers is

highlighted by the fact that, according to interviews the same consignment of fish will sometimes be

offered to processors by several trading companies at the same time.

Patterns of trade through Korea were further investigated using customs data. Since previous

studies concluded that fish entering China from Russia via Korea would not necessarily be recorded

as imports from Korea (e.g. if they are held in bonded warehouses and are not imported by Korea),

China’s import statistics were not considered to be a reliable source of information on the species

and quantities transiting Korea. Instead, Russian export statistics for whitefish and salmon were

obtained for 2010-2012 via a Russian non-governmental organization interviewed for this study18

in order to explore whether China and Korea are major destinations for Russian fish and which of

these two destinations is more often listed. These figures indicate a different situation to that

reported by interview respondents (Table 1).

Table 1. Russian export statistics for salmon, pollock and cod for 2010-2012 in t.

2010 2011 2012 Pollock Quantity Exported to China (China’s Share (%))

592,615 (63%)

569,384 (59%)

496,798 (68%)

Quantity Exported to Korea (Korea’s Share (%))

260,027 (28%)

277,766 (29%)

225,282 (31%)

Quantity Exported to Other Countries (Other Countries’ Share (%))

84,897 (9%)

116032 (12%)

9,944 (1%)

Salmon Quantity Exported to China (China’s Share (%))

38,422 (53%)

82,077 (66%)

44,093 (55%)


6,810 (9%)

16,685 (13%)

8,628 (11%)


26,647 (37%)

26,342 (21%)

27,477 (34%)

Cod Quantity Exported to China (China’s Share (%))

14,217 (22%)

13,384 (21%)

9,097 (6%)


19,070 (29%)

23,895 (37%)

22,502 (16%)


32,460 (49%)

26,737 (42%)

109,423 (78%)

18 Data were sourced from http://stat.customs.ru/ and included codes for salmon (0303-11 (‘sockeye salmon’),

0303-12 (‘other Pacific salmon’) and 0303-19 (‘other salmon’)); pollock (0303-67 (‘frozen pollock’, 2012

only), 0303-79 (‘other fish’, believed to be pollock in 2009-2010), 0304-75 (‘frozen pollock fillet’)), 0304-94

(‘minced pollock’); and cod (0303-52 (‘cod’), 0303-63 (‘frozen cod’) and 0304-71 (‘frozen cod fillet’)).

http://stat.customs.ru/

27

First, while it is true that the majority of Russian pollock is exported directly to China, about one-

third of the total exports is exported to Korea initially (from where it is then likely to be shipped

onward to China). Second, this pattern is similar for salmon but Korea receives a smaller share (15-

17%) of exported Russian salmon compared to China (83-85%) than it does of pollock. Third,

exports of cod show a strikingly different pattern with Korea consistently receiving more cod than

China. These statistics are surprising and are difficult to interpret on the basis of existing

information19. However, they suggest that unless the domestic demand for Russian pollock, salmon

and cod in Korea is larger than expected, the role of Korea as a transit point for Russian raw

materials into China continues. If all exports to Korea are actually destined for China, the averages

for 2010-2012 indicate that 31% of the pollock, 16% of the salmon and 64% of the cod supplied by

Russia to China transits Korea20.

There are at least two significant consequences of Korean involvement in the Russian fish supply

chain to China. From the upstream perspective, the shipment of fish to Korean ports on cargo

vessels offers the potential for illegal fishing and/or smuggling operations by avoiding mandatory

landings procedures in Russia. From the downstream perspective, storing and re-packing/re-

labelling fish in Korea could represent another opportunity for substitution of materials which have

CCs with those which do not.

The first (upstream) issue appears to have been recognized by Russian authorities who have

entered into arrangements with Korea, Japan and China to maintain vigilance over vessels

offloading Russian fish in foreign ports through prior notification rules and special document

checks. While there is little information available about these bilateral port State measures in the

Pacific, some interview respondents reported that in some cases (e.g. Korea and China) fishing

rights in Russian waters were offered as incentives for cooperation. It was also suggested that

Russia has not been satisfied with Korea’s performance under the arrangement thus far and has

withdrawn some of the previously conferred rights.

Some interview respondents suggested that the second (downstream) issue may be governed, at

least in the case of raw materials ultimately destined for the EU, by the provisions of the EU IUU

Regulation’s Article 14(1). This states that:

19 While it is possible that exporters in Russia know that the fish will be shipped to, but not imported by,

Korea and thus list China as the destination on the export form, this seems unlikely. Also, it is not clear why

this would be the case for cod and not for pollock or salmon. Another possibility is that the relative higher

cost of cod raw materials could make the role of Korean traders as financiers more attractive. However, the

relatively lower cost of pollock is likely to be compensated by its higher volume thus creating an equal

incentive for Korean involvement.

20 Calculated as quantity exported to Korea/(quantity exported to Korea + quantity exported to China)

28

“In order to import fishery products constituting one single consignment,

transported in the same form to the Community from a third country other

than the flag State, the importer shall submit to the authorities of the

Member States of importation: (a) the catch certificate(s) validated by the

flag State; and (b) documented evidence that the fishery products did not

undergo operations other than unloading, reloading or any operation

designed to preserve them in good and genuine condition, and remained

under the surveillance of the competent authorities in that third country.”

One case of where fish are re-exported without processing would be Russian whitefish landed in

Norway, re-packed (only) and shipped to the EU. Norway has developed a certificate which it calls

the “Storage Declaration Form” which asserts that “The following fishery products did not undergo

operations other than unloading, reloading or any other operation designed to preserve them in good

and genuine condition, and remained under the surveillance of the competent authorities in Norway”21.

In this case, Norway’s “Storage Declaration Form” allows the fish chain of custody to be

documented from the fishing grounds to the EU. It is not clear, however, how the EC would expect

to handle a situation in which fish with a Russian catch certificate are stored in Korea, exported to

China for processing, issued with a PPS, and then re-exported to the EU. What is clear from the

interviews conducted under this study is that Korea is not issuing any document akin to Norway’s

Storage Declaration, and that there is some concern amongst Chinese authorities about the lack of

such documents from Korea22.

Summary

In summary, while western Russia’s fisheries appear to be subject to strong fishery control systems

outside the EU IUU Regulation, eastern Russia’s fisheries lack these RFMO-driven controls.

Traceability of fish from Eastern Russia is further complicated by the role of transit countries such

as Korea, which formerly served as a landings centre and continues to serve as a trade hub and

warehousing centre. Korean documentation for fish unloadings, warehousing and potential re-

packing/re-labelling is weak and creates a gap both in Russian authorities’ ability to control illegal

landings of their vessels in Korea (e.g. through bilateral cooperation agreements) as well as in the

traceability chain of custody for fish under the EU IUU Regulation.

2.2. Non-governmental Legal Provenance Traceability Systems

Government regulations are not the only traceability requirements applicable to the flow of Russian

fish through China to the EU, US and Canadian markets. Companies buying these fish often have

21 https://www.catchcertificate.no/default.aspx

22 It is possible that a document like the Storage Declaration issued by Norway is necessary only if the fish is

imported before storage. Whether this is the interpretation of the EC, and whether fish are imported before

storage in Norway and not imported before storage in Korea, were not investigated under this study.

https://www.catchcertificate.no/default.aspx

29

their own corporate systems for ensuring the legal provenance of products. These systems may be

specific practices internal to an individual company or generic standards voluntarily adhered to by

a number of companies.

With regard to corporate traceability policies, some of the industry representatives interviewed for

this study asserted that their companies applied robust internal practices to assure the legal

provenance of their fish. However, these respondents declined to disclose the specifics of these

practices, stating only that they relied upon a network of trusted suppliers23 and variety of audit

tools. In contrast to these companies, many of the other companies interviewed stated that they

had no specific traceability policy other than maintaining full compliance with all applicable

government, certification scheme and corporate customer traceability requirements. For these

reasons, the following discussion focuses on traceability policies and standards proposed by

seafood industry organizations and certification schemes rather than in-house corporate schemes.

While the latter may contain stricter standards, there is insufficient publicly available information

to evaluate them.

2.2.1. Global Non-governmental Legal Provenance Traceability Schemes

One of the most widely applied provenance traceability systems in the global fish processing

industry is the MSC Chain of Custody standard. Any organisation buying or selling products that

derive from an MSC-certified fishery and wishing to sell these products with the MSC claim or eco-

label must obtain chain of custody certification24. In terms of legal provenance traceability, the

legal provenance is designed to be assured by the certification of the fishery and the traceability of

that provenance, both legal and sustainable, is designed to be assured by the chain of custody

standard. This standard sets mandatory requirements but does not dictate how these

requirements are to be met, instead leaving conformance to the judgement of the MSC Conformity

Assessment Bodies. These bodies assess the management system, the traceability system, the

controls on substitution, and the documentation and labelling. Clients which conform to the MSC

Chain of Custody standard for “one-up, one-down” traceability are certified. During a chain of

custody audit, company’s conformity with all elements of the standard will be evaluated including

an input/output reconciliation (or mass-balance) and a traceback test on a sample of products.

While the MSC Chain of Custody standard is probably the strictest and most frequently audited

provenance traceability standard for seafood, implementation is not perfect. Many interview

23 It is known based on the results of previous research that buyers for major seafood companies have a good

sense of whether specific lots of fish offered for sale are likely to be illegally-sourced based on price, location

and the point of contact. It is not known, however, to what degree sources which are on the whole “trusted”

by these major buyers may pass along illegally-sourced fish from time to time, either knowingly or

unknowingly.

24 Except in cases where companies are buying products already in consumer-ready tamper-proof packaging

intended for the final consumer

30

respondents reported hearing of incidents of substitution of MSC materials with non-MSC materials.

