Is an all-or-nothing WTO fisheries subsidies agreement achievable?

15 July 2014

Progress on disciplining harmful fisheries subsidies at the WTO has been slow. Could a distinction between different types of fish stocks according to their national or international locales help move the multilateral talks forward?

Since a back of the envelope calculation by the UN Food and Agriculture Organization (FAO) revealed that the total amount of fisheries subsidies in maritime countries globally could be as high as US$50 billion annually in the early 1990s, eliminating harmful fisheries subsidies has become an essential part of the quest to achieve sustainable fisheries. More recent detailed studies have put this number at US$15- 27 billion. This is still a substantial amount given that the total gross revenue from the world’s fisheries is estimated at around US$80-85 billion. There is a strong connection between fisheries governance, subsidy policies, and sustainable development. The crucial issue is that subsidies that motivate fishers to exert more pressure on stocks make fisheries governance – and therefore the attainment of sustainability and conservation goals – difficult to achieve. Negotiations for improved disciplines on fisheries subsidies at the WTO have, however, stalled in recent years and considerable challenges remain before a meaningful agreement can be reached.

Challenges to the WTO negotiations

A key reason for the lack of progress in these multilateral talks, after seven years of trying, is that the negotiations suffer from the problem of “lumpiness.” By this I mean negotiators aim for an all-inclusive deal or no deal at all. This lumpiness takes two forms. Firstly, the WTO Doha Round was constructed as a “single undertaking,” meaning that results must be achieved in all areas of the negotiations and not only in those regarding fisheries subsidies. Under this modus operandi any potential breakthrough in the negotiations on fisheries subsidies would be dependent on similar breakthroughs in the rest of the Doha Development Agenda (DDA).

The second lumpiness, which is the focus of this contribution, relates to negotiators’ goal to cut an all-inclusive deal on fisheries subsidies. Within this setting, a draft text released on 30 November 2007 (TN/RL/W/213) by the chair of the WTO Rules negotiations – the body charged with discussing issues including anti-dumping and subsidies – proposed an entirely new set of fisheries sector-specific disciplines. The draft text was designed to have two core elements; a broad set of prohibited subsidies and a list of general exceptions to these prohibitions, with complementary regulations guarding against circumvention; and a second special & differential treatment (S&DT) category, giving policy flexibility to developing countries through provisions of additional exceptions based on various combinations of factors, such as types and locations of fisheries. Most exceptions would be conditional on certain fisheries management requirements. As with many international agreements it is always a tricky issue when, even though there are often good reasons for doing so, developing countries are given special exemptions. I think some of the resistance to such exemptions, in the case of fisheries subsidies, lies in the fact that developing countries are not a homogenous group.

Subsequent sessions of the rules negotiations group revealed a range of conflicting views on the draft text. In December 2008, the chair issued revised versions of negotiating texts for the other rules issues, accompanied by a “roadmap” of a detailed list of questions around the fisheries subsidies sticking points. In 2011 the next Rules Chair produced a report on the fisheries subsidies negotiations, identifying areas of more and less convergence, but no new negotiating text.

Response to the challenge

One way to move forward would be to split the world’s fisheries into two categories. The first would be domestic fisheries, for example, fish stocks that spend all their lives within Exclusive Economic Zones (EEZ). The second would be international fisheries, made up of fish stocks that do not qualify as domestic fisheries as defined herein. These consist of transboundary fish stocks, highly migratory stocks – such as tunas that straddle the EEZs of many countries as well as the high seas – and stocks that spend all their lives in the high seas. This split could enable progress with the WTO fisheries subsidies negotiations in at least three ways. Firstly, the incentive for countries to eliminate harmful subsidies differs significantly, depending on whether a fishery is domestic or international; and within the latter, whether a fishery is a transboundary, highly migratory, or a discrete high seas stock. Secondly, different institutional frameworks are required to support the elimination of harmful subsidies between the two categories. Thirdly, by dividing fisheries into these groups, it would be easier to identify where to put emphasis on eliminating harmful subsidies.

Disciplining harmful subsidies to domestic fisheries

If a country depletes its domestic fish stock it would suffer the consequences. Hence the battle for eliminating or at least redirecting harmful subsidies for domestic fisheries should rightly be at home in individual countries. The key to success is to make it abundantly clear to fishing countries that it is in their best interest to divert harmful subsidies into more constructive uses. For example, countries that redirect their harmful subsidies to provide skills to fishers to help them transition to more sustainable livelihood activities would see win-win benefits in the sense that they would keep the money in the fishing communities while reducing the pressure to deplete a renewable food source.

Disciplining harmful subsidies to international fisheries

Incentives are less clear and more complicated at the international level. If a nation subsidises and over-fishes a highly migratory fish stock, its citizens will enjoy the short-term benefit of doing so, while the negative consequences are suffered by many other countries. As a result of the asymmetric nature of this cost-benefit distribution, the multilateral level and the WTO in particular, appears to be the most appropriate arena for tackling harmful subsidies in this second category of fish stock.

The trick here is to identify the low-hanging fruit. Examples include fisheries based on high and deep sea fish stock, as well as highly migratory high seas tuna species. Ecologically, high and deep sea fish stocks are known to grow slowly and live long, some with up to 100 year lifespans, both of which make them very vulnerable to overfishing. In addition, current legal and management structures are weak to say the least. These fisheries are operated by a few, mostly developed countries, producing a small percentage of the world total fisheries catch while employing only a small number of people. It has been estimated that without subsidies many of the bottom trawl fleet operating in the high seas would not be economically viable. Broadly speaking, the production-distorting effects of fisheries subsidies are most pronounced in high seas fisheries. Obtaining a WTO agreement onsubsidies relating to these fisheries would therefore be a significant win for conservation and sustainability.

Towards sustainable fisheries

While focusing on international fisheries presents an attractive option, particularly from an environmental perspective, this does not mean that the international community should ignore what happens to harmful subsidies domestically. From the development perspective the international community should be interested in disciplining domestic subsidies if only for global food security reasons. And the trade distorting aspects of subsidies to domestic fisheries should still make them a matter of concern to the global community. More details would also need to be worked out to implement the proposal outlined in this paper. For instance, how would countries be able to distinguish among subsidy programmes to target only certain species? Still, the principles behind my proposal are clear; in order to succeed in disciplining harmful fisheries subsidies, angle efforts more towards the interest of fishing nations, and deal domestically and internationally where appropriate.

Fisheries, WTO
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