TWN Info Service on WTO and Trade Issues (Oct20/01)
1 October 2020
Third World Network

Rules chair suffers setback over proposed fisheries deal
Published in SUNS #9201 dated 1 October 2020

Washington DC, 30 Sep (D. Ravi Kanth) –  The chair of the Doha rules negotiations at the WTO appears to have suffered a setback in his concerted push to decide on the form and the institutional arrangement of the proposed fisheries subsidies agreement, after members underscored the need to focus first on the core issues and substance of the new agreement, trade envoys told the SUNS.

At a heads of delegation (HoD) meeting on 29 September, the chair, Ambassador Santiago Wills from Colombia, pressed members to decide whether the proposed fisheries subsidies agreement should remain as a standalone agreement or as an Annex to the existing Agreement on Subsidies and Countervailing Measures (ASCM).

A day after the G20 trade ministers had pledged to wrap up the Doha fisheries subsidies agreement by the end of the year, the chair sent an email to members on 23 September emphasizing that he wants their endorsement to “draft the disciplines as though it were to be a standalone agreement on the understanding that, should we see an emerging convergence for an annex to the ASCM, it would be re-drafted to reflect this situation.”

The chair convened the meeting on Tuesday (29 September) thinking that he would chase the “form” of the agreement even without an iota of progress on the core fisheries subsidies disciplines, said a participant, who asked not to be quoted.

At the meeting, trade envoys from the developed countries, including the United States, Canada, and Norway among others, and developing and least-developed countries discussed the various pros and cons of having a standalone agreement or an annex to the ASCM.

Members told the chair that it is premature to discuss the “form” of the agreement when there is little progress on all the substantive issues concerning the disciplines for overcapacity and overfishing, IUU (illegal, unreported, and unregulated) fishing, and overfished stocks, said another participant, who asked not to be quoted.

While some members like Canada leaned towards a standalone agreement, some others said it should remain as an annex to the ASCM, which includes safeguard provisions, the participant said.

The US, for example, spoke about the history of the negotiations and the mandate to strengthen the fisheries subsidies rules, suggesting that it considered the agreement as an annex to the ASCM.

But members need to discuss the substantive issues first before moving to deciding the form of the agreement, the US suggested, according to participants, who prefer not to be identified.

In his statement at the meeting, China’s trade envoy Ambassador Zhang Xiangchen said that he would agree with the chair that “the choice of a standalone agreement or an annex to the ASCM may have implications for the drafting and the members’ ability to engage in text-based discussions.”

Ambassador Xiangchen said that members would benefit from having a “clearer direction on this institutional arrangement sooner rather than later,” suggesting that “the substance of the fisheries disciplines will be different from those in the ASCM.”

The Chinese trade envoy said that “though we do not have a holistic picture yet, we could see that the scope, the prohibitions, the remedies, the transparency requirements and the dispute settlement mechanisms may all turn out to be quite different from the current ASCM disciplines.”

He said that “the aim of the fisheries disciplines is to ensure sustainable fisheries, while the object and purpose of the SCM Agreement, as summarized by the Appellate Body, is to strengthen and improve GATT disciplines relating to the use of both subsidies and countervailing measures.”

He added that “such a difference may result in different scope of the disciplines, especially on the specificity requirement.”

Ambassador Xiangchen said that “subsidies are categorized as prohibited and actionable in the ASCM, while the fisheries disciplines largely prohibit harmful ones and may put some cap on certain subsidies as proposed by China and some other members.”

According to the Chinese envoy, “the fisheries disciplines will not include countervailing measures as remedies as the ASCM provides.”

He said that it will complicate the work of the current SCM Committee if it also takes up the additional tasks for the implementation of the fisheries disciplines.

He said that members must be “cautious (in) not making the WTO a fishery management organization,” adding that China “is open to the current format of the instrument we are negotiating and look forward to joining the consensus on that point.”

The trade envoys of South Africa, India, and several other developing countries delved into the pros and cons of having a standalone agreement or as an annex to the ASCM.

Responding to the debate on having a standalone agreement versus an annex to the ASCM, South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter said that the “mandate” is to clarify the rules on fisheries subsidies, suggesting that the overall focus is on subsidies, though seen from a fisheries perspective.

