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Info Service on WTO and Trade Issues (Dec24/02) New Delhi, 4 Dec (D. Ravi Kanth) — The revised draft text issued by the chair of the Doha fisheries subsidies negotiations at the World Trade Organization on 29 November, aimed at reaching a final agreement at the upcoming General Council meeting on 16-17 December, appears to have tilted the level playing field in favour of the big subsidizers, with weak disciplines and less stringent notification requirements, said people familiar with the development. The seven-page revised draft text on Additional Provisions on Fisheries Subsidies (TN/RL/W/285) issued by the chair, Ambassador Einar Gunnarsson of Iceland, has incorporated the issue of forced labour raised by the United States in yellow highlight (indicating insertions and/or deletions needed before final adoption). It states: “C. 2 (a) any vessels and operators for which the Member has information that reasonably indicates the use of forced labour, along with relevant information to the extent possible; and …” It implies that the issue is up for negotiations between the US and China with some other countries, said a capital-based official who preferred not to be quoted. The Additional Provisions are riddled with footnotes denoting several caveats for the big subsidizers if they can demonstrate before the Committee on Fisheries Subsidies, with varying time-lines, that they are taking adequate measures to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level, the official said. In contrast, the chair did not accord the same treatment to India which consistently demanded the inclusion of language in the revised draft text on non-specific fuel subsidies, the official added. Even though the big subsidizers are reported to have contributed to the problem of the global depletion of fish stocks through their tens of billions of dollars in subsidies contributing to overcapacity and overfishing, including distant-water fishing nations like China and the European Union, they are allegedly being “let off the hook” with manageable notification requirements, said people familiar with the provisions of the revised draft text. In stark contrast, the developing and graduating least-developed countries only managed to secure marginal improvements to special and differential treatment (S&DT) while leaving the crucial issue of transition periods for graduating least-developed countries as well as for India and Indonesia in square brackets. The chair also appears to have brushed aside the demand from several developing countries, particularly India, that the revised draft text be anchored on the UN Paris Climate Change Agreement (2015) framework of “common but differentiated responsibilities (CBDR)”, said several fisheries negotiators, who asked not to be quoted. The mandate for the fisheries subsidies negotiations was decided at the WTO’s 11th Ministerial Conference (MC11) in Buenos Aires, Argentina in December 2017, in accordance with the United Nations Sustainable Development Goal (SDG) 14.6. The Buenos Aires mandate states: “Building on the progress made since the 10th Ministerial Conference as reflected in documents TN/RL/W/274/Rev.2, RD/TN/RL/29/Rev.3, Members agree to continue to engage constructively in the fisheries subsidies negotiations, with a view to adopting, by the Ministerial Conference in 2019, an agreement on comprehensive and effective disciplines that prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU-fishing recognizing that appropriate and effective special and differential treatment for developing country Members and least developed country Members should be an integral part of these negotiations.” The UN SDG 14.6 states: “By 2020, 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.” REVISED DRAFT TEXT Article A of the revised draft Additional Provisions on Fisheries Subsidies (document W/285) on subsidies contributing to overcapacity and overfishing states: A.1. No Member shall grant or maintain subsidies to fishing or fishing related activities that contribute to overcapacity or overfishing. For the purposes of this paragraph, subsidies that contribute to overcapacity or overfishing include: (a) subsidies to construction, acquisition, maintenance, modernisation, renovation, or upgrading of vessels; (b) subsidies to the purchase or maintenance 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 except for such subsidies implemented for subsistence purposes during seasonal closures; (f) price support of fish caught; (g) subsidies to at-sea support; and (h) subsidies covering operating losses of vessels or fishing or fishing related activities. Footnote 2 states: “For greater certainty, the subsidies listed in this provision shall not be deemed to contribute to overcapacity or overfishing when granted or maintained in accordance with Article A.1.1.” Article A.1.1 (a) states: “A subsidy is not inconsistent with Article A.