fishing -...

Fishing Subsidies

Can the WorldTrade Organization Play a Positive Role?

TURNING THE TIDE ON

Fishing village on Kefalonia Island, Greece.

© WWF-Canon/Michel Gunther

Fishing Subsidies

Can the WorldTrade Organization Play a Positive Role?

TURNING THE TIDE ON

T U R N I N G T H E T I D E O N F I S H I N G S U B S I D I E S 1

When trade ministers from more than 144 countries met under the auspices ofthe WTO in Doha, Qatar, in Novemberof 2001, they agreed on a broadagenda for new global trade talks.Unique among the decisions made inDoha was a commitment to “clarify andimprove WTO disciplines on fisheriessubsidies, taking into account the importance of this sector to developingcountries.”1 By agreeing to addressgovernment payments that encourageoverfishing, the WTO has taken on asubject that is critical to the health of theworld’s oceans and to fishing communi-ties. Harmful subsidies, which supportthe overcapacity of the world’s fishingfleets, are a major root cause of over-fishing and destructive fishing practices.This decision represents a turning pointfor the WTO. For the first time ever, asignificant element of a global tradenegotiation is directly intended to helpconserve a vital natural resource, withthe twin goals of environmental steward-ship and sustainable development.

The World Trade Organization

(WTO) today has an unprece-

dented opportunity to help

improve the environmental and

economic health of the world’s

oceans by disciplining harmful

fishing subsidies. But success will

require negotiators to make

conservation and sustainable

development real priorities.

Harmful subsidies,which support theovercapacity of theworld’s fishing fleets,are a major root causeof overfishing anddestructive fishingpractices.

1 Doha WTO Ministerial 2001: Ministerial Declaration, WT/MIN(01)/DEC/1, ¶ 28 (WTONovember 2001).

2 T U R N I N G T H E T I D E O N F I S H I N G S U B S I D I E S

But if the negotiations on fishing subsi-dies are to deliver meaningful results,governments will have to move beyond“business as usual” at the WTO.

c They will have to make good ontheir repeated promises to give real priority to conservation anddevelopment.

c They will have to broaden theirthinking about the economic inter-ests at stake in a global economy.

c They will have to recognize theneed for the WTO to work inharmony with

international bodies responsible formanaging ocean resources andprotecting the environment.

c They will have to negotiate andadminister new WTO rules in a manner that is truly open and participatory.

Since 1997, WWF has worked hard toraise the issue of fishing subsidies andto put the topic on the agenda at theWTO. With the WTO talks now underway, WWF offers this issue brief as aguide to what governments must do tomake those negotiations a success.

PAYING FORDEPLETION

Many nations pay out significantsubsidies to their commercial

fishing sector to build and moder-nize fishing vessels. These subsidies

increase the capacity of the fleets of subsidizing nations, not only

giving them a competitive advan-tage but also creating excess

fishing capacity that outweighs theavailable resources. In simple

terms, there are too many boats,chasing too few fish.

In the South Atlantic, subsidizedvessels played a significant role

in the 1997 collapse of a highly valuable hake fishery off Argentina.

In the North Atlantic, subsidies perpetuated the cycles of

overfishing that brought major cod stocks to the edge of

commercial extinction.

Along the coasts of West Africa,artisanal fishing communities

watch as subsidized industrial fleets “strip-mine” their waters.

In the Pacific, subsidies alter thecompetitive balance in the race for prized fish such as tuna and

toothfish (“Chilean sea bass”).

Given such examples, it is nowonder that the World Bank, Asia

Development Bank, Asia-PacificEconomic Cooperation (APEC),

Organization for Economic Cooper-ation and Development (OECD),

U.N. Food and Agriculture Organi-zation (FAO), U.N. Commission onSustainable Development, and even

the WTO secretariat itself have allconcluded that harmful fishingsubsidies can have a negative

impact on fishery resources.

