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Info Service on WTO and Trade Issues (Jun22/06) Geneva, 7 Jun (D. Ravi Kanth) – The World Trade Organization’s Director-General Ms Ngozi Okonjo-Iweala appears to be adopting the practice of brinkmanship by tossing the five major unresolved deliverables to ministers to decide at the WTO’s 12th ministerial conference (MC12), which begins in four days’ time, said people familiar with the development. Following a series of small group/ “green room” meetings held over the last four days, it seems to have become almost clear that there are substantial divergences/gaps on the five deliverables including the WTO’s response to the pandemic, fisheries subsidies, agriculture, a decision on the food purchases made by the World Food Programme (WFP), and proposed WTO reforms, said people, who took part in these meetings. Several members, including India, have raised concerns about the alleged non-transparent processes being adopted in the fisheries subsidies negotiations. A large number of countries seem to have been kept in the dark in the DG-led meetings on agriculture, fisheries subsidies, discussions on the “TRIPS COVID-19” draft outcome document and trade-related issues in the WTO response to the pandemic, and the outcome document for MC12, particularly on the proposed WTO reforms. Members will have a clearer picture or greater clarity from the special General Council meeting being held on 7 June, said a trade envoy, who asked not to be quoted. Earlier, the DG and the General Council chair, Ambassador Didier Chambovey of Switzerland, suggested that if there are too many gaps in these five areas, then they may not be negotiated at MC12 due to the fear that the conference could collapse on one issue or the other. However, Ms Okonjo-Iweala appears to be going ahead with the square-bracketed texts in all the areas and pose them to the ministers to decide at the ministerial meeting, said people, who asked not to be quoted. Significantly, the United States stormed out of a meeting on the WTO’s response to the pandemic on 3 June, and also warned at a small group meeting on fisheries subsidies on 6 June that it is difficult to negotiate on fisheries subsidies due to the alleged carve-outs on special and differential treatment (S&DT) for developing countries, said people, who asked not to be quoted. The US has apparently dropped a plurilateral pledge along with the European Union over the DG’s draft decision on the WFP’s food purchases that attempted to satisfy both the proponents and the opponents, said people, who asked not to be quoted. The alleged US opposition to paragraphs in the MC12 outcome document also raises serious questions whether the proposed WTO reforms will be carried out according to the “foundational principles of the WTO” and under the auspices of the General Council. It appears that the US and the EU want to “hive off” the negotiations on the WTO reforms, saying they want the General Council only to “oversee” discussions and not directly administer them, said people familiar with the series of meetings since 3 June. Against this backdrop, it would not be inappropriate to suggest that if MC12 fails to secure significant results, then the blame could be apportioned between the US and the EU, said several people, who asked not to be quoted. Nonetheless, the DG is allegedly making her best efforts to issue her “Plan B” outcomes in some or all deliverables if MC12 fails to arrive at decisions based on the negotiations over the past six months, said people, who asked not to be quoted. FISHERIES SUBSIDIES At a “green room” meeting of select trade envoys on 6 June, the US apparently said that it is difficult to negotiate the proposed fisheries subsidies agreement due to the carve-outs being demanded by developing countries, while the EU maintained that the “mind set” to negotiate is not there, said people, who asked not to be quoted. Amidst sharp divergences among big subsidizers like China, the EU, the US, Canada, Japan, and South Korea on the one side, and a large number of developing countries on the other, on the chair’s controversial draft text, a fisheries subsidies agreement is increasingly appearing to be difficult to achieve at MC12, said people, who asked not to be quoted. The US seems irked by calls for capping subsidies, the extension of specific flexibilities for artisanal fishermen to carry out their fishing activities till the Exclusive Economic Zone of 200 nautical miles, and the duration of special and differential treatment to be extended for a period of 25 years among others, said several people, who asked not to be quoted. With the selective picking of trade envoys for attending the meeting, apparently at the behest of the chair of the Doha fisheries subsidies negotiations, Ambassador Santiago Wills of Colombia, there was considerable angst among some members, said a trade envoy, who asked not to be identified. Thailand, which has repeatedly complained about not being invited to the “green room” meetings, was invited while India was not initially invited but was later called back, said people familiar with the development. At the “green room” meeting, Thailand seems to have made a call for limiting the duration of S&DT to 5-7 years, a call that is in line with what the EU and other countries had made over the last seven days, said people familiar with the development. At the meeting, several members like Peru, Indonesia, and other developing countries seemed to have called for capping subsidies, a proposal that is apparently not acceptable to the big subsidizers such as the EU and the US among others, said people, preferring anonymity. On the issue of S&DT, where the chair seems to have made some tweaking of the draft text, India, Indonesia, and members from the African Group called for appropriate and effective special and differential treatment for a period of 25 years to ensure policy guidance for their fishermen. In a statement made at the informal open-ended meeting on 3 June, India criticized the chair for allegedly adopting a non-transparent process and keeping members in the dark, said people, who asked not to be quoted. India said that the chair’s draft fisheries subsidies agreement did not take its proposals on board while allowing the big subsidizers to continue with their subsidies. India suggested that the draft fisheries subsidies agreement does not seem to address the United Nations Sustainable Development Goal 