Fisheries Subsidies disciplines-Assymetrical Outcomes for Developing Countries
Fisheries Subsidies
disciplines -Implications of WTO Negotiations: Asymmetrical Outcomes for
Developing Countries
The 11th
Ministerial Conference was held from the 10-13 December, 2017 in Bueno Aires, Argentina.
In relation to fisheries, the WTO members decided to:
1. “Build
on the progress made since the 10th Ministerial Conference as reflected in
documents TN/RL/W/274/Rev.2, RD/TN/RL/29/Rev.3, Members agree to continue to
engage constructively in the fisheries subsidies negotiations, with a view to
adopting, by the Ministerial Conference in 2019, an agreement on comprehensive
and effective disciplines that prohibit certain forms of fisheries subsidies
that contribute to overcapacity and overfishing, and eliminate subsidies that
contribute to IUU-fishing recognizing that appropriate and effective special
and differential treatment for developing country Members and least developed
country Members should be an integral part of these negotiations.” And
2. “Members re-commit to implementation of existing
notification obligations under Article 25.3 of the Agreement on Subsidies and
Countervailing Measures thus strengthening transparency with respect to
fisheries subsidies.”
Subsequent
to the Ministerial Conference, there had been several debates (some members blaming
others for not achieving an outcome). This blog piece will discuss the issues for
developing countries and the Asymmetrical Outcomes.
Please see:
Issue 1: Developing Countries decapitated to utilize its fisheries
resources
The developed and developing countries including
the least developed economies are at different levels of development and
subsidisation. As highlighted in the previous sections, the developed countries
such as the EU and the “friends of fish” are advocating for the elimination of
fisheries subsidies that they had themselves provided in the past in order to
boost their fisheries sector.
A situation prevails where the developed countries are now in a position
to dominate the global fisheries market, after building their fishing capacity
on the basis of generous subsidies from the government. . The elimination of
fisheries subsidies will decapitate the developing countries from utilizing
their own fisheries resources. Several strategies have been applied by the
proponents such as linking the special and differential treatment to stringent
management measures which are burdensome for small states to achieve. With the
cost of implementation outweighing the benefits, it is obvious that the small
states would never be able to utilize their own fisheries resources. Secondly,
the standstill provision proposed by New Zealand, aims to undermine the policy
space for developing countries to develop its fisheries sector. The developing
and least developed countries rely on fisheries for food security and
livelihood. Further, some coastal states aim to domesticate their fisheries
industry. However, the elimination of subsidies will derail such aspirations.
In addition, if developing countries are prohibited from providing subsidies
for capacity enhancement, then they are unlikely to develop fishing fleets to
exploit their own marine resources in future.
Issue 2: Shift in Bargaining Power towards few
Developed countries DWFN for fish access rights.
The fisheries sector constitutes a demand and supply equation for
fisheries access rights. The developing countries including the coastal States
and LDCs are the holders of fish resources. The coastal States with their
maritime boundaries, own a major share of the fish resources extending up to
their EEZ. Under UNCLOS, these coastal states have the right to manage and
exploit the resources within their EEZ. In doing so, the coastal States also
have rights over the fisheries resources within their EEZ and will determine
its management measures as well. As discussed in the previous section, the
coastal States cooperate at the national and sub-regional level with various
institutions to manage their fisheries resources. For highly migratory and
straddling stock such as tuna and cooperation in the high seas, the coastal
States are members of RFMOs and negotiate management measures to sustainably
manage the resource.
Consequently, the coastal States are the owners of
the fish resource and thus the holders of fish access rights. Most of the
developed countries such as EU and the “friends of fish” are owners of fishing
vessels. In order for these countries to fish in the EEZ of other countries,
they have to bid for access rights i.e. buy rights to fish from the coastal
states. Currently, there are several distant water fishing nations that compete
for access rights, including China,
Japan, Korea, Thailand, EU and others. As a result
the small coastal States that are holders of fish resources, have the
opportunity to sell the access fishing rights of its EEZ to the highest bidder
i.e. whoever provides the best price for the fisheries resources will get the
right to fish. The developing countries therefore have some bargaining power.
The coastal States also ensure that while providing the fishing rights, the
right holder also adheres to the conservation and management measures in place.
Even when the highest bidder gets the resources, fishing happens in a
sustainable manner.
With the elimination of fisheries subsidies, the
developing countries that possess fishing vessels and provide specific
subsidies may be compelled to exit the market over time due to the high
operating costs. However, the developed countries that are vessel owners and
have undertaken fisheries reforms (and have a commercial interest), will
remain. There will be few demanders of fish access rights in the market i.e.
the EU and the “friends of fish”. The coastal states and other developing
countries would not be able to develop their fisheries sector, given the
constraints of disciplining fishery subsidies.