© WWF Spain/Luis de Ambrosio

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Danish industrial trawler fishing inthe North Sea.

Spanish trawler in the southern Atlantic Ocean.

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The Fishing Subsidies Problem The world’s fisheries are facing anunprecedented crisis. Populations of fish—and indeed of most marinespecies—have declined to a fraction oftheir historic natural levels. The commer-cial productivity of the oceans is at anall-time low, with 73 to 75 percent ofthe world’s major fisheries overex-ploited, fully exploited, or recoveringfrom depletion. Around the world,marine ecosystems and human communi-ties alike are suffering the consequencesof unsustainable fishing.2

The causes of this global crisis aremultiple and complex. Many fisheriesremain poorly managed or ineffectivelypoliced, because of the pervasiveproblem of open-access, common-poolfisheries. There are too few marinereserves and no-fishing zones to protect

biologically sensitive areas (includingimportant fish breeding grounds). Themarketplace for fish products often failsto reward responsible fishing practices.Ultimately, the restoration of healthyoceans will depend on correcting all ofthese problems. But alongside the othercauses of unsustainable fishing are two crude facts: the world’s fishing fleets are vastly oversized, and manycontinue to receive massive governmentsubsidies that encourage excesscapacity and overfishing.

0 1000 2000 3000 8173

Japan

EU

USA

Canada

Russia

Korea

Indonesia

Chinese Taipei

Norway

Spain

Italy

China

OFFICIALLY REPORTED SUBSIDIES TO FISH HARVESTING (US$M)3

These figures, compiled in a recentWWF report, total the fishing subsidies some leading countries have formally reported to interna-tional bodies. The WWF has found,however, that these figures areriddled with gaps and almostcertainly significantly underreportactual levels of subsidization.

Hard Facts, Hidden Problems (WWF 2001)

1996

1997

2 The State of the World Fisheries and Aquaculture 1999 (FAO 2000).3 Hard Facts, Hidden Problems: A Review of Current Data on Fishing Subsidies (WWF 2001).

A truck load of sardines for export.©

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The commercial productivity ofthe oceans is at an all-timelow, with 73 to 75 percent ofthe world’s major fisheriesoverexploited, fully exploited,or recovering from depletion.

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Global fishing fleets are estimated to beup to 250 percent greater than neededto catch what the ocean can sustainablyproduce.4 This excess capacity bringssignificant pressures on fisheries andfishers around the world and createspolitical realities that make it evenharder for governments to adopt goodfisheries management policies. Addingto the complexity of the current situationare the legitimate needs of some developing countries to expand theirfishing industries.

Underlying much of this overcapacity, and often driving unsustainable fishingpractices, are large subsidies paid bysome governments to their fishing indus-tries. Estimated to total at least US$15billion per year worldwide (roughly 20percent of the value of global fishcatches), the bulk of these subsidies leadto overfishing. Developing countries areoften particularly affected, as they

confront the excess capacity exportedfrom the mostly depleted fisheries ofricher countries. Meanwhile, detailsabout fishing subsidy payments oftenremain hidden from public view bygovernments (and subsidy recipients)who prefer not to reveal where themoney really goes.

Most governments now recognize thatharmful fishing subsidies are at the rootof the problem, and some have begunto take preliminary steps toward reform.As in most sectors, however, once subsidies are given, they are difficult to withdraw. Vested interests andmisguided politicians still resist realchange, and the harmful subsidiescontinue to flow. Solving the problemwill require action at the national leveland in a variety of international fora.The WTO can and should be one important part of the solution.

MONEYMADNESS

The lack of public oversight overfishing subsidies sometimes leadsto tragic results. In the only public

audit of fishing subsidies everconducted, the European Court of

Auditors found numerous pay-ments to recipients who did not

qualify for the subsidies, includingat least one to a vessel that had

already sunk. In the United States,a recent Government Accounting

Office report found vessel buy-back programs (designed to help

reduce excess fleet capacity) soineffective that it recommended

cutting off those funds.