She said members are called to “prohibit certain types of subsidies, which further confirms a link to the ASCM.”

Ambassador Xolelwa suggested that unlike the ASCM, “an outcome on fisheries subsidies does not have market access implications since the primary objective is to address sustainability.”

She argued that in order to make an outcome on fisheries subsidies work, members “would have to adapt the trade effects concept found in the ASCM.”

However, it “does not necessarily mean that the ASCM is not adaptable to the special context of the fisheries sector,” the South African trade envoy argued.

In the current approaches to negotiations, she said there are “references to prohibited and actionable subsidies or makes provision for a list of positive (green) subsidies and also contains exemptions based on considerations of sustainability and special and differential treatment.”

“A major issue that still needs to be addressed is that of specificity, not only in the context of fuel subsidies but more broadly,” said Ambassador Xolelwa, suggesting that “if a particular subsidy is designed to be horizontal, it escapes the disciplines that we are currently crafting, unless we have a strong link with Article 3 of the ASCM, noting that Article 2.3 which provides that any subsidy that falls under the prohibition of Article 3 shall be deemed to be specific.”

Consequently, “making this link to the ASCM is crucial in addressing many harmful subsidies that would otherwise escape the disciplines that we are designing,” the South African envoy said.

Ambassador Xolelwa suggested that “by adding to the categories of prohibited subsidies in Article 3, we will create much stronger disciplines that target the most harmful subsidies which are likely to have adverse effects on the environment.”

Further, “such an approach puts the primary obligation on the subsidizing member to ensure that subsidies do not go to activities that fall within such prohibitions,” she argued.

“We assume in this debate that those that cause the greatest harm through their subsidies will assume a proportionately greater obligation to refrain from doing so,” she emphasized.

“This is not only a true exemplification of the concept of sustainability but also the concept of common but differentiated responsibility and respective capabilities, in light of different national circumstances,” Ambassador Xolelwa argued, adding that “as we continue to seek common ground on S&DT (special and differential treatment), this notion should be borne in mind.”

South Africa said it is important that “the substance should inform the form of the instrument,” pointing out that “in the case of a standalone Agreement, we will need to assess whether and how we minimize/avoid the risk of possible double challenges to any offending measure under both the standalone agreement, as well as the ASCM.”

Ambassador Xolelwa called for continuing “work on the core disciplines with the ultimate goal being to prohibit harmful subsidies as per the mandate.”

She said that “a strong discipline on overfishing and overcapacity that targets the most harmful subsidies will positively reinforce other pillars of negotiations, including IUU fishing, which in many cases is carried out by distant water fishing, industrial scale fishing fleets that depend on deleterious subsidies to continue their plunder and pillage of fish stocks.”

South Africa emphasized that “the WTO is not a fisheries management institution,” adding that “our view is therefore that the institutional design of any outcome would have to be crafted based on the shape of the disciplines.”

Ambassador Xolelwa cautioned that “making an a priori choice at this stage risks deviating from the very explicit mandate given by our ministers to further clarify and improve existing subsidies disciplines.”

According to South Africa, a “choice in either direction (that is to say a standalone agreement or one integrated into the ASCM) is warranted at this given point in time.”

Ambassador Xolelwa suggested that her delegation is “ready to work on progressing the substantive negotiations and to make a choice regarding the institutional framework once enough progress is registered in this regard. The sequence is therefore important.”

In its intervention at the meeting, the ACP (Africa, Caribbean, and Pacific) group said that the “institutional design of any instrument is dependent on the nature and scope of the substantive disciplines.”

The ACP group cautioned that “any attempt to prescribe the form of an outcome on fisheries subsidies will interfere with the substantive discussions.”

“Whereas the final form of the agreement is an important consideration in the overall negotiations, the ACP believes that it is premature to bring this matter to the HoD for discussion,” the ACP coalition said.

In a similar vein, the African Group, which raised several questions about the institutional arrangement, said it is “not in a position to endorse any option at this time.”

It urged the WTO Secretariat “to do a technical note (without prejudice to members’ positions) on the options and their implications.”

In the face of sharp opposition and lack of consensus, Ambassador Wills merely concluded the meeting by saying that members need to come back to this issue at an appropriate time.

Members conveyed to him the need to focus more on the substance than on the form of the proposed agreement, said participants, who asked not to be identified.