Time running out for WTO to act on fishing subsidies

Trade ministers must deliver on pledge to phase out fishing subsidies by 2020. As the world’s biggest payer, China’s role is crucial
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Meeting for the first time in Latin America, the World Trade Organization’s 11th Ministerial Conference will take place in Buenos Aires from 10-13 December.

As usual, it will bring together trade ministers, negotiators and thousands of business and civil society leaders. Central to this year’s talks will be an international deal to curb harmful fishing subsidies. These are government payments or tax breaks that contribute to overcapacity, overfishing and illegal fishing (IUU) globally.

The 164 member countries of the World Trade Organization (WTO) will aim for a binding agreement to eliminate these subsidies, an issue that has been under discussion for more than two decades. This year, a strong, renewed commitment from all actors could help to achieve an urgently-needed deal.

“It is time to come to a resolution. If not, the credibility of the WTO regarding its commitment to sustainable development will be questioned. There are too many vessels competing for an increasingly exploited stock of fish,” Remi Parmentier, director of environmental consultancy The Varda Group, told chinadialogue.

Without a resolution, the credibility of the WTO regarding its commitment to sustainable development will be questioned

Subsidies paid to the fishing industry amount to around US$35 billion per year (232 billion yuan). Of this, US$20 billion (132 billion yuan) are given in forms that enhance the capacity of large fishing fleets, such as fuel subsidies and tax exemption programmes, according to the European Parliament’s Committee on Fisheries.

Proper management of fisheries can go some way to curb the impact of fleet expansion on dwindling resources, but measures are rarely enforced effectively, meaning fisheries are overexploited.

Around 60% of the world’s assessed fish stocks are fully exploited and 30% are already overexploited, according to the 2016 SOFIA report, published by theUnited Nation’s Food and Agriculture Organization.

Experts claim, along with many developing countries, that fisheries subsidies significantly distort global fish markets and are a major contributing factor to the depletion of resources.

However, developing countries want to protect subsidies, which they say support the livelihoods of low-income, resource-poor fishermen.

Tipping point

“There are a lot of boats that would not be working now if it they hadn’t received subsidies. The oceans can’t keep up with the pressure they are now facing, most of the resources are being fully exploited,” Guillermo Cañete, marine programme coordinator at Vida Silvestre, an Argentine non-governmental organisation (NGO), told China Dialogue Ocean.

The Sustainable Development Goals (SDGs) established in 2015 by the United Nations agreed to eliminate fishing subsidies by 2020 as part of the SDG 14, which aims to conserve and sustainably use the oceans and marine resources.

The role of the WTO in achieving this was reiterated in June 2017 at the UN Ocean Conference held in New York. WTO deputy general director Alan Wolff said eliminating fishing subsidies would be the “priority in Buenos Aires”, although preferential treatment may be given to lower income countries.

“Fishing subsidies have been in the agenda of the WTO since its last meeting in Nairobi [in 2016]. For Argentina, it’s an important issue and since it’s chairing the summit it’s possible to have some kind of agreement,” said Marcelo Elizondo, trade expert and head of business consultancy DNI.

National interests

The European Union, Japan, China, the United States and Russia spend the most on fishing subsidies, according to Permentier, who emphasised the role of Asia as the largest regional contributor of subsidies.

According to a study from the European Commission, China pays more in fishing subsidies than any other country. From 2011-2013 it spend an average of 5.6 billion euros per year; with 90% of subsidies going on ship fuel.

Second is the US, which paid 1.6 billion euros in 2013; followed by South Korea 1.5 billion euros in 2014; Japan 1.2 billion euros in 2015; and Russia 25 million euros.

China has the world’s largest distant water fishing fleet, with more than 2,900 vessels in 2016, according to Greenpeace. “China is a major trade power and a key actor in the WTO. We hope it will be supportive of these discussions,” said Permentier.

Main proposals

Ahead of the meeting, WTO members filed seven proposals on fishing. Although the proposals contained a consensus on the need to eliminate subsidies, countries’ proposed methods of implementation and reform limits varied.

China has filed a proposal to selectively ban subsidies for illegal fishing but is resisting pressure to curb its vast fleet. Its proposal seeks to exempt developing countries from all phase out measures and leave out areas subject to territorial disputes. It wants national governments and regional fishing organisations, rather than experts, to determine what constitutes illegal, unreported and unregulated fishing.

Norway, the EU, least-developed countries, several Latin American countries, New Zealand, Iceland and Pakistan have also issued proposals.

The difference in position held by countries is partly explained by the varying impacts such a deal would have on these groups. Ending fishing subsidies could have a negative effect on artisanal or small-scale fishermen from developing countries, who are the most vulnerable to the withdrawal of government pay outs and exemptions.

In fact, large-scale fisheries receive about four times as much in subsidies than their small-scale counterparts, with up to 60% of those subsidies promoting overfishing.

The largest such subsidy is fuel subsidies, 96% of which are given to the large-scale fisheries through marine diesel subsidies, according to a recent study by the University of British Columbia. Because of the high cost of purchasing and maintaining diesel motors, most small-scale fisheries vessels run on gasoline, which is not as heavily subsidised.

“There are still significant differences of position regarding what kinds of subsidies should be prohibited. And what, if any, exceptions might be granted for subsidies provided by developing country WTO members. For example, for small-scale fishing,” Alice Tipping, head of the International Centre for Trade and Sustainable Development (ICTSD) Environment and Natural Resources programme, told China Dialogue Ocean.

All proposals on the table include the prohibition of subsidies linked to unreported and unregulated fishing and to the exploitation of already overfished stocks.

These two prohibitions are thought to be leading candidates for the basis of an agreement, according to the report Low Hanging Fish by Bloom and The Varda Group.

However, the scope of the subsidy removals is still highly contested. All seven proposals suggest different approaches to limiting types of fishing activity.

Civil society groups and marine scientists have called for the agreement to contain a clause on overfishing so it complies with the SDGs, as well as a provision on preventing overcapacity as this contributes greatly to the depletion of fish stocks.

There is a strong case for extending the prohibition of subsidies to the entire ocean. In other words, not limiting a phase out to specific geographic areas, as some proposals have suggested.

Overfishing is a global problem so geographical limitations could present obstacles for the conservation and sustainable use of straddling and migratory fish stocks.

“Developing countries are the suppliers of fish to developed countries, which import large amounts. Countries that have a naval industry don’t want to see it go away so they continue pushing for subsidies,” Cañete said.

“Discussions have to be framed in regulating the fishing activity. The oceans’ capacity is exceeded by the number of boats that are currently manufactured.”

According to Tipping, negotiators are working on a draft agreement, which would include only a few areas of common ground due to the remaining differences among member states.

A final deal, in the form of a Ministerial Decision, would re-confirm WTO members’ commitment to continue negotiations towards comprehensive rules on fisheries subsidies.

If there’s no deal, countries can still include action in their broader political commitments to stop providing specific egregious kind of subsidies, Tipping said. This, at the very least, would keep the door open for some kind of commitment being signed.