Index

Expert Opinion: Fisheries Subsidies and Beyond

By John Kurien

“It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he had climbed up, in order to deprive others of the means of climbing up after him.” – Frederick List

This is a good characterization of the current negotiations on fisheries subsidies undertaken as part of the “Doha Development Agenda” of the World Trade Organization (WTO). Developed nations have provided substantial subsidies—sometimes even as high as 60 to 80 per cent of the value of the harvest—to develop their fisheries and fishing communities over the last several decades. Today, most of these countries are raising questions about the wisdom of continuing to provide such support and pointing fingers at developing countries; most of whom only offer trivial amounts of subsidies, if any at all.

Much is being said today about the presumed impacts of subsidies on fish stocks. Subsidies lead to overcapacity, we are told. This causes enhanced fishing effort leading to overfishing and resource depletion. Stop subsidies. However, not a word about the singular role played by subsidies in enhancing the quality of human development of fishing communities in developed countries!

This partial statement about the effects of subsidies is unfortunate. I personally attribute both development of their fishing communities and the depletion of their fishery resources to subsidies. In my understanding, even the direct relationship between subsidies and overcapacity and overfishing is largely untenable. The issue is far more complex.

There are several interacting and dynamic causal factors, which can promote the expansion of fishing activity and harvesting capacity and lead to overfishing. The first and most overarching factor is the rapid global expansion of the market for fish and fisheries products. At any given level of technology, this is a prime cause for expansion of fishing activity (effort) and, subsequently, for the physical expansion of harvesting capacity (craft and gear). Given the perishability of fish, fishers will catch more than they need for subsistence only if there is a market for their product.

A second factor spurring fishing effort and capacity are changes in harvesting technology. Technological change and its spread are greatly spurred in the context of an expanding market. The classic example is the diffusion of bottom trawling in Asian waters in the 1960s following the expansion of the market for shrimp in the United States, Europe and Japan. Today, bottom trawling is a bane to Asia’s fisheries resources.

Thirdly, there is the opening up of access rights to the resource. Historically, socially and culturally determined closed and/or limited access was a barrier to entry into fisheries resources. State control over the coastal waters altered the rules and norms governing access. While coastal waters were legally pronounced as state property, they deteriorated into a realm of open access where only possession rights prevailed. This created more incentives for unbridled fishing activity and raised fishing capacity.

Fourthly, market expansion creates demands for new products, which greatly expands fish processing facilities. The requirement for raw material for processing in these facilities fuels the expansion of backward linkages into the fishing activity and enhances capacity.

Finally, there are financial and other supports or subsidies in the system. These can exacerbate an already existing overcapacity problem. Such incentives, provided directly or indirectly by government or private sources (e.g., multinational fishing companies) play a role in enhancing activity and capacity. The extent to which this support is sustained will depend on the individual or joint presence of the other four mentioned factors.

For developing countries, trade in fisheries products provides a major source of quick and valuable foreign exchange earnings. In value terms, the global exports of fisheries products increased from US$6 billion in 1980 to US$58 billion in 2003, with developing countries accounting for half this trade. Net receipts from fish trade by developing countries increased from around US$4 billion to US$18 billion during this period. This revenue was greater than that from the total net exports of other agricultural commodities, such as coffee, bananas, rice and tea.

Supporting activity and investments in fisheries makes eminent sense for developing countries. The natural resources are available if properly managed. Skilled human capacity in the fisheries sector is plentiful. A judicious combination of these two factors will yield substantial economic and social returns over the long term.

Developing countries, which have a comparative advantage in fisheries products, should adopt a proactive strategy. They should pay greater attention to management of their fisheries resources, develop markets for their products and enhance the welfare of their fisherpeople. This will involve a menu of measures.

First, a program for aquarian reforms should be undertaken to grant priority rights of access to the productive coastal waters exclusively to those who fish and to grant the right of first sale of the produce to this “community” of fishers. This will create incentives for resource stewardship and greater producer control over the lower end of the commodity chain. The result will be greater incomes for the 30 million fishers and their dependents.

Secondly, developing countries need to negotiate reductions in tariff escalation to ensure that they graduate from exporting fish as a raw material to offering value-added food products.

Thirdly, developing countries should explore the scope for technological blending. The skills of artisanal small-scale fishers and the best of science-intensive technologies can create artifacts that are environmentally benign, with more emphasis on the quality of the fish harvested than on the throughput from the ecosystem.

Fourthly, ensuring international consumer solidarity for this agenda is important. This can shape the contours of sustainable fish consumption and play an important role in modulating market forces. This will place premiums on seasonally and sustainably harvested resources.

Fifthly, developing countries should negotiate to ensure international agreements that foster fair trade, ensure equitable access to resources and honor commitments in support of developing countries.

Finally, developing countries should provide judicious financial support in the form of subsidies, taking into consideration the “public good” nature of marine fisheries resources and the “merit good” nature of the human development requirements of fishing communities. Funds for this objective could be earmarked from their expanding export earnings from fish.

Developing countries need several ladders to climb to the heights of just, participatory and sustainable fisheries development. The subsidies ladder is one among them. Don’t kick it down yet!

John Kurien, from India, is a professor at the Centre for Development Studies, Thiruvananthapuram.