organisation for economic cooperation and development trade & agriculture directorate...
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ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT
Trade & Agriculture Directorate
Overfishing, undermanagement and Overfishing, undermanagement and subsidies: the economic link subsidies: the economic link
Anthony Cox,Anthony Cox,Fisheries Policies Division,Fisheries Policies Division,
Directorate for Trade & Agriculture Directorate for Trade & Agriculture
1 March 2007,1 March 2007,Palais de Nations, GenevaPalais de Nations, Geneva
Trade & Agriculture Directorate2
The economics of fisheries subsidies
• Subsidies change revenue, costs and profits
• Subsidies alter incentives facing fishers
• Subsidies result in an overall loss in economic efficiency and social welfare
• Subsidies stimulate rent-seeking behaviour
• Subsidies tend to reduce industry and community flexibility, and lock in technology and production patterns
• Very limited public policy rationale for subsidies
• Specific economic effects depend on the management context
Trade & Agriculture Directorate3
The management context has three dimensions
• Status of stocks • Under-fished or over-fished?
• Is the TAC or effort level set at a sustainable level?
• Single or mixed species?
• Is the science underlying assessments well-understood?
• Highly data intensive
• Not amenable to “rules of thumb”
Trade & Agriculture Directorate4
The management context has three dimensions
• Status of stocks
• Management regime
• Open access fisheries
• Regulated open access
• Effort controlled fisheries
• Rights based regimes (catch, effort rights)
• Robustness of regimes wrt incentives
Trade & Agriculture Directorate5
The management context has three dimensions
• Status of stocks
• Management regime
• Enforcement
• At-sea surveillance
• Land-based monitoring
• Monitoring of fleet capacity
• Incentives to comply/cheat
• Penalty structure
• Probability of conviction
• Adequacy of governance structures
Trade & Agriculture Directorate6
Trade effects of fisheries subsidies
• If supply effectively constrained subsidies will:– increase profits of exporters– have no effect on trade flows or prices (if fishers are price takers)
• But there will be a supply response in the case of:– Under-exploited or developing fisheries– Aquaculture– Fisheries with ineffective management– Monopoly producer– Strategic behaviour by fishers
• Difficult to disentangle the subsidy effects from the management effects
• Long-term trade gains from effective management, esp if competing countries have ineffective management
Trade & Agriculture Directorate7
Criteria for the management context?
• Management context represents a complex dynamic system– Spatially, temporally specific– High data requirements – Not necessarily amenable to “rules of thumb” Closer to certification criteria?
• Criteria flowing from the Code of Conduct for Responsible Fisheries?– Code is normative, voluntary, aspirational– Not an appropriate foundation for developing criteria
• Criteria in WTO rules?– Pushing the envelope on the WTO mandate – Risk of creating complex rules that provide plenty of shelter for
continued provision of subsidies
• Perhaps the institutional architecture has yet to be developed?