TWN Info Service on WTO and Trade Issues (Dec20/06)
4 December 2020
Third World Network

Chair’s questions on “sustainability”, OC&OF come under challenge
Published in SUNS #9247 dated 4 December 2020

Geneva, 3 Dec (D. Ravi Kanth) – Many developing countries have sharply challenged the underlying rationale behind a set of questions posed by the chair of the Doha fisheries subsidies negotiations on the “sustainability” argument and on disciplines on prohibiting subsidies for overcapacity and overfishing (OC&OF).

The underlying rationale behind the set of questions appears to be an alleged attempt to enable the major subsidizers to avail of reverse special and differential treatment while curtailing the policy space for countries who are not responsible for the depletion of global fish stocks, trade negotiators told the SUNS.

At a heads of delegation (HoD) meeting on 2 December, trade envoys of developing countries expressed sharp concerns over the questions posed by the chair, Ambassador Santiago Wills of Colombia, on several elements in Article 5.2 of the revised draft consolidated text issued on 2 November.

Following two days of HoD meetings on the questions raised by the chair on Articles 3.2 and 3.3 on issues concerning disciplines on IUU (illegal, unreported, and unregulated) fishing, and Article 5.2 relating to disciplines on OC&OF, the chair informed members that he will wait until the heads of delegation/Trade Negotiations Committee (TNC) meeting that will be held before the General Council meeting on 17 December to give a report, so as to provide more time for consultations.

Ambassador Wills sought to know from members “whether the sustainability element reflected in Article 5.2 could be modified to an appropriate level of comfort for all members.”

Article 5.2 in the revised draft consolidated text states that “notwithstanding paragraph 5.1, a Member may grant or maintain subsidies referred to in paragraph 5.1 if it demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.”

A biologically sustainable level “is the level determined by a coastal Member having jurisdiction over the area where the fishing or fishing related activity is taking place, using maximum sustainable yield (MSY) or alternative reference points; or by a relevant RFMO/A (Regional Fisheries Management Organization/ Arrangement).”

The ACP (Africa, Caribbean, and Pacific) group, which has the largest number of maritime members with livelihood fishermen, argued that “these provisions would be so demanding that in practice only certain Members, with a particular type of fisheries management, would be able to demonstrate meeting the sustainability elements, and thus would be able to provide subsidies to fishing capacity and fishing effort.”

The group pointed out that the barometer of sustainability is linked to overcapacity that results in overfishing, suggesting that the chair and the proponents seem to render special and differential treatment for developing countries unnecessary, said a negotiator, who asked not to be quoted.

The ACP group sought to know how Article 5 on prohibitions concerning overcapacity and overfishing functions and its overall relationship with Article 5.7.

Article 5.7, which is in brackets in the revised draft consolidated text, states the following:

5.7 (a) [The prohibition under paragraph 5.1 shall not apply to subsidies granted or maintained by LDC Members for fishing or fishing related activities.

(b) The prohibition under paragraph 5.1 shall not apply to subsidies granted or maintained by developing country Members for fishing or fishing related activities within their territorial sea.

(c) The prohibition under paragraph 5.1 shall apply to subsidies granted or maintained by developing country Members including LDC Members, for fishing or fishing related activities within their EEZ and the area of competence of RFMO/A if all the following criteria are met:

i. the Member’s GNI per capita exceeds US$5,000 (based on constant 2010 US dollars) for three consecutive years;

ii. the Member’s share of the annual global marine capture fish production exceeds 2% as per the most recent published FAO data;

iii. the Member engages in distant water fishing; and

iv. the contribution from Agriculture, Forestry and Fishing to the Member’s annual national GDP is less than 10% for the most recent three consecutive years.]

According to a negotiator, the ACP group sought to know from the chair whether the underlying rationale is to let a major subsidizing country granting or maintaining the type of subsidies that are listed in Article 5.1.1 to simply notify to the WTO the measures they are implementing to maintain the fish species in their own waters at biologically sustainable levels.

