Water Wars Special: How IUU Fishing Increases the Risk of Conflict

This month, the Biden administration made some early pronouncements on Chinese activity in the Taiwan Strait and reassured Japan that the U.S. is committed to its security. Japan signaled a more aggressive stance in the South China Sea, while China continued to test and grow its maritime capabilities.

Tensions in the Taiwan Strait

The U.S. Navy finished 2020 with a New Year’s Eve transit through the Taiwan Strait, the 13th such transit taken in 2020. This transit occurred as the Chinese People’s Liberation Army Navy aircraft carrier Shandong conducted naval exercises around Hainan Island, which is the smallest and southernmost province in China. Shandong and its accompanying ships had sailed through the Taiwan Strait just days earlier on their way to the 10-day exercises near Hainan.

But Shandong was not the only mainland-Chinese military presence in the Taiwan Strait. On Jan. 23, eight People’s Liberation Army Air Force (PLAAF) H-6K bombers and four J-16 fighter jets violated the Taiwanese Air Defense Identification Zone. Beijing has in recent months sent near-daily reconnaissance flights over southern Taiwan and the Taiwan-controlled (and Beijing-claimed) Pratas Islands (Mandarin: Dōngshā Qúndǎo), but the combination of mainland bombers and fighters represents a new escalation in pressure from Beijing. The U.S. State Department responded to Beijing’s incursion, noting that the U.S. “commitment to Taiwan is rock-solid” and urging China to cease its “attempts to intimidate its neighbors.” Notably, the de-facto Taiwanese ambassador to the United States was invited to attend the Biden-Harris presidential inauguration—the first time Taiwan was invited by the inauguration organizing committee since 1979. And on the same day as the PLAAF trespass, the U.S. Navy Theodore Roosevelt Carrier Strike Group entered the South China Sea “to ensure freedom of the seas, build partnerships that foster maritime security, and conduct a wide range of operations.”

A few days later, on Jan. 25, the Chinese state-run newspaper Global Times published an editorial that denounced the State Department’s press release and drew equivalences between the PLAAF’s violations of Taiwan’s airspace and the U.S. carrier strike group’s operations in the South China Sea. The editorial further warned that if the Biden administration continues what it called “Mike Pompeo’s extreme operations [against China], the situation across the Taiwan Straits is doomed to deteriorate.” Still, the piece ended on a more diplomatic note: “The Biden administration has a very professional diplomatic team. Hopefully they can clarify the boundaries and importance of the US interests on the Taiwan question, and restore Washington’s strategic sobriety.”

Japan Looks for Reassurance

In one of its first diplomatic moves in Asia, the Biden administration confirmed that the mutual defense provisions in the Japan-U.S. Treaty of Mutual Cooperation and Security apply to the Senkaku Islands (Mandarin: Diàoyú Dǎo) in the East China Sea. The application of the treaty to these Japanese-administered islands was first affirmed by President Obama in 2014 and reaffirmed in 2017 by President Trump. National Security Adviser Jake Sullivan expressed the United States’s opposition to any unilateral change in the status of the Senkakus, and both he and his Japanese counterpart, Shigeru Kitamura, agreed to work toward a “free and open Indo-Pacific” in concert with mechanisms like the “Quad,” which includes Australia and India. In addition to reconfirming its U.S. commitments, Japan and the United Kingdom have scheduled a February video conference between their respective foreign and defense ministers to discuss ways to increase security operations between the two island nations. This “two-plus-two” meeting is likely to include a discussion of the United Kingdom’s plan to send its Queen Elizabeth Carrier Strike Group to the Pacific for joint U.K.-Japanese and U.K.-U.S.-Japanese naval exercises. Additionally, Germany is considering sending a frigate to Japan this summer—another sign of strengthening naval ties between Japan and European nations.