4 Gareth Porter, Estimating Overcapacity in the Global Fishing Fleet (WWF 1998).

Dragging a full net on board a trawler in the southern Atlantic Ocean. © WWF Spain/Luis de Ambrosio

Global fishing fleets are estimated to be up to 250

percent greater than needed tocatch what the ocean can

sustainably produce.


A Positive Role for the WTO?Some people may wonder how an inter-governmental body dedicated to tradeliberalization can help conserve theworld’s marine resources. The answeremerges from the nature of the fishingsubsidies problem and from the mandateof the WTO to pursue expanded trade,

“while allowing for the optimal use ofthe world’s resources in accordance withthe objective of sustainable develop-ment, seeking both to protect andpreserve the environment and toenhance the means for doing so . . . .”5

Subsidies that distort internationalmarkets have been one of the maintargets of global trade rules since themultilateral trade system was foundedshortly after World War II. In fact, theWTO already prohibits some subsidies,particularly those directly designed topromote exports or prevent imports, andestablishes some controls over mostothers. Although the WTO has moreexperience dealing with harmful subsi-dies than any other international body,current WTO rules nevertheless fall shortwhere harmful fishing subsidies areconcerned (see sidebar).6

The gaps in the WTO rule system canand should be fixed. In fact, the WTOand its members have been promisingfor years to negotiate new rules thatdeliver true ”win-win-win“ outcomes fortrade, the environment, and sustainabledevelopment. But steps toward theWTO’s first real ”win-win-win“ were nottaken until the spring of 1998, when agroup of WTO countries, includingIceland, New Zealand, the Philippines,Peru, Australia and the United States,issued a joint public call for the WTO totake action on fishing subsidies in orderto address the problems of overcapacityand overfishing. Since that time, WWFhas worked closely with these and otherinterested governments to develop broadsupport for the issue and to overcomethe resistance of a few key WTOmembers, notably the European Unionand Japan, two of the world’s leadingsubsidizers of their fishing industries. Finally, last November,

Underlying much overcapacity, and often driving unsustainable fishing practices, are large subsidies paid by some governments to their fishing industries.

GAPS INCURRENT WTO RULESc The WTO defines “subsidy"

too narrowly, leaving doubtwhether some important fishing subsidies are covered(e.g., government-to-govern-ment payments for fishing rights for national fleets inforeign waters).

c Current WTO rules onlyconsider the harm done whenexporters lose market share to subsidized fish—the rulesignore the damage done when subsidies prevent fish-ermen from catching fish in the first place.

c Current WTO rules do notaddress the issue of sustain-ability and fail to considerwhether subsidies contribute to excess capacity, over-fishing, or unsustainablefishing practices.

c Current WTO rules offer nomechanism for the scheduledphase-out of harmful fishingsubsidies in place today.

c Current WTO enforcementdepends too heavily on legalchallenges and trade sanc-tions, making it difficult orimpossible for smaller countriesto confront the misdeeds oflarger ones.

c Existing WTO rules thatrequire governments to publishinformation about their subsidyprograms are weak and widely ignored.

Current WTO rules fall shortwhere harmful fishing subsidies are concerned.

5 Agreement Establishing the World Trade Organization, Preamble ¶ 1 (WTO 1994).6 For a fuller discussion, see Towards Rational Disciplines on Subsidies to the Fisheries Sector: A

Call for New International Rules and Mechanisms (WWF 1998).

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Sorting the catch on the deck of a Newlyn beam trawler.

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governments meeting in Doha agreed toinclude the necessary negotiations in thecurrent WTO talks.

