TWN Info Service on WTO and Trade Issues (Nov07/04)

1 November  2007

WTO Rules Group discusses fisheries subsidies, anti-dumping
Published by SUNS #6346 dated 18 October 2007

The following article is reproduced here with the permission of the South North Development Monitor (SUNS).  Any reproduction or re-circulation requires permission of the SUNS (sunstwn@bluewin.ch).

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Martin Khor
TWN

WTO Rules Group discusses fisheries subsidies, anti-dumping
Geneva, 17 Oct 2007:  By Kanaga Raja

The WTO Negotiating Group on Rules discussed on 15-16 October a second revision of an Indonesian proposal for new disciplines on fisheries subsidies as well as an Egyptian proposal on anti-dumping.

Argentina also briefly introduced a revision of a joint paper that it tabled with Brazil at the last meeting of the group on special and differential treatment for developing countries.

Indonesia introduced a second revision (TN/RL/GEN/150/Rev. 2) of its paper, which it said aims to provide a "solid middle ground" in the negotiations.

(The first revision of Indonesia's paper was discussed at a meeting of the Rules Group on 24 September. See SUNS #6331 dated 26 September.)

According to trade officials, Indonesia said that it had made changes in the text in response to comments at the last meeting of the group, notably the insertion of a prohibited subsidies category.

It stressed that developing countries should be able to extend assistance to small fishermen, and that imposing conditions like having a fisheries management system, would not be acceptable.

According to trade officials, many delegations welcomed the addition of a prohibited subsidies category, but a number of them expressed concerns, including on the insufficient level of ambition and complexity of the proposal.

The US said that the proposal contained a large number of exceptions, and expressed concern that virtually all subsidies by developing countries in this sector would be un-actionable. It believed that the proposal does not move the negotiations in a constructive direction.

Switzerland, Canada and the EU also expressed concern over the broad exemptions for developing countries. The EU and Canada said that assistance to small fishermen from developed countries should also be allowed.

According to trade officials, Argentina - citing the presence of some 80 footnotes - said that the proposal is too complex. It added that it did not go beyond what is already available in the current agreement. New Zealand and Malaysia said that they prefer a broad-based prohibition of fisheries subsidies.

India supported not making the establishment of a fisheries management plan mandatory for developing countries, but said that the paper's notification requirements are too burdensome.

Solomon Islands, speaking on behalf of the ACP Group, underlined the importance of special and differential treatment provisions for small, coastal states.

Japan said that the structure of Indonesia's paper could be a basis for further discussions as it bridges the gaps among members. It added that all countries should be treated equally in high-seas fishing.

Together with Chinese Taipei and the EU, it questioned Indonesia's definition of aquaculture, which it said would mean that most of farmed fish would fall under the new disciplines.

According to trade officials, Korea and Chinese Taipei said that subsidies should only be prohibited if they directly harm fish resources, and argued that government aid to operating costs of fishing vessels (e. g. fuel, bait and ice) should be exempted. They also maintained that state aid to small fishermen should be allowed for all.

Meanwhile, Argentina briefly introduced a revision of a joint paper on special and differential treatment for developing countries that it tabled with Brazil at the last meeting of the group.

The paper allows developing countries to grant fisheries subsidies related to fishing vessel construction and operation of fishing fleets under certain conditions, including adhering to sustainability requirements.

According to trade officials, Argentina said that the new paper adds a new Article XX on "Fishery adverse effects". It urged other delegations to submit bilaterally their comments.

With regards to the issue of anti-dumping, Egypt presented its paper (TN/RL/GEN/152) on "assessment of dumping."

According to trade officials, Egypt emphasized that the paper is not about the issue of "zeroing".

It said that as a new user of anti-dumping procedures, it wanted the Group to discuss possible situations that it could face in the future in the following four areas: targeted dumping, transaction-to-transaction comparisons, refunds and retrospective assessment of anti-dumping duties, and price undertakings.

According to the Egyptian paper, its proposal aims at establishing clear rules in relation to the assessment of the level of dumping under some of the comparison methodologies provided for in Article 2.4.2 (of the Anti-Dumping Agreement), in refund proceedings or when determining the final liability for payment of anti-dumping duties under Article 9.3.

Also, said the paper, it is intended to confirm that exporting producers and investigating authorities can agree that the price of all export transactions made under price undertakings is to be made at or above an agreed undertaking price in line with Article 8.1.

The paper contained specific amendments to the current Anti-Dumping Agreement (Articles 2, 8 and 9).

According to trade officials, many delegations expressed concern that Egypt's proposal would legalize the use of "zeroing" in calculating dumping margins, a methodology they said had been ruled illegal by the Appellate Body.

Japan said that Egypt seemed to want to make it more convenient for investigating authorities but it could lead to the legalization of "zeroing", which it said artificially inflates anti-dumping margins and hinders exports.

Brazil said that the paper creates problems on issues already settled by the Appellate Body, and stressed its opposition to increasing discretionary powers of investigating authorities to inflate dumping margins.

According to trade officials, also expressing concern over "zeroing" were: Canada, Korea, China, Mexico, Thailand, Colombia, India, Malaysia, Israel, Switzerland, Chinese Taipei, Chile, and Hong Kong-China.

The EU said that its investigating authorities probably would not be concerned about the paper, but that the text could create high risks for its exporters.

According to trade officials, the US welcomed Egypt's paper but said that it falls short in two areas: the scope is narrow, and that it centres on Egypt's own situation.

The US said that it had little experience in targeted dumping but that this is a matter of growing relevance, and pointed out that it would be seeking public opinion in the Federal Register in the next weeks on this issue.

On the issue of zeroing, the US stressed that this is a matter that needs to be fixed in the Group and reiterated its proposal tabled last June.

New Zealand congratulated Egypt for its paper, but said that the transaction-to-transaction system in determining dumping (which it uses) is not to blame as it had never been challenged in the WTO.

Australia said that it does not use "zeroing" but that in exceptional circumstances, its use could be allowed.

According to trade officials, Chairman Ambassador Guillermo Valles Galmes of Uruguay sounded the alarm, saying that the Group has come to a yellow light, and that this is not the path that the Group has been on for the past years.

He said that the Group has never sidestepped issues nor has it avoided arguments, and that it had always allowed consideration of all issues brought by members to the table.

Ambassador Galmes said that to succeed, the Group must follow the rule of consensus and not of the majority. He added that those who think that the Group has a lot of time to negotiate are wrong. He appealed for realism and pragmatism.

The Group is expected to meet for a wrap-up informal session on Thursday (18 October).