Source: International Centre for Trade and Sustainable Development
Author: Ussif Rashid Sumaila
Fishing plays a crucial economic role in many human communities around the globe. How can trade-related policies contribute to the sustainable management of halieutic resources?
The ocean is a vital component of the earth’s system. It is home to over half of the earth’s biodiversity and contributes significantly to the well-being of human society. Oceans provide half the planet’s oxygen and fix a quarter of the world’s carbon dioxide. Fisheries (marine, freshwater, and aquaculture) provide three billion people with up to 15 percent of the animal protein they consume and generate employment for at least 140 million people worldwide, including some of the most vulnerable.
The ability of oceans and fisheries to continue to deliver these functions and services depends on their sustainable use. Ensuring ocean sustainability has become a global challenge, as unsustainable practices threaten marine biodiversity, food security, and livelihoods, especially with respect to future generation needs, which are affected by overfishing, pollution and habitat destruction, warming, ocean acidification, sea level rise, and anoxia. The rapid expansion of aquaculture and contribution to fish protein supply has eased some pressures but also raised concerns about its environmental impact, highlighting the need to continue ongoing efforts to achieve sustainable aquaculture worldwide.
Trade in fish and fishery products is extensive and shapes global production patterns. An estimated 37 percent of fish harvest is exported as food for human consumption or in non-edible forms. This level of trade in fish and fish products provides an avenue for trade-related policies to make an important contribution towards solving the challenges facing the ocean and fisheries. To address the role of trade policy frameworks, ICTSD, in partnership with the World Economic Forum, convened a group of world experts under the broader E15Initiative. The objective was to provide fresh thinking on the key challenges facing the world’s oceans and fisheries, including aquaculture, and identify policy options and reform opportunities for the global trade system to support a transition towards sustainable fisheries and healthier oceans.
Challenges facing oceans and fisheries
A number of marine fisheries management and governance institutions have been established to support the sustainability of fisheries at the local, national, regional, and global level. While there are examples of success, these attempts have failed to meet the challenge of balancing current and future use of fisheries in many regions due to the prioritisation of short-term gains, the lack of precautionary and ecosystem-based management, and the weakness of enforcement mechanisms often leading to stocks being overfished.
The impact of overfishing on wild stocks
The expansion of the geographic extent of fishing in the second half of the 20th century has been accompanied by a ten-fold increase in global fishing effort (Figure 1). The reasons for this large increase in fishing effort are many, with ineffective management, technological innovation, and the provision of subsidies chief among them. The observed increase in effort and catch has impacted wild fish stocks and their habitats negatively. These impacts have significantly affected marine ecosystems and the health of oceans. To ensure the sustainability of world fisheries, the international community will have to implement comprehensive and cooperative policy responses in more effective ways than seen before.
The growth in aquaculture production
The aquaculture sector contributed to 3 percent of total fish supply in 1970. Today, the world’s fish farms supply more food fish than wild landings, although total global catch of wild fish remains larger due to non-food uses such as reduction to fishmeal. This huge increase in aquaculture production in recent years has its benefits and costs. It has helped to fill the gap between growing demand and stagnant landings from wild fish stocks. However, the increase in the production of fish in farms has resulted, in certain instances, in environmental impacts that have caused concerns among experts, including effects on the sustainability of wild fish stocks. It is thus crucial that coherent policies and measures are put in place to ensure that fish farms are operated in a manner that minimises negative externalities.
Illegal, unreported, and unregulated fishing
Illegal, unreported, and unregulated (IUU) fishing is still common in many parts of the world. It occurs not only in the high seas but also within exclusive economic zones (EEZs) that are poorly managed. IUU fishing is a barrier to the effective management and sustainability of oceans and fisheries and also represents a major loss of potential revenue and wealth for many coastal developing countries. IUU fishing occurs because of the significant overcapacity that exists in the world’s fishing fleet, growing demand for fish which boosts prices, inadequate fisheries management (especially monitoring and surveillance), and the low penalties usually meted out when fishers are apprehended fishing illegally. Trade-related policy measures have great potential in contributing to solving this source of unsustainability in fisheries.