MSC reportedly conducts full chain traceback exercises several times per year to verify the

effectiveness of the chain of custody programme, but the results of these exercises are not made

public. The MSC also conducts an annual DNA testing programme to validate correct species

labelling and in some cases regional origin. These results are made public on an annual basis and

have indicated mislabelling rates of less than 2% in 2011 and 2012. The MSC is implementing

several measures to strengthen the chain of custody standard in 2013, including enabling the MSC

to conduct a full supply-chain reconciliation of sales and purchase volumes across multiple

companies, and developing more species and regional-level DNA tests. The MSC will also be

running a pilot project in 2013-2014 for an online transaction database system, which would collect

sales and purchase volumes of MSC products into a centralised database, allowing aggregate

visibility across the supply chain and making Chain of Custody audits more effective at detecting

potential cases of mislabelling.

2.2.2. EU Non-governmental Legal Provenance Traceability Schemes

In Europe, AIPCE has promoted at least two initiatives regarding fish traceability in recent years.

The first of these was the AIPCE Letter of Warranty Scheme, also known as the Fish Capture

Traceability Document or Purchase Control Standards, first applied to Barents Sea cod and later to

Baltic Sea cod and Sri Lankan tuna (Morrison 2009). These documents vary in form and content

but broadly provide a warranty by the supplier that the fish were caught legally, and an agreement

to disclose relevant information to the purchaser and submit to independent audits. Interviews

conducted for this project suggested that, except in the case of Sri Lanka where the scheme is used

to separate Sri Lankan from Indonesian origin tuna, this scheme is no longer operating as it has

been replaced by the EU IUU Regulation.

The other AIPCE traceability initiative is the recently adopted “Principles for Environmentally

Responsible Fish Sourcing” (AIPCE 2010). Of the nine principles only one relates directly to

traceability for wild-caught fish and this states “Wild caught fish are to be traceable back either to

the catching vessel or a known group of vessels and their landing ports. Where required for legal

compliance or certification this must include the specific catch area.” As this principle would be met

through compliance with the EU IUU Regulation it does not appear to commit AIPCE to any higher

standard than what is required by law. Also, the wording does not make clear whether AIPCE

members are committing to external traceability (i.e. taking responsibility for the entire upstream

supply chain leading to their purchased product) or only to internal traceability (i.e. identifying

from whom they bought the product and to whom they sold it, and assuming that both seller and

buyer have similar traceability systems). The key difference between the two types of traceability

lies in the responsibility for full chain auditing, e.g. traceback and mass balance exercises. Since

these AIPCE principles are voluntary for members and there is no information on whether auditing

is conducted, either individually or for the full chain, the effectiveness of this policy is impossible to

evaluate.

Also in the EU, Young’s Seafood Ltd, part of the Findus Group, announced in 2012 that it applies

seven tests to suppliers of its fish. One of these is that the fish is sourced from legal, recorded and

31

regulated fisheries. Other tests cover issues such as intentional species or fishery substitution,

species adulteration, chain of custody abuse, catch method fraud and undeclared product

extensions (Seaman 2012a). Further details on how Young’s applies these tests are not available.

2.2.3. US Non-governmental Legal Provenance Traceability Schemes

The US seafood industry through the National Fisheries Institute (NFI) has produced a voluntary

traceability standard based on GS1 global standards for supply chain management and product

identification. Although the standard was primarily developed for food safety purposes, NFI points

out that sustainability information could be associated with the product at its first point of receipt

and then tracked throughout the supply chain. The guideline establishes minimum requirements

and best practices to facilitate one-up, one-down traceability as required by the Bioterrorism Act of

2002 and the Food Safety Modernization Act of 2010 (see Section 2.1.2) in a consistent manner that

can be shared throughout the supply chain.

The NFI standard does not require implementation under any specific technology, but best practice

would implement the system using bar coding. From the point of view of legal provenance tracking

one important feature of GS1 bar coding is that each producer must apply for a Global Trade Item

Number (GTIN) to be allocated to a product. If, for example, the product is defined as a species, the

GTIN will only identify that species, not its fishery location or gear type. If the GTIN is allocated

generically (e.g. by species) and if more detailed product specification (e.g. fishery), or referencing

of batch/lot numbers from within a particular GTIN is required, an encoding system referred to as

GS1-128 should be used. However, many manufacturers are currently using a more restrictive type

of bar code (ITF-14) which only allows electronic reading of the GTIN itself and not any of the

additional information (NFI 2011).

The Alaska Seafood Marketing Association (ASMI) has recently launched its own certification

scheme to support its claim of responsible fisheries management (RFM). Like the MSC scheme (see

above), the ASMI scheme has both fishery certification which can assure legal provenance, and

chain of custody certification which can assure traceability. Also like the MSC scheme the ASMI

scheme sets mandatory traceability requirements but does not dictate specifically how these

requirements are to be met. The scheme states that traceability can be demonstrated through

company affidavits, customer audits or third party audits, and it requires annual surveillance audits

during the certification period (ASMI 2013a, 2013b). The major difference between the ASMI RFM

scheme and the MSC scheme is not in the traceability component, but rather in the focus of the

ASMI RFM scheme on the fishery management system per se rather than the MSC’s requirement

that both the fishery management scheme and the stock status (target and bycatch) must be

sustainable.

Gulf Seafood Trace is a voluntary traceability and marketing initiative funded by NOAA under the

Gulf States Marine Fishery Council’s Oil Disaster Recovery Program (Seafood Source 2011). The

traceability component of the system uses TraceRegister software to share and validate data along

the supply chain creating an overlaid “information supply chain” (Gulf Seafood Trace 2013).

Although the Gulf Seafood Trace program is primarily aimed at increasing market demand for US

32

Gulf of Mexico products, it can provide information relevant to legal provenance. At the beginning

of the supply chain the electronic traceability system links to the state fish ticket system providing

information on the fishing vessel, the fisherman, the license number, the gear type and the catch

area. Once in the system this information is thus available for legal provenance verification

throughout the supply china.

Although it is not a traceability scheme per se, NFI also promotes an Economic Integrity Program

designed to encourage its members to refrain from engaging in tariff avoidance, mislabelling or

substitution, and to identify those that do (Wright 2007). This type of industry self-policing was

also referenced by some interview respondents when asked about their corporate traceability

policies. The number of cases raised by informants and handled by NFI is unknown, however,

several other interview respondents suggested this type of approach would not be successful as

there would be little incentive to participate.

2.2.4. Canadian Non-governmental Legal Provenance Traceability Schemes

In Canada, an industry-led and government-supported initiative known as Can-Trace has

established the Canadian Food Traceability Data Standard Version 2.0, a voluntary traceability

standard. This standard consists of minimum data elements and requirements for one-up, one-

down tracking, and like the NFI traceability standard discussed above, the Can-Trace standard is

based on the GS1 system (Can-Trace 2013). Since it is both primarily aimed at food safety

traceability and encompasses a broad range of food items, it does not appear to have data elements

specifically relating to legal provenance.

ThisFish is a small traceability scheme currently operating with almost 400 fishing vessels in

Atlantic Canada’s lobster and haddock fisheries and several British Columbia fisheries. Under this

partnership between Ecotrust Canada and participating fishermen, individual fish are tagged or

labelled by fishermen and information on how, when and where the fish was caught is uploaded to

a website. As the fish travels through the supply chain other information can also be uploaded, and

the consumer (restaurant or individual) can access the information via the website. In 2012,

ThisFish released its Traceability Data Standard 1.0 which provides full chain business-to-

consumer traceability, in contrast to the EU IUU Regulation’s business-to-government or NFI’s and

Can-Trace’s business-to-business focus (ThisFish 2013). While the ThisFish scheme should be

effective in establishing both legal provenance and full chain traceability, its reliance on individual

labelling of fish and uploading of information by fishermen is likely to make it impractical for many

fisheries.

2.2.5. Summary of Non-governmental Legal Provenance Traceability Schemes

Non-governmental legal provenance traceability information exists in many forms including global

eco-labels, industry-based traceability standards, and individual corporate schemes. In most

examples, documenting legal provenance is one of several motivations for establishing traceability

alongside issues such as guarding against mis-labelling of species, food safety and conferring a

branding advantage on certain fishermen and fisheries. Traceability systems which are designed to

33

apply across a broad range of high-volume food products may lack the ability to carry information

relevant to legal provenance (e.g. NFI’s GS1 standard) and focus more on one-up, one-down

tracking. At the other end of the spectrum, systems like ThisFish which require tagging of

individual fish and offer full chain traceability may not be practical in high-volume applications.

The diversity of traceability tools reviewed here suggests that there are many different objectives at

work leading to a proliferation of systems for individual needs.

34

3. Analysis of Implementation of the EU IUU Regulation

3.1. Introduction

As shown in the preceding review of government and non-government legal provenance

traceability schemes, the EU IUU Regulation is the most sweeping in scope. It could, if designed and

implemented properly, have a major impact on the market for IUU fish. While various other

systems which support some aspects of legal provenance traceability have been described in

Section 2, most of these focus on a narrow range of species/fisheries, are primarily aimed at food

safety, or are implemented for only a small portion of the market. Given the perceived lack of

similar instruments in other countries, the EU has advocated expansion of the EU IUU Regulation to

other major seafood markets (AIPCE 2011, Speltz 2011). This expansion would address the

concern that the market for products of IUU fishing must be curtailed, rather than merely displaced

from the EU. In order to inform this discussion of expansion, further analysis is provided on

whether the EU IUU Regulation in its current form provides a robust system to detect and reject the

products of IUU fishing.

Drawing upon the preceding information on national regulations and their implementation, the

following sections analyse three critical features of the EU IUU Regulation as currently drafted:

The creation of an export certification scheme with the issuance of the WICC note requiring

CC weights to be the same as consignment weights;

The ability to split consignments and copy CCs when indirectly importing to the EU; and

The lack of an explicit linkage to existing food safety batch integrity traceability systems.

Each section begins with a theoretical examination of the EU IUU Regulation’s requirements on

each topic and examples from trade systems studied prior to the preparation of this report. This is

followed by a discussion of new information obtained under this study concerning whether these

issues pose problems for the effectiveness of the EU IUU regulation when applied to the flow of

Russian whitefish and salmon through China.

