Op-Ed: Three Countries Could Scuttle WTO's Fishing-Subsidy Limit Agreement

More than 600 million people around the world seek to make their living through fishing or from processing the catch. Most of those workers – often impoverished – rightly pay little attention to the intricate debates of the World Trade Organization, but a newly struck Agreement on Fisheries Subsidies (FSA) heralds a breakthrough for the marine environment as well as a timely boost for multilateral rules-based cooperation.

Following 20 years of negotiations, the FSA came into force on September 15, 2025. The first phase of the agreement, known as “Fish 1”, targets subsidies linked to illegal, unreported and unregulated (IUU) fishing, overfished stocks, and unregulated fishing on the high seas.

For Pacific Island countries, the FSA means fairer competition, greater protection of vital marine resources, and increased economic security for artisanal fishers and fish exporters.

But many of the benefits could be undermined if just three countries – India, Indonesia and the United States – stall the second phase of the FSA negotiations, Fish 2.

Global fisheries subsidies total around US$35 billion annually, with approximately US$22 billion considered harmful. Subsidies such as fuel assistance, tax exemptions and vessel construction support allow distant-water fleets to fish profitably even when stocks decline. This creates overcapacity, encourages overfishing and contributes to IUU fishing. Most subsidies come from major economies including China, Japan, the United States and European Union members.

Pacific Island exporters account for over half of the world’s tuna catch – yet distant-water fleets can continue fishing even when catch stocks run low.

In the Pacific, IUU fishing causes estimated annual losses of US$333 million. Most violations are committed not by unlicensed vessels, but by licensed industrial fleets that underreport catches or breach licence conditions.

These practices reduce government revenue and threaten local food security, but also have major implications for employment and export industries in Pacific Islands countries. Locally based, industrial tuna vessels in member countries of the Pacific Island Forum Fisheries Agency (FFA) employ around 26,000 people. Many Pacific islands are significant exporters of marine animal products. Tuna exports from PNG make up about 18% of the global tuna catch, while Kiribati, Vanuatu, Solomon Islands, Tuvalu and Fiji are also major exporters. In fact, Pacific island exporters account for over half of the world’s tuna catch, either selling fishing access rights or exporting directly.

Subsidies and IUU fishing not only limit the ability of Pacific exporters to compete, but “foreign” fleets have far greater capacity to continue fishing in Pacific waters even when catch stocks are low. This means local fishers, whose livelihoods rely on fishing, face serious food shortages and loss of income.

The FSA seeks to address these problems by prohibiting subsidies for unregulated high-seas fishing and improving monitoring and transparency obligations. At a recent webinar on fisheries subsidies facilitated by the Institute for International Trade, Ambassador Mere Falemaka, Permanent Representative of the Pacific Islands Forum to the WTO, described the agreement as an important additional tool for protecting tuna stocks and supporting sustainable fisheries management. Falemaka highlighted the establishment of the WTO Fish Fund, which provides grants to developing countries to implement the agreement, strengthen fisheries regulation and improve surveillance capacity.

The impact of the FSA also extends to non-WTO members such as Kiribati and Tuvalu, by improving ocean health, reducing distant-water fleet pressure, curbing IUU fishing and supporting the livelihoods of small-scale fishers.

Despite these advances, the future of the agreement depends entirely on negotiations over Fish 2, which has broader aims to address subsidies contributing to overcapacity and overfishing. The FSA includes a sunset clause, meaning if WTO members fail to conclude Fish 2 negotiations by 15 September 2029, the entire agreement could terminate.

India and Indonesia argue that stronger subsidy disciplines could infringe upon national sovereignty and disadvantage developing fishing industries and small-scale fishers. Such claims are rejected by the overwhelmingly majority of WTO members and directly contradicted by Article 11 of the FSA, which preserves the jurisdictions, rights and obligations of members under international law, including the United Nations Convention on the Law of the Sea. The United States initially supported the agreement, but under President Donald Trump has adopted a more cautious stance.

For Pacific Island countries, concluding Fish 2 is critical. Australia and New Zealand need to throw their full support behind the “Blue Pacific” agenda. The three remaining Pacific Islands WTO members yet to ratify the FSA – Papua New Guinea, Vanuatu and Solomon Islands – should do so as soon as possible to amplify the Pacific’s voice in Fish 2 negotiations. Non-WTO Pacific Island countries can voice support through regional organizations.

Diplomatic pressure should be maintained on the United States, which says it is still committed to supporting a meaningful outcome. China, and other major users of fisheries subsidies, have to date been supportive of the FSA and Fish 2, and the United States should likewise offer its support to rebuild its flagging credibility in the Pacific

The success of the FSA will strongly reinforce that global cooperation, not narrow-minded nationalism, is the best way forward for a more sustainable and equitable planet. The recently concluded 14th WTO Ministerial Conference in Cameroon saw governments pledge to restart the stalled Fish 2 negotiations and finalise the second part of the agreement by mid-2028, so there is room of cautious optimism. The Pacific, more than most, will be watching.

Jim Redden is Director, Trade and Development at Economic Development Services Ltd, and a Visiting Fellow, Adelaide University.

Professor Peter Draper is Executive Director of the Institute for International Trade at the University of Adelaide.

Jameson Henderson-Redden is an International Relations Research Assistant, Economic Development Services Ltd.

This article appears courtesy of The Lowy Interpreter and may be found in its original form here.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.