The WTO’s role in fisheries subsidies and its implications for Africa

20 December 2016
What should we expect from the current discussions on fisheries subsidies at the WTO? And what are the potential implications for African economies?

Fisheries subsidies have been long identified as a critical issue for trade and sustainable development and, more recently, a matter of significant international concern in efforts to manage global fisheries. Subsidies to the fisheries sector, through resulting production and trade distortions, lead to unsustainable fishing practices and overexploitation of fish stocks. Such overcapacity and overfishing can have a debilitating impact on fragile marine ecosystems, the sustainability of both coastal and offshore fisheries and the livelihoods in fisheries-dependent economies. In light of these threats, members of the international community, in various configurations, have recognised the urgency of curtailing subsidies that contribute to overcapacity, overfishing, as well as illegal, unreported, and unregulated (IUU) fishing. This understanding was reflected in paragraph 173 of the outcome document of the United Nations Conference on Sustainable Development (Rio+20) in 2012 – “The Future We Want”.

The call to prevent the harmful impacts of fisheries subsidies received the unanimous endorsement of the international community in Sustainable Development Goal 14.6 of the 2030 Agenda for Sustainable Development, which sets the unambiguous target of 2020 for the elimination of certain forms of fisheries subsidies which contribute to overcapacity and overfishing. This commitment is reflected in the following undertakings: (1) the elimination of all forms of subsidies contributing to IUU fishing; (2) the prohibition of harmful subsidies that promote overcapacity and overfishing, and (3) a commitment by UN members not to introduce any new “such” subsidies. These targets are accompanied by a recognition that appropriate and effective special and differential treatment (S&DT) provisions for developing and least developed countries should be an integral part of the WTO negotiations on the topic.

While the collective resolve of the international community is reflected in the SDGs, international best practice and norms on fisheries subsidies are increasingly being fashioned by commitments undertaken in the context of bilateral, regional, and multilateral processes engaged in by countries of varying sizes, and at different levels of development. In this context, many African states have participated in, or agreed to the expansion of a raft of international measures on harmful fisheries subsidies.

Samoa Pathway

Given the existential ecological risks posed by certain forms of capacity-enhancing subsidies, the outcome document of the Third International Conference on Small Island Developing States (SIDS) addresses the issue of subsidies in the fisheries sector, and urges the prohibition of certain forms of subsidies that contribute to over-capacity and overfishing, in accordance with the Doha and Hong Kong WTO ministerial declarations, respectively adopted in 2001 and 2005.

Bilateral and plurilateral commitments

The expansion of commitments on fisheries subsides includes proposed new disciplines through the Trans-Pacific Partnership (TPP) – although significant uncertainty surrounds the future of the deal – wherein contracting parties “recognise that the implementation of a fisheries management system that is designed to prevent overfishing and overcapacity and to promote the recovery of overfished stocks must include the control, reduction and eventual elimination of all subsidies that contribute to overfishing and overcapacity.” To that end, contracting parties have agreed to provisions that explicitly prohibit subsidies negatively affecting fish stocks in an overfished condition and those for IUU fishing. Similar provisions can be found in the recently signed EU-Canada Comprehensive Economic and Trade Agreement (CETA) wherein parties committed to working jointly towards developing a multilateral resolution on fisheries subsidies. While this commitment falls short of those found in the TPP, the EU and Canada have assumed a binding commitment to advance efforts on fisheries subsides would materialise at the multilateral level.

A further deepening of the international consensus on harmful fisheries subsidies can be found in the joint UNCTAD-FAO-UNEP statement that emerged from the Fourteenth Session of the United Nations Conference on Trade and Sustainable Development (UNCTAD XIV) that, inter alia, reaffirmed SDG 14. In a nuance of SDG 14.6, signatories noted that “regulating fisheries subsidies cannot be seen as a stand-alone issue.” Moreover, the statement highlights the vital importance of adopting a “holistic approach for the sector’s development that also addresses market access (tariffs and non-tariff measures) and capacity constraints in implementing sustainable fisheries-related measures.” It also appears to reflect the implicit need to allow for equitable and differentiated rules for countries at different levels of development. As expressed in the statement, over 45 African countries – members of the African, Caribbean, and Pacific Group of States (ACP) – agreed to a standstill on subsidies that: (a) negatively affect overfished fish stocks; and/or (b) accrue to “vessels or operators engaged in illegal, unreported and unregulated fisheries.”