3.2. Creation of an Export Certification Scheme rather than a Catch Certification Scheme

3.2.1. Theoretical Analysis and Examples from other Trade Flows

The EU IUU Regulation is based upon international law which gives the flag State control over

fishing activities. Although no standards of flag State control are specified by the regulation, the EU

is enabled to list the flag State as a “non-cooperating third country” for failing to fulfil its duties to

combat IUU fishing (EU IUU Regulation Article 31). Otherwise, the EU IUU Regulation focuses

primarily on downstream tracking of the fish certified as legal on the flag State-issued CC. For this

reason, the point at which the CC is issued is critical to the effectiveness of the scheme.

As described in Section 2.2, guidance issued by the EC requiring CCs to be issued for consignments

rather than catches has explained that the scheme is intended to work as an export certification

scheme. It is not clear, however, whether that was the original intention of a regulation seeking to

35

curtail IUU fishing and making explicit reference to fishing vessels and their licenses. It is also

difficult to imagine how de-coupling the CC from fishing activities has a positive effect on fisheries

control, and thus tempting to ascribe the change associated with the WICC note as a practical move

to facilitate downstream tracking. The following discussion illuminates some of the potential

reasons behind issuing of the WICC note and the clarification of the EU IUU Regulation as an export

certification scheme.

When the EU IUU Regulation was first implemented some fish processing countries were puzzled

by the different requirements for products originating from domestic versus foreign vessels. If the

vessels supplying the processing plants were domestic vessels, Article 12 (direct importation)

applied and only a CC was required. However, if the vessels supplying the products were foreign

vessels, Article 14 (indirect importation) applied and both the foreign flag State’s CC and a PPS

linking the processed products to the foreign flag State’s CCs were required. Difficulties arose when

processing plants such as those in Sierra Leone25 (Hosch 2010a) and El Salvador (Hosch 2011a)

produced products which contained fish from both domestic and foreign vessels. These countries

proposed, for simplicity and enhanced traceability, that a PPS with annexed CCs be provided in all

cases. However, the additional documentation for the Article 12 (direct) imports appeared to

create confusion among EU BIP authorities leading, in the case of El Salvador at least, to significant

blocked shipment incidents and demurrage charges. Other countries adhered strictly to the EU IUU

Regulation requirements and submitted only CCs with their directly exported processed products.

The result in these latter cases was that the processed consignment weight was considerably less

than the certified legal catch weight shown on the CC (even more so when only part of the catch

shown on the CC was exported) and this also caused consternation among EU BIP authorities.

This lack of clarity led the EU to issue the WICC note for Article 12 which specified that the weight

shown in the CCs should only cover the consignment to be exported to the EU. The WICC note led

to the creation of a distinction between CCs based on catch weights, and CCs based on consignment

weights. Some countries, such as Indonesia26 and Greenland, have maintained catch-based CCs

even after issuance of the WICC note but this approach appears to be the exception. Most countries

have either switched from issuing catch-based CCs to consignment-based CCs (e.g. Norway), or

were issuing consignment-based CCs from the start (G. Hosch, personal observation; interview

respondents).

25 Sierra Leone was not exporting to the EU in 2010, but assistance was provided by the EU to set up the

administrative routines to issue CCs. During this work, future difficulties with Article 12 certification and the

lack of a Processing Statement were anticipated.

26 In the case of Indonesia, a catch-based CC is issued at landing. This CC is presented at the time of export of

the consignment, at which point a consignment-based CC is issued on the basis of the catch-based CC. In early

2013, Indonesia was actively engaged in developing a country-wide electronic traceability system, including

appropriate automated mass-balance checks, to ensure effective implementation of this system.

36

The replacement of catch-based CCs with consignment-based CCs is not an issue for legal

provenance traceability if both can equally assure that the catch is not the product of IUU fishing.

However, use of consignment-based CCs compromises this assurance because a consignment-based

CC cannot be issued until the consignment weight is determined, i.e. after the landed catch is sold,

split, processed and the consignment is containerized and ready for export. This reduces the role of

the fishing vessel master in the certification because by the time the consignment-based CC is

issued he/she has lost contact with the fish. It thus erodes incentives for vessels to operate legally

and reduces the opportunities to detect IUU fishing at landing when the probability of doing so is

highest. This development works against what was in some cases, such as Turkey, an initially

growing interest and capacity by fisheries inspection authorities to control fish landings as a result

of the EU IUU Regulation (Hosch 2010b).

Once the WICC note was issued, the EC became aware that consignments often, if not usually,

contain materials from more than one landing. The EC then developed a form that would link

consignment-based CCs back to [multiple] landing events but to date this form is not mandatory,

remains incomplete (i.e. lacks a section on transhipment), and exporting countries take a variety of

approaches to this issue (see Section 2.1.1). As using the new form would considerably strengthen

the linkage between the consignment and the catch, and thus provide more direct control of IUU

fishing, it is not clear why its use is not required. The new suggested template is also a clear

indication that the consignment-based CC covering Article 12 products is evolving into a de facto

processing statement, with the contributing vessel and original catches listed in annexes.

3.2.2. Information on the Flow of Russian Whitefish and Salmon through China

Whitefish from western Russia, usually cod or haddock, are often direct imports to the EU under

Article 12 of the EU IUU Regulation. Based on interview information, it appears that the usual route

for these fish is for a cargo vessel to collect catches from multiple vessels and for Russia to issue a

consignment-based CC while the cargo vessel is enroute to an EU port. In this case, while the use of

a consignment-based CC covering several vessels may weaken the legal provenance traceability,

this is somewhat mitigated in this particular instance by the strong control system for whitefish

fisheries in the Norwegian and Russian EEZs and on the high seas (see Section 2.1.5).

In contrast, fish from eastern Russia passing through China for processing are indirect imports to

the EU regulated under Article 14 of the EU IUU Regulation. According to interview respondents

consignments are commonly accompanied by a single CC which shows catches from one or more

vessels (e.g. up to a dozen, potentially arising from transhipment vessels collecting catches from

multiple vessels before landing). It was also reported to be not unusual for consignments to be

accompanied by multiple CCs. For example, one interview participant described a mixed

consignment with two CCs attached, one issued by authorities in the Sakhalin area for part of the

container and one issued by authorities in the Vladivostok area for the other part.

In addition to the possibility of multiple vessels listed on a CC, or multiple CCs for a single

consignment, discrepancies between consignment weights and weights shown on the CCs are

apparently common. Interview respondents report that fish consignments from Russia are

37

approximately half the time accompanied by a CC (or CCs) that show(s) a weight matching the

consignment weight, and the remainder of the time accompanied by a CC (or CCs) which show(s) a

weight greater than the consignment weight. There are several reasons why the CC might show a

greater weight than the consignment:

Russia’s fisheries sometimes produce very large catches; if such a catch is landed and a

single CC is issued at landing, it is very likely that the catch will be split into a number of

smaller consignments for export and each consignment will be accompanied by a copy of

the full CC27;

The CC was issued for the consignment weight when leaving Russia and then split in Korea

(see Section 2.1.5) or in a bonded cold store in China before import.

Little is known about the process of issuing CCs in Russia, although it appears that they are issued

upon request at a variety of points in the trade flow (see Section 2.1.5). In particular, interview

respondents claimed it was not unusual to have to request CCs for material that had already arrived

in China. In fact, all interview respondents buying fish from eastern Russia admitted that there are

“sometimes” to “often” problems with receiving Russian CCs prior to import to China. While

presenting an accompanying CC does not appear to be a requirement for importation to China (see

Section 3.3), delays in receipt of the CCs represent a high risk to potential buyers wishing to export

to the EU market. This may also represent a risk for buyers wishing to export to the US market, as

some US buyers reportedly also demand CCs.

In the case of eastern Russian whitefish and salmon, it appears that not only is the issuance of CCs

not necessarily occurring at the time and place of export from Russia, it may occur once the fish

have already been re-packed in a foreign warehouse and/or been processed in a foreign factory.

Since the EU IUU Regulation only governs the fish downstream from the point of CC issuance, this

leaves all upstream control to the flag State which would seem, despite recent moves by Russia

toward bilateral port State measures with its Pacific neighbours, to have little control over what

happens to the consignment once it leaves the flag State territory. This gap in effective control (i.e.

between export and the point of issuance of the CC) further weakens the EU IUU Regulation as an

anti-IUU fishing instrument.

3.2.3. Summary

The EC has chosen to apply the EU IUU Regulation’s catch certificates as a form of export, rather

than fishery, control by requiring that CCs be issued for exported consignments rather than

landings. This distancing of the CC from the actual on-the-water fishing activities is compounded in

the case of eastern Russia fisheries by issuance of the CC after the fish leave Russian territory, and

sometimes after they have been re-packed in Korean or Chinese bonded cold stores. As the EU IUU

Regulation only tracks material downstream of CC issuance, gaps between Russian authorities’

27 Note that this procedure is not in compliance with the WICC which would require that separate CCs be

issued for each consignment.

38

control in Russia (e.g. landings, and perhaps exports) and the point of CC issuance (e.g. sometimes

after fish have already reached China), create additional opportunities for substitution of IUU fish

for legal product. This lack of a linkage with effective fisheries control is therefore considered a

major weakness in the EU IUU Regulation as currently implemented.

3.3. Inadequate Document Security for Split Consignments


As the traceability system created by the EU IUU Regulation is paper-based, its performance is

heavily influenced by the issue of document security. This issue is particularly important in the

case of indirect imports, e.g. when the CC is issued for the amount of fish shipped to a third country

for processing, and the third country must attach a PPS to the CC when exporting to the EU. If the

amount shown on the CC is to be processed by a single plant, in theory, the original CC could remain

with the fish and be attached to the export documentation. However, in the vast majority of cases

an incoming consignment of raw material has been split, often in a bonded cold store facility, and

partial consignments have been dispatched to a number of factories seeking different sizes of fish

for different product specifications. In such cases, the first buyer may receive the original CC

(although generally not), and all other buyers will receive a photocopy of the original CC. The EU

IUU Regulation allows for photocopies of CCs to be used but does not specify requirements for

documenting the splitting of certified incoming consignments. Studies of the Western and Central

Pacific tuna trade through Thailand revealed that processing plants there claim to have never seen

an original tuna CC (Hosch 2011b).

