TWN Info Service on WTO and Trade Issues (Dec16/06)
21 December 2016
Third World Network

Rules Group discusses three new proposals on fisheries subsidies
Published in SUNS #8375 dated 13 December 2016

Geneva, 12 Dec (Kanaga Raja) -- The WTO Negotiating Group on Rules, at an informal meeting on 9 December, discussed in detail three new proposals on fisheries subsidies.

Amongst others, the objectives of these proposals include securing an outcome in this area at the eleventh session of the ministerial conference (MC11) in Buenos Aires December next year.

The three new proposals were tabled by the European Union, the African, Caribbean and Pacific (ACP) Group of countries, and six Latin American countries at a dedicated session on fisheries subsidies chaired by Ambassador Wayne McCook of Jamaica.

According to trade officials, the three proposals all had similar objectives, namely achieving SDG Target 14.6, ensuring effective disciplines in this area while also ensuring special and differential treatment for developing and least-developed countries, and securing an outcome at MC11.

[SDG Target 14.6 states: "By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated fishing and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation."]

The proponents of the proposals also called for negotiations in this area to take place on a stand-alone basis, with no linkage to other issues in the Rules negotiations.

THE EU PROPOSAL

The EU's text-based proposal, first introduced at a Rules Group meeting on 11 November, was presented by Mr Stefaan Depypere, Director of International Affairs at the European Commission's Directorate-General for Maritime Affairs and Fisheries.

According to the EU proposal (TN/RL/GEN/181), fisheries subsidies, similarly to other types of subsidies, can only effectively be addressed through a multilateral agreement covering all WTO Members. The fact that the sustainability of global fisheries is at stake, further reinforces the need for multilateral action.

The EU said its submission sets out in more detail the kind of subsidies that are harmful from a commercial and environmental point of view and therefore should be eliminated or prevented from being granted in the future.

For the purpose of this submission, said the EU, the issue of fisheries subsidies comprises four main components: (i) prohibited subsidies linked to overcapacity; (ii) prohibited subsidies linked to illegal, unreported and unregulated (IUU)-fishing; (iii) transparency; (iv) special-differential treatment (SDT).

In order to build on the existing consensus, the submission acknowledges the principles established in the SDG 14.6 while identifying in a factual manner the particular types of subsidies that contribute to those effects.

The submission proposes a ban on capacity-increasing subsidies but foresees special and differential treatment that would allow developing and least developed countries to derogate from such a ban under certain conditions.

The proposed approach aims to go as far as possible in prohibiting capacity-enhancing subsidies which lead to overcapacity and overfishing, and at the same time defines a clear and transparent framework based on international law for special and differential treatment, recognising that fishing activities are a traditional and economically important activity for multiple communities.

This would help contribute to creating a level playing field for operators, said the proposal.

The submission also proposes prohibition of subsidies that contribute to IUU fishing, which would apply to operators whose vessels are included in the subsidising country's IUU-vessel list and/or that of Regional Fisheries Management Organisations (RFMOs).

On transparency, the submission proposes a notification requirement for information that is strictly necessary and relevant, "while not being overly burdensome for WTO Members."

"In view of the global commitment made in SDG 14.6 to advance rapidly to discipline certain fisheries subsidies, immediate efforts are needed in the WTO to restart negotiations with a view to preparing an outcome for the 11th WTO Ministerial Conference that will be held in Buenos Aires in 2017," said the EU proposal.

According to trade officials, Mr Depypere said that the emphasis of the proposal was in addressing subsidies that contribute to overcapacity.

Specialists all agree that this is the main problem and that tackling this would resolve nearly all the problems related to the conservation of fisheries stocks, he added.

To this end, he said the proposal calls on members not to grant or maintain subsidies that increase the capacity of a fishing vessel, or support the acquisition of equipment that increases the ability of a fishing vessel to find fish; that support the construction of fishing vessels or the importation of fishing vessels; and that support the transfer of fishing vessels to other countries including through the creation of joint ventures with partners of those countries.

On the issue of banning subsidies for IUU fishing, Mr Depypere said this was "evident, you don't subsidize crime."

According to trade officials, while many of the delegations that spoke said that the EU's proposal was helpful in starting work on a concrete outcome for MC11 or would serve as a good basis for future work, a number of the delegations voiced concern over the absence of any reference to the need for disciplines on subsidies that contribute to overfishing.

These include the Philippines, the US, Dominica for the ACP group, New Zealand, Norway, Australia, Brazil, and Colombia.

