TWN Info Service on WTO and Trade Issues (Jan17/08)
26 January 2017
Third World Network

LDCs table proposal on fisheries subsidies disciplines
Published in SUNS #8388 dated 26 January 2017

Geneva, 25 Jan (Kanaga Raja) - An informal open-ended meeting of the WTO Negotiating Group on Rules on Tuesday (24 January) held an initial discussion on a new submission by the Least Developed Countries (LDCs), proposing some elements for discussion on new disciplines on fisheries subsidies.

In its paper (TN/RL/GEN/184), the LDC Group urged Members to take its submission into account to achieve "a concrete developmental and multilateral outcome" on fisheries subsidies rules for the Eleventh Ministerial Conference (MC11, to be held in Buenos Aires later in December).

The dedicated session on fisheries subsidies also continued its discussion on another three proposals from the African, Caribbean and Pacific (ACP) Group, the European Union, and six Latin American countries that were tabled at an earlier meeting last December (see SUNS #8375 dated 13 December 2016).

Amongst others, the objectives of all these proposals include securing an outcome on fisheries subsidies at MC11.

According to the LDC paper, fisheries are a crucial source of livelihood, rural development and economic growth in LDCs.

The sector also represents a vital source of export earnings for many LDCs and contributes directly to food and nutrition security.

According to the UN Food and Agriculture Organisation (FAO), fish is one of the most important sources of animal protein, accounting for about 17% of per capita intake at the global level, but exceeding 50% in many least-developed countries.

In Africa alone, the sector provides employment to nearly 13 million people.

The LDC paper said that ineffective fisheries management and the incentives created by cost reducing subsidies - particularly those granted to large-scale industrial fishing - have led to overcapacity (of fishing fleet) and over-fishing, undermining LDCs' food security and development prospects.

The FAO estimates that 58% of the commercial fish are fished at maximum levels and 31% are already over-fished.

According to the World Bank, the cost of over-fishing is estimated at USD80 billion a year.

The paper pointed out that with limited fishing capacity and largely under-developed fishing fleets, LDCs' share of global wild catches has remained small and the group has not been responsible for over-fishing.

"Yet LDCs are directly affected by the depletion of global fish stocks and harmful subsidies provided to large industrial fleets, fishing beyond their national jurisdiction in or close to LDCs' Exclusive Economic Zones."

The LDCs noted that the mandates for WTO fisheries subsidies negotiations are found in the Doha Declaration (paragraph 28) and the 2005 Hong Kong Ministerial Declaration, Annex D, paragraph 9.

The Nairobi Declaration, paragraph 24 calls upon Members to prioritize issues of importance to LDCs and paragraph 31 states the strong commitment of all Members to advance negotiations on the remaining Doha issues including rules.

In addition to the WTO mandates, Goal 14.6 of the 2030 Sustainable Development Agenda aims to strengthen disciplines on fisheries subsidies by 2020.

[SDG Target 14.6 states: "By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to 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 World Trade Organization fisheries subsidies negotiation."]

Overall, said the LDC paper, negotiations should aim to discipline fisheries subsidies which contribute to over-capacity and over-fishing, and eliminate subsidies to illegal, unreported and unregulated (IUU) fishing.

The scope of the disciplines should target primarily industrial fishing on a large scale.

While recalling the importance for Members to establish effective and sustainable management schemes of fisheries resources, disciplines should not apply to subsidies supporting the following activities:

(a) Coastal fishing activities related exclusively to artisanal, traditional, or small scale fisheries within the Member's territorial waters;

(b) Fishing activities, which exclusively exploit domestic fish stocks whose ranges are confined to the Members' EEZ.

(c) Fishing activities, which exclusively exploit quotas or any other rights established by a regional fisheries management organization (RFMO) or a regional fisheries management arrangement.

According to the LDC paper, disciplines should aim to prohibit, inter alia, the following types of subsidies:

(a) Subsidies to fishing vessels or fishing activity negatively impacting fish stocks that are over-fished;

(b) Subsidies provided to vessels or operators engaged in illegal, unreported and unregulated fishing (the prohibition should also apply to illegal trans-shipment at sea); and

(c) Subsidies to capital and operating costs which contribute to over-capacity and over-fishing.

