Last month the fight against Illegal, Unreported and Unregulated (IUU) fishing got a new boost as the U.S. ratified as twentieth party the 2009 FAO Agreement on Port State Measures to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing agreement (PSMA). So maybe it is a good time to have a closer look at this…
IUU fishing is still a common and often prevalent problem in many countries in the world, with significant social, ecological and economic impact. Just the worldwide economic loss due to IUU fishing sums up to a significant $10-$23.5 billion – every year!
Policy efforts to limit the extent of IUU fishing are plentiful – ranging from national voluntary industry efforts to global multilateral country level cooperation. One way to work towards reducing IUU fishing, which has shown to be quite popular recently, is to develop means to hinder IUU fishing products to enter legal markets. Next to private industry based certification and labeling schemes, trade measures have proven to be effective in this context. Such measure are mainly unilaterally defined, such as the European Union’s (EU) 2008 IUU fishing regulation or the upcoming U.S. regulation in accordance with the recommendations of the Presidential Task Force on Combating IUU Fishing and Seafood Fraud. In addition, there are also some bilateral or multilateral initiatives, like the 2009 FAO PSMA, the catch documentation scheme agreed on by parties to the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) or the trade regulation based on the Convention on the International Trade in Endangered Species of Wild Flora and Fauna (CITES). They all have in common that they influence the pattern of trade by implementing measures that impose stringent import documentation, certification or traceability requirements, regulate transshipment, or, as trade measure of last resort, prohibit trade in a relevant product.
Despite the promising potential of these actions to limit the extent of IUU fishing, (unilateral) trade measures require significant and often costly compliance efforts by exporting countries that affect the international competitiveness of their industries and restrict the size of exports in these goods. This is especially true for developing countries. Providing detailed catch documentation, full fledged monitoring schemes and effective enforcement of fishery regulation can be a huge financial and institutional obstacle for them. Several studies have shown that developing countries are differently, often negatively, affected by unilaterally imposed product standards than developed countries (see for example Chen and Matoo (2008) or Disdier, Fontagné & Mimouni (2008). The fact that 54% of world’s fisheries exports by value and 60% by volume are originating from developing countries (FAO 2014) makes trade restrictions a daunting threat for these economies.
How an increase in compliance cost affects the international pattern of trade in fish and fishery products depends on the change in relative prices and is merely an empirical question. Facing increased compliance costs under the IUU regulation scheme gives the exporting country two options. It can either serve the regulated market with a higher product price and a lower volume (assuming that demand for fish in the import market is not affected by the regulation), or it can decide not to comply with the IUU regulation and shifts their exports to less regulated markets, such as the Japanese one, which is the second largest import market worldwide.
So, how should a future trade-related regulation of IUU fishing look?
First, the different unilateral and multilateral policy efforts, like the EU IUU fishing regulation, the FAO PSMA, and the U.S. regulation in accordance with the recommendations of the Presidential Task Force on Combating IUU Fishing and Seafood Fraud have to be harmonized to minimize the compliance cost of exporting countries. Otherwise this may lead to artificial non-tariff barriers in international trade in fish and fish resources, which will result in fragmented markets where exporters, due to prohibitive high compliance costs, are not able to serve several differently regulated markets.
Second, unilateral trade related efforts to effectively combat IUU fishing should be combined to cover as many markets as possible. Fish is a resource that is not isolated in space. Fish migrate and are not bound by artificial country borders. Compliance effort by one country, and thereby a decrease in the exploitation pressure on the resource, can be compensated by an increased fishing effort by the unregulated countries as shown by Borsky and Raschky (2015). Integrated markets due to combined unilateral trade related efforts would reduce this adverse development.
Third, unilateral trade measures to regulate IUU fishing have to be designed in accordance with affected exporting countries. This is especially true for developing countries, which are often less informed about upcoming regulations, are less able to anticipate these regulations and their governments are often not able to provide the technical and institutional infrastructure (see for example Chen et al. (2008). A coordinated policy design would decrease the level of conflict in the affected exporting countries, would increase the level of compliance with the regulation and finally, would decrease the potential boost of illegal trade as it is often the case in other trade related environmental regulations (see the significant amount of illegal trade following CITES, the massive illegal trade in ozone-depleting substances as an evasion of the Montreal Protocol on Substances that Deplete the Ozone Layer or the illegal trade in hazardous waste based on non-compliance with the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal.
And the BUT at the end: don’t forget that we are only speaking about 37 percent of the total fish harvest. What to do with the other two-thirds, which consists of a huge amount of artisanal and subsistence fisheries and industrial fisheries for domestic consumption, is another story…
Image credit: Photo by Nguyễn Linh (published on unsplash.com)