Financing and Marketing Management

Unit 19 - Trade liberalization and fisheries markets

19.1. Trade liberalization and fisheries markets
Developing countries hold approximately 50 percent of the global export value of fish and represent 18 percent of the global import value. They therefore have an impressive trade surplus in fish commodities, which is particularly notable when compared with traditional agricultural exports that have shown little growth. Continued access to foreign markets is a major factor for developing countries seeking to increase and maintain their high performance in fish trade. In recent decades, the removal or reduction of many traditional trade barriers such as tariffs and quantitative restrictions through the General Agreement on Tariffs and Trade (GATT), and more recently the World Trade Organization (WTO), has played a significant role in increasing fish trade.
The modernisation of Indian seafood industry began in 1950s and is inextricably linked to the growth of shrimp export trade. In turn, shrimp export trade is closely related to trade liberalisation from the beginning. Shrimp continues to dominate the fisheries sector in general and the seafood export sector in particular. Subsidies and other assistance played a crucial catalytic role in the development of the export sector, although the quantum of assistance declined subsequently as private sector took over the activities. Promoting the sea as an open access resource has been an important subsidy in the modernisation period and other direct subsidies encouraged entry of outsiders and private capital into the sector in a big way.
Exports have come to account for a quarter of the contribution of fisheries to the GDP. Culture shrimp contributes four-fifths of the total shrimp exports, which is mainly because of the decline in marine catches than from increased production from culture sources. Japan, the EU and the US import a major proportion of India’s exports, and the main export species is shrimp. This focus on a few developed countries on the one hand and on shrimp on the other has implications on the profitability and sustainability of the export trade. There is a growing trade in finfish exports to developing countries, characterised by large quantities and small margins. The emphasis on production is not supplemented by developing adequate infrastructure facilities to support them; the availability and quality of infrastructure remains insufficient.
The growth of shrimp trade brought a number of new intermediaries into the market chain along with a complex range of trade relationships. It also necessitated entry of private capital and informal credit into the fisheries sector in a big way and led to over capitalisation of fishing activities in due course. There is little information on the role of different stakeholders – particularly the poor in the ancillary category – in the export sector. Consequently, the impact of any changes on the life and livelihoods of the poor is often overlooked at the policy and implementation levels. Since 1990s, three issues dominated Indian export scene: decline in overall catches, particularly shrimp; fluctuations in international markets depressing prices and profitability; and overcapitalization of the production and marketing activities increasing risk.
India embarked upon a massive programme of liberalisation since 1990s and this has a far-reaching impact upon the economy and on the quality of life in general. In spite of the strong emphasis on information and knowledge as fundamental features of the reform process, major knowledge gaps exist at the grassroots level on the process and the potential impacts of trade liberalisation. Liberalisation of Indian economy coincided with the establishment of the WTO, and the structural adjustment policies had to contend with domestic fiscal reform and also make sure that the processes are in line with the global trade agreements. The policy responses thus have been two-fold: at the domestic level, the focus is on fiscal discipline while at the international level, it is on arguing for exemptions for special conditions that prevail in developing countries like India.