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Info Service on WTO and Trade Issues (Feb24/04) Geneva, 1 Feb (D. Ravi Kanth) — The chair of the Doha fisheries subsidies negotiations on 29 January said that the second week of negotiations on crafting disciplines on subsidies contributing to overcapacity and overfishing (OCOF) seemed “productive and useful” ahead of the World Trade Organization’s 13th ministerial conference (MC13) beginning in Abu Dhabi on 26 February. An agreement on the second phase of the negotiations is imperative for the success of MC13. With less than two weeks left for the critical WTO General Council meeting ahead of MC13, differences over the carve-outs given to the largest subsidizers could unravel the negotiations, said people, who asked not to be quoted. In an email sent to the heads of delegations on 29 January, seen by the SUNS, the chair, Ambassador Einar Gunnarsson of Iceland, presented a detailed report on the state of play in the negotiations last week, claiming that the thematic sessions on special and differential treatment (S&DT) were useful. The discussions, he said, “revealed areas where intensive engagement will be needed in the next few days to close existing gaps.” However, the chair did not indicate how serious the gaps are and whether they could unravel the negotiations. The draft text he issued on 21 December appears to be overly tilted in favour of the big subsidizers, said people, who asked not to be quoted. In his email, the chair said, “At the end of each session last week, I felt encouraged by the earnestness of your efforts to clarify or resolve difficult issues in relation to SDT provisions.” Giving an account of how the negotiations progressed last week, following the first “Fish Week” of discussions (15-19 January), Ambassador Gunnarsson said that members “focused on Articles B.3, B.4, B.1 and B.2 together, and B.6.” The disciplines proposed in Article B of the chair’s draft text (TN/RL/W/277) refer to special and differential treatment: “ARTICLE B: SPECIAL AND DIFFERENTIAL TREATMENT B.1 The prohibition under Article A.1 shall not apply to LDC Members. A graduated LDC Member may grant or maintain the subsidies referred to in Article A.1 to fishing and fishing related activities within its Exclusive Economic Zone (EEZ) and in the area and for species under the competence of an RFMO/A through which the Member has fishing rights, for a maximum of [X] years after the entry into force of a decision of the UN General Assembly to exclude that Member from the “Least Developed Countries” category. B.2 A developing country Member may grant or maintain the subsidies referred to in Article A.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. A Member remains exempted until its share exceeds this threshold for three consecutive years. It shall be re-included in Article B.2 when its share of the global volume of marine capture production falls back below the threshold for three consecutive years. B.3 (a) Except as provided for in Article B.6, a developing country Member not covered by Article B.1 or B.2 may grant or maintain the subsidies referred to in Article A.1 to fishing and fishing related activities within its EEZ, and in the area and for species under the competence of an RFMO/A through which the Member has fishing rights, for a maximum of [X] years after the entry into force of these disciplines. Thereafter, such a developing country Member that would otherwise fall under Article A.1.1(a) may instead apply Article A.1.1(b) in respect of subsidies referred to in Article A.1 for a maximum of [Y] years. A developing country Member intending to invoke this provision shall inform the Committee on Fisheries Subsidies in writing within one year of the date of entry into force of these disciplines. (b) Subsidies granted or maintained under subparagraph (a) shall be exempt from actions based on Article A.1 and Article 10 of the Agreement on Fisheries Subsidies for a period of two additional years after the end of the period referred to in the first sentence of subparagraph (a). (c) A developing country Member to which subparagraph (b) applies may request an extension of the period referred to in that provision through the Committee on Fisheries Subsidies. The Committee shall take into account the specific circumstances of that Member, and shall give sympathetic consideration to developing country Members that demonstrate concrete progress toward implementing Article A.1. B.4 Except as provided for in Article B.6, a developing country Member not covered by Article B.1 or B.2 may grant or maintain the subsidies referred to in Article A.1 for low income, resource poor [and][or] livelihood fishing or fishing related activities up to [12][24] nautical miles, measured from the baselines, including archipelagic baselines. B.5 While applying Article B, a Member shall endeavour to ensure that its subsidies do not contribute to overcapacity or overfishing. B.6 A developing country Member engaged in fishing or fishing related