Opportunities And Challenges For Small Island Developing States

The Oceans Economy: Opportunities and Challenges for Small Island Developing States \ 11. IntroductionThe fact that oceans and seas (as well as rivers, waterways and estuaries) matterfor sustainable development is undeniable. Two thirds of the earth’s surface iscovered by water. The oceans1 are widely accepted as the incubator of all lifeforms. They are a fundamental yet delicate part of the Earth’s biosphere andessential to sustaining life on the planet. Oceans serve a variety of purposes, allcritical to the sustenance and preservation of human life. Among other things,they provide food and minerals, generate oxygen, absorb greenhouse gases(GHG), mitigate climate change, influence weather patterns and temperaturesand serve as highways for human transport and sea-borne trade.The link between humans and the oceans has been fundamental to thedevelopment of human civilisation. Today, more than 3 billion people live inclose proximity to the coast. This number is bound to rise with populationgrowth, urban drift and increasing demand for accommodation close to oceansand seas. The high level of dependence of humans on marine assets is puttingunprecedented pressure on marine ecosystems to service the ever-increasingdemands of the growing global population. There is therefore an increasingneed for regulation on the basis of an appropriate balance between the demandfor oceans’ natural resources and their sustainability.Healthy oceans and seas are essential to a more sustainable future for all.This is particularly true in the case of Small Island Developing States (SIDS).However, oceans are facing significant existential ecological risks that cannegatively affect the social and economic prospects of all countries, particularlySIDS and coastal States that are acutely dependent on oceans. Some of theserisks are a rise in sea levels due to climate change; acidification of oceansresulting from increased emissions of carbon dioxide; over-exploitation andpoor management of marine resources, including fisheries; wastewater runoff;deposit of pollutants into waterways; and the compromise of the seabed as aconsequence of mineral resource prospecting and extraction.1For the purposes of this paper the term ‘ocean’ is used to cover the marine environmentseaward of the baseline, as defined in the 1982 United Nations Convention on the Law of theSea, to distinguish the oceans within a nation’s jurisdiction from other marine ecosystems,such as salt marsh and intertidal zones, estuaries and lagoons.

2 \ The Oceans Economy: Opportunities and Challenges for Small Island Developing StatesIn the Rio 20 outcome document, ‘The future we want’,2 UN Member States,committed to: ‘protect, and restore, the health, productivity and resilienceof oceans and marine ecosystems, to maintain their biodiversity, enablingtheir conservation and sustainable use for present and future generations’.Sustainable use of oceans is critical to poverty reduction, food security,livelihood sustainability and mitigating climate change.In developing a sustainable balance between often competing ecological andeconomic imperatives, the concept of the oceans economy (also referred to asthe blue economy) was established and has been further elaborated in the ‘BlueEconomy, Abu Dhabi Declaration’.3The Rio 20 outcome document points to several avenues for theimplementation of its programme of action, including components thatrelate to the oceans economy. Elements of the programme of action includetrade, finance, technology and capacity building. Establishing an effectivegovernance regime for the oceans economy is essential to creating andregulating a sustainable balance between the utilisation of marine resourcesand the protection of marine ecosystems. In the areas of trade governance, therules-based multilateral trading system (MTS) – embodied in the World TradeOrganization (WTO) – is mandated to create and enforce trade rules in a mannerthat supports the optimal use of the world’s resources (including marine ones).Specifically, the mandate highlights the objective of sustainable developmentand seeks to both protect and preserve the environment in a manner consistentwith the needs and concerns of countries at different levels of economicdevelopment. In this context, SIDS through relevant alliances such as the SmallEconomies proponents engaged in WTO negotiations can seek to advancethe economic and environmental imperatives bound within the context of theoceans economy.The present study seeks to contribute to a better understanding of the nascentand developing concept of the oceans economy. This will be achieved through:(1) the identification of the main trade and development opportunities andchallenges in the ocean basin and (2) an assessment of the role of the MTSand relevant United Nations (UN) rule-making bodies in the development of23United Nations General Assembly 2012, ‘The future we want’, outcome document of the UnitedNations Conference on Sustainable Development (Rio 20), A/RES/66/288, New York.Declaration adopted by the High Level Event on the Blue Economy held in January 2014 aspart of the preparations for the Third International Conference on SIDS, to be held in Samoain September 2014. See: n.pdf

