In defiance of NGOs, EU backs fuel subsidies for its fleet at WTO talks

Vessels in the European Union's fishing fleet in harbor.

The negotiating team for the European Union at the ongoing World Trade Organization talks on harmful fishery subsidies is insisting that any deal allow for continued tax exemptions for fuel purchases.

The mirrors that of Europêche, the E.U. fisheries lobbying group. In June, Europêche called for the continuation of the subsidies, arguing that lower fuel prices found outside of Europe give the world’s other fishing powers an unfair advantage over European vessels. Additionally, fuel subsidies are vital for the competitiveness of the E.U. fleet because other fishing nations operate at lower standards of transparency, according to Europêche.

But environmental group ClientEarth has called for an end to all fuel subsidies for global fishing vessels, and refuted E.U. claims that 99 percent of the seafood it lands comes from sustainable sources.

“[Scientists have] consistently identified fuel subsidies, including tax exemptions, as harmful for the environment and confirmed they contribute to overfishing and to the destruction of marine biodiversity. It should be underlined that in the E.U., industrial-scale fishers benefit far more from these exemptions than smaller players,” ClientEarth fisheries lawyer Elisabeth Elisabeth Druel told SeafoodSource in July.

ClientEarth and other environmental groups have specifically demanded all tax exemptions for fuel purchases – and specifically those offered by the E.U. – should be phased out as part of any deal at the WTO.

But in comments to Seafoodsource, a European Commission spokesperson defended its fuel tax exemptions for its fishing fleet and its negotiating stance at the WTO.

“Tax schemes do not lower the price of fuel below the world market price and should be outside the scope of the agreement,” the spokespersons aid. “The real issue that we must address in the WTO negotiations is fuel subsidies that lower the price of fuel below the world market price. The E.U.’s fisheries policy aims to ensure that fishing is environmentally, economically, and socially sustainable. The E.U. has made deep reforms, phasing out harmful subsidies in favor of positive subsidies that promote sustainable fishing. As a result of all our reforms, we have seen very good results in terms of stock recovery.”

The WTO talks have seen members bargaining over how to structure opt-outs for developing member-states and how to define fuel subsidies. Members have also yet to agree on how sustainable fishery stocks are defined. Talks, which have been ongoing in different formats for 20 years and which stalled out earlier this month, are set to recommence in September.

The E.U. spokesperson said the bloc still sees room for an agreement based off the latest draft version of the bill, which The Pew Charitable Trusts has warned will have a minimal impact on fishery stocks conservation.

“While the E.U. sees areas for improvement with the consolidated text proposed by the chair of the negotiations, it provides a solid basis for the final leg of the negotiations,” the E.C. spokesperson said.

But as the new September date for an agreement nears, E.U. negotiators are keen to limit exemptions being claimed by developing countries, the spokesperson said.

“The E.U.’s focus in the final stretch of negotiations is on ensuring that the agreement is effective. The main prohibitions need to be based on sustainability,” the spokesperson said. “While special and differential treatment for developing countries is essential, we must avoid blanket carve-outs that will undermine the value of a deal. In addition, the E.U. will stress that sustainable fishing, such as that carried out under the E.U.’s sustainable fisheries partnership agreements, must be protected, and that the focus of any prohibitions related to fuel should be on those fuel subsidies that lower the price below market levels, which is the real sustainability challenge.”

The E.U.’s position is at odds with that of developing nations, with India taking a leading role in opposing the E.U.’s stance. At the 15 July ministerial meeting,

“I am disappointed to note that we are still short of finding the right balance and fairness in the agreement,” Indian Trade Minister Piyush Goyal said at the 15 July ministerial meeting. “Countries like India who are yet to develop fishing capabilities, cannot be expected to sacrifice their future ambitions, while protecting those members providing huge subsidies and overexploiting fisheries resources and continue to engage in unsustainable fishing. Therefore, it is imperative to preserve space for growth in fishing capacities of the developing world for the future without locking them into disadvantageous arrangements in perpetuity.”

U.S. Trade Representative Katherine Tai staked out a middle ground between the two extreme positions of the E.U. and India, while pushing for stronger measures on banning subsidies than currently exist in the draft text.

“While the WTO’s director-general described the 15 July meeting of trade ministers as a ‘successful ministerial,’ which set the ground for continued negotiations, [the text] does not yet contain the elements required for reaching agreement,” Tai said. “Flexibilities for certain developing county members with demonstrated needs can serve a valid purpose. However, these negotiations are about prohibiting harmful fisheries subsidies and should not result in an outcome that locks in the status quo or, worse, provides the WTO’s blessing to continue providing such subsidies – without regard to sustainability – in perpetuity. The United States believes that a blanket approach with permanent carveouts is neither appropriate nor effective given the purpose of this agreement. Moreover, it does not reflect the reality that some self-declared developing country members are among the largest producers and subsidizers or among the wealthiest or more significant members of this organization. We are prepared to consider flexibilities for particularized situations that does not result in the pitfalls of a blanket approach.”

Stephen Olson, formerly a U.S. trade negotiator and current senior research fellow at the Hinrich Foundation, which promotes sustainable global trade, penned a whitepaper following the 15 July ministerial meeting. Titled, “20 years on, still no WTO deal to curb overfishing,” Olson said in the paper the ongoing failure to reach agreement on fisheries subsidies is a symptom of a broader malaise at a dysfunctional WTO riven between member-states with developed and developing economies.

“Members are more inclined to pursue narrow self-interests rather than thinking in terms of mutual benefit and a common cooperative endeavor, both in terms of trade and the environment,” Olson wrote. “There is a large and growing rift between the perspectives of developed and developing members. Developing members are more insistent on asserting the need for special and differential treatment, which often translates into permission to continue practices that would otherwise be prohibited. Developed members are less willing to submit to new disciplines to achieve global goals when a sizable portion of the membership is given a free pass. The result is gridlock.”

In an apparent reference to China, which has also pushed for a carve-out, Olson said the rift is “exacerbated by members which self-designate themselves as ‘developing’ long after they have graduated to developed world status.”

Isabel Jarrett, manager of the reducing harmful fisheries subsidies program at The Pew Charitable Trusts, told Seafoodsource in December 2020 there is a middle path forward.

“Developing nations should only receive flexibilities for an interim period of time to help them transition away from their harmful fishing subsidies, and developed nations should not benefit from exceptions that would allow them to continue harmful subsidization even with management measures in place,” she said.

Photo courtesy of Europêche


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