Mahfuzuddin Ahmed (WorldFish Center)

1. Market Access and Liberalization in Fish Trade - Implications for Aquaculture Development in Developing Countries" Mahfuzuddin Ahmed (WorldFish Center) FAME Workshop, University of Southern Denmark, 8-10 June 2005

2. Outline • Globalization and Fisheries Trade • Market Access • - Market Constraints • - Domestic Constraints • - South-South Trade 3. Impacts of Liberalization • - Consequences on fish resources • - Implications for fisheries and aquaculture management 4. Discussion and Policy Recommendation

3. Globalization: Some Welcome Developments • Growth in world trade has outpaced growth in world output • Fish trade is in the frontier of economic globalization • Rapid rise in fish exports a major developing country trade story (Asian) • Aggregate value of net fisheries exports from developing countries surpassed traditional agricultural exports • Prospects of huge gains - alternative source of fish supply to domestic consumers, favourable terms of trade, higher export earnings

4. Fisheries Globalization: Some Worrisome Consequences for Fisheries • Risk to domestic nutritional security and consumer welfare • Threats to sustainability of fisheries – selective and heavy exploitation • Massive implications for fisheries management • Overdependence on exports and price volatility • Newer forms of barriers to trade –market access constraints

5. Understood as rising economic, political, social and cultural linkages among people, organizations and countries at the global level Interpreted as a tendency toward wider application of economic, political, social, cultural, institutional, and legal practices Perceived as dominance of fewer cultures and economies The question is: Who gets included and who gets excluded in the globalization process? Globalization - Different Things to Different People

6. Globalization in Earlier Periods in History • 1700s to early 1900s - modern economic growth • Brought world integration to a peak • Ended in pain and disintegration • Two world wars and a global economic depression • Politically and militarily divided post-war world • New process to begin soon with generation, adoption and diffusion of technology • End of cold war

7. Fish in the Frontier of Economic Globalization Technology Policy Market

8. FISH ONE OF THE BIGGEST TRADE STORY • Net export of fish greater than all other food crops in developing countries • Net export of fish for food from developing countries ~USD18 billion Net exports of food commodities in developing countries in 2000 (source, FAO)

9. 2. MARKET ACCESS

10. International Trade, MDGs and WTO • Improved market access and terms of trade for poor countries • Improved performance in fish trade and positive net export to help Millennium Development Goals (MDG) • Help trade flow smoothly, freely, fairly and predictably • Reduce tariffs and remove NTBs • Transparent trade policies • Trade concessions for developing country exports

11. Market Access – State of Play • Early efforts toward liberalization • Fish and fisheries products are not covered by the Agreement on Agriculture (AoA). • Instead, it is linked to the negotiations on Non-Agricultural Products Market Access (NAMA) • Some success in reduction of average tariff • Average tariff rate for fish reduced by 25% • Average tariff rates • 4.5% for developed countries • Below 20% for developing countries

12. Market Access – State of Play • Early success in reduction of tariff barriers soon followed with tariff peaks, tariff escalation and countervailing duties and proliferation of NTBs • Constraints to market access – • Demand side constraints (Tariff and Non-Tariff Barriers - NTBs) • Supply side constraints (Institutional constraints, capacity and affordability, sustainability)

13. Tariff and Non-Tariff Barriers Presently Applied in Fisheries

14. 1. Market Constraints – Tariff • Differential approach to tariff reduction on imports – • Many bi- and multi-lateral agreements • reciprocal tariff concessions and access agreements • fishing license agreements • Increase in bound tariffs for developing country exports (21% to 73% in the Uruguay Round) • Tariff escalation : Tariffs on processed fish generally higher and discourages value-addition in developing countries (tuna loins, 24%) • Countervailing and anti-dumping measures – Example: Case of Vietnamese catfish exported to US – ban on use of the name ‘catfish’ for non-US native species.

15. 1. Market Constraints – NTBs • TBT, SPS, labeling, quality standards present barriers to trade for developing countries • Frequent rejection of exports • Damage to national economy (eg. Five month ban on shrimp imports from Bangladesh by EU resulted in at least USD 14.7 million in short-term losses)

16. 2. Domestic constraints related to international fish trade - How to meet the standards? • High costs and lack of resources to implement safety standards • Weighing costs against benefits of food safety standards and regulatory measures (short term pains versus long term gains) • Differences in economies of scale at both country level and individual processors or exporters level • Post-harvest and processing – methods and technical capacity

17. (…continued) • Unaffordable adjustment costs and longer gestation gap in restructuring government revenue sources • Customs tariff contribute significantly to government revenue • Tariff-revenue dependence in least developed countries • Institutional framework and policy environment to vertically integrate the supply chain to face the challenges of globalization. • Special characteristics of production, supply chain, trade policy processes and policy environments in developing countries • Capacity of developing countries in assessing fisheries trade policies

18. (…continued) • Resource management and governance issues • Weaknesses in property rights • Lack of strong institutional setups • Rent dissipation • Fisheries – can become exhaustible resource if over harvested

19. 3. South-south trade Net imports of food fish (1997 and 2020) • Growing south-south trade

