Global fishing is in trouble. The sheer volume of fish we are taking from our oceans through fishing is reducing the ability of wild populations to replace their numbers. Adding insult to injury, governments around the world are subsidizing these harmful overfishing practices.
If you were to distill the problem down to its most problematic core, you would find government subsidies in one form or another. Government subsidies to build ever larger boats, design trawlers that drag huge nets across the seafloor or artificially lower fuel costs—all of these incentivize the overfishing that is depleting our oceans.
Fishing, particularly on the high seas far from shore, isn’t just destructive: It’s unprofitable. A June 2018 study found that about 54% of fishing on the high seas would be unprofitable without government monies. “It’s fair to say that certain subsidies result in more fishing boats on the water,” says Jesse Kreier, a former World Trade Organization official and now a professor of international trade law at Georgetown Law School. “Subsidies that encourage people to drive farther out and fish in situations where it wouldn’t be economically viable without the subsidy are putting a lot of stress on fisheries and the world’s biomes.”
Barring subsidies would be a key step toward keeping our oceans stocked and healthy for the next generation. This is a commonly accepted proposition—and it’s why so many eyes are on the WTO, which has been attempting to tackle fishing subsidies for more than 20 years. Finally, last year, members of the WTO agreed on certain disciplines to prohibit harmful subsidies. But the agreement needs two-thirds of WTO members to accept it before it enters into force. They are meeting again next year to hopefully close the deal.
What’s the Problem With Subsidies?
Subsidies are often held up negatively as anti-competitive and protectionist instruments for supporting certain favored industries in the face of international competition. Yet, in one form or another, subsidies can be found in just about every economy and reflect governments’ various strategic, political or social goals.
But in the case of subsidized fishing, the effects are devastating. Overfishing may bring in a large catch today, but it ignores the needs of tomorrow. According to the UN’s Food and Agriculture Organization, approximately 90% of the world’s fisheries are fully exploited or overexploited. Specifically, 35% are overexploited and 55% are fully exploited or on the verge of being overexploited. That 35% figure is up from 10% in 1974.
A given fishing area is “overfished” when it falls below what is regarded as its maximum sustainable yield. This means you can overfish a particular stock for a while before you notice diminishing returns. By that point, the fishery may be on a curve of irrevocable decline. Government subsidies provided to fishing fleets are one of the main drivers of this trend, incentivizing local fleets to overfish their own areas and encourage larger fleets to overfish the high seas. Many of the world’s most desirable fish, especially predatory species such as tuna and swordfish, have wide ranges or migratory habits that take them across the “borders” of the sea. Each coastal nation has an exclusive economic zone (EEZ) that extends about 200 nautical miles offshore. Some nations manage their EEZs better than others, and when locals deplete their own fish stocks, government-subsidized fishing fleets are often sent out to the high seas.
The Washington Post’s Harry Stevens recently wrote about one such attempt, when the Oyang 77, a South Korean fishing boat, was apprehended for illegally fishing in Argentinian waters. Advanced technologies like open-access platforms by Global Fishing Watch reveal how these fleets lurk right on the border of developing countries’ EEZs. With their oversized and subsidized fishing vessels, they scoop up as much marine life as they can before speeding away. As a result, local fishers are often left with depleted fish stocks.
According to one study in Sustainability Science, “Fishing on the high seas has increased to the point where cost now exceeds revenue.” The costs reach beyond today’s finances though—government subsidies are driving otherwise uneconomical fishing practices, which, in turn, leads to the diminished ability of fishing stocks to replenish themselves.
“The very fact that the stock is declining can trigger fishers to demand bigger subsidies,” said Georgetown Law’s Kreier. “There are not as many fish out there as there used to be, so the fishers say they need bigger boats with more powerful engines to go further out. They say they need subsidies to reduce their costs. So, governments give them more money for new equipment, and that puts even more pressure on the stocks. It becomes a negative feedback cycle where the subsidy response to the problem generates even greater problems.”
The Good, the Bad and the Ambivalent
Not all subsidies are created equal. A Marine Policy study organizes subsidies into three broad categories: beneficial, harmful and ambivalent. Beneficial subsidies include money spent on fisheries management and monitoring activities, as well as stock assessment and replenishment, research and scientific activities. These subsidies are beneficial because they help to protect against overfishing. Harmful subsidies are the opposite, because they encourage overfishing. They include money spent on “capacity expanding” activities, such as fishing vessel building modernization and fuel subsidies for fishing fleets. Ambivalent subsidies, as the name suggests, neither help the problem of overfishing nor make the problem worse. They include money provided to support people in the fishing industry, vessel buyback programs and rural support programs.
Technically, any subsidy to the fishing industry will enhance capacity one way or another. One might think that the bigger the subsidy, the more harmful it could be. But another Marine Policy article shows why it’s important to consider the type of subsidy and how it contributes to total fleet catch. Unfortunately, it turns out that the vast majority of fishing subsidies are of the harmful variety. As a metric, the authors calculate harmful subsidies in absolute dollar amounts, and in terms of total fleet catch value. Asia is the dominant region in terms of both absolute and relative amounts. Asia’s harmful subsidies total $13.9 billion in absolute value and represent 19% of the value of catch landed by the region’s fleet. In other words, Asia’s harmful subsidies are equivalent to 19% of the region’s total value of catch landed, and 24% of the region’s total fleet catch in their own local EEZs. Europe comes in second at 13% and 20%, respectively. On the other side of the spectrum is Oceania: That region’s harmful subsidies total $160 million and represent 6% of the value of total fleet catch landed (and 7% in EEZs).
