TWN Info Service on WTO and Trade Issues (Mar11/08)
17  March 2011
Third World Network

Malaysia, ACP Group table proposals on fisheries subsidies
Published in SUNS #7104 dated 9 March 2011

Geneva, 8 Mar (Kanaga Raja) -- Two new proposals on fisheries subsidies have been tabled at the World Trade Organization - one from Malaysia on excluding from prohibition subsidies for improving fishing vessels to meet food safety standards, and another from the African, Caribbean and Pacific (ACP) Group on special and differential treatment for developing countries.

Both proposals were discussed at an informal meeting of the WTO Negotiating Group on Rules on 7 March.

The Malaysian proposal (TN/RL/GEN/174) is aimed at further strengthening Article II: General Exceptions in the Chair's 2007 draft text.

The textual proposal notes that certain foodstuffs may present specific health risks to consumers. This is particularly with respect to food from animal origin. In order to ensure a high level of consumer protection and protection of public health, some countries impose health and hygiene standards with respect to food, including fish.

According to Malaysia, the imposition of food safety standards as a condition to gain market access is one form of non-tariff barrier widely faced by exporting countries.

"Different standards and regime[s] coupled with complexity of sanitary and [phytosanitary] regulations imposed by major importing countries are the key impediment faced by exporters, the developing countries. Additionally, different organizations and functions, practices and procedures of inspection at borders have also significantly impacted fish trade," said Malaysia.

The Malaysian proposal pointed out that among the standards required of fishing vessels in order to ensure food safety, include redesigning vessels' spatial layout, taking into account various activities including catching, handling and storage of catches, and offloading at jetties.

The primary objective of upgrading is to prevent contamination of the fish products from various sources of contaminants and pollutants, said Malaysia.

In this context, it pointed to some of the upgrading work, amongst others, that include construction of specially designed toilets and shower facilities; provision of wash basins; partitioning of engine room compartments and crew quarters from fish holds; fibre-glass coating and epoxy food grade painting for wooden sorting deck; separated storage facilities; and equipping the fish holds with hatch coamings.

"Failure of fishing vessels to meet these standards may cause serious trade implications, including, the denial of market access to exporting countries. Therefore, it is necessary that these standards are met."

Nevertheless, said Malaysia, the costs of meeting such standards may be prohibitive, particularly for developing countries. These include the costs of upgrading fishing vessels by laminating fibre-glass on the main deck and fish holds, repairing and re-fastening hull planking, installing fibre-glass toilet, shower and wash sink, painting underwater hull and ship-side and superstructure.

Considering the significant costs of meeting these standards, it may be necessary for the Governments of Members to provide assistance to fishermen in order to meet these standards, in order to alleviate the burden on fishermen and ensure market access for their catch, it added.

"While agreeing that subsidies on improvements, renovation and modification of fishing vessels should be generally prohibited, we hold the view that exception should be given with respect [to] subsidies for improving fishing vessels in order to fulfil food safety standards."

Noting that the Chair's 2007 draft text provides an exception for vessel modification and modernization in order to fulfil crew safety standards, Malaysia said: "We are of the view that the same exception should be provided for subsidies for improving fishing vessels in order to fulfil food safety standards."

The Malaysian proposal cited some "legitimate reasons why subsidies for fishing vessels modification in order to meet food safety-related objectives should be excluded from the prohibition."

Among these are that the modifications that are made to ensure fulfilment of food safety standards will not result in the increase or enhancement of fishing capacity, on the basis of gross tonnage, volume of fish hold and engine power of a vessel. In order to ensure that the creation of this exception would not lead to enhancement of fishing capacity, the exception proposed is conditional.

"Furthermore, Malaysia has sought to maintain the level of ambition of the draft text by retaining the fisheries management conditionalities. In this regard, the proposed amendment does not erode the current level of ambition contained in the Chair's draft text of 2007."

Furthermore, it said that such subsidies would promote the fulfilment of the legitimate objectives of ensuring consumer protection and public health protection. It would encourage the adoption of good handling practices, throughout the value chain, with a view to ensuring that fish is safe for public consumption.

According to trade officials, in introducing its proposal, Malaysia said that fisheries-exporting developing countries have been subject to strict health standards, and that the cost of meeting these standards can be prohibitive, ranging from $23,000 to $36,000 per boat.

Trade officials said that Pakistan, India, Kenya (on behalf of the ACP countries) and Tonga (on behalf of the Pacific Island countries) said that their fisheries exports have also experienced such restrictions.

They expressed general support for the proposal, said trade officials. They however also expressed a preference for making this item part of special and differential treatment for developing countries.

Indonesia, South Africa and Turkey also expressed support, further saying that the whole value chain up to the handling and processing of fish in port should also be exempted (from subsidies prohibition).

Trade officials said that Brazil, Korea, El Salvador (on behalf of the small, vulnerable economies), China, Colombia, Norway and the European Union also voiced general support for the proposal.

