Subsidies, Fisheries Management, and International Trade

The WTO members are conducting negotiations to clarify and improve disciplines on fisheries subsidies at the Doha Round. In this paper, I investigate how worldwide subsidy reform in the fisheries sector could affect fisheries output and resource stocks in a trading equilibrium. Using a simple static model of variable labor supply, I demonstrate that the effects of a reduction in subsidies on fisheries output will differ, depending on the conditions of the economy and fisheries management in different countries. A possible outcome of a reduction in non-capacity-enhancing subsidies is that fisheries output will rise in countries where catch quotas are not enforced and remain the same in countries where catch quotas are strictly enforced, expanding the total supply of fisheries products and reducing world fisheries resource stocks. Thus, this paper suggests that reducing some types of fisheries subsidies may yield unexpected and undesirable outcomes if fisheries resources are not properly managed.