As a result, the developed countries with large
fishing fleets will dictate the price of the fishery access rights to the small
coastal states and thus there will be a shift in the bargaining power for fish
access rights in the hands of a few developed countries. The developed
countries can then dictate the price of the access rights, i.e. purchase the
rights to fish at a lower price; thereby, monopolizing the entire fisheries
market.
Issue 3: Stifling the Future Development of Commercial Fisheries Sector
The global trend in the fisheries sector currently
shows that the developing countries’ export of fish and fish products exceeds
that of the developed countries. The developing countries include coastal
States that are owners of large fish resources within their EEZs and also
providers of specific subsidies. Furthermore, the small vulnerable coastal
states also envisage development of their fisheries sector and some would want
to venture into commercial fisheries. Given that these countries are already
members of RFMOs and sub-regional arrangements, their resources will be utilised
in a sustainable manner. However, the provision of subsidies will be integral
to ensure the development of their fisheries sector. The imposition of
disciplines, such as the elimination of fisheries subsidies and stringent
conditions to provide the subsidies will affect the development aspiration of
these countries.
This would stifle the future commercial fisheries sector development in
the developing countries.
Issue 4: Binding decisions of different RFMOs in
relation to Management and imposing it multilaterally on members
At the global level, countries are committed to conserving and
sustainably managing the fisheries resources. This is evident from the
commitments and membership of countries to the UNCLOS, the UN Fish Stocks
agreement and the participation of countries in the RFMOs, sub-regional
fisheries management and at the national level. In order to ensure that fish
resources are sustainably managed, the coastal states, the Distant Water
Fishing Nations and Cooperating Non-Members negotiate conservation and
management measures. There are several management measures negotiated as
highlighted in Table 1 and 2 as examples in the WCPFC and the IOTC. These
management measures are negotiated, taking into account the conservation of
resources and also the socio-economic conditions that prevail within the
region. As such, the element of disproportionate burden is crucial in the
negotiations.
In the current fisheries negotiations at the WTO,
members that are linking management to the fisheries disciplines are using the
WTO as a forum to impose the management measures under a legally binding
framework on all the members and in the context of the WTO these measures do
not take into account the full extent of the disproportionate burden on developing
countries, in particular the least developed countries. Secondly some of the
management measures imposed in the RFMOs are for the high seas jurisdiction.
However in the context of the WTO, some proponents have extended these to
territorial waters and EEZ.
For example, on the issue of transhipment at sea, the WCPFC regulation
2009-06 states that the measures shall not apply to transhipment of highly
migratory fish stocks where fish is taken and transhipped wholly in
archipelagic or territorial seas. Transhipments in ports or in waters under the
national jurisdiction of a member shall take place in accordance with
appropriate national laws. Furthermore the IOTC Resolution 17/06 states that a
program to monitor transhipment at sea applies only to a large scale tuna long
line fishing vessel. In the WTO, transhipment issues are also covered in the
fisheries text including extending it to small scale fishing activities.
Another illustration is that of the issue of
enhanced transparency that proponents such as the EU, ACCPU and New Zealand
have been advocating. The proponents are demanding
50
information such as catch data by species, the
status of fish stock, the kinds of conservation and management measures applied
and the fish capacity management plan.
The request for catch data by species is purely a
management issue. The CMM 2009-10 of the WCPFC provides for the monitoring of
landing of purse seine vessels at ports so as to ensure reliable catch data by
the species. The CMM further states that such information will be collected
from the canneries and shall be handled in the “non-public domain” i.e. kept
confidential. Catch data is important to determine the commercial interest of
the competitors as well. For the EU, ACCPU and New Zealand, the provision of
such data in the public domain through WTO transparency mechanisms is a means
for them to provide access to such data for their industries to have a
competitive advantage. The IOTC Resolution 15/02 also provides the caveat for
mandatory statistical reporting requirements for the IOTC contracting and
non-contracting parties. The members are to provide data on total catch by
species and gear (catch and effort data only) for surface fishers, long line
fishers and coastal fishers.
The issue of flag of convenience in the proposal
from Indonesia is also an issue from the IOTC RFMO. It is linked to management
measures. The Resolution 99/02 provides that the CP and the CNP shall take
every possible action consistent with their relevant laws and (i) urge their importers,
transporters and other concerned business people to refrain from transacting in
and transshipping tunas and tuna-like species caught by vessels carrying out
FOC fishing activities; (ii) to inform their general public of FOC fishing
activity by tuna long line vessels which diminish the effectiveness of IOTC CMM
and urge them not to purchase fish harvested by such vessels; and (iii) to urge
their fish manufacturers and other concerned business people to prevent their
vessels and equipment/devices from being used for FOC long-line fishing
operators.
