TWN Info Service on WTO and Trade Issues (Feb11/08)
22 February 2011
Third World Network

WTO Rules Group takes up proposals on fisheries subsidies
Published in SUNS #7086dated 11 February 2011

Geneva, 10 Feb (Kanaga Raja) -- The WTO Negotiating Group on Rules, at an informal meeting 7-9 February, discussed several proposals on fisheries subsidies including three on special and differential treatment for developing countries.

At the beginning of the three-day session on 7 February, Japan introduced a new proposal on fisheries subsidies disciplines.

The Japanese proposal was however criticized by several countries as having low ambition and representing a step backwards in the negotiations on disciplining fisheries subsidies (see below).

According to the Japanese proposal (TN/RL/GEN/171), the main and basic issue for the negotiations that are still pending is to decide what kinds of fisheries subsidies are to be prohibited because of their contributions to overcapacity and overfishing.

In addition, said the proposal, the nature and the extent of such overcapacity and overfishing caused by subsidies and how such phenomenon can be recognized and dealt with in the entire picture of global fisheries activities and fisheries management need to be fully taken into account in the development of the discipline.

The Japanese document contains specific text-based proposals on prohibition of certain fisheries subsidies, general exceptions, and special and differential treatment for developing countries.

In its proposal, Japan elaborated that it does not believe that a comprehensive and unconditional prohibition of fisheries subsidies is appropriate for the purpose of conservation and sustainable use of fishery resources.

Japan said that it is specifically prepared to consider prohibition of subsidies on the following items, with appropriate general exceptions: vessel construction and repair; transfer of fishing vessels; certain forms of operating costs; price support; and further transfer of fishing access rights.

Japan, however, maintained its position that infrastructure, income support, and the so-called "catch-all provision" should be crossed out, as there are no sufficient grounds for the prohibitions because neither infrastructure nor income support is related to overcapacity/overfishing, and that on the contrary, they contribute to reducing overfishing.

Japan said that it does not support such "catch-all provisions" because: (1) the pre-determination of specific prohibitions is extremely difficult; (2) prohibitions could be sweepingly wide, encompassing every fishing activity that inadvertently catches endangered fish species; and (3) even subsidies that are necessary for the stock recovery of such fish species could be prohibited, as a result.

According to trade officials, Japan said that it shared the urgency of concluding the Doha Round, and has thus tabled a text-based proposal to help the Chair in developing new texts.

It underscored three basic points: subsidies to be prohibited should be confined to those that really contribute to overcapacity and overfishing; fisheries management systems are of paramount importance for long-term sustainability of fisheries resources; and that special and differential treatment for developing countries should be in the spirit of shared responsibility.

According to trade officials, Japan's proposal received support from Chinese Taipei and Korea.

Chinese Taipei said that infrastructure and income support should not be subject to disciplines, while Korea was of the view that there are many similarities in its position and that of Japan, and called the proposal a positive contribution to the negotiations.

On the other hand, New Zealand said that the proposal's low ambition is incompatible with the Group's mandate, and that it would also be too complex to implement.

According to trade officials, New Zealand further said that the focus of the work in the WTO in this area should be on disciplining fisheries subsidies and not on fisheries management.

Mexico shared New Zealand's concerns, saying that it disagreed with Japan's proposal to exempt small-scale fisheries of developed countries from disciplines.

Trade officials said that Argentina also endorsed New Zealand's statement, while Australia said that it was disappointed by the Japanese proposal, which it described as a backward step.

The US also expressed disappointment with the proposal, calling it a Swiss cheese of loopholes for exceptions. It cited a recent UN Food and Agriculture Organization (FAO) report on the deteriorating state of world fisheries, which it said underlines the need for drastic action.

According to trade officials, the US further said that it could not understand Japan's proposal for a general exception to small-scale fishing, and stressed that the WTO is not a fisheries-management organization.

Canada said that while Japan did a good job on concentrating on the most egregious subsidies, it provided too wide a hole for other subsidies.

Norway said that it supported Japan's non-prohibition of social safety nets but it had concerns about S&DT (special and differential treatment) provisions.

According to trade officials, China questioned the direction of the Japanese proposal, as it believed that the ambition of the Chair's text of 2007 on fisheries subsidies had been substantially brought down.

India expressed serious reservations because it believed that the proposal diluted the disciplines and S&DT treatment, said trade officials.

Brazil said that it saw the proposal as barring new entrants to high-seas fishing, and that it would be difficult to accept that it could only buy second-hand fishing vessels under the proposal.

On 8 February, Canada tabled a revised proposal (TN/RL/GEN/156/Rev. 1) on establishing a de minimis amount of fisheries that would be exempt from disciplines.

In 2008, Canada proposed the addition of a new provision (TN/RL/GEN/156) in Article II of the Chairman's proposed Annex VIII of the Subsidies and Countervailing Measures Agreement (TN/RL/W/213). The proposal would add a provision to the fisheries annex, and allow Members to provide a certain amount of support (X%, to be negotiated) to fishing activities within waters subject to a Member's national jurisdiction, provided the value of programs did not exceed a set percentage of the landed value of fish harvested in these waters.

To better address development needs, Canada said that it is now proposing to include a new component for developing countries accounting for less than 0.5% of the global fishery.

It proposed that these countries would have access to a larger de minimis exemption than available to developed and larger-scale fishing developing countries, reflecting unique development needs (X% + Y%). An absolute de minimis component has also been included to include those situations where the fishing is at such a small scale that even the enhanced de minimis exemption (X% + Y%) would not exempt a small subsidy.