On the other hand, Australia, the US, New Zealand, Peru and Chile said that they were opposed to measures that would increase overcapacity and overfishing.

According to the ACP Group, its textual proposal (TN/RL/GEN/176, submitted by Kenya) is aimed at addressing the need for appropriate and effective S&DT (Special and Differential Treatment) for those developing countries which do not contribute to over-capacity and over-fishing, and to provide workable and effective solutions to allow ACP States to develop their fisheries sector, safeguard livelihood security and to pursue their national development strategies, including diversification of their economic base.

The ACP Group said that it has consistently insisted that the Chair's draft text, as it currently stands, does not effectively address the development priorities and concerns of the Group. The ACP proposal addresses Articles III and V of the fisheries subsidies Annex.

While it is fully committed to disciplining fisheries subsidies that lead to overcapacity and overfishing, the ACP Group reiterated that its share of global marine wild capture fishing is minimal and that the Group is, therefore, not a cause of overcapacity and overfishing.

For the ACP Group, any agreement reached must provide a balanced, fair and equitable outcome that duly takes into account, inter alia: (i) its minimal share of catch; (ii) its development priorities; (iii) the vital importance of the fisheries sector to the national, socioeconomic development of the ACP Member States; and (iv) the sufficient policy space that these ACP Members require to develop this sector in light of their resource and capacity constraints.

As regards to Article III, the Group said that it has previously argued that references to boat size are arbitrary, given that the length of a boat does not necessarily correlate to its capacity and effort.

The ACP Group therefore submits a different approach to Article III on S&DT. On the basis of this approach, the Group proposes that subsidies outlined in 1.1(a) and 1.1( c) of the Annex shall not be prohibited for Members whose share of the global marine wild capture fisheries is less than 0.60 per cent.

This threshold is reasonable as it allows ACP States to maintain the viability of their fisheries sector, stressed the ACP Group.

Concerning Article V, the ACP Group said that fisheries management systems are important to the Group. It reiterated its collective and individual commitment to the sustainable management of marine resources.

However, the ACP Group said that it is not a proponent of linking special and differential treatment provisions to the implementation of fisheries management conditionalities.

For the ACP Group, appropriate and effective S&DT has always been a prerequisite for facilitating the participation of developing countries in the multilateral trading system, given their inherent development challenges.

Nonetheless, in a spirit of constructive engagement, the Group said that it is willing to consider fisheries management systems which are confined to a core set of universal fisheries management elements that are cost-effective and easily enforceable in all developing countries.

On the other hand, the Group said that it cannot agree to any peer review as a precondition to provide a subsidy.

The ACP Group also said that it finds that the fisheries management systems as set out in the current Annex to be financially and administratively burdensome.

The Group, therefore, has proposed to streamline the management systems to ensure that they are easily implementable and within the capacities of resource-constrained developing countries.

According to trade officials, in introducing the ACP proposal, Mauritius said that the ACP countries have a minimal share of world fisheries production and are not to blame for the current depleted state of fish stocks.

It further said that for the ACP Group, any fisheries subsidies agreement must provide a balanced, fair and equitable outcome that takes into account the economic importance of the sector to the ACP and the need for adequate policy space for these countries to develop the sector.

Under the ACP proposal, said Mauritius, exempted from the disciplines on fishing boat construction and operating costs would be developing countries whose percentage share of global marine wild capture is not more than 0.60 per cent.

(According to trade officials, an annex in the proposal lists 27 ACP non-LDC WTO members in this category, ranging from Antigua and Barbuda, and Barbados, both with zero per cent share of global marine wild capture for the period 2006-2008, to Namibia with 0.54%).

Trade officials said that Tonga (on behalf of the Pacific Islands countries), Ecuador, Turkey and Pakistan voiced support for the proposal.

The US said that the percentage share may not indicate the impact of a country's fishing practices on a specific fish stock in a particular region.

According to trade officials, the US asked if there is a mechanism for graduating a country from the list.

New Zealand noted that the global share of ACP countries in fisheries may be low now but could go up in the future.

According to trade officials, Japan said that 0.6 per cent share is still a high level of fish catch, while Peru said that it could not agree to the creation of a new category of developing countries.

According to trade officials, the Rules Chair, Ambassador Dennis Francis of Trinidad and Tobago, reported that Contact Groups and "Friends of the Chair" have been meeting over the weekend on various fisheries subsidies issues. He urged interested delegations to meet with them.

The Chair further reported that plurilateral sessions this week will discuss the Malaysian and the ACP proposals on 8 March, and high seas fisheries on 9 March.

On 10 March, reciprocal and shared access to exclusive economic zones (EEZs) and on fisheries management, including reports from the "Friends of the Chair" on those topics, as well as income support, including the report from the Contact Group on that issue will be discussed.

On 11 March, discussions will be held on artisanal/small scale fisheries and fuel subsidies, including reports from the respective Contact Groups.

According to trade officials, an informal open-ended meeting will be held on 14 March, whereby the Chair will report to the membership on these plurilateral discussions. +