There are two key traceability issues arising from this situation. First, the overwhelming majority

of CCs in circulation are photocopies and the opportunities for altering photocopies for fraudulent

purposes are well known. This situation could be significantly improved if all major fishing nations

provided an online sample CC which would assist national authorities worldwide to check the CCs

they encounter, or if DG MARE who holds copies of all original templates posted these on their

website. Although national authorities must provide samples of their model CCs to the EC as part of

the flag State notification process under Annex III of the EU IUU Regulation, there are few model

CCs available online. A more costly but more effective solution would be for competent authorities

of major fishing nations to implement an online portal like that of the US or Norway for verifying

individual CCs.

Second, without requirements for documenting splits of consignments after the CC is issued (e.g. in

bonded cold store facilities), the amount of certified raw material shown on the CC given to each

processor will be higher than the amount they actually receive. In fact, the amount of certified raw

material on paper multiplies each time the CC is photocopied, e.g. from 80 t to 240 t (80 t x 3) with

three splits as shown in Figure 3. As this example illustrates, an unscrupulous processor could

complete processing of the quantity of certified raw material they receive (e.g. in the case of the

first split and assuming a yield of 50%, producing 20 t of product from the 40 t of certified material

received) and photocopy and reuse the same catch certificate to produce and export another 20 t

from uncertified material to the EU. This can be achieved simply by attaching the same CC to

39

additional PPSs. The processors receiving the second and third splits may do the same. In this

example, the actual certified quantity produced should be only ~40 t (certified 80 t x 0.5 yield) but

as much as ~120 t (3 x 80 t x 0.5 yield) could be produced without the system detecting it.

Arguably, the only tangible element of control lies in the fact that the total amounts shown on the

attached CCs must be greater than the amounts shown on the PPS if the consignment is to pass an

EU BIP without raising concerns.

Figure 3. Diagram of the potential for inflation of quantities of certified fish through photocopying of CCs

without recording the amount of the split. The quantity produced is calculated assuming a yield

of 50%. The potential laundered quantity is the difference between the quantity that could be

produced from the quantity shown on the CC (i.e. 80t x 0.5 = 40t) and the actual certified

quantity produced.

Under the current system, if an importing authority (either the EU BIP authority or the importing

authorities in a third country where processing takes place) suspects improprieties associated with

the CC or PPS they need to contact the competent authority issuing the CC or PPS with a query28.

28 EU-sponsored studies in Argentina, Colombia, Costa Rica, Ecuador, El Salvador, Egypt, the Gambia, Ghana,

Guatemala, Guyana, Indonesia, Kenya, Malaysia, the Maldives, Mauritius, Mexico, Myanmar, Namibia,

Nicaragua, Panama, Papua New Guinea, Peru, the Philippines, Senegal, Surinam, Tanzania, Thailand, Uruguay

and Vietnam in 2010-2011 revealed no specific instances of verifications of third country CC authenticity by

these countries following imports of materials for reprocessing (Anon (2010-2011)).

40

Responses, if provided at all, may require several weeks since many countries do not maintain

centralised or electronic records of issued CCs or PPSs. Even if such a database exists, unless each

CC is tracked in terms of the quantity of processed product reported against it, the issuing

authorities will usually only report whether the documents in question were validly issued, not

whether they have been over-used. Therefore, in the example above, unless splits are tracked and

reasonable yields are applied, any verifications for up to 120 t of processed product would be

expected to confirm the fish are legitimate, in some cases providing a “false positive” of certification

for IUU fish.

The most advanced country with respect to control of CCs is Norway which operates an online web

interface showing model documents as well as copies of individual CCs. However, information on

how much product from any individual CC has entered the EU is not provided by this system,

mainly because no such information is collected centrally by the EU and provided back to Norway.

Although Norway’s system only partially addresses CC verification needs, to date no EU country

offers to track their own CCs and provide online access to foreign users requesting clarifications.

Furthermore, this study identified only the US among developed countries, and no developing

countries, with online records of issued CCs. Among processing countries, this study identified only

China as currently tracking quantities produced from individual foreign CCs under which they

import fish (see Section 3.3.2).


As the world’s largest fish processor, the issue of photocopying CCs without recording splits has

potentially major implications for traceability in China. Interview respondents stated that

consignments of Russian raw materials often are accompanied by CCs showing higher weights. It is

not known how many of these instances may simply arise from CCs being issued in Russia without

regard to compliance with the EU’s WICC note guidance (i.e. that the CC weight should match the

consignment weight but Russia issues the CC for the entire catch weight). However, it is likely that

at least some instances involve consignment splits and CC photocopying in Korean or Chinese

bonded cold stores (i.e. after the CC is issued by Russian authorities). It should be noted that such

splitting and copying is not illegal under the EU IUU Regulation and there are no specific

requirements for documenting such activity. Nevertheless, breaking up of consignments of fish and

potentially re-packing them with copies or different sets of Russian CCs without any documentation

of this process appears to represent a serious potential lapse in legal provenance traceability.

To understand the reason for splitting of consignments in bonded cold stores it is necessary to

understand the working practices of the fish processing industry in China. Like many industries, in

fish processing those who have the capital to control the flow of raw materials have greater power

than those who don’t. Therefore, any factory which can afford to will buy up raw material when

prices are favourable and store it either in their own cold store or in a commercial cold store. Many

of these cold stores are bonded facilities such that material can be stored there without technically

being imported to China (i.e. even if the cold store is located in China). When material is moved out

of these bonded cold stores and “imported” to China, it must be processed by the nominated factory

unless cumbersome procedures are undertaken with CIQ and CCA to transfer the material to

41

another factory29. Since many factories wish to have raw material readily available for processing

but do not wish to take the risk of being saddled with material that they cannot sell on to customers,

they will use the bonded cold stores as a hedge. If customer orders are received, they will import

the material and begin processing30. If customer orders are not received, they can sell the material

on to other factories. When processors agree to buy raw materials enroute from Russia, e.g. in

times when supplies are scarce and they need to act quickly, they reluctantly run the risk that the

supply is never delivered. Therefore many processors, especially small and medium sized ones,

prefer to buy material from a bonded cold store as they can confirm its presence and quality. These

details of the supply situation help explain why many consignments received by processing

factories have been split and are accompanied only by photocopied CCs showing weights larger

than the weight of the consignment.

As outlined above, when unscrupulous factories receive a CC showing an amount greater than the

amount of material they received, it is in theory an opportunity for them to supplement the amount

they received up the amount shown on the CC. Realizing this vulnerability in the system, CAPPMA

designed and implemented the Quantity Cancellation Verification System (QCVS; see Section 2.1.4)

to ensure that CCs are not overused. However, the QCVS is not designed to police situations in

which two factories are processing material under the same CC (see Box 3). In such cases, the QCVS

has no way of identifying that the CC has been split and creates a “race to process”. In other words,

the situation allows the first processor with possession of the CC to finish processing, apply for a

PPS, and potentially utilize the full amount shown. When the second processor’s application shows

the CC is overused and is rejected, CAPPMA may investigate and attempt to mediate the situation

between the two factories. According to CAPPMA, this situation arises infrequently now but was

more common in the early days of EU IUU Regulation implementation. Interview respondents who

represented Chinese processing interests suggested they avoid this issue by only sharing CCs with

trusted partners and maintaining written documentation of which party is entitled to use which

portion of the CC.

29 It is reportedly also necessary to pay a fee to CIQ for this procedure of transferring material from one

factory to another. Due less to the fee than to the paperwork involved, interview respondents reported that

factories are reluctant to shift material in this way.

30 A drawback to this system was noted by one factory which prefers to import material directly without

using a cold store because of the additional paperwork burden of moving the material initially into a bonded

cold store and then importing it as a second step. This two-step process was considered more vulnerable to

delays in approval processes by government officials.

42

The same type of consignment splitting and CC photocopying may also occur in EU bonded cold

stores such as those in the Netherlands which receive imports of Russian whitefish from the

northeast Atlantic. While investigation of procedures applicable to Russia fish landed in EU ports

and then shipped to China for processing was not undertaken in detail, it is likely that the failure to

document CC splits and photocopying leads to the same legal provenance traceability issues for

western Russia as for Eastern Russia.

In addition to the above discussion of CC splits, it would be possible for an unscrupulous factory to

supplement certified material with uncertified material even without splitting or sharing a CC. This

is possible because the QCVS only considers the reported quantity of material processed against the

quantity shown on the CC. By manipulating yields it would be possible to add considerably more

material to each consignment (Box 4).

Interview respondents indicated that expected yields for pollock fillets from H&G pollock are on the

order of 62-63%. CCA’s ‘minimum’ yield for pinbone-out pollock is 61% and AIPCE (2012) cites a

72% yield for pollock fillets from H&G pollock. Although it could thus safely be assumed that

expected pollock yields lie in the range of 62-72%, one PPS application observed during this study

reported yields for five lots of H&G Pollock each at 78% ±<0.0001. Two other PPSs observed from

another company showed a yield 77% for pollock fillets (pinbone-out) and 95% for pollock fillet

blocks (boneless). Furthermore, a quick scan of a sample of PPS applications in the QCVS viewed

during this study showed many entries with yields above 80%31.

31 Recall that the QCVS records both the weight of raw material processed and the weight of the processed

products, but it only evaluates the former.

BOX 3. Assume that Factory A buys a 300 t consignment of raw material from

Russia with a CC that also reads 300 t. But Factory A overestimated its raw

material supply needs and doesn’t need all 300 t so it sells 200 t to Factory B.

For simplicity, assume that both factories operate with a 50% yield. Factory A

processes its remaining 100 t into 50 t of product, but then deviously processes

another 200 t of product from other material without a CC. Factory A then

applies for a PPS for a consignment of 150 t supposedly processed from 300 t of

material shown on the original CC. The application is approved. Meanwhile,

Factory B processes its 200 t from Factory A and produces 100 t of product. But

when it applies to export the material under the copy of the 300 t CC it received

from Factory A, the QCVS will reject its application on the grounds that the 300 t

CC has been overused.

