EU fuel fight ignites as WTO subsidies negotiations enter final week

Daniel Voces, the managing director of the European Union’s primary fishing industry advocacy group, Europêche, believes members of the World Trade Organization will reach a deal on curbing illegal fishing subsidies this week.

WTO Director-General Ngozi Okonjo-Iweala has pleaded with negotiators in Geneva, Switzerland, to come to an agreement before the deadline for negotiations arrives on 15 July. Negotiators are currently considering a draft version of an accord, but differences remain due to sparring over exemptions for developing nations as well as fuel subsidy definitions and enforcement mechanisms.

“The E.U. and its member states are pretty serious about reaching an agreement this year,” Voces told SeafoodSource. “We believe the ministerial meeting taking place on 15 July will constitute a turning point in the political negotiations towards concluding an agreement.”

As the talks in Geneva enter their final week, negotiators from the European Union are being pressured to defend the E.U.’s fuel tax relief scheme for its fishing fleet. But fuel supplied for the purpose of navigation, fishing, and aviation have “historically been exempted from taxation to ensure an international level playing field and cannot be considered as subsidies,” Voces said. Fuel “de-taxation schemes,” or tax-relief schemes, are also applied in agriculture and road transport, he said.

“Therefore, fuel tax relief schemes are a fiscal option, non-specific to our sector, rewarding the added value generated by the fishing industry,” Voces said.

Voces said fuel taxes should never have entered the remit of the WTO talks.

“Fuel tax relief schemes in the E.U. have not contributed to overcapacity nor to overfishing,” Voces said.

“Incredibly high” E.U. fuel prices and taxes mean European fishing companies face fuel prices 18 percent higher than the world average, according to Voces.

“Filling the fishing vessel tank in major developed economies, such as Russia or the United States, is between two to three times cheaper than in the E.U.,” he said. “These schemes should have been excluded from the scope of the WTO instrument from the beginning. A meaningful deal can therefore be found by nations on harmful subsidies without referring to de-taxation schemes.”

Voces suggested that non-governmental organizations criticizing the fuel tax remittances received by E.U. fleets are aiding larger, non-European fishing fleets, including China’s, a country Voces accused of being less transparent about its subsidies and fleet movements.

“We understand that some countries, backed by NGOs, want to see the end of these schemes, since their fleets can benefit from low fuel prices or from low tax rates, giving them a competitive edge in the world’s market,” Voces said. “We reiterate that global problems with overcapacity and overfishing lie in the fact that, opposite to the E.U., many countries do not have transparent fishing vessel registers nor sustainable management measures in place nor fishing capacity ceilings, and therefore continue growing their fishing fleets with or without subsidies.”

One of the NGOs critical of E.U. fuel subsidies for its fishing fleet is environmental campaign group ClientEarth

“By pushing to keep obviously harmful subsidies, Europêche is promoting a race to the bottom that is threatening the healthy recovery of our ocean and the survival of many fishing communities,” ClientEarth fisheries lawyer Flaminia Tacconi told SeafoodSource. “The only win-win option is for all countries to get rid of these subsidies and put an end to overcapacity and overfishing.”

ClientEarth fisheries lawyer Elisabeth Elisabeth Druel told SeafoodSource she sees the E.U. fishing industry as already benefitting from an “impressive assortment” of public funds and fuel subsidies for E.U. fleets may be coming to an end in any case.

“Cutting their fuel tax exemption at the E.U. level through the upcoming revision of the Energy Taxation Directive, and at the global level through an agreement at the WTO, should not send them into crisis mode. It simply means they will be bearing their business costs, rather than forcing citizens to foot the bill for overfishing,” Druel said. “[Scientists have] consistently identified fuel subsidies, including tax exemptions, as harmful for the environment and confirmed they contribute to overfishing and to the destruction of marine biodiversity. It should be underlined that in the E.U., industrial-scale fishers benefit far more from these exemptions than smaller players.”

Voces said the E.U. fleet has been a leader in reducing its environmental impact on its own, without any governmental directives.

“Opposite to other countries in the world that have exponentially grown their fishing fleets, the E.U. fleet has been reduced by 22,000 fishing vessels over the last 20 years, representing 20 percent of the E.U. fleet in number of vessels. In addition, despite tax exemptions, fuel consumption and CO2 emissions from fishing are down by 18 percent in only 10 years,” Voces said. “Fish stocks have been increasing significantly reaching in the Northeast Atlantic levels 50 percent higher than in 2010. Besides, 99 percent of the landings from E.U.-regulated stocks come from sustainable fish populations.”

But those claims were disputed by ClientEarth.

“The fishing industry’s carbon footprint is much higher than previously thought and it must be part of the global effort to combat climate change – starting with bearing the true cost of its fuel,” she said. “According to the most recent scientific estimations, the share of Northeast Atlantic overexploited fish stocks assessed by STECF was still above 40 percent in 2019. In the Mediterranean Sea, this percentage is even higher, as 75 percent of stocks there are overfished. Finally, the claim that 99 percent of fish landed in the E.U. come from sustainable sources is grossly misleading and has been refuted on numerous occasions by NGOs and scientists.”

The E.U. has pledged to be a leader in environmental protection through the E.U. Green Deal. Former E.U. Commissioner for Maritime Affairs and Fisheries Maria Damanaki last week told an online forum hosted by the Friends of Ocean Action, an organization hosted by the World Economic Forum, the E.U. has to lead by example at the WTO in getting a deal that requires all major fishery nations to cut fuel subsidies for distant-water fleets.

Campaigners and negotiators are worried that a deal reached at the WTO will be too compromised to have an impact. A meaningful deal should not be weakened by “zero-sum trade-offs and exceptions for all,” said Alice Tipping, former legal advisor to New Zealand’s mission to the WTO, told the forum.

Negotiators from major fishing nations like China have been closely watching the position of counterparts from the E.U., according to Tipping. In a recent study published by another NGO, Oceana, the E.U. was described as the third-ranked provider of harmful fisheries subsidies worldwide – after China and Japan.

By Mark Godfrey

This article was originally shared by SeafoodSource.