Reform of Taiwan’s fisheries subsidies: Technical rate of substitution and its implication

Abstract

Fisheries subsidies have been broadly applied in many countries to support the fishermen. The generous fisheries subsidy is, however, one of the leading reasons which aggravate the exhaustive fishing problem. Various Fisheries subsidies are subject to removal or cancellation in the future. Moving along this trend, Taiwan's fishery sector needs to prepare because there is an urgent demand to reform the current fishery support policy to meet the international standard. Our study suggests that non-actionable subsidies such as fisheries R&D, subsides to fisheries management services, and direct payments have significant impacts on the production of Taiwan's coastal and offshore sector. Along the way, the shift from fuel subsidies to non-actionable subsidies will be more likely to meet the WTO regulations. Meanwhile, to abate the adverse impact caused by the fuel subsidies reduction, the first step is to evaluate the intensity of any possible adverse impact via TRS calculation. The TRS between the fuel subsidies and direct payments is -1.142, the smallest one among the other non-actionable subsidies. The policy transforms from fuel subsidies to direct payments will impose less financial burden to the government. Moreover, the direct payment can be more flexible and multifunctional. Payments to eco-labeling, HACCP identification, fishery resource conservation or reallocation of aged producers are good examples and can be implemented to facilitate structural adjustment in the fishery industry. So, direct payment is the best candidate to the contentious fuel subsidies in Taiwan future fishery policy.