TWN Info Service on WTO and Trade Issues (May08/12)
14 May 2008
Third World Network

Trade: Rules Group takes up elements of fisheries subsidies disciplines
Published in SUNS #6465 dated 29 April 2008

Geneva, 28 Apr (Kanaga Raja) -- An informal meeting of the WTO Negotiating Group on Rules on 24-25 April heard amongst others a proposal by Canada allowing members - both developed and developing alike - to support small-scale fishing, as well as a joint proposal by India and Indonesia that stressed the need for effective special and differential treatment for developing countries.

The Group also discussed two other subjects suggested by the Chair of the Group - fisheries management system and peer review.

The Chair, Ambassador Guillermo Valles Galmes of Uruguay, also gave a detailed report of the plurilateral consultations that he held in March, and on anti-dumping and subsidies (last week).

Furthermore, the Chair announced his intention to produce a document to help all delegations move forward - to arrive at a "comfort level" in the horizontal process. He however did not explain further what kind of document it would be.

At the informal meeting, India introduced briefly its joint paper (TN/RL/GEN/155, and Corr. 1) with Indonesia on "Need for Effective Special and Differential Treatment for Developing Country Members in the Proposed Fisheries Subsidies Text".

India stressed the need for effective special and differential treatment (S&D) in the fisheries subsidies text, adding that the joint paper would do away with many conditionalities on S&D appearing in the Chair's text.

In their paper, India and Indonesia said that they were making a strong case for effective and unconditional S&D provisions in the Chair's text.

The paper provides a brief background of the nature of the marine fisheries in most developing countries. It said that most developing countries have large sections of their population involved in fisheries. More often than not, fishing is a means of livelihood in such countries, as opposed to its pre-dominantly commercial nature in developed countries.

Further, the fisheries sector is characterized by unpredictability and seasonality of catch, where prices obtained for catch on any given day can be highly uncertain. Available evidence also suggests that coastal fishing communities, in general, have lower levels of literacy, a lower sex ratio, and poorer conditions of housing, as compared to national averages.

Evidence also suggests that fishing communities are faced with a deteriorating quality of life as a result of pollution, sea erosion, increased pressure on coastal lands, degradation of the coastal environment and displacement, said the paper.

In addition, the technology used for fishing in developing countries is also very basic, with large sections of the fishing community using un-powered boats or at best, vessels with minimal motorization (up to 10 Horse Power outboard motors). For example, 44% of the fishing vessels in India are un-powered, but contribute to less than 10% of the marine fish production. If the small motorized vessels (up to 10HP motors) are also taken into account, these, together with the un-powered vessels account for about 75% of the vessels and 50% of the fish production. Most of these vessels are up to 20m length overall.

Similarly, in Indonesia, 85% of fishing vessels are small and traditional, operating mostly in the territorial waters. There are about 9,337 un-powered vessels and 77,339 small motorized vessels, which form this small and traditional fleet. Most of these vessels are also about 20m in length.

According to the paper, the fishing infrastructure in most developing countries is under-developed and in need of large doses of state intervention. For example, India has a long coastline of 8,118 sq km and an Exclusive Economic Zone of 2 million sq km. However, there are only 6 major and 41 minor fishing harbours and 2,000 landing sites. Most of the landing sites are rudimentary and in need of maintenance and repair. Clearly, there is a need to build more fishing harbours and landing sites.

It is therefore clear that developing countries need to protect the livelihood concerns of their poor fishermen and also take up major infrastructure development. Further, given the public good nature of the infrastructure and the involvement of huge investments with long gestation lags, it is clear that the State would have to continue to support such activities, the paper stressed.

The paper said that it is evident that the Chair's text on fisheries subsidies will not only restrict the efforts of developing countries at formulating and implementing public policies to address livelihood concerns of poor fishermen, but will also hinder their efforts at building infrastructure. Moreover, it seems to be unfair to restrict the very subsidies that developed countries have historically given to their small and artisanal fishermen and for developing their infrastructure.

The paper goes on to analyse the Chair's text and explains why developing countries would have a problem in accepting the S&D provisions in their current form. The paper provides a similar rationale for the difficulty in accepting Article V (in the proposed Annex VIII in the Chair's text on fisheries subsidies to the Agreement on Subsidies and Countervailing Measures) on fisheries management.

The paper also outlines the position of the two countries on notification and surveillance requirements (Article VI) and transitional provisions (Article VII). It provides an annex, where amendments to the Chair's text on fisheries subsidies have been suggested.

According to trade officials, the paper will be discussed at the next meeting of the Group.

Canada introduced a room document that proposed adding to the general exceptions a provision that would allow members (developed and developing countries alike) to support small-scale fishing.

According to trade officials, Canada proposed exempting fisheries subsidies granted by each member in its territorial waters that would not exceed "X% of the average landed value of fish harvested in these waters for the three preceding years for which data is available".

Canada said that it would need this exemption to rationalize fisheries in the context of the collapse of its cod stocks, and for programmes in support of aboriginal communities. It also stressed that these measures would not lead to over-fishing. It said that it did not yet have a definitive view on what the de minimis figure (X%) should be.

According to trade officials, Japan strongly supported the proposal as simple and workable, and one that did not depend on defining boat sizes. Korea said that its distant fishing communities need government support.

The EU strongly supported what it described as a simple and workable proposal. Hong Kong-China said that support for small-scale fisheries should be allowed for all members.

Chinese Taipei welcomed the general thrust of the proposal, while Norway said that it would also need to support small-scale coastal fishing but was concerned with the scope of the Canadian paper.

