News and Analysis • Volume 12 • Number 3 • May 2008

Will the WTO Mandate Stand up against the Tragedy of the Commons in Fisheries?

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The Doha negotiations on fisheries provide a significant opportunity to address overcapacity and overfishing. However, to be effective, future subsidy disciplines need to be coupled with stronger fishery management regimes, including in both public and private access agreements.

Overexploitation and risk of stock depletion remain a pressing concern in the fisheries sector. In 2004, the UN Food and Agriculture Organisation (FAO) estimated that about a quarter of global fish stocks were either depleted or overexploited, while more than half were fully exploited (see graph in PDF.).

Socio-economic Importance

Overall, more than 2.6 billion people get at least 20 percent of their animal protein intake from fish. The sector is also an important source of employment and income. In 2004, an estimated 41 million people worked as fishers and fish farmers, the great majority of these in developing countries. In addition, trade in fish represents a significant source of foreign currency earnings. Around 38 percent of total fisheries and aquaculture production were exported, amounting to an export value of US$71.5 billion in 2004. Between 1994 and 2004, developing countries’ net fishery exports grew from US$4.6 billion to US$20.4 billion. The share of fish trade in both total GDP and agricultural GDP has doubled over the past 25 years.

Curbing Overcapacity

This crucial importance of fisheries resources for livelihoods and food security, the survival of marine ecosystems, employment and development has been undermined by decades of overcapacity and overfishing – driven, to an important extent by government payments to support shipbuilding and operating costs, securing access to distant water resources and guaranteeing revenues in the sector.

In 2001, WTO Members agreed in Doha to launch negotiations aimed at clarifying and improving WTO disciplines on fisheries subsidies, taking into account the sector’s importance to developing countries. The 2005 Hong Kong ministerial declaration called for a strengthening of disciplines on fisheries subsidies, including through the prohibition of subsidies that contribute to overcapacity and overfishing, taking into account the importance of this sector to development priorities, poverty reduction, and livelihood and food security concerns.

These mandates represent a major challenge for the trade community to reassert the central place that the environment and sustainable development occupy in the multilateral trading system. Many see the negotiations on fisheries as the most genuine effort of the WTO to fulfil an environmental objective, upon which lie broader sustainable development stakes.

The first fisheries subsidy draft was released in November 2007. The proposed text would ban a wide range of government payments, especially those that boost fishing capacity and lead to overfishing. It allows certain subsidies, but these must be linked to proper management regimes, including science-based monitoring and assessment according to international standards (Bridges Year 11 No.7 page 10).

An effective deal on disciplining fisheries subsidies would have deep implications for the economic viability of the fisheries industry in many parts of the world, and likely to lead to a restructuring of the industry. There is high probability that excess capacity, especially in industrial countries, will not be completed dismantled, by transferred elsewhere, through various forms that may range from change of flag, adoption of flags of convenience, joint-ventures, etc.

Distant-water Fishing Arrangements

Coastal states gained control over 90 percent of the world’s exploitable fish resources when the UN Convention on the Law of the Sea established 200-mile-wide exclusive economic zones (EEZs) around their shorelines in 1982. Since then, ‘access agreements’ have become an increasingly important part of trade and development relations between developed and developing countries. These arrangements allow distant-water fishing nations to fish in the host country waters in return for ‘access fees’ paid to the coastal states.

WTO Members, and coastal states parties to fisheries access agreements in particular, have sought to exclude from the disciplines on fisheries subsidies revenues and payments arising from such agreements. Access fees represent a significant portion of government revenue for certain countries. In several Pacific states they account for an estimated 25 percent of total government income; in Guinea Bissau the share is around 40 percent.

While exempting access agreements from the future disciplines on fish subsidies, the draft text on fisheries provides a major opportunity to improve transparency and governance of fisheries exploitation under such arrangements.

Article III.3 of the November 2007 text states that for the exemption to apply, the fishery in question must be within the EEZ of a developing country Member, that the agreement must be made public, and contains provisions designed to prevent overfishing based on internationally recognised best practices for fisheries management and conservation. In addition, the text requires support for science-based stock assessment before fishing is undertaken, as well as management and control measures. It also calls for vessel registries, and reporting of effort, catches and discards to the national authorities of the host Member and to relevant international organisations, and any other measures as may be appropriate.

