TWN Info Service on WTO and Trade Issues (Mar21/18)
17 March 2021
Third World Network

Reverse S&DT to major subsidizers in fisheries disciplines
Published in SUNS #9307 dated 17 March 2021

Geneva, 16 Mar (D. Ravi Kanth) – The Chair of the Doha Rules negotiations, Ambassador Santiago Wills from Colombia, intends to hold meetings from 17 March on the most controversial issue concerning the alleged reverse special and differential treatment (S&DT) for major subsidizers that continue to engage in industrial-scale fishing, which has contributed to global depletion of fish stocks, said people familiar with the development.

In previous meetings of the Doha Rules negotiating body held in January and February, a large majority of developing and least-developed countries firmly opposed the alleged reverse S&DT for the major subsidizers and they sought a complete ban on harmful fisheries subsidies.

At the heart of the divide between the ten major subsidizers such as China, the European Union, the United States, Japan, Korea, and Chinese Taipei among others on the one side, and a large majority of developing and least developed countries on the other, is Article 5.2 in the chair’s second revised draft consolidated text issued on 18 December last year.

That article says: “Notwithstanding paragraph 5.1 (which lists out what would constitute as subsidies that are prohibited in the overcapacity and overfishing pillar), a member may grant or maintain subsidies referred to in paragraph 5.1, if it (the member) demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.”

The developing countries flatly rejected the S&DT provided gratis by the chair to the major subsidizers and it has become “a millstone” around the chair’s neck, said a negotiator, who asked not to be quoted.

At an informal Trade Negotiations Committee (TNC) meeting on 25 February, the ACP (Africa, Caribbean, and Pacific) group of countries said that “the ACP Group cannot accept transition periods alone with technical assistance and capacity building (for effective special and differential treatment for developing countries). Neither can we accept that Article 5.2 provides enough policy space for developing countries, when that provision is a disguised exemption for large subsidizers.”

At the same meeting on 25 February, South Africa said that “the aim of the negotiations is sustainability, therefore, the concept of common but differentiated responsibility is key.”

More importantly, said South Africa, “the outcome (on fisheries subsidies) must ensure that members that provide harmful subsidies cannot continue to do so. Importantly, management aspects should not be brought into the WTO.”

“Disciplines must target large-scale industrial fishing and safeguard food security and livelihoods of small-scale fisheries. The outcome must deliver on all the pillars of the mandate, including S&D. In this regard, S&D should be meaningful and cannot be limited to transitional periods. Text-based negotiations must be inclusive and Member-driven,” South Africa said.

CHAIR’S EMAIL TO MEMBERS

In an email sent to members on 9 March, and seen by the SUNS, the chair informed on the schedule of meetings that will be held in the March cluster of focused discussions on two major issues.

To start with, the meetings will kick-off with a discussion on a proposal from Argentina, Chile, and Ecuador on “artisanal fisheries” in the scope of the proposed agreement.

In a restricted proposal (RD/TN/RL/136) issued on 22 February, which remains in brackets, the three South American countries said that “this [Instrument] applies to subsidies, within the meaning of Article 1.1 of the SCM Agreement that are specific within the meaning of Article 2 of that Agreement, to marine wild capture fishing and fishing-related activities at sea” and it excludes aquaculture and inland fisheries.

Further, the three countries proposed that “[Notwithstanding paragraph 1 of this Article, this [Instrument] also applies to fuel subsidies to fishing and fishing-related activities at sea that are not specific within the meaning of Article 2 of the SCM Agreement.]”

And more importantly, the three proponents said that “[The subsidy prohibitions in Articles 4 and 5 (overfished stocks, and overfishing and overcapacity) shall not apply to low-income, resource-poor or livelihood fishing and fishing-related activities at sea with the aim of, among others, ensuring food security; provided that these activities are performed within a [12] nautical miles area from the coast baseline. The activities mentioned in this Article shall nevertheless comply with the applicable domestic legislation.]”

