payments made to fishing interests. These subsidies often allow fleets to operate where it would otherwise be unprofitable to do so, and can lead directly to overfishing and other unsustainable fishing practices.
I.B.1
Worldwide, fishing subsidies total roughly 20 percent of industry revenue.
Detailed information about the true extent of fishing subsidies has often been difficult to obtain (see¶ V.G.2). Over the past decade, there have been several significant efforts to catalogue and estimate fishing subsidies on either a regional or global basis.38Based
33.For more information on the MSC, see http://www.msc.org.
34.See, inter alia., WWF (2003a); IUCN (2003); Sumaila and Charles (2003); Ward and Hegerl (2003); Beattie, Sumaila, et al., (2002); NCEAS (2001); Ward et al. (2001, p. 133).
35.As discussed below (¶ V.E.4(b)), subsidies can play a positive role in the establishment of MPAs and “no take zones.” Unfortunately, however, government investment in this kind of subsidy has been very small. In Spain, for example, in the period 1994–2001 government support for MPAs, artificial reefs, and similar activities amounted to less than 1.2 percent of the subsidies provided to the fishing sector through the principal EU fishing subsidies fund (FIFG). (This figure is based on an as-yet unpublished analysis by WWF-Spain of information provided to WWF by the government of Spain).
36.See WWF (2004a).
37.See WWF (2002).
on an extensive analysis of information made public by governments in the past few years, WWF currently considers that the total level of fishing subsidies can be reliably estimated to be at least US$15 billion per year. With the total value of fish landed from commercial wild-capture marine fisheries running at approximately US$80 billion per year,39this constitutes roughly 20 percent of industry revenue.
I.B.2
Fishing subsidies come in many forms and are justified by a wide variety of
purposes.
For example, fishing subsidy programs have included• grants, low-cost loans, loan guarantees, or tax incentives for vessel construction or repair, or acquisition or modernization of fishing gear
• price supports for fish and fish products
• grants, low-cost loans, or other financial benefits to support the transportation or processing of fish or fish products
• income or wage supports, or unemployment or other social benefits for fishers and their families
• export promotion programs
• provision of discounted or free marine insurance
• governmental promises to reimburse vessel owners for fines or impoundments imposed by foreign authorities
• construction or maintenance of port facilities
• construction or maintenance of housing or other community infrastructure specifically for fishers
• provision of fuel or of tax credits or other rebates to offset the cost of fuel • provision of bait or ice
• payment or subsidization of payments for access to foreign fisheries
• government-funded campaigns to promote consumption of fish and fish products • grants to support research and development of fishery technology
• government expenditures on fisheries management • vessel buy-back programs
I.B.3
Subsidies intensify many of the problems at the root of the worldwide fisheries
crisis.
(a) Subsidies are a fundamental driver of overcapacity. The expert literature on
fishing subsidies is replete with explanations of the relationship between subsidies and overcapacity.40There is no significant dissent from the proposition that
Background and General Context
P A R T I
I.A.3–I.B.3
39.Based on a total value of worldwide capture fisheries of US$79.439 billion in 2001.
40.See, e.g., Gooday (2002); Cox (2004); Portsmouth Conference Report (1999); Lodge (2002); Milazzo (1998); Howgate (n.d.); Arnason (1999); Pauly et al. (2002); Porter (1998b).
subsidies can contribute to overcapacity under practically all real-world conditions.41
(b) Subsidies encourage unsustainable levels of fishing effort.Subsidies obviously can reduce the operating costs of fishing enterprises. Where depletion of a fishery is causing reduced “yield per unit effort,” production costs may quickly exceed revenues and cause fishing to slow or cease (assuming the demand for the fish in question is not highly price inelastic).42Subsidies can obviously short-circuit this
normal commercial limit.43
(c) Subsidies exacerbate IUU fishing.As discussed in ¶ V.C.3(b)(v), there is little question that substantial government subsidies do currently directly benefit some IUU activities (albeit for the most part inadvertently).44
I.B.4
The harmful nature of many fishing subsidies has been widely recognized.
