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TWN
Info Service on WTO and Trade Issues (Jun21/10) Geneva, 16 Jun (D. Ravi Kanth) – Many developing countries have turned the tables in the ongoing fisheries subsidies negotiations by seeking parity between the carve-outs granted to big subsidizers such as the United States, the European Union, and Japan to continue with their industrial-scale fishing, and appropriate and effective special and differential treatment in the most crucial overcapacity and overfishing pillar, said people familiar with the discussions. During the separate discussions on 11, 14 and 15 June, the developing countries exposed the allegedly imbalanced and asymmetrical provisions in the chair’s draft consolidated text (TN/RL/W/276) issued on 11 May, said people, who asked not to be quoted. Trade envoys from developing countries and also representing coalitions on 11 June demanded that if the big subsidizers are granted a carve-out in Article 5.1.1 of the draft consolidated text, then developing countries must be accorded the same level of treatment on the issue of special and differential treatment (S&DT) in the Alternative (Alt) 1 text of Article 5.5. Besides the many unresolved issues in all the three pillars – IUU (illegal, unreported and unregulated) fishing, overcapacity and overfishing, and overfished stocks – the parity as well as the linkage sought between these two provisions – Article 5.1.1 and Alt 1 in Article 5.5 – have almost brought a new dynamic to the negotiations, said people, who asked not to be quoted. At issue is the carve-out sought to be provided to the big subsidizers to continue with their subsidies under the pretext of sustainability-related flexibility in Article 5.1.1, which states 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.” Effectively, the prohibition on the subsidies listed in Article 5.1 need not be implemented by the big subsidizers if they could demonstrate that “measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.” The subsidies that contribute to overcapacity and overfishing in Article 5.1 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. In relation to any acceptance of Article 5.1.1, the developing countries demanded that Alt 1 in Article 5.5 must be accepted as well. Alt 1 of Article 5.5 introduced by the developing countries states: “[(a) The prohibition under Article 5.1 shall not apply to subsidies granted or maintained by LDC Members for fishing or fishing related activities. (b) The prohibition under Article 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 Article 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.]” Consequently, differences came into the open at an informal Heads of Delegation (HoD) meeting as well as the closed-door meeting of select countries convened by the WTO Director-General Ms Ngozi Okonjo-Iweala on 11 June, said people, who preferred not to be identified. RULES CHAIR’S REMARKS The prospects for any agreement by the 15 July ministerial meeting convened by the DG hang in the balance due to lack of convergence on the core disciplines in Article 5 on the overcapacity and overfishing (OC&OF) pillar in the chair’s draft consolidated text issued last month, said several people familiar with the development. Following the DG’s meeting, the chair of the Doha Rules negotiations, Ambassador Santiago Wills from Colombia, convened an informal HoD meeting on 11 June, where he presented his assessment on the ongoing discussions on Article 4 dealing with overfished stocks, and Article 5 dealing with the OC&OF pillar. The chair’s report revealed a lack of convergence on all elements in Article 5. However, for some inexplicable reason, the chair chose to highlight that members continue to differ on provisions concerning special and differential treatment, while the differences on Articles 5.1.1, 5.2 and 5.3 remain unbridgeable, said people, preferring not to be quoted. Ambassador Wills said that “there is a fundamental difference” on the focus of the special and differential treatment, particularly in paragraph 5.5 that contains alternative approaches for addressing appropriate and effective special and differential treatment, said people who took part in the meeting. The big subsidizers – the United States, Japan, and the European Union among others – have pressed for the continuation of the controversial paragraph 5.1.1, which amounts to an unlimited carve-out to continue with their industrial-scale fishing, subject to the caveat that “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,” said several people, who asked not to be quoted. The US, which made a brief statement at the meeting, remained silent on the issue of forced labour which it had raised in the previous meeting on 7-11 June. The US said it continues to hear the argument that the provision in paragraph 5.1.1 is too lenient or broad, arguing that it is the “correct formulation” and provides the right balance, said people, who preferred not to be quoted. In the face of the demand from a large number of developing countries that if they were to show flexibility and agree to Article 5.1.1 by limiting it to the EEZ (exclusive economic zone of about 200 nautical miles), the US said “we don’t support limiting 5.1.1 to EEZ”, said people, who asked not to be quoted. The US also opposed further modification of footnote 10 linked to Article 5.1.1. It also opposed any change in Article 5.2 (a), saying that the prohibition in the paragraph is squarely within the mandate. Article 5.2 (a), which is purportedly targeted at China, states that “no Member shall grant or maintain subsidies contingent upon, or tied to, actual or anticipated fishing or fishing related activities 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.” The US said it does not support the new carve-out in Article 5.2 (b), which is apparently designed to safeguard the European Union’s access agreements. Article 5.2 (b) states that “Subparagraph (a) shall not apply to the non-collection from operators or vessels of government-to-government payments under agreements and other arrangements with coastal Members for access to the surplus of the total allowable catch of the living resources in waters under their jurisdiction, provided that the requirements under Article 