( Raisa Gaio )
We have to prove to the rest of
the world that “the fish can
sing just like a bird”.
(Halldor Laxness)
The Friends of Fish is an informal coalition inside WTO Negotiation Group on Rules that was established by the Trade Negotiations Comitee in February 2002 in the First Doha Round through the Doha Declaration. From time to time they organize themselves forming what now consist of a group of 11 countries to negotiate with other WTO members’ significant reduction on fisheries subsidies. Their main issue in the negotiations is the pursuance after rules enforcement on fisheries subsidies related issues, alleging a possible connection between the subsidies on fisheries and the over-fishing. Their members consist on 11 members of WTO: Argentina, Australia, Chile, Colombia, Ecuador, Iceland, New Zealand, Norway, Pakistan, Peru, Philippines and the US. (WTO 2013)
Until now the efforts of the coalition to secure common ground are being attempted informally, not only because of the difficulty to establish negotiation ground on fisheries issues due to the difficulty to measure the impact of subsidies on sustainability and on trade, but also because of some members interests’ on fisheries expansion as Japan, South Korea and Taiwan. There is also the presence of developing countries asking for flexibility in granting subsidies to their fisheries sectors, as Brazil requesting permission for high seas fishery subsidies.
Subsidies on Trade
According to the WTO Agreement on Subsidies and Countervailing Measures (SCM) the term subsidy can be defined as a financial contribution given by a government or any public body within the territory of a Member which confers a benefit.
Forty years ago, subsidies were thought of generally as good things, as mechanisms whereby government policy could be implemented. Later on, because of questions about their effectiveness and controllability, about the role of government in society and the economy, and about the relative roles of environmental protection and economic development, subsidies in many areas of the economy generally are considered bad things, never more than in fisheries.
Types of Fishery Subsidies
There are many types of subsidies that are regulated by the WTO that present a risk for a non-discriminatory trade. There is a specif range of subsidies the fishery industry can profit from, categorizing these as possible damaging subsidies for level-playing field on fishery. The Food and Agriculture Organization of the United Nations (FAO) pointed out which are the most important types of subsidy forms for the fish industry already regulated by WTO rules on subsidies: direct government payments to the industry; tax waivers and deferrals; government loans and loan guarantees, and insurance; implicit payments to, or charges against the industry and general programmes that affect fisheries.
However there are some types of subsidy forms that are not yet regulated by the WTO, due to the difficulty to identify how these are exactly helping the national industry and, thus, classify them as subsidies, such as exchange rate manipulation or over-regulation requirements.
Fishery Subsidies Discussions in the WTO
At the same time that governments around the world continue to provide billions of dollars in subsidies to the fisheries sector, the Doha Ministerial Conference launched negotiations to clarify and improve WTO disciplines on fisheries subsidies. Finally at the Hong Kong Ministerial Conference in 2005 there was broad agreement on strengthening those disciplines, including through a prohibition of certain forms of fisheries subsidies that contribute to over-capacity and over-fishing.
The Doha mandate on trade and environment negotiations previews that fisheries subsidies are part of the Negotiation Group on Rules, where the “Friends of Fish” try informally to promote discussions and improve the address of regulation forms. The challenge now facing the Negotiating Group on Rules is to develop stronger rules while respecting the important policy concerns of WTO members, particularly developing and least-developed countries (LDC’s).
On fisheries subsidies, the grouping of the “Friends of Fish” say that subsidies to the fisheries sector have led to over-capacity and over-fishing. They argue that because of the sector's special characteristics, fisheries subsidies cause commercial harm — stock depletion which limits other participants' access to the resource – that cannot be addressed by the existing disciplines in the Subsidies Agreement.
The FAO has reported that, worldwide, 80% of world’s fish stocks are either fully exploited or overexploited. Catches of “Atlantic cod”, a type of fish specie, to take one of the worst and most important cases, fell from more than four million metric tonnes in 1968 to slightly more than one million tons in 1993. That shows very clearly the trends for the future not only for this specie but also for other species, when FAO has already documented the occurrence of similar declines of other important commercial species.
