Fisheries Subsidies Negotiations at the WTO-Buenos Aires Outcome and Issues on Existing Proposal
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). As such this excerpt aims to enlighten
members on the specific issues that has made the Negotiations on Fisheries
Subsidies resulting in non-outcome.
At
the outset, members have globally acknowledged the importance of the SDG goals
including SDG 14. However, the particular mandate on SDG 14.6 in the context of
fisheries subsidies in the WTO vis-Ã -vis the Chairs compilation text of TN/RL/W/274/Rev.2,
RD/TN/RL/29/Rev.3 and individual proposals comprised of elements of contention.
As such in this blog piece and the subsequent
pieces, I will discuss the following:
1.
Assessment
of Existing Proposal on Fisheries Subsidies Disciplines at the WTO members;
2.
The
relationship between Fisheries Negotiations and Market Access
3.
The
Asymmetrical outcomes in relation to Fisheries Negotiations for Developing
Countries.
Discussion 1: Assessment of Existing Proposals on
Fisheries Subsidies Disciplines at the WTO
The compilation text of the fisheries subsidies proposal is a
consolidation of the 8 individual
proposals that were tabled by proponents in
2017. Table 1, contains the list of proposals by members.
Table 1: List of Fisheries Subsidies Proposal
Proposals
|
Document
Number
|
|
1.
|
European Union
|
TN/RL/GEN/181/Rev.1
|
2.
|
Indonesia
|
TN/RL.GEN.189/Rev.1
|
3.
|
Norway
|
TN/RL/GEN/191
|
4.
Argentina, Colombia,
Peru Costa TN/Rl/GEN/187
Rica, Panama, Uruguay (ACCPU)
5.
|
African Carribean Pacific
|
TN/RL/GEN/192
|
6.
|
Least Developed Countries
|
TN/RL/GEN/184
|
7.
|
New Zealand
|
TN/RL/GEN/186
|
8.
|
China
|
TN/RL/GEN/195
|
In relation to the disciplines on fisheries subsidies the proponents focus
on Articles 1 and 2 of the Agreement on Subsidies and Countervailing Measures
(ASCM). Articles 1 and 2 of the ASCM provide for disciplines in relation to
specific subsidies. Given that most developed countries (e.g EU) have shifted
their specific subsidies to non-specific subsidies, the issue is whether in the
outcomes of the fisheries subsidies negotiations, the developed countries would
be making any substantial commitments. The EU provides 3.4 approximately
billion euro of annual subsidies to its fisheries sector, nearly 1 billion euro
comes from the EU budget notably in the form of structural aid. The national
level aid, which is regulated at the EU level is estimated at 973 million euro
per year. This is in addition to the foregone revenue resulting from fuel tax
exemptions (approximately 1.5 billion euro per year).[1] In
addition, Table 2 provides a list of countries granting budgetary support to
the fisheries marine capture.
According to the OECD data Australia, Canada,
Japan, New Zealand and the EU provide high levels of budgetary support
(non-specific subsidies) to the fisheries marine capture.
Table 2: Fisheries Marine Capture Budgetary
Estimates for 2015
Unit
|
US dollar
|
Year
|
2015
|
120,891,070
|
|
4,274,555
|
|
655,422,543
|
|
235,805
|
|
59,459,302
|
|
6,023,009
|
|
91,155,662
|
|
34,298,168
|
|
37,022,339
|
|
6,138,469
|
|
34,291,900
|
|
1,196,601,137
|
|
7,454,300
|
|
47,483,044
|
|
197,036,369
|
|
3,151,032
|
|
849,382
|
|
130,422,847
|
|
64,084,217
|
|
36,041,237
|
|
1,820,680,000
|
|
(Source:
OECD Database)
It is also interesting to note that the developed countries like New
Zealand, who are strongly advocating for the elimination of specific subsidies
in fisheries were once providers of these subsidies. Two policy instruments
that were used by New Zealand to encourage the expansion of their domestic
fleets into the EEZ included (1) package of financial incentives to domestic industry including duty free vessel
importation, concessionary interest and suspensory loans, investment allowances
and tax incentives and (2) Joint Ventures which enabled domestic fishing
companies to acquire technology and expertise, gaining access to international
markets and supplying on-shore processing facilities. The foreign partners
contributed equity to joint venture, provided capital for plant and equipment
and assisted with access to international markets. The companies in New Zealand
could charter foreign vessels. The chartered vessels were used to provide the
supply of raw materials necessary to establish on-shore processing and
distribution facilities. It was also recognized that the industry’s rapid
expansion was largely attributable to joint ventures. (Sharp, 1997, np).