The Oceans Economy: Opportunities and Challenges for Small Island Developing States \ 3an enabling regulatory environment supportive of the sustainable developmentof SIDS. In this regard, the paper will provide an overview of the currentmultilateral trade negotiations that touch on the oceans economy and providesuggestions on how the MTS can advance economic development whilesimultaneously promoting sustainable development objectives.The United Nations Conference on Trade and Development (UNCTAD) and theCommonwealth Secretariat have provided support, within their own mandates,to advance the agenda of SIDS from the inception of the international dialogueon their special treatment. In this context, both organisations have made ameasurable contribution to the Barbados Plan of Action and the MauritiusStrategy. These efforts will continue toward and beyond the Third InternationalConference on SIDS to be held in Samoa in 2014. Both at the UN level and thelevel of the Commonwealth Heads of Government Meeting (CHOGM), SIDSrelated issues have been highlighted and mandates have been produced toaddress their key concerns.1.1The oceans economy and its particularities1.1.1 ConceptThe oceans economy (also referred to as the blue economy) is a relatively newconcept that has its origins in the green economy concept endorsed at theUnited Nations Conference on Sustainable Development, held in Rio de Janeiroin 2012. It shares the same desired outcome: the improvement of humanwell-being and social equity, while significantly reducing environmental risks andecological scarcities. At its core the oceans economy refers to the de-couplingof socio-economic development from environmental degradation. In thisregard, efficiency and optimisation of natural marine resources within ecologicallimits becomes paramount. This includes, the sourcing and usage of local rawmaterials and where feasible, the utilisation of ‘blue’, low energy options torealise environmental benefits.The concept of an oceans economy also embodies economic and tradeactivities that integrate the conservation and sustainable use and managementof biodiversity, including maritime ecosystems, and genetic resources. Inaddition, it includes activities that are not natural resource intensive, supportsustainable patterns of consumption and generate lower or no GHG emissions.

4 \ The Oceans Economy: Opportunities and Challenges for Small Island Developing StatesIt also seeks to contribute to mitigation and adaptation efforts to addressclimate change risks manifested in the rise of the sea level and the acidificationof seawater.Additionally, an oceans economy approach supports sustainable livelihoodsand food security for SIDS and coastal populations. Globally, approximately350 million jobs are linked to the oceans through fishing, aquaculture, coastaland marine tourism and research activities.4 Moreover, in excess 1 billion peopledepend on fish as their primary source of protein.5 The over-exploitation andpoor management of marine resources have resulted in lost opportunities,heightened food insecurity and diminished economic opportunities for someof the world’s poorest people.1.1.2 Jurisdiction and regulatory frameworksThe international ocean governance framework comprises a multilayerand complex network of international and regional agreements involvingintergovernmental and civil society organisations.The overarching framework agreement governing the management of theoceans is provided by the 1982 United Nations Convention on the Law of theSea (UNCLOS), which establishes a comprehensive framework for the use anddevelopment of the oceans. The Convention defines the extent of variousjurisdictional zones, delineated according to distance from coastlines on thebasis of set baselines, and sets out the rights and obligations of countriesregarding those zones. Countries have sovereignty over their internal waters,territorial seas and archipelagic waters and sovereign rights over the resourcesin their exclusive economic zone (EEZ) and the seafloor of their continentalshelf. These zones represent about 30 per cent of all ocean areas (seeFigure 1.1).45World Bank 2012, ‘Living oceans’, http://go.worldbank.org/A2MYFIUQM0 (accessed3 August 2014).Ibid.

The Oceans Economy: Opportunities and Challenges for Small Island Developing States \ 5Figure 1.1: Economic Exclusive Zones (EEZ)Note: White areas represent EEZsSource: Ministry of Primary Industries of New Zealand (2008). See http://www.fish.govt.nz/en-nz/Starfish/Kids Zone/Factsheets/high seas.htmMajor features of UNCLOS include the conservation and management ofliving marine resources, rights to seabed non-living resources, the obligationto protect and preserve the marine environment, navigational rights, legalstatus of resources on the seabed beyond the limits of national jurisdiction,the conduct and promotion of marine scientific research and a procedure forsettlement of disputes between States. These basic parameters guide theapplication of other conventions insofar as they relate to the oceans.Another vital aspect of UNCLOS is that it governs activities both on land and atsea. That is, to the extent that activities on land impact the marine environmentor the habitat of marine species, they are addressed by various provisions ofthe Convention.In addition to UNCLOS, there are a number of other global and regionalagreements and declarations that supplement the Convention regardingspecific activities or regions, including the 1995 UN Fish Stocks Agreement,the Convention on Biological Diversity (CBD) and Chapter 17 of Agenda 21. Ofthese, the CBD is especially relevant as an international treaty that calls for theconservation of all biodiversity and is implemented in the marine environmentin a manner consistent with the rights and obligations of States under UNCLOS.