activities in any area further than one FAO Major Fishing Area beyond the one(s) adjacent to its natural coastline shall not have access to Articles B.1, B.2, B.3, and B.4.” Effectively, the proposed disciplines on S&DT seem to be based on differentiation where developing countries with larger shares in global fishing are subjected to stringent and narrow flexibilities, as compared to the largest subsidizers. As in the Uruguay Round Agreement on Agriculture, where the big subsidizers were given room to shield their trade-distorting domestic support, the largest subsidizers contributing to OCOF are seemingly also allowed to continue with their subsidies so long as they comply with the notification requirements and measures that would lead to the replenishment of the vulnerable fish stocks, said people who asked not to be quoted. In his email, the chair referred to “two deep dive sessions during the week – the first a simulation offered by Australia of how a notification could make the demonstration required under Article A.1.1(a) to fulfill the sustainability-based conditionality in the main OCOF discipline.” Article A.1.1 (a) of the draft text is a carve-out proposed for the big subsidizers. It states: “For a Member that is amongst the 20 largest providers of fisheries subsidies by annual aggregate value as notified to the WTO pursuant to Article C.4, a subsidy is not inconsistent with Article A.1 if the subsidizing Member demonstrates that measures are implemented that can reasonably be expected to ensure that the stock or stocks in the relevant fishery or fisheries are at a biologically sustainable level. Such demonstration shall be made through a notification as soon as practicable and no later than three months after a new subsidy program comes into effect, and thereafter in the Member’s regular notifications of fisheries subsidies under Article 25 of the SCM Agreement, Article 8 of the Agreement on Fisheries [Subsidies], and Article C.” Surprisingly, the chair is yet to offer a credible explanation as to why he has not included distant-water fishing engaged by the largest subsidizers in the list of prohibited subsidies under Article A.1, said people who asked not to be quoted. THE SPECIFICS “Turning to the specifics,” the chair said in his email, “we held our first focused thematic session of the week, regarding the transition period in Article B.3, on Tuesday afternoon.” (See Article B.3 above on S&DT). He added that, “The main objective of this session was to discuss our understanding of the interplay amongst subparagraphs (a), (b) and ( c) of this provision.” According to the chair’s email, “Members seem to agree that the provision, as currently drafted, would apply to Members not covered by Articles B.1, B.2, or B.6. Members also appear to see the peace clause provided for in Article B.3(b) as starting right after the end of the [X] years in the first sentence of Article B.3(a), and running in parallel with the [Y] years in the second sentence of Article B.3(a).” Further, “Members also seem to understand that during the period of application of the peace clause, the obligations under Article A.1, including the associated notification obligations and Committee scrutiny, would apply,” the chair said. The “peace clause” offered to the developing countries for availing of S&DT pales into insignificance as compared to the “peace clause” offered to the largest subsidizers, said people who asked not to be quoted. Ambassador Gunnarsson said, “We also had a productive conversation on the time periods in Article B.3(a) referred to as [X] and [Y] years.” The chair said, “Several delegations suggested 7 years for [X] in the first sentence, while at the high end 25 years was mentioned.” As previously reported in the SUNS, the deadline of 7 years was proposed by one of the biggest subsidizers, while a period of 25 years is being demanded by India, said people, who asked not to be quoted. At a more general level, the chair said in his email: “Many members suggested that this period should be based on commercial realities and should provide adequate policy space.” “Others, however, indicated that the duration of the period should be based on what is necessary to develop the capacity to implement the disciplines, with some indicating that 2030 could serve as an appropriate end point,” the chair said. Article B.3 ( c) of the draft text states: “A developing country Member to which subparagraph (b) applies may request an extension of the period referred to in that provision through the Committee on Fisheries Subsidies. The Committee shall take into account the specific circumstances of that Member, and shall give sympathetic consideration to developing country Members that demonstrate concrete progress toward implementing Article A.1.” According to the chair’s email, “one set of Members advocated relaxing the basis on which the peace clause could be extended; while another set of Members cautioned against a provision that could allow for an indefinite extension of the peace