International Law and Trade Agreements: Building a Sustainable Environment in the Hong Kong SAR
By Berry F.C. Hsu
INTRODUCTION
The rapid decline in world fishery stocks is an international concern. Fish is a vital source of food to the world community, and many people depend on fishing for their livelihoods. Many factors contribute to the demise of fishery stocks as open-access resources. Among these factors are environmentally harmful fishery subsidies and inadequate fishery management. Fishery subsidies have contributed to the over-expansion of fishing fleets, and, as a result of this expansion, fishery stocks are rapidly shrinking. Some of these subsidies, which violate international trade agreements, have created excessive harvesting and promoted unsustainable fishing practices. In the long term, fishery resources should be replenished to increase productivity and to maximize revenue. Although the fishery sector is not substantial from a global economy perspective, it nevertheless has a major impact on numerous coastal nation-states, and fishery products are a major component in world trade. The World Trade Organization (the “WTO”) Secretariat has asserted that widespread fishery subsidies distort trade and undermine the sustainable use of fishery resources.
Subsidies play a crucial role in achieving the national objectives of developing economies, and they provide a soft landing for market reforms in centrally planned economies. Any use of public revenue to finance the cost of a specific product, aimed at creating a lower price for the product, is in effect a subsidy. From an economic perspective, subsidies may be value-neutral. Unless a subsidy results in adverse trade effects, it will neither jeopardize the international trade balance nor create trade barriers. In fact, a subsidy may benefit an importing State by lowering the price for imports (e.g., a drug subsidy). Whether a subsidy is good or bad depends on the context in which it is implemented. Fishery subsidies may encourage sustainable fisheries and promote environmentally friendly fishing techniques. Such subsidies may reshape and revitalize the fishery sector and the coastal communities that rely on that activity, rather than enhancing the depletion of fishery resources and creating supply distortion.10 Ideally, such fishery subsidies would also be coupled with sound fishery management (i.e., sustainable management of fishery stocks).
International trade laws may help to reduce further decline in worldwide fishery stocks. Fishery subsidies supported by public funds may violate existing trade laws. However, fishery subsidies are so widespread that any action taken against such practices would have to overcome major hurdles. For example, the Agreement on Agriculture (the “AA”) of the WTO does not cover fishery products. Fishery subsidies, fishery stocks, and the environment impact of these events are global issues. Therefore, the international community must address them. During the latest rounds of discussions at the WTO Committee on Trade and Environment (the “CTE”), the environmental benefits of trade liberalization in the fishery sector were seriously considered. Moreover, the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”) of the WTO has general application, thus making it the only international trade agreement applicable to fishery subsidies. The underlying rationale behind this agreement is that, although no tariff may be imposed, subsidies can be an indirect barrier to trade.
The environmental impact of over-fishing arising from such subsidies is difficult to measure. Removing trade barriers and distortions may result in environmental benefits. Studies have shown that declining fishery stocks and poor government policy are related phenomena. With this in mind, this paper will discuss the application of international trade laws in eliminating trade-distorting subsidies for the purpose of conserving fishery resources, and for the purpose of creating a sustainable environment in the Hong Kong Special Administrative Region (the “HKSAR”). Though the applicable international trade law has been used primarily to eliminate trade distortions, it may also be utilized to establish a sustainable environment. Conversely, international trade law may also sponsor certain subsidies to achieve sustainable development. For example, one solution to alleviate over-fishing is to promote aquaculture, which may require government assistance. Other issues addressed in this paper include government-controlled marketing in the HKSAR and its monopolistic effects; the technical and financial assistance offered to fishermen as a fishery subsidy; the regulatory framework of aquaculture; and the implementation of an artificial reefs program as a means to conserve fishery resources and protect the environment.
Although the HKSAR is said to practice laissez-faire economics, it nevertheless provides fishery subsidies in many forms, including fish marketing and aquaculture subsidies. No study to date has addressed the HKSAR fishery subsidies from an environmental and international law perspective. As Hong Kong is now a special administrative region of the People's Republic of China (“China”), it must honor the international pacts made between China and other members of the international community. This paper first addresses the legitimacy of fishery subsidies under the WTO Agreement, and then sets out to discuss the pros and cons of fishery subsidies and the practicality of enforcing this international agreement. The rest of the paper will address fishery subsidies in the HKSAR context.
