Developing countries like India need to be prepared for multilateral negotiations. This is certainly true of the fishing economy

-- (Credit: Photographs: Amit shanker / CS)The export of fish and fish products from India is not a post-Independence phenomenon. Fish export statistics are available from mid-nineteenth century onwards. Princely states like Travancore and Cochin had vibrant export trade. Dried fish and prawns, fish oil, shark fins, sea cucumber, fishmeal -- these, and other products, held sway in international trade.

Immediately after independence, India lost many of its Asian markets. Regions that were part of the Empire, on attaining independence, restricted imports and diversified their sources of supply. However, enterprising individuals attempted to utilise technology -- such as freezing, still in its infancy -- and dared to cultivate new international markets. The best example was the trial consignment of frozen prawns to the us by an entrepreneur from Travancore-Cochin in 1953.

But in was only in the 1960s, with growing foreign exchange crisis and rupee devaluation (in 1966), that the vast potential of the marine fishery sector was recognised. Imports were near zero; every dollar earned in marine exports was a dollar the coffers netted. Central and state governments began to reorient fishery development plans to achieve the highest quantum of exports. The setting up of the Marine Products Export Development Council (later, it became the Marine Products Export Development Authority, mpeda) was just one indication. By the 1980s, fisheries development became equated to fish exports -- more precisely, the narrow pursuit of export of frozen prawns to Japan, the us and Europe.

An unintended effect of this all-out export-orientation was that the domestic component of the fish economy was orphaned. Harvesting, processing and marketing activities were left to fend for themselves. Major technological changes, the state-subsidised investments and other incentives went almost totally to export-oriented activities. The quantum of fish and fish products exported gradually increased, to reach about 20 per cent of the wet-weight equivalent of the country's fish harvests. The export sector became an island of wealth generation and modern food processing. It flourished amidst a sea of poverty and unhygienic and wasteful fish handling.

Today fish is considered to be the most internationally traded primary commodity. Global imports and exports of fish and fishery products range between us $55-60 billion. The main importers are the us, Japan and the eu: they account for over three-quarter of imports. The developing countries are the major exporters, accounting for about half the value of the trade. The long-term trend in India is not very different. The quantities, and value of exports in rupees, have been increasing rapidly. However, viewed in us dollar terms, the gains are not so impressive in the post-1982 period due to the sharp devaluation of the rupee.

Our share of total global fish trade is not very large. As a result we cannot substantially influence the dynamics of the international market. For the future, if we are to augment our role, it is important to examine critically the international trade situation. This is particularly so in the context of the new rules of trade which India has agreed to adopt by becoming a signatory to the world trade agreements of 1994.

There is today a view that fish is the business of the exporters, the Ministry of Commerce and the mpeda alone. This is shortsighted. True gains from international fish trade will come only with holistic development of the fish economy.
A fish called wto Under the World Trade Organisation (wto) agreements of 1994, fish and fish products do not come under the Agreement on Agriculture (aoa), but under industrial products. In the Uruguay Round, fish and fish products were first included in the Negotiating Group of Natural Resources-based Products. They then became part of the Agriculture Negotiating Group (ang). ang failed to agree on the core issue of tariffs, non-tariff barriers and access to resources/trade in fishing services. Therefore, in order to avoid the failure of the aoa (which was of greater interest to industrialised countries), the words "less fish and fish products" were added in paragraph 1 (i) of Annex 1 of the aoa.

Still, a minnow
Quantum and value of marine products exports from India

Year Quantity
(000, t)
Value
(Rs million)
Value
(US $ million)
1951/52 19.6 24 5
1972/73 38.3 581 78
1982/83 78.1 3613 350
1993/94 243.9 25036 800
1999/00 343.0 51166 1184

Source: CMIE

The economics and politics behind this decision was an admission that the different positions in fisheries could not be reconciled despite years of discussions.

The following are the relevant provisions of the Multilateral Trade Agreements in Goods that are likely to have a bearing on fish exports from India:

agreement on sanitary and phytosanitary measures (sps): This agreement, currently associated primarily with the Agreement on Agriculture, is of similar importance to fish trade. sps measures can take many forms, requiring (1) products to come from a disease-free area; (2) inspection of products; specific treatment or processing; (3) setting maximum permitted level of pesticide residues; or (4) permitted use of only certain additives.

In India's case we need to be cautious about (1) and (3), given poor sanitary conditions in coastal villages, harbours, landing sites and the high level of industrial pollution and pesticide residues in our rivers, backwaters and estuaries.

International agreements like the Codex Alimentarius Convention (cac), to which we are signatories, should become the standard. We have to bring up our domestic standards to these levels. India should take the lead to lobby to remove Article 3.3 of the sps Agreement, which allows countries to impose standards stricter than the ones suggested by the cac. Quality-control imperialism is certainly counter to free trade.

agreement on implementation of anti-dumping: This agreement allows a party to take action against imports of a product at an export price below its domestic price, where such imports cause injury to the domestic industry. Some fishworkers' unions in India have expressed concern that fish imports will have a depressing effect on shore prices. The effect of this on fishing communities need to be studied.

agreement on import licensing procedures: Many developing and developed countries still use import licenses and import quotas for fish and fishery products. This can lead to elaborate, costly and time-consuming procedures. Proper documentation of these procedures and their effective dissemination to the export processing industry must be a priority.

agreement on subsidies and countervailing measures (scm): The scm is built on agreements carried over from the Tokyo Round but introduces the concept of a "specific subsidy" (available only to an enterprise or industry). It is much more stringent than the subsidy provisions in the aoa. Trade in fish and fish products come under these more stringent provisions of the scm rather than the subsidy provisions in the aoa. So far they have not been invoked but only discussed in the wto Trade and Environment Committee. This lead to the fao Expert Consultation on Subsidies followed by relevant discussions at the fao Committee on Fisheries. There are no cases yet of the scm Agreement being used to restrict trade in fisheries from developing countries. However, what the future holds in store is difficult to say.

