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Info Service on WTO and Trade Issues (Jul24/12) Geneva, 12 Jul (D. Ravi Kanth) — The chair of the World Trade Organization’s Doha Rules negotiating body on 10 July issued a new draft text addressing fisheries subsidies that contribute to overcapacity and overfishing, which is seemingly biased in favour of the big subsidizers while allowing distant-water fishing nations a “free pass”, said people familiar with the text. The genesis of this latest text appears to be the result of bilateral and small-group meetings with the chair and select members, said people familiar with the discussions. It seems that the entire WTO membership has not yet had an opportunity to convene in a plenary session in the Rules negotiating body to discuss the text or share their views, said people who preferred not to be identified. It was originally the intention of the chair, Ambassador Einar Gunnarsson of Iceland, to introduce the text in a Trade Negotiations Committee (TNC) meeting scheduled for 15 July, which is the body overseeing the Doha Development Agenda negotiations, said a trade envoy, who asked not to be quoted. However, in what appears to be the makings of a “fiasco”, the chair, in a seemingly last-minute development, has decided to convene four in-person small-group sessions at the Heads of Delegation (HoD) plus one level on 12 July, the envoy said. The chair has also announced that he will be submitting the text through the delegation of Iceland, his own delegation, for inclusion in the upcoming July General Council meeting. “This latest development publicly highlights the procedural anomalies that have plagued the fisheries subsidies negotiations from the start,” said a fisheries expert, preferring not to be quoted. “The latest text is not the product of a true multilateral process but rather the work of a select few members,” the expert said, adding that “these members have weakened the disciplines to such an extent that they are now ineffective and fail to meet the objectives of SDG 14.6.” DRAFT TEXT The seven-page draft text (TN/RL/W/279) issued on 10 July is based on a two-tier, hybrid approach based on the sustainability criteria. More importantly, it has highlighted the proposal from the United States on forced labour in fishing activities. The first-tier sustainability criterion deals with prohibitions on subsidies contributing to overcapacity and overfishing (OC&OF) that do not apply to the big subsidizers provided they demonstrate “that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level”, as well as several other similarly weakened provisions. There appear to be several carve-outs provided to the big subsidizers such as China, the European Union, Japan, Korea, Chinese Taipei, and the US among others to continue with their prohibited subsidies. Effectively, the chair has allowed the ten big subsidizers to maintain the prohibited subsidies as listed in Article A.1 of the new draft text. Article A.1 of the draft text states: “No Member shall grant or maintain subsidies to fishing or fishing related activities that contribute to overcapacity or overfishing. For the purposes of this paragraph, subsidies that contribute to overcapacity or overfishing include: (a) subsidies to construction, acquisition, maintenance, modernisation, renovation, or upgrading of vessels; (b) subsidies to the purchase or maintenance 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 such subsidies 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.” However, in footnote one, the chair said that “for greater certainty, Article A.1 does not apply to subsidies to the extent they regard stocks that are overfished.” Under Article A.1.1 (a) of the new draft text, the big subsidizers are required to merely file their notifications demonstrating that they are adopting the requisite measures to ensure that fish stocks are maintained at a biologically sustainable level within six months after the agreement comes into force. Instead of prohibiting subsidies to distant-water fishing, which is economically undermining developing and least developed countries that survive on fishing for their livelihood, the chair has seemingly provided a major carve- out in Article A.2 to two big subsidizers – the EU and China – to continue with their subsidies to distant-water fishing. Here again, the chair appears to have merely diluted the conditions with weak notification requirements for the two big subsidizers. Article A.2 states as follows: “(a) Members shall refrain, to the greatest extent possible, from granting or maintaining 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), unless the requirements in subparagraph (b) are met. (b) For any subsidy referred to in subparagraph (a), Article A.1 shall apply. Such a subsidy is not inconsistent with Article A.1 if the subsidizing Member also: (i) makes the demonstration required under Article A.1.1(a) for the relevant subsidy; and (ii) in addition to the information referred to in Article A.1.1( c), provides information on the conservation and management measures governing the subsidized fishing or fishing related activities such as national legislation or competent RFMO/A(s), and provide the following information for the relevant subsidy: (1) the amount of the subsidy; (2) fleet capacity in the fishery for which the subsidy is provided; and (3) catch data by species or group of species in the fishery for which the subsidy is provided. (c) The Committee on Fisheries Subsidies shall assess the information provided under Article A.2(b)(ii) in accordance with the cycle of regular notifications under Article 25 of the SCM Agreement and Article 8.1 of the AFS, report on the total aggregate value of such subsidies, identify trends and the impact on small island developing state Members and least-developed country (LDC) Members, and report such findings to the Council for Trade in Goods”. However, the above notification requirements appear to go against the mandate of the negotiations, as set out in the United Nations Sustainable Development Goal 14.6, which was later reinforced in the ministerial outcome of the WTO’s 11th ministerial conference (MC11) held in Buenos Aires, Argentina, in December 2017, said people familiar with the negotiations. That mandate states: “By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated [IUU] 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 World Trade Organization fisheries subsidies negotiation.” The second-tier sustainability requirements, focused on special and differential treatment (S&DT) provisions for developing countries (except those among the top ten OC&OF subsidizers), seem somewhat “relaxed” on the face of it, said a capital-based official, who asked not to be identified. Yet, as compared to the alleged carve-outs provided to the big subsidizers, there appears to be an asymmetry as regards the conditions attached for availing of S&DT, the official said. S&DT In Article B of the draft text, the chair proposed the S&DT provisions that will apply to different categories of members. Article B of the draft text states: “B.1 Article A.1 shall not apply to LDC Members. A Member that graduates from the LDC category may grant or maintain