TWN Info Service on WTO and Trade Issues (Feb21/21)
26 February 2021
Third World Network

“Tug of war” between major subsidizers on fisheries & non-polluters
Published in SUNS #9294 dated 26 February 2021

Geneva, 25 Feb (D. Ravi Kanth) – The Doha Rules negotiations on prohibiting certain forms of fisheries subsidies remain at an impasse at the World Trade Organization over the blanket carve-out extended to major subsidizers to continue with their subsidies for overcapacity and overfishing (OCOF) that has led to the depletion of global fish stocks, negotiators told the SUNS.

At an informal Doha Trade Negotiations Committee meeting on 25 February, the chair of the Doha Rules negotiations, Ambassador Santiago Wills from Colombia, admitted that there is a “tug of war” going on between those countries seeking a complete prohibition of subsidies contributing to the OCOF problem on the one side, and those countries that want to continue with the subsidies for addressing sustainable marine management measures, on the other, according to a person present at the meeting.

The chair said that the “tug of war” is going on for years, adding that it is clear that one side will not be able to convince the other.

Ambassador Wills said he has advanced a hybrid approach, arguing that members must find a common ground.

At the February cluster of meetings of the Doha Rules negotiating body that ended on 19 February, members failed to make any progress and remained far apart on the architecture and proposed disciplines in the OCOF pillar, said negotiators, who asked not to be quoted.

Apparently, the United States did not take part in the February cluster of meetings held last week on the architecture for disciplines on overcapacity and overfishing (OCOF), special and differential treatment, and the standard of review for dispute settlement panels, said a negotiator, who asked not to be quoted.

At the heads of delegation (HoD) meeting held on 19 February to review the state of play in the discussions, sharp differences came into the open on the OCOF disciplines as laid out in Article 5 of the chair’s second revised draft consolidated text.

The major subsidizers supported the proposed language in Article 5, particularly the controversial paragraph 5.2, on the continuation of the subsidies subject to adopting marine management measures.

However, the large majority of developing and least developed countries, including India, Indonesia, and South Africa among others called for removing the asymmetries in the OCOF disciplines, said another negotiator, who asked not to be quoted.

The chair of the Doha Rules negotiations, Ambassador Santiago Wills from Colombia, has acknowledged at the meeting, the sharp divergences that surfaced among members on the proposed language in his second revised draft negotiating text, the negotiator said.

The second revised draft text was issued by the chair in his own capacity in December last year (see SUNS #9260 dated 23 December 2020), and it remains in brackets.

The text of Article 5 is as follows:

Prohibition on Subsidies Concerning Overcapacity and Overfishing:

5.1 No Member shall grant or maintain subsidies to fishing or fishing related activities that contribute to overcapacity or overfishing.

5.1.1 For the purpose of paragraph 5.1, 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.

5.2 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.

5.3 No Member shall grant or maintain subsidies:

(a) contingent upon, or tied to actual or anticipated fishing or fishing related activities at sea in areas beyond the subsidizing Member’s jurisdiction (whether solely or as one of several other conditions), 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 or fishing related activities outside of the jurisdiction of a coastal Member and outside the competence of a relevant RFMO/A.

5.3.1 With respect to sub-paragraph 5.3(a), the mere fact that a subsidy is granted or maintained to vessels or operators that may be engaged in fishing or fishing-related activities in areas beyond the subsidizing Member’s jurisdiction shall not for that reason alone be considered a prohibited subsidy within the meaning of sub-paragraph 5.3(a).

5.3.2 [PLACEHOLDER – NON-RECOVERY OF PAYMENTS UNDER GOVERNMENT-TO-GOVERNMENT ACCESS AGREEMENTS]

5.4 [No Member shall grant or maintain subsidies for a vessel not flying the flag of the subsidizing Member.]

5.5 [PLACEHOLDER – CAPPING]

5.6 [PLACEHOLDER – LIST OF NON-HARMFUL SUBSIDIES]

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) [ALT 1 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.]

[ALT 2 OTHER FORMS OF TRANSITIONAL MECHANISM]]

According to the chair, negotiators need to start reflecting on an outcome that they can live with for concluding the negotiations to save the fish and oceans.

The “friend of the chair”, Ambassador Didier Chambovey from Switzerland, also presented his report at the meeting on 19 February on the consultations held with members over effective and appropriate special and differential treatment, negotiators said.

However, the chair must recognize that his proposals in the second revised draft text are asymmetrical and that they fail to address the core issues for prohibiting subsidies in the OCOF pillar, said a negotiator, who asked not to be quoted.

The stand-off on the OCOF disciplines centers on allowing the major subsidizers to continue with what are being considered as the harmful subsidies that has led to the rapid depletion of global fish stocks, the negotiator said.

At issue is the specific carve-out given to major subsidizers – China, the European Union, the United States, Canada, Japan, South Korea, and Chinese Taipei among others – to continue with their subsidies as per paragraph 5.2 of the OCOF article in the second revised draft text.