Japan, the Republic of Korea and Taiwan, on the other hand, have expressed skepticism over the link between subsidies and over-fishing. They argue that fish stock depletion is caused mainly by inadequate management of fisheries resources.
Meanwhile, developing countries pledge for special and differential treatment. Brazil has tabled a proposal for differentiated disciplines and transition rules on fisheries subsidies of developing countries. In addition, a number of small coastal states (Antigua and Barbuda, Barbados, Dominican, Republic, Fiji, Grenada, Guyana, Jamaica, Papua New Guinea, St. Kitts and Nevis, St. Lucia, Solomon Islands, and Trinidad and Tobago) have jointly proposed that they be granted broad exemptions from any new disciplines, pointing to the importance of fisheries in their economies, and the artisanal and small-scale nature of their fisheries sector.
The focus of the discussions has evolved significantly since the beginning of the Doha Round: it is no longer on whether there would be any new disciplines but rather on the approach to, and structure of, such disciplines. The proponents of stronger disciplines argue for a broad ban on most subsidies to the fisheries sector, with limited exceptions. The participants on the other side of the issue favour an approach that would prohibit an agreed list of particular subsidies with the identified harmful effects.
Furthermore, an important problem that the WTO and the countries itself meet to improve regulations is on the extension of fishing jurisdiction, where coastal states found it virtually impossible to adequately limit the fishing activities of their own nationals, even thought many of them have established the 200-mile fishing zone jurisdiction, just as Canada, US and others. This situation is present in many of the world’s commercial fisheries economies, what surely affects the leck of regulation in over-fishing control.
Chart of Leading Exporters and Importers of Fishery Commodities
Iceland and the Fishery Subsidies
According to the FAO report on fishery subsidies, Icelandic fishery subsidies have a long history but they have generally been low relative to those of other countries like the US, Canada and Norway.
Perhaps the most important Government action in support of the fishing industry in the pre-World War II period was the devaluation of the krona in 1939, an action which helped to stimulate the international demand for Icelandic fish. More recently, specifically in the 1970s, the Government again devalued the krona to improve the competitive position of its fish exports. By the broad definition, this is a subsidy since it improves the profitability of firms in the fishing industry, although not yet regulated by the SCM. This kind of subsidy is the most controvertial one, because since the WTO doesn’t have any regulation on government macroeconomic policies, such as exchange rates manipulation, its Dispute Settlement Body (DSB) cannot interfere on those issues. It seems that the trend for the new trade related problems tend to be more strongly linked to State policies not yet reviewed by the WTO and, thus, depend more on the willing of Nations to cooperate, in a system which sovereignty still means a barrier for the WTO to adress its regulation policies.
Still in the 1970s, the Icelandic Government promoted a number of funds which were intended to cost the Government nothing, being financed through an export levy. These included the Catch Equalization Fund, the Fishing Vessel Capitalization Fund, the Fishing Vessel Oil Price Stabilization Fund, the Vessel Insurance Fund, the Fisheries Loan Fund and the Regional Development Fund. These funds redistributed income among fishermen, aided fishermen in modernizing old vessels or purchasing new, more modern, vessels, smoothed diesel fuel prices, paid most vessel insurance costs, provided investment funds for fish processing plants and fishing vessels, and provided loans on favourable terms to fishermen purchasing Icelandic-built vessels.
In 1979, the Government implemented a price support scheme, also financed by an export levy, to encourage fishermen to catch underutilized species. From the mid-1980s, Icelandic fisheries subsidies have been limited to tax advantages, loan guarantees and occasional loans. According to an OECD document, financial transfers from the Icelandic Government to the industry were US$29 million in 1997, US$21 million of which was in the form of tax waivers with the remainder in research and management expenditures. The US$29 million figure is low, for example, compared to those for the United States (US$877 million), Canada (US$509 million) and Norway (US$528 million).
