There are many ways of classifying subsidies and also many possible subcategories available. Some of the main aspects found in the literature according to which subsidies can be classified are:
Modalities
Classification according to how the subsidy works, i.e., what mechanism it has in the fisheries sector. In their report on subsidies and support programmes in the APEC countries, PricewaterhouseCoopers (2000, page 8) has developed a list of six modality categories, i.e.:
- Direct assistance to fishers and fish workers
- Lending support programmes
- Tax preferences and insurance support programmes
- Capital and infrastructure support programmes
- Marketing and price support programmes
- Fisheries management and conservation programmes
OECD also classifies subsidies (GFTs) according to how the transfers are implemented, i.e., as Market price support, Direct payments, Cost reducing transfers or as General services. The latter covers the subcategories fisheries management, enforcement and research (OECD 2000).
Application
Classification according to where in the fisheries sector the subsidy exists. PricewaterhouseCoopers (2000, page 9) defines three subsectors, i.e., Capture fisheries, Aquaculture and Fish processing. In cases where the industry is vertically integrated to a high degree, it may at times be difficult to clearly define the limits between the different subsectors.
Origin and specificity
Classification according to which government body is funding the subsidy - a fishery specific department or institution such as the Ministry of Fisheries, or one not directly related to fisheries - and whether the subsidy is specific for the fisheries sector or available also to other sectors. Subsidies can also be divided into local, national or regional subsidies. Milazzo (1998) reports on two types of "cross-sectoral subsidies": aid to shipbuilding and infrastructure development. Support to an underdeveloped geographic region, such as the Norwegian Industrial and Regional Development Fund, is an example of a subsidy benefiting the fisheries sector even though not targeting it directly (EEC 1997). A change in monetary policies, e.g., of interest rates, or in tax rates also affects the fisheries industry even if the intervention is general and originates outside the fisheries sector (Schrank and Keithly Jr. 1999).
Small scale vs. Large scale
Classification according to the monetary importance of the subsidy, either with regard to the total public expenditure or the benefits to single operators (PricewaterhouseCoopers 2000).
Short- vs. Longer-term
Classification according to within what time frame the subsidy is affecting the profits of the industry. Subsidies implying changes in capital usually mean longer-term effects. However, the issue is complex and the long-term effect can be defined in different ways. For example, a scheme subsidizing investment in fishing vessels will have both a short-term and a longer-term effect on the profits of the industry since it implies a change in capital. At the same time, it is known that with an increasing total fishing capacity, the rents from the fishery - and hence its profitability - will eventually diminish and in a further perspective the impact of the subsidy on profitability may be negative (Schrank and Keithly Jr. 1999). Moreover, subsidies are likely to have more implicit effects on efficiency in general and short-term effects on profits will over time translate into the overall economic sustainability of the activity.
Budgetary vs. Non-budgetary
Classification according to whether the subsidy is identifiable in the Government budget, e.g., the budget of a fisheries agency or department, or un-/under-budgeted, for example subsidized lending or tax preferences. This latter category may also include subsidies from non-fisheries agencies (Milazzo 1998).
"Normal" subsidies vs. Conservation subsidies
Classification according to whether the subsidies tend to increase production, e.g., the harvesting capacity, or whether they favourably affect the environment, aiming at decreasing fishing operations and enhancing the resource base. The former are often called "bad" subsidies while the latter are commonly considered to be "good" (Milazzo 1998).
Profit-enhancing vs. Profit-decreasing subsidies
Classification according to whether it is a subsidy that tends to increase the industry's profits, e.g., a grant or a loan guarantee, or a subsidy reducing profits, e.g., taxes. It should be noted, though, that a subsidy that is profit-decreasing - i.e. negative - to the fishing industry would be expected to be positive to society as a whole through positive effects accruing to other sectors. Likewise, externalities resulting from subsidies in other sectors can be negative subsidies for the fisheries industry (Schrank and Keithly Jr. 1999). Individual negative and positive subsidies sometimes cancel each other out. For example, a government levy on landed fish could be classified as a negative subsidy but if it finances a fish price support scheme of which the benefits accrue to the fishers paying the levy, the two programmes together constitute a self-financing activity rather than subsidies. Still, the government regulations supporting the activity can be classified as a subsidy since this is a government intervention affecting the profits of the industry.
Cost reducing vs. Income increasing
Classification according to how the subsidy influences the profits of the industry. In a communication to the WTO, the United States differentiated between Subsidies that reduce capital (fixed) and operating (variable) costs, and Subsidies that support incomes and prices (WTO Committee of Trade and Environment, 1999/2000). This classification can be further broken down and subsidies classified according to what type of earnings and costs that are affected by the subsidy.