clause, also arguing that the availability of this extension should be linked to the provision of technical assistance and capacity building.” Regarding Article B.3 overall, the chair said that “his assessment is that where certain competing viewpoints were expressed, these did not seem to be irreconcilable. Rather, they seemed to be about getting the details right within the same overall approach.” The chair said that during the discussion on the specificities of Article B.4, the focus “was two-fold: first, on the appropriate terminology to refer to the fishing communities that the provision intends to safeguard; and second, on elements that could ensure that the provision is fit for purpose and does not become a loophole for subsidizing commercial-scale fishing.” Article B. 4 states: “Except as provided for in Article B.6, a developing country Member not covered by Article B.1 or B.2 may grant or maintain the subsidies referred to in Article A.1 for low income, resource-poor [and][or] livelihood fishing or fishing related activities up to [12][24] nautical miles, measured from the baselines, including archipelagic baselines.” The chair acknowledged that discussions on Article B.4 revealed “difficulties involved in reaching a common understanding of terms such as small scale, artisanal, low income, resource poor, and livelihood fishing. I did not detect significant progress toward convergence around the meaning of any of these terms, nor a shared understanding on which terms would be the most suitable for use in Article B.4.” Thus, according to the chair, Article B.4 “remains a provision for which finding common ground will demand considerable dedicated attention in the coming days.” The chair said that members also discussed “the specifics of Article B.1 and Article B.2, especially in relation to the practical effects for a Member of being covered under these provisions, and the considerations regarding the application of other SDT measures to Members that graduate from these provisions.” In the final discussion on Article B.6 last week, the chair said that he asked members “in particular to share your understanding of how the provision would operate in practice, including how the reference to FAO major fishing areas would apply.” Article B.6 refers to distant-water fishing, which ought to have been a core discipline prohibiting OCOF subsidies. The chair seems to have ignored calls from developing countries to include distant-water fishing in the list of prohibited subsidies in Article A. According to the chair’s draft text, Article B.6 states: “A developing country Member engaged in fishing or fishing related activities in any area further than one FAO Major Fishing Area beyond the one(s) adjacent to its natural coastline shall not have access to Articles B.1, B.2, B.3, and B.4.” Why the chair has included distant-water fishing under the provisions on S&DT (in Article B) appears to be a mystery, knowing full well that it is directed against China, said a negotiator, who asked not to be quoted. In his email, the chair said, “Also, regarding Article B.6, some Members raised the concern that FAO major fishing areas are uneven in size, which could disadvantage certain Members. On this point, I would reaffirm that Article B.6 would exclude only Members that conduct fishing activities in the third FAO major fishing area out from their coastline, or beyond.” According to the email, “some Members raised the concern that Article B.6 could be triggered even if one fishing vessel that is flagged but not subsidized by a developing country is engaged in fishing in or beyond the third area out from that developing Member’s shore. Such Members suggested that to avoid this situation, Article B.6 should be operated based on subsidization of fishing activities in or beyond the third area out, rather than on engagement in fishing per se.” The chair finally acknowledged that “some Members oppose Article B.6 for systemic reasons, and suggest instead that there should be a voluntary mechanism for developing Members to opt out of using SDT if they so wish.” He also appointed three facilitators to discuss with members on some specific issues. “For Member-led drafting sessions, I have reached out to some delegates who have kindly agreed to facilitate specific sessions,” the chair said. The facilitators are: * Luis Fernandez from Costa Rica who has agreed to assist on the sustainability standard in Article A.1.1(a); * Matthew Whittles from the United Kingdom who has agreed to assist on notification requirements under Article A.1.1( c); and * Vueti May from Fiji on commercially confidential information in Article C.2(b)(iii). In short, despite a seemingly upbeat report by the chair on the state of play in the fisheries subsidies negotiations, some critical issues concerning the treatment accorded to subsidies contributing to OCOF provided by the largest subsidizers could unravel the negotiations, said people who asked not to be quoted. +
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