As it can be noticed, Icelandic subsidies have been substantially lower than those of the other countries listed above, and the subsidies have not directly affected Government finance, again in contrast with those of the other countries. The reason for this is that the fishery has dominated the Icelandic economy, comprising the overwhelming percentage of exports. Since independence during World War II, there have been no other industries large enough, with sufficient financial surplus, to provide sources of funds with which to finance the Icelandic fisheries. The Icelandic fisheries, although encouraged by Government policy, have largely had to stand financially on their own what later on would lead the country to also take part of the “Friends of Fish” group to regulate fisheries subsidies.
Final remarks
We have to prove to the rest of
the world that “the fish can
sing just like a bird”.
(Halldor Laxness)
The Friends of Fish is an informal coalition inside WTO Negotiation Group on Rules that was established by the Trade Negotiations Comitee in February 2002 in the First Doha Round through the Doha Declaration. From time to time they organize themselves forming what now consist of a group of 11 countries to negotiate with other WTO members’ significant reduction on fisheries subsidies. Their main issue in the negotiations is the pursuance after rules enforcement on fisheries subsidies related issues, alleging a possible connection between the subsidies on fisheries and the over-fishing. Their members consist on 11 members of WTO: Argentina, Australia, Chile, Colombia, Ecuador, Iceland, New Zealand, Norway, Pakistan, Peru, Philippines and the US. (WTO 2013)
Until now the efforts of the coalition to secure common ground are being attempted informally, not only because of the difficulty to establish negotiation ground on fisheries issues due to the difficulty to measure the impact of subsidies on sustainability and on trade, but also because of some members interests’ on fisheries expansion as Japan, South Korea and Taiwan. There is also the presence of developing countries asking for flexibility in granting subsidies to their fisheries sectors, as Brazil requesting permission for high seas fishery subsidies.
Subsidies on Trade
According to the WTO Agreement on Subsidies and Countervailing Measures (SCM) the term subsidy can be defined as a financial contribution given by a government or any public body within the territory of a Member which confers a benefit.
Forty years ago, subsidies were thought of generally as good things, as mechanisms whereby government policy could be implemented. Later on, because of questions about their effectiveness and controllability, about the role of government in society and the economy, and about the relative roles of environmental protection and economic development, subsidies in many areas of the economy generally are considered bad things, never more than in fisheries.
Types of Fishery Subsidies
There are many types of subsidies that are regulated by the WTO that present a risk for a non-discriminatory trade. There is a specif range of subsidies the fishery industry can profit from, categorizing these as possible damaging subsidies for level-playing field on fishery. The Food and Agriculture Organization of the United Nations (FAO) pointed out which are the most important types of subsidy forms for the fish industry already regulated by WTO rules on subsidies: direct government payments to the industry; tax waivers and deferrals; government loans and loan guarantees, and insurance; implicit payments to, or charges against the industry and general programmes that affect fisheries.
However there are some types of subsidy forms that are not yet regulated by the WTO, due to the difficulty to identify how these are exactly helping the national industry and, thus, classify them as subsidies, such as exchange rate manipulation or over-regulation requirements.
Fishery Subsidies Discussions in the WTO
At the same time that governments around the world continue to provide billions of dollars in subsidies to the fisheries sector, the Doha Ministerial Conference launched negotiations to clarify and improve WTO disciplines on fisheries subsidies. Finally at the Hong Kong Ministerial Conference in 2005 there was broad agreement on strengthening those disciplines, including through a prohibition of certain forms of fisheries subsidies that contribute to over-capacity and over-fishing.
The Doha mandate on trade and environment negotiations previews that fisheries subsidies are part of the Negotiation Group on Rules, where the “Friends of Fish” try informally to promote discussions and improve the address of regulation forms. The challenge now facing the Negotiating Group on Rules is to develop stronger rules while respecting the important policy concerns of WTO members, particularly developing and least-developed countries (LDC’s).