For the USA, in 1960s[2] the US
Government had also provided substantial specific subsidies to the fisheries
sector. The US Government has transferred fishing equipment to the private
sector, presumably at no cost. In addition, the US implemented the Fishing
Vessel Construction Differential Subsidy Programme and other subsidy programmes
were instituted to promote the expansion and modernization of the American
fishing fleet. Starting in 1957, the Fisheries Loan Fund was used to encourage
the expansion of the fishing fleet, through the refinancing of old debt or the
creation of new debt for vessel construction. This programme, evolved into the
Fishing Vessel Obligation Guarantee Programme and then the Fisheries Finance
Programme. The Vessel Mortgage Insurance Programme was established in 1960 to
provide insurance for mortgages taken to finance fishing vessel construction.
In relation to the European Union, within the period of 2000-2006[3], the EU
has granted subsides of more than 480 million Euros for the construction of new
vessels and more than 227 million euros for increasing processing capacities
amounting to 707 billion euros for expanding fishing fleet capacity. In
addition, fuel tax exemption remains an additional subsidy provided by the EU.
In relation to the subsidization by region, from 200-2008[4], EU has
given a total of 34.5 million to subsidize its Mediterranean Tuna Fishing
Fleet. With 23 million euros on construction of new boats and an additional
10.5 million euros given to modernize existing vessels where 1 million euros
was used to decommission vessels.
The proposal of New Zealand, Iceland and Pakistan,
includes a standstill provision which ironically states that no member shall
introduce new or extend or enhances existing, subsidies within the meaning of Article 1.1
of the SCM Agreement, to the extent they are specific within the meaning of
Article 2 of the SCM Agreement, that contribute to overfishing or overcapacity.
While these prohibitions appear to be inspired by the Trans Pacific Partnership
(TPP) text, it is a clear reflection of how developed economies are aiming to
ensure that it retains the market dominance and the first mover advantage in
the fisheries sector globally.
Most developing countries including the least
developed countries are in the early stages of their fisheries sector
development and these economies are not major contributors to the problem of
IUU, their growth of the fisheries sector is likely to be hampered by disciplines
on specific fisheries subsidies. It is also
interesting to note that the United States is also a major provider of specific
subsidies to its fisheries sector as well. The disciplines on fisheries
subsidies will therefore affect some of the developed countries while
benefiting a selected few that have a commercial interest in the sector. For Illustrative List of Specific Subsidies provided by Developing
Countries and USA
Refer to Note For further Reading: See http://wtocentre.iift.ac.in/workingpaper.asp
A reduction of such specific subsidies will curtail
the development of their fisheries sector. This will result in others exiting
the market. If any balance in the fisheries negotiation outcomes in subsidies is to
be achieved then developed countries should take major commitments toward
eliminating or reducing their non-specific subsidies and vessel capacity.
In relation to overcapacity, the developed
countries have a greater fleet capacity in relation to the number of vessels
and the gross tonnage. EU, New Zealand and Argentina the ratio of gross
tonnage per number of vessel are significant. Refer to Fleet Capacity Gross Tonnes per Vessel by Country:
The developed countries have the capacity to fish
and with reduction and or elimination of subsidies in global fisheries trade,
the developed countries will once again enjoy greater policy space while the
developing countries will pay a higher price. This is similar to the
situation of the agricultural fisheries subsides.
The latter is an issue which the developing countries are still trying to
reverse to date.
There have been discussions on the need to combat
IUU and thus the elimination of subsidies being the reason. It is
obvious fact that no country whether developed or developing favour IUU and it
is a problem that requires a solution. However, to deal with responsible
fisheries WTO can only discuss this from a trade perspective with actual
solutions that do not undermine development.
In some of the proposals (EU and Indonesia), the
Special and Differential Treatment for developing countries are linked to
conditions on fisheries management. In the EU proposal in order for developing
countries to develop their fishing capacity, the vessel benefitting from the
subsidy should not target fish stocks that are in an overfished condition; the
targeted stocks are managed on the basis of the best available science at the
disposal of the concerned member, consistent with the conservation and
cooperation obligations under the relevant international law, as reflected in
UNCLOS, conservation and management measures of competent Regional Fisheries
Management Organizations (RFMOs), and generally accepted standards for
conservation and management of fisheries resources and the subsidizing member
has a management plan for the fleet segment it intends to subsidise.
Furthermore, the EU defines the management plan in a footnote of its text and
also aims to legally bind the guidelines and generally accepted standards which
otherwise only reference documents such as the FAO Code of Conduct. These are
management conditions that are in fact aimed to deter the development of the
fisheries sector for the developing countries.
