Michael Earle
Brussels, 8 July 2003


The world's fisheries are in a state of crisis. Virtually everywhere you look, fish stocks are over-fished and fishing fleets are far too large, while control and surveillance of fishing activities are far too often poor or non-existent. Huge quantities of fish are simply thrown away (up to a quarter of all fish caught) and much of the fish taken in the waters of low-income, food-deficit countries finds its way onto the dinner plates of rich northern consumers. Major reforms of the international management of fisheries are desperately needed, that would be sensitive to the particularities of developing countries and the needs of coastal communities everywhere.

It is into this delicate and controversial situation that the WTO has begun to insert itself.

What is at Stake in Cancun

The Cancun Ministerial meeting of the WTO will discuss the matter of fisheries. Ostensibly, according to the Doha Declaration, the primary focus of the discussions is to bring "discipline" to the practice of subsidizing the fishing industry, to the extent that these subsidies may distort trade. This will be dealt with in the Negotiating Group on Rules. However, there is also a cross reference to fisheries subsidies in the paragraphs on Trade and Environment, leaving open the possibility of extending these discussions to include certain environmental aspects of fisheries, such as management and conservation. This "creeping jurisdiction" is typical of the approach the WTO takes to issues and care must be taken that discussions are limited to trade-distorting subsidies.

How the EU Subsidizes the Fishing Industry

The European Union has a very long history of providing financial aid to its fishing industry. A wide variety of subsidies is available, including for vessel construction and modernization, vessel scrapping or export, port improvements, joint enterprises and aid for the processing industry. Certain types of socio-economic measures are funded, such as early retirement schemes or for temporary vessel lay-ups. EU-funded agreements for access to fish stocks have been concluded with countries around the world. There is also a limited market intervention scheme. Altogether, these subsidies total about €750 million per year, on average, of EU money (national contributions bring the total to between €1 and €1.5 billion). Other types of support include tax reductions for fuel, access to port facilities and reduced tariffs for imported fish, but no published data exist on the amounts involved.

Of these, the most controversial have doubtless been those geared towards the fleets themselves - in a situation of grossly excessive fishing capacity, the EU continues to place greater emphasis on funding the construction and modernization of vessels than on vessel removal (destruction or export). The network of fisheries agreements has also been blamed for contributing to overfishing in the waters of developing countries, resulting in local problems of food security and economic hardship, for these EU vessels benefit from subsidies not available to the local fleets.

In the EU's much-vaunted reform of the Common Fisheries Policy in December 2002, some of the more outrageous subsidies were constrained. Construction, modernization or export of vessels will no longer be supported after 2004; rather, emphasis is to be placed on reduction of fleet size.

On the assumption that it has now sufficiently cleaned up its own house, the EU is now proposing that the WTO agree to ban certain types of subsidies while allowing others to continue - not surprisingly, the list of forbidden and approved subsidies mirrors the December decisions.

What the Competition Pays

Despite considerable recent interest in attempting to quantify the extent of global fisheries subsidies, no clear consensus has emerged on how much money is actually involved. In part, this is due to differing definitions on what actually constitutes a subsidy. Should management expenses such as surveillance or stock assessments be included? Is development aid for small-scale fisheries in developing countries a subsidy? But more importantly, it is a result of a lack of transparency and public access to the relevant data. Nonetheless, surveys by the World Bank, the OECD, UNEP, APEC and FAO have demonstrated that significant amounts of money are funnelled into the fishing industry, possibly as much as $15 to 20 billion per year, equal to 20% to 25% of dockside revenues. Canada, the EU, Japan, Korea, Norway and the USA are among the heavier contributors.

