Strengthening European Union fisheries by removing harmful subsidies

Marine Policy 136 (2022) 104884 Available online 27 November 2021 0308-597X/© 2021 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Strengthening European Union fisheries by removing harmful subsidies Sebasti´ an Villasante a , * , U. Rashid Sumaila b , Jose María Da-Rocha c , Natacha Carvalho d , Daniel J. Skerritt e , Anna Schuhbauer e , Andr´ es M. Cisneros-Montemayor f , Nathan J. Bennett g , h , Quentin Hanich i , Raúl Prellezo j a CRETUS, Department of Applied Economics, University of Santiago de Compostela, Santiago de Compostela, 15782, Spain b Institute for the Oceans and Fisheries and Fisheries Economics Research Unit, University of British Columbia, Canada c Economics and Business Administration for Society (ECOBAS) and Facultade de Ciencias Empresariais Turismo (FCETOU), Universidade de Vigo, As Lagoas, Campus Universitario, 32004 Ourense, Spain d Independent Consultant e Institute for the Oceans and Fisheries, University of British Columbia, 2202 Main Mall, Vancouver, B.C. V6T 1Z4, Canada f School of Resource and Environmental Management, Simon Fraser University, Burnaby, B.C. V5A1S6, Canada g The Peopled Seas Initiative, Vancouver, B.C., Canada h People and the Ocean Specialist Group, Commission on Environmental, Economic and Social Policy, International Union for the Conservation of Nature, Gland, Switzerland i Australian National Centre for Ocean Resources and Security (ANCORS), University of Wollongong, Australia j AZTI, Marine Research, Basque Research and Technology Alliance (BRTA), Txatxarramendi ugartea z/g, 48395 Sukarrieta, Bizkaia, Spain ARTICLE INFO Keywords: World Trade Organization Fisheries Subsidies Europe ABSTRACT Harmful fisheries subsidies have historically contributed to fleet overcapacity and continue to be allocated to the fishing industry to artificially maintain its profitability. However, in this contribution we show that removing harmful subsidies and reducing overfishing will help to recover the resource biomass, subsequently leading to increased levels of sustainable catches, income and well-being of fishers, and reduces inequities in income and consumption when fish stocks are not effectively managed. Maintaining harmful fisheries subsidies is socially and economically inefficient. Taking the example of the EU fishing fleet, one of the largest fishing fleets in the world, we use the total factor productivity to show that small-scale fishing fleet’s productivity is almost two-fold in the North Atlantic and 16% higher in the Mediterranean and Black seas compared to large-scale vessels. This result is explained because the harmful fisheries subsidies disproportionately allocated to large-scale vessels introduce distortions in the efficient allocation of inputs. With critical WTO negotiations ongoing regarding the global rules on fisheries subsidies, the EU must take advantage of the opportunity to lead a desirable transformative change while also supporting developing nations to truly achieve global sustainable and equitable fisheries. Harmful fisheries subsidies – government payments that incentivize overcapacity and lead to overfishing – can distort seafood markets, hinder international fisheries cooperation [1], exacerbate inequality by undermining the economic viability of small-scale fisheries [2], lead to higher CO 2 emissions [3], and act as a driver for Illegal, Unreported and Unregulated (IUU) fishing [4] and distant-water fishing [5]. Previous research shows that distant-water fishing, including that within the high seas, is almost exclusively conducted by a handful of rich countries [6] and that the majority of their activity occurs within the Exclusive Economic Zones (EEZs) of low-income developing countries [7]. Economic concerns have been increasing because many fisheries exploiting high-seas resources and those within or adjacent to other nations’ waters would not be viable without government subsidies and only provide jobs and significant financial benefits to relatively few [8,9]. Harmful fisheries subsidies have historically contributed to fleet overcapacity and continue to be allocated to the fishing industry to artificially maintain its profitability [10]. However, scientific evidence shows that removing harmful subsidies and reducing overfishing will help rebuild the resource biomass, subsequently leading to increased levels of sustainable catches, income and wellbeing of fishers, and * Correspondence to: Faculty of Business Administration and Management-Cross-Research in Environmental Technologies (CRETUS), Department of Applied Economics, University of Santiago de Compostela, Santiago de Compostela, Spain. E-mail address: [email