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TWN
Info Service on WTO and Trade Issues (Jun21/02) Geneva, 3 Jun (D. Ravi Kanth) – Major developed countries and some developing countries at the WTO have strongly supported a controversial formulation in the latest draft consolidated chair’s text on fisheries subsidies that allegedly provides reverse special and differential treatment (S&DT) to the big subsidizers for continuing with their harmful subsidies in the overcapacity and overfishing pillar, said people familiar with the development. At an informal heads of delegation (HoD) meeting held virtually on 2 June, the chair of the Doha Rules negotiations, Ambassador Santiago Wills from Colombia, sought members’ views on Article 5.1.1 in his draft consolidated text, which is being seen as an “eyesore” in the ongoing fisheries subsidies negotiations. At the meeting, the major subsidizers – the European Union, the United States, Japan, Canada, and Norway, as well as Korea and Chinese Taipei among others – endorsed the chair’s formulation of Article 5.1.1 in his draft consolidated text in order to avail of a special carve-out to continue with their subsidies in the overcapacity and overfishing (OC&OF) pillar. These countries, which are now attempting to severely undermine special and differential treatment for developing countries in the ongoing fisheries subsidies negotiations, showed their willingness to avail of special and differential treatment for their harmful subsidies in the overcapacity and overfishing pillar, which has led to the depletion of global fish stocks in the past many decades, said people, who are participating in the negotiations. The chair appears to have provided the specific carve-out to the major subsidizers under Article 5.1.1, which says that “a subsidy is not inconsistent with Article 5.1 if 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”. Article 5.1 of the chair’s draft consolidated text states that “no Member shall grant or maintain subsidies to fishing or fishing related activities that contribute to overcapacity or overfishing. For the purpose of this paragraph, 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-related activities.” Yet, in the very next paragraph of Article 5.1.1, the chair proposed that “a subsidy is not inconsistent with Article 5.1 if 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”, under the pretext of the undefined “sustainability- related flexibility.” According to developing countries, Article 5.1.1 has turned out to be an “eyesore” in the proposed fisheries subsidies agreement that the WTO Director-General Ms Ngozi Okonjo-Iweala wants to conclude at an informal trade ministerial meeting on 15 July. Moreover, Article 5.1.1 strikes at the very heart of the United Nations Sustainable Development Goal (SDG) 14.6. The UN SDG 14.6 calls on WTO members to, by 2020, “prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to IUU (illegal, unreported, and unregulated) fishing and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least-developed countries should be an integral part of the WTO fisheries subsidies negotiation”. Many developing and least-developed countries, including India, Indonesia, South Africa, the ACP (African, Caribbean, and Pacific) group, the African Group, and the LDCs have consistently opposed Article 5.1.1 on grounds that it provides reverse special and differential treatment to the major subsidizers engaged in industrial- scale fishing, said people familiar with the development. CHAIR’S E-MAIL TO HOD Ahead of the meeting on 2 June, the chair sent an e-mail to heads of delegation on 31 May in which he proposed discussions on “the sustainability-related flexibility in Article 5.1.1.” Ambassador Wills said that “while some Members see the current text of Article 5.1 (a hybrid approach) as a compromise formulation between different approaches, views still diverge on the operation of this provision.” “In particular, the sustainability-related flexibility in Article 5.1.1, which some view as being too lenient, and others as too restrictive,” he said. Ambassador Wills posed a question to HoDs: what specific “changes” they are seeking “to the current draft of Article 5.1.1 [that] would maintain the effectiveness of the subsidy prohibition in Article 5.1, while making it accessible to all Members regardless of their fisheries management system or fish stocks?” In his opening remarks at the meeting on 2 June, the chair defended Article 5.1.1, saying that it is not meant to be an exception and that it is part of the prohibition. He said Article 5.1.1 does not allow a lenient approach to the harmful subsidies listed in Article 5.1, adding that it is subject to transparency and notification requirements. He acknowledged that the current text is not perfect, suggesting