Under Article 5.1.1, subsidies that contribute to overcapacity or overfishing [include]:

(a) subsidies to construction, acquisition, modernization, renovation or upgrading of vessels;

(b) subsidies to the purchase of machines and equipment for vessels (including fishing gear and engine, fish- processing machinery, fish-finding technology, refrigerators, or machinery for sorting or cleaning fish);

(c) subsidies to the purchase/costs of fuel, ice, or bait;

(d) subsidies to costs of personnel, social charges, or insurance;

(e) income support of vessels or operators or the workers they employ;

(f) price support of fish caught;

(g) subsidies to at-sea support; and

(h) subsidies covering operating losses of vessels or fishing or fishing related activities.

According to a negotiator, the chair’s question suggests that the prohibition will not apply to subsidies to fishing in the waters of only that subsidizing member.

However, the negotiator suggested, if the subsidy is for the vessel/owner fishing in both the domestic waters of the subsidizing member and also the waters of another Member, it is not clear whether the entire subsidy be prohibited, or allowed under Article 5.2.

The negotiator said that if Article 5.2 is left unchanged, it “appears to constitute a reverse special and differential treatment for developed countries and big subsidizers to maintain and expand their fleet capacity and catch efforts unabated.”

Worse still, under the guise of “sustainability” measures, the developing countries are being denied any flexibility even though they are not providing subsidies to overcapacity and overfishing, the negotiator suggested.

At the meeting, the ACP group said that the proponents of Article 5.2, if they are serious about sustainability, they should then de-commission 60% of their capacity immediately as an early payment, the negotiator said.

The ACP group said that “developing country and LDC special and differential treatment (S&DT) must be de-linked from Article 5.2” as it fails to address the S&DT claims of any of its members.

The chair has also raised two other questions. They include:

(1) “in the context of the overcapacity and overfishing pillar, an important question that emerged from the discussion is how special and differential treatment flexibilities can be structured to ensure that they are consistent with the sustainability objective of the negotiations”, and

(2) “concerning transition periods, several delegations have stated that they would need them under each pillar for a variety of reasons, including the time needed to adjust laws and take other steps needed to implement the disciplines. Others have stated that they could envisage short transition periods that would be limited to one or two pillars. Given that the objective of a transition period is to allow a limited period of time to implement obligations, what transition periods might be considered to be appropriate and under which pillars.”

The ACP group suggested that more work needs to be done to resolve the issue of S&DT, arguing that “the latest rush to impute a set of conditions on our right and obligation in this mandate to make S&DT integral is inappropriate.”

It suggested that its members are learning “a new script this late in the negotiations which is becoming a serious setback in their negotiations.”

The developing countries are now being told that there will be no exclusions, as exclusions are counter to the sustainability goal of the mandate, that they must now undergo needs assessment to prove the eligibility for S&DT, and that if they submit to this new conditionality, then they will be granted transition periods for a limited time with technical assistance.

More disturbingly, a loophole is being created for this discipline to ensure, what will be tantamount to S&DT, “without time limits or transition periods for the major providers of harmful subsidies” for contributing to overcapacity and overfishing, the ACP group argued.

The African Group also asked the chair or the proponents to clarify several issues concerning the specific language in Article 5.2.

It argued that the “discipline in Article 5 means that members can continue to provide the subsidies listed in 5.1 as long as they have management plans and system in place,” implying the continuation of the status-quo.

Responding to the chair’s questions on S&DT, the African Group suggested the following points:

* Global overcapacity has mostly contributed to overfishing and to some stocks being overfished;

* Governments have contributed to this situation by providing capacity enhancing subsidies to fishing efforts that would otherwise not be profitable;

* By prohibiting subsidies that contribute to overcapacity, the members would contribute to reducing overfishing and overfished stocks globally;

* However, most of the excessive fishing capacity comes from developed countries and some developing countries;

* It is, therefore, proposed that members prohibit certain of those capacity enhancing subsidies where that is already excessive and to allow flexibility where it does not exist or is very little.

The African Group said that given the financial constraints of most of its members, their subsidies programs will mostly remain for artisanal fishing.

It reiterated that the African Group “is not taking any commitment at the WTO regarding fisheries management, stock assessment or IUU fishing regimes.”

“We are only committing to not grant or maintain subsidies to IUU fishing and not to build our industrial fishing capacity unsustainably,” the group said, calling for a balanced outcome that would ensure policy space for the developing countries.