WORLD TRADE
ORGANIZATIONTN/RL/W/21
15 October 2002
(02-5560)
Negotiating Group on Rules Original:  English
ADVERSE TRADE AND CONSERVATION
EFFECTS OF FISHERIES SUBSIDIES
Communication from the United States
The following communication, dated 14 October 2002, has been received from the Permanent
Mission of the United States.
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I. INTRODUCTION
1. The United States is a strong supporter of the WTO negotiations on clarifying and improving
disciplines on fisheries subsidies launched at Doha, and recent developments have further underscored
their importance.  At the recent World Summit on Sustainable Development (WSSD) inJohannesburg, South Africa, World leaders recognized the critical role the fisheries sector can play in
sustainable development, and the need for action to maintain or restore world fish stocks to
sustainable levels.  The WSSD Plan of Implementation recognizes that harmful fisheries subsidies can
further exacerbate the overexploitation of fish  stocks and calls for countries to eliminate such
subsidies, "while completing the efforts undertaken at the WTO to clarify and improve its disciplines
on fisheries subsidies, taking into account the importance of this sector to developing countries".
1
2. Despite the multilateral outcomes at Doha and Johannesburg, which involved Ministers andeven Heads of State, some WTO Members continue to question whether there is a connection
between fisheries subsidies and adverse trade and conservation effects.
2  The United States is
submitting this paper to help clarify certain aspects of the relationship.
II. GLOBAL HARVESTS, TRADE, AND SUBSIDIES
3. Fisheries are distinct, complex and fragile.  For fisheries biologists, finding answers to why
fish stocks are likely to fluctuate, and between what range, is a difficult task.  Fisheries economists
have developed graphic illustrations to help explain why and at what point a limited, renewable
natural resource, such as fish, will decline if harvests exceed a maximum sustainable yield (MSY).Even taking into account these imprecisions, it is clear that many commercially important stocks have
collapsed in the last two decades.  As these stocks were depleted, other stocks, often located much
further away from traditional fishing centers or containing previously undesirable species, were
exploited.  Overfishing, biological limits, natural fluctuations and the substitution of one formerly
commercially viable stock for another have contributed to the fact that – following decades of stronggrowth –  global wild (capture) fishery harvests began to level off from 1990-93 and have, since 1994,
remained more or less the same (Table 1).
                                                     
1 WSSD Plan of Implementation para. 30(f).
2 TN/RL/W/17 is the most recent such submission.TN/RL/W/21
Page 2
4. This trend in stock health and landings precipitated the concerns raised at the 1992 World
Environmental Summit in Rio, and led to the negotiation of a number of international agreements in
the fishery sector, including the United Nations  Food and Agriculture Organization (FAO) Code of
Conduct for Responsible Fisheries, the UN Fish  Stocks Agreement, and the FAO Compliance
Agreement.  As is clear from the attention given to fisheries issues ten years later at the WSSD, there
is little reason to believe that this trend has been reversed.  According to FAO data3, harvests from
capture fisheries have developed as follows:
Table 1
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
(Million of metric tons)
World Total 85.5 84.5 85.4 86. 6 91.6 91.9 93.5 93.8 86.9 92.9
Marine
Fisheries80.0 84.9 84.6 86.1 86.3 78.9 84.6
Inland
Fisheries6.5 6.7 7.3 7.4 7.5 7.9 8.3
5. Globally, fish has become a highly traded co mmodity, with approximately one-third of total
fisheries product being sold in foreign markets.4  However, after impressive growth in the 1970s and
1980s, growth in global fisheries trade appears to have slowed since 1994.  The latest FAO data(Table 2) show that the quantities of fish products that were traded actually decreased from 1994 to
1999 (46 to 43 million metric tons).
5  Other FAO data indicate that the total global value of fisheries
trade also fluctuated in a fairly narrow range of $45 to $53 billion during that same period, with total
exports of fishery products by 55 “low income food deficit” countries (almost all in Africa) remaining
level at $2.5 billion annually throughout the second half of the 1990s.6  This means that while global
catches have remained stable in recent years, they have done so as some of the last available
underutilized stocks world-wide have been exploite d.  If FAO data trends continue, catches will be
expected to decline.