20. Growing south-south trade Net imports of fish meal (1997 and 2020)

21. South-south Trade (…continued) • Structural and institutional rigidities for trade within developing countries • Domestic trade policies (eg. Philippines – milkfish fry trade) • Export restrictions/tax versus import duty liberalizations • Role of food safety regulations in south-south trade – consumer preferences and increasing importance of food safety concerns

22. 3. IMPACT OF LIBERALIZATION

23. Impacts of Liberalization • Poverty, livelihoods and food security of poorer fishers and farmers • No clear evidence of negative impact on the poor (Kurien, 2004); More comprehensive studies needed • Impacts on producers and consumers in exporting countries • Greater incentives for commercial fishing operations, threatening livelihoods of fishing-dependent poor • Excess demand situation leading to sharp increase in price

24. Inequity at the micro-level Compounding effects of regulatory barriers Market Barriers to Small-scale Operators • Lack of access to land, water, capital, credit and technology • Lack of access to market/ lack of competitive advantage • Women being cut-off from the marketing and processing chain • High costs to exclude small producers and processors from export supply chain • Long supply/market chains affecting and adding costs • Lack of a uniform standard adding to risks and uncertainty

25. Impact of Liberalization(…continued) • Impacts on natural resource sustainability in fish exporting developing countries • Little provision to charge user-cost in developing countries for un-priced resource stocks • High price and high demand reduced stocks for number of species <20% of pre-fishing level • Increase in illegal, unregulated and unreported (IUU) fishing • Ecosystem impacts of excessive removal of target species through by-catch

26. Consequences on Fish Resources • Overexploitation -IUU • Emphasis on fish farming • Selective harvesting -LRFF Increasing demand Increasing prices Increasing trade

27. Implications for Fisheries Management Characteristics that may determine impacts of trade liberalization Developed countries have an advantage.

28. IMPLICATIONS FOR FISHERIES AND AQUACULTURE • Trade - a magnifier of existing environmental practices in both directions • - lack of effective management regime - trade is double-edged sword • - good management practice – trade is a Win-Win • High demand and high price will encourage aquaculture • Trade can lead to emergence of effective management regime • - at higher prices protection is afforded to resource • - higher incentive for good management

29. 4. DISCUSSIONN AND POLICY RECOMMENDATIONS

30. How fisheries should be taken up into WTO process Discussion and Policy Recommendations • General principals • Different international policies for different issues • Securing institutions • Bundling – Sectoral approach / Vertical approach • Horizontal Approach / Simultaneous agreement on all issue • Major issues to be addressed – Tariff, NTBs, capacity and costs • Special and Differential Treatment • Credit for autonomous liberalization • Less than reciprocal reduction • Export importance to developing countries

31. (… continued) • Related discussions of country positions on NAMA • Cautionary approach (eg. Japan, Korea, Taiwan) • Full and complete liberalization (eg. USA, Canada, Singapore) • ‘Less than full reciprocity’ (eg. India)

32. Policy Issues • Harmonizing international trade policies in developing countries • South-south trade • Ensuring sustainability • Fisheries to be treated as exhaustible resource (Japan, Korea, Taiwan) • Trade liberalization to be integrated within the framework of sustainable fisheries management • Role of effective management • FAO Code of Conduct for Responsible Fisheries

33. (… continued) • Special and differential treatment • Trade related technical and financial assistance • Longer implementation period • Less than full reciprocity in reduction commitment • Preference for tariff reduction on products of export interest to developing countries • Increasing the capacity of developing countries in trade negotiations • Technical capacity • Resources to participate and represent views in trade negotiations

34. Summary - Needed Actions • Tariff Barriers • Harmonization of tariffs • Tariff escalation is a significant barrier – accelerated reduction of tariff escalation • Tariff reduction have positive impact on south-south trade • Non-tariff Barriers (TBT and Standards) • Tendency to shift from one instrument to another – Instrument shift shouldn’t be allowed • Country of origin labels • Traceability and bioterrorism measures pose huge challenge as a non-tariff barrier • Lack of an agreed standard and lack of transparency in the implementation and verification are much bigger concerns than ability and willingness to comply with standards • Agreement on standards among exporter and importer Members • A subset of programme to deal with implementation of technical measures • Role of and access to technical knowledge (information, research and training

35. Needed Actions • Social Sustainability • How to handle adjustment costs? • Poor mobility of fishers and participation of small-scale operators • Environmental Sustainability • Will tariff reduction create pressure on stock? Lower price higher exploitation? • need for total agreement on effective management • fisheries to be treated as exhaustible resource (Japan, Korea, Taiwan) • capture-culture links be part of effective management • Should sustainable management be integrated into framework of trade liberalization • Agreement and enforcement on effective management and property rights • FAO Code of Conduct for Responsible Fisheries and Aquaculture

36. Business Security Consumer Benefit Environment Security Needed Action - Three Prong Strategy • Complete and Full Removal of Tariffs – ensure full access to markets • Many of the agreed principles for NAMA will apply • Invest in area of standards and safety as part of development investment • Total commitment to technical, institutional and infrastructure • Public-private partnerships • Development / technical assistance • Regional cooperation • Global agreement on management of fisheries and transboundary marine resources • Orbit agreement in WTO • Separate body in alliance with FAO, UNEP to handle management

37. Thank you