TWN Info Service on WTO and Trade Issues (Oct17/14)
19 October 2017
Third World Network

New "vertical" text on fisheries, assessment by Rules Chair
Published in SUNS #8553 dated 16 October 2017

Geneva, 13 Oct (Kanaga Raja) - The proponents of the seven textual proposals, put forward in the ongoing negotiations on fisheries subsidies, have submitted a new "non-paper" compiling these proposals.

The non-paper was provided at an informal meeting of the WTO Negotiating Group on Rules on 12 October.

According to trade officials, the Chair of the Negotiating Group on Rules, Ambassador Wayne McCook of Jamaica, told the meeting that this text reflects the proponents' collective efforts to compile their proposals into an "integrated, vertical document."

Employing the analogy of a handoff of the baton in a relay race, the Chair remarked: "This leg requires careful attention and technique. If you run the curve well, you will win the race."

According to the Chair, high-level officials attending the informal ministerial meeting in Marrakesh earlier this week gave an impression of having strong expectations of a fisheries subsidies outcome at the upcoming 11th WTO Ministerial Conference in Buenos Aires (beginning on 10 December).

Therefore, said the Chair, there is much pressure to see how the remaining time can be used effectively to provide ministers with an outcome document that they can decide upon.

The proponents behind the seven textual proposals on fisheries subsidies tabled so far are New Zealand, Iceland and Pakistan (TN/RL/GEN186); the European Union (TN/RL/GEN/181/Rev. 1); Indonesia (TN/RL/GEN/189/ Rev. 1); the African, Caribbean and Pacific (ACP) Group of countries ((TN/RL/GEN/192); Argentina, Colombia, Costa Rica, Panama, Peru and Uruguay (TN/RL/GEN/187/Rev. 2); the Least Developed Countries (TN/RL/ GEN/193); and Norway (TN/RL/GEN/191).

Ambassador McCook had called a meeting for 12-13 October where he said that he plans to share the vertical/ integrated text for the consideration of the membership, as well as provide an assessment of the issues and outline some suggestions for the next steps (see SUNS #8550 dated 11 October 2017).

According to trade officials, the Rules Group meeting continues on Friday (13 October) with the proponents expected to introduce the new document and members are to be given the opportunity to comment and pose questions.

The rather heavily square-bracketed 13-page "non-paper" on fisheries subsidies, which the proponents said is introduced "as a tool to facilitate negotiations" in the Negotiating Group on Rules, contains a Preamble and eight Articles as well as an Annex.

The eight Articles pertain to definitions, scope, prohibited subsidies (illegal, unreported and unregulated fishing, overfishing/overfished/un-assessed stocks, over-capacity/capacity enhancing), standstill, special and differential treatment, transparency/notification, transitional provisions, and institutional arrangements.

According to trade officials, at the meeting on 12 October, the proponents said they had worked hard, sometimes overnight, on the document.

South Africa, on behalf of the ACP Group, said members are invited to introduce textual suggestions using the document as basis.

South Africa and Indonesia further said that the new document is not meant to replace proponents' individual proposals, which remain relevant and on the table.

The European Union and Argentina (on behalf of the six Latin American countries) said that the document is intended as a tool to facilitate negotiations.

New Zealand said that the document is an outcome but not a final negotiated outcome. The talks need to be intensified, it added.

According to trade officials, Senegal, on behalf of the Least Developed Countries (LDCs), said that while they supported intensification of negotiations, they also called on members to give the 30 countries that make up the LDC group more time to consult among themselves.

ASSESSMENT BY THE RULES CHAIR

In his summary assessment of the negotiations on fisheries subsidies on 12 October, the Chair shared with the members some thoughts about where he thinks "we are in our collective work on the negotiations, and what I see as critical issues that are emerging."

"I know that different delegations have different levels of ambition in these negotiations, and this is something that of course we will have to deal with further down the road," said the Chair.

"That said, I see maintaining the current atmosphere and way of working that we have achieved in this Group as a critical enabling condition that will remain instrumental in determining whether there will be a fisheries subsidies outcome at MC11 [eleventh WTO ministerial conference in Buenos Aires this December]."

