For almost 20 years the World Trade Organisation (WTO) has been negotiating to regulate subsidies granted to the fisheries sector which adversely impact the sustainability of global fish stocks. Discussions are currently underway in Geneva to conclude negotiations by the end of 2020 on subsidies which contribute to overfishing, overcapacity and illegal, unreported and unregulated (IUU) fishing. Negotiators are working to meet the target date set by world leaders in the 2015 United Nations Sustainable Development Goals (SDG). Leading organisations have called on world leaders to end harmful fisheries subsidies. James Bacchus and Inu Manak have written that the very future of the global trading system is at stake. This post argues that the ultimate success of WTO fisheries subsidies disciplines will depend on aligning the outcome of the WTO negotiations with sustainable fisheries management.
What is the Problem?
The latest information from the Food and Agriculture Organisation (FAO) is that the percentage of fish stocks that are within biologically sustainable levels has decreased from 90 percent in 1974 to 65.8 percent in 2017. In other words, about 34 percent of stocks are fished at biologically unsustainable levels. The sustainability of global fish stocks has steadily worsened over the last few decades. This has been paralleled by increasing concern over the potential contribution of fisheries subsidies to the decline in fish stocks. The issues were raised by the FAO as far back as 1992 and 2003, by international and regional intergovernmental organisations, academics, and think tanks. The extent of the problem is significant. According to the most recent analysis Governments around the world spend USD $35.4 billion on fisheries subsidies each year. Of that total, more than USD $22.2 billion is spent on subsidies to enhance the fishing capacity of fleets. The majority of these subsidies are provided by distant water fishing nations which fish in international waters and the waters of distant developing countries.
Not all fisheries subsidies are harmful. Studies have categorised fisheries subsidies into those that are “good”, “bad” or “ambiguous”. The heart of the problem is fishery subsidies which enable a fishing industry to continue to fish even though its fishing operations would be uneconomic without a subsidy. They encourage overfishing and lead to a decline in global fish stocks. Fisheries subsidies which benefit industrialised fishing industries drive out other fishers from the fishery. In particular small scale and artisanal fishers are unable to compete. Subsidies enable IUU fishing and adversely impact disproportionately on developing countries, their food security and the livelihoods of their coastal communities.
The WTO: Following the Lead or Leading the Charge?
The FAO is the responsible global fisheries management organisation and has worked for many years on measures to prevent overfishing, overcapacity, and IUU fishing. In 1998 the FAO International Plan of Action for the management of overcapacity recommended the reduction and elimination of harmful subsidies that contribute to overcapacity and overfishing. However, it was the existence of strong enforcement procedures under the WTO which inspired interest in finding a way for the WTO to become involved in sustainability issues, including through controlling subsidies to fishing industries.
The WTO Doha Round mandate of November 2001 included improved WTO disciplines on fisheries subsidies within its ambit. This was then expanded at the Hong Kong Ministerial in 2005. The progress and milestones of the negotiations have been described by the South Centre. But It was not until attention shifted to other international fora that global political support galvanised behind the need to address the link between fisheries subsidies and overcapacity, overfishing, and IUU fishing. First the Rio Conference on Sustainable Development, followed by the UN General Assembly agreed SDG target 14.6, revitalised WTO negotiations on fisheries subsidies. This led to further WTO negotiations, described by the International Institute for Sustainable Development. This has culminated in the introduction in June 2020 of a draft consolidated text of disciplines by the Chair of the fisheries subsidies negotiations, Ambassador Santiago Wills of Colombia. Negotiations on this text are underway in Geneva.
The core issues in the negotiations
There appears to be general agreement that the WTO fisheries subsidies rules will cover fisheries subsidies to IUU fishing, and those subsidies which contribute to overcapacity and overfishing. The rules are expected to include WTO notification and transparency provisions. But beyond this general framework, there is little agreement over the precise scope of the subsidies to be disciplined, what exemptions are to be allowed, and whether subsidies over a certain level would be permitted. Other core issues include the special treatment to be accorded to developing countries to enable them to develop the fisheries resources under their national jurisdiction; whether rules will cover not only subsidies to vessels, but also subsidies to vessel operators who actually operate the vessels receiving subsidies; and how to operationalise the link between fisheries subsidies and fisheries management.
The need to align trade with fisheries management
The WTO fisheries subsidies negotiations are premised on the need to address the adverse impact that certain subsidies have on the sustainability of global fish stocks, while recognising the importance of the fisheries sector to developing countries. However, they deal with only one piece of the puzzle. The prevention of IUU fishing, and efforts to prevent overfishing and overcapacity, are multi-faceted and complex problems that require a collaborative approach between States, industry and organisations to ensure that they are addressed in a holistic manner. Without acknowledging the linkages between fisheries subsidies and the practical realities of fisheries management, there is a danger that the WTO negotiations will either fail in ambition or not be sufficiently consonant with fisheries management for them to be properly implemented.
The link between subsidies and fisheries management is especially strong in determining the existence of overfishing and IUU fishing. In the case of overfishing, coastal States and Regional Fisheries Management Organisations (RFMO) decide on the level of fishing effort which will maintain stocks within sustainable levels. In those international waters where there are no RFMOs, or where there are no or unreliable stock assessments, WTO fisheries subsidies disciplines alone will not prevent overfishing, nor for that matter overcapacity. The WTO is not a fisheries management organisation, nor should it be, but a way must be found to fold in assessments of overfishing into WTO disciplines. With respect to IUU fishing, RFMOs have processes and procedures for determining and listing vessels involved in IUU fishing. The vessels listed on IUU vessel lists are only the tip of the iceberg. WTO disciplines which concentrate only on RFMO vessel lists are unlikely to target the bulk of the IUU fishing problem. It is this which has led several countries to propose a prohibition on subsidies to vessels that are not flying the flag of the subsidizing WTO Member. This would discourage flags of convenience and encourage flag States to take responsibility for their vessels and help prevent IUU fishing.
The international fisheries management framework is predicated on the role of the coastal State in managing fisheries resources within its exclusive economic zone (EEZ) which extends to 200 nautical miles from the coast. Given that most coastal States are developing countries, a significant issue in the WTO negotiations is the extent of special and differential treatment to be accorded to developing countries. At the core of this is not only the need for food security and incomes for small-scale and artisanal fishers, but the role of the coastal State in developing its fishing capacity beyond its coastal waters and within its EEZ.
This is as an opportunity for the WTO to demonstrate a triple win for trade, the environment, and development. The transparency and notification procedures will shine a light on fisheries subsidies and enable peer pressure to be exerted in favour of their removal. To achieve this goal there is a need to integrate disciplines on fisheries subsidies with the practicalities of fisheries management undertaken by coastal States and RFMOs. WTO rules on fisheries subsidies are one more tool in the toolbox to address fisheries sustainability. But they will need to be implemented in a manner that gives room to developing countries to grow their own fishing industries, especially in their own waters. The concern is that the largest subsidisers may only adopt constraints on their fisheries subsidies if others are prepared to do the same. Success will therefore require political leadership and a willingness to compromise for the improved sustainability of global fisheries.