Fisheries subsidies
Three types of subsidies can be identified according to the impact they tend to have on fisheries resources: (i) subsidies for management and research, sometimes defined as good subsidies because they are generally assumed to have a positive effect on our ability to sustainably manage fishery resources; (ii) capacity-enhancing subsidies, including those for boat construction and renewal, fuel subsidies, and fishery development programmes, which tend to promote disinvestment in the resource by motivating overcapacity and overfishing; and (iii) ambiguous subsidies, including those to vessel buy-back programmes and rural fisher community development, which can promote or undermine the sustainability of the fish stock depending on circumstances. While reliable and accurate data remains sparse, partly due to a lack of transparency, total fisheries subsidies are estimated at around US$35 billion, which constitutes 30 to 40 percent of the landed values generated by the wild fisheries sector worldwide. Capacity-enhancing subsidies make up the highest share at around US$20 billion.
Tariffs and non-tariff measures
Tariffs and non-tariff measures shape fish processing and trade. They are widely employed by countries. From a sustainable development perspective, the question of tariff liberalisation presents a number of policy tensions. The first includes balancing the interests of those who benefit versus those who may lose if tariffs on fish products are lowered. The second relates to balancing the increased demand and potential economic gains from liberalisation with the need to limit catch levels to ensure the long term sustainability of fish stocks. In addition, while tariff barriers to fish products have gradually fallen through regional integration and unilateral liberalisation, non-tariff measures, which include both public and private standards, are growing in significance. They can be perceived as either barriers to market access or necessary tools to protect public health and support sustainable fish production. In the context of sustainable development objectives, the manner in which fish products are produced matters. The policy options summarised below have thus been crafted with the recognition that differentiation based on process and production methods may be legitimate.
Trade-related policy options
Trade policies and measures constitute an essential part of the overall policy framework needed to support sustainable environmental and human development priorities connected to oceans and fisheries. In support of these objectives, the policy options are divided into three work packages: closing the market for IUU fish catch, disciplining fisheries subsidies, and addressing tariffs and non-tariff measures.
Closing the market for IUU fish catch
At its root, the fisheries problem is caused by overcapacity in fishing fleets, inadequate management, weak governance, and greed. The goal is to suggest trade policy measures as key elements of a solution. This could be achieved by progressively closing down international trade in IUU fish products, taking into account the implications of adjustment for low-income countries. One way to work towards eliminating IUU fishing is thus to establish means to make it difficult for fish products from IUU fishing to enter the market.
Build consultative, effective, & coordinated unilateral import measures
The European Union’s IUU regulation, particularly its escalating warning system, is having an impact. A key gap in the current situation is that the EU’s import policy is limited to one market although the US is developing options. For this recommendation to succeed, other large seafood markets need to adopt trade measures that incorporate good aspects of the EU system, such as those that address the transhipment and import of IUU caught fish. Coordinated unilateral measures must include consultation with affected trading partners and they should take a stepwise and fair approach with an import ban as a last step. The impact of IUU import measures will depend on improving underlying marine governance systems, including Catch Documentation Schemes, IUU vessel lists, traceability, and flag state responsibilities.
Create a network of regional measures toaddress IUU fish trade
The global nature of fisheries trade means that many producers may be able to sell IUU fish catch in less regulated markets. To extend the reach of import measures, they need to be adopted on a bilateral or regional basis through regional trade agreements (RTAs). The real novelty in this approach is that it seeks to use RTAs to link unilateral IUU trade measures in a cohesive network with broad country coverage — either directly or by establishing platforms that will help countries converge towards best practice. To increase the effectiveness of these measures, linkages would need to be developed with large import markets, especially China.
Develop a system of multilateral instruments on trade in IUU products
Regional approaches to closing the market for products from IUU fishing could gradually change the economics of the activity such that the cost of supplying IUU fish catch is too high to make it worthwhile on a large scale. However, a comprehensive and inclusive solution to the problem would most efficiently be negotiated multilaterally. This option is new in that it seeks to use regional agreements to support the entry into force of other multilateral instruments, and to establish, through the WTO, a code of conduct on illegal fish trade. The following options could be considered: RTAs could be used to incentivise the ratification of the FAO Port State Measures Agreement (PSMA), which targets the landing of illegal fish products; endangered marine species could be listed in Appendix I or II of the Convention on International Trade and Endangered Species (CITES); and, elements of best practice from unilateral and regional systems could be captured in a voluntary code on IUU fish imports and transhipment within the WTO.
