Time to finish fishing subsidies

Monika Patriarchea // 16 June 2021

Historically the EU has subsidised certain industries, especially those in the agricultural sector. EU fisheries are no exception, with the European Maritime and Fisheries Fund (EMFF) heavily subsidising fisheries within the EU under the Common Fisheries Policy (CFP), reaching a budget of 6.4 billion in 2020.

EU fishing subsidies include but are not limited to tax exemptions for fuel. While subsidies may be well-intentioned policies, they are harmful from both an environmental and economic perspective

Fishing subsidies stand in the way of competition and economic efficiency. By subsidising the ongoing fishing practices regulators hinder private actors from altering and enhancing their model through innovation. The production is ultimately kept as a status quo, which is unstainable both from an environmental and economic perspective.

A recent study examining the sustainability of EU fishing subsidies found that less than half of all EU fishing subsidies were clearly environmentally beneficial for the period between 2014-2020, meaning they promoted conservation and management, while mediating the impact of overfishing. 21% were deemed ambiguous, suggesting the possibility both of positive and negative effects, while 30% were classified as capacity-enhancing. The latter is particularly tricky as it includes provisions for reduced operational costs such as tax exemptions for fuel, which have been found to create a correlation with overfishing and overcapacity.

The EU, aware of this environmental impact and trying in vain to fix the lack of sustainability, had promised in 2020 to play a key role in promoting sustainable practices in the fishing sector but has failed to do so. While the EU claims to seek a balance between sustainability and economic growth, European fishermen continue to fish faster than certain species reproduce.

Those who pay the price for the unfulfilled promises and lack of sustainable practices are EU taxpayers. They pay the price both literally through tax contributions that fund subsidies and metaphorically through the impending destruction of the biodiversity. Research shows that oceans can absorb more than a third of CO2 emissions and thus play a key role in reducing the impact of climate change. Sucking the life out of the oceans may not be the most strategic move when the aim is to minimise the impact of climate change.

This unsustainable fishing model is far from unique to the EU, as the WTO is currently concluding talks to end these harmful subsidies on a global level. The organisation’s lengthy bureaucratic procedures, along with the obstacles imposed by COVID-19 and Trump’s blocking of the appointment of a new WTO Director-General, have led to inordinate delays in progress within the organisation. This, combined with the consensus needed to pass decisions with the WTO, has made the organisation’s task of protecting the oceans more difficult than they had hoped. Hence, the WTO missed the deadline to introduce the ban of harmful subsidies, initially meant to be released by the end of 2020.

Delays and missing deadlines in the WTO reflect bloc-wide reservations towards supporting these subsidy bans. For instance, strong lobbying derived from fisheries has rendered the EU unable to be decisive when it comes to ending harmful subsidies. The argument relates to the unfair competition which would be imposed upon the single market as compared to non-European fisheries if these subsidies were to be absent.

These obstacles render the EU’s actions against climate change inconsistent. On one hand, the bloc promotes one regulation after another to tackle climate change, but on the other hand, due to the Union’s protectionist agenda, it fails to address one of the most pressing problems: fishing subsidies. If the EU wants to be a holistic and effective actor in the fight against climate change, it should stop hindering its market with subsidies. But since there is little hope on the EU side to act on its own, all hope rests on the WTO, which due to the legally binding nature of its decisions, has the capacity to decisively alter the chances of harmful subsidies.

This hope is strengthened by the announcement by the Chair of the fisheries subsidy negotiations, Ambassador Wills. On 8th June, Ocean Day, he announced that the negotiations to end harmful fisheries subsidies are proving fruitful, with the main text complete and only some final gaps to fill. This progress, combined with the alignment of the blocs in support of Dr Okonjo-Iweala’s leadership and her own determination to push this issue forward, make the WTO better equipped to limit the destruction of the oceans by overfishing, as facilitated by fisheries subsidies, and thus taxpayers in Europe and worldwide.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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