While recognising the advantages of enhanced transparency, the LDC Group considers that any additional requirements on transparency and notification should remain proportional to the global objective and should not be burdensome for LDCs.

The prohibitions under (a) and (b) should apply to all Members without exception.

However, technical assistance and transition periods should be provided to address LDCs' institutional and financial constraints in implementing the disciplines including the fight against IUU fishing.

Prohibitions other than those outlined in (a) and (b) should not apply to LDCs.

Capacity-building should be provided to help LDCs develop their fishing capacity in a sustainable manner, to assess and monitor stocks, and control fishing activities, said the LDC paper.

According to trade officials, in introducing the LDC Group proposal, Benin and Senegal said that addressing fisheries subsidies was a priority matter for LDCs, who were not the cause of overfishing and overcapacity but were the first to be affected by it.

The paper sets out disciplines to achieve the SDG goals in the future but emphasises the importance of S&D.

In this context, Benin and Senegal pointed out that disciplines should be calibrated to target large-scale industrial fishing operating outside national exclusive economic zones (EEZs) and not prevent artisanal and small-scale fishing in territorial waters.

The fisheries sector is important to the livelihood and well-being of LDC members, and not all subsidies cause overfishing, they said.

According to trade officials, several members highlighted that the proposals complement each other in several ways.

They suggested that thought be given to consolidating these proposals into a single text that could serve as the basis for negotiations and possible agreement by MC11.

One suggestion that was made was to have a draft negotiating text ready by the summer break (which begins around end-July and runs till end-August).

This could either be produced by the proponents of the proposals or by the Chair of the Rules Group, and the remaining months until MC11 could then be dedicated to hammering out the final wording of an agreement.

However, other members pointed out that there were a number of "philosophical" issues that need to be addressed.

There were also many open questions about the types of disciplines being proposed, appropriate flexibilities for developing countries and LDCs, and transparency obligations which needed to be discussed more thoroughly.

According to trade officials, Dominica, on behalf of the ACP Group, said that the LDC Group proposal closely resembled the proposal tabled by the ACP Group (TN/RL/GEN/182) and that the LDC proposal had the backing of the ACP Group.

Both agree that subsidies contributing to IUU fishing should be prohibited and appropriate S&D given, including technical assistance and transition periods. Not only subsidies given for high seas fishing should be disciplined, said Dominica.

While all members welcomed the proposal tabled by the LDC Group, a number voiced some concerns.

According to trade officials, China voiced agreement that the focus should be on large-scale industrial fishing.

However, it said that it would like to clarify the definition of some terms such as small-scale and artisanal fishing in territorial waters, which would be exempt from disciplines.

China underlined the importance of granting appropriate S&D to both developing country and LDC members.

China said that it would not use S&D as a blank cheque to escape disciplines, but firmly rejected the use of any criteria that deprives developing countries of the S&D they deserve.

According to trade officials, India welcomed the LDC proposal but said it had a number of questions regarding the proposed disciplines.

These included exclusions for fishing within territorial waters, the meaning of subsidies linked to capital and operating costs, transparency obligations, and the timeframe for implementation.

Morocco expressed support for the LDC proposal.

Indonesia was of the view that S&D treatment needed to be an integral part of the disciplines for both developing countries and LDCs, and that artisanal fishing was necessary to sustain the livelihood of its fishermen.

Cameroon pointed out that the proposed S&D in the LDC paper fell short of that outlined in a 2006 United Nations resolution on sustainable development.

Argentina expressed misgivings about the proposed application of disciplines to activities outside of EEZs.

Brazil and Fiji highlighted the LDC proposal to exclude from disciplines fishing activities carried out under regional fisheries management organizations (RFMOs).

Brazil said it had questions about the effectiveness of such arrangements. Fiji said that any fisheries subsidy deal should not discipline what is agreed in RFMOs on management and conservation of fish stocks.