Footnote 143 to Article I.1. (g), which provides for the exemption to access agreements in the draft text, seems to refer only to government-to-government payments for access to marine fisheries. It has been argued that private agreements do not encompass a subsidy element within the meaning of the WTO. From a sustainable development perspective, however, the point is not whether private agreements amount to subsidies, but ensuring that the broad management regimes sought in Article III.3 apply to the entire range of access agreements, whether public or private. This is particularly important given that many coastal states are moving away from bilateral government-to-government agreements towards other forms of arrangements such as joint-ventures or agreements with foreign private operators.

Private Access Agreements on the Increase

The growing unpopularity of fisheries access agreements has rendered their conclusion difficult, leading to delays in the renewal of expired agreements in many countries. In Senegal, for instance, authorities have resorted to direct agreements with commercial European fishing vessels after negotiations for a renewal of the 2002-2006 bilateral agreement with the EU ran into difficulties. Their motivation was to ensure uninterrupted supply of raw tuna to the 3,000 workers employed in the local fishing industry, which has limited tuna-fishing capacity and thus depends largely on landings by EU vessels.

A 2002 European Commission communication on an integrated framework for fisheries partnership agreements with third countries (COM(2002) 637) noted that difficulties facing the EU’s distant-water fleet policy could lead to its gradual reduction, but less through scrapping vessels than through changing them to a flag of convenience and/or an increase in private fishing arrangements. The commission further remarked that the experience of the past years had shown that with the departure of the EU fleet from third country fishing grounds, the amount of fishing did not decrease, but stayed the same or even increased, as EU boats were replaced by vessels from third countries or by vessels flying flags of convenience.

Private agreements tend to provide weaker governance regimes than government-to-government agreements. They often are less transparent in their negotiations and weaker in their modalities of enforcement, monitoring and reporting. Yet, there are indications that in the years to come, private agreements, rather than government-to-government agreements, will increasingly govern access to resources in distant nations.

Strengthening Fisheries Management Is Crucial

The existence of a fisheries management system is essential for the sustainable use and conservation of marine resources. Experience – with the Canadian east coast cod fishery, for example – suggests that even when such management regimes are in place, collapse of stocks may occur.

Article V.1 of the draft text on fisheries subsidies indicates that any Member granting or maintaining any of the permitted subsidies shall operate a fisheries management system regulating marine wild capture fishing within its jurisdiction, designed to prevent overfishing. Such management systems shall be based on internationally recognised best practices for fisheries management and conservation, and shall include, among other requirements, regular science-based stock assessment, as well as capacity and effort management measures. A number of developing country WTO Members have argued that these requirements are so stringent that they render the exceptions provided to them unusable (see page 9).

Key to the problem of fisheries management is that is has been approached in terms of the burden and costs associated with it rather than the social, environmental and economic benefits of having such systems in place. In fact, not only do management systems contribute to the monitoring of fishing effort and conservation of resources; they can be important tools for generating greater revenues from a country’s marine resources.

In Tanzania, for instance, the establishment of a monitoring, control and surveillance programme was instrumental in increasing vessel registration and licensing. While in 2002, twelve foreign tuna boats were licensed to fish in the country’s waters, the number increased to 84 when foreign fleets realised that Tanzania was regularly patrolling its EEZ. The registry system in turn resulted in reports from the registered purse-seiner fleet, which revealed that during the peak fishing season the weekly tuna catch in Tanzania’s EEZ reached up to 10,000 tons. In the absence of reliable information of the fishing effort and level of catches, which a proper management regime can generate, informed policy decisions can hardly be made.

Where management systems are lacking, revenues are also likely to dwindle due to illegal and unreported fishing. In 2005, the British Marine Resources Assessment Group estimated that illegal, unreported and unregulated fishing in Africa could be valued at approximately US$1 billion annually.

Conclusion

Reforming subsidies that lead to overcapacity and overfishing is a useful effort. However, countries can do much more to fish in a sustainable manner and conserve resources within their waters, generate meaningful revenues and contribute to real economic growth, food security and poverty reduction.

The ‘tragedy of the commons’ begins when governments fail to realise the long-term gains of conservation and sustainable use of their resources, and confine themselves to quick and easy financial gains that eventually deprive the fishery resource of its high value in local and world markets.

A failure to seize the opportunity provided by the Doha mandate to reduce overcapacity and overfishing can have disastrous consequences. The collapse of the Canadian East coast cod fishery in the late 1980s left 25,000 fishermen and 10,000 other workers unemployed. Today, over-exploitation of West Africa’s fish resources by local, as well as foreign, fleets is forcing artisanal fishers in a desperate search for alternative livelihoods to migrate to some of the very regions that are exploiting their resources.

Moustapha Kamal Gueye is Senior Programme Manager, Environment Cluster, at ICTSD.