43

These examples demonstrate that even though CAPPMA has taken the proactive stance of using a

QCVS database to match incoming CCs with their output, the database cannot guarantee that CC

quantities are not overused. This is due to the lack of EU IUU Regulation requirements for

documenting CC splitting and copying, and to the fact that the QCVS does not take into account

whether the declared yield is reasonable. As described in Section 2.1.4, China has a strict system

maintained by the China Customs Administration (CCA) for auditing product yields and ensuring

that raw materials are not siphoned off for the domestic market without paying import tariffs.

There is, however, no communication between CAPPMA and CCA concerning administration of the

EU IUU Regulation.

3.3.3. Summary

Processing and re-export in third countries has long been suspected of providing a simple and

effective means of laundering IUU fish into seemingly legal production streams. By allowing CCs to

be photocopied without recording the consignment (or catch) split attached to each photocopy, the

EU IUU Regulation does little to prevent augmentation of certified quantities of legally caught fish

with uncertified fish. As this issue may be particularly problematic for the large quantities of

Russian fish passing through China, further investigation was undertaken in China to explore

whether systems implemented by CAPPMA can close this traceability gap in the EU IUU Regulation.

CAPPMA has proactively implemented a quantity checking database which can detect blatant

overuse of CCs but cannot preclude inflation of certified quantities through CC photocopying. A

further avenue for supplementing certified fish with uncertified fish was discovered in the potential

for over-reporting yields which are not checked by the system. Therefore, although China has

partially closed the gap created by the lack of adequate quantity tracking requirements under the

EU IUU Regulation, the situation still represents a serious traceability shortcoming.

BOX 4. Assume that Factory C buys 100 t of headed and gutted (H&G) pollock

from Russia with a CC that also reads 100 t. It would be expected that some of

this material would be lost during processing, say with expected yields of 70%

only 70 t of pollock fillets would be produced. However, since CAPPMA’s QCVS

only compares the amount on the CC against the amount of raw material the

processor processed, yields are not taken into account. If an unscrupulous

processor reported processing all 100 t, but actually produced ~70 t and then

added 15 t of uncertified material, this would represent an unrealistically high

yield (85%), but the PPs would be approved as there is no check on the weight

or yield of produced goods.

44

3.4. Insufficient Maintenance of Batch Integrity

The third major traceability gap inherent in the EU IUU Regulation, and thus in the systems adopted

by third countries to implement it, is insufficient maintenance of batch integrity. The text of the

regulation requires general assurances that the fish certified by the flag State is the same fish

imported by the EU after processing (e.g. some wording in the attestations in the pro forma

certificates), but nowhere does it specifically refer to traceability. This omission is both critical and

surprising given that batch integrity is essential for legal provenance traceability and is rigorously

addressed by sanitary regulations which pertain to the very same raw fish materials covered by the

CC scheme.

Maintaining batch integrity requires more than simply assuring that the quantity of input reconciles

with the quantity of output. In other words, using the example from the preceding section,

monitoring split consignments might reveal that no more than 40 t of product could be produced

under the CC in Figure 3, but a batch integrity system would be needed to ensure that the 40 t of

product actually derives from the material imported under that CC. The following discussion

describes different approaches by Thailand and China to the issue of batch integrity when

implementing the EU IUU Regulation.


Studies of the implementation of the EU IUU Regulation in Thailand provide a useful example of

how a major processing country has tried, and failed so far, to establish traceability between

certified imported and exported fish (Hosch 2011b). When fish is imported to Thailand for

processing, an Import Movement Document (IMD) is established by the Fish Inspection Service and

the IMD’s unique number is assigned to the batch. Upon implementation of the EU IUU Regulation

in January 2010, the Thai competent authority for the EU IUU Regulation (CA-IUU) initiated a

procedure whereby it verified the match in quantities between the IMD and the CC, stamped the

IMD and filled in (by hand) the CC number. However, by August 2010 imported product flows had

slowed to a trickle due to the CA-IUU paperwork processing backlog. Buckling under pressure, the

CA-IUU discontinued the procedure linking the IMDs and CCs.

Under the current procedures in Thailand the CA-IUU does not see the CC until the consignment is

ready for export to the EU. The CA-IUU must at this point take the processor’s word that the proper

CC is attached as there is no means of cross-checking the CC and Processing Statement submitted by

the processor against the import documentation (i.e. the IMD). A Raw Material Balance Stock

(RMBS) document, which is designed to account for the usage of catch under a specific CC, must be

submitted by the processor, but in practice these documents are rarely checked due to workload

issues. Before export the CA-IUU will also check that the vessels shown on the CCs are not on IUU

Vessel blacklists. The CA-IUU was audited by DG MARE in April 2011 with respect to its

implementation of the EU IUU Regulation and no significant non-compliances were observed.

The procedures described above may comply with the requirements of the EU IUU Regulation, but

they represent several serious traceability shortcomings. With respect to batch integrity, there is

45

little meaningful auditing that can be performed by an authority which is only able to check paper

records provided to it by processors. Without at least a periodic on-site presence at the processing

plant, and without the ability to check the date, quantity and type of imported raw material (from

the IMD) against the CC, the Processing Statement and the RMBS, it is highly unlikely that any

substitution of material would ever be detected. These traceability gaps are compounded by the

lack of accountability between export from the country of production to import (as discussed in

Section 3.2) and an inability to monitor the mass balances of the certified materials against their

individual CCs (as discussed in Section 3.3).

While this example is drawn from Thailand, it appears to be the norm rather than the exception

worldwide. Field missions to thirty developing countries in 2010 and 2011 (excluding China)

verified that most monitoring and inspection routines, where they exist at all, are confined to

checking of figures supplied by processors to authorities and ensuring they tally from page to page.

No country aimed to detect IUU fish products entering production streams through the monitoring

of processing yields. Even within the EU, BIPs can only check whether quantities match between

customs, health and legal provenance certificates, as there are no robust control tools for detecting

IUU fish laundered into inbound trade streams.

It is recognized that batch integrity traceability systems, including documentation, validation and

auditing, entail a cost. Yet it is also important to consider that most major food production

industries worldwide apply internationally-agreed food production safety practices such as the

Hazard Analysis and Critical Control Points (HACCP) system, specified by the United Nations Codex

Alimentarius Commission, which require exactly the same type of batch integrity tracking as is

needed for legal provenance traceability. While these sanitary traceability systems are mandated

for all of the countries which export fish to the EU market, there are no known systems to track the

legal provenance of fish using CCs that are linked to these sanitary systems.


Batch integrity tracking has important implications for Russian fish whenever these fish are

processed before being imported to the EU. As discussed in Section 1.4, a substantial portion of

whitefish from western Russia and the vast majority of salmon and whitefish from eastern Russia

pass through China for processing before being shipped to EU markets. A previous study has

detailed China’s food safety and hygiene traceability system administered by CIQ and concluded

that it represents international best practice. However, China’s system for implementing the EU

IUU Regulation as administered by CAPPMA does not take advantage of the batch integrity tracking

features of the CIQ system and indeed is not required to do so by the EU IUU Regulation. Interview

respondents familiar with the work of CAPPMA in China described a situation similar to that

described for Thailand’s CA-IUU above: neither authority sees the CC until the export application

stage, and neither plays a hands-on role in monitoring or auditing traceability procedures within

processing plants. The administrative reasons underlying this situation in China are described in

Section 2.1.4. The remainder of this section discusses how the lack of batch integrity tracking for

the EU IUU Regulation’s CCs makes the scheme vulnerable to co-mingling of certified and

uncertified material.

46

CIQ, as China’s competent authority for issuing import clearances and export health certificates for

processed food, clearly understands the importance of batch integrity. CIQ’s systems are designed

to uniquely identify imported material batches, prevent mixing of batches, and match import and

export inspection paperwork. But since CIQ has no authority for checking CCs for imported fish

materials under the EU IUU Regulation, CIQ’s system does not make explicit use of the CCs.

Surprisingly, given this point, interview respondents gave a variety of answers when asked whether

CIQ requires that a CC be shown before materials are authorized for import. In Qingdao, responses

included “usually”, “only for pollock and only about 20% of the time”, “only for salmon” and “never”.

In Dalian, which operates under a separate CIQ office from Qingdao answers ranged from “seldom”

to “always”. In addition, some interview respondents drew a distinction between CIQ requiring

submission of a CC and CIQ actually checking a CC: while the submission requirement was in some

cases confirmed, the degree to which CIQ examines the document was not. One respondent

indicated that if the CC has not yet been received from Russia at the time of import, the processor

can obtain a special exemption from CIQ and be allowed to import, but when the CC arrives from

Russia the processor must submit it to CIQ immediately. Some interview respondents suggested

that CIQ also requests to see the CCs at export.

Several interview respondents suggested that when the EU IUU Regulation was first implemented,

CIQ showed a strong interest in checking CCs, including even stamping some PPSs32, but that CIQ’s

influence is now either more restricted and/or more nebulous. Some stated that CIQ has developed

its own system similar to CAPPMA’s QCVS (see Section 3.3) for controlling the over-use of CCs.

Others described how CIQ now asks for its own form of certification from the exporting country

that the fish was caught legally (i.e. a parallel form of CC). These examples document that CIQ is

able, and even perhaps willing, to link legal provenance information into their own batch integrity

tracking system. Furthermore, it is important to consider that CIQ inspects all fish raw materials

and processed products, both at import and export. In contrast, CAPPMA is unaware of materials

and products until the processor applies for a PPS just prior to export of finished products, and

CAPPMA only receives applications for materials which are destined for the EU. At least one source

alleged that CCs are being over-used by attaching the same CC to both EU-destined and US-destined

consignments. Several interview respondents confirmed that some US customers are requesting

CCs as additional confirmation of legal sourcing. In this situation, CAPPMA might be aware of the

use of the CC in association with a consignment(s) destined for the EU (and potentially prevent its

over-use), but it would not be aware of a consignment re-using that CC for the US market.