Of course, none of this implies that theWTO should start managing the world’soceans. Since the WTO was created,WWF has joined many other citizensgroups in criticizing the negative impactWTO rules have on conservation andsustainable development. Such negativeimpacts occur when the WTO overstepsits jurisdiction and core competence bypassing judgment on environmental lawsand policies. The fishing subsidies issueis an opportunity for the WTO to play apart—but only its proper part—in thestewardship of a vital natural resource.As discussed below, this effort willrequire the WTO to form new formalrelationships with other relevant institu-tions to cooperate on this issue.

Six Key PrinciplesThe new WTO negotiations began inearnest in March of 2002 and arescheduled to conclude by January 1,2005. But if the talks are to result ineffective fishing subsidy disciplines—disciplines that make conservation andsustainable development true ends inthemselves—WTO members will need tosteer a careful course. On the one hand,if governments cling too closely to theWTO’s traditional modus operandi, theywill never find the means to produce ameaningful result. On the other hand, ifgovernments allow the WTO to exerciseinappropriate authority over conserva-tion and fisheries policies, the resultcould be a trade system that is increas-ingly hostile to development and effec-tive environmental action.

The fishing subsidies issue isan opportunity for the WTO to

play a part—but only itsproper part—in the steward-

ship of a vital natural resource.

Icelandic fishing harbor.


To chart a course between thesehazards, WTO members should aim forimproved WTO disciplines on fishingsubsidies that:

1. Require governments to phaseout and avoid subsidies thatcontribute to excess fishingcapacity, overfishing, and unsustainable fishing practices.New disciplines should include bothgeneral obligations to eliminate andrefrain from harmful fishing subsi-dies, as well as a schedule forphasing out or reforming specificallynamed fishing subsidy programs.The new rules will need to recognizeinternational economic harms thatrelate closely to resource depletionand the access of fishermen to stocks

(i.e., the rules must go beyond asimple preoccupation with the distortion of export markets).

2. Take account of the needs andperspectives of developing countries. Developing countrieshave a lot at stake in the fishingsubsidy issue. Fishing subsidy disci-plines must include rules designed toprevent subsidized vessels fromricher countries abusing the fisherieson which developing countriesdepend. But new disciplines mustalso avoid placing undue restrictionson government developmentprograms and must be crafted withattention to the special needs ofdeveloping countries within theWTO rule system.

THE GOODAND THE BADFishing subsidies come in allshapes and sizes—from taxbreaks for new vessels topayments for scrapping oldvessels and from direct incomesupports to the construction ofport facilities. New WTO ruleswill have to distinguish betweenthose practices that are harmful tothe sustainability of a resourceand those that are helpful—a taskthat will not always be easy.Some types may need to beprohibited outright, such assubsidies designed to expand ormaintain oversized fleets. Othersmay need special protection fromWTO intervention, such assubsidies that demonstrablycontribute to improved fisheriesmanagement or safety. Some mayneed to be disciplined on thebasis of the specific fisherycontexts in which they operate.Crafting the right rules—andadministering them—will requirethe WTO to work with otheragencies with expertise andauthority over fisheries policies.

© M

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Trawlers in Montauk, Long Island, USA.

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3. Give broad definition to the term“fishing subsidy.” The preciseWTO definition of “subsidy” hasbeen the subject of long debate.7

New fishing subsidy disciplines needto resolve existing ambiguities in away that covers any governmentsupports that encourage excesscapacity or unsustainable fishing. Forexample, government-to-governmentpayments under “fishing accessagreements” or as “tied aid” shouldfall within this definition. Excesscapacity in this context is the maintenance of a fishing fleet that is larger than market forces alonewould sustain and that leads to areduction in fish stocks or harm to the wider marine environment (which will in itself further degrade fisheries resources).

