Previous Page Table of Contents Next Page


REVIEW AND DISCUSSION OF ONGOING WORK PROGRAMMES


6. As a first step towards defining future of FAO work on fisheries subsidies, each participant provided a brief review of the subsidies-related work being conducted within the various IGOs and the research agendas of the three invited experts.

Overview of ongoing work-programmes

7. In preparation for this agenda item FAO had commissioned a study of work undertaken by European based IGOs on fisheries subsidies. The report "Effects and Impacts of Subsidies: a review of missions and methods" was made available to participants before their arrival in Rome. It is attached to this report as Appendix D.

8. As recommended by the previous ad hoc meeting (July 2002) FAO had invited a large number of IGOs to attend the meeting. Amongst those invited were: Association of Caribbean States (ACS), Division for Ocean Affairs and the Law of the Sea (DOALOS), European Fair Trade Association (EFTA), United Nations Conference on Trade and Development (UNCTAD) and United Nations Industrial Development Organization (UNIDO). Two representatives of Southern African Development Community (SADC) were prevented at the very last moment from attending the meeting.

Asia-Pacific Economic Cooperation (APEC)

9. Mr Stetson Tinkham presented the work of the APEC Fisheries Working Group and began by noting the direct involvement of leaders of the 21 member economies through annual Ministerial meetings, the outcomes of which include APEC Economic Leaders' Declaration. Through this Declaration, the member economies expressed support for the abolition of subsidies and endorsed the Osaka Action Agenda.

10. Charged with this mandate, the APEC Fisheries Working Group[1] made attempts to study the nature and extent of subsidies in the APEC member economies but found it very difficult to extract data on the magnitude of subsidies within member economies. In summary, the difficulty in collecting data on subsidies in fisheries is the major impediment to analyzing the effects of subsidies.

Association of Southeast Asian Nations (ASEAN)

11. Mr Somsak Pippopinyo reported on ASEAN involvement with fishery subsidies, stating that having considered a number of possible impacts and consequences on social, economic and the environmental outcomes, including potential implications on trade-related issues, ASEAN Member Countries continue to monitor and address the issues of fisheries subsidies. This is done through the ASEAN Sectoral Working Group on Fisheries (ASWGFi), under the "Program on Fish Trade". The issues are also discussed as a regular agenda in the collaborative efforts between ASEAN and Southeast Asian Fisheries Development Center (SEAFDEC) through the ASEAN-SEAFDEC Fisheries Consultative Group (FCG) meetings.

12. However, since the last report to the Second Ad Hoc Meeting of Intergovernmental Organizations on Work Programmes Related to Subsidies in Fisheries, held in July 2002, very little work has been completed for the in-depth study on fisheries subsidies in the ASEAN region. Initial work and efforts were basically focused on compilation and identification of the fisheries subsidies provided by individual Member Countries’ governments. The different types and details of subsidies and their effects, however, were not yet well investigated.

13. In general, ASEAN Member Countries were of the view that most of their fisheries activities are at small-scale and non-industrial levels. Government support is to provide a vital incentive to change unsustainable fishing practices, to avoid over-fishing, and are not considered to cause significant trade distortions. A large proportion of government transfers to the fisheries sector in ASEAN Member Countries is necessary for basic infrastructure development, to keep pace with emerging global product standards, to promote change toward sustainable practices, for poverty alleviation, or for other social reasons.

14. ASEAN was also of the view that the levels of subsidies in Member Countries were low compared to other regions/countries. However, further studies on the extent and impact of subsidies are required. In this regard, ASEAN Member Countries have decided that "in collaboration with international technical organizations such as the Food and Agriculture Organization of the United Nations (FAO) and the World Trade Organization (WTO), assess the impact of government subsidies on fisheries, particularly on the needs of small-scale fisheries in the ASEAN region and sustainable fisheries.", as stipulated under the Plan of Action on Sustainable Fisheries for Food Security for the ASEAN Region, which was adopted during the ASEAN-SEAFDEC Conference on Sustainable Fisheries for Food Security in the New Millennium: "Fish for the People" in November 2001.