It important to consider that while CIQ and CAPPMA do not interact, CIQ’s batch integrity tracking

system should prevent the mixing of certified legal material from one lot (e.g. imported raw

material consignment with a CC) with uncertified material from another lot (e.g. imported raw

material consignment without a CC). This will hold true as long as there is adherence to the CIQ

rules by the processor, or that any violations are detected and curtailed by CIQ. However, CIQ’s

32 CIQ-stamped PPS were reportedly rejected by EU BIP authorities because CIQ is not China’s nominated

competent authority for implementing the EU IUU Regulation.

47

system may maintain batch integrity for uncertified materials up to the point of processing at which

point an unscrupulous processor could attach a CC to that uncertified lot/consignment and apply to

CAPPMA for a PPS. As long as the quantity shown on the PPS is reasonable, CAPPMA would issue

the PPS without any means of verifying that the CC is attached to the right material. Furthermore,

when there is more than one CC attached to an imported consignment or batch, interview

respondents said that they treated the material as if it derived equally from each CC as there was no

way to attach part of the batch to one CC and the remainder to another.

In addition to the CIQ sanitary control system which can ensure batch integrity but is clearly not

linked to the issuance of the PPS by CAPPMA, there are other types of traceability systems

operating in China. One of these is the MSC eco-label’s chain of custody. MSC requires that all

seafood sold or labelled as ‘MSC certified’ must be fully traceable from the final product back to a

certified source fishery. Batches of certified product may be combined but must be traceable back

to the input raw material batches, and no uncertified (non-MSC) batches can be mixed with

certified product.33 This system in theory achieves batch integrity, without any linkage to the

sanitary system administered by CIQ, through one-up, one-down traceability requirements. For

both MSC and CIQ, the evidence for whether batch integrity is actually achieved derives from audits,

although CIQ only tracks material while it is in China whereas MSC audits the full supply chain.

Another difference is that CIQ in theory tracks all material, whereas MSC tracks only those

quantities of fish from certified fisheries that are to be sold with the MSC label—a much smaller

volume. In both cases, since the results of the audits are not in the public domain, and a failure

might never be disclosed, it is difficult to assess how effectively batch integrity is maintained in

reality under either system. While it is likely that trade flows of MSC-certified products adhere to a

higher standard of traceability than non-MSC certified products, issues involving suspension of MSC

chain of custody certificates for Chinese processing plants have occurred in recent years (Clarke

2009b) and are reportedly continuing (Seaman 2012b). Many interview respondents considered

that when prioritizing traceability issues in China, substitution or co-mingling of MSC with non-MSC

material is a greater concern than substitution or co-mingling of legal with illegal material.

Regardless of how well the MSC and CIQ batch integrity systems work in practice, a key point is that

such systems exist and can be audited, whereas there are no such requirements under the EU IUU

Regulation nor under the system implemented by CAPPMA.

Another possible pathway for maintaining batch integrity is through traceability requirements

imposed on Chinese processors by foreign customers. As discussed in Section 2.2 companies have

proved reluctant to reveal the details of their traceability programmes beyond the fact that they

maintain compliance with all applicable laws and regulations. Nevertheless, several examples of

private traceability schemes were encountered during the field visits and interviews in China. First,

some companies follow a custom processing model under which they own the fish from the fishing

33 In certain cases, up to 5% of the seafood ingredients in an MSC labelled product can come from non-

certified sources, typically used for flavourings or additives. These cases must be approved by the MSC and

are audited by certifiers.

48

ground until it reaches the destination market. Companies which follow this model have a much

greater incentive to track their material throughout the chain of custody than do those companies

which simply purchase processed products from plants (which in turn purchase raw materials from,

e.g., brokers operating out of bonded cold stores). Clarke (2009b) calculated that only 20-30% by

weight and 30-40% by number of shipments of whitefish and salmon were imported by China

under the custom processing model. Interviews for this study indicated that custom processing

was the exception and that only 10% of the processing in China is handled under this model34.

Processors which do not follow the custom processing model (and even some of those which do)

may be subject to unannounced audits by their corporate customers. One example given in the

interviews was of a three-hour timeframe to transfer all relevant documents for an audit.

(Although they appear rigorous, the standards applied in these audits are not known, and they may

or may not be conducted at the level of detail required for full legal provenance traceability).

Another interview respondent revealed that one of their EU-based clients requires a special

“Traceability Report” to be provided in addition to the other required paperwork used by

government regulators. This Traceability Report format, like the CC, lists the fishing vessel,

transport vessel, flag State, and catch period and area (Appendix 3). It also lists the health

certificate number, i.e. a link to the CIQ sanitary traceability system, but does not list the CC number.

This situation suggests that for the purposes of the customer’s traceability requirements the flag

State certification of the legality of the catch is not important, otherwise the CC number would be

shown. On the other hand, the inclusion in the Traceability Report of a number of the same details

as the CC could indicate that the customer itself plans to verify the legality of the catches (to the

extent possible, e.g. checking published vessel blacklists).

These and other corporate requirements are another way that batch integrity tracking can be

maintained, but they like the CIQ and MSC systems do not appear to link to the CCs and PPSs under

the EU IUU Regulation. It is also unclear to what extent corporate schemes focus on legal

provenance, and if they do not rely on flag State certification, how they assess legality.

3.4.3. Summary

The lack of batch integrity requirements under the EU IUU Regulation means that the traceability of

material imported under a given CC is not guaranteed. This, by definition, means that the potential

for substitution or co-mingling of certified/legal with uncertified/illegal material is high. In the

trade flow of interest, since CIQ’s sanitary traceability system prohibits mixing there is some

control on substitution or co-mingling within batches. However, under the EU IUU Regulation as

34 One interview respondent provided the following typology of processing models in China arranged from

most to least common: 1) processing trading - buy raw material, own it throughout its “process cycle”, and

sell it; 2) pure trading - companies or individuals without plants who strictly buy and sell fish; 3) custom

processing - buyer (not the factory) owns the fish and pays the factory only the processing fee; 4) contract

processing - customer contracts the entire workshop so that it is dedicated to just one customer (the factory

will typically charge less for this type of arrangement but only large customers can afford this arrangement).

49

well as in China’s implementation of it, there is no means of preventing a situation in which batch

integrity is maintained for uncertified material, and then a CC obtained for other material is

attached to it. In other words, there is currently no process for confirming that the material

attached to the CC at export is the same as the material attached to the CC at import. Although they

are also vulnerable to substitution, CIQ, MSC and some corporate traceability systems have explicit

requirements for batch integrity, and provide for auditing against these requirements. By

establishing an independent CC system without batch integrity requirements or auditing, the EU

IUU Regulation’s standards are both weak and duplicative with regard to existing traceability

practices.

50

4. Recommendations for Improving Legal Provenance Traceability for

Russian Whitefish and Salmon

Concerns about the current status of global fish stocks and about their sustainable utilization are

reflected in continuing efforts towards combatting IUU fishing. Traceability is touted as one of the

key tools for identifying the products of IUU fishing and excluding them from international trade. In

creating its catch certification scheme for almost all wild-caught fish imports, the EU has

established the world’s most widely implemented instrument for legal provenance traceability.

Subsequently there have been calls for an “adequately harmonized” global system to insure that

wild-caught seafood is “legal, healthy, fully traceable and accurately labelled” (WEF 2013).

While these general goals appear to be widely supported, interviews conducted with EU-based

seafood industry representatives in the first phase of this study revealed a distinct lack of

enthusiasm for development of a new and more comprehensive set of traceability standards. First,

the interview respondents were uniformly surprised by the suggestion that there was a need for

traceability standards beyond those required under the EU IUU Regulation and those that they

implement internally, e.g. purchasing from trusted suppliers. Second, it was clear that interview

respondents already feel they are bearing the cost burden of increasing market/consumer demands

for traceability (including certification). They appeared to be extremely unlikely to welcome any

supplemental traceability standards which would entail additional costs, including any disturbance

to existing procedures to which they have already adapted. Third, interview respondents believe

that the number of traceability, certification and labelling systems is excessive (MRAG 2010).

Several respondents stated that existing standards should first be harmonized before any new ones

are created, and that duplication of procedures should be avoided in all instances. The importance

of a risk-based approach, i.e. specific measures targeting particular problematic issues rather than

broad-spectrum measures, was also emphasized.

All of these points suggest that efforts toward ‘harmonization’ will be supported but systems which

are considered duplicative, complex and costly will not. Given that the existing approaches to legal

provenance traceability by the EU, US and Canada vary widely (Section 2.1), reaching consensus on

which systems to retain or modify, and which systems can be discarded or replaced for the sake of

avoiding duplication, will be a major undertaking. In addition, it is not necessarily the case that the

traceability tools which are most practical, affordable and broadly applicable will be the most

effective in deterring IUU fishing. For example, while the EU IUU Regulation’s catch certificate

scheme is the most comprehensive system, and thus it may be the most practical basis for a

harmonized scheme, several of its critical traceability shortcomings have been highlighted in this

report and its actual effectiveness remains to be documented. It is thus likely that even the best

existing traceability schemes will require changes and improvements if they are to be both

integrated and optimized.

In recommending a way forward for strengthening, harmonizing and expanding legal provenance

traceability schemes, two strategies are considered. The first strategy presumes that the EU IUU

Regulation will, in the near term, continue to be the dominant legal provenance traceability

51

instrument for fish. Therefore patching key weaknesses in this scheme represents the best

immediate step toward reducing IUU fishing. The second strategy is premised on the assumption

that any proposal for a harmonized scheme, however ideal, will be opposed on the basis that it

requires too many changes to existing schemes and/or is impractical. Therefore, to circumvent this

potential stalemate, an alternative strategy of benchmarking existing schemes against five

functional criteria is proposed as a means of identifying where improvements are most needed.

These two strategies are described in the following sections.