4. Recognize that some fishingsubsidies can play an importantrole in the transition to sustain-able fisheries and responsiblefishing practices. For example,when properly designed and moni-tored, subsidies can actually be usedto help reduce fleet capacity or toimplement important managementtools and mechanisms. They may be

helpful in helping fishermen switch to safe and sustainable fishing tech-niques. Subsidies also can be animportant element of sustainabledevelopment policies in poorer countries, for example, in enhancinglocal artisanal and community-basedsmall-scale fishing industries and providing safety nets to protect fishersin a rapidly liberalizing sector. Even beneficial fishing subsidies, however,should be subject to substantiallyimproved monitoring and reportingrequirements, including through the WTO.

5. Create mechanisms for coopera-tion with appropriate bodiesoutside the WTO. The WTO cannotand should not “go it alone” on theissue of fishing subsidies. Administer-ing new disciplines could wellrequire information and judgmentsbeyond the expertise and authorityof the WTO. Such disciplines shouldinclude formal roles for intergovern-mental entities charged with fisheriesmanagement and marine conserva-tion (including, e.g., the FAO andthe United Nations EnvironmentProgramme [UNEP]). These rolesshould ensure that the WTO will not

ACCESSAGREEMENTS

AND SUBSIDIESDistant water fleet nations make

payments to coastal states in returnfor access to their fishery resources,

generally under bilateral accessagreements. The payments are a

form of subsidy to the distant waterfleet vessels fishing in these waters.

These fees, in some instances,contribute to fleet overcapacity in

the waters of developing countriesand can lead to overfishing.

Moreover, they typically representonly a small fraction of the value of

the developing country’s fisheriesresource. In many cases, without

these payments, current distantwater operations would become

uneconomical at current levels.Where these payments are

contributing to overcapacity in afishery, they should be phased out.

Payments for access should be transparent and equitable and

should avoid contributing toproblems of overcapacity.

For more information on fishingaccess agreements, see WWF’s

Handbook for Negotiating FishingAccess Agreements (2001).

AT THE FAO,A FIRST STEP

In 1999 the U.N. Food andAgriculture Organization (FAO)

adopted an International Plan of Action (IPOA) aimed ataddressing excess fishingcapacity. The IPOA treats

subsidies as a prime economicfactor driving overcapacity and

calls on governments to eliminatesubsidies that contribute to unsus-

tainable fishing. But the IPOA is purely voluntary—it has no

binding legal force. And so far,implementation has been less than

vigorous. Still, the FAO’s IPOAmay provide one reference point

for future WTO disciplines.

7 See Rational Disciplines for the history of this debate and its application to fishing subsidies.

Men fishing in Gamba Gabon.

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be drawn into the role of a fisheriesmanagement or conservation body,or infringe on the powers or auto-nomy of existing authorities, such asregional fisheries conventions.

6. Emphasize transparency andeffective public participation.Fishing subsidy programs and theWTO share a common failing: bothtend to operate behind closed doors.In the case of fishing subsidies, thelack of transparency and publicaccountability is a major concern.Studies commissioned by WWFhave repeatedly found that govern-

ments often cannot, or will not tell,the public what really happens to thetaxpayers’ money they spend onfishing subsidies.8 Meanwhile,current WTO rules that requiregovernments to report fishing subsi-dies to the WTO are blatantly disre-garded 90 percent of the time.9 Forits part, the WTO has neverprovided adequate means for public participation in WTOoperations, despite years of publicoutcry. Symptomatic of the closednature of the WTO is the fact that,as the WTO fishing subsidies negoti-ations were getting under way, other

Improved WTO fishing subsidy disciplines should be

administered in a manner that is fully transparent and

that provides meaningful opportunities for effective

public participation.

8 For an overview of this subject, see Fishing in the Dark issues brief and symposium proceedings(WWF 2000). For a comprehensive review of national underreporting to intergovernmentalbodies, see Hard Facts, Hidden Problems.

9 See Towards Rational Disciplines; for an updated review of WTO performance see WWF Press Release “Fishing Subsidies: Governments Admit US$ billions; hide billions more,” 5 October 2001.

