people science environment partners mahfuzuddin ahmed (worldfish center) market access and...

people Ÿ science Ÿ environment Ÿ partners

Mahfuzuddin Ahmed (WorldFish Center)

Market Access and Liberalization in Fish Trade - Implications for Aquaculture Development in Developing Countries"

FAME Workshop, University of Southern Denmark, 8-10 June 2005


Outline1. Globalization and Fisheries Trade

2. Market Access - Market Constraints - Domestic Constraints- South-South Trade

3. Impacts of Liberalization

- Consequences on fish resources- Implications for fisheries and aquaculture

management4. Discussion and Policy Recommendation

people Ÿ science Ÿ environment Ÿ partners 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


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


Globalization - Different Things to Different People

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?

people Ÿ science Ÿ environment Ÿ partners 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


Technology

Policy

Market

Fish in the Frontier of Economic Globalization


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)


2. MARKET ACCESS


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


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


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 –

(i) Demand side constraints (Tariff and Non-Tariff Barriers - NTBs)

(ii) Supply side constraints (Institutional constraints, capacity and affordability, sustainability)


Tariff and Non-Tariff Barriers Presently Applied in Fisheries

Type of barriers Examples of instruments

Tariffs Differential import tariffs Tariff escalation Tariff peaks Countervailing duties

Non-tariffs Technical Barriers to Trade (TBT) and Standards – (Sanitary and phyto-sanitary – SPS and HACCP)

Rules of origin Labeling related to environmental management


1. Market Constraints – TariffDifferential 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.


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)


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


(…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


(…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


1997

1%

99%

Sub Saharan Africa Developed World

2020

4% 12%

13%

71%

Other South Asia Sub Saharan Africa

West Asia & North Africa Developed World

Growing south-south trade

Net imports of food fish (1997 and 2020)

3. South-south trade


Net imports of fish meal (1997 and 2020)

Growing south-south trade

1997

43%

11%1%6%

39%

China SEA India & Other South Asia W.Asia & N.Africa Developed World

2020

44%

19%

2%

8%

27%

China SEA India & Other SA WANA Developed World


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

South-south Trade (…continued)


3. IMPACT OF LIBERALIZATION


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


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

Inequity at the micro-level

Compounding effects of

regulatory barriers

Market Barriers to Small-scale Operators


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

Consequences on Fish Resources

Increasing demand

Increasing trade

Increasing prices

•Overexploitation -IUU

•Emphasis on fish farming

•Selective harvesting -LRFF


Characteristics that may determine impacts of trade liberalization

Negative Positive

Nature of fish population

Slow growing, long-lived

Fast growing, short-lived

Number of people with access to fisheries

Large Small

State of harvesting technology

Modern Traditional

Discount rate of harvesters

High Low

Monitoring system Poor Effective

Developed countries have an advantage.

Implications for Fisheries Management

people Ÿ science Ÿ environment Ÿ partners 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


4. DISCUSSIONN AND POLICY RECOMMENDATIONS


Discussion and Policy Recommendations

General principals

(i) Different international policies for different issues• Securing institutions

(ii) Bundling – Sectoral approach / Vertical approach

(iii) Horizontal Approach / Simultaneous agreement on all issue• Major issues to be addressed – Tariff, NTBs, capacity

and costs

(iv) Special and Differential Treatment• Credit for autonomous liberalization• Less than reciprocal reduction • Export importance to developing countries

How fisheries should be taken up into WTO process


(… 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)


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

Policy Issues


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

(… continued)


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

Summary - 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

Needed Actions


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

Needed Action - Three Prong Strategy

Business Security

Environment Security

Consumer Benefit

Complete and Full Removal of Tariffs – ensure full access to markets

Many of the agreed principles for NAMA will apply

people science environment partners mahfuzuddin ahmed (worldfish center) market access and...

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