TWN Info Service on WTO and Trade Issues (Jul20/18)
23 July 2020
Third World Network

South calls for extending deadline to conclude fisheries deal to MC12
Published in SUNS #9166 dated 23 July 2020

Geneva, 22 Jul (D. Ravi Kanth) – Several developing countries, including India, have suggested extending the deadline to conclude the fisheries subsidies agreement until the WTO’s 12th ministerial conference (MC12) in June 2021, due to the escalating Covid-19 health crisis that would make it difficult for their capital-based officials to physically participate in negotiations, trade envoys told the SUNS.

At a heads of delegation (HoD) meeting convened by the Chair of the Doha rules negotiating body, Ambassador Santiago Wills from Colombia, the developing countries – India, South Africa, the African Group, the ACP (Africa, Caribbean and Pacific) group, and the least-developed countries (LDCs) – suggested that the Covid-19 has already imposed severe difficulties on their capital-based officials to participate in face-to-face negotiations, said trade envoys, who asked not to be quoted.

India said that capital-based officials who have to participate in the actual negotiations here in Geneva, due to the complexity and technical details involved in crafting new disciplines on fisheries subsidies, will find it difficult to travel due to the Covid-19 health crisis, said trade envoys who attended the meeting.

India suggested that members should remain open to concluding the agreement by the WTO’s 12th ministerial conference in Nur Sultan, Kazakhstan, in June 2021.

South Africa along with the coordinators of the African Group, the ACP group and the LDCs also echoed similar concerns about concluding the Doha fisheries subsidies agreement by the end of this year, stating difficulties in coordinating with capital-based officials and arranging their travel.

In sharp contrast, the developed countries – the United States, Switzerland, and the “Friends of the Fish” group led by New Zealand and several South American countries – signaled their intention to conclude the fisheries subsidies negotiations by the end of this year as per the United Nations Sustainable Development Goal 14.6.

At the meeting which was specifically convened by the chair to elicit initial responses to his draft consolidated text issued last month, sharp differences on various provisions came to the fore between the major subsidizers in the fisheries sector and developing and poorest countries seeking credible balanced disciplines with strong special and differential treatment (S&DT) provisions as per the United Nations Sustainable Development Goal 14.6, trade envoys said.

In his introductory remarks at the meeting, the Chair Ambassador Wills announced an intense work plan for negotiations based on his draft consolidated text beginning from 14 September, 5 October, 2 November and 30 November and, outside of these dates, members were encouraged to continuously engage with each other.

He said remote connections will again be provided in these meetings to allow capital-based experts to participate virtually, according to people present at the meeting.

Around 50 countries made preliminary remarks that revealed sharp differences between the major fisheries subsidizers – China, the European Union, the United States, Japan, and Korea among others – and a large majority of developing countries that are seeking balanced disciplines as per their per capita fish catches and per capita subsidies, said trade envoys who asked not to be quoted.

The United States fired the first salvo against the special and differential treatment (S&DT) in the draft consolidated text.

Ambassador Dennis Shea said that Washington considers that the treatment in the draft text of special and differential treatment is only a starting point for discussions.

Suffice it to say that the S&DT text currently included will utterly undermine any beneficial effect of the draft prohibitions and will not garner any consensus, Ambassador Shea emphasized, according to trade envoys present at the meeting.

The US described the draft document issued by the chair as a “partial” text, and a “skeleton” that needs to be improved substantially in the intense fisheries negotiations beginning in the fall.

Significantly, the major fisheries subsidizers – China, the European Union, the United States, Japan, and Korea among others – are pushing for “capping” harmful fisheries subsidies.

Up until now, developing countries have severely opposed the capping of harmful fisheries subsidies instead of eliminating them completely, said a trade envoy who asked not to be quoted.

Even China supported the demand for capping harmful fisheries subsidies like several countries in the “Friends of the Fish” Group, said a trade envoy, who asked not to be quoted.

The US trade envoy Ambassador Shea emphasized on one of Washington’s core demands about transparency and notification requirements.

The US said transparency and accountability for individual members are key to the success of any WTO fisheries subsidies agreement, according to trade envoys present at the meeting.

The missing pieces in the draft text, according to Ambassador Shea, are only placeholders for items suggested by the US “on capping subsidies, subsidy levels and transparency and notification provisions.”

The US trade envoy said that “the more we look at members’ positions on overfishing and overcapacity, the more we are convinced to negotiate subsidy caps which can provide transparent and accountable policy space with serious constraints on major subsidizers.”

