1. 1 Fisheries Subsidy in an LDC: The Case of Marine Fisheries Sector in Bangladesh CENTRE FOR POLICY DIALOGUE (CPD) B A N G L A D E S H a c i v i l s o c i e t y t h i n k – t a n k By Fahmida Khatun Mustafizur Rahman Debapriya Bhattacharya April, 2004

2. 2 I. Marine Fisheries Sector in Bangladesh II.Trade Policies for the Fisheries Sector III. Estimation of Exploitation Status of Marine Fisheries IV. Policies to Promote Sustainable Management V. Implications of the Study Findings ISSUES FOR DISCUSSION

3. 3 V. Policies to Promote Sustainable Management of the Marine Fisheries in Bangladesh I.MARINE FISHERIES IN BANGLADESH Enormous potential for marine fisheries sector in Bangladesh 710 kilometer long coastline Accounts for 20% of total fish production 5% trawl fishing, 95% artisanal fishing Annual growth of production about 4% during 1990s Export of frozen fish is a prominent economic activity Employment increased at 5% per annum during 1990s -around 1 million families directly involved

4. 4 II.TRADE POLICIESIN BANGLADESH 2.1 Bangladesh - An Active Trade Policy Reformer (a) reduction in the tariff levels (b) narrowing of dispersions in the tariffs (c) withdrawal of import bans (d) withdrawal of import quota restrictions 2.2 Effect Reduction in tariff rates Reduction in a number of commodities under quota restrictions -Real growth of the export sector -Structural shifts from traditional to non-traditional exports -Created a conducive policy environment favouring export oriented activities

5. 5 2.3 Trade Policy for the Fisheries Sector Marine fisheries sector promoted through general policy support Rise of frozen food exports is a direct outcome of trade policy Direct support for marine fisheries in the form of subsidies etc. negligible Amount of subsidy has not undergone any change over years

6. 6 III. ESTIMATION OF EXPLOITATION STATUS OF THE MARINE FISHEREIS IN BANGLADESH 3.1 Methodology Historical Review: discussion on the policy evolution, regulatory framework, the intervening factors and the consequences Statistical Analysis: quantitative techniques to examine sustainability of the sector Participatory Approach: consultation with a broad cross- section of stakeholders

7. 7 3.2 Data Base Primary Field level data from four marine fishing sites Debriefing of leaders of the trade bodies: - Bangladesh Marine Fisheries Association - Bangladesh Frozen Food Exporters Association - Chittagong Chamber of Commerce and Industries - Apex Foods(a leading private enterprise) Secondary Bangladesh Bureau of Statistics Ministry of Fisheries Department of Marine Fisheries

8. 8 Table 4: Estimation Results MSY: 642,130 tonnesActual Yield, 1998: 310,000 tonnes Effort At MSY: 101,442 horsepowerActual Effort, 1998: 71,184 horsepower Total Cost at MSY: US$ 337.7 mln Total Revenue at MSY: US$ 648.8 mln Economic Rent at MSY: US$ 311 mln MSY Yield per unit of Effort: 6.32 tonnesActual Yield per unit of Effort: 4.35 tonnes MSY Rent per unit of Effort: US$ 4.27 mlnActual Rent per unit of Effort: US$ 3.9 mln

9. 9 3.3 Study Findings - Yield level has not reached MSY - Applied effort is also lower than MSY level effort - Derived total revenue at MSY is much higher than total cost General incentives package have no detrimental effect on fishing practice - Still large scope for applying more efforts in the exploitation as well as development of the sector

10. 10 IV. POLICIES TO PROMOTE SUSTAINABLE MANAGEMENT OF MARINE FISHERIES IN BANGLADESH - Assessment of the sector - Integrated approach - Emphasis on small scale fishing - Support for infrastructure development - Monitoring, control and surveillance - Smooth operation of licensing system - Regional cooperation - Capacity building

11. 11 V. IMPLICATIONS OF THE FINDINGS (a) Classical example supporting the counter-factual proposition - in the absence of market distorting subsidies or preferential fishing agreements, the country may improve its foreign revenue from exports and still maintain a sustainable stock (b) Impact of the Study - Poverty Reduction Strategy (PRSP): Importance on natural resource - Fisheries Sector Review 2003: A no. of policies suggested - New Fisheries Project: 9 new projects with emphasis on Community based, livelihoods aspects, environmental dimensions - Awareness of the stakeholders including the associations

12. 12 (c) Follow- Up by CPD - Study on Fish Trade Liberalisation - Suggestion in the advisory committee of the WTO cell at the Ministry of Commerce, GOB - Member of the advisory committee at the Ministry of Agriculture - Consultation with the stakeholders