BusinessWorld | By Eusebio Jacinto, Jr., Bas Umali and Jaime Escober, Jr., Tambuyog Development Center | September 29, 2003
Mere liberalization of fisheries trade does not guarantee either resource sustainability or food security, particularly food security based on self-sufficiency or self-reliance on local food resources.
On the contrary, it will only worsen resource depletion and threaten food security, especially that of local communities that have traditionally used and depended on the now heavily traded fishery and coastal resources.
WTO tariff elimination proposal in fisheries. The lowering of tariffs in fisheries has been in effect since 1993 as a part of the Philippine commitment to the Asean Free Trade Association (AFTA), particularly under the Common Effective Preferential Tariff (CEPT), a council under AFTA. A yearly schedule of tariff reduction was set until the target tariffs of 0-5 per cent were reached by 2002. This schedule of commitment to CEPT was subsequently submitted by the Philippines to the World Trade Organization (WTO), in effect binding the country to this commitment.
But the 1998 Fisheries Code provides contrary trade restrictions to fish importation. It allows the importation only of fishery products intended for processing and canning, although the Department of Agriculture Secretary, with concurrence from the Fisheries and Aquatic Resource Management Council (FARMC), can issue a certificate of necessity to import that will allow importation for the local wet market (SIKAT, 2001). Thus, trade restrictions remain in effect because of the Fisheries Code.
Local fisheries trade does not fall under the jurisdiction of the Agreement on Agriculture, but it is still covered by at least six other agreements of the WTO. Recently, negotiations for a separate agreement on non-agricultural products (in which fishery products are included) have gained ground in the WTO. The Negotiating Group on Market Access (NGMA) came out with a draft paper in August 2003 that calls for the elimination of tariffs through three phases of equal length starting from the bound rates of 2001 (WTO, 2003) .
As in other key areas of negotiations in the WTO, the position of the Philippine government on the NGMA draft is a well-kept secret and not well-consulted, even though the Filipino people, especially the three-million small fisherfolk, will be affected by the effects of any agreement it commits the fisheries sector to trade liberalization. But going by its previous commitment in the CEPT, tariff elimination in fisheries is a foregone conclusion.
Trade liberalization and resource over-exploitation. The application of low tariffs or zero tariffs in accordance with the commitments to CEPT and WTO is not compatible with resource sustainability and food security for the country. It is a prescription for heightened resource exploitation that will result in resource depletion in the long run. In the absence of resource management measures, trade liberalization is an incentive for fish exporting countries to over-exploit migratory species.
But even if a country like the Philippines chose to import tuna instead of catching it from our waters, its tuna stocks will not necessarily recover since these are migratory species that are caught by other fishing countries within its defined habitat that stretches along the South China Sea and the Pacific (contrary to Hanneson's argument mentioned in Worldwide Fund for Nature, 2002). The same holds true for other migratory fishes that are the "shared stocks" of several fishing countries.
At present, the Philippines is both a fish-exporting and -importing country; a single species that it both exports and imports (although the latter at a limited amount) is tuna. But resource depletion is true not only for capture fisheries but also for aquaculture. Increasing exports of shrimp and other aquaculture products will encourage greater resource exploitation in an open access situation that in the end will only result in the depletion of coastal resources.
Death of the tuna industry? In tuna fisheries, the effects of trade liberalization are a bit complicated since there are at least three subsectors with their different interests. The canning and processing sub-sectors also operate most of the commercial tuna fishing in the country. Thus, it may be cheaper to rely on tuna imports in the short run, rather than continue engaging in costlier fishing operations.
The tuna handline subsector, which consists of the most number of fishers or producers (more than 20,000 fishers), will be adversely affected by the lowering of tuna prices brought about by the influx of cheaper tuna imports. This is so because the handline subsectors also sell a large part of their products in the domestic market.
At present, importation of tuna is allowed - but in a limited amount - to "institutional" buyers such as tuna canneries and processing plants under Fisheries Administrative Order 195, series of 1999. But somehow, the tuna imports - mostly from Taiwanese fishing vessels - find their way into the local wet markets in Mindanao and even the Japanese market. Already, we can foresee the possible consequences of zero tariffs on fish imports from this ongoing smuggling of Taiwanese tuna that uses FAO 195 as a cover.
Tuna smuggling has already caused the prices of tuna in the local wet market and even the Japanese market to fall to nearly half of the previous levels. Taiwanese tuna is cheaper partly because Taiwanese fishers are subsidized, that is, they can buy fuel at a much lower cost in Indonesia than Filipino tuna hand-liners can in the Philipines due to the Taiwanese-Indonesia Access Agreement. Also, being illegal, smuggling is "tariff-free."
This steep fall in tuna prices is already causing economic dislocation among Filipino tuna hand-liners. In the long run, the entire tuna industry will suffer from the consequences of unsustainable resource exploitation. Depletion of tuna stocks in both local and international waters will mean costlier production and higher prices. An estimated 60,000 workers dependent on the local tuna industry will be displaced. A total of 300,000 people will be affected if the family members of tuna workers are included.
