Aishwarya Vardhan, LL.M. Candidate, World Trade Institute
The WTO Agreement on Fisheries Subsidies (“AFS”) has been widely seen as a historic achievement, and rightfully so. It is the first WTO agreement to place environmental sustainability at the centre of its framework, targeting government subsidies that help fishing fleets catch fish faster than stocks can recover. It also reflects more than two decades of negotiations that repeatedly faltered as countries struggled to reconcile environmental and developmental priorities.
Yet the Agreement’s entry into force in September 2025, following its adoption at the 12th Ministerial Conference in 2022, does not put an end to the debate on fisheries subsidies. In many respects, it marks the beginning of a more difficult conversation.
The rules now in force, known as “Fish 1”, prohibit subsidies linked to illegal, unreported and unregulated fishing, overfished stocks and certain fishing on the unregulated high seas. The more contentious issues of overcapacity and overfishing, which lie at the heart of the fisheries crisis, remain unresolved and continue to be negotiated under the proposed Fish 2 disciplines.
This is where the real difficulty lies. There is broad agreement that harmful fisheries subsidies should go. The disagreement is over who should bear the cost of cutting them, given the vast differences in countries’ fishing capacities, development needs and historical contribution to the problem. The current answer, a short and uniform transition period for all developing countries, satisfies neither side. If Fish 2 is to succeed, the flexibilities will need to reflect what countries can realistically implement and what their subsidies actually do: expand industrial fleets, or sustain small-scale fishers?
Balancing Sustainability and Costs
According to the Food and Agriculture Organization, more than 35% of assessed marine fish stocks are being exploited beyond biologically sustainable levels. Fisheries subsidies are widely recognized as one of the drivers.
However, while the environmental crisis is shared, the historical contribution to that crisis has not been equal. For decades, several economies have provided significant support to large-scale industrial fishing fleets. For instance, China is the single largest provider of global fisheries subsidies at 21%, followed collectively by European Union Member States (11%), the United States (10%) and the Republic of Korea (9%). Together, these actors account for a substantial portion of all global subsidy outlay. As a result, a relatively small number of major subsidising nations account for a disproportionately large share of global fisheries subsidies.
This reality has shaped the position of certain developing countries and least-developed countries (“LDCs”) during ratification discussions and the ongoing Fish 2 negotiations. They are not arguing in favour of harmful subsidies, but that the burden of complying with subsidy disciplines should take into account the unequal circumstances.
The Developing Country Implementation Gap
Much of the discourse surrounding the AFS focuses on the legal obligations it imposes. Less attention has been paid to whether developing countries have the capacity to comply with those obligations, giving rise to what may be described as a developing country implementation gap.
The AFS relies on a robust notification and transparency framework. Members are expected to notify their fisheries subsidies, provide information on the state of fish stocks and their fleets, and take part in a WTO committee that monitors compliance.
For many developed countries, these requirements build upon institutional systems that already exist. For many developing countries, they do not.
Many coastal developing countries and LDCs continue to face significant constraints in stock assessment, vessel monitoring and data collection. Even where political commitment exists, administrative capacity may not.
The challenge is therefore one of capability, not merely willingness. The success of the Agreement depends not only on the strength of its legal disciplines but also on its ability to accommodate different levels of regulatory capacity among Members.
Are the current flexibilities enough?
To accommodate these disparities, the AFS incorporates Special and Differential treatment (S&DT) – the WTO term for flexibilities granted to developing countries and LDCs. This includes a transitional period ending in September 2027, during which certain domestic subsidies granted by developing members within their own waters are shielded from WTO dispute challenges. Beyond this flexibility, AFS also has provisions for technical assistance and capacity building support, through the WTO’s Fish Fund.
These provisions offer some accommodation, but there is a growing debate about whether they are sufficient.
A temporary transition period may postpone compliance obligations, but it does not create the institutional capacity needed to fulfil them. This is where much of the dissatisfaction among developing countries originates.
Moreover, the problem with the current S&DT architecture is not only how much flexibility it provides, but how that flexibility is distributed. The same flexibilities apply to all developing country Members despite their very different levels of development and fishing capacity (WTO Members decide for themselves whether they are “developing”). While many developing countries argue that the current flexibilities are inadequate, several developed countries contend that the framework fails to differentiate among developing country Members themselves, treating small island states and major fishing powers alike.
This matters most for the Fish 2 negotiations, which target the subsidies at the core of the fisheries crisis. For Fish 2 to command broad acceptance, S&DT may need to evolve from a brief transition period into a mechanism calibrated to countries’ regulatory capacities and to the livelihoods that depend on fishing.
The ratification debate and the missing stakeholder
Despite the AFS entering into force, several Members, including Indonesia, Mexico and Morocco, have not yet ratified it. With 123 Members having already accepted the Agreement, some see these holdouts as undermining a rare multilateral success at a time when the WTO can ill afford setbacks.
India, which ratified the Agreement in July 2026 as the 123rd Member, illustrates the tension. It has consistently advocated for a 25-year transition period for developing countries and has questioned approaches that focus solely on aggregate subsidy spending, arguing instead for measures that account for subsidy intensity, i.e. the level of support received by individual fishers. Its reasoning is that fisheries subsidies in many developing countries serve a fundamentally different purpose from those provided to large industrial fleets: they function as livelihood support for coastal communities rather than a means to expand industrial fishing capacity.
Indonesia, which has not ratified the Agreement yet, has raised concerns that certain subsidy disciplines may encroach upon State sovereignty. It argues that the rules should not indirectly allow other Members to review its fisheries management decisions within its Exclusive Economic Zone – the waters up to 200 nautical miles offshore where international law gives coastal States authority to manage resources.
Lost in these debates are small-scale and artisanal fishers, who are often absent from broader discussions of fisheries subsidies. Across many developing economies, these communities play a critical role in food security, employment and coastal livelihoods. For them, subsidy reform is primarily an issue of livelihood.
The challenge facing Fish 2, therefore, is not simply to discipline harmful subsidies but to do so in a way that is both environmentally effective and socially fair.
Conclusion
There is no doubt that the AFS is an extraordinary achievement. At a time when confidence in multilateral institutions is increasingly fragile, this Agreement demonstrates that there remains interest in collective action.
However, Fish 2 will test whether that interest can survive the harder question of who bears the cost. Developed countries are right in emphasising that oceans cannot wait indefinitely, and developing countries are equally justified in demanding that the burden of adjustment reflects historical responsibility and current capacity. The way forward is unlikely to be a longer one-size-fits-all transition period. It is more likely to lie in flexibility that reflects what countries can realistically implement and whether their subsidies build industrial fleets or sustain small-scale fishers.
Environmental sustainability may have brought Members to the table; reaching consensus on who should bear how much of the cost may determine whether they stay.