that all the proposals are on the table. MAJOR SUBSIDIZERS ENDORSE CHAIR’S FORMULATION In response to the chair’s question, the US said that “we support the chair’s hybrid approach”, and called for removing the brackets in Article 5.1 that lists all subsidies that contribute to the OC&OF pillar, said people, who took part in the meeting. In a similar vein but with varying degrees of nuanced comments, Japan, the European Union, Norway, and other developed countries supported the Chair’s formulation in Article 5.1.1, said people who took part in the meeting. But some developed countries like Iceland raised specific concerns about Article 5.1.1. CHINA’S INTERVENTION China, which has emerged as the biggest subsidizer, said that the whole of Article 5 must be viewed holistically, with Article 5.1 (all the listed subsidies that contribute to overcapacity and overfishing) and Article 5.1.1 (the exemption or reverse special and differential treatment) “are the overarching articles that set the foundation of the OCOF discipline and serve to bind all provisions in this article to our mandate.” China called for applying Article 5.1 with Article 5.1.1 horizontally and equally to all sea areas. China, which is opposed to the chair’s formulations about subsidies granted to vessels that are engaged in high seas in Articles 5.2 and 5.3, said they “are not only apparently unwarranted but also discriminatory, which we are not in a position to live with.” China said the WTO “must recognize the significant differences of fishery management systems among members based on different resource situation, stock levels, fishing methods and development levels, etc,” adding that “a one-size-fits-all high standard for the fishery management is neither necessary nor feasible, and the biologically sustainable level should be determined by the coastal members.” INDONESIA’S INTERVENTION Indonesia, which has a large marine zone with millions of artisanal and resource-poor fishermen, said that “fishery management is a pre-condition for extending SDT (special and differential treatment) to developing countries.” “Hence, to bring fishery management as the main discipline is clearly giving a reverse SDT to the big subsidizers,” Indonesia argued. Indonesian trade envoy Ambassador Syamsul Bahri Siregar pointedly asked that “if all WTO members could maintain, and even increase, their level of subsidy based on this Article 5.1.1, what will be our contribution to the current overcapacity and overfishing?” He said that some members suggested that “developing countries and LDCs could utilize this provision to increase their subsidies.” “But if we are increasing our pollution, what really is the benefit of this discipline,” he argued, suggesting that “there is no international standard for sustainable level in the fisheries.” Indonesia sought to know “how then a Panel concludes that a subsidy is against the discipline. And even if they can, what is the WTO panel’s competence to look at fishery management beyond the issue of international trade.” “Those three issues concerning Article 5.1.1 are pertinent to our delegation if we are committed to fighting against current overcapacity and overfishing,” the Indonesian envoy said. Responding to the chair’s specific question in his e-mail, Indonesia said “ideally, Indonesia wants Article 5.1.1 to be removed entirely so that the prohibition under Article 5.1 is stronger.” Indonesia said that “this Article is a form of Special and Differential Treatment for developed countries.” SOUTH AFRICA’S INTERVENTION South Africa, which has consistently opposed Article 5.1.1, said “we do not see it as accessible to us, actually we see this as reverse S&D for the biggest subsidizers.” “In our view,” the South African trade envoy Ambassador Xolelwa Mlumbi-Peter said, “it provides a loophole to circumvent the prohibition in Article 5.1 and reduces the effectiveness of the disciplines.” The biggest contributor to overcapacity and overfishing are “subsidies, hence these negotiations,” South Africa said. The “management measures implemented by WTO Members have not been sufficient thus far and we are not convinced that they will be effective going forward,” she argued. On the issue of how the “subsidizing Member demonstrates that measures are implemented to maintain the stock(s) in the relevant fishery or fisheries at a biologically sustainable level,” Ambassador Xolelwa said “we have noted your explanation that Article 8 on notification and transparency contains a specific link to the flexibility in Article 5.1.1 and that substantive clarification concerning the demonstration requirement might not be appropriate for the text itself, and is better dealt with by the Committee or other body charged with overseeing the implementation of the disciplines established