Support the expansion of private sectorschemes
It is generally accepted that state-based solutions alone will not suffice to address the challenges of IUU fishing. They need to be supported and complemented by private sector initiatives and actors. Several private sector certification schemes focus on assessments of the sustainability and legality of fish caught, and some already involve comprehensive and reliable traceability systems, which could be used to ensure the legality of fish provenance in the supply chain. However, private schemes could be improved by enhancing the participation of developing country fisheries in sustainability and legality certification. Assistance directed at the development of data collection and infrastructure to enable the traceability and certification of fish products could be provided as aid for trade.
Disciplining fisheries subsidies
The goal of this work package is to improve transparency regarding global fisheries subsidies and build momentum towards a multilateral agreement on subsidy reform. The very high level of annual capacity-enhancing support advanced to the fisheries sector is a key driver of unsustainability that the following options would seek to discipline and reduce significantly.
Develop reliable data on fisheries subsidies
There are few independent assessments of actual subsidy levels against which to evaluate inconsistent WTO notifications. Improving transparency is a fundamental requirement for further work on disciplines. It could stimulate action not only by revealing the scale of the problem but also by providing a dataset accepted by governments with the responsibility of implementing reform. This would underpin the transparency and monitoring of unilateral reform efforts, support improved coherence across national policies, strengthen momentum for collective reform, and enable the reporting and implementation of reduction commitments to be verified.
Adopt fisheries subsidies disciplinesamong a core group of countries
Given the difficulty in achieving universal subsidies disciplines through the WTO and the urgent need for action, an option would be for a coalition of countries to move forward with disciplines. To reduce the extent of free-riding on the part of large subsidisers, an agreement among a core group of countries to reform harmful subsidies could, in the context of an RTA, be combined with trade rules that specify preferential conditions under which this core group would engage in the trade of fish and fish products with countries that are not participating in the agreement.
Establish multilateral disciplines builtstepwise and bottom-up
Another approach would be for a group of countries to stimulate collective action with bottom-up voluntary commitments to subsidy reform. Each country would declare the amount of capacity-enhancing subsidies that they would voluntarily eliminate within a given time period. Based on these voluntary commitments, the group would then negotiate the remaining “ambition gap” between the offers made and the level of overall reductions required at a multilateral level. To effectively close the gap, the process would require either multilateral participation or at least the involvement of the world’s largest providers of fisheries subsidies. The stepping stone of a plurilateral agreement could eventually be multilateralised in the WTO if enough large subsidisers were involved.
Restart WTO negotiations based on areas of relative agreement
The first best option — an ambitious multilateral agreement — could be pursued by establishing disciplines built on areas of subsidy reform that attracted the most support in the WTO fisheries subsidies negotiations. These include subsidies to IUU fishing, vessel transfers, and access agreements. There was arguably some level of consensus with the idea of reforming vessel construction subsidies and those affecting overfished stocks. It may therefore be possible for WTO members to agree to eliminate a small list of subsidies in the interest of healthy oceans and sustainable fisheries by focusing on the low-hanging fruit.
Align incentives by focusing negotiationson international fish stocks
A key reason for the lack of progress in protracted fisheries subsidies negotiations at the WTO is that they suffer from the requirement that negotiators should aim for an all-inclusive deal. One way to overcome this difficulty is to align subsidies policies with national interests by splitting the world’s fisheries into domestic and international fisheries. The former would comprise fisheries operating within a country’s EEZ, targeting fish stocks that spend all their lives within the zone. The latter would include fish stocks that are transboundary, highly migratory, or discrete high seas stocks. International negotiations could then prioritise agreement to reform subsidies that affect international fish stocks, and governments, pressured by civil society, would work unilaterally to reform subsidies that affect their domestic fisheries.