In his email to members, the chair said that he intends to hold a series of meetings on 18 March on the most controversial issue in Article 5.2 concerning the so-called reverse S&DT for major subsidizers engaged in industrial-scale fishing that has contributed to the depletion of global fish stocks, said people familiar with the email.

According to the chair’s email, the series of meetings will focus on “overcapacity and overfishing, in particular Article 5.2 of the draft consolidated document (RD/TN/RL/126/Rev.2).”

The chair said “this provision states that a Member may provide subsidies otherwise prohibited in Article 5.1 if the subsidizing Member demonstrates that measures are implemented to maintain stocks at a biologically sustainable level.”

Ambassador Wills argued that “footnote 13 to Article 5.2 then explains what a “biologically sustainable level” refers to. In 126/Rev.2, some text was added (in brackets) to this footnote based on a suggestion by some Members that was aimed at ensuring that Article 5.2 would be accessible to all Members.”

“As I explained in a number of earlier meetings, my reading is that Article 5.2, together with footnote 13, qualifies the prohibition on subsidies that contribute to overcapacity and overfishing in Article 5.1, such that subsidies that do not have harmful effects on sustainability are allowed for all Members,” the chair argued.

According to the chair, his proposed dedicated meeting on Article 5.2 has become “necessary” due to the fact that “delegations’ understanding of the overall structure of Article 5 would benefit from more in-depth and detailed discussion on Article 5.2, so I would like to hear your views on this provision,” including on the following aspects:

(1) Some Members have raised questions about how a subsidizing Member would apply Article 5.2.

The chair said that his reading is that “Article 5.2 requires the subsidizing Member to demonstrate that there are measures in place to maintain the stocks at a biologically sustainable level, but it does not prescribe a specific way in which the subsidizing Member should make this demonstration.”

Ambassador Wills argued that this does not mean that Article 5.2 is a self-judging standard, adding that “it has been brought to my attention that, in the case of the SPS and TBT Agreements, an interested Member can question a measure taken by another Member which is expected to provide an explanation of how that measure meets the requirements of either Agreement.”

“In all cases,” he said, the “dispute settlement is an option for any Member that considers that there has been a breach of the Agreement. In short, a subsidizer should be able to “demonstrate” that it meets the requirements of the discipline, preferably in the Committee but also under dispute settlement if necessary.”

(2) The chair said that “some Members think that the term “demonstrate” sets a very difficult benchmark for the subsidizing Member to reach, but some other Members think it is far too lenient or vague. This suggests to me that some Members read this term very differently. As I mentioned above, my reading of Article 5.2 is that the term “demonstrate” is not prescriptive, i.e. it does not require the subsidizing Member to demonstrate the sustainability standard in Article 5.2 in a specific way. Nor does it amount to a simple assertion by the subsidizing Member that it has some measures in place to maintain stocks at a biologically sustainable level. Instead, Article 5.2 would require the subsidizing Member to make the necessary demonstration in one way or another, but allow others to pose questions, be it in a committee or in the context of a dispute.”

(3) According to the chair, “some Members also raise questions about Article 5.2 in the context of a dispute, in particular on which party bears the burden of proof that Article 5.2 has been complied with. My reading of Article 5.2 is that, once the complainant establishes that there has been a violation under Article 5.1 (i.e. that the respondent Member has granted or maintained a prohibited subsidy under Article 5.1), it would be up to the subsidizing Member as the respondent to raise and establish the specifics referred to in Article 5.2, i.e. to demonstrate what is required.”

It remains to be seen whether the chair’s attempts to justify what amounts to special treatment to the major subsidizers will bring about convergence among members, said people familiar with the development.

Moreover, the chair wants to resort to small-group meetings in varying configurations for addressing issues in Article 5, suggesting that “I would like to benefit from the interactivity of a small-group setting while at the same time hearing the full range of delegations’ views on the above topics, given that the prohibition on subsidies that contribute to overcapacity and overfishing is at the core of our work and many delegations are actively engaged on this pillar.”