15. Toward this end, ASEAN Member Countries intend to:

Caribbean Community (CARICOM)

16. Mr Milton Haughton of the Caribbean Regional Fisheries Mechanism (CRFM), alerted the meeting to the lack of data, information and documentation regarding the nature, extent and impact of subsidies on the fisheries of the region. However, there is a growing interest in this subject; therefore steps are being taken within the CRFM, including strengthening the collection of social and economic data to improve understanding of the social and economic characteristics of the fisheries and in the context of these studies will seek to isolate and consider the issue of subsidies and their impact on the fisheries. In addition, CARICOM will support a short-term consultancy analyzing the impacts of trade liberalization on CARICOM countries; hence, fisheries subsidies, to be completed by December, 2003.

17. Mr Haughton noted that CARICOM countries may provide direct or indirect subsidies to the fisheries sector in the form of incentives aimed at stimulating growth and development of fisheries and aquaculture primarily by reducing the cost inputs. These have typically included the provision of subsidized fuel, duty concessions on the purchase of fishing gear and equipment including fishing boats and engines, and the provision of subsidized loans to fishermen through special credit schemes.

18. Mr Haughton further explained that the CRFM is interested in clarifying and improving understanding of the nature and extent of subsidies and their relationship to over-exploitation and trade distortions and subsequently to improve disciplines on subsidies in the fisheries sector within the context of the WTO negotiations. Mr Haughton further highlighted the special situation of the small island developing states and the need for special and differential treatment regarding future subsidy disciplines. He said that more technical assistance is needed, especially from the international environmental organizations such as UNEP and FAO to support the efforts of the countries.

19. However, government subsidies to the fisheries sector have been substantially reduced over the past two decades and the CARICOM considers subsidies to be negligible in the Caribbean. This is largely due to the structural adjustment policies adopted by the governments and the fact that resources are not available to provide significant support to the fisheries sector.

20. Following this presentation, participants’ interventions revolved around the difficulties faced by many small developing states given the small-scale nature of many of their fisheries and, therefore, the dependency on subsidies to support the government management structure.

Permanent Commission for the South Pacific (CPPS)

21. Mr Alfonso Jalil reminded the meeting of the maritime policy coordination role that the CPPS plays for its four member states: Chile, Colombia, Ecuador, and Peru. The Economic Directorate of the CPPS is presently compiling studies performed by IGOs and others in major fishing countries in order to inform the November, 2003 CPPS General Assembly of on-going and completed work within the fisheries subsidies arena. These actions obey the mandates given to the General Secretariat by the "Ministerial Declaration of Santiago 2000" article 21, and the "Ministerial Declaration of Santiago 2002" article 15.

22. Mr Jalil informed the meeting that CPPS governments no longer provide significant subsidies to their fisheries; however, many fisheries were developed in the early years with the support of subsidies. There remains a great deal of interest about fisheries subsidies among these countries because of the possible links between subsidies and trade and the environment.

23. In addition, member countries would be interested in learning about the indirect effects of subsidies, provided to third-country vessels, on stocks of migratory species fished on the high seas.

24. Finally, Mr Jalil mentioned studies on fisheries subsidies within Chile and the desire of the Commission to proceed toward an analysis of the impacts on trade, environment and sustainable development of such subsidies.

Food and Agriculture Organization of the United Nations (FAO)

25. Mr Angel Gumy provided an overview of the FAO Fisheries Department’s work programme with regard to fisheries subsidies. The main recent and on-going activities of this programme include:

26. With regard to future activities, the Twenty-fifth Session of the Committee of Fisheries (COFI) confirmed the importance of the subsidies issue, especially in the light of the World Food Summit on Sustainable Development (the Johannesburg Summit 2002) and the Fourth WTO Ministerial Conference (Doha). The Committee urged FAO to accelerate its work in relation to the impact of subsidies on fisheries resources sustainability and sustainable development. The Committee also encouraged FAO to continue promoting cooperation and coordination with other relevant intergovernmental organizations such as the WTO, OECD, UNEP and others in the field of fisheries.

27. The Committee also agreed that FAO should convene a Technical Intergovernmental Consultation. In this Consultation, attention should be given to a practical mandate to consider the effects of subsidies on fisheries resources, such as effects on IUU[2] fishing and overcapacity. Many Members recommended that the Technical Consultation should take into account the impacts of subsidies on sustainable development, trade in fish and fishery products, food security, social security and poverty alleviation, especially in the context of recognizing the special needs of developing countries and small island developing States as recognized in international instruments. COFI stated that the Technical Consultation should also consider the ways in which FAO can support the WTO’s work on fisheries subsidies, noting the independence of the WTO timetable.