A growing convergence of international commitments and the establishment of international norms and best practice on fisheries subsidies have led to an increased interest and effort at the WTO to agree on disciplines on fisheries subsidies ahead of the Eleventh WTO Ministerial Conference, carded for Buenos Aires, Argentina, in 2017.

Fisheries subsidies disciplines, food security, and Africa

Multilateral rules that discipline fisheries subsidies can have a significant impact on food security in coastal and island African countries. Quantitative analysis of the sector reveals that fish is an important source of food for about over 400 million Africans, mostly supplied by small-scale, coastal, and inland fisheries.[1] It is projected that the continent will require an additional 1.6-2.6 million tons of fish per year by 2030 in order to satisfy anticipated consumption needs. Coastal and island African countries have extensive marine wild-capture fisheries that remain largely underexploited commercially, or as it relates to domestic consumption. This market failure is largely due to the fact that subsidised foreign fleets capture most of the fish for export via bilateral fisheries access agreements. Curtailing capacity-enhancing subsidies (which constitute approximately 60 percent of global fish subsidies) including operating subsidies, such as fuel subsidies, will impact on the ability of foreign fleets to exploit Africa’s offshore fisheries resources. At the same time, any new multilateral disciplines must allow sufficient policy flexibility for coastal and island African countries to develop their domestic fisheries sectors, and thereby reap increased benefits from their own abundant resources. Additionally, any such approach by African countries to better exploit their own fisheries should be based on adequate science-based national and regional fisheries management systems as well as appropriate levels of transparency.

Towards this end, the ACP Group issued a submission on 15 November 2016 which builds on, refines, and reaffirms previous ACP submissions related to the disciplining of fisheries subsidies, discussed in further detail in the next section.

Recent ACP proposal on principles and elements for fisheries subsidies negotiations

The ACP submission reprises the original fisheries subsidies mandate as well as a supplementary mandate agreed in 2005 that, inter alia, holds that “appropriate and effective special and differential treatment (S&DT) for developing countries and least developed countries should be an integral part of the negotiations, taking into account the importance of the sector to development priorities, poverty reduction and livelihood and food security concerns.[2]

The core principles outlined in the ACP submission include the disciplining of IUU fishing, subsidies provided to large-scale commercial or industrial fishing, and subsidies to fishing activities outside of a member’s maritime jurisdictions subsidies that promote fishing in the high seas or in the exclusive economic zone (EEZ) of another member. As a cross-cutting S&D principle, the ACP proposes the adoption of a general carve-out according to which “nothing shall prevent” a developing country or LDC member from maintaining or granting subsidies that do not contribute to overfishing and overcapacity or do not negatively affect third countries (with examples of such subsidies cited in the text). Specifically, and with due account of jurisdictional considerations with respect of multi-species catch, the ACP has proposes the prohibition of:

  • Subsidies to fishing vessels or fishing activity that negatively affect fish stocks that are in an overfished condition; and
  • Subsidies provided to vessels or operators engaged in illegal, unreported and unregulated (IUU) fishing.

In terms of S&DT, the ACP proposal specifies that provisions should ensure that LDCs and SVEs are not required to assume commitments beyond these two general prohibitions and that implementation-related flexibilities, including with respect to transparency and notification requirements, should be supported by technical assistance and capacity building.