Expert analysts from a wide variety of organizations have concluded that fishing subsidies are often counterproductive in economic and environmental terms. A sampling of statements by leading institutions, organizations, and individuals is attached as Appendix 2.
I.B.5
Nearly all fishing subsidies programs lack transparency and accountability.
As discussed in ¶ V.G.2, one of the most disturbing aspects of fishing subsidies is how difficult it has been for the public—or even sometimes for decision makersthemselves—to know what is really happening with fishing subsidies. Social scientists often decry the tendency of subsidies to be subject to political capture and abuse, and fishing subsidies are no exception to this rule.
I.B.6
The majority of fishing subsidies are granted by a small number of countries.
While the total amount of subsidization to the fishing industry is large, its distribution is very uneven. For example, in 1996, seven major industrialized countries accounted for more than 90 percent of all officially reported fishing subsidies.45Smaller
developing economies are all but excluded from the fishing subsidies game. This 41.Some observers have argued that proper fisheries management can prevent subsidies from resulting in
overcapacity. See, e.g., WWF (1998b, 45). This argument, however, faces two strong objections. First, if there is any truth in it at all, it would only be under ideal fisheries management conditions. As one group of governmental and nongovernmental experts recently agreed, “Subsidies would not be translated into increased fishing effort only where effort can be effectively and completely constrained by regulation or where property rights are perfectly assigned”; Portsmouth Conference Report (1999). Second, as discussed in ¶ I.B.7, subsidies can cause harmful distortions even within well-managed fisheries.
42.Unfortunately, this “commercial feedback” mechanism sometimes does not operate, or begins to limit effort only long after a stock has been badly overfished.
43.It is interesting to note that the current international debate over fishing subsidies was effectively launched by an FAO publication that noted a very large gap between global fishing costs and revenues. In 1992 FAO calculated this gap on a worldwide basis, and found a “deficit” of US$54 billion. The FAO concluded at the time that “[s]ubsidies are presumed to cover most of this deficit.” FAO (1993, 32).
44.It can also be said that subsidies exacerbate the damage caused by “under-regulated” fishing. In addition to depleting fish stocks, poorly regulated fishing activities can lead to wider ecosystem damage from a variety of impacts, including distortion of the marine food chain, by-catch (of fish, birds, mammals, turtles, etc.), damage to the benthic environment (sea floor), “ghost fishing” by lost nets and lines, and pollution from fishing vessels. To the extent such activities are sustained by them, fishing subsidies contribute to these additional harms.
45.The countries were Japan, the EC, the United States, Canada, Russia, Korea, and Chinese Taipei. See WWF (2001a, p. 11, Table 1, and p. 16, Table 4: Table 4 shows 90 percent based on per country “officially reported” figures in 1996, taking averages of any ranges, and including EU member states within EU total, in comparison with the midpoint of the total range for 1996 from Table 1).
concentration of fishing subsidies is further exacerbated by an apparent tendency of governments to provide greater support to larger, more industrialized fleets than to smaller, community-based operations. For example, within the European Union, the Spanish fishing industry—dominated by large, industrial enterprises—is much more heavily subsidized than the smaller-scale fishers of Greece.46
I.B.7
Subsidies can be damaging and trade distorting even in effectively managed
fisheries.
Well-managed fisheries are rare. Thus, those who argue that improved management rather than subsidies reform is the answer to the fishing subsidies problem have a heavy burden to show how and when good fisheries management will become the norm. But even in fisheries that are subject to significant management measures, undisciplined fishing subsidies continue to threaten the resource base and distort trade. The threat to the resource base posed by subsidies in these fisheries arises from three factors:• first, even in a fishery subject to management controls, economic and social factors may allow subsidies to encourage overcapacity or unsustainable levels of resource extraction;47
• second, even in a well-managed fishery, subsidies can obviously still cause competitive distortions between subsidized and unsubsidized producers;48and
• third, by maintaining artificial levels of ownership and employment in a fishery, subsidies can produce individuals and enterprises with a strong vested interest in continued fishing, sometimes adding significantly to the political pressures against maintaining good science-based limits on effort or on catches.
