Will WTO deal to curb fisheries subsidies work?

In its three decades of existence, the members of the World Trade Organization (WTO) have negotiated only two new trade deals. The latest one is the Agreement on Fisheries Subsidies (AFS), which entered into force last week. At the 12th Ministerial Conference (MC12) in Geneva in 2022, the members of the multilateral trade rule-making body agreed to accept the deal. Since then, it took almost two and a half years to become effective, as it is necessary to be ratified by at least two-thirds of the members. So far, 112 members have ratified or officially accepted the deal by submitting the instrument of ratification or formal paper of acceptance to the WTO secretariat. Earlier, at the 9th Ministerial Conference (MC9) in Bali, Indonesia, in December 2013, members agreed to introduce the Trade Facilitation Agreement (TFA), which came into effect in February 2017.
After obtaining the necessary ratification, the WTO General Council celebrated the entry into force of the fisheries subsidies deal at a special meeting last week. Despite the celebration, it is only the first phase of the agreement labelled as Fish-1 that comes into effect. To make the entire deal effective, the members must complete the negotiation of Fish-2 within four years. At the 13th Ministerial Conference (MC13) in Abu Dhabi last year, members were unable to break the deadlock on the negotiations for Fish-2. Now they have agreed to finish the talk by September 2029. Before going to analyse the scope and effectiveness of the agreement, let's have a look at the key areas of the deal in brief.
The AFS aims to curb harmful subsidies and protect the livelihoods of fishing communities worldwide. To do so, the first phase of the deal prohibits subsidies on: (i) illegal, unreported and unregulated (IUU) fishing; (ii) the fishing of overexploited stocks and (iii) fisheries on the high seas outside the jurisdiction of regional fisheries management organisations. According to the Food and Agriculture Organisation (FAO) of the United Nations (UN), approximately 36 per cent of global fish stocks are currently overfished, compared to 10 per cent in 1974. It is also estimated that governments spend approximately US$22 billion annually on subsidies to expand fishing capacity, contributing to overcapacity, overfishing, and other practices that deplete fish stocks and undermine efforts to achieve sustainable fisheries. Additionally, the total economic losses caused by IUU fishing are estimated to be approximately US$50 billion. The second phase of the agreement aims to curb subsidies that promote overcapacity in fishing fleets or overfishing. These two types of subsidies were also included when negotiations for the agreement began. Later, some members strongly objected to negotiating the last two types of subsidies for the time being. So, it was excluded from the negotiation and placed as the second phase of the deal for later talk.
As Bangladesh is yet to ratify the deal, the country can continue the tiny subsidies it has been providing. It will, however, not be eligible to get the technical assistance. AFS provides a 'peace clause' to the least-developed countries (LDCs) and developing countries, exempting them from subsidy bans within their own exclusive economic zones for two years. Furthermore, developing nations and LDCs whose annual share of the global fish catch does not exceed 0.8 per cent will be allowed to submit their fisheries notifications to the WTO every four years instead of every two years.
To understand the implications of the AFS, the government in June this year appointed a consulting firm to conduct a 'Study on WTO Agreement on Fisheries Subsidies: Impact and Way Forward for Bangladesh.' As the study is likely to be completed by the end of the year, it yet to see what the output it can provide. Meantime, the country needs to closely monitor the progress on the second phase of the deal.
The WTO deal is expected to reduce the depletion of global fish stocks and support sustainable fisheries, and it is the first trade deal in the WTO which is more focused on the environment than on trade. The big question is whether the agreement will be able to curb the harmful subsidies and ultimately protect the global fish stocks to a sustainable level. The answer requires some analysis.
First, the deal is applicable to countries that have ratified it, and not to those that have not officially accepted it. Some big fish-producing and exploiting countries are yet to ratify the deal. For instance, India, Indonesia, Thailand, Mauritania, Mexico, Morocco and Thailand alone account for one-fifth of the world's fishing catch, and they have not ratified the deal along with some other countries like Bangladesh, which has a little or negligible share in global fishing catch. Nevertheless, over a quarter of the world's sea fish catch is not covered by the deal, and the countries will be able to continue with their subsidies.
Second, though WTO members are already required to notify their fisheries subsidies under the WTO Agreement on Subsidies and Countervailing Measures, under the AFS, they have to provide fisheries-related information, such as subsidies, fish stocks, conservation methods, fishing fleets, vessels identified as involved in illegal fishing, and others. Those who do not ratify the agreement have no obligation to provide any such information, and so there will be a gap in this regard. In other words, the repository on global fish subsidies will be incomplete for a long time. Members who accepted the deal can exchange information among themselves, but they can't compel those who have yet to accept the deal. It is difficult to say when the rest of the members will ratify the agreement.
Third, the WTO DG is playing a crucial role in the progress of the AFS. The DG is expecting that there will be good progress in the upcoming ministerial conference, to be held next March in Cameron, regarding Fish-2. With only six months in hand, such an expectation is overambitious, especially when there is almost no sign of advancement in negotiation. It is also unlikely that countries like India and Indonesia will move ahead soon unless their demand on some aspects of the second phase of the deal is addressed. In December last year, both countries blocked the revised text on the Fish-2, which is also labelled as the additional provisions on the fisheries subsidies agreement. India argued for 'subsidy paid per fisher' approach instead of 'total subsidy' by a country that contributes to overfishing and overcapacity.
Overall, WTO members have to do a lot of work in the near future to make the AFS effective and all these are not easy at all as a number of obstacles are already there. Addressing the concerns of the millions of small fishermen is a big challenge also. So, it is unlikely that the deal will contribute to reduce the fisheries subsidies and help the sustainability of the global fish stock.

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