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TWN Info Service
on WTO and Trade Issues (Mar20/12) Rules Chair issues
first draft on overcapacity & overfishing Geneva, 10 Mar (D. Ravi Kanth) -- A draft text issued by the chair of Doha rules negotiations on the prohibition element of the disciplines on overcapacity and overfishing appears to be largely tilted against the interest of developing countries while giving carve-outs from the disciplines to developed countries, sources told the SUNS. The chair of the Doha rules negotiations issued on Monday (9 March) "a first draft of a working document on the prohibition element of the disciplines on overcapacity and overfishing". This sets the stage for hard negotiations to conclude an agreement on fisheries subsidies at the WTO's 12th ministerial conference (MC12) in Nur Sultan, Kazakhstan, in June. In an email sent to members on Monday evening, the chair, Ambassador Santiago Wills of Colombia, said "the text draws from the facilitator's work and proposals from Members." But it is not clear yet whether the chair's text has properly reflected the issues raised by India in its latest proposal that was circulated on 6 March as well as of other developing countries (see below). Nonetheless, the chair claimed in his email that "as such, the elements contained in this draft text should be nothing new to delegations." "It [the text] seeks to reflect different views and provide a middle-ground basis starting the focused engagement by HoDs (Heads of Delegation)," on Wednesday (11 March), Ambassador Wills insisted. He said, at the last HoD meeting on Friday (6 March), that "I had promised to distribute a text which was as clean and readable as possible for HoDs." "To this end," the chair said, "the attached text contains no brackets, given that the whole document is in brackets." He asked the members to justify if brackets are "absolutely necessary" with "reasons for the requested brackets" in the text. "Similarly, any delegation that may disagree with certain language in the draft is requested to suggest alternative language that would more likely build further convergence amongst Members than what is currently in the document," the chair argued. He claimed that "this document is without prejudice to any other text, or to any Member's position," hoping that members would enter into "a focused and interactive discussion." Ambassador Wills urged members to keep their remarks "concise" based on the text. The meeting will be limited to "HoDs+1" format on Wednesday, implying that there will be roughly around 350 WTO delegates attending, given the enveloping novel coronavirus or the so-called COVID-19. With Italy, the immediate neighbour of Switzerland, being in total lock-down because of the COVID-19, a big gathering of 350 participants could raise concerns, suggested a person, who is familiar with the negotiations. The text issued by the chair says that "no Member shall grant or maintain the following subsidies within the meaning of Article 1.1 of the SCM Agreement that are specific within the meaning of Article 2 of the SCM Agreement: X.1 Subsidies that contribute to overcapacity or overfishing." Effectively, it placed all WTO members - those who contributed to overcapacity and overfishing over many decades as well as those who had no role in creating this problem such as a large majority of developing and least-developed countries - in the same category for addressing the OC&OF (overcapacity and overfishing). From all existing data, the major subsidizers that contributed to OC&OF include China, the European Union, the United States, Japan, and Korea among others, said a negotiator, who asked not to be quoted. According to the chair, "a subsidy contributes to overcapacity or overfishing if it reduces capital costs or operating costs of fishing or fishing related activities at sea regarding a stock that is being fished at a rate of fishing or with a measure of fishing capacity that is greater than would allow the stock to be maintained at a sustainable level". "A sustainable level," the chair clarified in a footnote, "is the level determined by the coastal Member having jurisdiction over the area where the fishing is taking place, using MSY (maximum sustainable yield) or the alternative reference points or by a relevant RFMO (regional fisheries management organization)." Accordingly, "for the purposes of this article," the chair proposed that "(a) capital costs [of the subsidy] would include costs of construction, acquisition, modernisation, renovation or upgrading of vessels, purchase of machines and equipment for fishing vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machine for sorting or cleaning fish)," and "(b) operating costs include costs of fuel, ice, bait, personnel, income support of vessels or operators or the workers they employ, social charges, insurance, payments based on the price of fish caught, gear, and at-sea support; or operating losses of vessels or activities." Further, the chair said, "a subsidy shall be deemed not to be prohibited" if the subsidizing Member can demonstrate that it has other policies in place that effectively ensure the stock or stocks in the relevant fishery or fisheries are maintained at a sustainable level. This would definitely help some big subsidizers like the EU, US, Japan, and Korea among others if they can demonstrate that they have in place other policies to ensure that the fish stocks are maintained in the relevant fisheries at a sustainable level. The text also includes subsidies that are: "(a) contingent upon, or tied to actual or anticipated fishing or fishing related activities at sea in areas beyond the subsidizing Member's national