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TWN
Info Service on WTO and Trade Issues (Sep25/08) Geneva, 12 Sep (D. Ravi Kanth) — The World Trade Organization (WTO) on 9 September informed that the partial Fisheries Subsidies Agreement – commonly referred to as “Fish 1” – has entered into force. The agreement aims to curb subsidies contributing to illegal, unreported, and unregulated (IUU) fishing and subsidies regarding overfished stocks. However, “Fish 1” is likely to have little or no binding effect unless the second phase of the agreement – or “Fish 2” – is swiftly concluded, said legal experts and trade diplomats on a background basis. “Fish 2”, which deals with disciplines on subsidies contributing to overcapacity and overfishing, has so far failed to secure consensus due to sharp differences over the alleged “asymmetrical” disciplines proposed in the draft fisheries subsidies text, said people familiar with the development. The WTO plans to formally celebrate the entry into force of “Fish 1” at a specially convened General Council meeting on 15 September. “Fish 1” will remain legally binding until a “comprehensive” agreement – comprising both “Fish 1” and “Fish 2” is adopted within four years of the entry into force of “Fish 1”. If “Fish 2” is not concluded by the stipulated deadline, then “Fish 1” will be automatically terminated, according to a legal analyst from a member country speaking on a background basis. The automatic termination provision is explicitly stipulated in Article 12 of the Agreement on Fisheries Subsidies, adopted on 17 June 2022. Under the sub-heading “Termination of Agreement if Comprehensive Disciplines Are Not Adopted,” Article 12 states: “If comprehensive disciplines are not adopted within four years of the entry into force of this Agreement, and unless otherwise decided by the General Council, this Agreement shall stand immediately terminated.” “Fish 1″ remains legally binding as a partial outcome only until the four-year deadline expires,” said another trade envoy, who requested anonymity. “After that point, Article 12 triggers automatic termination – unless Members reach consensus through the General Council to extend or amend the mandate.” Efforts are underway – potentially this month or early next month – to convene a special General Council meeting to either extend or amend the current mandate, the trade envoy added. “Crucially,” the trade envoy clarified, “the mere expiry of the “Fish 2” negotiation deadline does not immediately terminate “Fish 1”. Termination occurs only after the full four-year period – unless Members adopt further disciplines or explicitly agree to preserve or revise “Fish 1″.” “In short,” the trade envoy concluded, “inaction leads to “Fish 1″ lapsing – not an extension by default.” There are also significant doubts whether “Fish 1” comprehensively addresses the root causes of IUU fishing and stock depletion. According to a former African trade official, “Fish 1” covers only the most urgent cases: subsidies contributing to IUU fishing; fishing of overfished stocks without rebuilding measures; and unregulated high-seas fishing. “Importantly,” the official noted, “Fish 1 does not comprehensively cover the broader range of capacity- enhancing subsidies – such as those for fuel, vessel construction, or operating losses – which are the primary drivers of overcapacity and stock depletion. These were intended to be addressed under Fish 2 and remain entirely unregulated unless new disciplines are agreed upon.” COLLAPSE OF “FISH 2” TALKS The “Fish 2” negotiations – aimed at establishing disciplines on subsidies contributing to overcapacity and overfishing (OC&OF) – effectively collapsed earlier this year. On 14 July, India and the United States, among several other members, opposed the chair’s draft text during the informal sessions, preventing consensus ahead of the upcoming WTO’s 14th Ministerial Conference (MC14). Faced with the irreconcilable differences, the chair of the “Fish 2” negotiations, Ambassador Einar Gunnarsson of Iceland, announced that he would step down before the summer break (in August) – a move that deepened concerns over progress on “Fish 2” toward MC14. Ambassador Gunnarsson later revealed in a briefing note issued on 14 July that two countries – though unnamed – had contributed significantly to the deadlock. Participants present at the meeting confirmed that India and the US, despite having differing positions, both voiced strong objections to the draft text (TN/RL/W/285) on additional provisions on fisheries subsidies. The WTO’s official briefing note recorded Ambassador Gunnarsson’s four key observations: 1. “For most Members, document TN/RL/W/285 continues to be the basis upon which they believe the negotiations on Additional Provisions could be concluded.” 2. “However, the position of the Member [India] that presented its papers during the small group meetings remains unchanged.” 3. “In addition, another Member [the US] announced that its position with respect to document TN/RL/W/285 had evolved, noting that it would need to see significant revisions to that text to find it acceptable.” 