WTO Fisheries Subsidies Negotiations: Aligning Trade with Sustainability
Penelope Ridings is an International Lawyer, New Zealand’s Candidate for the International Law Commission for the term 2023-2027, Member of the Pool of Arbitrators of the WTO Multi-Party Interim Appeal Arbitration Arrangement, and Legal Advisor to the Western and Central Pacific Fisheries Commission.
After 20 years, negotiations on harmful fisheries subsidies are reaching their final stage. The Chair of the negotiations has tabled a revised Chair’s text, accompanied by an explanatory memorandum, which seeks to reduce gaps and build convergence around precisely how to discipline fisheries subsidies. A virtual WTO Ministerial meeting is scheduled for 15 July, 2021 to review a final text. I argue that the success of the WTO negotiations is within reach. If success is achieved, this will be due in part to aligning the outcome of the WTO negotiations with existing international legal frameworks and sustainable fisheries management, and recognition of the special circumstances of subsistence, artisanal and small-scale fisheries.
What is the problem with fisheries subsidies?
The Food and Agriculture Organisation (FAO) reports that the percentage of fish stocks that are within biologically sustainable levels has decreased from 90 percent in 1974 to 65.8 percent in 2017. In other words, about 34 percent of stocks are fished at biologically unsustainable levels. The sustainability of global fish stocks has steadily worsened over the last few decades. This has been paralleled by increasing concern over the potential contribution of fisheries subsidies to the decline in fish stocks. The issues were raised by the FAO, other intergovernmental organisations, and think tanks. The extent of the problem is significant. Governments around the world spend USD $35.4 billion on fisheries subsidies each year. Of that total, more than USD $22.2 billion is spent on subsidies to enhance the fishing capacity of fleets. This includes subsidies for construction or modernisation of vessels and subsidies for operational purposes, such as the purchase of fuel, bait and ice. But not all fisheries subsidies are harmful. Some, such as subsidies for fisheries research and management, are beneficial for the sustainability of fisheries resources.
The heart of the problem is fishery subsidies which enable a fishing industry to continue to fish even though its fishing operations would be uneconomic without a subsidy. This encourages overfishing and leads to a decline in global fish stocks. Fisheries subsidies which benefit industrialised fishing operations drive out other fishers from the fishery and leave artisanal and small scale fishers unable to compete. Subsidies facilitate illegal, unreported and unregulated (IUU) fishing and adversely impact disproportionately on developing countries, their food security and the livelihoods of their coastal communities.
The WTO: following the lead or leading the charge?
The FAO is the responsible global fisheries management organisation and has worked for many years on measures to prevent overfishing, overcapacity, and IUU fishing. In 1998 the FAO International Plan of Action for the management of overcapacity recommended the reduction and elimination of harmful subsidies that contribute to overcapacity and overfishing. However, it was the existence of strong enforcement procedures under the WTO which inspired interest in finding a way for the WTO to become involved in sustainability issues, including through controlling subsidies to fishing industries.
The WTO negotiations on disciplining fisheries subsidies have had a bumpy ride. It was not until attention shifted to other international fora that global political support galvanised behind the need to address the link between fisheries subsidies and overcapacity, overfishing, and IUU fishing. This culminated in the adoption by the United Nations General Assembly of SDG target 14.6 which revitalised WTO negotiations on fisheries subsidies and set 2020 as a deadline for their conclusion. Although this deadline has passed, the WTO has reasserted its leadership role. There is now a greater likelihood of successful conclusion of the negotiations than ever before.
The core issues in the negotiations
There are three central pillars in the WTO fisheries subsidies negotiations: rules on i) fisheries subsidies to vessels engaged in IUU fishing, ii) subsidies for fishing on overfished stocks, and iii) subsidies which contribute to overcapacity and overfishing. Together with the three pillars are provisions relating to special and differential treatment (SDT) which would cover all three pillars, and notification and transparency requirements to facilitate implementation and monitoring of the disciplines. Although there is consensus on the general shape of the fisheries subsidies rules, there is less agreement on some of the details within each of the three pillars. In particular there are divergent views on what flexibilities will apply within each pillar, and the nature of the SDT flexibilities accorded to developing countries. These remaining differences highlight a tension between those Members seeking higher ambition, and those seeking to protect their subsistence, artisanal and small-scale fisheries and to develop their domestic fishing capacity in their waters. The largest subsidisers are unlikely to adopt constraints on their fisheries subsidies unless others are prepared to do the same.
