Hello again from New Zealand. On this small strip of terra firma in the South Pacific, the ocean is never far away and its sustainability — for environmental, economic and spiritual reasons — is, for many, part of the national psyche.
As today’s main piece argues, the decades-long failure by nations with large fisheries industries and the World Trade Organization to tackle subsidies shamefully leads to continued widespread environmental plunder as well as human rights abuses at sea.
Our policy watch looks at accusations between Britain and Brussels over the City of London’s EU market access rights after Brexit, while our chart of the day highlights signs that an economic war between China and India has begun.
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Industry still receives a whopping $35bn each year
Last week the FT published allegations of South Korea’s deepwater fishing fleet harvesting protected species such as dolphins, walruses and seals as well as subjecting Indonesian fishermen to harrowing working conditions.
The accounts — documented in testimonies given to UK and Korean non-government organisations — sparked calls for an overhaul of South Korea’s fishing system, particularly in oversight and enforcement of existing laws that are meant to protect both the environment and labourers.
While the NGOs focused on South Korean vessels, similar problems have been linked to fleets owned by companies in Taiwan, China, Spain, Russia and Ukraine, among others.
Experts say a key part of the problem globally stems from massive government subsidies, particularly for fuel, which breathes life into an industry that would otherwise be unprofitable. Simply, governments reduce the costs for companies, leading to overcapacity and overfishing.
Despite nearly 20 years of talks at the WTO to combat the problem, the fishing industry still receives a whopping $35bn in subsidies each year, amounting to as much as one-third of the value of global fisheries production, according to the World Bank.
The statistics around overfishing are equally stark.
Almost one-third of global fish stocks are fished at unsustainable levels, according to UN data; that is a change from about 10 per cent in the 1970s. Meanwhile, fish consumption increased by more than 120 per cent from 1990 to 2018. And on vessels with wafer-thin margins, problems such as human trafficking, debt bondage, excessive hours and physical abuse are all too commonplace.
Experts say a key part of the problem of overfishing stems from large government subsidies © Johannes EiseleAFP/Getty Images
Back in 2001 when trade ministers met in Doha and committed to new WTO measures designed to reduce fishing subsidies — while also taking into account that many developing nations relied on the sector as a critical part of their economy — the move was viewed in a hopeful light.
But by 2004 the World Wildlife Fund forewarned that the process presented “WTO members with a crucial test of their willingness to adopt trade policies that deliver ‘win-win-win’ outcomes for trade, environmental conservation, and sustainable development”.
Ultimately over the intervening two decades WTO members have failed that test. In fact, there are clear signs that the problems are only getting worse and few countries involved should escape shouldering the blame.
In both China, which has the world’s biggest fishing industry, and South Korea, subsidies have actually increased over the past 10 years, according to research published in Marine Policy, a leading academic journal on oceans policy. Even the EU and Japan each provide more than $2bn annually in the harmful “capacity enhancing” subsidies to their fleets, which is “most directly linked to overfishing”.
“For the benefit of marine ecosystems, and current and future generations of people, all hands must be on deck in helping the WTO reach a meaningful agreement to discipline subsidies that lead to overcapacity and overfishing,” the research said.
In Geneva, all hope is apparently not yet lost as WTO members race to meet a UN target of finally reaching an agreement on subsidies this year. Last week the chair of the negotiating group, ambassador Santiago Wills of Colombia, introduced a new working document and talks have resumed.
A range of broad proposals is still on the table including prohibiting subsidies for illegal fishing and those that contribute to overfishing or fleet overcapacity. China has suggested capping spending limits on government support. India wants different treatment for developing countries.
These suggestions appear to be alarmingly high level with six months to go. Overcoming countries’ self-interest and winning global buy-in remains problematic. Given the lack of agreement for nearly 20 years, scepticism seems appropriate.
Still, Mr Wills in November succinctly surmised the task ahead: “The world is watching what we do here and we simply cannot afford to fail both the health of the oceans and the credibility of this organisation.”
Charted waters
India’s government is reconsidering its economic relationship with China in the aftermath of this month’s border fight in the Himalayas. With little appetite for a military showdown, New Delhi wants to hit its more powerful neighbour where it thinks it can hurt — its coffers — by limiting Chinese companies’ access to the Indian market. There are signs that the economic war has begun.
Policy watch
Talks between the UK and the EU over market access rights for the City of London after Brexit have made little headway © Chris Ratcliffe/Bloomberg
Britain and Brussels have accused each other of hobbling efforts to determine the City of London’s EU market access rights after Brexit, with a key milestone in the talks between the two sides set to be missed.
Valdis Dombrovskis, a European Commission executive vice-president, said the UK had so far answered only four of 28 questionnaires sent by Brussels seeking information about British regulation of the financial services industry after the Brexit transition period.
British officials said it was the EU’s fault that talks between the two sides on financial services had stalled, and that Mr Dombrovskis’ claim that the UK was dragging its feet was “complete rubbish”.
Don’t miss
• The US will bar the export of weapons and sensitive technology to Hong Kong, as it revokes the territory’s special trade status in response to China’s imposition of national security legislation on the Asian financial hub. Mike Pompeo, US secretary of state, said the Trump administration could “no longer distinguish between the export of controlled items to Hong Kong or to mainland China” in the wake of Beijing’s decision to introduce the controversial legislation, which could come into force this week.
Read more
The EU has one week to decide whether to put forward a candidate for WTO head after EU trade commissioner Phil Hogan pulled out of the race © Denis Balibouse/Reuters
• The decision by Phil Hogan, the EU’s trade commissioner, to pull out of the race to become the next head of the WTO leaves the bloc with one week to decide whether to put forward an alternative candidate. Countries including France, Germany, Belgium, the Netherlands and Denmark have questioned the need for an EU figure in the race, saying priority should be given to any candidate who could pull together the organisation’s disparate 164-strong membership.
Read more
• The UK has bowed to calls for an independent commission to advise on post-Brexit agriculture trade policy in a move that has cast doubt on the government’s ability to secure a quick deal with the US.
Read more
Tokyo talk
The best trade stories from the Nikkei Asian Review
• The border crisis between China and India has begun to spill over into bilateral trade as the Indian government considers tariffs on China’s auto sector and restrictions on telecoms equipment from Huawei.
Read more
• A decade from the signing of what amounts to a free trade agreement between Taiwan and China, economic integration remains a long way off, as growing wariness towards Beijing in Taipei has stalled implementation.
Read more