the subsidies referred to in Article A.1 to fishing or fishing related activities for a maximum of four years after the date on which the decision of the UN General Assembly to graduate that Member from the “Least Developed Countries” category becomes effective. B.2 A developing country Member may grant or maintain the subsidies referred to in Article A.1 if its share of the annual global volume of marine capture production does not exceed 0.8 per cent as per the most recent published FAO data as circulated by the WTO Secretariat. A Member remains exempted until its share exceeds this threshold for three consecutive years. It shall be re-included in Article B.2 when its share of the global volume of marine capture production falls back below the threshold for three consecutive years. B.3 (a) A developing country Member not covered by the special and differential treatment provided for in Article B.1 or Article B.2 may grant or maintain the subsidies referred to in Article A.1 to fishing or fishing related activities within its EEZ, and in the area and for species under the competence of an RFMO/A through which the Member is authorized to engage in such fishing or fishing related activities, for a maximum of 10 years after the entry into force of these Additional Provisions. A developing country Member intending to invoke this provision shall inform the Committee in writing within one year of the date of entry into force of these Additional Provisions. (b) Subsidies granted or maintained under subparagraph (a) shall be exempt from actions based on Article A.1 and Article 10 of the AFS for a period of two additional years after the end of the period referred to in the first sentence of subparagraph (a). (c) A developing country Member to which subparagraph (b) applies may request no more than two two-year extensions of the period referred to in that subparagraph through the Committee. The Committee shall take into account the specific circumstances of that Member, and shall give due and sympathetic consideration to developing country Members that demonstrate concrete progress toward implementing Article A.1. B.4 (a) A developing country Member may grant or maintain the subsidies referred to in Article A.1 for small-scale and artisanal fishing or fishing-related activities that are primarily low income, resource poor or livelihood in nature as operationally defined by that Member. (b) A developing country Member availing itself of subparagraph (a) shall, in its regular notification under Article 25 of the SCM Agreement and Article 8.1 of the AFS, notify the subsidies provided under this provision and provide its operational definition(s) of the fishing or fishing related activities referred to in subparagraph (a), and promptly inform the Committee of any modifications thereafter. B.5 Subsidizing developing country Members are encouraged to make a binding commitment not to avail themselves of Article B.1, Article B.2, Article B.3, and Article B.4.” While paragraph B.1 of Article B allows LDCs to provide the so-called prohibited subsidies, it would allow graduated LDCs to continue with the same subsidies for a maximum period of only four years after the date on which the decision of the UN General Assembly “to graduate that Member from the “Least-developed Countries” category becomes effective.” However, the graduated LDC may feel let down, as the treatment on S&DT is not the same as for the big developing country members, said an LDC member who asked not to be quoted. The draft text also offers a de minimis condition for developing countries like those from the ACP (African, Caribbean, and Pacific) group of countries to provide prohibited subsidies if their share of the annual “global volume of marine capture production does not exceed 0.8 per cent as per the most recent published FAO data as circulated by the WTO Secretariat”, as set out in Article B.2 While India had demanded a period of 24 years as the duration of S&DT so that it could develop its nascent fisheries sector, it may now get a maximum period of 12 years, as the ratification of the agreement is expected to take at least two years before it comes into force, said people familiar with the provisions. In an apparent concession to small-scale and artisanal fishers, the draft text states in Article B.4 (a) that: “A developing country Member may grant or maintain the subsidies referred to in Article A.1 for small scale and artisanal fishing or fishing related activities that are primarily low income, resource-poor or livelihood in nature as operationally defined by that Member.” Further, if the big subsidizers, including distant-water fishing subsidizers, can continue with the prohibited subsidies with inadequate notification requirements, then why can’t the same treatment be offered to the big developing countries, said a Geneva-based fisheries negotiator, who asked not to be quoted. NOTIFICATION & TRANSPARENCY The chair has highlighted in Article C.2 (a) (in yellow), a proposal submitted by the US on forced labour. It states: “any vessels and operators for which the Member has information that reasonably indicates the use of forced labour, along with relevant information to the extent possible;” According to the chair’s explanatory note (TN/RL/W/279/Add.1), the other highlighted issue is in footnote 25, which is the opt-out provision under Article B.5, “which are still the subject of active engagement between Members, and which will require further action before the final conclusion.” As and when deals are being struck, it is expected that China will accept Article B.5, and opt out from S&DT in exchange for the US dropping the forced labour provision, said people familiar with the negotiations. In contrast, as demanded by India on including the issue of non-specific fuel subsidies in the list of prohibited OC&OF subsidies, the chair merely highlighted the provision in yellow in the notification and transparency requirement in his April draft text. In TN/RL/W/278, the provision highlighted was as follows: “C.3 Notwithstanding Article 1 of the AFS, and to the extent possible, each Member shall notify to the Committee in writing on an annual basis of its fuel subsidies granted or maintained to fishing or fishing related activities that are not specific within the meaning of Article 2 of the SCM Agreement.” However, the chair has removed that provision on non-specific fuel subsidies in the latest draft text on grounds that there is no support for the proposal, the negotiator said. “This shows a marked bias in favour of the US, while not granting the same treatment to India,” the negotiator said. The draft text includes language in Article D suggesting that there shall be a review of the operation of the above provisions five years after the agreement comes into force. It remains to be seen whether the draft text will be accepted at the upcoming TNC meeting on 15 July. Attempts are allegedly underway to reach an agreement on the additional provisions by end-July so that it could become a major plank for the WTO Director-General, Ms Ngozi Okonjo-Iweala, to burnish her profile in seeking a second term, said people familiar with the development.
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