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No final fix (yet) on fisheries subsidies WTO negotiations on regulating fisheries subsidies in order to curb overfishing delivered an incomplete and inequitable deal at MC12. Ranja Sengupta THE WTO has been negotiating an agreement on fisheries subsidies from 2016 based on a mandate from Sustainable Development Goal (SDG) 14.6. The negotiations have been complex and difficult, with major conflicts over securing special and differential treatment (S&DT) for developing countries and least developed countries (LDCs) on the one hand and over developed countries with industrial fishing activities getting exemptions on the other.1 After significant last-minute negotiations, MC12 secured a partial, interim agreement with the objective to reach a comprehensive agreement in the near future. This partial agreement is to be ratified by Members based on Article X.3 of the WTO’s foundational Marrakesh Agreement. It is to be noted that paragraph 4 of the Ministerial Decision (WTO document WT/MIN(22)/33 – WT/L/1144) gives the mandate to negotiate the comprehensive agreement ‘with a view to making recommendations to the Thirteenth WTO Ministerial Conference for additional provisions’. The MC13 deadline is not very stringent and negotiations may continue beyond that deadline. However, according to Article 12 of the current agreement, the agreement will terminate by four years after its entry into force (unless otherwise decided by the WTO General Council) if the comprehensive agreement is not reached by then. Therefore, it seems there is an apparent deadline of four years after entry into force of the current agreement to reach the comprehensive agreement. However, based on the mandate given by paragraph 4 of the Decision, there is nothing in principle to stop negotiations even if this four-year period is breached. But it may then have to deliver an entirely new agreement rather than simply the additional provisions that are mandated to be negotiated. Below, some key features of the current agreement are summarised and some implications for further negotiations are explored. • While developing countries and LDCs managed to extend S&DT (under Articles 3.8 and 4.4) to the Exclusive Economic Zone (EEZ) from the previous 12 nautical miles (NTM) under the provisions on illegal, unreported and unregulated (IUU) fishing (Article 3) and on overfished stocks (Article 4) in the current agreement, the entire S&DT ceases to be applicable after two years, after which even LDCs have to cut subsidies under these pillars. • Under Article 4.3, the sustainability exemption which amounts to reverse S&DT for developed countries remains. In spite of counter-proposals by several developing countries and LDCs, this exemption to historically large subsidisers and industrial fishing nations has not been conditioned, qualified or narrowed in any manner over the last two years of the negotiations. There is still no recognition of the concept of common but differentiated responsibilities (CBDR) which would place higher responsibility on those historically responsible for overfishing and subsidising. • The disciplines under Article 5 (on overcapacity and overfishing or OCOF) have been largely postponed and are to be agreed under the comprehensive agreement. But in the meantime, there is no S&DT in Article 5. LDCs, developing and developed countries all enjoy the same exemption up to the EEZ. • Under Article 5.1, disciplines on distant water fishing will apply but government-to-government payments under access agreements are not covered under the scope of this agreement (footnote 2), thereby largely exempting the EU’s distant water fishing activities. • Under a due restraint clause (Article 5.2), the issue of subsidies for flying under a different Member’s flag has been settled by placing the onus on the Member who gives the subsidies. • Another due restraint clause (Article 5.3) says: ‘A Member shall take special care and exercise due restraint when granting subsidies to fishing or fishing related activities regarding stocks the status of which is unknown’ (emphasis added). This is likely to affect developing countries and LDCs more as they do not always have the mechanisms to monitor the status of stocks. Due restraint clauses in other WTO agreements, such as in Article 13 of the Agreement on Agriculture, have been quite seriously adhered to. It is not clear how binding this due restraint clause is likely to be. • The provision on non-specific fuel subsidies, which was earlier square-bracketed (indicating lack of agreement) under Article 1.2, is now completely deleted. It had been a persistent demand of India and many other developing countries to discipline these subsidies while integrating S&DT. • Technical assistance and capacity building (Article 7) remains