The reform of the European Union’s Common Fisheries Policy (CFP) is focusing attention on EU distant water fishing activities, including the agreements signed with developing coastal states. Here, the EU’s fishing agreement with Madagascar, among the poorest countries to hold such an agreement, is examined. Incomes received by Madagascar since the first agreement with the EU in 1986 are documented, in both nominal and real terms, and discussed in the context of other conditions tied to the agreement, in particular support provided by the EU to improve Madagascar’s fisheries management capacity. Results indicate that since 1986, EU quotas increased by 30% while the fees paid by the EU decreased by 20%. Yet, Madagascar’s treasury income from these agreements decreased by 90%. This shows that the EU agreements with Madagascar are in direct contradiction to the goals set forth by the CFP, which states that benefits of agreements should be directed towards developing countries, and not towards private EU entities. This raises profound ethical questions that the CFP reform must address. A new framework is proposed, prioritizing fisheries sustainability and equitable benefit sharing, in which reasonable quotas are set, fees are indexed to the landed value of catches, and all costs of agreements are borne directly by the benefiting industries. EU development assistance should be decoupled from these agreements, and should focus on enhancing the host countries’ monitoring and enforcement capacities. This new framework would increase the benefits to Madagascar while reducing costs to EU taxpayers.