According to trade officials, Australia and Norway said that any agreement must prohibit subsidies that lead to IUU and overfishing of depleted stocks, and that it must apply to all members without exception.

New Zealand said that S&D provisions should not undermine the effectiveness of the agreed disciplines.

According to Japan, LDCs accounted for 10 million tons of catch in 2014, or 11% of the global catch, and that it was not appropriate to provide S&D to all fisheries activities.

Japan and Korea highlighted the importance of effective management of fisheries stocks as a major contributor to reducing overfishing.

The United States said that it could only provide preliminary comments given the recent change of government.

It however viewed the LDC Group's proposed S&D exclusions as overly broad. This view was shared by Iceland, Uruguay and several others.

In response, Benin said that the LDC Group never asked for an exemption or carve-out for illegal fishing practices and that it wanted it to be clear that the group agreed on the need to combat this type of fishing.

However, Benin pointed out that the LDCs don't have the necessary means to combat these practices effectively and immediately, and that technical support was needed along with an appropriate transition period.

Discussions continued on the other proposals on fisheries subsidies that had been tabled previously.

On the European Union's text-based proposal (TN/RL/GEN/181), the EU said that it was open to any ideas on improving its proposal.

According to the EU proposal, the issue of fisheries subsidies comprises four main components: (i) prohibited subsidies linked to overcapacity; (ii) prohibited subsidies linked to illegal, unreported and unregulated (IUU)-fishing; (iii) transparency; (iv) special-differential treatment (SDT).

The EU submission proposes a ban on capacity-increasing subsidies but foresees special and differential treatment that would allow developing and least developed countries to derogate from such a ban under certain conditions.

It also proposes prohibition of subsidies that contribute to IUU fishing, which would apply to operators whose vessels are included in the subsidising country's IUU-vessel list and/or that of Regional Fisheries Management Organisations (RFMOs). (See SUNS #8375 dated 13 December 2016).

The EU said that it understood that some members wanted to address certain issues such as operational subsidies but that it thought there was not enough time to reach such an agreement.

Its proposal sets out simple disciplines which addresses most of the problems the SDG goals seek to address.

The time available before MC11 is very short, the EU said, adding that in order to secure an agreement by December, members needed to move to text-based discussions and concrete negotiating texts.

Peru re-introduced the proposal (TN/RL/GEN/183) from the six Latin American countries - Argentina, Colombia, Costa Rica, Panama, Peru and Uruguay.

According to the proposal, the Trade Facilitation Agreement (TFA) approach can result in a useful tool for the fisheries subsidies' negotiations.

It called for commitments to be established by MC11 and implemented by 2020, according to SDG 14.6. (See SUNS #8375 dated 13 December 2016.)

According to trade officials, Peru also said time was of the essence and that negotiations have to be stepped up.

Peru said that the goal should be to come up with a textual proposal by the summer break so that it could be refined in the months running up to MC11.

Australia said that it was hard to disagree with Peru that members really needed to step up the pace of the talks, and that more meetings need to be scheduled.

Dominica said it was important to work on a common basis, and that means coming up with a consolidated text, even one with lots of brackets, before the summer break.

In his summing up, the Chair of the Rules Group, Ambassador Wayne McCook of Jamaica, said that progress was steadily building meeting-by-meeting and that the next phase of the negotiations would be crucial.

He informed the meeting that he would hold consultations with interested members starting the week of 30 January and in early February with the idea of reconvening the Rules Group in the third week of February to review the progress made.

According to trade officials, the Chair noted the early warnings from some delegations that time was already running short if a deal was to be clinched in Buenos Aires.

"When we come back in February, the idea is that we need to proceed in a very deliberate manner towards some objective we can all agree on," he said.

Meanwhile, Canada informed members that the first meeting of participants in a plurilateral initiative on fisheries subsidies would take place later this week and that any delegation interested in attending should let Canada, the group coordinator, know of its interest.

According to trade officials, 16 members have so far signalled their interest in taking part in the talks.