At a country level, the People’s Republic of China is far and away the largest provider of subsidies in absolute terms as well as the number-one provider of harmful subsidies, paying 28% of its landed value in fishing support. The United States, by contrast, pays 8% of its landed value in harmful subsidies. This perhaps explains why China is often seen as dragging its feet in the WTO negotiations over subsidies, while the United States is generally supportive.
But there are enough governments heavily invested in the subsidies game to have kept negotiations dragging on for two decades. There is plenty of blame to go around, and focusing on any one country is likely unproductive. The aforementioned Marine Policy study analyzed the global impact of fishing subsidies, noting that developed nations provide a greater share of the world’s total subsidies than less developed ones. They estimated that global fisheries subsidies totaled $35.4 billion in 2018, and that the top five subsidizing entities are China, the European Union, the United States, South Korea and Japan. Together, these five entities account for a whopping 58% ($20.5 billion) of global fisheries subsidies.
What Has the WTO Accomplished?
In June 2022, negotiators at the 12th Ministerial Conference in Geneva reached an agreement to limit certain types of fishing subsidies. U.S. negotiators point out a number of key provisions in the agreement that limit or prohibit subsidies to:
- Vessels or operators engaged in illegal, unreported and unregulated (IUU) fishing or fishing-related activities in support of IUU fishing;
- Fishing or fishing-related activities regarding stocks that are overfished; and
- Fishing or fishing-related activities on the unregulated high seas.
While it should seem obvious that IUU fishing should not be subsidized, the WTO agreement would make violations of such practices punishable under international trade rules. The agreement relies on accepted scientific data and coordination with relevant regional fisheries management organizations to prohibit governments from subsidizing live catches in overfished stocks. Similarly, the ban on subsidies for fishing in unregulated high-seas waters also relies on coordination with these organizations.
Many observers, while appreciating the landmark aspect of the fisheries agreement, nevertheless express frustration and disappointment with its relatively narrow scope. “What could have been a watershed moment for international fisheries governance and the state of the ocean itself is yet another missed opportunity,” wrote Daniel Skerritt, senior analyst at the nonprofit environmental organization Oceana, in the wake of the agreement. In particular, the agreement fails to place restrictions on the harmful subsidies that contribute the most to overfishing and the depletion of stocks. “The meager fisheries subsidies agreement highlights the difficulties in delivering meaningful collective action to solve shared problems.”
This view is common among environmental organizations that have been watching the WTO process evolve over time. Adding to the fever of these concerns is the pending meeting of the 13th Ministerial Conference, scheduled for February 2024 in Abu Dhabi.
Meanwhile, Ernesto Fernández Monge, a senior officer for conservation support at the Pew Charitable Trusts, works with WTO negotiators tackling the subsidies issue and says the agreement that came out of the 12th Magisterial last year may not be perfect but that it still represents progress. While the provisions of the agreement address a fraction of fishing subsidies, there is real weight behind them. “There are real provisions now,” he says. “Real rules exist that have teeth, and members need to think about when and how they subsidize their fishers. They need to think about whether they are complying with the agreements.” In other words, nations cannot freely bestow subsidies without considering international rules.
In Fernández Monge’s view, the very fact subsidies regulations are now on the books gives governments that might have been leery of such restrictions a stake in their successful implementation. They need to think about their domestic social and industrial programs in the context of the agreement. For example, countries have to pay closer attention to the activities of their flagged fishing vessels if they want to avoid trade penalties. Hopefully, compliance will also help to shape their fisheries policies proactively going forward.
“I believe the trade negotiators are acting in good faith trying to reflect the concerns of their constituents,” he said, although they may be taking too parochial a view of what those interests are. “At Pew, we want to help the negotiators look beyond that and also show that there are other aspects, like coherent public policies and the fact that subsidies reform needs to go hand in hand with effective and robust sustainable fisheries management, that affect the livelihoods and well-being of their constituents, and maybe they aren’t taking these into consideration.”
Multiple Approaches, One Goal
Sarah Stewart, executive director of the Silverado Policy Accelerator, a Washington, D.C.-based geopolitical think tank, says that even with a limited scope, the WTO fisheries subsidies agreement is bringing a lot of new energy and momentum to a host of conservation and sustainability issues. The reaching of an agreement “is an enormous historic milestone,” she said. “Regardless of what you think about it, what’s in it or what’s not in it, it is amazing that they were able to reach an agreement.”
An international trade lawyer, Stewart is a former deputy assistant United States Trade Representative and was a key negotiator for the U.S.-Mexico-Canada Agreement (USMCA) and the Transatlantic Trade and Investment Partnership negotiations with the European Union. The USMCA in particular had significant content related to managing fisheries and subsidies. That negotiation, she said, was going on in parallel with the WTO, and the various negotiating teams could learn a lot from each other. “The United States had long been a leader in pushing for commitments on sustainable fisheries management and to discipline fisheries subsidies and we looked to build those types of commitments into the USMCA to align these policies among the USMCA parties,” Stewart said. “Not in an identical way, but to achieve a similar level of effectiveness.”
Achieving commitments in trade agreements is no small feat. And different countries will have different reasons for committing: In the case of restricting subsidies to protect fish stocks, countries may be driven by conservation, food security or economic objectives. It’s definitely apparent that as more coastal nations see their fishing stocks depleted, more economic interests are at risk. Last year, leaders of 14 nations that sit on the world’s coastlines committed to address overfishing, including Australia, Ghana, Indonesia, Japan and Norway.
Decades ago, the United States used trade rules defensively to protect species such as dolphins and sea turtles from being unduly harmed by fishing activities. Now, international trade rules are once again in the spotlight as a tool to help prevent irrevocable harm to a global resource—our oceans. All eyes will be on Abu Dhabi next year to see whether WTO members can close a deal on ending harmful subsidies that are depleting our oceans.