Think Piece

A ‘Clean Sheet’ Approach to Fisheries Subsidies Disciplines

April 2015
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This paper is designed to contribute to the E15Initiative Subsidies Task Force’s conclusions and recommendations on the need for new or revised rules on subsidies for the global trading system. The World Trade Organization’s (WTO) Agreement on Subsidies and Countervailing Measures (ASCM) is the basis for the global trading system’s disciplines on subsidies, and therefore a logical base to start from in assessing the need for additional disciplines on subsidies to the fishing industry. The ASCM already disciplines subsidies to fisheries production to the extent they distort international trade. However, some fisheries subsidies also potentially distort countries’ ability to harvest shared stocks, and have environmental impacts on stocks even where trade is not involved. Other subsidies are more benign, and support the provision of public goods, including the sustainability of fisheries resources themselves.

The objective is to assess the need for a new set of disciplines on fisheries subsidies, and describe options for them based on the structure of the disciplines of the ASCM, which might help to address these impacts. Drawing on current evidence around the economic and environmental impact of subsidies to the fishing industry, the paper takes a “clean sheet” approach to how disciplines on those subsidies might be structured. In proposing options, it also identifies where the ideas are already reflected in the 2007 Chair text in the WTO fisheries subsidies negotiations and how each idea has been discussed in the context of those negotiations.

The first part of the paper describes the policy rationales behind different kinds of subsidies and the impact these subsidies have on the economic incentives of fishers. The second part summarizes analysis by the United Nations Environment Programme (UNEP) of the impact that different kinds of subsidies have on fish stocks under different management and stock conditions. Using these assessments of the impact of subsidies on fishers’ incentives to increase production, and (taking into account fisheries management) their likely impact on fisheries resources, the paper suggests a structure for new disciplines.

The options include a prohibition of those subsidies that appear to be most production-enhancing and to have the most impact on the health of targeted fish stocks and potentially on production possibilities. They include options for subsidies that could be made “actionable” on the basis that they may, depending on how they are designed, be production enhancing. Finally, they include subsidies that could be candidates for exceptions from the disciplines as “non-actionable” subsidies, including those that have market-correcting objectives and, under the rubric of “special and differential treatment,” subsidies that would otherwise be prohibited but which low-income countries might continue to provide as long as their environmental impact and production-distorting potential could be limited.

Fisheries subsidies have different economic and environmental impacts depending on their formal incidence and the bio-economic state of the fisheries they affect. With the exception of expenditure on fisheries management and the research supporting it, current evidence suggests that most subsidies are harmful in most circumstances, reinforcing the argument that disciplines are required. The fact that only a small fraction of global fisheries have any room for increased exploitation suggests that any exceptions to new disciplines should be carefully designed so as to minimise the potentially negative impact of production-enhancing subsidies on fish stocks, and thus on sustainable development in the long term.

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