Working group of nations go after China's flags of convenience

Published on
October 22, 2020

Fisheries officials from the European Union, South Korea, Taiwan, Thailand, and the United States have met to discuss cooperation on limiting the use of flags of convenience by distant-water fishery companies involved in illegal fishing.

The online meeting, which took place 15 October, follows a report by the advocacy group Environmental Justice Foundation criticizing the process whereby fishing companies buy flags from flag states, which are then unwilling or unable to monitor the activity of problem trawlers. The report, “Off the Hook: How Flags of Convenience Let Illegal Fishing Go Unpunished,” details the damage that flags of convenience cause to fisheries and how they are used to conduct illegal fishing. In the report, EJF calls for sanctions to end the practice and more transparency surrounding the registration of fishing vessels.

“Flags of convenience in fisheries confound accountability,” the EJF report states. Flags of convenience and the frequent practice of re-flagging used by vessel owners to escape sanctions also “hinder efforts to identify and sanction the ultimate beneficiaries of illegal fishing activities,” according to the report.

An earlier EJF report on the same issue, published nearly a decade ago, named the E.U. and fishing countries in East Asia as the key users of flags of convenience. South Korea, Taiwan, and Thailand, whose fleets were all the subject of earlier attention from EJF for partaking in flags of convenience, are all now part of the new working group. The group appears to be focused on China, which is not part of the group. China has received a global reputation for operation through ownership of local companies in poor fishing countries and for the frequent use of flags of conveniency by its vast distant-water fleet. Chinese vessels fishing in Ghana under the colors of Liberia, a popular source for flags of convenience, have been a recent focus of attention for EJF.

Aside from flags of convenience, fishing companies dodge scrutiny by registering in jurisdictions with “corporate laws that are permissive, or laxly enforced,” according to the EJF report. That enables the local registration of fishery companies that are actually under foreign ownership.

The move against flags of convenience may draw support from policymakers from the countries in the working group, given their movement in recent years against global money laundering and tax evasion. Several have introduced beneficial ownership registries delineating the true ownership of assets often held through shelf companies in offshore jurisdictions, where disclosure rules are lax. Britain and the E.U., for instance, have launched a publicly available corporate registry requiring disclosure of beneficial ownership. Both are moving to require similar registering of their overseas territories, like the British Virgin Islands, whose corporate registry is favored by Chinese companies seeking to hold assets offshore.

The EJF is calling for similar transparency brought to bear on flags of convenience, which “conceal the identities of the true beneficial owners, precluding identification and sanctions where their vessels engage in illicit activities.”

“These same, secretive corporate structures frustrate the investigations of tax authorities and other non-fisheries government agencies,” the group said in the report.

The EJF report is the latest to investigate the exploitation of Africa’s fishery resources by large industrial trawlers from several major fishing nations, including China. The issue of flags of convenience has become central to ongoing talks on ending harmful fishery subsidies at the World Trade Organization, and negotiators seek to seal off work-arounds like fleets registered overseas.

Fishery representatives in West Africa are watching closely. Artisanal fishermen, women processors face threats from industrial trawlers that weigh on fishery resources, marine biodiversity, and domestic fishermen, according to Alassane Dieng, head of Groupement des Armateurs et Industriels de la Pêche au Senegal (GAIPES), which represents local fishing interests.

“We are against any form of so-called subsidies which have a negative impact on fish stocks, on the fishing industry of developing countries and on the populations of artisanal fishermen and women processors of fishery products,” he told SeafoodSource. “Unfortunately, however, these are practices that are the prerogative of distant fishing countries, which allow their vessels to be efficient and hyper-profitable to sail the seas and compete unfairly with local artisanal and industrial fishermen, in particular in West Africa.”

Photo courtesy of Environmental Justice Foundation

Want seafood news sent to your inbox?

You may unsubscribe from our mailing list at any time. Diversified Communications | 121 Free Street, Portland, ME 04101 | +1 207-842-5500