Tackling Fisheries Subsidies at the WTO: What’s in it for LDCs?

8 November 2017

At the Buenos Aires ministerial conference, WTO members will have an immediate opportunity to make progress against the UN Sustainable Development Goals (SDG) target 14.6 by establishing meaningful disciplines on fisheries subsidies to curb their environmental effects on fish stocks. Why are these talks of importance to LDCs?


Fisheries play a crucial role in supporting the livelihoods and nutrition security of hundreds of millions of people around the world. According to the UN Food and Agriculture Organization (FAO), in 2013, fish provided more than 3.1 billion people around the world with nearly 20 percent of their average per capita intake of animal protein. In some least developed countries (LDCs) and small island developing states, this figures often exceeds 50 percent. Fish production is also an important source of employment: together, capture fisheries and aquaculture support the livelihoods of between 10 and 12 percent of the world’s population, who are variously involved in harvesting or post-harvest activities, including processing and distribution.

In Africa alone, the FAO estimates that 12.3 million people are directly employed as fishers or processors, with the vast majority of them in artisanal fishing. In terms of trade, in 2014, fishery exports from developing countries were worth US$80 billion, according to the FAO, generating more revenue for developing countries than many other agricultural commodities, including meat, tobacco, rice, and sugar, combined. For some LDCs, fish exports account for a major share of total exports. Between 2000 and 2013, for example, fish represented around 25 percent of Senegal’s total exports, around 30 percent for Mauritania, 42 percent for Cape Verde, and over 50 percent for Vanuatu.
 

The rationale for international disciplines on fisheries subsidies

Wild fisheries’ ability to continue to meet the needs of a growing global population is limited. Most fisheries for which the FAO collects data are already fully exploited; around 31 percent are overfished and only around 10 percent may be able to produce larger harvests. As a result, aquaculture is playing an increasingly important role in filling the demand gap. In this context, subsidies provided to the global fishing industry can tend to undermine efforts to conserve wild fish resources for sustainable use. Estimates suggest that of the US$35 billion in subsidies provided annually to the industry, around US$20 billion are provided in forms that tend to enhance fishing capacity.

While LDCs only account for a marginal share of global subsidies, this type of support has often enabled large industrial fishing nations to exploit resources beyond their national economic exclusive zones (EEZ) in the high seas, but also close to or in the EEZs of several LDCs. In the absence of effective fisheries management regimes in poor countries, subsidies can contribute to increasing fishing effort and harvests beyond sustainable limits, sometimes at the expense of local artisanal fishing communities in LDCs. Overcapacity combined with weak enforcement of national regulations in LDCs have also resulted in significant rates of illegal, unreported, and unregulated (IUU) fishing (see box 1).

Ensuring that fisheries can continue to support sustainable development is a key objective of the UN’s 2030 Agenda for Sustainable Development, which dedicates one of its 17 Sustainable Development Goals (SDG 14) to the conservation and sustainable use of oceans, seas, and marine resources. In SDG target 14.6, UN member states committed to prohibit, by 2020, certain forms of fisheries subsidies that contribute to overcapacity and overfishing and to eliminate subsidies that contribute to IUU fishing, explicitly acknowledging the role of WTO negotiations in reaching this objective. At the WTO, members’ mandate for these negotiations, established in the Doha Declaration and reaffirmed by the Hong Kong ministerial declaration, underlines the importance of the sector in the development priorities of developing country and least developed country member states. LDCs, like all players in the international trading system, arguably have an interest in reaching a meaningful agreement which demonstrates that the multilateral trade system is a useful forum for international cooperation and rule-making, and that it both contributes, and is seen to contribute, to sustainable development and poverty reduction.
 

The proposals currently on the table

The proposals on the table in the WTO negotiations focus, among other things, on subsidies that contribute to illegal, unreported, and unregulated (IUU) fishing; subsidies provided to fish already overfished stocks; and subsidies that contribute to overcapacity and overfishing. These are concerns that the LDC group shares with the entire WTO membership, but are arguably particularly acute for some LDC WTO members.

As highlighted in box 1, losses to illegal and unreported fishing is a particularly acute challenge for LDCs. Around 37 percent of all catch in the Central Eastern Atlantic (off the coast of West Africa), for example, has been estimated to be illegal and unreported. Worldwide losses have been estimated at between US$10 billion and US$23 billion per year, and in some regions the problem is particularly severe. The same study also indicates that illegal and unreported catch tends to be higher in areas where governance is weak. This suggests that LDCs with marine fisheries sectors and that face governance challenges could stand to benefit from a multilateral agreement that reduces subsidies paid to vessels and operators engaged in illegal fishing.

The WTO membership as a whole, and LDCs in particular, could also stand to gain from a multilateral agreement that resulted in reduced harmful subsidisation of fleets which exploit fish stocks that are already overfished. As highlighted above, the FAO’s 2016 State of World Fisheries and Aquaculture estimates that in 2014, just over 31 percent of global fish stocks were overfished, meaning that increases in their production would only be possible after stocks had been allowed to return to healthy levels. To the extent that subsidies to fishing activity impede overfished stocks from growing back to levels where they can produce maximum sustainable yield, they may in fact prevent fisheries from contributing as much as they could to food production. This should be a concern for the WTO membership as a whole, given that it is a pervasive problem in global fisheries. The World Bank has estimated that allowing global fish stocks to rebuild could increase annual harvests by 13 percent, with consequent potential improvements for the incomes and food security of communities that depend on fisheries in both developed and developing countries.

Finally, further proposals on the table in the negotiations would limit subsidies to operating costs (often considered to contribute to overfishing) and to capital costs (often considered to contribute to overcapacity in fishing fleets). Subsidies to fuel, in particular, can support distant water fishing that often target fish resources within and just outside EEZs under national jurisdiction. As highlighted in box 1, estimates suggest that a large proportion of catch by foreign vessels in some EEZs – such as those of ECOWAS countries – is not reported, undermining national and regional fisheries management efforts. This suggests that WTO members, in particular those LDCs that lack the capacity to monitor their EEZs closely, could stand to gain from new disciplines that would limit subsidies to operating costs, such as fuel subsidies, as such support can enable distant water fishing vessels to fish without authorisation in their EEZs.

Developing new rules on subsidies based on their environmental impact is a new kind of role for the trade system and the WTO in particular, but such an endeavour enjoys significant political support. It represents a key opportunity for the WTO to demonstrate the relevance and value of a cooperative trade policy approach to a collective sustainable development challenge.


 

Author: Alice Tipping, Programme Manager, Environment and Natural Resources, ICTSD

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