The Trade Facilitation Agreement style approach to a fisheries agreement

The November 2016 proposal by Argentina, Peru, and other co-sponsors calls for a WTO fisheries agreement that would be structurally and procedurally similar to the Trade Facilitation Agreement (TFA).[3] The co-sponsors of the proposal are correct in pointing out that since the UN adopted fisheries-related goals as part of the SDGs, members have effectively de-linked progress on fisheries subsidies from other areas of the Doha Round, tacitly agreeing to untie fisheries subsidies from the straightjacket of the so-called single undertaking. Such an approach has been challenged by other members who wish to preserve the spirit of the “single undertaking”, according to which nothing is agreed until all elements of the package are agreed, at least within the context of the rules negotiations.

The Argentina and Peru proposal seeks to establish a framework that aligns the commitments to be undertaken by members with their capacity to implement each measure, similar to the approach followed by the WTO TFA. Proposed implementation categories are as follows: (1) category A – implementation of disciplines by 2020; (2) category B – to be implemented after a transitional period following the entry into force of the agreement (available to developing and least developed countries); and (3) category C – technical cooperation is required for capacity building to implement relevant measures. It should be noted that unlike category C of the TFA, technical assistance is not an explicit condition for implementation under the proposed structure.

There are some preliminary concerns regarding thisproposal, particularly with regard to how policy space (appropriate S&DT provisions) for small and vulnerable economies – including SIDS – and LDCs can be accommodated in the proposed structure. Additionally, given the general lack of information regarding current subsidies baselines, it would be difficult for members to agree on which subsidies would fall under category A, and which would be appropriate for category B. The criteria for subsidies that would fall into category A would need to be spelt out clearly if such an approach is to yield results. One size does not fit all, even within the developing country grouping. A self-designation approach as contemplated by the Argentina proposal might be used by some of the more advanced developing countries to avoid taking meaningful commitments, hence watering down the proposed disciplines and limiting the ability of any new multilateral rule to discourage the harmful effects of certain types of subsidies. In the context of fisheries, category C would also have to relate to technical cooperation directed at strengthening fisheries management plans and systems for targeted fisheries and/or fleets.

Furthermore, the proposal ends up reopening Pandora’s Box with regards to the definition of “overfishing”, “overcapacity”, and “artisanal fisheries”, which has proven to be a major sticking-point in previous discussions within the negotiating group on rules. The enhanced notification requirement provision is an interesting proposal that ought to be explored while ensuring that this obligation is not unduly burdensome for developing countries. Overall, given the complexity and unique nature of the fisheries issue, a TFA style approach may become unwieldy and unnecessarily complicated. Hopefully proponents will provide further clarification in the weeks and months ahead.

Recent EU proposal and its implications for Africa

The recent EU proposal ought to be credited for its attempt to revive text-based discussions in the WTO negotiations.[4] In particular, it rightly emphasises the need to start defining the subsidies that are harmful if members are serious about developing disciplines ahead of the upcoming 2017 ministerial conference.

The EU’s submission was preceded by a blog post by EU Trade Commissioner Cecilia Malmström, which specifically acknowledged that apart from targeting IUU fishing, the focus needs to be on disciplining capacity-increasing subsidies, based on UNCTAD’s estimate that 60 percent of global fisheries subsidies are capacity-enhancing.[5] The lack of data from reluctant governments continues to be a major problem in identifying the size and nature of national subsidy programmes. However, if the above statistic is accurate, the textual proposal presented by the EU is a step in the right direction, given that it specifically targets subsidies supporting the construction of new vessels, the enhancement of capacity through equipment/technology, and the importation and transfer of fishing vessels through joint ventures (i.e. those that increase the capacity of the vessel to fish more).

Some have expressed concerns that the EU, in its proposal, does not explicitly prohibit fuel subsidies, which are technically effort-enhancing and have been found to have significant effects on the overexploitation of fish stocks. Fuel subsidies constitute 22 percent of total subsidies and have been particularly problematic in extending the range of the distant water fishing fleets into African waters.[6] However, a strong argument can be made that operating subsidies such as fuel are a part of “subsidies that increase the marine fishing capacity of a fishing vessel” and are thus forbidden under the EU proposal. Alternatively, members can push for an explicit prohibition by drawing a distinction based on strict definitions of fishing capacity and fishing effort or cost-reducing categories of subsidies.