Besides tuna, domestic trade in small migratory fishes like mackerel and round-scad (galunggong) will be negatively affected by the expected influx of heavily subsidized foreign small pelagics from such countries as Taiwan and China. While this may discourage local resource exploitation, it will have an immediate negative impact on the local small commercial and municipal subsectors whose economic survival is considerably dependent on the capture of small migratory fishes. In the long run, even resource sustainability is not ensured because being migratory, mackerel and roundscad are not confined in the local waters and are caught by other fishing countries in Southeast Asia and the Pacific.
Like tuna imports, mackerel imports for institutional buyers have found their way from the Navotas Fish Port Complex to several wet markets in Metro Manila and Luzon. While too limited yet to cause a major impact, the presence of imported mackerel in these wet markets has already caused fish prices to fall.
In contrast, the market "externalities" are staggering. One of these is the loss of mangroves that provide habitat for other coastal species and are thus important to the productivity of coastal ecosystems, besides protecting local communities from storms.
Other effects include the sinking of land and flooding, salination of drinking water, discharge of water-polluting toxic antibiotics and chemicals, and release of fishpond sludge that causes water siltation and soil salination.
Moreover, coastal lands that used to be common property resources are virtually "privatized" under existing ultra-liberal fishpond lease agreements granting lessees and their inheritors up to 50 years of fishpond operation. This situation has already brought economic dislocation to subsistence fishers who used to gather shells and crustaceans in what were previously mangrove areas.
Above all, domestic food supply has declined due to lower productivity of coastal areas and because of the steep rise in shrimp prices resulting from its exportation to the markets of developed countries.
Severe as these "externalities" already are, lower tariffs for shrimp in the world market will only exacerbate food insecurity in local coastal communities who depend on the remaining mangrove areas and other coastal resources for their subsistence, as it continues to wreak havoc on these mangrove areas and coastal resources.
Alternative sustainable production and trade. Production and trade should be based on the maximum sustainable yield and carrying capacity values of the resource base. Production should be undertaken hand in hand with effective resource management. Without resource management, increasing production under a liberalized trade regime of low or zero tariffs is a sure recipe for disaster.
For shrimp (and aquaculture production in general), it will mean not only internalizing all market externalities or shifting to sustainable production methods and systems, but also ensuring that the profits from trade redounds to the local communities that have traditionally used and benefited from the resource base now being used for aquaculture.
With its severe "externalities," intensive shrimp aquaculture should be restricted and ultimately phased out.
Restricted trade and application of subsidies. For tuna and small migratory species, sustainable trade will mean trade restrictions in the form of quotas based on the domestic need. There should also be trade (both domestic and export) restrictions consistent with maximum sustainable yield and carrying capacity values of fishery stocks and resource base.
Also, the government should provide subsidies in the form of resource management, research and development on appropriate tuna production and processing technology, and even production capital assistance to less financially able but potentially more productive and more sustainable subsectors like the tuna handliners. Subsidies will not bring about overfishing if an effective resource management system is in place.
Cancun post mortem. We think that the Post-Cancun trade position of the government is inadequate because it seems limited to the elimination of the subsidies of developed countries and opposition to further lowering of our import tariffs. But it is silent about the need to give the necessary local subsidies to the fisherfolk and other sectors like the farmers who are in danger of economic dislocation in this era of globalization.
The so-called "safety nets" have hardly been felt by the fisherfolk, although the Department of Agriculture (DA) allotted Php3.36 billion from 1999-2001 for support programs that were meant to enhance the competitiveness of the fisheries sector, as provided by the Agriculture & Fisheries Modernization Act. Last September 2002, we conducted a survey on government subsidies and support programs among 70 fisherfolk leaders belonging to 14 national and regional fisherfolk federations. Of the 70 respondents, 84 per cent said that government subsidies and support programs were "non-existent," 13 per cent said they were "insufficient" and only three per cent said they were "sufficient." The types of subsidies and support programs included in our survey are direct assistance to fishers, lending, tax preference and insurance, capital and infrastructure, marketing and price support, and fisheries management and conservation.
If divided among the three million fisherfolk, the DA allotment of Php3.36 billion in three years, or Php1.13 billion per year, would be equivalent to a little more than Php1 a fisher per day. This is small compared to the subsidy that the United States gives its cows, which is$2 dollars a cow per day. Still and all, it is a surprise that a big majority of the fisherfolk leaders we surveyed in 2002 were not aware of any fisheries programs for which the amount of P3.3 billion was spent.
What the fisherfolk need are not safety nets they can hardly feel, but tangible subsidies that will make their system of production more sustainable, efficient and gain more value-added. They deserve government support because they are among the least mobile (i.e., least able to shift to other jobs/livelihood) sectors in our society, and because they and their estimated 12-15 million dependents comprise a significant portion of our national population. It is only by giving them the necessary subsidies that the fisherfolk' products can be at par later on with foreign competition. If government fails to support them now they will not survive in this era of globalization. nor prosperity to our nation.BusinessWorld:
