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WTO fisheries failure demands tariff reform

December 15, 2020

By Charles Benoit, CPA Trade Counsel

Yesterday the WTO announced that it missed yet another deadline to agree on rules fighting overfishing. These talks began in 2002, and 18 years later have achieved nothing.

The showstopper appears to be a letter sent by India to the WTO negotiating committee on March 6, 2020. India demanded that proposed rules seeking to curb unreported and unregulated fishing shouldn't apply to developing countries. Alarmingly, the proposed rule merely asked for WTO members to stop giving subsidies for unreported and unregulated fishing.

Reuters quotes one negotiating delegate describing India's carve-outs as so broad "as to render the agreement meaningless". No kidding.

The WTO's own fact sheet on the negotiations cites UN data "that 34% of global stocks are overfished compared with 10% in 1974, meaning they are being exploited at a pace where the fish population cannot replenish itself." The United Nations’ Food and Agricultural Organization documents much of the global travesty known as "Illegal, Unreported, and Unregulated (IUU)" fishing. Shrimp peeling sheds in many countries contain some of the most horrific human abuses.

The good news is that America can do a lot to fix this on our own. The United States now imports over 90% of the seafood we consume, and we are the #1 importer worldwide. The vast majority of seafood imports can come from anywhere in the world tariff free because we have mostly 0% tariffs. Indeed, thanks to much tougher health and sanitary border checks in Europe, the U.S. has become the dumping ground for much of the world's excess fishing, mostly from Asia.

The silver lining here is that being the number one consumer of imported seafood gives us all the leverage to save the fish.

We do this by declaring that international trade in fisheries is doing far more harm than good, and it's well past time the United States raised our default tariffs on seafood to prohibitive levels. We can limit imports to countries we have free trade agreements (FTAs) with or among the 119 countries who partner in our various trade preference programs. Working bilaterally with these countries, we can ensure we're only importing seafood from responsible fishing nations. Sorry China and India, you're out.

For a century, U.S. seafood processing companies have held all the sway in Washington, wanting seafood landings as cheap as they can get them, leaving our fishermen to fend for themselves in global markets. To be clear, India never bargained for our 0% seafood tariffs. Secretary of State Cordell Hull reduced them to 0% in deals with Canada and Mexico during World War II, and India got a free ride on those 0% tariffs when it joined the GATT in 1948.

After we impose a $100 per kilogram default tariff up and down the seafood schedule, WTO rules will allow certain principally affected countries to raise their tariffs in response. That's fine. Our most export-sensitive fishery is lobster. But China already shut down their U.S. lobster imports in 2018, so nothing new there. While China's retaliatory tariffs caused some short term pain in soybeans and lobsters, it hasn't done much else except net the U.S. Treasury a $70 billion windfall.

As for other countries: Indonesia's average bound tariffs are at 37.1%, and India's at 48.5% (with many tariff lines having no binding at all!). America's average bound tariff is 3.4% - the absolute lowest average binding among all WTO countries. Things can't get worse for us at the WTO.

Tariff agreements with our FTA partners and the 119 developing countries that participate in our tariff preference programs will not be affected. By signaling to the world that we're not going to giveaway duty-free treatment to countries just because they're in the WTO, we'll have also immeasurably strengthened our leverage in one-on-one negotiations.

The solution to help our fishermen and farmers isn't chasing export markets; it's ensuring sustainable harvests and pricing here at home. Many countries have excellent models of supply management along these lines.

Our seafood trade will be better managed bilaterally. As the world's #1 consumer, we have a responsibility to the planet to get this right.

Trade and Tariffs

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