If the proposed prohibitions lead to a reduction in the activities of subsidised commercial foreign fleets in the EEZs of African coastal and island states, it will benefit the development of the continent’s artisanal and small-scale commercial fisheries, which has long been neglected. Recent studies that have carried out bottom-up re-estimations of catch show that EU and Chinese fishing fleets report only 28 and 6 percent of their actual catch respectively, and overall, have a poor record in terms of illegal fishing, patterns of exploitation, and contribution to the sustainability of resource use.[7] There is also evidence that foreign bottom-trawlers have significantly exploited near-shore fisheries in places like Senegal that have a long tradition of fishing.[8] Additionally, benefits from license fees obtained through bilateral fishing treaties with foreign governments do not trickle down to benefit African populations.

Cecilia Malmström’s blog post also acknowledges an important fact: that a one-size-fits-all approach cannot work with regards to these disciplines, hence the need for appropriate S&DT provisions, which is followed through in EU’s WTO submission. However, the submission falls short of providing any flexibility for the development of commercially viable small-scale fisheries, including commercial-artisanal fisheries. Proposed exemptions in the EU proposal provide only for subsistence fishing activities, which are for non-commercial purposes only. The development of small-scale fisheries has been identified by numerous fisheries agencies (such as the World Fish Centre) as an opportunity for growth, and a high priority for increasing food security. Indeed, linking commercial retailers/exporters to artisanal fish supply chains in coastal and island African countries has been identified as an innovative strategy for producing more stable incomes and improving the livelihoods of their fisheries-dependent communities.

Implications for the African region

Regardless of the approach adopted by WTO negotiators, sufficient flexibility should be granted to African countries, which lack the capacity to engage in commercially viable fisheries, to allow them to provide policy support aimed at the development of capacity, including support for the scaling-up from subsistence to commercially-viable fisheries, especially small-scale fisheries.

Substantial investments will have to be made in order to build capacity and develop the continent’s fisheries sector domestically, as it is now dominated by distant-water fishing vessels. According to the World Fish Centre, 25 percent of the fish caught and landed in Africa never makes it to the mouths of the consumer, largely due to poor infrastructure (storage, handing, and transporting) and poor domestic processing facilities.[9] In order to capture more of the value-added component of the value chain domestically, investments will have to be made to improve processing facilities and technologies. This will require sufficient flexibility for African countries to allow for the development of viable and sustainable fisheries sectors. Unfortunately, fisheries management is still a low priority for several governments, and thus will continue to be a key concern. In this regard, any exemptions to WTO provisions ought to be conditioned on the implementation of science-based fisheries management plans.

AuthorsStephen Fevrier, International Trade Consultant and advisor on small state issues. Manleen Dugal, International Trade Consultant and former WTO delegate for the Pacific Island Group.

[1] World Fish Center. “Fish Supply and Food Security in Africa.” July 2009.

[2] WTO Document TN/RL/GEN/182, 16 November 2016

[3] WTO Document TN/RL/GEN/183, 28 November 2016.

[4] WTO Document TN/RL/GEN/181, 18 October 2016.

[5] Cecilia Malmström. “Protecting global fisheries through the WTO,” Blog post, 17 October 2016.

[6] Sumaila, Ussif R., et al. Note titled “Global Fisheries Subsidies”, prepared for the European Parliament’s Committee on Fisheries. 2003.

[7] Belhabib, Dyhia, et al. “Euros vs. Yuan: Comparing European and Chinese Fishing Access in West Africa.” PLoS ONE 10(3). 2015.

[8] Pala, Christopher. “African Fisheries Plundered by Foreign Fleets.” IPS News. 23 June 2016.

[9] World Fish Center. “Fish Supply and Food Security in Africa.”

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