critically important for developing countries and LDCs even to put in place the necessary infrastructure to meet sustainability objectives. However, the funding mechanism continues to be voluntary and the initial pledges seem grossly inadequate compared with the needs. • The notification conditions under Article 8 continue to be quite stringent and detailed compared with the capacities of many developing countries and LDCs. If this agreement gets enforced, these provisions are likely to continue and not be renegotiated at all. However, there is no mandatory requirement for additional notification for using S&DT provisions, unlike in earlier versions of the text (earlier Article 8.7). As the agreement stands now, the SDG 14.6 mandate is unlikely to be met as those who subsidise most remain free to subsidise. For those Members who do not subsidise much but are dependent on the conservation of fish stocks for meeting livelihood and food security needs, this will be an important consideration. However, many developing countries have large fisher populations, and therefore their subsidies need to be looked at in that context. While China, Japan, the US, Brazil, Canada and Indonesia are at the top in terms of total subsidies (2014-2016, OECD estimates), the picture is somewhat different if we look at per-fisher subsidies. Denmark, Sweden, the Netherlands, New Zealand, Norway, Canada, Ireland, Germany, Australia and Japan are the top 10 subsidisers in terms of per-fisher subsidies, with amounts ranging from $75,000 to $7,729 per fisher. In comparison, China gives a subsidy of $485, Mexico $290, Indonesia $90 and India $15 per fisher. As we go forward, several questions remain. It may not be prudent to ratify the current agreement without knowing the substance of the comprehensive agreement. Developing countries and LDCs could at least adopt a wait-and-see policy for the next few months. There are several considerations here: • The agreement has to be ratified by two-thirds of the Membership, according to Article X.3 of the Marrakesh Agreement. Those who do not ratify will not have obligations, so many Members may not ratify. There may be pressure on developing countries and LDCs to ratify first while developed countries do not take on these obligations; • There is a lack of clarity from a legal perspective on several points, which need to be reviewed and addressed before the ratification process even begins; • Any Member’s ability to negotiate on the final and comprehensive agreement and ensure its interests are protected may be reduced if it ratifies the current agreement too early; • If the comprehensive agreement does not get done but the current agreement gets extended (as allowed under Article 12 of the agreement), then Members may have to live with this incomplete and inequitable version; • A lot of domestic work is involved in the ratification process but this may finally not lead to desired outcomes; • One important point to note is that for two years after entry into force of this agreement, developing countries and LDCs will have to stop providing subsidies related to IUU fishing and overfished stocks, but then can start again if the comprehensive agreement is not agreed in another two years. At the minimum, S&DT should be extended till the comprehensive agreement is reached. Finally, the interface between the current truncated agreement and the postponement of the final and comprehensive agreement poses complex challenges for developing countries and LDCs. In the comprehensive agreement, can developing countries and LDCs, firstly, ensure effective and appropriate S&DT, and avoid adopting a principle of differentiation of S&DT exemptions based on arbitrary thresholds? Secondly, how can they ensure stronger disciplines on those who subsidise most and are industrial fishing nations? Given the history of the negotiations thus far, whether the comprehensive agreement can deliver anything additional to developing countries is debatable. But in the absence of it, they may be stuck with the challenges posed by the current agreement. Further, there is significant lack of clarity on when each agreement and the processes around them are supposed to end. Given this complex situation, each Member may have to undertake its own assessment on the ratification and the forthcoming negotiations depending on how it sees the costs and benefits of the current agreement and based on the realities of negotiating the comprehensive agreement. Endnotes 1.
For detailed analyses by the Third World Network of previous draft
texts tabled in the fisheries subsidies negotiations, please read
https://twn.my/title2/wto.info/2022/ti220613.htm
and https://twn.my/title2/briefing_papers/MC12/briefings/Fisheries *Third World Resurgence No. 351, 2022, pp 29-30 |
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