The developed countries have been selective in imposing management
measures from the RFMOs which (i) have been agreed through negotiations within
the RFMOS by members states. It is obvious that given that these proponents may
not have achieved the negotiated outcomes in the relevant RFMOs, such measures
are sought to be introduced into the WTO forum and to exacerbate it further, if
caution is not exercised will be imposed on all WTO members under a legal framework.
However the proponents EU, New Zealand, Iceland and
others that have linked management aspects under different provisions and
shadowed it with the explanation of development, have in effect ignored other
fundamental aspect of the CMM that are development driven. A few examples of
requirements under the CMMs that are missing from WTO negotiations are provided
below:
·
IOTC Resolution 03/01 on the
Limitation of Fishing Capacity of Contracting Parties and Cooperating
non-Contracting Parties states that the parties which have more than 50 vessels
on the 2003 IOTC record of vessel shall limit in 2004 and following years the
number of fishing vessels larger than 24 meters in length. The limitation
number shall commensurate with the corresponding overall tonnage expressed in
Gross Registered tonnage and where vessels are replaced the over tonnage shall
not be exceeded.
·
The WCPC resolution 2013-06 on
the criteria for developing CMMs states that the CMMs must not result in
transferring directly or indirectly a disproportionate burden of conservation
action on small states. As such new proposals on CMMs have to be assessed
against set criteria. In cases where transfer of disproportionate burden of
conservation is present, this needs to be mitigated by phased or delayed
implementation, exemption from specific obligations, proportional or rotational
implementation and the establishment of compensatory funds.
·
The WCPFC resolution of 2013-07
on Special Requirements of Small Island Developing States provides for a list
of areas for assistance that must be provided to developing countries for
implementation. These include capacity development training, institutional
support, technical training on data collection, scientific research, stock
assessment, by catches mitigation, fisheries science and administration. The
CMM further states that assistance should also be provided for monitoring
control and surveillance, technology transfer, support for domestic fisheries
sector including ensuring SIDS and territories to account for 50% of total
catch and value of highly migratory fish stocks by encouraging investment and
collaborative arrangement. It further states the actions should not constrain
coastal processing and use of transshipment facilities and associated vessels
of SIDS to undermine legitimate investment in SIDS. The CCMs shall take action
to eliminate barriers to trade in fish and fisheries products and promote
activities of domestic fisheries sector and fisheries related businesses in
SIDS and territories.
From the above, the strategy of the developed
countries is virtually clear in that in the WTO it aims to (i) selectively bind
the conservation and management measures of the different RFMO, that are serves
its own commercial interest and (ii) modify some of the RFMOs CMM decisions
that were negotiated among members in the RFMO and further expand their own
interest in the process to achieve the outcomes they prefers and (iii) ignore
the full development aspect in relation to developing countries even in the
development of management measures in the RFMOs i.e. the element of
disproportionate burden and special requirements of developing countries as a
special and differential element in the WTO.
Issue 5: Undermining Development
Provisions (SDT) in the Fisheries Subsidies Negotiations
The special and differential treatment provisions are integral in the
fisheries subsidies negotiations. The current proposals in the fisheries
negotiations focus mainly on the transition period for the implementation of
the subsidies reform by members. Some proposals have also adopted a format
similar to that of the trade facilitation agreement on declaring the capacity
constraints and assistance needed to implement the fisheries disciplines. However,
it should be noted that fisheries subsidies disciplines differ from trade
facilitation and thus the latter approach may not be feasible. According to
WT/COMTD/W/196, there is a six- fold typology to the special and differential
treatment. These include (i) provisions aimed at increasing trade opportunities
to developing country members, (ii) provisions under which WTO members should
safeguard the interests of developing country member, (iii) flexibility of
commitments of action, (iv) the use of policy instruments (v) transitional
time-period and (vi) technical assistance and provision in relation to LDC
members.
The fisheries proposal has limited the scope of the special and
differential treatment to only selected time periods for implementation with
the exception of the ACP proposal that has listed additional types of
assistance. Through the WTO process of fisheries negotiations which is a
legally binding agreement, the developed countries further aim to reduce the
special and differential aspect of fisheries and at the same time expand on
other commitments. The principle of special and differential treatment is
embedded in other internationally legally binding instruments in relation to
fisheries such as the UNCLOS and UN Fish Stock Agreement. Other non-legally
binding agreements also have the recognised special and differential treatment
(known as Special Requirements of Developing Countries).
The UN Fish Stocks Agreement for instance recognizes (i) the
vulnerability of developing states which are dependent on the exploitation of
living marine resources, (ii) the need to avoid adverse impact and ensure
access to fisheries by subsistent, small scale and artisanal fisheries and
(iii) the need to ensure that such measures do not result in transferring
directly or indirectly, a disproportionate burden of conservation action upon
developing states.