28. As a next step in investigating the impact of fisheries subsidies and also as part of the preparatory work for the Technical Consultation, the FAO Fisheries Department is now planning a series of case studies. The intention is to carry out six or eight case studies in different countries from different parts of the world. The overall objective of the case studies is to improve the current knowledge on what environmental, economic and social impact subsidies have and by what mechanisms these effects are created. More specifically, the intention is that the case studies will give information regarding the mechanisms by which subsidies work. Related to this, the outcome of the case studies should also give indications with regard to:

29. It is expected that the case studies and the analysis of their results will provide a good insight into the above listed issues. However, it is not realistic to expect the work to give final answers. Hence, an additional objective of the work is to clearly identify further empirical and theoretical research needs.

Organisation for Economic Co-operation and Development (OECD)

30. Mr Anthony Cox briefed the meeting on OECD’s work programme with regard to fisheries subsidies. The main recent and current activities of the OECD relating to fisheries subsidies include:

31. Moreover, with regard to a closely related issue, a workshop examining IUU fishing from an economic perspective will be organized in April 2004.

United Nations Environmental Programme (UNEP)

32. Ms Anja von Moltke presented UNEP’s work on fisheries subsidies. The organization’s mandate gives priority to work with developing countries and economies in transition. Within this framework, UNEP is assisting countries in improving their abilities with regard to assessing fisheries subsidies and their impact, and in finding ways to reduce environmentally harmful subsidies. This work has focused on understanding the relationship between fisheries subsidies, overcapacity and the sustainable management of marine resources. The main activities are:

World Trade Organization (WTO)

33. Ms Christina Schröder from the WTO explained the history of the natural resources based products - including fish and fishery products - within the framework of GATT and WTO. While these products were discussed already in the Uruguay Round, it was only in the Fourth Ministerial Conference in Doha in 2001 that a clear mandate for negotiations on fisheries subsidies was provided and that it was agreed that the WTO rules should be clarified and improved in this regard.

34. The relevant negotiations are taking place in the Negotiating Group on Rules. The WTO members will review progress at the Fifth Ministerial Conference to be held in Cancún, Mexico, in September 2003. According to the timetable set out in the Doha declaration, the negotiations should be finalized by 1 January 2005.

35. Ms Schröder noted that, although the requirement to notify the WTO of the use of subsidies in fisheries, only twenty out of 146 member countries have supplied this information and with varying levels of detail. In order to increase notification rates, the WTO has held seminars on completing and improving the notifications.

Invited experts

36. Three invited experts, Rögnvaldur Hannesson, William Schrank, and Basil Sharp, described their work and interests concerning fisheries subsidies. Mr Hannesson described his work modelling the links between management regimes and subsidies with the OECD; Mr Schrank described his work on econometric models of the Newfoundland Fisheries, which was followed by studies in which he found that for certain years, government spending on fisheries exceeded the value of landings in these fisheries. Mr Schrank’s interest lies in understanding why these situations occur.

37. Mr Sharp described his time-series work regarding New Zealand fisheries from their subsidies-based beginning through their transformation into a rights-based system. Mr Sharp stated an interest in mapping out how subsidies are transformed into observable results (e.g. stock effects, technical change).

Methodologies used by participating organizations to establish the effects and impacts of subsidies

38. Ms Lena Westlund presented a proposal for how the planned FAO Fisheries Department case studies could be carried out. She explained the mandate given to the Department by the Committee on Fisheries, pointing out the emphasis given to the impact of subsidies on overcapacity, IUU fishing and sustainable development. The main questions that the studies are going to attempt to find answers to were outlined, i.e.:

39. Ms Westlund suggested that case studies be carried out in 6-8 countries and that the studies only cover the marine capture fisheries subsector. It was also proposed that the focus of the studies be clearly defined and that one specific fishery be selected in each country. Moreover, the studies could focus on a selected number of subsidies that potentially lead to overcapacity and IUU fishing (infrastructure, decommissioning schemes and income support) and the impact analysis could concentrate on a limited number of aspects, e.g. effects on the target stock and on the livelihoods of fishing communities, in particular with regard to income and employment.

