Fisheries Subsidies, Sustainable Development and the WTO

Anja von Moltke

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781136530180
• Edition: 1
• Topic: Biological Sciences
• Subtopic: Ecology
• Index: Biological Sciences

The fisheries sector is in crisis. Inappropriate subsidies to the fishing industry are a key factor responsible for worldwide fisheries depletion, overcapitalization and ecosystem degradation. There is an urgent need for an international mechanism to promote the appropriate restructuring of fisheries subsidies in order to create a more sustainable industry. In recent years the leading international forum charged with providing such a mechanism has been the World Trade Organization (WTO).This book explains why and how the reform of fisheries subsidies has become one of the most concrete and potentially successful international efforts to achieve global environmental, economic and developmental policy coherence. It describes the history and current status of the discussions at the WTO, drawing on UNEP's key documents and reflecting on the major issues. Accompanying the book are downloadable resources containing full-text versions of the most important source material used in the publication. The book is aimed at a broad stakeholder audience, including policymakers in the fields of trade, fisheries, environmental economics and international environmental governance, as well as academics and others looking for an overview of the fisheries subsidies issue and an introduction to its technical components.Published with the United Nations Environment Programme (UNEP)

Chapter 1

Fisheries Governance, Subsidies and Sustainable Development

On a global scale, the limits of the Earth's ecosystems have never before been tested as severely as they are being tested today. In the near term, it may be the impending collapse of marine fisheries that most quickly teaches us the costs of failure to respect the limits of our planet's natural resources. The world's fisheries are in deep trouble. Outsized fleets are hauling in catches that exceed the biological limits of fish stocks in every ocean. As marine ecosystems are disrupted by widespread unsustainable fishing practices, livelihoods and food security are being jeopardized, often in the most vulnerable communities of developing countries.

A proper solution to the problem of overfishing will have to be global, durable and equitable. Achieving it will require nothing less than constructing a new ‘green economy’ in the fisheries sector. This will mean altering the system of economic incentives that currently lead fishers and merchants to perpetuate an unsustainable race for dwindling stocks. Among the reforms needed will be a fundamental change in the way governments currently employ subsidies to the fisheries sector. The various facets of that reform and the technical and political challenges to accomplishing it are the subject of this book.

This chapter sets the fisheries subsidies issue in its broader context, looking first at the economic values at stake in the fisheries sector and then at the basic elements of international fisheries governance through which the international community has begun to confront the overfishing crisis. Against this background, the chapter then concludes with an overview of the fisheries subsidies problem itself.

The Need for a ‘Green Economy’ of Fishing

The dimensions of the global fisheries crisis are dramatic. Eighty per cent of commercially valuable fish stocks are now overexploited, fully exploited, significantly depleted or slowly recovering from depletion (FAO SOFIA, 2008). Of the top 10 commercially used species – roughly 30 per cent of world marine catches – most are overexploited or fully exploited. The biomass of many top predator species such as bluefin tuna and swordfish has been reduced to small fractions of historic levels. Species that were once the staples of regional economies, such as cod in the northwest Atlantic, are all but commercially extinct. Even along some of the most biologically bountiful coasts, such as off the coast of Senegal in West Africa, unsustainable fishing has already taken a toll on local food supplies. And the trend lines remain negative, with the percentage of the world's fisheries that are not overfished continuing to shrink each year.

All of these grim facts result from a rapid expansion of fishing capacity that has seen global fish landings increase more than 5 times over the past 50 years (FAO SOFIA, 2006). Today, the fishing power of fleets worldwide may be as much as 250 per cent higher than can be sustainably utilized. As is commonly said, there are simply ‘too many boats chasing too few fish’. But even this apparently simple reality comes with historic complexities: while it is generally accepted that aggregate fishing capacity must be reduced, there remain more than a few developing countries whose fishing industries are underdeveloped and for whom some degree of continued expansion is an equitable necessity.

Political leaders worldwide have though come to acknowledge that resource-based economies cannot exploit the very basis of their existence and that investing in a ‘green economy’ is crucial for a sustainable economic development (see Box 1.1) This can be achieved through reshaping and refocusing policies, investment and spending on sustainability in the fisheries sector. A ‘greening’ of the economy is necessary in order to have better returns on natural, human and capital investments in the fisheries sector, while at the same time reducing greenhouse gas emissions, social disparities and extracting and using less natural resources. Positive resource and environmental effects of more sustainability focused spending in the sector include a re-building of fish stocks, keeping the global fisheries industry within the limits of the marine resources and a strengthening of value-addition instead of uncontrolled expansion of fishing effort.