Fishing port, Korangi town, Karachi, Pakistan. © WWF/Mauri Rautkari


intergovernmental agencies withexpertise and authority over fish-eries—agencies that should be activeparticipants at the negotiations—were not even granted passiveobserver status.

The current negotiations on fishingsubsidies should address theseproblems by emphasizing trans-parency and public participation in three ways:

c Improved WTO fishing subsidydisciplines should includesubstantially improved and moreenforceable reporting require-ments. These requirements willbe particularly important formonitoring any “beneficial”fishing subsidies allowed undernew WTO rules.

c Improved WTO fishing subsidydisciplines should be adminis-tered in a manner that is fullytransparent and that providesmeaningful opportunities foreffective public participation.This effort will require significantchanges in current WTO prac-tices regarding access to WTOinformation, deliberation, anddispute resolution processes.10

c The WTO fishing subsidiesnegotiations themselves shouldbe transparent, should allow for the formal and effectiveinvolvement of other appropriateintergovernmental bodies, andshould guarantee adequateopportunities for participation byall affected stakeholder groupswithin civil society.

10 Obviously, WWF does not seek suchreforms only with regard to fishing subsi-dies. See, e.g., Reform of the WTO’sDispute Settlement Mechanism forSustainable Development (WWF 1999).

Mauritanian fisherman at work, untangling catch from the mesh.

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Moving AheadDisciplining fishing subsidies presents challenges that are at once straightfor-ward and complex, and achieving apositive outcome at the WTO willrequire both creativity and technicalskill. Above all, however, WTOmembers will need the political commit-ment to embrace environmental anddevelopmental interests among theWTO’s core clientele. Governments cando this without weakening traditionaltrade disciplines. And they can do itwithout overstepping the WTO’s legiti-mate authority.

If governments succeed at seizing thisfirst concrete “win-win-win” opportunity,they not only will make a lasting contri-bution to the health of the world’smarine ecosystems, but they also will seta precedent for a better balanced andmore productive WTO. If governmentsfail, threats to the world’s fisheries willincrease, and skeptics will have solidreason to believe that the WTO is inca-pable of living up to its promises—andits mandate—to make a real contributionto sustainable development and thestewardship of natural resources. Now is the time for the WTO to prove it really can help turn the tide on harmfulfishing subsidies.

Fishing boat, Waddensea, Netherlands. © WWF-Canon/Hartmut Jungius

For more information contact

Claudia Saladin Aimee GonzalesDirector Senior Trade Policy AdvisorSustainable Commerce Program Trade and Investment UnitWorld Wildlife Fund WWF International1250 24th Street, NW Avenue du Mont Blanc 27Washington, D.C. 20037 CH 1196, Gland, [email protected] [email protected]://www.worldwildlife.org/commerce http://www.panda.org/

WWF is the world's largest and most experienced independent conservationorganization. We have 4.7 million supporters and a global network in over96 countries. WWF's mission is to stop the degradation of the planet'snatural environment and to build a future in which humans live in harmonywith nature by

n conserving the world's biological diversity,

n ensuring that the use of renewable natural resources is sustainable, and

n promoting the reduction of pollution and wasteful consumption.

© 2002 WWF. All rights reserved by World Wildlife Fund, Inc.

© 1986, W

WF–know

n internationally as the World W

ide Fund for Nature, ®

Registered Trademark ow

ner

FRONT COVER (top to bottom)

Background: Fishing boat, Waddensea, Netherlands. © WWF-Canon/Hartmut Jungius

Fishing village on Kefalonia Island, Greece.© WWF-Canon/Michel Gunther

Icelandic fishing harbor.© Michael Sutton

Codend on the deck of a factory trawler. Reykjaviks Ridge,southwest of Iceland.© WWF-Canon/Quentin Bates

Fishing port, Korangi town, Karachi, Pakistan.© WWF/Mauri Rautkari

Emptying the codend on the deck of beam trawler “Liliane J”.© WWF-Canon/Quentin Bates

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