Using the WTO to clamp down on illegal, unreported and unregulated fishing

Date: August 31, 2017

Source: ICTSD
Author: Carl-Christian Schmidt

Eliminating subsidies that contribute to illegal fishing activities, formulating enforceable WTO rules, and using a well-established forum for informed discussions among flag, coastal and subsidising states could prove a novel and useful addition to the toolbox of measures to fight illegal, unreported and unregulated fishing.

Illegal, unreported and unregulated (IUU) fishing is a nasty undertaking, undermining good fisheries management and sound governance. Products from IUU activities enter international trade and can undercut products from legal activities, taking away a living from those who depend on fishing. Clamping down on IUU activities is one of the objectives under Sustainable Development Goal (SDG) 14 in the United Nations 2030 Agenda for Sustainable Development, and SDG target 14.6 calls specifically for the elimination of subsidies to IUU fishing.[1] Agreeing meaningful rules to discipline subsidies that contribute to IUU fishing is an important contribution that the WTO can make to the 2030 Agenda, and a deal should be achievable by the WTO Ministerial Meeting in Buenos Aires in December 2017.

Disciplining subsidies that support IUU activities

The international community has invested considerable work in combatting IUU activities over the past decades. A range of measures have been put in place, including the FAO International Plan of Action to Prevent, Deter and Eliminate IUU Fishing (IPOA-IUU) as well as the Port State Measures Agreement (PSMA), which entered into force in June 2016. The toolbox of measures to fight IUU, however, can still be enlarged.

Illegal, unreported and unregulated fleets are likely to benefit from operational subsidies, for example fuel subsidies, and support for infrastructure used by their vessels. A WTO discipline on subsidies that support IUU activities could be a novel instrument in the fight against IUU fishing. It could offer something other international arrangements do not have: notification, discussion, and above all an enforcement mechanism in the form of dispute settlement, including the potential for retaliatory action in case of non-compliance by the country that has been found to be providing subsidies to the IUU activity. Encouragingly, a prohibition on subsidies to IUU activities has been one of the central pillars of negotiations at the WTO in the lead-up to the next ministerial meeting in December.

Crafting an operational discipline has its challenges: WTO members will need to agree on the scope of a possible WTO discipline, how an IUU activity might be identified for the purpose of subsidy rules, and how a possible prohibition could be applied.

For an IUU subsidies discipline to be effective, the identification of reprehensible activities needs to encompass both national and international IUU fishing activities, as the variety of possible scenarios and applicable legislation warrant different approaches.

National and international approaches

National IUU legislation already exists in most countries as required by the FAO Code of Conduct for Responsible Fisheries, the IPOA-IUU, and the PSMA. With this in mind, one option would be to agree to an obligation in a WTO text that members must include, in national laws, a prohibition on providing subsidies to IUU activities as defined in the national context. This could help to support coherence between domestic policies.

As far as international IUU activities are concerned, regional fisheries management organisations’ IUU vessel listings could be a useful way to identify the vessels to which the subsidies prohibition would apply. A third way of identifying IUU activities could be to draw on the information generated through the implementation of the PSMA.

When information on IUU offences also includes information on a vessel’s flag state and (beneficial) owner, this could be discussed in the WTO Subsidies and Countervailing Measures (SCM) Committee to discourage subsidising and flag countries to take corrective action against IUU offending companies. The SCM Committee could serve as a valuable forum for encouraging non-compliant flag state WTO members to be more vigilant in addressing the IUU problem, and encourage WTO members to implement their obligations not to subsidise these activities.

A subsidies discipline focused on IUU activities is likely to be primarily of an ex post character. Vessels may have been constructed with subsidies prior to engaging in IUU activities, a past event which it may be difficult to undo. However, domestic legislation that requires the prohibition of subsidies to vessels, and potentially also to operators or owners of vessels once an IUU activity is discovered, could impact on the provision of operational subsidies (for example fuel tax rebates, interest rebates, subsidies for buying bait or ice). Furthermore, once vessels, their owners and operating companies have been convicted of IUU activities and no longer receive subsidies, continued monitoring of their activities could prove a valuable ongoing form of dissuasion. Similar procedures exist for tax avoidance; once caught by the national tax system offenders are usually subject to tax surveillance for years to come.

Eliminating subsidies that contribute to IUU activities, formulating enforceable WTO rules, and using a well-established forum for informed discussions among flag, coastal and subsidising states could prove a novel and useful addition to the toolbox of measures to fight IUU fishing. Above all, the WTO would provide a forum for an open and frank discussion among members who are concerned with the link between subsidies and illegal fishing activities.

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