An article, ‘Tackling perverse subsidies in agriculture, fisheries and energy’, published by ICTSD in August 2012, underlines that the allocation of subsidies have raised criticisms concerning ‘the inefficiencies and economic distortions they create, their perverse distributive consequences, and the negative impact they tend to have on the environment’.
The article summarises the state of the negotiations on subsidies within the WTO, highlighting that negotiations have not progressed very much, the matter being very sensitive, due to the critical importance of fisheries in both developed and developing countries.
Regarding ACP countries, the article highlights that in the fisheries subsidies negotiations, ACP countries having FPAs obtained an exclusion of access fees paid by distant fishing nations to host countries (so-called government-to-government payments) from the disciplines on fisheries subsidies. This was a key issue, as, in the event that access fees were to be considered as subsidies, ACP states might find themselves negatively affected in their fisheries relations with distant-water fishing nations. Such adverse effects could occur in the sourcing of fish from foreign vessels for processing and export, and in reductions in employment and revenues arising from the operations of these foreign fleets. On the other hand, ‘a reduced foreign presence may provide an opportunity for reducing the fishing effort, thereby contributing to more sustainable use and less competition for capture and export between foreign vessels and the local fishing industry’.
Finally, the article discusses the reform of the EU Common Fisheries Policy, highlighting that this reform ‘would be significantly boosted by international agreement on subsidy reform’.
The contention that the end of bilateral government-to-government arrangements involving cash for access may lead to a lower foreign presence and more sustainable fisheries in ACP countries is largely misguided. Foreign fleets are able to find modalities to access ACP resources through a variety of arrangements, only one of which is bilateral government-to-government arrangements, which may provide a higher degree of transparency and control than other types of arrangements. Other arrangements are either far more commercial in nature – private-sector arrangements such as vessel chartering or joint ventures – or in the case of EU FPAs, the financial package is increasingly geared towards providing a sustainable fisheries management framework, rather than providing cash for access. Subsidies that probably have a stronger impact on the sustainability of ACP fisheries include fuel subsidies (including under the form of tax rebates), which allow many foreign fleets to maintain unsustainable activities through the whole variety of access arrangements.