This is particularly so after special mention has been made of fishery subsidies at the Doha Round. The level of subsidies in the developing countries is nowhere close to those being given to the fisheries sector in the developed world. In that sense, it may be appropriate for developing countries to argue for reduction in subsidies: this will lower fish production in the developed countries and thus raise international prices to our benefit.

The scm agreement establishes three categories of subsidies: (a) prohibited -- contingent on export performance and on use of domestic rather than imported goods; (b) actionable -- not per se prohibited but which have adverse effects on the interests of other signatories; and (c) non-actionable -- either non-specific subsidies or specific subsidies involving assistance for research, development activity, assistance to disadvantaged regions and for adapting existing facilities to new environmental requirements imposed by law. There is no substantive evidence yet before the wto Committee on Trade and Environment on the adverse effect of fishery subsidies on sustainable use of resources. However, given ill-defined rights to fishery resources, there is little doubt that subsidies will lead to building of overcapacity in the harvesting and processing sectors. In this context, India needs to examine the nature of subsidies being provided to the fisheries sector, and re-orient them to take the form of payments. These will be non-actionable and contribute to create a wholesome resource management environment in the fisheries sector. However, we still do not have a concrete fisheries management strategic plan.

agreement on safeguards: This agreement allows a wto member to take safeguards to protect domestic industries from unforeseen increases in imports of any product that can cause serious injury to the industry. If large-scale fish imports into India become a threat to the domestic fishery, this agreement can be of relevance. In the context where the level of subsidies in the developed countries' fishing industries is high, such imports can attract countervailing measures under the scm agreement. However, there is a demand from the fish export processing plants that they be allowed to import raw material to facilitate greater capacity utilisation. Both issues require careful consideration.

Other fish
There are a few other crucial instruments India needs to pay attention to:

gatt article xx (general exceptions): This enables wto members to take measures inconsistent with the provisions of gatt 1994. Article xx (b) permits action necessary to protect the life or health of human beings, animals or plants. Article xx (g) permits action relating to the conservation of exhaustible natural resources.

There can be new issues specific to India. One potential candidate with far reaching consequences is the issue of pollution of coastal waters due to the use of outboard engines.

fao's code of conduct for responsible fisheries (ccrf): The initiative to start discussions on "responsible fishing" and on formulating a code came from Mexico following trade embargoes imposed on Mexican tuna by the us. Under the ccrf, Article 11 (on Post Harvest Practices and Trade) provides guidelines which can be adopted by those involved in processing and marketing for domestic and export markets. Though this is a voluntary code, India is a signatory to it and there have been initiatives at the national level to implement it in all maritime states. Translation of the ccrf into Indian languages will be a good beginning.

convention on international trade in endangered species (cites): It is important to keep track of the various listings under this convention. There could be species that are identified as endangered and result in the creation of a non-tariff barrier. A good example is the status of sharks, under discussion since 1994.

social clause issues: Matters pertaining to child labour, exploitation of women and the rights of workers are also likely to become contentious issue in the future.

investment agreements: Where international investments are required to be given the same status and treatment as national investment, it will be judicious to examine how to assign access rights and property rights to coastal seas and inland water bodies.

The Doha round
The Doha Ministerial Declaration issued in November 2001 has on its expanded negotiating agenda at least three areas that have a bearing on fisheries and fish trade.

subsidies: The Declaration refers to "clarify and improve wto disciplines on fisheries subsidies". It is not clear what this means. The different implications of the social, economic and ecological benefits and costs of subsidies in the context of rich and poor countries, small-scale and large-scale, and coastal and distant-water fisheries, both in the short and long run need to be studied closely.

market access: Under Market Access for Non-Agricultural Products -- the category under which fish trade falls -- modalities are to be agreed upon to reduce or eliminate tariffs, particularly on products of export interest to developing countries. Such negotiations can potentially contribute to employment benefits, especially to women. Presently tariffs have come down only for unprocessed fish. Developing countries need to apply pressure to bring down or eliminate the tariffs on processed fish and fish products (like canned tuna in brine or oil) that are exported to the industrialized nations. Exporting processed fish, instead of raw fish, can contribute to better conversion of wet weight to product weight, with positive implications for fisheries resource conservation.

trade and environment: A third area of relevance is the negotiations on the relationship between wto rules and specific trade obligations under multilateral environmental agreements. cites and iccat are examples of agreements that have set out specific trade obligations.

The iccat management measures sometimes apply to imports from non-member countries. Further, certain species of sharks and sea horses, mainly harvested in developing countries, are likely to find their way into the cites Appendices i and ii in the near future. This is a potential area of conflict between 'development' and 'conservation' interests, and the debate could very well be polarised between industrialised and developing countries. There seems to be consensus emerging at the international level that free trade in marine fish and fish products can be counter-productive to conservation of fish stocks. There is reference in the Doha Ministerial Declaration that the wto Committee on Trade and Environment should continue its work to examine the effects of environmental measures on market access as well as labeling requirements for environmental purposes. However, these could also develop in the private sphere and under conditions where participation of developing countries could be very restricted.

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