40. The analytical part of the work would cover three components:

41. The in-country work should preferably be finalized in January 2004. The results of the individual studies would then be explored and synthesized into a report to be presented to the Technical Consultation scheduled for June next year.

42. Given the limited timeframe of the work, it was pointed out that the results of the studies are unlikely to give final answers to the questions defined above. Nevertheless, it is expected that a better understanding of the qualitative and quantitative effects of subsidies - as well as of the mechanisms by which they are created - will be achieved and that this will help formulate new research questions and define the need for further work. Copies of the presentation (in the form of printed PowerPoint slides) are enclosed in Appendix E.

43. Within this presentation, Ms Westlund provided the meeting with an outline for discussing the overarching questions and methodologies to consider when developing the FAO work plan on subsidies for the coming six months to a year. Issues considered included the following six areas:

  1. Are the questions asked relevant and realistic?
  2. Is the focus adequately defined?
  3. What analytical procedures and models would be applicable for the analysis?
  4. What assumptions, limitations and concerns need to be considered?
  5. Are there aspects of the study that could be changed to benefit the IGO community better?
  6. Is there scope for closer collaboration, with regard to the proposed case studies or in follow-up work?

1. Are the questions asked relevant and realistic?

44. The first question is general in nature. It allowed the meeting to ascertain whether the proposed research questions - or issues - are indeed tractable, independent of time and funding constraints.

1.1 What impact by what type of subsidy?

45. The meeting decided that although establishing a link between subsidies and their economic, social and environmental impacts would be a difficult task, there is merit in trying to disentangle such effects, perhaps by starting with the more evident subsidies. One participant noted the utility of determining a hierarchy, if not magnitude, of effects in order to assist decision makers in prioritizing amongst the various subsidies and their tradeoffs. For example, if the subsidies take the form of either cost reducing or revenue enhancing subsidies, it would be relatively easy to make adjustment to a model and estimate the effect of such subsidies. Other subsidies, on the other hand, would necessitate changes in the model itself adding an additional layer of complexity to the work.

1.2 What are the mechanisms and role of subsidies regarding overcapacity and IUU fishing?

46. On the link between subsidies, overcapacity and IUU fishing, the meeting clarified the notion that fisheries subsidies create incentives to invest in a fishery through adjusting the cost and revenue functions of firms; therefore, it is analytically possible to determine the link between subsidies and overcapacity. The problem of IUU fishing arises as a result of poor enforcement and from inadequate management and legal frameworks. However, the underlying economic framework for analysing IUU fishing is similar to that used for analysing non-IUU fishing. Therefore, IUU fishing could be analysed after the economic/operational links between subsidies and overcapacity have been established.

1.3 How to measure impact and assess trade-offs?

47. Given the multiple and often contradictory objectives each government faces (e.g. maximize economic development, maximize employment, minimize the effects on the environment), the meeting saw a need to focus the analysis on impacts and trade-offs among sustainable development and resource stability (i.e. trade-offs between natural and man-made capital, capital and labour).

1.4 What surrounding circumstances are important?

48. When the time-series data collected exhibit unexplainable trends, one would need to explore all possible surrounding circumstances (e.g. management regime, general economic state, expectations of fishers, stock status, access to markets, international trade) to help explain these trends. Given the limitations of the current work-plan, it was decided that management regime and stock status are to be considered the minimum country-specific circumstances to be analysed.

2. Is the focus adequately defined?

2.1 Types of subsidies potentially leading to overcapacity?

49. The meeting agreed that the subsidies to be studied should be policy relevant. The meeting discussed a list of subsidies hypothetically linked, whether overtly or less obviously, to overcapacity. The meeting then agreed that infrastructure, decommissioning schemes, income support, boat building schemes and modernization/enhancement subsidies would be amongst those useful to study. There was general recognition that a possible lack of interest amongst countries to participate in these studies would limit the possibility to select case studies on the basis of the types of subsidies that it could be interesting to analyse.