For example, said Canada, where the total catch of a country is $150,000 and a fuel subsidy of $15,000 is provided, the subsidy is 10% of the value of the catch and would exceed any de minimis level, but would be exempted by the fixed amount threshold.

According to trade officials, New Zealand said that the proposal would create a big loophole for all kinds of fisheries subsidies.

The US said that the proposal would not limit anything, and might even encourage more harvesting to get more subsidy exemptions.

Australia, Norway, Argentina and Peru expressed similar views, said trade officials.

China and India said that there would be no special treatment for developing countries, as the de minimis would apply to all, including developed countries.

The EU said that it strongly supports the Canadian proposal. It noted that a large number of its coastal communities depend on fishing for employment.

Meanwhile, three proposals were tabled on special and differential treatment for developing countries: one from Morocco (TN/RL/GEN/170), a second from Ecuador and Peru (TN/RL/GEN/172), and a third from Argentina, Chile, Egypt and Uruguay (TN/RL/GEN/173/Rev. 1).

The text proposed by Morocco contains amendments to the Chairman's text (TN/RL/W/213), reflecting its views regarding future disciplines on fisheries subsidies while maintaining the approach and structure of the text proposed by the Chairman.

The amendments suggested by Morocco mainly concern S&DT and, more specifically, artisanal or small-scale fisheries.

In the absence of a universal definition for this category, Morocco said it has endeavoured to base its definition of artisanal or small-scale fisheries on objective criteria that are unambiguous for all Members.

These criteria are as follows: 1. The radius of activity, which must be confined to the inshore area within the territorial waters of the Member concerned; 2. The state of the catch when landed, which must be fresh; and 3. The organization of the activity, characterized by unsophisticated, non-capitalistic structures.

Morocco considered that in the context of the developing countries, government support for fishery activities meeting these three criteria cannot lead to the over-exploitation of resources and furthers the legitimate improvement of economic and social conditions for fishermen.

The proposal by Ecuador and Peru is on S&DT for artisanal fisheries. The sponsors proposed text on disciplines for artisanal fisheries subsidies within the framework of the exceptions that form part of special and differential treatment for developing countries in the Doha negotiations.

In the case of the sponsors of the proposal, artisanal fishing represents an important source of livelihood, employment and food security for their populations.

"We therefore seek to promote the sustainable development of artisanal fisheries through various measures such as the provision and maintenance of basic infrastructure, the improvement of fishing vessels, and training for fishermen, as well as through programmes aimed at enhancing the management of such fisheries," they said.

They proposed that the geographical area in which artisanal fishing activity is practised be defined as the "waters under the national jurisdiction of the Member States".

They further proposed several cumulative conditions including amongst others that artisanal fishery products be "mainly destined for direct human consumption"; the size of artisanal vessels should be "15 metres in length"; fishing operations be "carried out using simple fishing gear, tools and techniques and involve predominantly manual labour"; and destructive fishing practices (such as dynamiting and poisoning) be banned.

Furthermore, said the proposal, in order for Members to apply this regime, it is mandatory that they establish a fisheries management system and contains flexibilities and ad hoc mechanisms, and which ensures the sustainability of resources. To this end, the disciplines must provide for a five-year period to implement such a system.

In their proposal, Argentina, Chile, Egypt and Uruguay consider that, in order to reflect an adequate balance between sustainability and development, the conditions under which a developing country could exercise its right to grant or maintain subsidies to fishing activities in accordance with the future disciplines to be adopted should be: (a) with regard to capacity: (i) the existence of under-exploited or unexploited fisheries resources within its jurisdiction (exclusive economic zone), and, (ii) the lack of enough fishing capacity to exploit the natural resource in a sustainable way; (b) with regard to infrastructure: the improvement in physical port facilities exclusively or predominantly for activities related to marine wild capture fishing, in jurisdictional waters, related to the livelihood of fishers and their families, and in compliance with FAO Code of Conduct.

The four sponsors said that compliance with these two conditions would allow to reach a balance between exploitation and sustainability in any circumstance, and this would allow the diverse situations prevailing within the group of WTO Developing Country Members to be taken into account.

Reaching such equilibrium would necessarily require the future disciplines to be flexible and dynamic, in order to be able to keep pace with technological changes and adapt to developmental change in beneficiary countries.

The latter is one of the reasons why it is considered convenient and desirable to avoid the use of static parameters such as boat length, percentage of participation in marine capture fisheries, etc. in the definition of conditionalities for the S&DT disciplines, they said.

They added that a change in the level of coverage would not necessarily imply a change in the structure of the S&DT discipline which, broadly, could be described on the basis of the following three necessary elements: (a) definition of S&DT beneficiaries; (b) conditionalities required in order to access the benefit; and ( c) exceptions to conditionalities.

According to trade officials, the three proposals were generally well-received, in particular, by other developing countries.

Brazil, China and India, in welcoming these papers, stressed that S&DT should not be subject to strict conditions, and that flexibility must be accorded to subsidies on infrastructure (e. g. fishing ports) and no definitive geographical limits should be set.

Trade officials said that New Zealand, Australia, the US, Japan and others agreed with the importance of S&DT in the negotiations but said that this should also be seen in conjunction with the goal of sustainable fish resources.

Kenya, on behalf of the ACP group, stressed the need for simple S&DT that would be easy to implement.

According to trade officials, the Chair, Ambassador Dennis Francis of Trinidad and Tobago, will be holding plurilateral sessions on 10 and 11 February, with the Group meeting on 14 February, for a transparency session on these plurilateral meetings. +