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TWN
Info Service on WTO and Trade Issues (Dec23/02) Geneva, 5 Dec (D. Ravi Kanth) — The chair of the Doha fisheries subsidies negotiations, Ambassador Einar Gunnarsson of Iceland, on 4 December began the crucial eighth week of negotiations at the World Trade Organization but the latest changes proposed by him on prohibiting subsidies contributing to overcapacity and overfishing seemingly contain some cosmetic changes in an apparent attempt to assuage the African Group while leaving the big subsidizers almost untouched, said people familiar with the discussions. According to several studies, the five big subsidizers are China, the European Union, the United States, Japan, and Korea. In addition, there are other big subsidizers with varying levels of subsidies contributing to overcapacity and overfishing (OCOF) such as Chinese Taipei. At a meeting on 4 December, the chair said: “This week is of paramount importance if we want to achieve our collective goal of providing our ministers with recommendations at MC13.” The WTO’s 13th ministerial conference (MC13) is scheduled to be held in Abu Dhabi from 26 to 29 February 2024. “This week will be crucial for laying the groundwork for delivering the second wave of negotiations at MC13 – so let’s make it count,” the chair added. The WTO’s deputy director-general Ms Angela Ellard said the eighth “Fish Week” is “an important one and a litmus test for our ability to deliver on this important file at MC13.” “Although we have come a long way from the start of our work in February, considerably more bridge building has to take place this week if we are to meet our MC13 target,” she added. Ahead of the eighth “Fish Week” that began on 4 December, the chair issued an unofficial restricted room document (RD/TN/RL/184) in which he said: “I am sharing an attempt at capturing some of your ideas on how to further develop Article A.1.” Under the provisions of Article A.1, “no member shall grant or maintain subsidies to fishing or fishing-related activities that contribute to overcapacity and overfishing.” The subsidies that contribute to overcapacity or overfishing in Article A.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 [except for when such subsidies are implemented for subsistence purposes during seasonal closures]; (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. The unofficial room document further says that “before granting a subsidy, a member must consider the consequence of the subsidy on overcapacity and overfishing.” In an email sent to members, the chair informed that he would discuss Articles A.1, and B, which deals with special and differential treatment (S&DT) provisions. The chair elaborated on his ideas to be discussed this week. He said: “Overall, a major focus of recent discussions has been on how to tighten the sustainability conditionality and, in the case of a two-tier system, ensuring that it is operational.” He seems to have tweaked the S&DT provisions, saying that “SDT has largely focused on low income, resource poor and livelihood fishing or fishing related activities and the de minimis.” According to people engaged in the negotiations, the proposal on S&DT seems to be an attempt to divide the developing countries into different categories to allegedly undermine the overall S&DT provisions for countries like Indonesia, India, and other developing countries. Commenting on the Article A.1 illustrative list, the chair said: “One item on the illustrative list of subsidies that has given rise to considerable debate is item (e) on income support of vessels or operators or workers.” According to Ambassador Gunnarsson, “Many Members raised concerns that it may pose limitations on providing assistance relating to the livelihood of low-income fishing communities, notably as regards to income support during closed fishing seasons. This concern seems to be somewhat related to artisanal fishing but developing Members that have raised this, have largely done so in the context of the list in Article A.1.” Further, the chair argued that “many Members have requested the deletion of item (e) (dealing with income support), whereas others reiterated the illustrative and indicative nature of the list and caution that removing items from it may have unintended implications.” “In an attempt to address this,” the chair said, “you will see a proposal for a qualification that excludes income support during closed fishing seasons from the list.” Commenting on “the sustainability-based conditionality in Article A.1.1 and Article A.1.2,” the chair said that he noted “a strong desire to maintain a two-tier hybrid approach (list approach and effects approach) to the disciplines.” He said: “Members have focused on further tightening the tiers whilst at the same time taking into account practical considerations. Given the challenges associated with the use of the available data on aggregate subsidies as contained in RD/TN/RL/174, Members have been exploring alternative bases to give effect to the two tiers.” According to the unofficial room document, apparently “Members saw merit in exploring criteria such as subsidy intensity or distant water fishing.” As previously reported in the SUNS, the chair held an Interactive Thematic Session on 27 November, where “Members explored the merits and practicalities of such criteria.” He said the interactive session “was useful in identifying challenges as well as possible solutions to either of the two criteria.” TWO OPTIONS Ambassador Gunnarsson presented “two options for Members to consider as an attempt to capture the