Discussions in the WTO

There are two schools of thought on what should be done about fisheries subsidies. One, which refers to itself as the "Friends of Fish" (FoF) and includes Australia, Ecuador, Philippines, New Zealand, Argentina, Chile, Peru, Iceland, Norway and the US, argues that certain subsidies not only lead to over-capacity of the world's fishing fleets and depleted fish stocks, but, even worse, they commit the cardinal sin of distorting trade. According to this line of reasoning, in situations of competition for access to fish stocks, especially depleted stocks, fleets benefiting from such subsidies as third-country agreements or aid for fleet construction have an unfair advantage compared to non-subsidized ones. Since one third of the global catch enters international trade, this inevitably leads to trade distortions.

Japan and Korea are of the opposite view - there is no evidence that subsidies lead to over-fishing, stock depletion or trade distortions, and these unfortunate situations are best dealt with by improved international cooperation in fisheries management and control. Consequently there is no need to treat fisheries subsidies any differently from any other type of industrial support. Indeed, they reject the precedent of giving fisheries a special treatment.

It is doubtless true that fishing fleets are too large at the global level, and that this has led to depleted stocks. The extensive financial support given by certain governments to the fishing industry has played a role in this. To that extent, any reduction in subsidies to the fleets is arguably a good thing, so the recent decision by the EU should be welcomed and other countries should be encouraged to reduce their subsidies as well. However, that does not automatically mean that the WTO should be given a pre-eminent role in discussions outside the context of trade.

Subsidies are only part of the complex of problems with fisheries management today. Among others are:
strong market demand encourages massive flows of fish from the developing countries to the rich markets of the north (via vessel exports, fishing agreements or illegal fishing), often from the poorest, most fishery-dependent regions; landings by subsidized vessels from industrialized countries into developing countries may cause distortions in local markets;
control and surveillance on the high seas are virtually non-existent, while in the waters of many developing countries it is scarcely any better, due to a lack of financial and other resources;
fisheries management is too often based upon the flawed concept of maximum sustainable yield, a practice that is known to lead to over-exploitation and depleted stocks, especially in concert with political manipulation of the management process; recent development of a precautionary approach to fisheries has not been widely adopted;
extensive use is made of flags of convenience, especially by ship-owners in rich countries, in order to escape the constraints of conservation and management measures, safety and labour standards and other norms.

The current regime of subsidies may play a role in some of these problems, and to that extent the WTO discussions could play a positive role in improving the lot of fish stocks or coastal fishing communities in both developing and developed countries. But subsidies are only part of the problem, and far more comprehensive and radical reforms to the global system of fisheries management are necessary.

Further, it is not as easy as it might seem to determine if certain types of subsidies are "environmentally friendly" or not. For instance, if ship-owners know that they can always get a million euros or more to decommission or export their fishing vessel when things get really difficult, that can act as an incentive for them to keep fishing longer than they otherwise might. Similarly, aid for the fleets can be put to a number of good uses, such as improving gear selectivity or fuel efficiency. A truly innovative programme could even be used to reshape the fishing fleet, placing more emphasis on the development of smaller vessels that provide more employment while doing less harm to the marine environment, thus reversing the current trend towards excessively efficient monster vessels that make unsustainable catches with minimal crews. Certain types of government expenditure, though, should clearly not be described as subsidies; programmes for stock assessments, control and surveillance and research into gear selectivity, among others, belong within the mandate of governments, which are responsible for managing fisheries for the public trust.

One possible guideline that could be used is the extent to which subsidies contribute to the realization of the principles of good fisheries management and the application of a precautionary approach, as defined in Articles 5 and 6 of the UN Fish Stocks Agreement. While the Agreement is restricted to straddling and highly migratory stocks, its principles are relevant to fisheries in all waters.

In short, bringing some sanity to the use of subsidies for the fishing industry, without at the same time favouring the fleets of the world's richest and most powerful countries, is a very laudable objective, but it is also a very complicated affair, necessarily paying great attention to regional conditions. The sledge-hammer approach that the WTO is well known for is not conducive to these subtleties, which implies that strict constraints on the mandate for the discussions are necessary.