under this Instrument.” She expressed doubts over the chair’s assurance, arguing that, “if this gives sufficient comfort on demonstration and whether this will not create legal uncertainties going forward.” South Africa sought to know whether “the geographical scope of the flexibility in Para 5.1.1 is intended to be restricted to a subsidizing Member’s exclusive economic zone.” She said that “the proposed Article 5.3 in W/276, is a prohibition for subsidies in areas beyond a subsidizing Member’s jurisdiction and outside the competence of a relevant RFMO/A (regional fisheries management organization/arrangement).” South Africa said that it “indicated in the last NGR [Doha Rules negotiating group] that flexibility with the hybrid approach is subject to (1) appropriate and effective S&D under 5.5; (2) Flexibility in relation to 5.1.1 being limited to what you expressed in your 12 February note, which will ensure that the flexibility will apply to subsidies to fishing within the EEZ (exclusive economic zone of 200 nautical miles or 230 miles) of the subsidizing Member and relevant RFMO.” South Africa said if members have to live with Article 5.1.1, then “its application would have to be limited to a Member’s EEZ.” Ambassador Xolelwa said for South Africa, “the answer is not in making 5.1.1 more accessible to all Members regardless of their fisheries management system or fish stocks but in reducing the spillover impact on us that will be the target of the big subsidizers who are proponents of 5.1.1.” She said that if Article 5.1.1 “is not confined to the subsidizing Member’s EEZ, it will lead to imbalances; it has no conditionalities compared to Article 5.5.” In short, she said, Article 5.1.1 “favours those members that have well developed fisheries sectors and are huge subsidizers and it will maintain the status quo.” INDIA’S INTERVENTION In a hard-hitting statement, India’s trade envoy Ambassador Brajendra Navnit raised several critical issues with the chair’s text, arguing that the “polluter-pays” principle as well as that of common but differentiated responsibilities in the climate change agreement must be applicable to Article 5.1.1. The Indian trade envoy pointed out that despite repeatedly asking for clarifications from the proponents of Article 5.1.1 during the past eight months, it has not received any answers, while the same countries continue to ask repeatedly the same questions in the TRIPS waiver discussions in the TRIPS Council even after being provided all the answers. Raising several questions, India said the moot question is “who is responsible for this situation of depleting the oceanic resources,” suggesting that the big subsidizers had constructed large-scale industrial fleets to enhance their capacities for overfishing. It said that the advanced countries had provided $26 billion as subsidies in the OC&OF pillar, while the poorest countries provided only around $3.6 billion. India said that it is disappointed with the current text as it continues to perpetuate the asymmetries in the proposed fisheries subsidies agreement, somewhat akin to what the developed countries did in the Uruguay Round Agreement on Agriculture, according to people familiar with the discussions. India pointed out that Article 5.1.1 would be tantamount to market access for the big subsidizers, arguing that it should be restricted to the EEZ (exclusive economic zone) only, and should not be extended to the high seas. In response to the chair’s question, Bangladesh said “any provision to live by all members, by nature, would be too lenient for those who have the capacity to implement and too tight for those who do not have the capacity to do so.” Given the reality that “members are at different levels with regard to the fisheries management system,” Bangladesh said “subsidization has a clear link with the Members’ level of development.” “With that understanding,” said Bangladesh, “it would be an unjustified attempt to make one provision, or one type of test mechanism, as it is in the current Article 5.1.1, accessible to all members.” Further, Article 5.1.1 would pose risks of abuse of such lenient flexibility by its unintended users. “Also, it is not reasonable as, undeniably, subsidization and its resultant effect on the fish stock damage has historical context for which not all members are equally responsible,” Bangladesh said. In short, the discussions on Article 5.1.1 revealed once again that the WTO works for the big subsidizers who have contributed to overcapacity and overfishing, said people, who asked not to be identified. More importantly, the discussion showed that the proposed fisheries subsidies agreement is diametrically opposed to the cardinal principles enshrined in the UN SDG 14.6, people said.
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