Japan also added its voice to the chorus of nations rejecting China’s territorial claims in the South China Sea. On Jan. 21, the Japanese Mission to the United Nations presented the U.N. secretary-general a note verbale arguing that China’s claims violate the U.N. Convention on the Law of the Sea. Japan criticized China for continuing to reject the ruling in Philippines v. China, the 2016 South China Sea Arbitration. Some analysts think that Japan sent this unusually aggressive communique to increase pressure on China in its East China Sea negotiations with Japan. With this note verbale, Japan joins a collection of nations—Australia, France, Germany, Indonesia, the Philippines, Vietnam, the United Kingdom and the United States—in pressuring China to accept the 2016 ruling. Importantly, however, Japan’s note verbale was less comprehensive than those of the United States and its allies: Japan focused only on China’s obstruction of freedom of navigation and overflight around ocean features that “do not have territorial sea and airspace of their own,” rather than rejecting outright Beijing’s claims to historic sovereignty over South China Sea islands.

China Flexes Its Maritime Muscles

The last month also provided a small window into China’s underwater drone operations. Late in December 2020, Indonesian fisherman discovered an underwater drone near Selayar Island in the Flores Sea. The drone that the fisherman recovered resembled a Chinese Sea Wing underwater glider, which can be used to gather ocean data essential to planning submarine operations. Then, during the week of Jan. 11, the Indonesian Coast Guard intercepted the Chinese survey ship Xiang Yang Hong 3 “running dark” near the Sunda Strait, meaning that the ship was not broadcasting its position over the automated information system as required. This interception, combined with the discovery of the underwater drone, suggests that China is serious about gathering intelligence in Indonesian waters, probably to have a better understanding of the underwater environment within the Sunda, Lombok and Malacca straits—the three gateways between the South China Sea and Indian Ocean.

On Jan. 22, China passed its new Coast Guard Law, which authorizes its Coast Guard to “take all necessary measures, including the use of weapons, when national sovereignty, sovereign rights, and jurisdiction are being illegally infringed upon by foreign organizations or individuals at sea.” This law also allows the Chinese Coast Guard—which is often used by the Chinese government to keep maritime confrontations below a military threshold—to destroy other countries’ structures located on Chinese-claimed islands and to create exclusion zones around those islands to temporarily prevent other vessels from entering. This new law is likely to continue to raise tensions and provoke further clashes between China and other South China Sea claimants.

Water Wars Special: IUU Fishing and the Potential for Conflict

Illegal, unreported and unregistered (IUU) fishing, a global issue that many experts attribute to large state subsidies for fisheries, is more than simply an environmental or economic concern. Such activity heightens the risk of conflict at sea.

Most notably, China’s expanding fishing fleet—called the distant-water fishing (DWF) fleet—has precipitated tensions around the world. In 2016, an Argentine naval vessel sank a Chinese fishing boat illegally trawling in its waters, and the Argentine Coast Guard seized another Chinese-flagged vessel in May 2020. The vessel had turned off its identification system, illegally entered the Argentine exclusive economic zone (EEZ) at night, and carried 300 tons of fish in its hold. Similar incidents have occurred in the East China Sea. A South Korean attempt to interdict Chinese IUU fishing turned deadly in 2016, and Seoul recently announced enhanced efforts to seize Chinese fishing vessels illegally operating within its EEZ.

On Jan. 18, the World Trade Organization (WTO) reconvened negotiations for an agreement on fishing subsidies. Such a deal could stabilize global fish stocks, reduce IUU fishing and mitigate a potential source of maritime conflict. But an agreement is unlikely to come easily— geopolitical tensions and conflicting interests among major fishing powers have complicated subsidies negotiations since the 2001 Doha Round.

Four years ago, the WTO set 2020 as the deadline for an agreement to eliminate subsidies that promote overcapacity and IUU fishing. Although negotiators failed to meet the 2020 target, WTO leadership remains optimistic that efforts will prove successful in 2021. However, in a brief for the International Institute for Sustainable Development, Alice Tipping and Tristan Irschlinger outlined several issues that may impede success. The application of “special and differential treatment” for China remains one contentious question, and its resolution implicates maritime security in the South China Sea and beyond.

