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TWN Info Service
on WTO and Trade Issues (Mar23/04) Geneva, 21 Mar (D. Ravi Kanth) — The new chair of the Doha Rules negotiations, Ambassador Einar Gunnarsson of Iceland, has apparently brought a new lease of life to the fisheries subsidies negotiations on 20 March, with enhanced transparency and a member-driven process to conduct the negotiations, said people familiar with the discussions. As compared to his controversial predecessor former Ambassador Santiago Wills of Colombia, who allegedly circulated draft texts without considering members’ proposals, Ambassador Gunnarsson seems to have anchored the negotiating process based on members’ proposals, said a fisheries negotiator. At the first meeting of the fisheries week on 20 March, Ambassador Gunnarsson indicated some broad changes in the process for the sake of transparency, which was largely missing under the tenure of Ambassador Wills, said another negotiator, who asked not to be quoted. In the presence of the WTO’s Director-General Ms Ngozi Okonjo Iweala, who attended the brief one-hour meeting, the new chair suggested changes in the process, such as establishing four small groups comprising 20 countries who, in turn, will hold discussions with another 20 members. One group of members will spell out the broad ideas to the other group of 20 members to crystallize ideas/ proposals, the negotiator said. The small group consultations will focus on the most difficult/critical pillar of subsidies that contribute to overcapacity and overfishing (OC&OF). Apparently, in a note sent to members, the chair indicated that the small group meetings could address: (1) how to deal with subsidies that contribute to OC&OF, and (2) how to deal with Special and Differential Treatment (S&DT). He seems to have emphasized the need to focus the discussions on issues pertaining to sustainability, the negotiator said. The small group consultations will be held on 22-23 March, while on 21 March, members will hold bilateral negotiations with the participation of capital-based officials. The fisheries week is expected to conclude on 24 March. The chair seems to have agreed with a proposal that the small group consultations could be followed by officials in capitals in a listening mode only, said negotiators, who preferred not to be identified. Ambassador Gunnarsson appears to have underscored the need for early acceptance of the partial Fisheries Subsidies Agreement protocol that was agreed upon at the WTO’s 12th ministerial conference (MC12) last June. So far, only three countries – Switzerland, Singapore, and the Seychelles – have deposited their instruments of acceptance of the protocol out of 164 WTO member countries in the last nine months. The DG has repeatedly exhorted members to submit their instruments of acceptance but the response has been lukewarm, said negotiators, who asked not to be quoted. It appears that the new chair wants members to work on a template of notifications for the preparation of the final protocol. It appears somewhat unclear whether the new chair will proceed on the basis of the last text issued by the previous chair at MC12 last June. On Article 5 concerning subsidies contributing to overcapacity and overfishing, the former chair issued the text under his own responsibility. The provisions in Article 5 on OC&OF include: 5.1[1] No Member shall grant or maintain subsidies to fishing or fishing-related activities that contribute to overcapacity or overfishing. For the purpose of this paragraph, subsidies that contribute to overcapacity or overfishing include: (a) subsidies to the construction, acquisition, modernisation, renovation or upgrading of vessels; (b) subsidies to the purchase of machines and equipment for vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machinery for sorting or cleaning fish); (c) subsidies to the purchase/costs of fuel, ice, or bait; (d) subsidies to costs of personnel, social charges, or insurance; (e) income support of vessels or operators or the workers they employ; (f) price support of fish caught; (g) subsidies to at-sea support; (h) subsidies covering operating losses of vessels or fishing or fishing related activities. 5.1.1 A subsidy is not inconsistent with Article 5.1 if the subsidizing Member demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level. 5.2 (a) No Member shall grant or maintain subsidies contingent upon, or tied to, actual or anticipated fishing or fishing related activities in areas beyond the subsidizing Member’s jurisdiction (whether solely or as one of several other conditions).[2] (b) Subparagraph (a) shall not apply to the non-collection from operators or vessels of government-to- government payments under agreements and other arrangements with coastal Members for access to the surplus of the total allowable catch of the living resources in waters under their jurisdiction, provided that the requirements under Article 5.1.1 are met. 5.3 No Member shall grant or maintain subsidies provided to fishing or fishing related activities outside of the jurisdiction of a coastal Member or a coastal non-Member and outside the competence of a relevant RFMO/A (Regional Fisheries Management Organization/Arrangement). 5.4 A Member shall take special care and exercise due restraint when granting subsidies to vessels not flying that Member’s flag. 5.5[[3]] (a) A developing country Member may grant or maintain the subsidies referred to in Article 5.1 to fishing and fishing related activities within its exclusive economic zone and the area of competence of a relevant RFMO/A [for a maximum of 7 years after the entry into force of this Agreement][up to the year 2030]. Subsidies granted or maintained under this paragraph shall be exempt from actions based on Articles 5.1 and 10 of this Agreement for a period of 2 additional years after the end of the period referred to in the prior sentence. A developing country Member intending to invoke this provision shall inform the Committee in writing within one year of the date of entry into force of this Agreement. (b) (I) A developing country Member may grant or maintain the subsidies referred to in Article 5.1 to fishing and fishing related activities if its share of the annual global volume of marine capture production does not exceed [0.8] per cent as per the most recent published FAO data as circulated by the WTO Secretariat. (ii) A Member remains exempted until its share exceeds the threshold in Article 5.5(b)(I) for three consecutive years. It shall be re-included in Article 5.5(b)(I) when its share of the global volume of marine capture production falls back below the threshold for three