by Francisco mari
In this article, Francisco Mari, advocacy officer for global food security, agricultural trade and maritime policy at Bread for the World, reviews the WTO agreement on fisheries subsidies; following its recent entry into force. For this, he points at what till remains unaddressed and the costs and opportunities for developing countries, including the impact on small-scale fisheries.
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The new WTO Agreement on Fisheries Subsidies (“Fisheries I”) has entered into force. It is the result of more than 20 years of negotiations among over 160 countries.
The presumed goal is to establish globally binding rules to curb industrial overfishing and illegal, unreported, and unregulated (IUU) fishing. But how substantial is this new “standard” in reality—and what gaps still remain?
What is regulated and what remains unaddressed
States are required to report to the newly established WTO Committee on Fisheries Subsidies. The aim behind these reporting obligations is to use transparency and oversight, particularly with respect to large industrial fishing fleets, to reduce incentives for IUU fishing and overfishing. These reporting requirements apply in principle to all member States that have acceded to the Agreement, albeit in a gradual manner. In this context, three different groups of developing countries have been established to uphold the WTO principle of Special and Differential Treatment. For those countries that have not ratified the WTO Agreement on Fisheries Subsidies—such as India or Morocco—the provisions do not apply.
The Agreement primarily targets subsidies to fishing vessels that are proven to be engaged in IUU fishing. Government support for fisheries in already overexploited areas or in unregulated parts of the high seas can no longer be granted. WTO Members that have joined the Agreement must report, in accordance with Article 8.3, all the relevant forms of support, yearly, to the dedicated committee. The goal is to mitigate incentives for IUU fishing and overfishing, especially by large fleets, through enhanced transparency and monitoring.
However, all subsidies for which no direct causal link to IUU fishing or fishing in already overfished areas can be established remain permissible, including government assistance that drives overcapacity and overfishing. Furthermore, “non-specific” subsidies—such as tax exemptions on marine fuel (e.g., VAT exemptions)—continue to be allowed, even if they serve to further increase the windfall profits from IUU fishing.
The reasoning behind the non-inclusion of fuel subsidies under the agreement is that this tax exemption, as defined under the WTO Agreement, qualifies as a subsidy that is “non-specific”. That is, fuel tax exemption is not granted “specifically” to fishing vessels, rather, it applies to all ships operating in international waters, including merchant and cruise ships. This particular WTO logic clearly benefits industrial fishing fleets, and particularly the distant-water fleets, which have much higher fuel consumption. Given that fuel subsidies can account for 30% to 50% of total operating costs in fisheries, they represent a significant advantage.
On the other hand, efforts to achieve greater transparency are limited by the wording of Article 8.1 of the Agreement: States are only required, “to the extent possible,” to report detailed information to the WTO—such relevant vessels, fleets, and catch data. In practice, however, major fishing countries can invoke data protection, national practices, or lack of detailed records to submit only aggregate notifications or even withhold information altogether. This results in significant transparency gaps, making targeted control or enforcement often impossible.
To oversee subsidy notifications from WTO Members, a “Committee on Fisheries Subsidies” has been established. Here, States—and, indirectly, NGOs and fisheries associations—can raise questions about national subsidy notifications and demand improvements, such as regarding incomplete disclosure or opaque beneficiary structures. However, this committee itself does not have any sanctioning power. Consequences only arise if a WTO dispute settlement procedure is launched and successfully pursued. The complainant does not have to be a country directly affected by IUU fishing; any WTO Member may bring a complaint against another Member suspected of violating the Agreement—e.g., by awarding subsidies to IUU fishing. Yet under the current US-blockade of the WTO Appellate Body, this process cannot be completed, so even successful complainants cannot enforce sanctions—typically the suspension of trade benefits.
2. Consequences for developing countries and small-scale fisheries
For developing countries with numerous islands and extensive coastlines, where artisanal and small-scale fisheries play a critical role for both the economy and food security, the new Agreement is a double-edged sword.
Any country (such as Vietnam or the Philippines) that produces more than 0.8 percent of the global fish catch is, after two years, subject to the same, stricter reporting and control requirements as those States with large industrial fleets. These developing countries, even if their own fleets are barely involved in IUU fishing or overfishing, must make substantial administrative efforts to comply with Article 8. This results in a heavy bureaucratic burden, often overwhelming for local administrations. Indonesia, for example, has nearly 600,000 small fishing boats, many propelled by oars or sails rather than motors, and many unregistered or landing catches without reporting catch areas or quantities. Such unregistered catches supply part of daily food intake, yet thousands could suddenly loose state support simply due to a lack of registration.
It is therefore understandable that thousands of small-scale fishers in resource-rich developing countries fear their governments may forgo aid for small-scale fishing altogether, rather than set up a burdensome bureaucracy just to document and report to the WTO “subsidies” worth only a few hundred euros per vessel per year. The small consolation offered by the “richer Members” of the WTO—such as Germany or Japan—of establishing a fund to help developing countries meet their reporting obligations does little to alleviate these concerns.
There is no doubt that the main beneficiaries of the Agreement are the industrial fishing fleets and state-subsidized distant-water vessels in China, the EU, South Korea, Japan, and Russia. These fleets can continue to access fuel subsidies, energy discounts, and modernization aid, provided there is no direct evidence of involvement in IUU fishing.
3. Opportunities for greater transparency and peer pressure
Nevertheless, there are new opportunities. For the first time, there is a global obligation to report at least certain relevant subsidies. Developing countries and NGOs can now raise critical questions before the WTO Committee and demand improvements from major fishing nations. This exerts peer pressure on States like China or the EU to transparently and fully report all subsidies as required by Article 8.3—and, step by step, to enact further improvements.
The Agreement also contains a so-called “sunset clause”: after four years, it will automatically expire unless WTO Members agree to an extension or tighter disciplines, such as those planned under “Fisheries II” Agreement. These should tackle overcapacity and overfishing.
This 4-year period is therefore both an opportunity and a risk: It can increase political pressure to finally address non-specific subsidies, overcapacity, and fairer control rules for small-scale fisheries: Yet it also poses the danger that, if political deadlock continues, the Agreement could simply expire, and everything would be reset to zero.
Conclusion
The new WTO Agreement is an important and long-awaited step towards enhanced sustainability and fairness in global fisheries. This legal text marks a historic effort toward regulating harmful subsidies, but its implementation reveals major challenges, especially in transparency, fair burden-sharing, and the protection of small-scale fisheries in developing countries.
For the next steps, key challenges remain. A comprehensive disclosure of all subsidies is imperative, especially for industrial fleets and unspecific support measures such as tax exemptions for fuel. For small-scale fisheries in developing countries, differentiated and simple exemptions are needed. The EU and other major actors should demonstrate leadership and, in the upcoming successor agreement (“Fisheries II”), show that more effective rules—without exemptions for those primarily responsible for the legal and illegal plundering of the oceans—are feasible in practice.
Ultimately, truly sustainable ocean governance will only succeed if political loopholes are closed and all States are genuinely willing to commit to clear and fair rules. Only with collective political will, a closure of loopholes, and leadership from the major subsidizers will it be possible to deliver lasting sustainability and equity in the world’s oceans.
Banner photo: Illustration image. Fishing trawler Brites moored in Aveiro, Portugal, by Ricardo Resende.
At the occasion of the 20th session of the FAO subcommittee on trade, more than 19 CSOs and small-scale fisheries organisations, the signatories ask that FAO and its members adopt “blue food systems” that align with the ecosystem-based approach, the principles of social equity and animal welfare, and that they stop supporting the mass production of seafood through industrial feedlot aquaculture without consideration for the environment or local communities.