Table
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
(Million of metric tons)
Total
exports33.2 33.7 34.8 39.4 46.4 44.7 44.5 46.2 38.6 42.8
6. While many factors have doubtless contributed to the leveling off of harvests and trade
(including ineffective fisheries management regimes in many cases), global levels of subsidies have
played a significant role in the decline of certain  stocks.  As discussed in the Committee on Trade andEnvironment, and mentioned in a recent paper submitted in this Negotiating Group (TN/RL/W/3), the
OECD and APEC have done or commissioned signific ant work in estimating the levels of subsidies
benefitting their members.
7. The OECD  examined government financial transfers (GFTs) in the form of  “direct
payments” and “cost reducing transfers”, and concluded that these categories of GFTs totaled
approximately $1.5 billion annually in the period 1996-1999, representing 4 to 5 per cent of total
                                                     
3 FAO, Fishery Statistics: Capture Production, Vol. 88/1 (1999).
4 FAO, Fishery Statistics: Commodities, Vol. 89 (1999).
5 FAO, Fisheries Statistics .
6 Ibid.TN/RL/W/21
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landed value in OECD countries.7  However, despite the fact that reporting on government financial
transfers was meant to cover the range of government policies,  many OECD members reported only
budgeted programs and failed to include unbudgeted assistance measures.  In view of the fact that
these types of programmes are considered subsidies under the WTO Agreement on Subsidies and
Countervailing Measures, these programmes should be examined as well.8  Thus, subsidy levels
among OECD members are likely higher – and higher by a significant amount –  than those reported.
8. APEC  in 2000 commissioned a study of fishery sector subsidies and other “support
programmes” among its Pacific Rim members (2000)9, which includes a number of Asian and Latin
American countries that are not OECD members.  This study estimated that APEC member subsidies
and support programs totaled approximately $12.6 billion.  While as discussed above the OECD
study’s definition of subsidies may have been too narrow for present purposes, the formatting of theAPEC study was in some respects relatively broad: certain programmes that were included, such as
“management and conservation” and “infrastructure,” are not so easy to categorize as either harmful
or beneficial.  Like the OECD study, the APEC st udy also suffered from data challenges:  data on
many potentially relevant programs were not submitted or unavailable to the authors (and only 10 of
21 APEC members submitted any responses).  Nevertheless, the APEC study was able to concludethat, of the total, programs that promote increases in effort and therefore may undermine stock
abundance account for $8.4 billion –  twice as much as the $4.2 billion accounted for by potentially
beneficial programmes.
9. Given the definitional and data limitations described above, the global level of subsidies is
almost certainly higher than reported by the OECD and APEC studies:  a level of between $10 to $15
billion may be a conservative estimate.
10  Since the total value of world capture fishery harvests have
fluctuated between $70 and $80 billion (in dock-side revenues) from 1993 to 1999, we may
reasonably conclude that global subsidies amount to somewhere between  15 and 20 per cent  of
aggregate dock-side revenues.  It is important to note that this aggregate, global incidence of subsidiesprovided to fishing fleets is three to four times higher than the five per cent threshold for presuming
“serious prejudice” under the now lapsed Article 6.1 of the SCM Agreement.
10. In the large majority of the world’s capture fisheries, the failure adequately to control and
manage fisheries has allowed more harvesting effort and capacity than is appropriate.  Subsidies
amounting to 15-20 per cent of total first-sale revenues appreciably reduce costs and/or increase
revenues, and, therefore, inevitably encourage even more added effort and investments in over-fishedand depleted fisheries, which tend to predominate in the developed world.  Therefore, subsidies that
promote effort and capacity have contributed meaningfully to the erosion of resource sustainability of
those fisheries.  That same excess capacity is now being exported to previously undesirable fisheries
and to fishing grounds off of many developing countries.  These countries may have the desire to
develop their own fisheries but are prevented from doing so by overfishing by distant-water fleets anda lack of law enforcement resources to effectively monitor fishing in their waters.  On the other hand,
subsidies that do not promote effort and capacity have not had these undesirable outcomes.