The fisheries proposal from the developed countries are either
overriding or reducing the scope of the special and differential treatment. In
the EU proposal for example, the SDT is conditioned on the implementation of
fisheries management measures. The Indonesian proposal also has a similar
language. It completely ignores the special and differential treatment
provisions that members are entitled to under international agreements and
disregards the aspect of “disproportionate burden”. The WTO process is
selective in relation to the six-fold approach and only stipulates transition
period as an accepted SDT practice. The Indonesian proposal recognizes special
and differential treatment but with stringent measures that the assistance has
to be mutually agreed by developed and developing countries. This defeats the
purpose of assistance and also undermines the special requirements of
developing countries which the members are obliged to provide without reason or
negotiation should there be issue of disproportionality in international
fisheries agreement. As a result, the special and differential treatment is
undermined.
Issue 6: Strategy to shift market dominance of
fisheries into the hands of few developed countries- tuna related products too
Globally the demand for fish and fish products is
projected to grow in 2022. The global fishmeal & fish oil market is
projected to reach a value of USD 14.28 billion by 2022. The market is driven
by factors such as growing trend in fishmeal & fish oil trade and the
increasing global demand for quality fish. Moreover, the demand for aquaculture
is increasing in export markets, which influences the supply of improved
fishmeal & fish oil for animal production. On the basis of industrial
application, fishmeal & fish oil were most widely consumed in 2016 in the
pharmaceuticals industry.
According to the FAO 2016 State of the World Fisheries report, the share
of the world fish production that is used for human consumption has risen
substantially from 67% in the 1960s up to 87%. About 146 million tonnes of the
fish are used for human consumption. The reminder 21 million tonnes are used
for non-food products of which 76% was used in 2014
for fishmeal and fish-oil. The rest were largely
used for numerous purposes including raw material for direct feeding in
aquaculture. As such the by-product of the fisheries is also becoming an
important industry.
The report further states that fish and fishery
products represent the most traded segment of the world food sector and 78% of
seafood products are estimated to be part of the international trade
competition. In terms of the market share of fisheries trade, the developing countries
world fisheries trade rose from 37% in 1976 to 54% of total fishery export
value by 2014. The trade in fish and fishery product is primarily driven by the
demand from developed countries, which dominate the fisheries import covering a
share of 73% of the world imports. In the developed countries there is high
dependence on imports to meet the demand for domestic consumption of fish. (FAO
State of World Fisheries, 2016, 58)
As a result, the removal of fish subsidies would constrain the
developing countries from developing their fisheries sector due to the
inability of the small-scale fisheries to expand into commercial fisheries.
Secondly, those developing countries that may be in a position to export
fisheries product and are still in the competitive fishing industry, may exit
the market once fisheries subsidies are eliminated. The only remaining players
in the global fisheries industry would be the developed countries that have
large fishing fleet with high gross tonnage. These will primarily include the
EU and the “friends of the fish” group of countries including New Zealand and
Iceland that will dominate the fisheries market. As a result the fisheries
resources would be in the hands of a few developed countries who would control
the entire fisheries market. Those countries such as India that are major
players in the pharmaceutical industry for generic medication will also be
affected. The second effect will be that these industries will also control the
global value chain. The likely outcome will be that the developed countries
will become the producers and manufacturers of fish and fish related products
as well as global exporters, holding a major share of the global fish market.
In other words, a reversal of the current state of global fish exports, the
developed countries becoming the dominating players.
Issue 7: Replicating Box Shifting Effects of Agreement
on Agriculture in Fisheries Subsidies Negotiations
The fisheries subsidies negotiations and the
prohibition of subsidies is a replication of the strategy employed by the
developed countries for agricultural subsidies. The issue of agricultural
subsidy is an ongoing debate in the WTO. The developed countries provided high levels of agriculture support during the Uruguay
round agreement in 1994. Even though restrictions were applied under the
agreement, most of the developed countries have retained the high level of
support through “box shifting” i.e. moving most of its limited subsidies into
the “Green Box” of subsidies. Even though the Green Box entitlements are
available to the developing countries, however, due to resource constraints
(fiscal budgetary restraints), they are unable to fully utilise these.
As a result, the imbalances exist to date in
agriculture. Most of the developing countries are providing specific subsidies
whereas the developed countries such as the EU and the friends of fish have
shifted their fisheries subsidies towards non-specific subsidies. Negotiations
on fisheries subsidies risk meeting a similar fate, whereby the developed
countries may enjoy greater policy space in comparison to the developing and
least developed countries. Under the current subsidies negotiations members are
targeting disciplines as per Article 1 of the ASCM which targets specific subsidies.
Accordingly, the developing countries will be the ones making substantial
commitment while the developed countries will gain greater policy space and a
competitive edge.
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