New Zealand said that unlike the developing countries, developed countries have so far failed to make a case for their exemption. It said that the potential coverage of the Canadian proposal is not small-scale - if one would use the Agriculture Agreement's de minimis of 10%, fisheries subsidies allowed for developed countries would be substantial and would be increasing because of rising fish prices.

According to trade officials, Australia said that the proposal is like using a sledgehammer to kill a mouse because this would lead to a large carve-out for small programmes. It said that the proposal presents a wrong shift in the debate. The US noted the concerns expressed on the paper, and believed that the proposal was premature.

India asked if the developed countries are the ones asking for a blank cheque. It said that small programmes in developing countries are completely different from those in developed countries, adding that one developed-country fishing boat could represent a fishing company in developing countries.

Barbados, speaking on behalf of small and vulnerable economies, said that the paper would give a great deal of flexibility to developed countries. It said that it would have to study the implications.

Brazil expressed concern that some large programmes could be allowed. China said that the situation of developing- and developed-country fishermen are different. It noted that Chinese fishermen earn on average only $3 a day.

Papua New Guinea said that small-scale fishing in the Pacific Island countries are mainly for livelihood purposes.

According to trade officials, Thailand, South Africa, Cuba and Turkey said that S&D for small-scale fisheries should be for developing countries only.

The Group also discussed two other subjects suggested by the Chair - fisheries management system and peer review. According to trade officials, many delegations said that the requirement for establishing a fisheries management system is at the heart of the draft agreement to control over-fishing.

Brazil said that the requirements here must not be overly prescriptive, especially for developing countries. Trade officials said that similar views were expressed by the Solomon Islands, China, Venezuela, Argentina and Turkey.

Barbados and El Salvador stressed the need for increased technical assistance in this area. Japan and Korea said that fisheries management systems would do more to control over-fishing than prohibiting fisheries subsidies.

According to trade officials, the EU, Canada, Australia, the US and Norway supported in general the Chair's text in this regard.

With respect to the peer review of members' fisheries regime, the Chair clarified that this would be in the form of written question-and-answer format similar to the current working procedure in the WTO Committee on Subsidies. He said that this would not be a review by scientific experts but by trade representatives, who can draw from expertise of organizations outside the WTO.

According to trade officials, many delegations said that they felt more comfortable with the text after this clarification, including Barbados (on behalf of the small and vulnerable economies), Jamaica (on behalf of the ACP countries), Thailand, China, Egypt and others.

Brazil stressed that all decisions in this area should be made by the WTO members. The EU urged more teeth to the peer review through the establishment of a fisheries division in the WTO Secretariat, and the publication of independent reports on members' fisheries management systems.

The US noted that nearly all delegations agree on the need for transparency, and that there was broad agreement on using outside expertise. It said that reports arising out of these reviews should not have legal consequences.

New Zealand said that sudden changes in fish stocks would require frequent reviews, while Chinese Taipei stressed that it could never accept the idea that the FAO or a non-WTO body would conduct the peer review.

In conclusion, the Chair said that there had been a very good discussion this week, and the one on peer review was encouraging. He noted that the Group is concerned not only with saving fish but also with saving jobs.

On the afternoon of 25 April, the Chair gave a detailed report on the plurilateral consultations that he held in March, and on anti-dumping and subsidies (last week).

On anti-dumping, Ambassador Valles Galmes said that the consultations dealt with the following subjects: information request to affiliates, facts available, duty assessment, new shipper review, changed circumstances, limited examination (Article 6), price undertakings, deletion of the lesser-duty rule, cost allocation and transition rules on the automatic sunset.

He said that consultations were also held on proposals of members not addressed in his text: de minimis margins, negligible import volumes, mandatory preliminary determination, standing, seasonal perishable products, and compliance.

On subsidies, there were discussions on the following issues - regulated prices, below-cost financing, allocation of subsidies and footnote number 2.

There were also consultations on the following subsidies proposals not addressed in the Chair's text: benchmark estimation (by Brazil); withdrawal of subsidy and de facto export subsidization (both from Australia).

According to trade officials, Indonesia, on behalf of ASEAN, noted that they have formally asked for a revised rules text before the horizontal process. Indonesia noted that the Trade Negotiations Committee (TNC) Chair had said it is a widely-shared view that the Rules Chair must come up with more than just a report, and not just a compilation either.

Indonesia added that this text should reflect the member-driven process in the WTO. It said that there is little time to spare for a good, solid and balanced outcome.

Thailand presented a room document proposing to delete references to "security" in revised Articles 9.3 and 11.2 (footnote 49) in the Chair's text.

According to trade officials, the Chair noted that the rules area has been the subject of two "Green Room" meetings (restricted meetings convened by the WTO Director-General) and that there were statements made at the recent informal meeting of the TNC.

He assured delegations that he had carefully taken very good note of the statements made by delegations at those meetings.

He said that he intended to produce a document to help all delegations move forward - to arrive at a comfort level in the horizontal process. He will do so in good faith, in a manner that will help all reflect on where the negotiations stand, and on how members could proceed forward after the horizontal process.

The Chair promised to do his best but stressed that this was not the end of the road but just the beginning. He cautioned against over-mystifying what the Chair can do - as this would put an unbearable weight on his shoulders.

Delegations are the ones who have to negotiate, the Chair stressed, and that their sights must be trained beyond the horizontal process.

The next meetings of the Rules Group are scheduled for the week of 13 May (on fisheries subsidies) and the week of 19 May (on anti-dumping). +