2.2 Sub-sector (marine capture fisheries)?

50. The meeting agreed to begin analysing subsidies among marine capture fisheries.

2.3 Impact on target stocks and livelihoods of fishers?

51. This question related to the prioritization amongst four general categories of subsidies impacts on sustainable development: target stocks, marine environment, macro-level economic effects, and social well-being (micro-level economic) effects. Although a complete analysis should comprise all four categories as decision makers need to know the full range of impacts, it was recognized that the effects of subsidies on the marine environment and macro-level effects should be considered when feasible. At a minimum, the analyses should determine the impacts on the target stocks and the micro-level effects (e.g. income and employment).

3. What analytical procedures and models would be applicable for the analysis?

3.1 What indicators should be used for descriptive trend analysis regarding mechanisms and impacts (capacity, resources, livelihoods)?

52. While an exhaustive list of indicators would be ideal (see examples in Table 2 of Ms Westland’s report in Appendix D) the meeting needed to define a minimum set of quantitative indicators comprising stock levels and trends, value of captures, cost and revenue structures, fishing fleet size (gross tonnage, number of vessels), fishing effort, employment, and subsidies. Less emphasis should be placed on trade aspects of the fisheries, unless these data are readily available and easily incorporated into the analysis.

53. Qualitative indicators, such as governance, degree of co-management, and regime changes over time, would certainly add to the explanatory abilities of this analysis and should be included whenever possible.

3.2 Would the proposed quantitative model be useful?

54. The meeting noted that it would be highly desirable to initiate work to develop quantitative models suited for the analysis of empirical data on fisheries receiving subsidies. A simple analytical model, based on a theoretical model developed by Ragnar Arnason, was proposed by Mr Schrank. The proposed model would allow for an estimation of the magnitude of the effects of subsidies on industry profits, fishing effort, and stocks. Limitations of this model include the restriction to cost decreasing or revenue enhancing subsidies and the use of simplified production and population dynamics equations. However, this model does not contain heavy data requirements, is simple to use and interpret, other types of subsidies may be included by adjusting the effort equation, and capture limits could easily be included in the model. This model has not been tested for appropriateness in a real-world scenario; therefore, a test run using real data is necessary before applying this model to the afore-mentioned case studies. The meeting endorsed this approach.

3.3 Can the link to the OECD-UNEP work be incorporated and would it be meaningful?

55. There was general agreement that this work would be complementary to the OECD work and would follow a similar path as that of the UNEP work.

4. What assumptions, limitations and concerns need to be considered?

56. Several additional concerns were highlighted by the meeting including:

57. It was suggested that the case studies would be the first empirical application of analytical work, moving one step closer to linking the theoretical knowledge with real-world scenarios. In conclusion the meeting recognized that the case studies as proposed will undertake empirical work so far not attempted at the level of individual fisheries on the relationships between subsidies and their impact on resources and livelihoods. Therefore it seemed reasonable to initiate in parallel with the proposed work programme the development of a more elaborate analytical framework (possibly in the form of an econometric model). However, such an effort would probably need at least a year’s research effort just to develop the model.

5. Are there aspects of the study that could be changed to benefit the IGO community better?

58. Ms Schroder of the WTO suggested that trade aspects be built into the model in order to describe the link, if any, between subsidies and trade distorting effects. Mr Jalil seconded the need to include impacts on trade as decision makers are in need of such information. However, the difficulty of doing so and the lack of a mandate to do so place this suggestion into future research needs. Mr Cox of OECD confirmed that the work programme as proposed is complementary to the work done by OECD; work that is at a higher level of aggregation. Mr Tinkham believed that the work programme as proposed might stimulate the APEC fishery working group to develop project proposals that might be complementary in nature for the Pacific Rim Economies. Mr Haughton of CARICOM, as well as Mr Pippopinyo of ASEAN, also expressed the view that the work programme, if executed, would be beneficial to their own efforts in the field of fishery subsidies[3].

6. Is there scope for closer collaboration, with regard to the proposed case studies or in follow-up work?

59. The representatives from the various IGOs expressed their support of the proposed work-plan, their eagerness to learn from the results, and a willingness to assist whenever possible. All acknowledge that this was a very important first step in the analysis of historical impacts of fisheries subsidies at the level of individual fisheries.


[1] http://www.apecsec.org.sg/workgroup/fish.html
[2] IUU: Illegal, Unreported and Unregulated Fishing
[3] The representative of UNEP, Ms A. Moltke, for reasons beyond her control, was unable to participate in this discussion.

Previous Page Top of Page Next Page