6 \ The Oceans Economy: Opportunities and Challenges for Small Island Developing StatesAt the regional level, the United Nations Environment Programme(UNEP) Regional Seas Programme and other regional marine environmentalprogrammes include multilateral agreements that address the use andprotection of the marine environment. In certain regions of the world’soceans, these regional environmental agreements are complemented byRegional Fisheries Management Organisations (RFMOs), established forthe development of conservation and management measures for fisheries.Numerous sector-specific instruments have also been adopted underthe auspices of relevant governing bodies, such as the InternationalMaritime Organization (IMO) for shipping and the International WhalingCommission (IWC).Many economic activities that take place in the oceans such as fisheries andsea transport have been regulated through conventions and customaryinternational law for some time. Other economic activities are relatively recentand have emerged as a consequence of new technological and infrastructuredevelopments that have made it possible to reach, extract, and use naturalresources that were not previously accessible. This has resulted in, for example,resource exploration and harvesting in various sectors such as bio-prospectingand marine renewable energy or sea oil and gas exploration. It is expected thatadvances in technology will significantly enhance access and capacityto extract additional marine resources in the coming decades.This is not, however, the end of the governance story. More recently, multilateraltrade negotiations and agreements have increasingly been playing a role in theregulation of goods and services that affect and concern oceans and marineresources. This is evidenced in the high profile disputes settlement cases suchas Tuna-Dolphins6, Shrimp-Turtle7 , and Seals8 at the WTO as well as in the678There have been several cases over the last three decades, including: GATT Panel Report, United States – Restrictions on Imports of Tuna, DS21/R,3 September 1991. GATT Panel Report, United States – Restrictions on Imports of Tuna, DS29/R, 16 June 1994. WTO Panel Report, United States – Measures concerning the Importation, Marketing and Saleof Tuna and Tuna Products, WT/DS381/R, 15 September 2011. WTO Appellative Body Report, United States – Measures concerning the importation,marketing and sale of tuna and tuna products, WT/DS381/AB/R, 16 of May 2012.WTO Appellate Body Report, United States – Import Prohibition of Certain Shrimp and ShrimpProducts, WT/DS58/R, adopted 6 November 1998.WTO Appellate Body Report, EU- Measures European Communities – Measures Prohibiting theImportation and Marketing of Seal Products, WT/DS400/AB/R and WT/DS401/AB/R, adoptedthe 22 of May 2014.

The Oceans Economy: Opportunities and Challenges for Small Island Developing States \ 7WTO Doha Round mandate, which proposes negotiations on fish subsidies,non-agricultural market access (NAMA) and environmental goods and services(EGS). WTO SIDS are actively participating in the Doha Round negotiationsthrough several groupings – including the Africa, Caribbean and Pacific Group(ACP), least developed countries (LDC) and small, vulnerable economies (SVEs)– with a view to advancing their trade and development interests and ensuringa balance between environmental sustainability and economic growth. Manyof the issues that concern SIDS are also under discussion in specific plurilateraland regional trade negotiations (e.g., environmental goods liberalisation andfisheries subsidies).