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. Such demonstration shall include an explanation of how those measures ensure, or can reasonably be expected to ensure, that the stock or stocks in the relevant fishery or fisheries are maintained at a biologically sustainable level and shall be made through a notification by the subsidizing Member as soon as practicable and no later than six 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 Agreement on Subsidies and Countervailing Measures (SCM Agreement) and Article 8.1 of the Agreement on Fisheries Subsidies (AFS).” Effectively, under the above flexibility, big subsidizers such as the US, Japan, Korea, the EU, China, Canada, and Australia among others will be exempted from the prohibition on fisheries subsidies if they comply with the notification requirements based on the sustainability criterion. Further, the subsidizing members are required to provide notifications containing the following information: (i) conservation and management measures in place; (ii) status of the fish stocks (e.g., overfished, maximally sustainably fished, underfished, or unknown) and the reference points used, and whether such stocks are shared with any other Member or are managed by a Regional Fisheries Management Organization or Arrangement (RFMO/A); (iii) catch data by species or group of species as compiled by a Member; and (iv) information on the fleet capacity as compiled by a Member. A.1.1 (b) of the revised draft Additional Provisions states: “With the exception of Members covered by Article B.5 and notwithstanding Article A.1.1(a), for a developing country Member that is: (i) neither amongst the 10 largest providers of fisheries subsidies by annual aggregate level of fisheries subsidies as notified to the Committee on Fisheries Subsidies (the Committee) under Article C.3; (ii) nor significantly engaged in fishing or fishing related activities in any Food and Agriculture Organization of the United Nations (FAO) Major Fishing Area farther than one FAO Major Fishing Area beyond the one(s) adjacent to the Member’s coast; a subsidy is not inconsistent with Article A.1 if the subsidizing Member demonstrates through its regular notifications of fisheries subsidies under Article 25 of the SCM Agreement and Article 8.1 of the AFS that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.” However, the chair appears to have ignored the principle of common but differentiated responsibilities, which has not been taken into consideration, said several fisheries negotiators. In fact, he is required to take into consideration the per capita level of subsidies. “The picture changes if you consider the per capita level of subsidies as compared to the aggregate level of subsidies,” said a fisheries negotiator from a developing country who asked not to be quoted. The provision in Article A.2 (a) concerning distant-water fishing appears to be further diluted through the insertion of “to the greatest extent possible”, allegedly giving a carve-out to China and the EU. The provision now states: “Members shall refrain, to the greatest extent possible, from granting or maintaining 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). If such subsidies are nevertheless granted or maintained, the requirements in subparagraph (b) shall be met.” Instead of abolishing subsidies to distant-water fishing, the chair appears to have allowed these two members to manage their subsidies through flexible demonstration requirements, said negotiators familiar with the provisions. Given the rather poor record of members in complying with agriculture subsidy notification requirements, the big subsidizers could be tempted to find “escape routes” to overcome the notification requirements in the Committee on Fisheries Subsidies, said negotiators who asked not to be identified. S&DT In the chair’s draft Additional Provisions, the issue of special and differential treatment (S&DT) is dealt with in Article B. Article B.1 (a), dealing with the least developed countries, states: “Article A.1 shall not apply to LDC Members. A Member that graduates from the LDC category may grant or maintain the subsidies referred to in Article A.1 to fishing or fishing related activities for a maximum of […] years after the date on which the decision of the UN General Assembly to graduate that Member from the “Least Developed Countries” category becomes effective.” This implies that graduating LDCs, which were given a period of four years in the previous draft, now have to negotiate “a maximum of […] years”, a process that could result in hard bargaining as well as some divide-and- rule practices, said an LDC negotiator who asked not to be quoted. Article B.1 (b) states: “Subsidies granted or maintained under subparagraph (a) shall be exempt from actions based on Article A.1 of these Additional Provisions and Article 10 of the AFS for a period of two additional years after the end of the period referred to in the second sentence of