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Thursday, July 07, 2022

Opinion: The WTO agreement on fisheries is flawed but significant

Prabhash Ranjan, Sunayana Sasmal write: Negotiations over the global commons are not easy. But the Agreement on Fisheries Subsidies is an important milestone in trade governance.

Written by Prabhash Ranjan , Sunayana Sasmal |
Updated: June 23, 2022 8:55:47 am
A logo is pictured at the World Trade Organization (WTO) headquarters ahead of the Ministerial Conference (MC12) in Geneva, Switzerland, June 12, 2022. (Reuters/Denis Balibouse)

One of the most promising outcomes of the recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) is the adoption of a new, first-of-its-kind, sustainability-driven trade agreement called the Agreement on Fisheries Subsidies (AFS). The significance of the adoption of AFS can be gauged from the fact that this is only the third instance of amending the WTO agreement in its 27-year history. The aim of AFS as echoed by Sustainable Development Goal (SDG) 14.6 is to address harmful fisheries subsidies provided by countries towards marine fishing and to save the world’s fish stocks from further depletion.

Fundamentally, AFS prohibits three kinds of subsidies: First, illegal, unreported, or unregulated (IUU) fishing; second, fishing of already over-exploited stocks; and third, fishing on unregulated high seas. As part of special and differential treatment (S&DT), developing countries like India have been given a two-year transition period for phasing out the first two kinds of subsidies within their Exclusive Economic Zone (EEZ).

However, the final negotiated outcome, most crucially, lacks the much-needed discipline on subsidies for fishing in other members’ waters and those that contribute to overcapacity and over-fishing (OCOF). India has been steadfastly demanding that developing countries be given a longer transition period of 25 years to put an end to OCOF subsidies within their EEZ. India’s stand on this issue is rooted in its national interest. Given its long coastline of nearly 7,500 kilometres, the blue economy — sustainable use of ocean resources for economic growth — occupies a cardinal place in India’s development trajectory. India has set a target of exporting marine products worth $14 billion by 2025. Thus, India needs the policy space to invest in developing the marine infrastructure to harness the full potential of the blue economy. Moreover, India needs to protect the livelihood concerns of close to four million marine farmers, the majority of whom are engaged in small-scale, artisanal fishing, which does not pose a great threat to sustainability.

India rightly contends that WTO disciplines should not be developed in a manner that throttles its emerging sector while richer nations continue to negotiate exemptions for indefinite subsidisation and exclusion of horizontal, non-specific fuel subsidies (that is, fuel subsidies not limited to marine fishing purposes) in the text. Rich countries have historically provided massive subsidies to build capacity for large-scale fishing and fishing in distant waters, thereby contributing the most to depletion. The sheer numbers — India provided subsidies worth a mere $277 million in 2018, in sharp contrast to the top five subsidisers (China, EU, US, South Korea, and Japan, whose subsidies range from $7,261-$2,860 million respectively), prove the discrepancies.

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However, India’s demand for a longer transition period was not acceptable to many countries who insisted on this period being seven years. Consequently, WTO member countries agreed to a limited AFS sans regulations disciplining OCOF subsidies, which have been pushed to the future and are expected to be completed within four years. If negotiations fail, the AFS will stand terminated, as provided in Article 12. Meanwhile, all countries can continue providing most OCOF subsidies, that is, except for fishing on unregulated high seas.

For the sake of sustainability, countries need to overcome their differences soon and forge a comprehensive agreement with the inclusion of meaningful S&DT, else they risk the indefinite continuation of harmful subsidies by all players and/or weaponisation of this agreement as a bargaining chip in other negotiations. One balancing act could be to consider different ways to effectuate such flexibilities while accommodating the demands in a more targeted manner. Other strategies for India could involve strengthening infrastructure and mechanisms now to be able to utilise any future exemptions.

For India, the AFS is less-than-perfect, with a potential of no real outcome at the end of four years if the negotiations fail. But negotiations over the global commons are not easy. Countries, true to the SDGs, should fulfil their mandates of sustainability and development in good faith. Although the road ahead is arduous, the AFS is an important milestone in global trade governance.

This column first appeared in the print edition on June 23, 2022 under the title ‘Regulating global commons’. Ranjan is a professor at the Jindal Global Law School and Sasmal is an international trade and investment law researcher based at Columbia University

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