8 \ The Oceans Economy: Opportunities and Challenges for Small Island Developing States2. The oceans economy and SIDSSmall Island Developing States (SIDS) are a distinct group of developingcountries that face common social, economic and environmental challenges.These include small populations, high dependency on development assistanceand international trade (especially commodities through preferential traderegimes), susceptibility to external shocks, high transportation costs and lowconnectivity, susceptibility to natural disasters and high vulnerability to theimpacts of climate change. Of particular concern to SIDS in this regard arethe risks associated with rising ambient temperatures and sea levels.The United Nations Conference on Trade and Development (UNCTAD)classifies 29 countries as SIDS, of which 22 are also Commonwealth membercountries (Table 2.1). There are 10 in the Caribbean and the Americas, 12 inthe Pacific, 5 in Africa and 2 in Asia. This represents a significant geographicaldispersion and highlights the difficulties they face in forging common solutionsto many of their inherent challenges. For example, while a similar templatefor marine management systems could be used by different small States,remoteness and geographic dispersion prevents the pooling of resourcesfor their implementation.Table 2.1: UNCTAD list of SIDS (used for analytical purposes in this study)Antigua and BarbudaMaldivesSolomon IslandsBahamasMarshall IslandsSaint Kitts and NevisBarbadosMicronesia (FederatedStates of)Saint LuciaCape VerdeMauritiusSaint Vincent and ongaFijiPapua New GuineaTrinidad and TobagoGrenadaSamoaTuvaluJamaicaSao Tome and PrincipeVanuatuKiribatiSeychellesAlso Commonwealth member States.

The Oceans Economy: Opportunities and Challenges for Small Island Developing States \ 9While SIDS share common characteristics, they are not homogenous and havediverse social and economic structures. These structures may well define thepolicy approaches they pursue and the extent to which additional opportunitiesfrom the oceans can be harvested. The level of dependence on oceans bySIDS differs from country to country. For example, some are reliant on naturalresources to drive economic development due to factor endowments.Resource-dependent SIDS include Nauru, Papua New Guinea and Trinidadand Tobago, which rely heavily on either oil, gas, phosphates, timber or fishexports. Other SIDS – including Barbados, Mauritius, Saint Lucia and theSeychelles – are more services-oriented, with an emphasis on tourism andsome financial services.For SIDS, oceans and seas constitute a much larger geographic area thantheir inland territory, especially when the EEZ is taken into account. The CookIslands, for example, have a land space of 240 square kilometres and an EEZ of1.8 million square kilometres. Therefore, the sustainable harvesting of marineresources presents a significant opportunity for environmentally sound, sociallyinclusive economic growth and development.Several countries and regions are starting to assess the need for and are strivingto implement common governance frameworks under an ocean basin approach(marine spatial planning). Examples of their use can be found in the design of adraft national marine policy in the Bahamas, the oceans economy road map ofMauritius and the regional oceans policy adopted by the Organisation of EasternCaribbean States (OECS).In the case of the Bahamas, an integrated marine policy framework is beingimplemented to manage the ocean basin and marine resources with theobjective to give greater clarity to roles, functions and actions of approximately34 governmental bodies. It will also hold competence over marine affairs andconsolidate 36 pieces of subsidiary legislation regulating marine activities.9Mauritius launched its first oceans economy roadmap in 2013, which seeks totake advantage of the immense economic potential of oceans.10 The roadmapplaces emphasis on the need to make use of the untapped value locked up inthe EEZ by ensuring sustainable and coordinated utilisation of living and nonliving resources. Sectors of interest include tourism, seaports and seafood9 Commonwealth Secretariat 2013, ‘Oceans governance’, Small States Digest, Issue 4: 2013.10 Mauritius Prime Minister’s Office 2013, ‘The ocean economy: a road map for Mauritius’, availableat: www.oceaneconomy.mu/ (accessed 3 August 2014).

10 \ The Oceans Economy: Opportunities and Challenges for Small Island Developing Statesrelated activities. In order to advance the roadmap’s priorities, a national publicprivate task force as well as an oceans business park and an oceans researchcentre will be created. This new institutional set up will be complemented andsupported by a comprehensive regulatory review of the oceans economy.Likewise, the member States of the OECS in 2013 approved, the EasternCaribbean Regional Oceans Policy. This regional policy architecture providesa framework that guides planning and development of marine activities in arational and sustainable manner within the region.11It is too early to point toward concrete results of these policy frameworks, buta shift in mind-set towards a ‘common oceans basin space’ at a regional levelis starting to emerge. Other SIDS could also consider the development of abroader regional

Issues of relevance to Small Island Developing States (SIDS) ix Key suggestions and the way forward x 1. Introduction 1 1.1 The oceans economy and its particularities 3 1.1.1 Concept 3 1.1.2 Jurisdiction and regulatory frameworks 4 2. The oceans economy and SIDS 8 3. Trade and the oceans economy: challenges and opportunities for SIDS 11