Cut the bait and fish

The Doha Development Trade Round hangs in the balance, but most now accept the developmental aspects of what an agricultural deal could do for the poorest countries and save consumers and tax-payers in rich countries.

This deal would return up to 5 times more to Africa than all the "aid" and loan write-offs put together. Rich countries subsidise agriculture to the tune of a billion dollars a day. The smallest 60 per cent of European farmers receive only 10 per cent of Europe's subsidies. Fixing this would mean an effective pay increase of $30 per week for European families. At the moment, in the US the richest 1 per cent of farmers get 72 per cent of the government pay-outs. US cotton subsidies cost nearly $4 billion - $156,000 per US farmer - three times more went to US cotton growers than all the US aid to sub-Saharan Africa in 2001.

The story of sugar is as bad and coffee even worse. This appalling story is true too of protectionist policies in the Nordic countries, Switzerland, Japan and South Korea.

One trade issue, where at last environmentalists get it and are supporting the Doha Development Round, is fishing subsidies. A total of 2.6 billion people get at least 20 per cent of their total animal protein from fish, 1 billion people depend on fish as their primary source of protein. The UN Food and Agriculture Organisation claims that 75 per cent of the world's fish population is either over-exploited, fully exploited, significantly depleted, or recovering from an over-exploitation. The global fishing fleet capacity is now 250 per cent greater than what is needed to catch what the world's oceans can sustainably produce.

Fishing subsidies encourage inefficient, energy-costly and over-catching. The University of British Columbia suggests that annual fishing subsidies cost about $30 to $34 billion annually, and supports fishing fleets sucking up species in places that would not be profitable without such subsidies. This accounts for $10 to $15 billion of the subsidies, an amount equal to 20-25 per cent of the global trade in fish. That means that subsidies account for about 25 per cent of worldwide fishing revenue. The biggest subsidies by Japan $5.3 billion, EU $3.3 billion and China $3.1 billion.

Battle

Other than the fish, who are the biggest losers? Poor countries. Subsidies are always a battle between which country has the biggest treasury. With all this money slopping about, a terrible moral hazard exists where governments are offered millions of easy dollars for their fishing rights, so long as they don't ask questions, and to a bank of their choosing.

I discovered this, to my personal cost, when I put together a project in an African country where we would train people, have locals on the boats, fish sustainably, create a ministry of fisheries to oversee it all and in a few years turn it all over to the locals.

This was deep-water fishing which the locals didn't do at that moment. We had satellite pictures, water temperatures and knew it would work. Then came the question of paying off key people, millions of dollars. So much easier not to do a joint venture, not to train people, monitor fishing levels, just put the money into an overseas account. Easier still if rich governments paid the money via subsidies for projects elsewhere that can be recycled, then it's not a direct bribe by a government.

An example of this evil is poor Mauritania where local fishermen are put out of business by the trading of fishing rights to the highest bidders. Subsidised fishing fleets never have an incentive to fish sustainably, in fact their incentives are to do the opposite.

Local fisherman have to compete with ships from Russia, Spain and China, who have their fuel bills paid by their governments, 340 foreign vessels are licensed to fish in Mauritania's sovereign waters. This is a classic case of government subsidy being used ruthlessly to out-compete family fishermen and corrupting governments with easy money, much of which doesn't even get to the countries' treasuries that sell their fishing rights. Poor countries everywhere are vulnerable. No wonder it's hard to complete the Doha Development Round, it was hard, impossible, I was told, to even launch the round. This can still be done.

As a great US trade negotiator said when an earlier round was in trouble, it's time to cut the bait and fish, or as president Lyndon Johnson said even more graphically, "It's time to - it or get off the pot."

Mike Moore is a former prime minister of New Zealand and a former director-general of the World Trade Organisation.