On fisheries subsidies, the grouping of the “Friends of Fish” say that subsidies to the fisheries sector have led to over-capacity and over-fishing. They argue that because of the sector's special characteristics, fisheries subsidies cause commercial harm — stock depletion which limits other participants' access to the resource – that cannot be addressed by the existing disciplines in the Subsidies Agreement.
The FAO has reported that, worldwide, 80% of world’s fish stocks are either fully exploited or overexploited. Catches of “Atlantic cod”, a type of fish specie, to take one of the worst and most important cases, fell from more than four million metric tonnes in 1968 to slightly more than one million tons in 1993. That shows very clearly the trends for the future not only for this specie but also for other species, when FAO has already documented the occurrence of similar declines of other important commercial species.
Japan, the Republic of Korea and Taiwan, on the other hand, have expressed skepticism over the link between subsidies and over-fishing. They argue that fish stock depletion is caused mainly by inadequate management of fisheries resources.
Meanwhile, developing countries pledge for special and differential treatment. Brazil has tabled a proposal for differentiated disciplines and transition rules on fisheries subsidies of developing countries. In addition, a number of small coastal states (Antigua and Barbuda, Barbados, Dominican, Republic, Fiji, Grenada, Guyana, Jamaica, Papua New Guinea, St. Kitts and Nevis, St. Lucia, Solomon Islands, and Trinidad and Tobago) have jointly proposed that they be granted broad exemptions from any new disciplines, pointing to the importance of fisheries in their economies, and the artisanal and small-scale nature of their fisheries sector.
The focus of the discussions has evolved significantly since the beginning of the Doha Round: it is no longer on whether there would be any new disciplines but rather on the approach to, and structure of, such disciplines. The proponents of stronger disciplines argue for a broad ban on most subsidies to the fisheries sector, with limited exceptions. The participants on the other side of the issue favour an approach that would prohibit an agreed list of particular subsidies with the identified harmful effects.
Furthermore, an important problem that the WTO and the countries itself meet to improve regulations is on the extension of fishing jurisdiction, where coastal states found it virtually impossible to adequately limit the fishing activities of their own nationals, even thought many of them have established the 200-mile fishing zone jurisdiction, just as Canada, US and others. This situation is present in many of the world’s commercial fisheries economies, what surely affects the leck of regulation in over-fishing control.
Chart of Leading Exporters and Importers of Fishery Commodities
Leading Exporters and
Importers of Fishery
Commodities, 2002 (US$1,000) |
||||
Exporters
|
Importers
|
|||
1. China
|
4,485,274
|
1. Japan
|
13,646,050
|
|
2. Thailand
|
3,676,427
|
2. United States
|
10,065,328
|
|
3. Norway
|
3,569,243
|
3. Spain
|
3,852,942
|
|
4. United
States
|
3,260,168
|
4. France
|
3,206,511
|
|
5. Canada
|
3,035,353
|
5. Italy
|
2,906,007
|
|
6. Denmark
|
2,872,438
|
6. Germany
|
2,419,534
|
|
7. Vietnam
|
2,029,800
|
7. United
Kingdom
|
2,327,559
|
|
8. Spain
|
1,889,541
|
8. China
|
2,197,793
|
|
9. Chile
|
1,869,123
|
9. Korea
|
1,861,093
|
|
10.
Netherlands
|
1,802,893
|
10. Denmark
|
1,805,598
|
|
Source: FAO
|
||||
Iceland and the Fishery Subsidies
According to the FAO report on fishery subsidies, Icelandic fishery subsidies have a long history but they have generally been low relative to those of other countries like the US, Canada and Norway.