jurisdiction (whether solely or as one of several other conditions or criteria), including subsidies provided to support at-sea fish processing operations or facilities, such as for refrigerator fish cargo vessels, and subsidies to support tankers that refuel fishing vessels at sea; (b) provided to fishing outside of the fisheries jurisdiction of a coastal Member and outside the regulatory area of a relevant RFMO/A." The chair further clarified that "the mere fact that a subsidy is granted to operators or vessels that may be engaged in fishing or fishing-related activities in areas beyond its national jurisdiction shall not for that reason alone be considered a prohibited subsidy within the meaning of this Article." The chair also included "subsidies for a vessel not flying the flag of the subsidizing member" in the text on OC&OF (overcapacity and overfishing), a crucial demand made by the US, Australia, Brazil and several other South American countries. The text covered other elements such as the controversial proposal on capping by China, the US, Brazil, and Australia, "list of non-harmful subsidies", and "special and differential treatment" in the placeholder. It is not clear yet why special and differential treatment (S&DT) is included in a placeholder when India and the ACP (Africa, Caribbean, and Pacific) countries unambiguously stated that disciplines in OC&OF must be based on the S&DT framework. More importantly, by including S&DT in a place holder and not including it in the text on OC&OF, there is a danger that developing countries will be asked to negotiate separately on S&DT later. To address the concerns of "small countries, poor countries, and those countries dependent on fishing activities (on a non-industrial scale)," India has proposed that special and differential treatment be incorporated as follows: For unreported and unregulated fishing: "(a) The prohibition under Article [Z] in respect of unreported and unregulated fishing, shall not apply to subsidies granted/maintained by developing countries including Least Developed Countries (LDCs) for fishing and fishing related activities at sea by vessels other than large scale industrial fishing vessels within their territorial sea. (b) The prohibition under Article [Z] in respect of unreported and unregulated fishing, shall not apply to subsidies granted/maintained by developing countries including LDCs for fishing and fishing related activities at sea by vessels other than large scale industrial fishing vessels in their Exclusive Economic Zone [EEZ] and the area of competence of Regional Fisheries Management Organization/Arrangement [RFMO/A] for a period of seven years from the date of entry into force of this instrument." For overfished stocks, India has proposed: "(a) The prohibition under Article [Z] in respect of overfished stocks, shall not apply to subsidies granted/ maintained by developing countries including LDCs for fishing and fishing related activities at sea in their territorial sea. (b) In respect of fishing and fishing related activities at sea within their EEZ, the developing countries including LDCs shall be entitled to a transition period of two years to withdraw or modify any subsidy for fish stocks that have been declared as overfished by the national authorities based on the best scientific evidence available to such Members." As regards "overfishing and overcapacity," India has proposed that: "(a) The prohibition under Article [Z] in respect of overfishing and overcapacity shall not apply to subsidies granted/maintained by LDCs for fishing and fishing related activities at sea. "(b) The prohibition under Article [Z] in respect of overfishing and overcapacity shall not apply to subsidies granted/maintained by developing countries for fishing and fishing related activities at sea within their territorial sea." Based on the Annex 7 framework in the WTO's Agreement on Subsidies and Countervailing Measures (ASCM), India further clarified that "the prohibition under Article [Z] in respect of overfishing and overcapacity shall apply to subsidies granted/maintained by developing countries for fishing and fishing related activities at sea in their Exclusive Economic Zone [EEZ] and the area of competence of Regional Fisheries Management Organization/Arrangement [RFMO/A] if all the following criteria are met: i. their GNI per capita crosses US$5000 (based on constant $2010) for three consecutive years; ii. their individual share exceeds 2% of the annual global marine capture fish production as per most recent published FAO data; iii. they engage in distant water fishing; iv. the contribution from Agriculture, Forestry and Fishing in their national GDP is less than 10% for three consecutive years." The least-developed countries (LDCs) also circulated a proposal on 6 March in which they sought an exemption under OC&OF disciplines. Against this backdrop, it remains to be seen how the developing countries and LDCs will approach the text proposed by the Chair at the HoD meeting on 11 March. Significantly, at the HoD meeting on Friday (6 March), the WTO Director-General and chair of the Doha Trade Negotiations Committee (TNC), Roberto Azevedo, admonished members for not making rapid progress in the Doha fisheries subsidies negotiations, saying that he would not put one cent on the table for finalizing an agreement at the 12th ministerial conference in Nur Sultan, Kazakhstan, beginning on 8 June, said several trade envoys, who asked not to be quoted. At that HoD meeting, Azevedo also told members that they will be given one minute to answer specific issues, said trade envoys, who asked not to be quoted. +
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