Fishing Subsidies, Overcapacity and IUU Fishing

According to the Organization for Economic Cooperation and Development (OECD), the U.N Conference on Trade and Development, and myriad studies, fisheries subsidies incentivize IUU fishing, create excess capacity and encourage overfishing. Thus, government efforts to support the domestic fishing industry often come at a global cost.

Capital-enhancing subsidies are considered the most harmful. For instance, deep-sea bottom trawling is notorious for the harm it causes to fish stocks and the environment. Bottom trawling is fuel intensive, and research indicates that 64 percent of trawling operations would prove unprofitable without fuel subsidies. Nevertheless, such inefficient methods proliferate due to government support and fuel subsidies. Indeed, trawlers constitute the most common vessel in China’s DWF fleet, and reports indicate that China National Fisheries Corp. maintained a profit in 2019 only through a generous government subsidy.

Of course, China is not alone when it comes to fisheries subsidies. Economists estimate that global fisheries subsidies exceeded $35 billion in 2018, and Japan, Spain, Taiwan, South Korea and the United States together are responsible for 56 percent of such expenditures. But China’s position is unique. Beijing operates the world’s largest fishing fleet; its catch constitutes 40 percent of global fishing efforts; and its harmful, capital-enhancing subsidies far surpass those of other nations.

Moreover, as Blake Herzinger discussed recently in Foreign Policy, Chinese-flagged fishing vessels often flout international norms and ignore local regulations. In fact, the IUU Fishing Index has found China responsible for more IUU fishing than any other state. For instance, a Greenpeace investigation revealed that China National Fisheries Corp. “grossly falsified” the tonnage of fishing vessels when requesting access to West African EEZs. The report also observed that 80 percent of Chinese-flagged fishing vessels would turn off their automated identification systems (AISs) while fishing in the Gulf of Guinea.

In 2019, the Center for Strategic and International Studies (CSIS) published a similar study that examined fishing practices in the South China Sea. Leveraging AIS data and open-source imagery, CSIS uncovered extensive unregistered fishing near contested reefs in the Spratlys and found that only 3 percent of fishing vessels broadcast their positions using their AISs. And while Beijing recently implemented new regulations designed to improve transparency and promote sustainable fishing practices, a September 2020 report by advocacy group Oceana suggests that such laws “were merely rhetoric.” Oceana used publicly available AIS data to monitor 297 Chinese DWF vessels that operated near the Galapagos in summer 2020 and found that the vessels likely disabled their AISs to avoid detection while illegally fishing in the Ecuadorian EEZ. The conclusion? China’s IUU practices remain unchanged, despite the new regulations.

Unsustainable Fishing and the Potential for Conflict in the South China Sea

The Food and Agriculture Organization of the United Nations has classified one-third of the world’s marine fisheries as overfished. The impact of unsustainable fishing is especially acute in the South China Sea, where coastal fisheries have lost 70 to 95 percent of their stocks since the mid-20th century and catch rates have declined by 70 percent throughout the past two decades. Furthermore, the sea’s coral reefs, which nurture critical feeding grounds for fish stocks, decline by 16 percent every 10 years. As traditional fishing grounds prove less fruitful, fishermen venture farther from shore and operate in contested areas. Indeed, when China faced dwindling coastal stocks in the 1990s, Beijing embarked on a massive shipbuilding effort; and President Xi Jinping continues to exhort Chinese fishermen to “build bigger ships and venture even farther into the oceans and catch bigger fish.” Such efforts incentivize IUU activity, heighten competition for increasingly scarce resources and feed an escalating cycle that accelerates stock depletion.