"Indeed if we lose this, I cannot see a way that we could generate a draft for Ministers in Buenos Aires that will provide them with a clear basis for making those final decisive calls," Ambassador McCook underlined.

Turning to the issues, the Chair pointed out that there are three tracks on which possible disciplines would be pursued - illegal, unreported and unregulated fishing (IUU), overfishing or overfished stocks and overcapacity.

"We have seen a number of promising ideas which could contribute to building some convergence with respect to prohibitions relating to subsidies contributing to IUU fishing and subsidies in respect of overfished stocks," he said.

"There is a general acceptance of the situation of global overcapacity but we are yet to see how best to address this in the light of widely varying national approaches and assessments in this regard. That said, while there is a lot of convergence around the general proposition that these sorts of subsidies are harmful, as we have deepened our discussions of the respective proposals, we have discovered considerable complexity in these areas."

Before getting into the specifics in these areas, Ambassador McCook also pointed to what he saw as clear convergence on some of the key, cross-cutting foundational elements:

"First, there seems to be a general agreement that we are talking about subsidies disciplines in the realm of marine wild capture fishing and related activities only - to the explicit or implicit exclusion of inland fishing and aquaculture.

"Second, we also seem to have general agreement that the measures that would be disciplined are certain specific subsidies as defined in Articles 1 and 2 of the SCM Agreement.

"Third, I have noted from our discussions that in terms of chapeau language to the specific proposed disciplines there also is a lot of convergence regarding not "granting or maintaining" whichever particular instances of subsidization would be prohibited.

"Fourth, there is convergence that subsidies would be attributable in all cases to the subsidizing Member."

According to the Chair, in all of these areas the precise drafting that would garner consensus has not yet emerged but conceptually there is a degree of convergence.

This is important as it provides a solid foundation for the further elaboration of the disciplines themselves.

Regarding whether disciplines would cover subsidies for any land-based activities, in addition to those on-board, discussions are continuing.

And for another important cross-cutting issue, territoriality, the Chair said, "we have had good and constructive engagement on proposed language aimed at ensuring that anything we do here does not prejudice these broader issues that are outside the WTO's remit. While still works in progress, we are moving in a positive direction on all of these points."

PROPOSALS ON IUU FISHING

On the proposals related to IUU fishing, the Chair pointed out that a number of issues would need to be resolved.

An initial issue is how "IUU" fishing would be defined in the WTO rules. Here, virtually all Members refer to Article 3 of the International Plan of Action on IUU.

Some cross-reference this definition in a dynamic way while others consider that the existing definition should be statically reflected, via fixed cross-reference or by incorporation of the text into the WTO rules.

Another issue here is whether this definition would have direct legal effect in WTO rules or instead would serve as a source to be wholly or partially reflected in national legal definitions.

Another issue is how the prohibition would be formulated - in respect of subsidies "related to" IUU fishing, a relatively broad formulation; or instead in respect of subsidies "provided to or benefiting" "vessels", or "owners", or "operators", or all three.

In this connection, some delegations consider that the latter types of formulations would be clearer and thus more implementable.

There also are differences of view as to whether any such reference should be only to vessels, or also to owners and/or operators, and in the latter two cases whether it should be those "involved in" or instead those "controlling" the operations of the vessels in question.

Ambassador McCook highlighted that another main issue related to IUU is what the basis or bases would be for an IUU determination that would trigger the subsidy prohibition.

Here, the proposals generally refer to IUU vessel lists of RFMOs (regional fisheries management organisations), as well as to lists of or determinations by a flag state or a subsidizing Member. Some proposals also refer to lists of or determinations by coastal states.

"The degree of deference that would be accorded to each of these potential bases remains under discussion," he noted.

For some Members, all RFMO lists would be accepted at face value, for others these lists would be accepted so long as they were established with recognized due process and transparency, and for others they would be accepted where the subsidizing Member was party to the listing RFMO, with acceptance of other RFMOs' lists subject to national law.

Some Members also identify non-discrimination and openness for any WTO Member to join as additional criteria for acceptance of RFMO IUU vessels lists.

"Determinations by a flag state or subsidizing Member seem less inherently problematic, based on our discussions, as these situations would essentially be internal, domestic determinations in respect of one's own vessels or owners or operators. There has not been a lot of discussion on these situations."

