China makes concession on eve of WTO fisheries talks

Published on
December 12, 2017

On the eve of an important gathering of world trade ministers, Chinese fishery officials have made a concession by publishing a document that promises to limit the country’s international fishing fleet to its 2016 level. 

This came in a briefing at the Ministry of Agriculture in Beijing, which oversees fisheries, on the newly released 13th Five-Year Plan of Distant Water Fishing Development.

The timing of the briefing appears to be part of an effort by Beijing to change the framing of a potential deal on overfishing. Trade ministers meeting at a World Trade Organization summit from 10 to 13 December in Buenos Aires, Argentina, have promised to seek an agreement phasing out state fuel subsidies in order to preserve fishery stocks. By doing so, the WTO, which has made much of commitment to sustainable development, would be delivering on a United Nations pledge as part of the Sustainable Development Goals set in 2015, to eliminate fishery subsidies by 2020. 

But the WTO’s 164 members are split between those who want to end subsidies – among them developing nations who argue that the pay-outs distort fishery trade and allow overexploitation of their resources – and nations who say the subsidies are needed to protect fishermen from poverty. Chief among the latter group is China, the world’s biggest payer of such subsidies, which wants developing counties exempted from any subsidies phase-out.  

Yet while the number of vessels and number of companies involved in China’s distant-water fishing fleet will remain frozen at 2016 levels, there are no details in the ministry’s document on how this will impact the size of vessels currently in the fleet. China has promised to direct government money – particularly at the local government level – into resizing existing vessels. It’s also not clear if the reefers which Chinese companies have been recently launching at an accelerating rate will be counted in the final figures.

Does this mean that all the new vessels launched this year –many of the launches were covered by SeafoodSource – and which have considerably added to China’s overseas fleet – will be counted against 2016 numbers?

China currently has 164 legally registered companies operating nearly 2,900 distant water fishing vessels, according to the China Fisheries Yearbook, published by Ministry of Agriculture earlier this year. The focus will now be on improving the “quality of the fleet’s catch” and “operations,” according to the ministry, which may mean the government will help the fleet transition into bigger, smarter vessels. 

This would ultimately increase the capacity, if not the nominal size, of China’s fleet. The country has not addressed whether vessel size will be accounted for in its new limits. Nor has it clarified whether vessels purchased by the country’s fishery companies internationally will be counted in China’s overall fleet size.

And then there are the fuel subsidies. China gives nearly USD 6 billion (EUR 5.1 million) per year to its fishery sector in half-price diesel to facilitate the fleet’s ventures overseas. Indeed, subsidies from central government are often the difference between profit and loss at big players like Shanghai Kaichuang and CNFC. 

From statements and speeches given this year by the country’s top fisheries official, Yu Kangzhen, a vice minister at the agricultural ministry, these payments look set to continue. Yu believes the subsidies cushion low-income fishermen from poverty. But he hasn’t directly addressed how subsidies are also propping up corporations like CNFC (which being a state-controlled entity is also run effectively by a government official), which the national government would not like to see fail.

Firms like CNFC operate at an unfair advantage to international peer companies that don’t get similar-sized checks from government. And they operate with complete dominance in the waters of West Africa and Pacific island nations, where there’s no significant local fleet to compete and where artisanal fishermen are being squeezed out of livelihoods just to help supposedly hard-up Chinese fishermen, who happen to be sailing on cheap fuel. 

Chinese negotiators also want phase-out of subsidies to be limited to cases of illegal fishing (rather than a total phase out of subsidies) and they want governments, rather than independent experts, to decide what constitutes illegal, unreported, and unregulated (IUU) fishing. It also wants disputed territories like the South China Sea to be exempt from any phase-out of subsidies.  But China has not put forward any proposal about who will be verifying where Chinese vessels are fishing or by what mechanism subsidies to transgressors will be eliminated.

While many nations and their trade negotiators at the WTO meeting in Argentina would like to see China’s subsidies cut back, Chinese diplomatic influence and trade leverage will certainly come into play. Some of the countries with the biggest grievances against Chinese fishing companies are also bound into loans and restrictive trade agreements with China, including resource-for-infrastructure deals.

In that regard, it’s not surprising that Chinese negotiators at the talks in Buenos Aires also want the designation and rules on overfishing and illegal fishing to be set by governments, rather than independent experts. Unpublished government-to-government deals are the modus operandi of Chinese fishery dealmakers. 

While many parties are hoping for a deal in Buenos Aires, it seems as if China holds the cards on whether one will get done. But already facing many major questions relating to the subsidization of its fishing fleet, China has just created even more with its newly announced plan. And that may throw any potential of a deal into doubt.

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