In the South China Sea, with its kaleidoscope of disputed claims, China’s excess capacity and IUU fishing practices exacerbate a particularly volatile environment. Depleted fishing stocks force fishermen to operate further from shore and increase the chance of violent encounters. Filipino authorities have intercepted Chinese boats illegally fishing off Palawan, and Philippine President Rodrigo Duterte claimed that Chinese fishermen intentionally rammed a Filipino fishing boat and left its crew stranded in the sea in 2019. Three years earlier, the Chinese Coast Guard rammed an Indonesian patrol boat attempting to interdict Chinese fishermen. As the Vietnamese government actively encourages fishermen to contest China’s expansive maritime claims, the Chinese Coast Guard expelled nearly 1,200 fishing boats from the northern half of the South China Sea last summer. During one such encounter, a Chinese Coast Guard vessel repeatedly rammed a Vietnamese fishing boat and sent its 17-person crew overboard. It’s true that fishing subsidies did not create the region’s historic animosities. But the activities these subsidies support add fuel to an already smoldering fire.

Current Status of WTO Negotiations on New Fishing Disciplines

Dwindling stocks of fish, unsustainable practices and IUU fishing constitute a global crisis and increase the risk of maritime conflict. But this risk can be mitigated through international cooperation: A World Trade Organization (WTO) agreement on fishing subsidies would address a fundamental cause of these fishing-related problems and create a binding legal framework through which members could seek relief.

In November 2020, the chair of the WTO Negotiating Group disseminated a revised draft agreement among member states. Although the document was not made public, reports indicate that myriad issues remain unresolved. Chief among these issues is the issue of “special and differential treatment” (SDT). Since its inception, WTO agreements have employed SDT to protect the economies of developing and least developed countries through delayed obligations, preferential tariff schemes and various other exceptions. In 2005, the WTO declared that any agreement on fishing disciplines must “take into account the importance of this sector to development priorities, poverty reduction, and livelihood and food security concerns,” and U.N. Sustainable Development Goal 14.6 explicitly calls for an agreement that incorporates “appropriate and effective” SDT. No one disputes that less-developed countries should benefit from SDT; however, which “developing” states should qualify for “appropriate and effective” SDT remains contentious. At present, the WTO provides no clear definition, and members can self-identify as “developing.”

In a May 2020 Foreign Policy article, James Bacchus and Inu Manak claimed that the “binary approach [to SDTs] no longer works” because it “blurs distinctions between developing countries,” harms the most vulnerable states, and undermines any agreement’s effectiveness. In a separate piece, Bacchus and Manak analyzed U.S. proposals to reform the system, finding that “a new evidence-based, case-by-case approach to SDT could ensure both that the concerns of the poorest countries are addressed and that advanced developing countries carry their weight.” They note that the OECD, the World Bank and the U.N. Development Program all use measures such as gross national income per capita to measure developing status. Such a system would still protect the most vulnerable states but would prove more effective than the current system by providing a more objective metric than self-identification.

Ultimately, states are seeking that which suits their best interests: China continues to advocate for the broad use of SDTs, while India seeks to maintain massive carve-outs for itself but exclude any state (like China) that meets certain production thresholds. Wealthier member states fear that India’s proposal remains too far-reaching and would render the agreement meaningless. The U.S. and Australia wish to limit the application of SDTs allowed to China and have proposed a tier-based system based on a member’s share of global fish capture or global fish exports. Such an approach might address the concerns raised by Bacchus and Manak, and reports indicate that several members have expressed a willingness to consider it. Nevertheless, the issue of SDTs will likely remain a sticking point during ongoing negotiations.

As Tipping and Irschlinger note, the application of SDT is but one of several disputes yet to be resolved. Negotiators must establish a process for assessing fish stocks, determine the authority for making IUU fishing designations and clarify the review standard for dispute resolution. However, in our view, the effectiveness of any agreement will ultimately depend on the issue of SDT, and any new fishing disciplines should apply to China from the start.

To exclude the largest provider of capital-enhancing fishing subsidies—and the port of origin for some of the most notorious IUU fishing violators—would render any agreement dead in the water.