Other members voiced criticism over an exception for fuel de-taxation subsidies.

According to trade officials, Senegal (for the LDC Group), Morocco (for the African Group) and India said the EU's definition of S&D treatment and subsistence fishing - including an exception for subsidies to fishing boats of 10 meters in length or less - was too narrow.

The US said that differences over these definitional issues had already emerged in earlier talks within the Doha Round context.

The US asked what had changed to make the EU believe that members could now reach agreement on this.

Japan said the focus should be on fisheries management and that it was not appropriate to ban all the subsidies proposed by the EU unilaterally.

Several delegations pointed out that the proposal's emphasis on limiting new capacity would lock in the advantages already enjoyed by those members with large, industrial fishing fleets and deny those members with small fisheries industries and fleets the right to expand in the future.

According to trade officials, the EU said some of the issues raised by the members were "fiendishly complex", such as the fuel de-taxation issue.

If these were not exempt, the EU asked, would this result in "bunkering" vessels setting up outside of territorial waters to fuel ships and posing threats to the environment?

The EU also maintained that the idea of disciplining subsidies that contribute to overfishing was over-ambitious and probably not feasible.

If members want something concrete for MC11 and reply to the challenge set under the SDGs, they need to focus on something concrete, feasible, definable and implementable, the EU said.

The Chair summarised by saying that while the EU described some issues as "fiendishly complex", other members viewed the need to address subsidies that contribute to overfishing as well as overcapacity as "fiendishly necessary".

Nevertheless, he said, "what has taken place this morning is a serious discussion around a serious proposal."

THE ACP PROPOSAL

Dominica introduced the proposal on behalf of the ACP Group.

According to the ACP proposal (TN/RL/GEN/182), fisheries are a crucial source of income and employment, particularly in developing countries, and contribute directly to economic growth, food and nutrition security.

According to the FAO, fish provide more than 3.1 billion people with almost 20% of their average per capita intake of animal protein, and the sector supports the livelihoods of between 10 and 12% of the global population.

For several ACP countries, fish also represent a vital share of total exports and provide critical opportunities for value addition.

Overfishing, however, is undermining fisheries' ability to play their crucial role in supporting food security and development, said the ACP proposal.

Within this backdrop, it said stocks are faced with depletion.

Today, 58% of the stocks are fished at maximum levels with no room to grow, while the share of over-fished stocks increased from 10% in 1974 to over 31% in 2013.

The ACP said fisheries subsidies, estimated at over 35 billion dollars annually, are a major factor contributing to overfishing and overcapacity.

This is particularly the case of harmful subsidies granted to large-scale industrial fishing in areas beyond national jurisdictions, targeting straddling or highly migratory stocks in the high seas and close to the EEZ (exclusive economic zone) of developing countries.

The ACP proposal said that negotiations aimed at establishing effective disciplines on fisheries subsidies must continue as a matter of priority, within the Negotiating Group on Rules leading to a multilateral outcome.

"Given the urgency facing the international community and the need to meet the 2020 deadline agreed under SDG goal 14.6, negotiations should also aim at delivering concrete results by the eleventh Ministerial Conference."

"Furthermore, disciplines by MC11 must deliver on the development dividend on their own merit without being hampered by linkages with other negotiating areas."

Overall, negotiations should aim to discipline fisheries subsidies which contribute to overcapacity and over-fishing, and eliminate subsidies to illegal, unreported and unregulated (IUU) fishing.

As a priority, disciplines should target subsidies provided to large scale commercial or industrial fishing and subsidies to fishing activities outside of the Member's maritime jurisdiction (i. e. in the high seas or in the EEZ of another Member e. g. through access agreement).

In addition, said the ACP, to further address most developing country and LDC Members' concerns, Members might consider adopting the principle that "nothing shall prevent" a developing country or LDC Member from maintaining or granting subsidies that do not contribute to overfishing and overcapacity or do not affect third countries such as subsidies to:

* Coastal fishing activities related exclusively to the artisanal, small scale, subsistence and livelihood of the fishermen and their families within the Member's territorial waters;

* Fishing activities, which exclusively exploit domestic fish stocks whose ranges are confined to the Members' EEZ;

* Fishing activities, which exclusively exploit quotas or any other rights, established by a regional fisheries management organization (RFMO) or a regional fisheries management arrangement.