The draft text is also missing narrowly crafted language for income support programs which are essential to recovering from a natural calamity, the US argued.

The US said it is ready to work with members to finalize a balanced fisheries subsidies agreement by the end of the year.

Switzerland said the draft text is a good basis for arriving at a balanced outcome, but pressed for more work on S&DT to ensure sustainable development.

India said that the draft consolidated text seems to be reasonable and balanced for starting negotiations.

The new Indian ambassador to the WTO Brajendra Navnit listed various points that would need clarity in the architecture.

He asked whether the final agreement on fisheries subsidies will remain a standalone agreement or become part of the existing Subsidies and Countervailing Measures (SCM) agreement.

Ambassador Navnit proposed that all definitions in the text must be clearly explained up-front, and the need to work out the elements of the preamble.

More importantly, India called for addressing fuel subsidies so as to arrive at a balanced outcome.

India has suggested that whether or not they are “specific” to a particular industry such as fisheries, should be included in the coverage of subsidy prohibitions.

India’s demand for a balanced agreement on non-specific subsidy was also echoed by China, said trade envoys, who asked not to be quoted.

China argued that specificity does not justify an exemption from subsidy disciplines and that members with non-specific subsidies should make a contribution.

However, the European Union, which is one of the major subsidizers, opposed including fuel subsidies in the prohibited list, arguing that their fuel de-taxation program does not reduce local prices to levels lower than world market prices and thus should not be included in the scope of the fisheries subsidies prohibitions.

Japan said it was not appropriate to include non-specific fuel subsidies in the negotiations.

Ambassador Navnit of India also highlighted the need for including language on a dispute settlement mechanism.

India emphasized on robust special and differential treatment in all pillars – IUU (illegal, unreported and unregulated) fishing, overfishing and overcapacity, and overfished stocks, saying that India’s subsidies in the fisheries sector are minuscule as compared to the big subsidizers.

India called for finalizing the preamble and dispute settlement provisions. India warned that the final fisheries subsidies agreement will only be an agreed agreement when everything is agreed.

South Africa reminded members that “for developing countries and LDCs, fish is not just used for human consumption but contributes to the upstream and downstream industries in line with their aspirations to move up the value chain and take advantage of the blue ocean economy.”

Against the worsening Covid-19 pandemic that has struck a heavy blow to economies in developing countries, special and differential treatment has become a paramount need due to the economic losses arising from COVID-19 for many developing countries and LDCs, South Africa suggested.

“Our small-scale and artisanal fishers have been hard hit during this time, without the ability to go to the sea; a post-COVID recovery plan must rebuild and improve food systems and livelihoods in a sustainable way,” South Africa suggested.

South Africa urged the chair to capture in the text this dimension to improve food systems and livelihoods.

It warned members that there can be no one-size-fits-all approach for disciplining fisheries subsidies because of differing levels of development.

“Those countries that have not yet developed their fisheries sector need to be provided with an effective and implementable S&DT provision,” South Africa said.

South Africa called for paying dedicated attention “to issues of S&DT not only based on proposals in your (Chair’s) text, but also other proposals that remain valid and require further discussion.”

Without appropriate S&DT flexibilities, developing and least developed Members will simply not be able to take on any obligations, South Africa warned.

Citing the UN SDG 14.6 for eliminating subsidies to IUU fishing and prohibition of certain subsidies that contribute to overfishing and overcapacity, South Africa said it would support the clear articulation of the ACP list-based approach that reflects that only certain subsidies lead to overfishing and overcapacity.

South Africa said it is imperative that members recognize that non-harmful subsidies are not captured by this prohibition.

“We are not advocating for box-shifting of any kind in an ala carte menu, but merely that we must therefore think holistically about the classification of subsidies without disturbing our mandates,” South Africa said.

It underscored the need “to target large scale industrial fishing and not constrain the use of beneficial subsidies that contribute to the sustainability of fish stocks, safeguard food security and livelihoods of coastal communities, including policy space to develop their marine resources.”

South Africa called for specific language that takes account of natural disasters, the impact of climate change and future pandemics on the regulatory framework and design of fisheries subsidies outcomes.

South Africa criticized the draft text for giving an “incentive for Members who do not intend to abide by their obligation to put in place “mitigation measures” even if their subsidies cause harm to fisheries.”