I.B.8
Fishing subsidies are even more likely to do harm where management is
inadequate.
Even those delegations and stakeholders who have been most skeptical of the need for new WTO disciplines on fishing subsidies would be unlikely to argue against the proposition that subsidies can exacerbate the negative effects of poor fisheries management. Given the current realities of inadequate fisheries management, the opportunities for fishing subsidies to cause harm are unfortunately widespread.49I.B.9
Developing countries are particularly disadvantaged.
The special vulnerability of developing countries to harmful fishing subsidies derives from three facts:Background and General Context
P A R T I
I.B.3–I.B.9
46.For example, in 2000 the Spanish fleet received almost four times as much support per tonne of fishing capacity as the Greek fleet. If vessel power is considered, the Spanish fleet received nearly eight times the level of support given to Greek fishers. On a per vessel basis, this disparity rose to just under 20 times the level of subsidization. See IEEP (2002b, Table 11) (note that Table 11 as published contains an apparent calculation error in the subsidies per vessel column, where all but the first number appear to reflect the division of the fifth column (“kW”) by the seventh column (“vessels”) rather than the division of the third column (“Euros”) by the seventh).
47.Munro and Sumaila (2002). Note also that whenever subsidies raise fishing effort, there will be an increase in nonresource impacts of fishing (such as marine pollution, damage to the sea floor, by-catch, and greenhouse gas emissions).
48.For example, in a fishery where “maximum economic yield” (i.e., the catch level at which the difference between costs and revenues is greatest) is lower than “maximum sustainable yield” (i.e., the maximum catch level that is biologically sustainable), subsidies may distort production without straining the limits of good biological management.
49.The potential relevance of the adequacy of fisheries management to operation of new WTO fishing subsidies rules raises important technical questions, discussed in ¶ III.C.3. WWF believes that it is generally (but not always) possible to distinguish the most harmful fishing subsidies mainly on the basis of their design, without reference to the surrounding fisheries context.
(a) Subsidies put developing countries at a competitive disadvantage.As is the case with agricultural subsidies, countries with fewer resources are heavily outspent by major economies when it comes to fishing subsidies. (For a sense of the unbalanced levels of spending see¶ I.B.6.)50As FAO experts have observed, fishing subsidies
that reduce costs or increase revenues of producers can be expected to have trade effects, including allowing subsidized producers to achieve increased shares of domestic or international markets.51
(b) Developing-country fisheries are especially subject to depletion by subsidized foreign fleets.Many of the most heavily subsidized fishing enterprises belong to the “distant water” fleets of major fishing powers. As developed-country fisheries have suffered increasing depletion and overcapacity, these fleets have become
increasingly active off the coasts of developing countries. While not always rapacious, such activities often create unsustainable pressures on coastal fisheries, while intensifying competition with smaller-scale native fishing enterprises.52
Although distant water fleets often operate under the authority of formal “access agreements” (see¶ V.B.2(a)), these agreements have not always proved capable of guaranteeing the sustainable management of the host country fisheries, or of being negotiated on terms that maximize the benefits received by the developing-country host.53The immature condition of management regimes in many developing
countries has also made them especially prey to “illegal, unreported, and unregulated” (IUU) fishing by foreign fleets (see¶ V.C.3(b)(iv)).
(c) The food security of many developing countries is particularly threatened by the general depletion of fisheries worldwide. As discussed in ¶ I.A.2, developing countries are home to the great majority of people who are heavily dependent on fisheries for food and for employment. To the extent that fishing subsidies are contributing to the erosion of global fisheries resources, developing countries will suffer a disproportionate share of the harm.