Determinations by a coastal state, that a foreign vessel or entity has engaged in IUU activities in the waters of the coastal state, are more difficult for some Members, the Chair emphasised.

Here again, the central question is the degree of deference to such determinations that might be incorporated in a WTO rule.

Issues include whether such determinations are made with due process and transparency, how subsidizing Members would become aware of such determinations, and whether they would be required to accept them at face value and if so, subject to what if any conditions or criteria.

Another key issue for potential subsidies disciplines relating to IUU is the nature and extent of any exceptions, exemptions, or scope limitations.

Here, the proposals all would prohibit such subsidies by all Members in all waters, although some proposals distinguish unreported and unregulated fishing from illegal fishing, and would create transition periods for developing Members to implement the prohibitions in respect of the "U" and the "U", on the basis that they would need time to develop reporting and regulatory measures before being subject to the related subsidy prohibition.

For others, no such distinction is justified, as the rules would be about subsidies, not about IUU fishing as such.

Finally, on transparency in the area of IUU, said the Chair, "we have a proposal that RFMOs should inform the WTO of their respective IUU lists, and that coastal states should inform the WTO of their IUU determinations involving foreign vessels in their waters."

Some Members have questioned the necessity or appropriateness of the WTO receiving such information, while others consider that it would provide necessary transparency regarding the reliability of the IUU determinations that would trigger the subsidy prohibitions.

PROPOSALS TO PROHIBIT SUBSIDIES VIS-A-VIS OVERFISHED STOCKS

On the proposals to prohibit subsidies in respect of overfished stocks, the Chair pointed out that a number of important scoping issues have emerged in respect of the formulation of the prohibition itself.

One is whether we are talking about subsidies "in connection with" or "for" or "to", "fishing" only or also "fishing related activities" or "fishing Vessels".

And further, whether a prohibition would apply to subsidies "involving" or instead "negatively affecting" the stocks in question.

As to which stocks, a further question is whether this would be all overfished stocks or "targeted" overfished stocks.

Those favouring the reference to "targeted" stocks are concerned that unintended by-catch could trigger the prohibition, while others consider that such a qualifier would overly narrow the discipline.

As for the condition of the stocks, would these be stocks that are "in" such a condition or stocks that have been "assessed" to be in that condition?

"In respect of these different facets of formulating this prohibition, various Members have raised issues of clarity and implementability on the one hand versus breadth of coverage and effectiveness of the discipline on the other," said Ambassador McCook.

The next set of issues relates to the basis for determining that a stock is overfished, which again would trigger the subsidy prohibition. One question in this regard is whether the rules should contain a substantive definition of what is meant by "overfished", or whether instead this should be left to national authorities and RFMOs to define and implement in accordance with their own standards and procedures.

Should these be taken at face value regardless of source, or should the rules somehow define a substantive standard?

In this regard, we have been having considerable debate about "science-based" stock assessment, and which science that would be - science available to the particular Member or science in a more general sense?

Would different degrees of deference be accorded to determinations by RFMOs versus national authorities?

Related to this is whether having a quota from an RFMO is sufficient to indicate that the stock in question is not overfished, a presumption that figures in some proposals pertaining to subsidies contributing to overfishing.

Some Members point to a disconnect in some RFMOs between the stock assessments and the quotas that are set.

The Chair pointed out that another facet of this debate is whether, and if so how, a subsidy prohibition in respect of particular fish stocks also would extend, as a precautionary measure, to un-assessed stocks. In this respect, resource constraints related to assessing stocks have frequently been pointed to, as have complexities relating to multi-species fisheries - in terms of both targeting catch and assessing particular stocks in such fisheries.

For these reasons, some Members call for flexible standards for stock assessments, including references to the science available to the subsidizing Member, reflecting Members' different abilities to assess stocks.

Whether the prohibition would extend to all subsidies in respect of overfished stocks, or instead to those "negatively affecting" such stocks is a further question under debate.

If the latter, the question then becomes what kinds of effects these would be and how they would be identified and when? Would there be a presumption that certain kinds of subsidies did or did not cause such effects, or would effects have to be demonstrated case-by-case after the fact?

