We have shown that subsidy-enhanced industrial fishing effort is geographically ubiquitous in industrial fisheries around the world and that the places with more subsidies also tend to be the worst managed. While much work remains to establish causality and make quantitative predictions, this evidence is at least suggestive that subsidy reform could have large, and geographically-extensive consequences for many of the world’s largest fisheries.
Yet, while reforming harmful subsidies seems straightforward in theory, it is extremely nuanced and complicated in practice. An enormous obstacle is the asymmetry between the timing of benefits and costs of subsidy reform. Many fishers stand to suffer large short-term losses from reforming subsidies. While subsidizing any economic sector creates vested interests who will oppose subsidy removal, fisheries are in a special class because the reform is likely to eventually increase resource stocks, which will improve fishers’ livelihoods in the long-term, particularly in poorly-managed fisheries. Related industries, such as fish processing, may also benefit from fishery recovery. Another likely co-benefit is that the small-scale fisheries not considered in this analysis may also benefit greatly from removal of capacity-enhancing subsidies to industrial fishers. This arises because reduced industrial fishing can allow fish stocks to rebuild, thus allowing small-scale and artisanal fishers to compete on a more level playing field (Sumaila et al. 2014). Care must be taken to ensure that subsidy reforms intended for the industrial fleet are indeed focused there and not unintentionally shunted to artisanal fishers.
We therefore encourage the WTO to remain focused on reaching an agreement, and to avoid unnecessary loopholes that could undermine otherwise effective disciplines. We propose the following set of policy recommendations for consideration by the WTO that could help to ease the transition:
Fisheries are globally interconnected (Ramesh et al. 2019), and we have shown that subsidies affect fishing effort in all corners of the ocean. Globally-coordinated subsidy reforms therefore have the greatest potential to unleash benefits for fish stocks, fishers, consumers, and taxpayers. But the realization of these benefits is entirely dependent on the WTO’s willingness to lead with ambition and make decisions with the long-term goal of global fisheries sustainability in mind. Stringent caps on capacity-enhancing subsidies, coupled with incentives for improved fisheries management, where it is incumbent on the subsidizing country to show they are not subsidizing overfishing or fishing on overfished stocks, would be a practical and effective path forward. Given the interdependencies between fisheries, and that management systems are rarely perfect, we encourage well-managed fisheries to lead by example and to not seek exceptions that have the potential to introduce loopholes that might undermine an effective agreement. Safeguards should also be put in place to ensure that any exceptions do not allow for excess capacity to leak into other fisheries.
Repurpose subsidies to ease the transition
The largest hurdle to subsidy reform is the short-term cost that is imposed on incumbent fishers who have grown accustomed to the subsidy. These are often the most marginalized members of society, so this situation must be handled with great care. We argue here that subsidies need not be “removed”—rather, they could be repurposed to support livelihoods during the stock rebuilding phase, which typically lasts between 5 and 20 years (Costello et al. 2016). Global governments could repurpose some or all of the roughly US$22 billion they annually distribute as harmful subsidies to directly support fishers’ incomes without incentivizing overfishing. For example, this funding could support business development skills for fishers, be given to fishers as lump sum cash transfers, or be used to develop and institute management reforms (Martini and Innes 2018)—all of which would support low-income fishers, particularly in developing countries (Mourougane 2010). The best way to repurpose subsidies will undoubtedly differ across countries.
Promote cross-country technical and financial assistance
When one country removes its subsidies, other countries benefit from the resulting stock recovery (Bayramoglu et al. 2018). This is made apparent in our analysis presented above where a great deal of industrial fishing effort occurs outside of the flag nation’s EEZ. Thus, side agreements between countries—e.g., the transfer of technical or financial assistance for fisheries management or stock assessments from countries that experience the smallest short-run costs to countries that experience the greatest short-run costs—may help to alleviate some of the short-term costs of reforming subsidies, particularly for developing countries. However, this must be done in a way that does not inadvertently create new incentives for overfishing, something that should be addressed by the WTO.
Simultaneously reform fisheries management
Given the persistence of capacity-enhancing subsidies in fisheries with poor fisheries management (Fig. 1d), the benefits of ambitious subsidy reform in these fisheries could be magnified dramatically if it was coupled with improved fisheries management (of national fisheries, straddling stocks, and even high seas stocks). Therefore, the best way to support the livelihoods of fishers is to also improve fisheries governance. Coupling fisheries management reforms with subsidy removal is a powerful combination that should be pursued. There are many different approaches to fisheries management that can be effective, and the goals and context of each fishery will ultimately dictate the best solution for that fishery. For example, rights-based fisheries management, which has been shown to raise catch, profits, and biomass for many stocks, provides one possible collection of approaches that have proven to be effective (Melnychuk et al. 2012; Costello et al. 2016; Sumaila 2018), and can be carefully designed to fit the context of each fishery.