The rapid decline in world fishery stocks is an international concern. Fish is a vital source of food to the world community, and many people depend on fishing for their livelihoods. Many factors contribute to the demise of fishery stocks as open-access resources. Among these factors are environmentally harmful fishery subsidies and inadequate fishery management. Fishery subsidies have contributed to the over-expansion of fishing fleets, and, as a result of this expansion, fishery stocks are rapidly shrinking. Some of these subsidies, which violate international trade agreements, have created excessive harvesting and promoted unsustainable fishing practices. In the long term, fishery resources should be replenished to increase productivity and to maximize revenue. Although the fishery sector is not substantial from a global economy perspective, it nevertheless has a major impact on numerous coastal nation-states, and fishery products are a major component in world trade. The World Trade Organization (the “WTO”) Secretariat has asserted that widespread fishery subsidies distort trade and undermine the sustainable use of fishery resources.
Subsidies play a crucial role in achieving the national objectives of developing economies, and they provide a soft landing for market reforms in centrally planned economies. Any use of public revenue to finance the cost of a specific product, aimed at creating a lower price for the product, is in effect a subsidy. From an economic perspective, subsidies may be value-neutral. Unless a subsidy results in adverse trade effects, it will neither jeopardize the international trade balance nor create trade barriers. In fact, a subsidy may benefit an importing State by lowering the price for imports (e.g., a drug subsidy). Whether a subsidy is good or bad depends on the context in which it is implemented. Fishery subsidies may encourage sustainable fisheries and promote environmentally friendly fishing techniques. Such subsidies may reshape and revitalize the fishery sector and the coastal communities that rely on that activity, rather than enhancing the depletion of fishery resources and creating supply distortion.10 Ideally, such fishery subsidies would also be coupled with sound fishery management (i.e., sustainable management of fishery stocks).
International trade laws may help to reduce further decline in worldwide fishery stocks. Fishery subsidies supported by public funds may violate existing trade laws. However, fishery subsidies are so widespread that any action taken against such practices would have to overcome major hurdles. For example, the Agreement on Agriculture (the “AA”) of the WTO does not cover fishery products. Fishery subsidies, fishery stocks, and the environment impact of these events are global issues. Therefore, the international community must address them. During the latest rounds of discussions at the WTO Committee on Trade and Environment (the “CTE”), the environmental benefits of trade liberalization in the fishery sector were seriously considered. Moreover, the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”) of the WTO has general application, thus making it the only international trade agreement applicable to fishery subsidies. The underlying rationale behind this agreement is that, although no tariff may be imposed, subsidies can be an indirect barrier to trade.
The environmental impact of over-fishing arising from such subsidies is difficult to measure. Removing trade barriers and distortions may result in environmental benefits. Studies have shown that declining fishery stocks and poor government policy are related phenomena. With this in mind, this paper will discuss the application of international trade laws in eliminating trade-distorting subsidies for the purpose of conserving fishery resources, and for the purpose of creating a sustainable environment in the Hong Kong Special Administrative Region (the “HKSAR”). Though the applicable international trade law has been used primarily to eliminate trade distortions, it may also be utilized to establish a sustainable environment. Conversely, international trade law may also sponsor certain subsidies to achieve sustainable development. For example, one solution to alleviate over-fishing is to promote aquaculture, which may require government assistance. Other issues addressed in this paper include government-controlled marketing in the HKSAR and its monopolistic effects; the technical and financial assistance offered to fishermen as a fishery subsidy; the regulatory framework of aquaculture; and the implementation of an artificial reefs program as a means to conserve fishery resources and protect the environment.
Although the HKSAR is said to practice laissez-faire economics, it nevertheless provides fishery subsidies in many forms, including fish marketing and aquaculture subsidies. No study to date has addressed the HKSAR fishery subsidies from an environmental and international law perspective. As Hong Kong is now a special administrative region of the People's Republic of China (“China”), it must honor the international pacts made between China and other members of the international community. This paper first addresses the legitimacy of fishery subsidies under the WTO Agreement, and then sets out to discuss the pros and cons of fishery subsidies and the practicality of enforcing this international agreement. The rest of the paper will address fishery subsidies in the HKSAR context.