discussions regarding the way to operationalize the sustainability-based conditionality based on two tiers.” Option 1, based on subsidy intensity, provides for more scrutiny of Members whose subsidies are greater than five percent of the total value at the first landing of total marine capture production. The chair said, “Proponents of this approach elaborated on the operation and the tightening of the tiers during the brainstorming session. The draft below takes into consideration some of the practical issues raised by Members including the periodicity of notifications.” The term “which” in Article A.1.3 (ii), proposed by some Members in order to strengthen the discipline, has been bracketed to reflect that a deeper discussion is needed on whether it is practical and operable. Option 2, based on distant water fishing, provides for more scrutiny of Members characterized as fishing in distant waters. The chair said: “The brainstorming session raised some important considerations regarding the practical application of characterizing distant water fishing as fishing or fishing-related activities beyond the FAO (United Nations Food and Agriculture Organization) major fishing area(s) that is (are) adjacent to the natural coastline of a Member. Members acknowledged the arbitrariness of such a distinction given its intended use by the FAO for statistical purposes only. As such, some Members raised the possibility of exploring other considerations including fishing or fishing-related activities within the context of RFMO/A membership or in nearby jurisdictions pursuant to arrangements based on the shared management of migratory stocks.” The first option, which seems to be based on the Australia-New Zealand proposal, is apparently problematic as it essentially gives more leniency to members engaged in large-scale fishing including on-board processing, and more leniency to members providing other subsidies like to illegal, unreported, and unregulated (IUU) fishing or other overfished stocks. S&DT On special and differential treatment, the chair said: “Overall, there is merit in rearranging the SDT provisions as suggested by some Members. Therefore, this document starts with the provisions regarding least-developed Members and developing Members below a de minimis threshold based on their share of global marine capture.” “These provisions remain largely unchanged except for adding “graduated” in front of “LDC Member” in the second sentence of Article B.1. In this document, you will not find Article B.3 ALT as contained in document RD/TN/RL/174. Although the deep dive session on a cap based on the level of subsidization presented potential opportunities, it also revealed some persistent challenges. In any event, convergence was not materializing and therefore it is not included in this document.” SOME QUESTIONS RAISED The chair’s latest unofficial room document seems to have raised several questions on the prohibition of subsidies contributing to OCOF, as well as the architecture on S&DT provisions, said people familiar with the negotiations. First, there appears to be a lack of clarity on what are “subsistence purposes”, as this concept differs from the concept of “low income, resource-poor or livelihood fishing or fishing related activities” in Article B.4 of the Chair’s text. In a similar vein, “seasonal closure” is not defined. A closure of the fishing season might not be a total closure (only closure for certain areas, certain species, certain vessels, or certain gear methods), and it might not be necessarily recurring or recurring during the same period of the year. “The question is whether “seasonal closure” implies a yearly recurring total closure or if it would encompass other types of closures as well,” a person said. According to the Paris-based Organization for Economic Cooperation and Development (OECD) data on subsidies, it is highlighted that, “Payments based on fishers’ income do not have much impact on overfishing or overcapacity. These are transfers made depending on the current income of the recipient. This would include employment insurance, disaster payments, wage subsidies, special income tax concessions, and similar (incentives).” “The African Group proposed an additional item in the list, based on experiences inter alia of subsidy practices by France, namely “subsidies contingent on re-investment in fishing or fishing related activities”,” said another person who asked not to be identified. Furthermore, there are no real disciplines for demonstration inter alia proposed by the African Group, the Latin American Group, etc. Finally, rather surprisingly, there is no reference to the large-scale fishing category in the room document. One member suggested that the tiers could be based on the type of subsidies instead of based on the members, for instance, subsidies to large-scale industrial fishing could be subject to more stringent demonstration requirements compared to other subsidies. Indonesia has proposed that subsidies to large-scale and distant water fishing cannot avail of any flexibility under Articles A.1.1/A.1.2. The African Group pressed for focusing on the large-scale subsidizers, said a member, suggesting that the chair’s text cannot be claimed to be a “bridging” text. It remains to be seen how the eighth “Fish Week” will unfold in addressing several major issues concerning subsidies contributing to OCOF as well as the S&DT architecture for developing countries, who did not contribute to the problem of the global depletion of fish stocks, said people, who asked not to be quoted.+
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