In paragraph 5.1 of Article 5 on “prohibition of subsidies concerning overcapacity and overfishing,” the chair proposed that “no member shall grant or maintain subsidies to fishing or fishing related activities that contribute to overcapacity or overfishing” (and the list of subsidies are indicated in Article 5.1.1 of the chair’s second revised draft text).

However, in paragraph 5.2 of the second revised draft text, it is proposed that “notwithstanding paragraph 5.1, a member may grant or maintain subsidies referred to in paragraph 5.1, if it (the subsidizing member) demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.”

It has further clarified in a footnote as to what would constitute “a biologically sustainable level”, namely that it is “the level determined by a Coastal member having jurisdiction over the area where the fishing or fishing related activity is taking place.”

The footnote says: For the purpose of this paragraph, 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 such as [level of depletion, or level of or trend in time series data on catch per unit effort, commensurate with the data available for the fishery]; or by a relevant RFMO/A (regional fisheries management organization/arrangement).

Also, differences emerged on the “appropriate and effective” special and differential treatment being sought by the developing countries, particularly their demand for policy space to assist their hundreds of millions of fishermen who do not engage in industrial-scale fishing but depend on fishing for their livelihood, the negotiator suggested.

INTERVENTIONS BY THE MAJOR SUBSIDIZERS

At the meeting on 19 February, the major subsidizers – the EU, Japan, Canada, South Korea, and Chinese Taipei – supported the architecture as proposed in Article 5 with varying caveats.

Canada said finding an agreement on the OCOF disciplines as reflected in Articles 5.1, 5.2, and 5.3, advancing disciplines in IUU (illegal, unreported and unregulated) fishing, and elaborating on specific list of notifications in Article 8, are imperative, according to people present at the meeting.

The EU is understood to have said that while it can work with the overall architecture, it has raised some concerns about paragraph 5.1, according to the negotiator, who asked not to be quoted.

Japan has suggested that the overall OCOF architecture is in the right direction but added that no member must grant subsidy under Article 5.7 (c), which relates to India’s specific criteria for availing of special and differential treatment, the negotiator said.

In a similar vein, on the standard of review for taking up issues with the dispute settlement panels, there is a clear divide between Australia, New Zealand, and a few other countries that want robust procedures for approaching the issues in the Dispute Settlement Body based on a scientific approach, like the SPS (sanitary and phytosanitary measures).

INTERVENTIONS BY DEVELOPING COUNTRIES

On behalf of the African Group, Mauritius’ trade envoy Ambassador Usha D Canabady expressed sharp concern over the “persisting divergences among members” on the approach to OCOF disciplines. She said that “these negotiations need to be focused on subsidies and subsidies only.”

Ambassador Canabady cautioned against the narrative developed by the subsidizers “that have built their fishing capacity over time with the support of the government.”

The African Group, she said, is of the view that “the prohibition of the capacity and effort enhancing subsidies, in particular building more vessels and effort enhancing subsidies, along with the improvement of fisheries management may contribute to more sustainable fisheries globally.”

The African Group said it can support the instrument “that would automatically invite panels to review the evidence of IUU determination or national administrative and judicial procedures or the policy choices and methodologies of fisheries management.”

Jamaica, on behalf of the ACP (Africa, Caribbean and Pacific) group, drew several markers on the general architecture and drafting of Article 5 on grounds that it does not give a clear sense that the main objective in overcapacity and overfishing will be met.

“The largest subsidizers are seeking a permanent carve-out under Article 5.2 which will invalidate the primary prohibition contained in Article 5.1,” the ACP group argued.

Jamaica reminded the chair that “the mandate is to discipline certain forms of subsidies, not fish management”, emphasizing that “appropriate SDT (special and differential treatment) must be such that is not [conditioned] on inappropriate and burdensome obligations.”

The ACP group also issued a strong message that the SDT as set out in Article 5.7 (c) “cannot be restricted (to) a monolithic transitional period or modalities or technical assistance or capacity building”, suggesting that the discussions revealed a “clear link between the SDT and the final disciplines that will be agreed under the OCOF pillar.”

South Africa said the “big subsidizers must take responsibility and show leadership by committing to discontinue the provision of harmful subsidies to their fishing fleets that harm the health of our oceans.”

Ambassador Xolelwa Mlumbi-Peter from South Africa emphasized that “the principle of common but differentiated responsibility must underpin the disciplines.”

Ambassador Xolelwa expressed concern over the demands made by the major subsidizers/industrialized countries that “special and differential treatment should be limited for members with level of subsidization to develop their fishing capacity to mere transitional periods and some unspecified technical assistance and capacity building.”

South Africa demanded clear sequencing work and urged the chair to ensure that the proposed small group meetings for advancing the negotiations must be open ended, and representative not only in terms of different categories of members but in terms of different views and not limited to only a few members.

India called for the “polluter-pays” principle to ensure that the big subsidizers must pay for the damage they had created, suggesting that S&DT in the OCOF pillar must have the “required policy space to help their millions of fishermen.”