Perhaps the most important Government action in support of the fishing industry in the pre-World War II period was the devaluation of the krona in 1939, an action which helped to stimulate the international demand for Icelandic fish. More recently, specifically in the 1970s, the Government again devalued the krona to improve the competitive position of its fish exports. By the broad definition, this is a subsidy since it improves the profitability of firms in the fishing industry, although not yet regulated by the SCM. This kind of subsidy is the most controvertial one, because since the WTO doesn’t have any regulation on government macroeconomic policies, such as exchange rates manipulation, its Dispute Settlement Body (DSB) cannot interfere on those issues. It seems that the trend for the new trade related problems tend to be more strongly linked to State policies not yet reviewed by the WTO and, thus, depend more on the willing of Nations to cooperate, in a system which sovereignty still means a barrier for the WTO to adress its regulation policies.
Still in the 1970s, the Icelandic Government promoted a number of funds which were intended to cost the Government nothing, being financed through an export levy. These included the Catch Equalization Fund, the Fishing Vessel Capitalization Fund, the Fishing Vessel Oil Price Stabilization Fund, the Vessel Insurance Fund, the Fisheries Loan Fund and the Regional Development Fund. These funds redistributed income among fishermen, aided fishermen in modernizing old vessels or purchasing new, more modern, vessels, smoothed diesel fuel prices, paid most vessel insurance costs, provided investment funds for fish processing plants and fishing vessels, and provided loans on favourable terms to fishermen purchasing Icelandic-built vessels.
In 1979, the Government implemented a price support scheme, also financed by an export levy, to encourage fishermen to catch underutilized species. From the mid-1980s, Icelandic fisheries subsidies have been limited to tax advantages, loan guarantees and occasional loans. According to an OECD document, financial transfers from the Icelandic Government to the industry were US$29 million in 1997, US$21 million of which was in the form of tax waivers with the remainder in research and management expenditures. The US$29 million figure is low, for example, compared to those for the United States (US$877 million), Canada (US$509 million) and Norway (US$528 million).
As it can be noticed, Icelandic subsidies have been substantially lower than those of the other countries listed above, and the subsidies have not directly affected Government finance, again in contrast with those of the other countries. The reason for this is that the fishery has dominated the Icelandic economy, comprising the overwhelming percentage of exports. Since independence during World War II, there have been no other industries large enough, with sufficient financial surplus, to provide sources of funds with which to finance the Icelandic fisheries. The Icelandic fisheries, although encouraged by Government policy, have largely had to stand financially on their own what later on would lead the country to also take part of the “Friends of Fish” group to regulate fisheries subsidies.
Final remarks
As can it be noticed after the reading of this work, the “Friends of Fish” iniciative and presence on the Negotioation on Rules in the Doha Rounds shows the dimension of importance that discussions on this trade area is taking. In this work, it could be indentified that fishery subsidies have a huge impact on trade of the fishery industry itself and also in sustainability issues, as over-fishing, food security, distribution, environmental chains of species and the main concern of the group the limitations to other participants in the industry to access the resource as a consequence of stock depletion.
However, this work also presents the difficulties that the “Friends of Fish” group has to address the rules enforcement it aims, since a lot of other countries represent divergent interests regarding to the industry, willing to expand their fisheries in the future. It is also important to notice the barriers that WTO has itself to address fisheries subsidies since the impacts of those on benefits to the industry, over-fishing or even sustainability problems are difficult to be measured. As an example of those, this work sheds light more specifically on governmental macroeconomic policies related to exchange rate manipulation, which are not yet regulated by WTO agreements.
However, this work also presents the difficulties that the “Friends of Fish” group has to address the rules enforcement it aims, since a lot of other countries represent divergent interests regarding to the industry, willing to expand their fisheries in the future. It is also important to notice the barriers that WTO has itself to address fisheries subsidies since the impacts of those on benefits to the industry, over-fishing or even sustainability problems are difficult to be measured. As an example of those, this work sheds light more specifically on governmental macroeconomic policies related to exchange rate manipulation, which are not yet regulated by WTO agreements.
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