                                                     
7 OECD Review of Fisheries 2001
8 FAO, Report of the Expert Consultation on Economic Incentives and Responsible Fisheries, Rome,
28 November-1 December 2000.  See, generally,  FAO Fisheries Department, Marine fisheries and the law of the
sea: a decade of change, FAO Fisheries Circular No. 853 (Rome 1993).
9 APEC, Study into the Nature and Extent of Subsidies in the Fisheries Sector in APEC Member
Economies (2000).
10 Steenblik, R. and Wallis, P., “ Subsidies to Marine Capture Fisheries: the International Information
Gap”, in Fishing in the Dark, A Symposium on Access to Environmental Information and GovernmentAccountability in Fishing Subsidy Programmes, World Wildlife Fund, Endangered Seas Campaign,Washington, DC (2001), at 17-39;  Hard Facts, Hidden Problems: A Review of Current Data on Fishing
Subsidies, World Wildlife Fund Technical Paper (Oct. 2001).TN/RL/W/21
Page 4
11. Subsidies that promote effort and capacity also have implications for prices, and, in a sector in
which almost half of global harvests are sold in foreign markets, these implications affect trade.  In
the management environment most prevalent globally, subsidies that reduce fixed and variable costs,
or increase revenues, distort trade and undermine competition in global seafood markets.
12. In sum, an emerging consensus among fisheries economists is that effort- and
capacity-enhancing subsidies tend to aggravate the most fundamental problem in most fisheries in
many parts of the world, i.e., the absence of clearly defined and enforceable  harvest rights.  One
recent study concludes:  "The economics of the world’s marine fisheries are heavily distorted not only
by the externalities coming from the common property problem but also by direct and indirect
government subsidies to the fishing industry . . . .  Thus, fisheries subsidies generally exacerbate the
common property problem".11
13. Global fisheries subsidies in the present range stimulate the building and operation of moreharvesting capacity than a rational and efficient use of available resources would dictate.  Excess
investments in harvesting capacity, in turn, encourages a tendency to “free ride” and “cheat”, which
serve to undermine effective management.  In the fisheries sector, such behavior assumes manyforms, including non-compliance with fishing regulations (quota busting), illegal operations, or
reluctance to accept the judgments of scientists regarding resource sustainability.  Notably, the WSSD
Plan of Implementation expressly acknowledges the linkage between these practices and subsidies by
calling for countries to “eliminate subsidies that contribute to illegal, unreported and unregulated
fishing and to over-capacity,’”  in conjunction with the fisheries subsidy negotiations in the WTO.
12
14. Thus, while it is undoubtedly true that management problems are inevitable in a sector aspoorly policed and geographically disaggregated as fisheries, it is equally true that subsidies have
made these management matters even more difficult to address.  As one authority has put it:  "If
subsidies are not the root cause of the intimately linked problems of resource overexploitation andovercapitalization, there is no question that subsidies seriously exacerbate both. Indeed, their impact is
probably more pervasive and malign than has been realized heretofore."
13
15. Finally, this paper has not addressed the many studies that focus on particular fisheries and
specific national subsidies.  We believe that it would be useful to consider these in future discussions,
particularly to clarify the kinds of situations that could be usefully addressed through these
negotiations.
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11 Arnason, R., “Fisheries Subsidies, Overcapita lization and Economic Losses,” in Overcapacity,
Overcapitalization and Subsidies in Eur opean Fisheries, Proceedings of the first workshop held in Portsmouth,
UK (28-30 October 1998), at 27-49.
12 WSSD Plan of Implementation para. 30(f).
13 Munro, G., in “A Theoretical Framework for Examining Interactions between Subsidies,
Overcapitalization, and Resource Overexploitation: Shor t-Term and Long-Term Consequences,” in PECC Task
Force on Fisheries Cooperation and Development, workshop on “The Impact of Government FinancialTransfers on Fisheries Management, Resource Sustainability, and International Trade,” Manila (August 1998),
at 19.