A few issues have vexed the negotiations to date and remain unresolved. One of these is defining the rules and flexibilities relating to the subsidies which contribute to overcapacity and overfishing. Consensus now appears to be forming around a proposal to allow some flexibility based on sustainability of fish stocks. However, the SDT issue remains unresolved. In the IUU fishing pillar and the overfished stocks pillar, the proponents of SDT are arguing for an exemption to address the difficulty of implementing the disciplines in subsistence, artisanal or small-scale fisheries. Others argue that no SDT provision should be included in those pillars given the need to prevent IUU fishing and rebuild overfished stocks. In the overfishing and overcapacity pillar, there are divergent views on the purpose of SDT mechanisms. On the one hand there is a view that the SDT provisions could support implementation of the new disciplines in these fisheries, and on the other that they are necessary to provide policy space to developing countries to allow them to develop their fishing capacity in their waters. At the core of this is not only recognition of the need for food security and incomes for small-scale and artisanal fishers, but also the role of the coastal State in developing its fishing capacity within its waters.
Aligning trade with existing fisheries management and legal frameworks
In an earlier blog, I suggested that in order to be successful, WTO disciplines on fisheries subsidies had to align with fisheries management. The WTO is not a fisheries management organisation, nor should it be. However, a way must be found to fold determinations of IUU fishing and assessments of overfishing into WTO disciplines in a way which respects the existing international legal frameworks for fisheries management.
As the negotiations have progressed, there has been a greater appreciation of the differing mandates of the WTO and those involved in fisheries management, and the need for the WTO disciplines not to interfere with the latter. Attention has been paid in the Chair’s text to the use of consistent concepts to ensure that there is no inadvertent overlap or fragmentation of international legal requirements. For example, IUU fishing is being addressed in a way which does not seek to amend or interfere with the existing legal frameworks for addressing IUU fishing, including those of regional fisheries management organisations or arrangements (RFMO/As). This recognition of existing frameworks would be overturned if due process and evidentiary standards were imposed on RFMO/As which make determinations of IUU fishing, as suggested by some Members, even though RFMOs are governed by international law and comply with their own procedures for listing of IUU vessels. By way of another example, some draft provisions been revised to avoid a WTO panel inquiring into the fisheries management decisions of coastal States or RFMO/As. In these ways, the revised Chair’s text better aligns the WTO fisheries subsidies disciplines with the applicable international legal frameworks for fisheries management.
There are two areas where positions of negotiators diverge, but which could contribute to strengthening disciplines on fisheries subsidies consistent with good fisheries management. The first is an extension of the prohibition on subsidies to not only vessels engaged in IUU fishing but also the operators of those vessels. People operate vessels and people receive subsidies, so it is reasonable to extend the prohibition to operators of vessels engaged in IUU fishing. The second is a prohibition, currently in square brackets in the text, on subsidies to vessels that are not flying the flag of the subsidizing WTO Member. This provision would discourage the use of flags of convenience or flags of countries that do not exercise effective control over their vessels. It would encourage flag States to take responsibility for their vessels and help prevent IUU fishing.
Grasping success with both hands
Success of the WTO fisheries subsidies negotiations is within reach, provided the necessary political leadership and willingness to compromise is shown. WTO fisheries subsidies disciplines would be another tool in the toolbox to prevent IUU fishing, and address overfishing and overcapacity in fisheries. The efforts that have been made during the negotiations to align WTO rules with the frameworks for fisheries management will help ensure that the rules are able to be properly implemented in the future. If the WTO disciplines are successfully negotiated, this will be due partly to this alignment and to recognition of the special circumstances of subsistence, artisanal and small-scale fisheries. This is as an opportunity for the WTO to demonstrate a triple win for trade, the environment, and development. It should be grasped with both hands.
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