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Energy transitions and trade law: lessons from the reform of fisheries subsidies

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Abstract

Fossil fuel subsidies, like subsidies to the fishing sector, lead to trade-distorting and ecologically harmful practices. The US$35 billion in subsidies provided by countries every year to the fishing sector leads to more and more boats being built, even as 90% of fish stocks are either fully exploited or overfished. An estimated US$444 billion in subsidies are provided annually for the production of fossil fuels by G20 countries, even as evidence emerges that oil, gas and coal reserves must remain unexploited to limit global warming increases to 2 °C. Of course, each country has its own development priorities, livelihood concerns and need for food and energy security. Agreeing upon subsidy reform is a complex undertaking that requires the assessment of social, political and historical considerations, as well as the involvement of international and transnational legal regimes that govern climate change, energy, fisheries and trade. This article reviews proposals for reform within the World Trade Organization and regional trade agreements, including the new disciplines on fisheries subsidies that were endorsed in the text of the Trans-Pacific Partnership. Although the latter agreement is unlikely to enter into force, consensus is emerging on the need to prohibit subsidies that contribute to overfishing or that are linked to illegal, unreported or unregulated fishing. The article shows how these legal developments might inform attempts to limit fossil fuel production and consumption subsidies. It highlights the need for learning and open deliberation about subsidy reform by affected stakeholders, including representatives from international organizations and civil society. It also points to new arrangements that link compliance with subsidy rules to standards and benchmarks from fisheries regimes, and demonstrates how such inter-regime connections are legitimate in the context of the fragmentation of international law. While reform to fisheries subsidies is still preliminary and fraught, there are useful lessons for the equally important project of energy transitions.

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Notes

  1. While economic classifications such as Journal of Economic Literature (JEL) codes may contrast these natural resources as non-renewable (hydrocarbon resources) and renewable (fisheries), the WTO has recognized living resources including fish to be an exhaustible natural resource (WTO 1998).

  2. For scientific evidence that fish excretions contribute an important role in maintaining the ocean’s pH balance, see Wilson et al. (2009).

  3. Note that research and development may still amount to ‘bad’ subsidies under the ASCM, such as in the recent dispute concerning Boeing and Airbus (e.g., WTO 2012).

  4. The provision was adopted on a provisional basis for a period of five years (Article 31). When it expired on 31 December 1999, a lack of consensus among WTO members meant that it was not renewed.

  5. Membership varies according to time and the content of submissions. Members have included Australia, Chile, Ecuador, Iceland, New Zealand, Peru, Philippines and the USA.

  6. See http://www.wto.org/english/tratop_e/region_e/rta_pta_e.htm; see also http://www.rtaexchange.org.

  7. Brunei, Malaysia, Mexico, Peru, Singapore, and Vietnam.

  8. Article 11.11 of the EU-Korea FTA also deems additional categories of state assistance to be ‘specific’ for the purposes of Article 2 ASCM (prohibited subsidies), including subsidies to insolvent or ailing businesses. However, it expressly excludes subsidies to the coal industry.

Abbreviations

ACP:

Africa, Caribbean and Pacific Group of States

ASCM:

Agreement on Subsidies and Countervailing Measures

FAO:

Food and Agriculture Organization of the United Nations

FFFSR:

Friends of Fossil Fuel Subsidy Reform

G20:

Group of 20

GATT:

General Agreement on Tariffs and Trade

ICTSD:

International Centre for Trade and Sustainable Development

IEA:

International Energy Agency

IMF:

International Monetary Fund

IPCC:

Intergovernmental Panel on Climate Change

IUU:

Illegal, unreported and unregulated

MSY:

Maximum sustainable yield

RFMO:

Regional fisheries management organization

RTA:

Regional trade agreement

SDG:

Sustainable Development Goal

TPP:

Trans-Pacific Partnership

UN:

United Nations

UNCTAD:

United Nations Conference on Trade and Development

UNEP:

United Nations Environment Programme

US:

United States

WTO:

World Trade Organization

WWF:

World Wide Fund for Nature

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Acknowledgements

With thanks to participants at the workshop for the Research Network on Fragmentation and Complexity in Global Governance (REFRACT) sponsored by the Research Foundations—Flanders at the Vrije Universiteit Brussel on 26 June 2015 and especially to the workshop organizers Thijs Van de Graaf and Harro van Asselt. Thanks also to Elizabeth Sheargold for research assistance and Ben Czapnik and the two anonymous reviewers for helpful comments.

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    Margaret A. Young

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Young, M.A. Energy transitions and trade law: lessons from the reform of fisheries subsidies. Int Environ Agreements 17, 371–390 (2017). https://doi.org/10.1007/s10784-017-9360-2

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