Tariffs and non-tariff measures
There are several broad policy reforms that could support more efficient markets for fishery products. These include reducing distortions like tariff escalation, improving infra-structure, and establishing procedures to lessen the costs of trade. The options in this work package address more specific issues in international fisheries trade, particularly in relation to developing country producers.
Differentiate between capture and aquaculture fish in HS tariff codes
Distinguishing between wild-caught and aquaculture fish products in tariff lines would enable better measurement of the changing structure of global fisheries trade and improve the traceability of products through the value chain. It would also help policy-makers address the distinct environmental impacts of the two production methods. The purpose would be to gather information regarding wild capture and aquaculture product flows, and not to allocate different tariff levels to these products.
Support the adaptation of preference-dependent countries
As preference margins are gradually eroded, preference-dependent producers will need to adjust to a changing competitive environment. More flexible rules of origin in preferential arrangements could help producers diversify their sourcing of inputs and access global production networks, thereby creating more options as their competitiveness evolves. They could also facilitate the development of regional value chains. Flexibility could be conditioned on fish meeting sustainability and legality requirements. Beyond rules of origin, there may be a case for international financing mechanisms, including under the Aid for Trade initiative, to provide technical assistance for producers to adjust to a loss in competitiveness caused by preference erosion or graduation from preference schemes.
Assist low-income fish exporting countries to reach standards
The aim of this option is to help producers adapt to changing competitive conditions imposed by sustainability standards. As tariff barriers become less relevant in major markets, public and private standards are likely to become the main market access constraint for fish products. Producers that are small, located in poor countries, with limited access to capital, or operating in fragmented industries, are at a disadvantage when it comes to meeting high standards in export markets. Given the contribution of fisheries trade to employment and income in many developing countries, an inclusive approach in which producers can move towards certification is essential. Private actors are well positioned to both improve access to existing certification schemes and assist producers and retailers to work towards bridging the gap between production realities and sourcing requirements.
Ensure coherence between private standards and the TBT Code on standards
Although the provisions of the WTO Agreements on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) Measures do not formally cover private standards and labels, non-governmental standard-setting bodies should be urged to adhere to the TBT Agreement’s Code of Good Practice for the Preparation, Adoption and Application of Standards. In order to both their economic power to shape production patterns and ensure they are inclusive, these schemes should be encouraged to follow basic principles set out in the 2000 Decision of the TBT Committee on international standards, such as transparency, openness, and coherence, while preserving their effectiveness as incentives for sustainable fisheries and aquaculture production.
Link mutual recognition systems forstandards applicable to fish products
National SPS and TBT systems differ and are sometimes applied inconsistently. Mutual recognition between large markets can exclude other producers and reduce their competitiveness — even when these standards can be met. In order to ensure that these integration tools covering behind-the-border measures are inclusive, the parties to large regional trade agreements (e.g. TPP and TTIP) could consider including a linking mechanism by which trading partners who are outside of the agreement, but whose testing and conformity assessment systems enjoy mutual recognition with one or more of the parties involved, could benefit from the agreement’s wider mutual recognition provisions.
Priorities and next steps
Priority trade-based policy solutions include the reform of harmful subsidies and efforts to restrict the global fisheries market to sustainable and legal products. While there is a preference for multilateral approaches, options are proposed that may compromise on multilateralism in the short term in order to facilitate the building of broader solutions in the system in the longer term. Coordinated unilateral instruments, including trade bans as a final step, could be useful short-term measures, but they should be fair, transparent, reasonable, and proportionate.
A sectoral trade agreement on sustainable fisheries could address a number of different aspects of fisheries trade, including tariffs and non-tariff measures, IUU fishing, and fisheries subsidies. Aid for trade and other development finance tools can be used not only to catalyse agreement and action but also to mitigate the potential negative impacts of these policies on small-scale fisheries. Such a sectoral initiative could be developed either within the WTO as a plurilateral agreement or within the framework of regional trade agreements.
To restate the premise on which the policy options have been devised: with 37 percent of fish and fish products traded internationally, enlightened and well-informed trade-related policies can make an important contribution towards securing a healthy ocean and sustainable fisheries worldwide. The three work packages provide an innovative and inclusive agenda for domestic reform and international cooperation.