“This results in a zero outcome for more advanced Members that can easily evade any obligations while resource-poor Members will not have this luxury,” South Africa warned.

Commenting on the intense negotiating schedule of meetings or “continuous mode of negotiations” after the summer break, South Africa asked the chair that “since capital-based officials will have to attend meetings virtually, given different time zones, how do you propose we structure the planned clusters?”

The chair must clarify whether it is proper to indicate “only 4 meetings to conclude, when there are seminal substantive and institutional disciplines that are still to be negotiated,” South Africa said, suggesting that it will be a near impossible task given the past track record of negotiations.

On behalf of the African Group, Botswana highlighted the asymmetries in the draft consolidated text that is largely based on the “Facilitators’ texts” which were at different levels of maturity and, in some areas, there were divergences and concerns expressed by some Members.

The African Group argued that the draft text “did not take into consideration issues that are very important to our Members (from the African region).”

It listed the following concerns:

* The African Group has been consistent in its position on the necessity to focus the disciplines on large-scale industrial fishing due first to environmental considerations and second to the social and economic dimension of the small-scale fishing.

* “We have also strongly advocated for the necessity to ensure that the disciplines are simple, implementable and effective in addressing harmful fisheries subsidies as well as keeping them within the ambit of the WTO’s competence.”

* Furthermore, the African Group has emphasized the importance of respecting national and international fisheries laws and regulations, and avoiding a precedence that would have the WTO undermine or re-invent existing legal and institutional frameworks on fisheries.

The African Group pointedly conveyed to the chair that “the goal of our negotiations is to discipline fisheries subsidies and not to discipline fisheries management,” arguing that “prohibiting harmful fisheries subsidies should be considered as part of good fisheries management.”

The African Group drew attention to “potential inconsistencies in the draft text”, arguing that “the prohibitions (IUU, overfishing and overcapacity and overfished stocks) may be undermined or rendered ineffective by exceptions or conditionalities that are further provided for in the text.”

Given the glaring inconsistencies in the draft text, the African Group said that “the WTO can do better in terms of arriving at a text that can be technically sound, implementable and effective in addressing the overcapacity and overfishing situation around the world in which harmful subsidies play an important role, while at the same time providing policy space and special and differential treatment to developing and least developed members in need.”

The African Group said it cannot agree with elements in the current draft text, as “the text has language related to areas considered as red lines to some WTO members and it is important to understand your (Chair’s) views on how to deal with such provisions.”

Moreover, “the cross-cutting issues like the nature and place of this instrument in the WTO legal architecture, the monitoring and surveillance, the enforcement at the dispute settlement level as well as the transparency and notification elements of the instrument remain outstanding,” the African Group argued.

The ACP group expressed sharp concerns about “capping” as “it would include LDCs and our Members that are not providing harmful subsidies.”

The ACP group said it would oppose “any inclusion of beneficial subsidies,” arguing that it remains “open to refining the list of beneficial subsidies and applying them to the overfished and overcapacity/overfishing disciplines.”

China’s trade envoy Ambassador Zhang Xiangchen said that Beijing is committed to eliminating all harmful subsidies, suggesting that past negotiations have proved it to be impossible for all parties to agree on overall prohibition of subsidies.

Like the US, China, which is reckoned to be the largest subsidizer for the fisheries sector, called for a “pragmatic” way to negotiate reduction of subsidies, capping and exemption of beneficial subsidies.

China suggested the need for arriving at a proper criteria and methodologies of reduction, failing which members will go around in circles and arrive nowhere.

Ambassador Xiangchen underscored the need for taking account of the exemption of beneficial subsidies and formulate meaningful and effective S&DT for developing members in this process.

Indonesia, which has a long maritime coastline, called for disciplines on fuel subsidies that are not specific within the meaning of Article 2 of the SCM agreement.

Indonesia’s trade envoy Ambassador Syamsul Bahri Siregar said “horizontal fuel subsidy is not only tantamount to the fishing policy of each member, but more importantly, tied closely to energy policy holistically.”

Indonesia said “specificity of subsidy is an important factor in the discipline to ensure that such subsidy is not providing an upper-hand, both in decreasing cost of production and maintaining unsustainable fishing, to specific industry.”

Concerning overfished stock, Indonesia said that it is still not convinced of the idea of maintaining subsidies in overfished situation, be it caused by fishing activity or natural phenomenon.

On overcapacity and overfishing, Indonesia said whatever proposal or ideas are placed in this section will still be heavily debated by all members.