The International Business Transactions Blog

Historic WTO Agreement on Fisheries Subsidies

By Yuki Taylor
Law Student Editor

On June 17, 2022, the WTO adopted an Agreement on Fisheries Subsidies in its 12th biennial ministerial conference.  This multilateral treaty is “the first WTO agreement with environmental sustainability at its core.”  The purpose of the Agreement is to prohibit and eliminate certain forms of fisheries subsidies that contribute to overfishing and especially to Illegal, unreported, and unregulated (IUU) fishing, in order to salvage and rebuild marine natural resources to a sustainable level.  In the agreement, “fish” is defined broadly as “all species of living marine resources, whether processed or not.”

The Agreement on Fisheries Subsidies was 25 years in making, commencing with the establishment of a workshop organized by UN Environmental Programme (UNEP) in 1997.  The Agreement was also a declared target under the Sustainable Development Goals (SDGs), which form the heart of the 2030 Agenda for Sustainable Development adopted by all UN member states in 2015.  SDGs consist of commitments on 17 subjects, such as poverty, hunger and climate action.  Target 14 concerns “life below water,” and is designed to “conserve and sustainably use the oceans, seas and marine resources for sustainable development.”  The Agreement was one of the targets set under Target 14, although it was originally intended to be implemented by 2020.

The subsidies subject to the Agreement consist of any government benefit given: (1) to a vessel or operator engaged in IUU fishing or fishing related activities in support of IUU fishing; (2) for fishing or fishing related activities regarding an overfished stock; or (3) to fishing or fishing related activities outside of the jurisdiction of a coastal member or a coastal non-member and outside the competence of a relevant Regional Fisheries Management Organization or Arrangement.  The Agreement will enter into force when two-thirds of WTO member states have ratified the treaty or deposited an instrument of acceptance.

According to the UN Food & Agriculture Organization (FAO), the percentage of stocks fished at biologically unsustainable levels increased since the late 1970s from 10% in 1974, to 35% as of 2019.  Because fishing employs 59 million persons worldwide, and 600 million depend on fisheries for employment, overfishing threatens the livelihoods of hundreds of millions of persons. Governments worldwide are estimated to spend US$ 35 billion annually in support of the fishing sector.  While government support for fishery management or R&D is deemed a beneficial incentive, subsidies implemented to reduce fishers’ operating costs such as support for tax, fuel, gear and shipping vessels have directly led to overfishing or capacity-enhancing, thus harming the sustainability of marine resources.

Of the global subsidies total, US$ 22 billion are considered to be capacity-enhancing or harmful.  The WTO agreement ambitiously aims to curb harmful subsidies, or 63% of the current worldwide support to the fishing industry.  Seven countries in aggregate contribute to more than two-thirds of the global harmful subsidies, specifically China, Japan, the EU, South Korea, United States, Russia and Thailand.

According to the FAO’s latest statistics, in 2020, global marine captures were 78.8 million tons, reflecting a 6.8% decline from the peak recorded in 2018 at 84.5 million tons due to the sever effects of the pandemic.  Additionally, marine captures were heavily dependent on oceanographic conditions such as El Niño events.  Further, global marine fisheries continue to be highly concentrated among a small number of producers.  In 2020, in line with the previous years, the top seven countries accounted for over 50% of the global total, led by 14.9% of captures by China alone, followed by Indonesia at 8.2%, Peru 7.1%, Russia at 5.4%, India 4.7%, Vietnam at 4.2%.  Japan, the largest producer of marine fisheries in 1980’s, producing approximately 10 million ton annually now ranks 8th place after Vietnam.  After replacing Japan for the top spot in the 1990’s, China continuously remains the largest source of marine captures, although its reported fisheries trajectory is in decline as seen in the 18.2 % decrease since 2015.

Analogous to other WTO agreements, the fisheries subsidies treaty as well contains a clause for special and differential treatment for developing countries.  Further, unlike the least-developed-countries whose criteria are set forth by the UN, WTO’s preferential “developing country” status is established by self-identification, and a majority of WTO member states are developing countries.  China, the world largest marine fisheries producer and largest contributor of harmful subsidies, is still a self-proclaimed developing country.