5.1.1 are met.” The EU, however, maintained that both Articles 5.2 (a) and 5.2 (b) are interlinked and any attempt to undermine Article 5.2 (b) is a “red line” for the EU members. FUEL SUBSIDIES In response to a demand from China and several other countries to treat fuel subsidies as a non-specific subsidy, the US said at the meeting on 11 June that if members were to discuss non-specific subsidies, it should take place in the context of Article 1 dealing with the scope of the agreement. Meanwhile, India proposed on 14 June that “fuel subsidies, that are not specific within the meaning of Article 2 of the SCM Agreement, granted or maintained by the Member to fishing and fishing-related activities at sea and/or availed by such Member’s fishing vessels” must be reported under the transparency and notification provisions of Article 8.1. China said both Articles 5.2 and 5.3 are inconsistent and go beyond the mandate. China said that members’ target ought to be tackling harmful subsidies while allowing permissible subsidies. In a nutshell, China said it will not accept the definition of subsidies in Articles 5.2 and 5.3. China called for the deletion of these two articles (5.2 and 5.3) from the disciplines. Many developing countries, including the ACP (Africa, Caribbean, and Pacific) group, the African Group, South Africa, India, and Indonesia among others said that Article 5 is imbalanced and asymmetrical. South Africa said that “Article 5 is the core of the disciplines and the agreement will be judged whether it lives up to the mandated objectives of United Nations Sustainable Development Goal 14.6.” South Africa said the UN SDG 14.6 is supposed to address the issue of sustainability, suggesting that its view on common but differentiated responsibilities as outlined in the climate change agreement remains key, and the biggest subsidizers will have to assume the biggest responsibility in the overcapacity and overfishing pillar, said people familiar with the discussions. South Africa reiterated that the disciplines should target the large subsidizers, arguing that appropriate and effective S&DT should be an important part as mandated. South Africa said that it has advocated a carve-out for artisanal and subsistence fishermen for addressing their food security needs. It argued that the chair’s text is “imbalanced and enables the biggest subsidizers to continue their industrial-scale fishing under OCOF pillar.” South Africa said that Article 5.1.1 “is not acceptable to us and we indicated that we can live with it and show flexibility subject to appropriate and effective S&DT.” The use of the flexibility granted to big subsidizers should be limited to the exclusive economic zone of 200 nautical miles (roughly around 210 miles). Consequently, the negotiation of S&DT provisions in the WTO’s fisheries subsidies agreement should go beyond transitional periods and technical assistance, South Africa said. It called for effective S&DT that has to include provisions that “safeguard the interests of the WTO members and flexibility of commitments and use of policy instruments to advance the development objectives of developing countries.” Dismissing the Alt 2 text as proposed by the big subsidizers, including the United States, South Africa said “Alt 2 in 5.5 does not allow us to move forward, (and) in our view, it does not reflect our views of developing countries who are the proponents of S&DT, and it does not meet the standard of being appropriate and effective.” In sharp contrast to the developing countries’ proposal under Alt 1 of Article 5.5, Alt 2 in the same article, which is being proposed by the big subsidizers, attempts to bring about differentiation among developing countries for availing of S&DT. It states: “[(a) The prohibition under Article 5.1 shall not apply to subsidies granted or maintained by LDC Members for fishing or fishing related activities. (b) The prohibition under Article 5.1 shall not apply to subsidies granted or maintained by developing country Members for low income, resource-poor or livelihood fishing or fishing related activities within 12 nautical miles measured from the baselines [for a period of [7] years from the date of entry into force of this [Instrument]]. (c) For subsidies other than those referred to in subparagraph (b), a developing country Member may grant or maintain the subsidies referred to in Article 5.1 for fishing and fishing related activities within its EEZ and the area of competence of a relevant RFMO/A for a maximum of [5] years after the entry into force of this [Instrument]. A developing country Member intending to invoke this provision shall inform the [Committee] in writing before the date of entry into force of this [Instrument]. (d) If a developing country Member whose: i. share of the annual global volume marine capture fish production does not exceed [0.7%] as per the most recent published FAO data; and ii. subsidies to fishing or fishing related activities at sea do not exceed US$ [25 million] annually deems it necessary to apply subsidies referred to in subparagraphs (b) and (c) beyond the [7 or 5] years provided for, respectively, in those subparagraphs, it shall not later than one year before the expiry of the applicable period enter into consultation with the [Committee], which will determine whether an extension of this period is justified, after examining all the relevant needs of the developing country Member in question. If the [Committee] determines that the extension is justified, the developing country Member concerned shall hold annual consultations with the [Committee] to determine the necessity of maintaining the subsidies. If no such determination is made by the [Committee], the developing country Member shall phase out the remaining subsidies prohibited under Article 5.1 within two years from the end of the last authorized period.]” Meanwhile, during the discussions on the transparency and notification provisions under Article 8 on 15 June, sharp differences emerged among the US, Australia, Japan, and the European Union on the one side, and the developing countries on the other over the allegedly burdensome and onerous notification requirements, said people, who asked not to be quoted.
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