protected] (S. Villasante). Contents lists available at ScienceDirect Marine Policy journal homepage: www.elsevier.com/locate/marpol https://doi.org/10.1016/j.marpol.2021.104884 Received 10 November 2021; Accepted 14 November 2021 Marine Policy 136 (2022) 104884 2 reducing inequities in income and consumption when fish stocks are not effectively managed [11]. Although positive changes have occurred to the fisheries subsidies provided by the European Union (EU) over the past two decades [12], progress has been slow and significant capacity-enhancing subsidies remain, particularly in the form of fuel tax exemptions [13]. Maintaining harmful fisheries subsidies is socially and economically inefficient. The total factor productivity 1 estimated for the EU fishing fleet, one of the largest fishing fleets in the world, indicates that the small-scale fishing fleet’s productivity is almost 200% higher in the North Atlantic and 16% higher in the Mediterranean and Black seas compared to large-scale vessels [15]. This result can be explained because the harmful fisheries subsidies disproportionately allocated to large-scale vessels introduce distortions in the efficient allocation of inputs (capital, labour and energy) [11]. Therefore, vessel size and productivity are not necessarily correlated or, in other words, large or small vessels cannot be considered synonymous of productive or unproductive vessels in the EU fleets, respectively [16]. Concerted international efforts to formally discipline fisheries subsidies have carried on for more than twenty years. The World Trade Organisation (WTO) began negotiations on fisheries subsidies in 2001 with a mandate to ‘clarify and improve’ existing WTO measures on fisheries subsidies. That mandate was further developed in 2005 to include prohibiting fisheries subsidies that contribute to overcapacity and overfishing [17]. In 2017, the Eleventh Ministerial Conference adopted a work program to conclude the negotiations by aiming to adopt an agreement on fisheries subsidies that supports the United Nations Sustainable Development Goals (UN SDGs) [18]. Despite the work plan, still no agreement has been reached, and negotiations are continuing. Further delay jeopardises the progress needed to achieve sustainable and equitable fisheries, which underpin broader efforts to protect biodiversity, reduce poverty, provide nutritious food and secure livelihoods, making the achievement of interconnected UN SDGs less likely. Reducing policy distortions that affect resource allocation across broad EU fishing fleet segments could yield significant productivity payoffs. Subsidies to EU distant-water fishing fleets must also be eliminated to avoid overfishing on the high seas and in the EEZs of other countries where EU distant-water vessels operate. Overseas development aid should be separated from fisheries partnership agreements, and designed to support coastal State management and development priorities. Simultaneously, coastal developing states need flexibility to use appropriate non-harmful subsidies to achieve their own development aspirations, for example; incentivising landings at processing plants through partial fee refunds, financing local coastal community projects, or providing community infrastructure to improve long term economic viability. This can be addressed through proposals on special and differential treatment for developing States that avoid perverse consequences for developing States. With critical WTO negotiations ongoing regarding the global rules on fisheries subsidies, the EU must take advantage of the opportunity to lead a positive transformative change while also supporting developing nations to truly achieve global sustainable and equitable fisheries [19]. Acknowledgements This research is supported by the EQUALSEA (Transformative adaptation towards ocean equity) project, under the European Horizon 2020 Program, ERC Consolidator Grant Agreement no 101002784 funded by the European Research Council, and Grupo de Referencia Competitiva GI-2060 AEMI, under Grant ED431C2019/11. S.V thanks the Consellería de Educaci´ on da Xunta de Galicia (Galicia, Spain) for additional funding support. U.R.S. and D.J.S. thank the Pew Charitable Trusts and Oceana for their support of work related to harmful fisheries subsidies, and the OceanCanada Partnership supported by the Social Sciences and Humanities Research Council of Canada. The opinions expressed in this paper are those of the authors alone. References [1] B. Bayramoglu, B.R. Copeland, J.F. Jacques, Trade and fisheries subsidies, J. Intern. Econ. 112 (2018) 13–32, https://doi.org/10.1016/j.jinteco.2018.01.009. [2] A. Schuhbauer, U.R. 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