How to craft a strong WTO deal on fishing subsidies

19 November 2020

By David Vivas Eugui, Legal Officer, UNCTAD

Tuna fish market in Japan
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Japanese tuna fish market / ©Mario

The chair of the World Trade Organization’s (WTO) negotiations on fish subsidies recently presented its members with a revised consolidated text for a potential agreement on tackling harmful fish subsides.

The move has renewed hope for a positive outcome on an issue that has been under negotiation for more than two decades, as such a text has only been on the table on two other occasions, in 2007 and 2017.

However, much of the text hasn’t yet been agreed due to significant differences among countries. Bridging the differences will require real compromises by WTO members.

A meaningful outcome on fish subsidies will yield a key piece of multilateral trade and oceans governance. It could significantly reduce and phase out public support to illegal, unreported and unregulated (IUU) fishing, fishing of overfished stocks, overcapacity and overfishing. It could also potentially cap or reduce support to industrial fishing, particularly in the high seas.

Even though the current text shows a near-complete set of rules that could help countries agree on a range of issues, several gaps remain. The future agreement needs to do six things:   

1. Be as comprehensive and effective as possible

Disciplines for subsidies to IUU fishing, overfishing and overcapacity should be clearly maintained, enhanced and not weakened, as vessel operations with no enforceable and effective control by government authorities can lead to the continuation of overexploitation. Disciplining subsides to industrial fleets and the most harmful practices and activities in the high seas must remain the main target.

The currently proposed three-pillar prohibition scheme would be compatible with a subsidies cap and reduction system under the text if flexibility for developing countries and small scale and artisanal fishers is incorporated. Special and differential treatment must be devised as a tool for enabling sustainable fisheries development, with incremental incorporation of developing countries, least developed countries (LDCs) and small island development states (SIDS) into the disciplines.

2. Be accompanied with significant support for IUU fishing sanctioning, monitoring and transparency, and a related subsidies allocation.

Disciplines to prohibit subsidies to IUU fishing as currently drafted will only apply to final determinations by countries (whether coasts, flag, subsidising or port states) or by regional fish management organizations (RFMOs), based on positive evidence and under due process. 

While this would be an important achievement, firm IUU determinations are the last phase of investigations or sanctioning processes nationally or regionally. Also, most countries don’t compile records for IUU fishing determinations at the national level. Therefore, any agreement, should also consider significant support for the improvement of monitoring and transparency capacity in IUU vessels’ determinations by WTO members, and with legal support to establish national ex ante and ex post procedures for withdrawing benefits in proportion to the type of violation.  

3. Apply prohibitions to subsidies concerning overfished stocks, overcapacity and overfishing to members, even in the case of solid stock management systems.

Under the current draft, this type of subsidies can be granted or maintained when implemented in a manner that ensures stocks’ rebuilding by the coastal member where the fishing is occurring or by the relevant RFMOs in areas and species of competence.

Therefore, if a country can prove that it has a good stock management system, it can continue or even expand subsidies unless a cap and reduction system is also added. This has been pointed out by various developing country observers as a reverse special and differential treatment, as such a provision will free most industrialized countries from prohibitions, making them only applicable to countries with weak management systems.

While such a provision does not necessarily imply a negative effect on stocks, it would give fleets from countries with good stocks management capacity an unfair financial advantage over fleets located in countries with low management capacity, making asymmetries in the fisheries sector even worse.

4. Be applicable to fuel subsidies even if not specific.

While this is not yet agreed upon, fuel needs to be listed as part of the operational costs prohibited under disciples on subsidies concerning overcapacity and overfishing.  Subjecting fuel subsidies to disciplines will be essential for a future outcome to be effective, as it’s estimated that fuel can account for between 50% and 80% of fishing costs.

5. Shift subsidies that hinder sustainable fishing towards blue recovery support.

Such a shift needs to be better reflected in the text. There is no better time to introduce subsidies reform than during the COVID-19 pandemic and post-pandemic period, as resources need to be urgently reallocated to enable recovery and stop unsustainable activities

Taxpayers’ money should be used to support good and effective management and use of stocks; sustainable and selective fishing by small scale and artisanal fishing; transition towards alternative economic activities by affected populations (e.g. toward sustainable aquaculture and port logistics); and improved sanitary, human rights and labour performance, especially in the high seas.

6. Establish conditions for its effective implementation, including inter-agency cooperation in the implementation and technical assistance support.

A WTO fish subsidies outcome will imply significant implementation efforts in terms of scoping analysis of existing fish subsidies (i.e., volumes and allocations).

Also, it will require support for data gathering and notification in accordance with Article 25 of the WTO Subsidies and Countervailing Measures Agreement and a future fish subsidies outcome, and national and regional policy and legal reforms to implement new disciplines (e.g., introduction of prohibitions, monitoring systems, ex ante and ex post procedures for withdrawing benefits for non-compliant actors, subsidies box shifting, and potentially capping systems).

Expertise will also need to be drawn from agencies with specific fisheries, development and environment mandates. In this regard,  cooperation with the WTO under the UNCTAD-FAO-UNEP Inter Agency Plan of Action on Sustainable Development Goal 14 could be a vehicle for enabling a wider implementation base and internal reforms.  

While all WTO members are working hard to weave a net for fish subsidies disciplines, they must be careful not to leave large holes that would allow public support to harmful and inequitable practices to fall through. 

UNCTAD stands ready to support countries in implementing a future WTO outcome and ensuring it is effective and conducive to sustainable blue economy, especially in the developing countries, LDCs and SIDS.