14.6 as it does not seem to underscore the need for bigger cuts in subsidies from the big subsidizers, insisting that the “polluter pays” principle is being given a short shrift. The UN SDG 14.6 states: “prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU 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 WTO fisheries subsidies negotiation.” India said, “Keeping with the spirit of these principles, India is committed to conclude the negotiations on Fisheries Subsidies, as long as it provides for balancing current and future fishing needs to diversify its fisheries sector, address the needs of millions of poor fishermen, preserve policy space for equitable growth in fishing capacities and modernizing its fleet in future.” New Delhi argued that “accordingly, we have advocated the need for appropriate and effective special and differential treatment (S&DT) under all three pillars (as per the UN SDG 14.6) to protect the livelihoods of poor fishermen, address food security concerns and provide future policy space for all maritime zones including high seas. However, we see that our concerns still remain in current text and the sustainability of fish stocks has been put on the back burner.” In a restricted room document (RD/TN/RL/158) issued on 6 June, India told the chair that “on one hand, there are very liberal and non-effective provisions in Article 5.1 to accommodate flexibilities for distant water fishing nations, on the other hand, developing countries have not been provided with appropriate and effective S&DT under Article 5.4.” India said that “our understanding is that text of Article 5 (concerning the OCOF pillar) will keep the asymmetries as such with those who have already created over-capacities and adversely affect developing countries with no scope for future policy space to catch up.” “Therefore, we reiterate our need for appropriate and effective special and differential treatment (S&DT) under all three pillars,” India said. Explaining the S&DT provisions under Article 5.4, India said that there are three elements, i.e. “the transition period (Article 5.4(a)), de minimis threshold (Article 5.4(b)(i)) and geographical limit for low income or resource poor or livelihood fishing or fishing related activities (Article 5.4(b)(ii)).” “For us, all the three elements are an integral part of the S&DT package and through these three elements together, we seek to balance the rest of the obligations/flexibilities/carve outs under Article 5.” Needless to say, India said, “in case any of these elements is removed/not agreed to, the delicate balance is disturbed and the whole article will collapse, thus reducing our hard work till now to a nought.” India highlighted that “the transition period of 25 years under Article 5.4(a) is a must-have for us.” “Without agreeing to the 25-year transitional period, it will be difficult for us to finalize the negotiations as we need this policy space to develop our fisheries sector,” India warned. India said “this is a transition period and not a permanent carve-out” and “it is also important to note that India’s fisheries subsidies are quite low in comparison to our number of fishermen and production.” Based on FAO statistics of the number of fishermen, India said its “per capita subsidy is only USD 26 per annum and for production, the subsidies are only USD 29 per unit of MT production. These figures are far less than most of the developed countries.” India argued that “to bring balance to the text of Article 5, the exemption for low income or resource-poor or livelihood fishing should be up to EEZ (200 nautical miles)”, as opposed to the chair’s textual proposal of 12 nautical miles as the limit for artisanal fishermen in developing countries. “Regarding the S&DT under the pillar of Unregulated and Unreported fishing (Article 3.8), we seek exemption from prohibition in respect to non-industrial vessels up to 12 nautical miles and a transition period of 7 years for fishing in EEZ,” India said. “Similarly, under the overfished stocks (Article 4.4), we seek exemption for low income, resource poor or livelihood fishing up to 12 nautical miles and transition period of two years from the time of declaration of stock,” India pointed out. Indonesia also made a strong statement underscoring the need for S&DT provisions, particularly extending the limit for fishing activities of its small, resource poor, and livelihood fishermen to 200 nautical miles (Exclusive Economic Zone) in its hundreds of islands, said a person, who asked not to be quoted. On Friday, the chair made some changes to the draft text “to adjust the prohibition on granting subsidies to vessels not flying that Member’s flag.” In Article 1 concerning the scope of the agreement, the chair said “this Agreement applies to subsidies, within the meaning of Article 1.1 of the Agreement on Subsidies and Countervailing Measures (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.” The chair added a new footnote 3 that seems to have caused considerable confusion as to the underlying reasons for introducing this footnote, said a negotiator from the least developed countries. The footnote three states, “for greater certainty, for the purposes of this Agreement, a subsidy shall be attributable to the Member conferring it, regardless of the flag or registry of any vessel involved or the nationality of the recipient.” In an apparent attempt to give an alleged carveout to the European Union, the chair said, in footnote two, “government-to-government payments under fisheries agreements shall not be deemed to be subsidies within the meaning of this Agreement.” Several countries argued that government-to-government payments would constitute a form of insidious subsidies, said people, who asked not to be quoted. The chair proposed an issue concerning Member’s flag in Article 5.3 which says that “a member shall take special care and exercise due restraint when granting subsidies to vessels not flying that Member’s flag.” However, there are many unresolved issues, including the issue of territoriality, forced labour in the fisheries sector introduced by the US, and the architecture of Article 5 dealing with the subsidy disciplines in the overcapacity and overfishing (OCOF) pillar that includes the so-called “hybrid” carve-outs for the big subsidizers while chipping away at appropriate and effective special and differential treatment for developing countries.
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