subparagraph (a).” Articles B.2 to B.5 of the draft Additional Provisions relate to S&DT for developing countries. For instance, on the issue of de minimis, Article B.2 states: “A developing country Member may grant or maintain the subsidies referred to in Article A.1 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.” This is a specific flexibility accorded primarily to the ACP (African, Caribbean and Pacific) group of countries, many of whom have a share in volume terms in the global fish catch that is less than 0.8 per cent. Article B.3 (a) states: “A developing country Member not covered by the special and differential treatment provided for in Article B.1 or Article B.2 may grant maintain the subsidies referred to in Article A.1 to fishing or fishing related activities within its EEZ, and in the area and for species under the competence of an RFMO/A through which the Member is authorized to engage in such fishing or fishing related activities, for a maximum of […] years after the date of entry into force of these Additional Provisions. 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 these Additional Provisions.” According to Article B.3 (b), “Subsidies granted or maintained under subparagraph (a) shall be exempt from actions based on Article A.1 of these Additional Provisions and Article 10 of the AFS for a period of two additional years after the end of the period referred to in the first sentence of subparagraph (a).” Article B. 3 ( c) states: “A developing country Member to which subparagraph (b) applies may request no more than two two-year extensions of the period referred to in that subparagraph through the Committee. The Committee shall take into account the specific circumstances of that Member, and shall give due and sympathetic consideration to developing country Members that demonstrate concrete progress toward implementing Article A.1.” The above provisions leave India, Indonesia, and other developing countries to negotiate on the “maximum of […] years” after the date of entry into force of these Additional Provisions. In the previous draft text (WT/RL/W/279), the chair had suggested a period of 10 years for S&DT for developing countries. As for small-scale and artisanal fishing or fishing-related activities, Article B.4 (a) states: “A developing country Member may grant or maintain the subsidies referred to in Article A.1 for small scale and artisanal fishing or fishing related activities that are primarily low income, resource poor or livelihood in nature as operationally defined by that Member.” In addition, Article B. 4 (b) states: “A developing country Member availing itself of subparagraph (a) shall, in its regular notification under Article 25 of the SCM Agreement and Article 8.1 of the AFS, notify the subsidies provided under this provision and provide its operational definition(s) of the fishing or fishing related activities referred to in subparagraph (a), and promptly inform the Committee of any modifications thereafter.” In a similar vein, Article B.5 states: “Subsidizing developing country Members are encouraged to make a binding commitment not to avail themselves of Article B.1, Article B.2, Article B.3 and Article B.4.” While such explicit conditions are being suggested for developing countries who did not contribute to the problem of overcapacity and overfishing, the ten largest subsidizers are allegedly being accorded “kid-gloves” treatment, said people familiar with the additional provisions. NOTIFICATION & TRANSPARENCY Article C.1 of the draft Additional Provisions dealing with notification and transparency states: “Article 25 of the SCM Agreement and Article 8 of the AFS shall apply to these Additional Provisions, with the additions provided for in Article A, Article B, and this Article.” The chair appears to have complied with the US demand by inserting language on forced labour in Article C.2 (a), though it is up for further negotiations between the US on the one side, and China and other developing countries, on the other. Article C.2 states: “Each Member shall notify the Committee in writing on an annual basis of: (a) any vessels and operators for which the Member has information that reasonably indicates the use of forced labour, along with relevant information to the extent possible; and (b) a list of any agreements in force, or existing arrangements, for obtaining access to the fisheries resources of another coastal Member or non-Member, and such notification shall consist of: (i) the titles of the agreements or arrangements; and (ii) a list of their parties. A Member may meet this obligation by providing an up-to-date electronic link to the Member’s or other appropriate official web page that sets out this information. This notification may be presented either individually or jointly by Members who are parties to an agreement or arrangement.” According to Article C.3, “Each Member shall notify to the Committee information that is necessary for the determination