consecutive years. (c) A developing country Member may grant or maintain the subsidies referred to in Article 5.1 for low-income, resource-poor and livelihood fishing or fishing related activities, up to [12][24] nautical miles measured from the baselines, including archipelagic baselines. (d) While applying Article 5.5, a Member shall endeavour to ensure that its subsidies do not contribute to overcapacity or overfishing. In addition to his text issued at MC12, the former chair also circulated an addendum to explain the state of play in the negotiations. But several members seem to have pronounced that the chair’s text is asymmetrical and biased towards the biggest subsidizers such as the United States, the European Union, China, Canada, Japan, and Korea among others, said negotiators, who asked not to be quoted. While carve-outs seem to have been provided to the big subsidizers, the developing countries, who did not contribute to the problem of overcapacity and overfishing, were seemingly punished with restricted special and differential treatment provisions in Article 5.5, said negotiators. Also, the core provisions in the OC&OF pillar seemed to have failed to live up to the mandate outlined in the United Nations Sustainable Development Goal (SDG) 14.6, said people, who asked not to be quoted. According to SDG 14.6, members are required to, by 2020, “prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU (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 WTO fisheries subsidies negotiation(s).” HURDLES AHEAD The developing countries appear to have locked themselves into what several WTO members reckon as a “toothless” Fisheries Subsidies Agreement that was concluded at MC12 on 17 June 2022, said people familiar with the decision. The new Fisheries Subsidies Agreement, concluded last June, will remain only on paper and is “static” for all purposes without an immediate value until an accompanying protocol is ratified by two-thirds of WTO members when they submit their instruments of acceptance. Given the past record of new agreements that were ratified, ratification is a time-drawn process and it may take several years to ratify the Fisheries Subsidies Agreement, said people, who asked not to be quoted. After nine months, only two “friends of the system” – Switzerland and Singapore – as well as the Seychelles have signed the protocol. For the protocol to the agreement to come into effect, two-thirds of members have to ratify it as per paragraph 3 of Article X of the Marrakesh Agreement. According to Article 12 of the Fisheries Subsidies Agreement, if the final and full agreement is not concluded within four years, the negotiations will be terminated. As per Article 12,”If comprehensive disciplines are not adopted within four years of the entry into force of this Agreement, and unless otherwise decided by the General Council, this Agreement shall stand immediately terminated.” As previously reported in the SUNS, the agreement includes a prohibition on subsidies to a vessel or operator found to have been engaged in illegal, unreported, and unregulated (IUU) fishing, if “heavy” transparency provisions by the coastal Member are complied with, with a right to the subsidizing Member to limit the duration of such limited prohibition. Secondly, it includes an absolute prohibition of subsidies for fishing in high seas not under the competence of regional fisheries management organizations or arrangements (RFMO/As). However, in practice, practically every area is under the competence of RFMO/As. This is a landmark prohibition that assumes that the competence of RFMO/As over areas of the high seas equates to sustainability. Thirdly, the provision on overfished stocks will allow the continuation of subsidies regarding the most vulnerable stocks in the first phase of the agreement. It has been well established by various studies and reports that the big subsidizers such as the European Union, the United States, Canada, Norway, Japan, and Korea among others, through their subsidies, have mainly contributed to the global depletion of fish stocks. Yet, the burden of commitments appears to have been gradually shifted to the developing countries, who had little or no contribution to the global depletion of fish stocks, said several MC12 participants, who asked not to be identified. The question, according to several people who spoke to the SUNS, is why would countries want to ratify an “incomplete” agreement merely focused on IUU fishing and overfished stocks, when they do not know what they are going to commit to in the overcapacity and overfishing (OC&OF) pillar in the future. More importantly, after ratifying the new agreement, members would need to complete negotiations on the OC&OF pillar in four years (as per Article 12 of the new agreement), said people, who asked not to be quoted. SUBSTANTIVE ELEMENTS OF FSA As regards the substantive elements of the Fisheries Subsidies Agreement (FSA), it is relevant to mention that non-specific fuel subsidies, which was in square brackets in the previous text, has been removed from the FSA. In document WT/MIN(21)/W/5, the Indian proposal was incorporated: “[1.2 Notwithstanding paragraph 1 of this Article, this Agreement 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.]” The crucial part of the new FSA on IUU fishing is in paragraph 3.8, which states: “For a period of 2 years from the date of entry into force of this Agreement, subsidies granted or maintained by developing country members, including least-developed country (LDC) Members, up to and within the exclusive economic zone (EEZ) shall be exempt from actions based on Articles 3.1 and 10 of this Agreement.” The developing countries are also subjected to a rather intrusive notification process on their IUU fishing subsidies. In a similar vein, paragraph 4.4 on “subsidies regarding overfished stocks” states: “For a period of 2 years from the date of entry into force of this Agreement, subsidies granted or maintained by developing country Members, including LDC Members, up to and within the EEZ shall be exempt from actions based on Articles 4.1 and 10 of this Agreement.” Significantly, on subsidies regarding overfished stocks, the big subsidizers are allowed to grant subsidies, provided “if such subsidies or other measures are implemented to rebuild the stock to a biologically sustainable level.” The European Union managed to get a big carve-out for its “government-to-government payments under fisheries access agreements” as they “shall not be deemed to be subsidies within the meaning of this agreement”, according to footnote two of the FSA. +
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