Reviving the Oceans, Revitalizing the WTO: Three Ways to Make the WTO Agreement on Fisheries Subsidies a Success
Christine McDaniel, Senior Research Fellow, Mercatus Center at George Mason University
This week, all eyes are on the WTO 13th Ministerial Conference (MC13) and its 2022 Agreement on Fisheries Subsidies— not only out of concern for sustainability but also because the agreement is seen by many as a test of whether WTO members can still use the institution to strike a meaningful deal. The 2022 agreement was a landmark deal that establishes a binding set of global rules to curb harmful fisheries subsidies. Further rules proposed for MC13 would help members better target the underlying role of harmful fisheries subsidies that cause overcapacity and overfishing.
Once two-thirds of WTO members sign on, the real test will be in implementation. Recent research highlights three ways to make implementation a success, including bottom-up solutions that involve local communities, leveraging existing international agreements like regional fisheries management organizations, and swift implementation combined with technical assistance for developing countries on monitoring and enforcement.
Members will consider additional rules during MC13 that better address subsidies that drive overcapacity in global fishing fleets and incentivize unsustainable levels of fishing. Indeed, the problem is pressing: The United Nations (UN) reports that approximately 90% of the world’s marine fish stocks are now fully exploited, overexploited, or depleted.
While most trade policy practitioners are well-versed on tariffs, subsidies, and trade flows, few are as familiar with the ins and outs of global overfishing, at least beyond headline numbers. In June 2023, the Mercatus Center at George Mason University and the Center for Governance and Markets at the University of Pittsburgh brought together experts across disciplines for an intensive workshop to identify how to make the WTO Agreement on Fisheries Subsidies a success. Legal experts, industry participants, marine biologists, oceanographers, economists and other social scientists, who might not otherwise cross paths, came together to identify key factors in the implementation of the agreement. Interested readers can access participants’ issue briefs here, and hear participants explain why the multidisciplinary approach is essential here.
Bottom-up solutions are key
A common response to economic policy problems is often to increase centralized authority. However, there was an overwhelming agreement among workshop participants that for meaningful solutions to complex problems such as global overfishing, bottom-up solutions are essential. Participants drew on their vast experience with bottom-up solutions and global commons resource problems. Professor Ilia Murtazashvili of the University of Pittsburgh and Associate Director of the Center for Governance and Markets, said that governance institutions that work best here will likely involve local and indigenous communities, the people being governed (fishers), the nonprofits that want to improve fisheries management, and regional organizations responsible for management and conservation of fish stocks. Implementation design must tap into the incentives of each participant along the supply chain from fisher to consumer. Each participant must be part of designing implementation to ensure proper incentives to comply and penalties for non-compliance. “When people are given the space to be creative,” Murtazashvili writes, “they can find multifaceted solutions to complex, global problems.”
Leverage existing international agreements
The WTO Agreement on Fisheries Subsidies won’t exist in a vacuum. WTO members should leverage other international agreements for success. Elizabeth Mendenhall explains that WTO members can use the Biodiversity Beyond National Jurisdiction Agreement, which calls for the creation of a committee to oversee capacity building and the transfer of marine technology. Capacity building is critical because it will “empower coastal developing and island states to more fully and effectively participate in monitoring, verification, and enforcement,” Mendenhall writes.
WTO members should also leverage regional fisheries management organizations, which oversee commercial fishing in more than 95% of the world’s oceans. The WTO Agreement on Fisheries Subsidies prohibits subsidies to a vessel or operator engaged in IUU fishing, and IUU fishing includes where a regional fisheries management organization has made a determination of IUU fishing (through placing a vessel on an IUU vessel list). These regional organizations can enable members to scale up workable solutions.
Regional fisheries management organizations can also support the WTO agreement in policing illegal, unreported, and unregulated (IUU) fishing through vessel lists, observer requirements, and catch documentation schemes, all of which can help ports flag illegal catches. Mendenhall explains that the UN Law of the Sea Convention (UNCLOS) has an important follow-on Fish Stocks Agreement that obligates states to participate in the cooperative management of shared international fisheries through the creation and operation of such regional organizations.
Developing countries have the most to gain
Large, subsidized foreign fleets are overfishing waters in and around the exclusive economic zones of developing countries, and threatening the livelihoods of coastal communities reliant on the seas. The citizens of these developing and emerging economies have the most to gain from the WTO Agreement on Fisheries Subsidies.
An estimated 600 million people depend at least partially on fisheries and aquaculture. But catch rates are in decline. For instance, India’s “per-capita catch per fisher has declined from 3.0 metric tons in 1980 to 2.3 metric tons in 2019,” report Badri Narayanan Gopalakrishnan and M. Krishnan, two Indian economists and fisheries experts.
India and other coastal and developing nations suffer from subsidized industrial foreign IUU fishing in and around its coastal waters. Narayanan and Krishman explain the consequences including reduced export earnings, food security concerns, and challenges for poverty alleviation. In this way, the WTO agreement can be seen as a helpful tool in the economic development of countries like India.
Director of the Ocean and Climate team of the UN Foundation Kerrlene Wills explains the challenges for countries in the Caribbean Community (CARICOM). In fact, the Western Central Atlantic Region, which includes the Caribbean, is among the world’s top five overexploited fisheries. IUU fishing in that region is estimated to account for 20% to 30% of the total reported harvest. According to Wills, enforcement of existing regulations is weak and small-scale and artisanal fishers often lack systems that monitor the movement of fishing vessels and the subsidies. Technical assistance should aim to design interagency systems and digital databases. These efforts would aid in conservation management, she argues, and generating lists of vessels and operators that have been determined to commit IUU fishing in accordance with the notification requirement under Article 8.2 of the WTO Agreement on Fisheries Subsidies.
“Working with key international partners will be important for CARICOM countries in the fight against illegal fishing by distant-water fishing vessels,” Wills says. She points to the role of the U.S. Southern Command in tackling IUU fishing and strengthening CARICOM countries’ defense against IUU fishing in the region. Coast guards in Latin America and the Caribbean are also key in these partnerships and should be part of capacity building efforts.
Wills suggests that once the agreement goes into force, a WTO Fisheries Funding Mechanism could be essential in supporting CARICOM countries and other developing, coastal nations in implementation, such as meeting the agreement’s notification requirements. The fisheries fund could be used to help countries meet the agreement’s notification and transparency requirements, such as gathering and reporting on the types of fishing activities for which a subsidy is provided, the status of fish stocks in question, catch data, and fisheries management measures. Such a fund could assist regional and national fisheries management bodies in strengthening systems that collect and report on these types of data.
Successful implementation requires bottom-up solutions, leveraging international agreements, and technical assistance
The UN reports that approximately 90% of the world’s marine fish stocks are now fully exploited, overexploited, or depleted. Harmful subsidies are a key driver of overfishing, and the WTO Agreement on Fisheries Subsidies is a significant milestone. Adopting the additional disciplines that WTO members are considering at MC13 is just as important. The additional disciplines will provide members with effective ways to address the harmful subsidies that lead to unsustainable fishing capacity. Once the broader agreement is adopted, WTO members should implement the agreement with bottom-up solutions that involve local communities, leverage existing international agreements like regional fisheries management organizations, and swift technical assistance for developing countries on monitoring and enforcement.
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