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Explainer: What's Included in the WTO's Fishing Subsidies Agreement?

Fishing subsidies
Distant-water fishing vessels on the high seas of the Pacific (File image courtesy U.S. Coast Guard)

Published Jun 29, 2022 1:33 PM by China Dialogue Ocean

[By Fermin Koop]

It has taken more than 20 years, but government representatives at the World Trade Organization (WTO) in Geneva have finally agreed on a deal to curb the harmful subsidies that are compromising fish populations and damaging the marine environment.

It is the first time the WTO’s 164 members have made a deal with "environmental sustainability at its heart," said the WTO director-general, Ngozi Okonjo-Iweala, in her closing speech. “This is also about the livelihoods of the 260 million people who depend directly or indirectly on marine fisheries,” she added.

The agreement bans subsidies for vessels and operators engaged in illegal, unreported and unregulated (IUU) fishing, and puts curbs on funding that supports the exploitation of overfished stocks. It also prohibits subsidies for fishing on the high seas – areas beyond national waters – if operations fall outside the jurisdiction of a regional fisheries management organisation (RFMO).

What are RFMOs?

Regional fisheries management organisations are international bodies made up of countries with fishing interests in a geographical area or a highly migratory species, such as tuna. RFMOs can establish conservation and management measures on the high seas beyond individual nations’ exclusive economic zones.

However, in order to reach consensus, states put off agreement on topics where a deal proved elusive. Negotiations on the goal of eliminating subsidies that contribute to overfishing and overcapacity – a fleet’s ability to harvest more fish than is sustainable – will be re-opened at the next WTO ministerial meeting, likely to happen in 2023.

The agreement creates an international standard of transparency by making it mandatory for governments to make publicly available details of subsidies granted to their fleets and fishing operators. A Committee on Fisheries Subsidies was also created, which will have to meet at least twice a year to review the information submitted by governments.

“What we have in terms of the agreement is a really positive step. It’s quite an achievement to have 164 members agree to take binding measures for subsidies to fishing,” said Isabel Jarrett, manager of the Pew Charitable Trusts’ project to end harmful fisheries subsidies. “This also positions the WTO to take on challenges of the 21st century.”

What has been agreed? 

Some of the key provisions within the WTO’s Agreement on Fisheries Subsidies include:

• Article 3: WTO members cannot grant or maintain subsidies to ships and operators engaged in IUU fishing activities; least developed countries (LDCs) are given a two-year exemption to implement this measure in their exclusive economic zone (EEZ);

• Article 4: Subsidies targeting overfished stocks are to be prohibited, but a state “may grant or maintain subsidies if such subsidies or other measures are implemented to rebuild the stock to a biologically sustainable level”;

• Article 5: WTO members shall not grant or maintain subsidies for fishing or fishing-related activities in areas of the high seas that are outside the competence of an RFMO, and shall exercise restraint when considering subsidies for fish stocks whose status is unknown;

• Article 7: A voluntary WTO funding mechanism is established to provide technical assistance and capacity-building to developing countries;

• Article 8: WTO members shall strengthen and enhance transparency and notification of fisheries subsidies; this includes providing annual lists of vessels and operators identified as engaging in IUU fishing;

• Article 9: A WTO Committee on Fisheries is established, and will meet at least twice a year to review and improve implementation of the Agreement.

The scope of the problem

Fisheries negotiations at the WTO began in 2001. In recent years, the talks saw renewed momentum, due partly to UN member states’ adoption in 2015 of a dedicated target for fisheries regulation within the Sustainable Development Goals (SDG), as well as large-scale civil society campaigns such as the Stop Funding Overfishing coalition.

“The agreement doesn’t resolve every issue, but its approval was essential,” said Rémi Parmentier, head of environmental consultancy The Varda Group and adviser to Friends of Ocean Action. “Governments will now stop wasting money on harmful subsidies and instead free up funding for a better management of fishing resources.”

Subsidies described as harmful allow fishing to occur in places that would otherwise be unprofitable to exploit. This increase in fishing activity can deplete fish stocks to unsustainable levels and alter the marine environment, affecting the livelihoods of coastal communities around the world.

Governments spend about $35 billion on fishing subsidies every year, with $22 billion of that amount going towards harmful subsidies, according to a 2019 study. Since negotiations for an agreement began more than two decades ago, governments have spent an estimated $400 billion on harmful fishing subsidies.

The WTO works by consensus, meaning any of the member states could block the agreement from moving forward. This was initially the case with India, which asked to be allowed to build its own fishing industry infrastructure as developed countries did decades ago. For observers, this was incompatible with avoiding further damage to marine ecosystems. Around 60% of assessed fish stocks are already fully exploited and more than 30 percent are overexploited.

Prior to the agreement, Chinese commerce minister Wang Wentao indicated his country’s support for a deal, toward which it had earlier expressed reservations. “China has taken a constructive part in fisheries subsidies negotiations and supports an early agreement so as to implement the United Nations’ 2030 Agenda for Sustainable Development,” Wang said.

The agreement includes a set of benefits for developing countries, who are exempt for two years from banning IUU fishing subsidies, for example. A funding mechanism to support implementation in these countries was also created, with US$5 million already committed by developed countries, and an eventual goal of $20 million. 

Daniel Skerritt, a senior analyst at Oceana, described the deal as a “significant moment for the sustainability of the fish stocks”, but said this isn’t the end of the road. “We are not going to give governments credit for saying they will make it better. Now we have to see it actually happening. I’ll hold my breath in the meantime,” he added.

The way forward

Experts agree there’s still a lot of work ahead. Two-thirds of the WTO member countries will have to ratify the deal for it to enter into force. This might require approval by parliament, depending on the rules of each country.

In the meantime, governments will continue trying to reach a consensus on the outstanding issues of the agreement, including overfishing and overcapacity, in time for the next ministerial conference, MC13, likely to be held next year.

Observers believe the implementation of the agreement will prove difficult due to the lack of fisheries performance data from many parts of the ocean. Rashid Sumalia, an expert in fisheries economics at the University of British Columbia, said “the real work has just begun”, and that countries “just don’t have the necessary data” for implementation.

For Steve Trent, CEO of the Environmental Justice Foundation, any law or regulation is only as good as its implementation and enforcement. “We would be foolish to assume all countries are going to implement this with the same energy. It’s not a case of a lack of ambition. Some just lack the resources and capacity to make it happen,” he added.

Peter Thomson, the UN Secretary General’s special envoy for the ocean, agreed: “This agreement to end harmful fisheries subsidies has been over 20 years in the making, and we applaud the WTO, its director-general and its members for reaching a meaningful deal. But ocean life cannot wait another 20 years for the agreement to enter into force. I call upon all WTO members to fast-track their ratification process so that this deal comes into force at the latest by the next WTO Ministerial Conference.”

The agreement at the WTO comes amid a year with a packed agenda for oceans. This week, governments and observers are meeting in Lisbon for the second UN Ocean Conference, delayed due to the pandemic. And in August, delegates will meet in New York to try to seal a treaty on protecting and sustainably using biodiversity on the high seas, also known as the BBNJ Treaty.

“The partial success at WTO will help maintain focus on oceans for the rest of the year,” Pepe Clarke, Oceans Practice Lead at WWF, said. “The future of the ocean relies on us resolving key governance issues for fisheries and marine life. If WTO had failed entirely that would have been harmful.”

Fermín Koop is an Argentine journalist specializing in the environment with experience across diverse publications such as the Buenos Aires Herald, Clarín, Ámbito Financiero, Buena Salud and Notio Noticias.

This article appears courtesy of China Dialogue Ocean and may be found in its original form here.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.