Box 1.1: International Calls for ‘Greening’ the Economy

23. Stable and sustained long-term growth will require a smooth unwinding of the existing imbalances in current accounts…New sources of growth will have to be supported by investments in infrastructure, innovation and education to facilitate productivity growth, while ensuring sustainable use of resources in a greener economy, within a context of open markets… 60. …A shift towards green growth will provide an important contribution to the economic and financial crisis recovery…

(G8 Declaration, 8 July 2009)

The need for a green fisheries economy is compelling in human terms. To begin with, fisheries are an important contributor to food-security, employment, and economic development. For the dozens of ‘Low Income Food Deficit Countries’ (which face the most serious food security concerns), fish provides an average of about 20 per cent of people's protein needs. In some Small Island Developing States (SIDS), as well as in some developing coastal states, this figure rises to above 50 per cent. And even where fish is consumed in smaller amounts, it provides essential micro-nutrients. In short, for hundreds of millions of people, fish are a critical source of nutrition. And demand for fish products is continuing to rise due to population growth, income growth and urbanization (Delgado et al 2003). Even the advent of aquaculture – heralded by some as the solution to the problem of limited fish supplies – has increased the pressure on wild capture fisheries as demand has risen rapidly for fishmeal to feed farmed fish. Since it can take up to four kilos of small fish to make the meal needed to produce 1 kg of a farmed product, this has raised new questions about how best to utilize wild fish to meet human protein needs.

Beyond supplying food directly, the fisheries sector also provides employment to scores of millions of people. Worldwide, the fisheries sector directly employs around 43.5 million people, with the great majority in developing countries (UNEP, 2005a). Over the last three decades this number has grown faster than the world's population (due in part to the rapid growth of aquaculture in China and elsewhere). Taking into account the people employed in processing and marketing fish products, estimates of employment in the sector rise up to 170 million. In developing countries, local processing and handling industries are often dominated by women, tying the fisheries economy directly to household welfare and social development in traditional communities. Meanwhile, in both developed and developing countries, the fishing industry is the foundation of local livelihoods in coastal communities. Almost 90 per cent of all fishers worldwide are artisanal and small-scale harvesting accounts for approximately 25 per cent of global catches (UNEP, 2005a).

Given the socio-economic stakes, the costs of unsustainable fishing are severe. The World Bank and FAO estimate that overfishing and overcapacity already cost approximately US$50 billion per year in lost economic benefits (see Box 1.2).

The Scale and Dynamics of Trade in Fisheries Products

The fisheries economy has already gone global. As of 2006 trade in fish and fishery products is a US$86 billion-per-year industry. Fisheries exports increased by 32.1 per cent from 2000 to 2006 in real terms (in other words, adjusted for inflation), with exports in 2006 accounting for 37 per cent of total fisheries and aquaculture production (FAO COFI, 2008). Fish is thus one of the most highly traded food and feed commodities in the world – the percentage of meat traded globally, for example, is less than a third of this. Fish is also a highly diversified trade product with more than 800 species estimated to be traded worldwide. Further adding to the degree of diversification is the general trend of moving away from the export of raw fish to processed fish products (Ahmed, 2006).

Box 1.2: The Economic Need for ‘Greening’ Fisheries

Marine capture fisheries are an underperforming global asset…The difference between the potential and actual net economic benefits from marine fisheries is in the order of $50 billion per year…The principal drivers of the overexploitation in marine capture fisheries and the causes of the dissipation of the resource rents and loss of potential economic benefits are the perverse economic incentives embedded in the fabric of fisheries harvesting regimes, reflecting a failure of fisheries governance…Improved governance of marine fisheries could capture a substantial part of this $50 billion annual economic loss. Reform of the fisheries sector could generate considerable additional economic growth and alternative livelihoods, both in the marine economy and other sectors.

(World Bank/FAO 2008, pp. ix and 39)

Trade in fisheries products is especially important for developing countries, which generate close to 50 per cent of world fisheries exports – a figure that does not even reflect the significant additional movement of fish products out of developing country waters that results from fisheries access agreements.¹ The rapid expansion of fish exports by developing countries has been due to a variety of factors, including technological advances that have made long-distance marketing of fish products increasingly plausible and affordable. Also contributing to higher trade figures is the increasing internationalization of value chains, with processing often outsourced to Asia and, in some cases, to Central and Eastern Europe. Generally, outsourcing decisions have been taken on the grounds of differences in labour costs (FAO COFI, 2008) and have led to an increase in exports of processed products as well as increased trade in raw-materials (ICTSD, 2006a).