Disciplines should aim at prohibiting, at a minimum, the following types of subsidies with due regard given to specificities of jurisdictions with multi-species catch: subsidies to fishing vessels or fishing activity negatively affecting fish stocks that are in an over-fished condition; and subsidies provided to vessels or operators engaged in illegal, unreported and unregulated (IUU) fishing.

Appropriate and effective special and differential treatment for developing countries including LDCs and SVEs shall be an integral part of any additional disciplines and should take into account the importance of the sector to development priorities, poverty reduction, livelihood, and food security concerns.

Such provisions should include among others: prohibitions beyond those outlined should not apply to LDCs and SVEs; flexibilities in the design and implementation of disciplines; technical assistance and capacity building to address institutional and financial constraints faced in the implementation of disciplines; and transparency and notification requirements that are proportionate to the capacity of developing countries and their contribution towards overfishing and overcapacity, the ACP proposal said.

According to trade officials, members welcomed the ACP proposal while expressing some concerns with specific provisions.

A number of delegations including the EU, the US, New Zealand and Japan questioned a proposed exception for subsidies related to fishing activities which exclusively exploit domestic fish stocks in a member's EEZ.

Iceland questioned the rationale for this carve-out given that most fishing, including large-scale industrial fishing, takes place in EEZs.

Canada said that the proposal was a good basis for discussion. It was open to discussion on other subsidies that contribute to overfishing and overcapacity.

Korea said that the best way to bring over-fished stocks back on a sustainable path is through effective fisheries management based on science.

Dominica said that its paper was not a text-based proposal and that the ACP group realized it would need to come back and provide some clarity on some of the ideas put forward.

The Chair said that there was need for further reflection and consultation in framing broader responses to the initiative.

THE PROPOSAL BY LATIN AMERICAN COUNTRIES

The proposal co-sponsored by Argentina, Colombia, Costa Rica, Panama, Peru and Uruguay (TN/RL/GEN/183) noted that in recent years, a growing consensus within the international community has been emerging on the need to act to prevent the harmful impacts of certain fisheries subsidies on sustainability of marine resources.

It said the Trade Facilitation Agreement (TFA) approach can result in a useful tool for the Fisheries Subsidies' negotiations.

"Such a scheme has been accepted by all WTO Members and has allowed them to deliver a multilateral outcome recently. Its structure can be adapted to the particularities of these negotiations, serving as a practical tool."

"Through the SDG 14.6, our Heads of State and Government gave to WTO Members a specific mandate to negotiate this issue on its own merits, without linking its process to any other WTO negotiation. Therefore this should be a standalone Agreement, as the TFA, in which all Members should agree on definitions, disciplines and timelines," said the six Latin American countries.

As a complement, said the proposal, rules should be established aiming at: ensuring the appropriate enforcement of disciplines; exploring cooperation between competent authorities; identifying cases in which flexibilities (S&DT) should be given to fulfil the commitments included in the Agreement.

According to the proposal, the commitments should be established by MC11 and implemented by 2020, according to SDG 14.6.

Colombia introduced the proposal, saying that the initiative was the subject of wide-ranging consultations with members, and an attempt to respond through multilateral negotiations to the serious situation facing the oceans.

It was hopeful that the approach would help achieve results in Buenos Aires.

Peru said that the heads of government through the UN gave a specific mandate to the WTO to negotiate fisheries subsidy disciplines on their own merits and that the talks should not be linked with any other negotiations.

According to trade officials, several members said they understood and appreciated the logic underpinning the approach by the proponents.

However, the proposal lacked details, specifically on the subsidies to be disciplined and the right of developing country members to designate their own transition periods in light of the 2020 goal fixed under SDG 14.6.

Mexico and New Zealand said they saw the Latin American proposal for a TFA framework as a complement to the two other proposals rather than overlapping.

China said SDG 14.6 constitutes a mandate for negotiating fisheries subsidy disciplines on its own and that it respects the UN General Assembly on this matter.

It however questioned how WTO members were to achieve this goal while respecting the current WTO negotiating mandate which links the fisheries talks to others under the Rules heading.

Peru said the proponents believed that the proposed TFA-style flexibilities would result in some targeted fisheries subsidies being phased out beyond 2020, but that certain subsidies such as those linked to IUU fishing should go by that date.

Meanwhile, Canada informed the meeting that a group of countries participating in a plurilateral initiative on fisheries subsidies were planning to hold their first substantive meeting early next year and that any member wishing to take part in the initiative could join in.

According to trade officials, 16 members have signalled their interest so far, with Panama, Iceland and Brazil the latest to join the discussions. +