[The Viewpoint] Grant of fisheries subsidies: India’s approach

Fishing is a primary economic activity that is a major source of livelihood in India. Fisheries subsidies have been in place for a long time, and recently, a World Trade Organization (WTO) committee formed to eliminate subsidies on illegal, unreported and unregulated fishing and to ban certain forms of fisheries, has stated that negotiations between countries should end as soon as possible.

As a reminder, the aim of these negotiations is to eliminate subsidies that contribute to overcapacity and overfishing, while also taking into account special and differential treatment for developing countries.

India’s proposal to the WTO on retaining the subsidies if they meet certain standards and criteria, garnered widespread attention. India also tipped the scales in helping developing countries retain certain subsidies, which are otherwise sought to be eliminated.

What are fisheries subsidies?

Fisheries subsidies are subsidies on fishing activities to supplement the low incomes of extractors of fish. These subsidies were a part of the Sustainable Development Goal 14 and was one of the 17 sustainable development goals since the subsidies resulted in illegal, unreported and unregulated (IUU) fishing. IUU fishing causes overcapacity fishing, which leaves a very harmful impact on the environment. This results in depletion of fishing stocks across the globe.

Fisheries subsidies can broadly be classified into three categories:

1. Beneficial Subsidy - usually in the form of investment into any natural resource of the country or any other management system that manages fisheries, with the end goal being to enhance fishing stocks of the country;
   

2. Capacity Enhancing Subsidy - directly increase the fishing capacity. This can be in the form of fuel subsidies provided to the vessel that carries out fishing activities or providing subsidies for construction of ports where such vessels are parked;
   

3. Ambiguous Subsidy – mainly comprise those subsidies that impact the environment in an undetermined way.

Among the three subsidies, it is the capacity enhancing subsidies that have the most detrimental impact, as they result in depletion of marine resources, causing harm to the environment. It is estimated that about 14 to almost 54 billion US Dollars in subsidies are given to this industry, which has led to a steep decline in the world’s marine resources.

India’s stance

India’s latest proposal at the WTO states that developing countries that have a global marine capture production of less than 0.7% can provide subsidies on fisheries within their Exclusive Economic Zones. As far as developing countries are concerned, the draft seems to be open-ended in the sense that the number of years to provide and continue these subsides has not been disclosed and is open to negotiation by countries.

While fisheries subsidies in itself is a very sensitive topic because of its impact on the environment, when looked at from the perspective of developing countries like India, the concerns seem more prominent. This is due to the dichotomy between member-state obligations vis-a-vis their economic growth. Over the years, India has been trying to elevate its ‘developing status’ to join the big leagues. The truth remains that it is a developing country, and it will take leaps of efforts to drop the current tag. These efforts also require action on part of the government to boost the economy.

India has, for the longest time, been an agrarian economy. Consequently, grant of subsidies becomes inevitable as it is in the top seven countries that produce fish, accounting for almost 50% of total captures. India, while accounting for its needs, has taken a stand of phasing out subsidies instead of a complete ban.

The fisheries sector in India provides livelihoods to around 16 million fishermen and fish farmers who are just at the primary level. If the entire chain in the industry is to be looked at, the number would surely double. This step seems to be at par with its status as a recipient of Special and Differential Treatment (SDT) under the WTO. SDT as a principle under the WTO envisages for longer time periods to implement agreements as well as commitments for least developed countries as well as developing countries. This provision also helps to protect a country’s own interests while encouraging trade opportunities and implementing technical standards. It also buys enough time to come up with a strategy to devise alternatives that are more environment-friendly.

The proposal submitted by India also mentions that any country that fishes in the high seas must declare certain details within 90 days after the agreement comes into force, including details of the vessel and names of the people engaged in such activities. India has taken a strong stand as regards banning subsidies if the nation is fishing in areas that exceed their respective Exclusive Economic Zones (EEZs), also referred to as Distant Water Fishing, which occurs when a country engages in fishing activities in another country’s territory. This ban, as per India’s proposal, is to be in place for at least 25 years to combat the problem of overfishing.

India's proposal seems to be at par with its proposed domestic law, which is the Marine Fisheries (Regulation and Management) Bill, 2019. It addresses the ever-increasing incidents of IUU Fishing and provides for impounding of foreign vessels fishing in EEZs and imposing penalties for the same. It also criminalizes violations. The Bill requires local fishermen to obtain a license to fish in the EEZ. The same is, however, yet to be enacted. Another Indian legislation that provides for seizure and detaining of fishing vessels as well as equipment and other things on board, in case of suspicious activity as identified by the Indian coast guard, is Maritime Zone of India (Regulation of Foreign Vessels) Act, 1981.

Possible implications

The main question is how disputes that arise from grant of fisheries subsidies and over-exploitation of resources are going to be resolved. Unfortunately, since there is no specific agreement that addresses fisheries subsidies yet, the chances of disputes arising in terms of IUU fishing due to grant of subsidies on fishing activities are low. Due to a lack of an instrument, it becomes hard for countries to challenge another country's mechanism as there is no legal backing to any claim. The question of alternatives to the already existing mechanism arises, where most countries have voiced their opinion regarding an arbitration system of sorts, where there is involvement of a third party that helps take care of the needs of both countries. The European Union (EU) was one of the first to propose a Multi-Party Interim Appeal Arbitration Agreement (MPIA).

While India has refused to be a part of the MPIA, it might prove to be beneficial to do so. It would help in compliance with regard to an agreement or any measure in question employed by other WTO members - which include parties to this agreement - as against bilateral negotiations.

Conclusion

An outright ban on fisheries subsidies is a step that India cannot pursue at the moment, to ensure the stability of its economy and the lives and livelihoods of those in the industry. While a complete ban of fisheries subsidies is the end goal, it can only be achieved gradually, as India’s latest proposal suggests. The fishing industries in most developing and least developed countries involve small fishermen who do not necessarily possess the technical capability for deep sea fishing. Along with this, such nations do not get major investments in this sector and do not have flourishing research and development teams to help establish a system that would require top-notch equipment and surveillance to help prevent overcapacity fishing.

It is also pertinent to keep the principle of ‘Common But Differentiated Responsibilities and Respective Capabilities’ in mind while negotiating the text at the WTO, so that it accounts for the needs of not only developing countries, but also least developed countries. This principle under trade law essentially means that all member nations will have common but also differentiated responsibilities which are highly dependent on their capabilities as nations, more specifically on their natural resources and economic growth and their ability to comply with agreements depending on their resource strength.

Shradha Rajgiri is a Senior Associate with Shivadass & Shivadass (Law Chambers). The authors would like to acknowledge the contributions of Nandini Nair, law graduate from School of Law, CHRIST (Deemed to be University), Bangalore.

The contents and comments of this document do not necessarily reflect the views/position of Shivadass and Shivadass (Law Chambers) but remain solely of the author(s). For any further queries or follow up, please contact admin@sdlaw.co.in.