4.1. Recommendations for strengthening the EU IUU Regulation

The EU’s current efforts toward advancing seafood traceability appear to be based around lobbying

other authorities to adopt schemes similar to the EU IUU Regulation (AIPCE 2011, Mitolidis 2013,

Holland 2013). However, as the preceding analysis has shown, there would be little gained by

propagating the EU IUU Regulation in its current form. On the other hand, closing major loopholes

in this existing, dominant, mandatory traceability instrument is likely to provide the greatest

reduction of markets for IUU fish, while still appealing to stakeholders in terms of simplicity and

cost.

4.1.1. The Rationale for Strengthening

A number of critical legal provenance traceability shortcomings have been identified by the analysis

in Section 3: lack of a linkage with effective fisheries control; lack of adequate quantity tracking

requirements; and lack of batch integrity requirements. It is unclear whether the EC recognizes any

of these issues or has any plans to tighten the regulation through amendments or issuing additional

guidance.

Compounding the identified critical design flaws, there are no available performance data to

confirm the success of the scheme. Although this study has had access to some information on

national implementation of the regulation by some third countries, the EC does not routinely

disclose information on its third country audits, and conditions in other implementing countries

may further elevate the threats to traceability highlighted here. In addition, the EC ’s lack of

disclosure of EU BIP inspection and rejection data does not help to support its claims regarding the

effectiveness of the scheme (World Fishing & Aquaculture 2011, Damanaki 2013). Two studies of

EU fish imports have concluded that there has been no change in trade flows since implementation

of the EU IUU Regulation (Lutchman et al. 2011, AIPCE 2011). While this does not necessarily

confirm that the regulation is ineffective (e.g. rejected IUU fish may be promptly replaced by legal

fish), it also does not provide any evidence that the regulation is preventing the infiltration of IUU

fish. In fact, the combination of design flaws and lack of performance data raises substantial doubts

about whether the regulation currently imposes any meaningful level of control.

Nevertheless, the EU is expected to promote expansion of the scheme because, as AIPCE has

recognized:

‘…this is a global issue and needs the adoption of similar

standards of focus and control globally to have real effect.

52

Whilst the EU is the biggest market for fish products it is not

the only market and AIPCE-CEP urges all parties to ensure

that these regulations do not simply displace any trade in IUU

products.’ (AIPCE 2011)

The EU first targeted its expansion efforts toward the major seafood markets of the US and Japan

(AIPCE 2011, Speltz 2011) but results thus far have been limited to general agreements with both

countries to “join forces against IUU fishing”. These agreements call for systematic IUU information

exchange, and promotion of monitoring, control and surveillance (MCS) and Port State measures,

but do not specifically commit to establishing trade control systems similar to the EU’s (EC 2011c,

EC 2012d).

Beyond the US and Japan, the influence of the EU’s IUU Regulation on the global traceability

landscape appears to be marginal. In particular, the regulation has not caused major fish

processing countries such as Thailand and China to strengthen their own existing fish traceability

systems. Rather it has created an additional, and arguably ineffective, layer of paperwork for EU-

destined products only. Field missions to dozens of developing countries in 2010-2011 found the

same situation: these countries provide the EU with the certificates they demand but do not

actually incorporate any new legal provenance traceability requirements into default national

systems for exports (Anon. 2010-2011).

For all of these reasons, it is not appropriate to rely on the EU IUU Regulation as currently written

and implemented to deter IUU fishing or to serve as the basis for a harmonized global system for

legal provenance traceability. Specific recommendations for improving the regulation are outlined

below.

4.1.2. Specific Recommendations for Amendments to the EU IUU Regulation

A number of modifications to the EU IUU Regulation are recommended to close critical gaps in

traceability. There are also some procedures and systems that the EU can implement without

amending the regulation which will significantly improve its effectiveness. The first challenge in

both cases will be to convince the EC of the need for these changes. If the EC does not accept the

need to strengthen its control scheme it appears that neither industry nor third countries are likely

to volunteer in large numbers to exceed the existing requirements. It is also crucial that a flawed

national scheme not be used as the basis for a harmonized global scheme. Therefore, the

importance of persuading the EC to strengthen its requirements and systems cannot be

overestimated.

Recommendations for closing identified traceability gaps in the EU IUU Regulation and improving

its effectiveness are given in Table 2. Implementing any combination of the following

recommendations would strengthen and improve the scheme to a substantial degree.

53

Table 2. Identification of traceability gaps in the EU IUU Regulation, the consequences of these gaps, and

recommendations (numbered) to remedy them.

Traceability Gap Consequences of Inaction Recommendation to the EC 1 CCs are issued for exported

consignments rather than catches (Section 3.2)

CCs issued for consignments are export certifications which are de-linked from landings and less effective in detecting IUU fishing Weights shown on CCs are difficult to match with catches and thus hamper traceability

Require use of a form already issued by the EC (Annex IV, EC 2011a) to link exported quantities to catches. (While the form is designed for processed exports (i.e. headed and gutted, filets, etc under Article 14), it could equally be used for unprocessed exports (whole fish) under Article 12).

2 CCs can be issued for consignments which have already been exported (Section 3.2)

CCs can be issued for consignments which have already left the sphere of control of the flag State competent authority

Define expectations for the timing of CC issuance, and the degree of vigilance the competent authority can exercise over the consignment at that point, and audit against these expectations when evaluating third countries’ implementation and effective control.

3 Undocumented re-packing in transit ports prior to issuance of the CC compromises the chain of custody and hampers traceability

Require documentation to maintain traceability for consignments which transit a third country before reaching the processing country (see Section 2.1.5 re: Korea).

4 Photocopied CCs can be over-used to certify more material than shown on the original (Section 3.3)

Creates a prime opportunity for laundering IUU fish through processing (third) countries which cannot be detected by the existing system

Require that catch/consignment splits of individual CCs be recorded on the original/master CC sequentially showing the split amount, the receiver, the date and the remaining amount (e.g. Split 1: 2 t, Company X, 10 December 2012, 8 t remaining). Allow only originals/masters to be copied.

5 Create an electronic record of all CCs received by EU BIPs, and request that all flag States upload their issued CCs to the same system, to allow audits examining whether CCs are over-used.

6 Define expectations for third countries issuing PPSs to control for the overuse of CCs and audit against these expectations when evaluating these third countries’ implementation and effective control.

7 There is no requirement to validate processing yields when issuing re-export certificates for processed fish (Section 3.3)

Material lost due to processing can be replaced with uncertified material and re-exported under the original CC

Define expectations for yield accounting and audit against these expectations when evaluating third countries’ implementation and effective control.

54

Traceability Gap Consequences of Inaction Recommendation to the EC 8 There is no requirement to

maintain batch integrity for imported certified material (Section 3.4)

Full chain traceability is broken and the potential for substitution of certified with uncertified material is high

Require third countries receiving fish for processing to link CCs to their existing batch tracking scheme required under international sanitary best handling practices and to be able to demonstrate this linkage.

9 Include auditing of the linkage between the CC and batch tracking schemes, and the performance of the batch tracking scheme, when evaluating third countries’ implementation and effective control.

Some of the recommendations contained in Table 2 fall short of the ideal for traceability assurance

but would still represent major improvements in the scheme and would be easily implemented.

For example, with regard to the fourth and fifth recommendations, the ideal system would be for

the EC to require that all countries upload and manage their CCs through an electronic system that

it would establish centrally. Within this system split catches would be subtracted from each

individual CC and automated checks would be performed to ensure that the amount of material

received by the EU does not exceed the expected amount of product from each CC. A less effective,

but more practical, approach would be to require that the third country establish some kind of

system for tracking the utilisation of CCs during processing (e.g. like CAPPMA’s QCVS). With regard

to the eighth and ninth recommendations pertaining to batch integrity tracking, ideally the EC

would require that all third countries processing for the EU market be able to demonstrate full

mass balance accounting for all fish material imported and exported under EU IUU Regulation CCs.

Instead, the recommendation is to require that third countries link the CCs to their existing batch

integrity tracking systems and demonstrate that the linkage is effective.

By advocating practical but effective changes, the recommendations aim to strike a balance

between maximum traceability improvements, and the implications for costs, compliance rates, and

real or perceived barriers to free trade. In particular, some of the recommendations (#1 and #8)

call for using forms and systems which are already in existence; other recommendations (#2, #6,

#7 and #9) can be implemented through expanding the terms of reference for the EU’s existing

inspection programmes. The remaining recommendations would involve either modifying existing

forms (#3 and #4) or creating a new system within the EU (#5). Some of the recommendations

may entail higher costs in third countries implementing the scheme, e.g. in the case study of

Thailand (Section 3.4.1) there were reportedly workload issues associated with the linking of CCs to

the batch integrity tracking system (Recommendation #8). However, as shown in the case of China

(Section 3.4.2), CIQ appears already able and willing to make this important linkage. Wherever

possible the recommendations propose that the EU define expectations, rather than prescriptive

procedures, and audit third countries against these expectations. This approach is consistent with

the approach of the EU IUU Regulation to national sovereignty and allows initial flexibility, but

55

provides a mechanism to encourage and propagate incremental improvements (e.g. best practice

among implementing countries could be determined and gradually developed into a requirement).

Finally, this study concurs with the conclusions of Lutchman et al. (2011) that the EU IUU

Regulation and control scheme currently lacks the necessary transparency, particularly in light of

the identified traceability shortcomings, to assure stakeholders that it is working effectively.

Therefore, it is recommended that the EC develop an annual reporting format to indicate for the

public record how the scheme is performing, e.g. publishing the number of refused import

shipments and the reasons for refusal, the number and results of verifications conducted, and the

outcomes of third country audits.

4.2. Functional Benchmarking of Existing Legal Provenance Traceability Schemes

While an effective global scheme is a laudable goal, given the practical and political considerations

involved it will likely remain elusive for some time to come. As the EU is likely to continue its

efforts to expand the coverage of its EU IUU Regulation to other major seafood markets, the

preceding strategy aims at strengthening that scheme so that if it is expanded it is more likely to be

effective. However, with or without strengthening, non-EU authorities are likely to raise concerns

regarding compatibility, cost and practicality and to express a preference for maintaining existing

national schemes.