of its annual aggregate level of fisheries subsidies, building upon its existing notifications under Article 25 of the SCM Agreement and Article 8.1 of the AFS. The first notification of this information shall be submitted not later than 240 days from the date of entry into force of these Additional Provisions. Thereafter, this information shall be provided in the Member’s regular notifications of fisheries subsidies under Article 25 of the SCM Agreement and Article 8.1 of the AFS. Each Member shall submit this information through a template the content and form of which shall be previously adopted by Members.” Article C.4 states: “Within one year from the date of entry into force of these Additional Provisions, the WTO Secretariat shall compile and make publicly available a list of Members and their respective annual aggregate levels of fisheries subsidies, on the basis of the information referred to in Article C.3. The list shall be ranked in descending order by annual aggregate level of fisheries subsidies. The list shall be updated in accordance with the cycle of regular notifications under Article 25 of the SCM Agreement and Article 8.1 of the AFS. For the purpose of establishing the list, the WTO Secretariat may request technical clarifications from the subsidizing Member concerning the notified subsidies. The Committee shall review the list at its regular meetings.” Article C.5 states, “Nothing in these Additional Provisions requires the provision of confidential information, including confidential business information.” OTHER PROVISIONS Article D.1 (a) of the draft Additional Provisions states: “Not later than five years after the date of entry into force of these Additional Provisions, the Committee shall review their operation. This review shall assess, in particular, the overall impact of these Additional Provisions on overcapacity and overfishing, distant water fishing or fishing related activities, aggregate levels of fisheries subsidies, and aggregate levels of subsidies contingent upon, or tied to, actual or anticipated fishing or fishing related activities in areas beyond national jurisdiction, and whether these Additional Provisions have increased economic benefits to small island developing state Members and LDC Members from the sustainable use of marine resources. The review shall also identify any necessary modifications to further strengthen the operation or improve the effectiveness of these Additional Provisions, taking into account their objectives and UN Sustainable Development Goals target 14.6 and target 14.7. Such modifications may include quantitative limitations or reduction commitments to subsidies of the major subsidizers. If either the aggregate levels of subsidies or aggregate levels of subsidies contingent upon, or tied to, actual or anticipated fishing or fishing related activities in areas beyond national jurisdiction have increased, the Committee may recommend quantitative limitations or reductions unless it determines that other modifications are more appropriate. In considering any modifications to these Additional Provisions, the Committee shall take into account the information provided under Article A.2 ( c) and Article C.3.” The Committee on Fisheries Subsidies shall report its findings to the Council for Trade in Goods. The chair states, in Article E.1 of the revised draft Additional Provisions, “These Additional provisions together with the AFS, constitute the comprehensive disciplines referred to in Article 12 of the AFS and achieve the comprehensive agreement on fisheries subsidies in accordance with paragraph 4 of the Ministerial Decision on the AFS adopted at the Twelfth Session of the WTO Ministerial Conference …” Paragraph 4 of the MC12 Ministerial Decision states: “Notwithstanding Article 9.4 of the Agreement on Fisheries Subsidies, the Negotiating Group on Rules shall continue negotiations based on the outstanding issues in documents WT/MIN(21)/W/5 and WT/MIN(22)/W/20 with a view to making recommendations to the Thirteenth WTO Ministerial Conference for additional provisions that would achieve a comprehensive agreement on fisheries subsidies, including through further disciplines on certain forms of fisheries subsidies that contribute to overcapacity and overfishing, recognizing that appropriate and effective special and differential treatment for developing country Members and least developed country Members should be an integral part of these negotiations.” Paragraph 4 of the MC12 Ministerial Decision appears to have diluted the original mandate by removing the phrase “prohibit” OCOF subsidies. In conclusion, it seems rather clear that the OCOF subsidies of the largest subsidizers like China, the EU, the US, Japan, Korea, and Chinese Taipei among others will not be “prohibited” but will continue on with manageable notification requirements, said people familiar with the revised draft text. +
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