4. “Several other Members expressed varying degrees of support for one or more elements of the positions advanced by these two Members. There is, however, no uniformity amongst these other Members on what would be most important for them, and many of them continue to indicate that document 285 still offers the most viable path towards a successful conclusion.” India has consistently opposed “Fish 2” since the WTO’s 13th Ministerial Conference (MC13) in Abu Dhabi in March 2024. New Delhi stated that it could not join the consensus on the text, arguing that the text heavily favours the major subsidizers while imposing onerous commitments on developing countries – nations that were not primarily responsible for global overcapacity and overfishing, according to officials familiar with the matter. Last year, India submitted three detailed papers challenging the chair’s draft text, highlighting what it viewed as gross asymmetries and carve-outs being granted to the large subsidizing nations, including the European Union, China, Japan, South Korea, Chinese Taipei, and the United States. Interestingly, under the previous Biden administration, the US had signaled its readiness to endorse “Fish 2” at MC13. However, the current Trump administration reportedly views the proposed OC&OF disciplines as being “of low ambition” and insists on substantial revisions to the draft text, according to sources familiar with the internal discussions. CHAIR’S FINAL BRIEFING NOTE In his 14 July briefing note, Ambassador Gunnarsson reflected on the trajectory of the negotiations: “In my consultations, I noted that in 2024, I had reasons to believe Members were in striking distance of concluding the negotiations on Additional Provisions on Fisheries Subsidies on three separate occasions: at MC13 in Abu Dhabi; and at the July and December General Council meetings. However, since then, I have not seen any indication or picked up any signals of a possible pathway that could lead the Negotiating Group on Rules (NGR) towards that objective.” He added: “The open and insightful engagements in the small group meetings in May revealed that the gaps that had prevented Members from concluding in 2024 remain – and, in some respects, have possibly widened.” “So, in summary,” he concluded, “while the possibility of concluding our negotiations based on document 285, with limited adjustments, continues to enjoy broad support across the Membership, the call for wide-ranging substantive changes to that document – not necessarily all in the same direction – continues to exist and appears to have even strengthened.” “In the light of these developments, I do not detect any grounds to conclude our work on the Additional Provisions by the July General Council.” Ambassador Gunnarsson outlined two potential paths forward: A. “Members may decide to do nothing for now, focusing instead on the entry into force and effective implementation of the Agreement on Fisheries Subsidies (AFS) – which addresses IUU fishing and overfished stocks. Some Members believe that successful implementation of AFS could build trust and confidence, potentially serving as a catalyst for resuming Fish 2 negotiations in the future. B. The only other realistic alternative, from my perspective, is to continue negotiating on the basis of the hybrid approach outlined in documents W5 and W20, consistent with the NGR’s existing mandate established at MC12. This would require Members to appoint a new NGR Chair as soon as possible and provide that individual with full institutional support.” However, the chair cautioned: “It may not be a realistic goal for a new NGR Chair to further develop the negotiations in time for a conclusion at MC14.” “Therefore, I urge Members to focus instead on the imminent entry into force and successful implementation of the Agreement on Fisheries Subsidies, along with the operationalization of the WTO Fish Fund. Such action would perhaps build confidence and generate data that could help in the negotiation of the additional provisions.” Though originally expected to serve until the end of December, Ambassador Gunnarsson’s abrupt decision to depart before the summer break has intensified pessimism surrounding preparations for MC14, scheduled to be held in Yaounde, Cameroon on 26-29 March 2026. In closing, the chair said: “I am deeply grateful to all Members for entrusting me with this role and for allowing me to lead this Group since 2023. These have been among the most rewarding two and a half years of my career. I remain Chair until this summer.” It is widely understood within diplomatic circles that the draft text (TN/RL/W/285) was allegedly structured to accommodate the interests of the major subsidizing nations, incorporating specific carve-outs and lenient notification requirements that critics argue effectively shield the billions of dollars in subsidies to distant-water fishing – contrary to the core mandate of prohibiting subsidies that contribute to overcapacity and overfishing. “One can hardly miss the asymmetry,” said a trade envoy speaking anonymously. “The chair’s draft appears designed not to eliminate harmful subsidies, but to manage their visibility – granting de facto exemptions to the largest beneficiaries while asking developing countries to make deeper concessions.” Another member, also speaking off the record, added: “The chair ought to have mustered the courage to fully explain his allegedly asymmetrical treatment – offering generous carve-outs and relaxed reporting obligations to big subsidizers, while proposing only modest improvements in Special and Differential Treatment (S&DT) provisions for developing nations.” +
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