The resulting fish trade has a strong ‘south–north’ orientation, with the greatest portion (US$32 billion in 2003) taking place between developing and developed countries. Trade among developed countries is also significant (US$23.8 billion), while trade between developing countries is much less significant (US$8.3 billion) and consists mainly of low-value species. Exports from developed to developing countries is only US$4.1 billion. As a result of its south–north character, fish trade is an important source of foreign exchange earnings for many developing countries. Net exports of fisheries products from developing countries have grown significantly over the past decades and now bring in more foreign exchange than exports of coffee, rubber, cocoa, meat and bananas combined (FAO SOFIA, 2008, fig. 32).

The rapid increase in fish trade has created an increasingly complex environment. New actors, such as multinational traders and distant water fishing nations, have emerged, creating new challenges for fisheries managers and policy-makers. And the regulation of fisheries trade itself has emerged as a significant and highly technical field that involves tariffs, quotas, safeguards, anti-dumping measures, standards, health and safety regulations and rules of origin.

Moreover, even as many developing countries have embraced export-led growth in their national fisheries sectors, the ability of fish trade to produce durable benefits has been less than perfectly reliable. While fisheries exports can increase foreign exchange earnings, they can also lead to a decreased availability of affordable fish on local markets, thereby reducing food security (see, for example the case of Senegal explored in Chapter 3, ‘Fisheries Subsidies: The Senegalese Experience’). Similarly, even in importing countries, increased trade in fish and fishery products has both negative and positive aspects. On the one hand, increased imports improve food supplies and provide raw materials for domestic industries. On the other hand, cheap imports can undermine local markets and destroy jobs (ICTSD, 2006a). Nor is there any guarantee that the positive effects of trade will reach the poorer parts of society without government measures to guide market forces. Export-led growth can also put significant pressures on fisheries resources, leading to depletion of stocks unless fully effective management systems are in place.

Governance of Global Fisheries

As governments and industry strive to expand their share of the potential economic returns from the fisheries sector, they face a challenge to balance economic growth and sustained employment with the absolute necessity of ensuring long-term resource sustainability. The need for international action to protect the marine environment and its resources started to become apparent at the beginning of the 1970s, as centuries of ever-increasing pollution and demand for marine resources left their mark on the productive capacity of the oceans. Then, in the 1990s, the fisheries crisis itself rose rapidly on the international agenda, producing a series of new international legal instruments. As a result, the international policy and legal framework for fisheries management is dispersed among a variety of treaties, instruments, management schemes and economic policies that operate at international, regional, national and sometimes even local levels.

UNCLOS and its progeny

Historically, governance of the world's oceans was characterized by the principle of ‘freedom-of-the-seas’, under which coastal nations tenaciously held jurisdiction over the waters directly touching their coastlines while the remainder was...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• The United Nations Environment Programme
• Contents
• Foreword by Achim Steiner
• List of Figures, Tables and Boxes
• Acknowledgements
• List of Abbreviations
• Introduction
• 1 Fisheries Governance, Subsidies and Sustainable Development
• 2 Fisheries Subsidies and their Resource Impacts*
• 3 National Experiences with Subsidies, their Impacts and Reform Processes
• 4 Emergence of an International Issue: History of Fisheries Subsidies in the WTO
• 5 Four Key Issues at the WTO
• 6 Conclusion and Way Forward
• Annex 1 Timeline – The Emergence of an International Process on Fisheries Subsidies
• Annex 2 Summary of International Fisheries Related Agreements
• Annex 3 Regional Fisheries Bodies
• Annex 4 Regional Seas Programmes and Conventions
• Annex 5 2001 Doha Ministerial Declaration
• Annex 6 2002 Plan of Implementation of the World Summit on Sustainable Development (excerpts)
• Annex 7 2005 WTO Hong Kong Ministerial Declaration (excerpts)
• Annex 8 WTO Chair's Text on Fisheries Subsidies (TN/RL/W/213, 30 November 2007, Annex VIII, pp.87–93)
• Annex 9 WTO Fisheries Roadmap (TN/RL/W/236, 19 December 2008, Annex VIII, pp.85–94)
• Annex 10 WTO Agreement on Subsidies and Countervailing Measures (ASCM) (excerpts)
• Annex 11 Developing Country Categories and S&D Benefits under the ASCM*
• Annex 12 Artisanal Fishing: A Few Examples of Existing Usages and Definitions*
• Annex 13 Summary of Proposed Sustainability Criteria*
• Annex 14 Benchmarks for Rapid Overall Evaluations*
• Annex 15 Model WTO Language on Sustainability Criteria*
• Annex 16 Resource Material: Contents of the CD-ROM
• Bibliography
• Index