In anticipation of this situation, five functional criteria are proposed which can be used to assess

how well existing national schemes achieve legal provenance traceability for fish (Table 3).

Benchmarking national, or even industry-based, legal provenance traceability schemes against

these criteria can identify priority areas for improvement as well as suggest where harmonization

efforts would be best targeted. The five criteria are: effective fishery management control,

issuance of certificates for legal fish, maintaining the integrity of the certified quantity of fish,

maintaining the integrity of the certified fish through processing, and transparency of performance.

These criteria are high-level components of legal provenance traceability systems designed to be

applicable to a broad range of national traceability regulations and programmes. Examples of

specific considerations are given in the final column but these would need to be adapted to suit

particular systems or supply chains. Given the range of systems that might need to be assessed, it is

suggested to apply the criteria as a screening tool using qualitative evaluations rather than

construct a quantitative ranking system.

56

Table 3. Functional criteria for benchmarking national legal provenance traceability schemes for fish

Criteria Principle Examples of Specific Considerations Fishery Management

Fishery management systems for the source fishery are adequate to ensure that any incidence of IUU fishing will be detected and curtailed

What on-the-water MCS systems are in force by the flag State/coastal State?

What catch reporting requirements are in place?

What other tools for fishery oversight are applicable?

What is the overall reliability of these systems for detecting IUU fishing?

When IUU fishing is detected are appropriate actions taken in response?

Catch Certification

Fish which are caught in full compliance with the fishery management system are certified by a competent authority

Is a catch certificate issued or can one be requested?

Does the management authority distinguish between fisheries/species or issue a blanket certificate for all?

At what stage is the certificate issued and can proper control be exercised at that stage?

Is there a database of all issued certificates than can be used for verification?

Catch Quantity Integrity

The quantity of certified fish is tracked and controlled to ensure the quantities are not inflated with uncertified fish

Is the catch certificate secure with regard to tampering or fraud?

Are there provisions for tracking splits of material?

Is the chain of custody adequately documented throughout the supply chain?

Is mass balance tracking attempted and/or achieved?

Catch Processing Integrity

The processing of certified fish is tracked and controlled to ensure there is no co-mingling with, or substitution of, uncertified fish

Is batch integrity assurance required? If so, what audit systems are in place to assess

effective implementation of batch tracking? How are processed products linked to the

catch certificate? Are yields assessed and validated?

Transparency Performance of the legal provenance traceability scheme is publicly reported in a way that allows assessment of its effectiveness

Are performance data publicly reported at reasonable intervals?

Do these data include the number of rejected shipments, verifications and inspections?

Can these data be used to evaluate the effectiveness of the scheme?

Are there formal review exercises and opportunities for scheme improvements?

4.3. The Need for Electronic Traceability Systems

Implementation of electronic systems for recording, storing and managing traceability data is often

touted as an essential element of an effective traceability scheme. Electronic systems have major

advantages including more efficient:

57

Data capture (e.g. scanning rather than filling in forms);

Data checking (e.g. automatic algorithms to identify errors);

Data maintenance (e.g. easier than paper to store and backup);

Data protection (e.g. data can be submitted with confidential fields hidden);

Data access (e.g. can be accessed remotely and at any time); and

Data analysis (e.g. electronic searches and reports completed in seconds).

In the long-term, such electronic traceability schemes may provide a substantial cost savings to

those who use them in terms of higher productivity, as well as provide better information for

regulatory authorities and resource managers.

On the other hand, the EU IUU Regulation appears to have consciously avoided prescribing

electronic systems perhaps due to concerns about creating barriers to compliance for developing

countries. Interview respondents cited various reasons why electronic systems, other than the

routine scanning of paper-based documents, are not widely used at Chinese processing plants.

These reasons ranged from a lack of ability by factory workers, to harsh temperatures in cold stores,

to a culture of stamping forms in China. Despite an apparently widespread reluctance to commit to

electronic traceability systems in China, processors interviewed for this study were using systems

such as barcode scanning of individual frozen fish blocks and video monitoring of production lines

and warehouses. In addition, it was reported that CIQ requires closed circuit television monitoring

of every factory. It is therefore clear that technology and cost barriers have been overcome when

circumstances warrant. In the case of electronic traceability systems resistance may arise for other

reasons including a desire to limit the amount of information that can be reviewed by an auditor

during a fixed period of time.

These considerations raise issues which are far broader than legal provenance traceability per se

and are likely to take considerable time to resolve. In the interim, regulators and stakeholders will

continue to rely on paper systems for the vast majority of traceability functions. Recommendations

in this report are thus designed to create systems which are as robust as possible in paper form and

which can be further improved with the adoption of electronic technology if and when that is

practical.

4.4. Summary of Recommendations

Calls for harmonization of seafood traceability systems enjoy widespread support in principle, but

are likely to falter when specific proposals are tabled. For example, the EU’s IUU Regulation is the

most widely-implemented scheme for legal provenance traceability but its comprehensive

approach contrasts sharply with the species-specific approach employed by the US. It appears

unlikely that these two approaches can be “harmonized” without major changes to one or both

schemes.

Since the EU is actively lobbying both for harmonization and to expand its scheme to other

countries, it is important to recognize the serious gaps in traceability posed by the EU IUU

Regulation in its current form. If these gaps can be closed, the scheme would be considerably

58

strengthened and could serve as the basis for an effective global fish traceability scheme. However,

if major players in the global seafood supply chain refuse to adopt an EU-style import control

scheme, it may be necessary to continue to work with a patchwork of national traceability

regulations and systems. In this case, the functionality of existing schemes should be evaluated to

identify where improvements are most needed. For example, it may be the case that strengthening

different schemes individually can be achieved faster and with more benefit than harmonizing them.

In addition to finding the right balance between individual versus harmonized schemes, there will

be trade-offs between rigour and practicality, and between ease of implementation and

effectiveness. Electronic traceability systems offer many advantages but may be resisted on a

number of fronts. This resistance should not be allowed to delay progress in improving paper-

based systems. Any legal provenance traceability scheme for fish should be evaluated first and

foremost for its effectiveness in deterring IUU fishing. Therefore, of all the recommendations,

disclosure of performance data to allow objective evaluation is arguably the most important first

step.

59

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APPENDIX 1. Official yield rates for flatfish processed in China (source:

http://guangzhou.customs.gov.cn/Portals/31/zhuanti/dhbz/2007-59.pdf )

Processed Products Materials No. Product

name Unit Product

Code Product Description Name Unit Product

Code Quality Description Net

Cost kg/kg

Process Loss Rate (%)

1 Frozen flatfish fillet

kg 304299090 Without head/ skin/ gut/ bone

Frozen flatfish

kg 3033200 1、up to the national standard

（GB/T 18109）2、With head and gut, 150-400g

1 67


kg 304299090 Without head/ gut/ bone, With skin

Frozen flatfish


（GB/T 18109）2、With head and gut, 150-400g

1 60


kg 304299090 Without skin/ bone Frozen flatfish


（GB/T 18109）2、headed and gutted, 150-400g

1 57


kg 304299090 With skin and without bone

Frozen flatfish



1 50

5 Frozen flatfish block

kg 304299090 Without head/ gut/ tail/ scale; With bone and skin, 40/35/30 pieces per 5 kg

Frozen flatfish


（GB/T 18109）2、with head and gut, 150-400g

1 43

6 Frozen flatfish block

kg 304299090 Without tail/ scale; With bone and skin, 40/35/30 pieces per 5 kg

Frozen flatfish



1 22

7 Frozen flatfish

kg 3033200 Without head/ gut/ scale

Frozen flatfish



1 35

8 Frozen flatfish

kg 3033200 Without head/ gut/ scale

Frozen flatfish



1 15

9 Frozen flatfish

kg 3033200 Without scale Frozen flatfish



1 5

http://guangzhou.customs.gov.cn/Portals/31/zhuanti/dhbz/2007-59.pdf

67

APPENDIX 2. Official yield rates for cod and pollock processed in China (source:

http://guangzhou.customs.gov.cn/Portals/31/zhuanti/dhbz/2003-283.PDF

No. Product name

unit product code

Product description

Material name

unit code Material description

Loss standard（No more than）

Yield Rate (calculated)

1 Frozen Pollock fillet

Kg or LB 3042090.9 without skin, without pinbone

Frozen Pollock

Kg or LB 3036000 Length of 20-25 cm; Headed and gutted

1.65 0.61


Kg or LB 3042090.9 without skin, with pinbone

Frozen Pollock

Kg or LB 3036000 Length of 20-25 cm; Headed and gutted

1.6 0.63


Kg or LB 3042090.9 without skin/bone

Frozen Pollock

Kg or LB 3036000 with head and gut

2.6 0.38

4 Frozen Cod fillet


Frozen Cod

Kg or LB 3036000 Headed and gutted

1.55 0.65

5 Frozen Cod fillet

Kg or LB 3042090.9 Deeply skinned without bone

Frozen Cod

Kg or LB 3036000 Headed and gutted

1.6 0.63

6 Frozen Cod fillet


Frozen Cod


2.3 0.43

7 Frozen Cod fillet

Kg or LB 3042090.9 Deeply skinned without bone

Frozen Cod


2.4 0.42

http://guangzhou.customs.gov.cn/Portals/31/zhuanti/dhbz/2003-283.PDF

68

APPENDIX 3. Example of the format of a “Traceability Report” required from Chinese processors

by some EU-based customers.

Traceability Report Product: Net Weight: Shipped by: Container No: Loading Port: Destination Port: Health Certificate No. Catching method (wild or farmed) Name of Factory: Factory’s EU Approval No.: Production Date:

Name of Fishing Vessel (EU No.)

Name of Transport Vessel (Call Sign)

Port of Discharge

Origin of Raw Material

Catching Period

Part of Quota

Catching Area (FAO)

Sub Catching Area