Would it be permissible to provide subsidies for fishing on overfished stocks if there were fisheries management in place and if so, would such management have to meet a particular standard?

According to the Chair, some Members also have suggested geographic limitations to such a prohibition. These include in particular Members' territorial seas - out to 12 nautical miles - from such a prohibition, in recognition of the considerable amount of small-scale and artisanal fishing, and the attendant difficulties of assessing stocks, in those areas and fisheries.

SUBSIDY PROHIBITIONS TO OVERCAPACITY, OVERFISHING

Ambassador McCook also drew attention to the proposed prohibitions of subsidies contributing to overcapacity and overfishing.

In relation to overcapacity, he noted, the proposals mainly focus on capital cost subsidies, for vessel construction, renovation, modernization, vessel transfer, vessel acquisition, and similar elements, and for various kinds of on- board equipment.

Some Members consider that constraining subsidies to some such capital costs not only would address the current situation of overcapacity but also would address, by proxy, subsidies contributing to overfishing.

In the view of some Members, it is easier and more implementable to discipline subsidies for certain specified capital costs than to craft a discipline on subsidies contributing to overfishing, as in their view any kind of subsidy could have this effect, and defining "overfishing" as opposed to "overfished stocks" would be very difficult.

Some proposals, however, take the same approach as for overcapacity, listing certain forms of subsidies - mainly to operating costs - that they consider most directly to contribute to overfishing and that therefore should be prohibited.

"Here, the questions of fuel de-taxation and fuel subsidies continue to divide opinions, with some considering finding a consensus too difficult and sensitive, and others considering these measures among the most direct contributors to overfishing."

Both of these sets of proposed prohibitions - of certain such capacity- and effort-related subsidies - are accompanied in a number of proposals by proposed S&DT (special and differential treatment) exceptions and other flexibilities, including transition periods.

In general, said the Chair, developing and some other Members point to a need for room to grow their domestic fisheries sectors, citing among other things the uneven distribution around the world of fishing capacity and excess capacity.

In this connection, some proposals would subject S&DT flexibilities for these types of subsidies to management conditionalities, aimed at ensuring that any subsidies to capacity and effort should not overshoot the ability of the fisheries in question to withstand the increased fishing activity that would result.

Another need identified is to be able to support subsistence and/or small scale and/or artisanal fishing, whether or not formal or informal management measures are in place.

There has been some discussion in this regard of whether flexibilities for subsidizing these types of fisheries should be available to all Members or only to developing Members.

Some of the proposals in respect of subsidies identified as contributing to overcapacity and overfishing also have a significant geographic component, applying differently to fishing activities within the subsidizing Member's own waters and those in areas beyond national jurisdiction.

For example, in some proposals, stronger disciplines would apply in respect of large-scale fishing outside a Member's own jurisdiction than in respect of fishing activities in domestic waters.

A number of proposals would allow subsidies for fishing in areas beyond national jurisdiction to fulfil quotas assigned by an RFMO, on the presumption that having such a quota is a reliable indicator that the fishery in question is well managed or not overfished.

The Chair noted that this presumption is questioned by some delegations. Some of these proposals are in the context of S&D treatment and others would apply generally to all Members.

PROPOSALS ON TECHNICAL ASSISTANCE, CAPACITY BUILDING

The Chair further pointed out that accompanying the proposals for S&DT are proposals for technical assistance and capacity building.

"Some seek assistance to implement new subsidy disciplines, while others go beyond this to assistance in establishing and implementing fisheries management, including measures to combat IUU fishing."

Some delegations have responded that the nature and scope of both the final S&DT provisions and provisions on technical assistance and capacity building will need to be calibrated on and proportionate to the disciplines that are agreed.

The Chair said that similar points have been made in respect of proposed transparency provisions.

"While various proposals suggest that a range of information related to the fisheries in question be reported to the WTO, some delegations question the need for such information as well as the WTO's ability to use it."

Here too there are calls by some to await further clarity on the disciplines before deciding on what information beyond that already required by Article 25 of the SCM Agreement should be reported in connection with new fisheries subsidies disciplines.

"So it should be clear to all of us that we will need to work very hard, and with a great deal of pragmatism and flexibility, to achieve an outcome in December, even in areas of most convergence," the Chair concluded.