A More Tailored Regional Approach

The appropriate venue for the examination of the factors contributing to the current depleted status of so many fish stocks is the network of multilateral bodies that have been developed for just such a purpose - the regional fisheries organizations (RFOs). They differ widely in their geographical scope, their mandate, their effectiveness and their membership, but they have been specifically designed as fora for fisheries management and cooperation. While none of them are ideal, the recent entry into force of the UN Fish Stocks Agreement has significantly strengthened the importance of RFOs and should lead to a greater degree of harmonization among their provisions. Recent examples show how the RFOs are coming to grips with excessively large fishing fleet capacity, which, in the absence of effective management, is arguably the single biggest threat to sustainable fishing.

Some, particularly the tuna RFOs, have begun to establish explicit limits on the capacity that is authorized in a fishery. The members of ICCAT have agreed to limit the capacity of their fleets in certain fisheries (albacore, bigeye) and the IOTC is considering a similar approach. The IATTC reached an agreement on limiting capacity for 1999 but were not able to agree for subsequent years.

Agreeing on how many vessels to allow into a fishery is only a first step, obviously, as deterrence must be established to prevent other fleets from fishing without authorization. Two approaches have focussed on denying market access. Catch documentation schemes use certificates to identify fish that has been caught in conformity with the appropriate management measures of the RFO. CCAMLR , ICCAT and the CCSBT use variations on this theme and contracting parties are to prohibit the importation of fish that is not accompanied by a certificate.

The most interesting measure so far adopted by an RFO though is the prohibition of imports from specified countries. Over a period of years, ICCAT has formally identified several countries as fishing outside the internationally agreed conservation and management programme and adopted bans against the importation of certain species of tuna. At present, five countries are sanctioned, including both ICCAT members and non-members.

Considering the current poor state of the world's fish resources, it is obvious that the RFOs still have a long way to go but it is equally clear that they are showing encouraging signs of waking up from their lethargy. ICCAT is a good example, having shown impressive imagination, even daring, in its recent activities. Though the import bans adopted there have not been challenged under the WTO, the WTO Secretariat has stated that they are "WTO-consistent (i.e. non-discriminatory) use of trade measures".

Fish stocks, fishing fleets and capital are all highly mobile, so considerable coordination and among RFOs is required if their management is to be effective and lead to sustainable fisheries - they can no longer act in isolation from each other. FAO has been of some help in this regard but there is an urgent need for deeper and broader levels of cooperation.

Regional Fisheries Organizations or the WTO?

The WTO has proven itself to be an institution of remarkably little subtlety or nuance. It tends to approach issues from a single perspective, that of their impact on trade, and usually even that is limited to impact on the trading economies of the richest countries. However, the WTO is the body with a mandate to adopt rules on subsidies, and subsidies have contributed to overfishing and depleted stocks, as well as economic hardship and local market disruption in developing countries. The challenge is thus to use the clout of the WTO to reduce the destructive influence of subsides while not allowing it to take control over the international system that has been built up for fisheries management.

The WTO should strictly limit its mandate to subsidies and other trade-distorting mechanisms such as tariffs. All other aspects of fisheries are best left to the bodies that are specialized to deal with them, including the FAO and the various RFOs. Conservation measures that these bodies have so far taken, including catch documentation schemes, trade restrictions and access limits to fish stocks must be preserved and supported, rather than undermined in the name of free trade.

The WTO's role must be a supportive one, in that its activities must be geared to facilitate the implementation of the conservation and management measures that the RFOs, with their far greater expertise and more specific mandate, decide are necessary. It is particularly important to ensure that developing countries are given the help that they need, as so far, both bilateral and multilateral aid schemes are often linked to access agreements or tariff reductions.

If the demands being made by the Friends of Fish for the Doha Agenda are limited to this, and if they can simultaneously use their enormous political and economic influence to improve the effectiveness of the RFOs to reduce overfishing, provide help to developing countries and to strengthen control and surveillance programmes, then the Round will have accomplished something worthwhile with respect to fisheries.

reprinted courtesy of the H. Boell Foundation, Germany