The management of fisheries resources is complex. There are respective
RFMOs that are specialized to discuss issues in relation to management measures
including undertaking fish stock assessment. In the context of the WTO
negotiations these issues should be left to the RFMO. The proposal submitted by
China recognizes the role of the RFMO. On the other hand from the EU and the
Indonesian proposal and to some extent the New Zealand proposal on
transparency, the provision requires members to notify CMM and catch data by
species which are all linked to management measures. These are measures that
are discussed in the RFMOs.
Members need to be cautious as there is an explicit and implicit attempt
to push resolutions from the RFMOs in the WTO fisheries subsidies text. In
other words, the WTO is sought to
be used as a as a forum to implement fisheries
management measures, mainly prevailing in RFMOs. In many of the RFMOs for example
the WCPFC and the IOTC, CMMs are negotiated and agreed by member states. As
such WTO is further sought to be used as a forum by the developed countries to
obtain the negotiating leverage on management issues on which they may not be
able to obtain a consensus in the RFMOs. In the context of the RFMOs, the
conservation and management measures are negotiated decisions. In the RFMO
forum the developed and developing countries negotiate CMMs taking into account
the special requirements of the developing countries. In the event where EU and
the developed countries may not be able to negotiate and achieve the required
outcomes of a CMM in the RFMOs, they will utilize the WTO dispute settlement to
challenge the measure and impose on the developing countries.
For example, on the issue of transshipment at sea, at the WCPFC,
regulation 2009-06 states that the measures shall not apply to transshipment of
highly migratory fish stocks where fish is taken and transshipped wholly in
archipelagic or territorial seas. Transshipments in ports or in waters under
national jurisdictions of a member shall take place in accordance with
appropriate national laws. Furthermore the IOTC Resolution 17/06 states that a
program to monitor transshipment at sea applies only to a large scale tuna long
line fishing vessel. In the WTO, transshipment issues are also covered in the
fisheries text including extending it to small scale fishing activities.
Another example is the CMM 2009-10 of the WCPFC. It provides for the
monitoring the landing of purse seine vessels at ports so as to ensure reliable
catch data by species. The CMM further states that such information will be
collected from the canneries and shall be handled in “non-public domain” i.e.
kept confidential. Catch data is important to determine the commercial interest
of 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 competitive
advantage in catch as well. The IOTC Resolution 15/02 provides the caveat for
mandatory statistical reporting requirements for IOTC contracting and
non-contracting parties. The members are required to provide data on total
catch by species and gear (catch and effort data only) for surface fishers,
long line fishers and coastal fishers.
In the nineth Regular Session of the WCPFC in 2012 a resolution was agreed by members
on “best available science”. In the EU proposal in the WTO, the members are
discussing the issue of “best available science” within the
context of the fisheries subsidies negotiation, although this is an issue for
the RFMOs.
This highlights (1) the strategy of the developed
countries to bring the management issue, which is well placed in the RFMOs,
into the WTO and impose it on all members and (2) the issue of “cherry picking”
certain decisions of the RFMO to have it implemented legally in another forum.
Should members plan on using RFMO resolutions in the WTO fisheries subsidies,
the appropriate resolution would be the “Resolution on the Reduction of
Overcapacity” of the WCPFC agreed on 12 December 2005. The resolution calls for
developed countries to reduce overcapacity by a certain period of time. The
developing countries must therefore exercise caution in the fisheries subsidies
negotiations
In relation to Illegal, Unreported and Unregulated
fishing (IUU), most of the proposal have made a direct reference to FAO Code of
Conduct on IUU with exception to the ACP proposal that has an Annex listing and
also refers to the national legislations. One must be cognizant that the FAO
Code of Conduct on IUU is a guideline which may evolve in future. As such a
direct importation of the guidelines may lock further space for discussions should
situations evolve. Secondly, members should also be provided the option to be
guided by their national laws and regulation. The FAO Code of Conduct and most
Members’ legislation separates the definition of I, U, U. This is a practical
means of resolving and reaching some level of convergence. In the proposal from
China and the ACP it moves away from this position of explicitly referencing
the Code itself. Both proposals provide room for determination as per the
national legislation and thus retaining policy space. The Chinese proposal on
IUU in its determination further references the RFMOs procedures which are
consistent given that many RFMOs have set guidelines and procedures for listing
and delisting vessels. For example the WCPFC CMM measure 2010-06 and the IOTC
Resolution 17/03 both provide for definition of IUU, vessel listing and
delisting procedures and the required information to be submitted by parties
concerned.
It is obvious that no member country would
deliberately allow for illegal fishing. In order to combat IUU in relation to
management these need to be discussed outside the WTO in the relevant forums. Member countries in practice collaborate at
the national, sub-regional and regional level with Monitoring, Control and
Surveillance and penalties.
Another important consideration in relation to IUU
that needs to be examined is the need to provide technical and financial
resources to the developing countries to improve their regulation and reporting. This could be through legislative changes,
having observers on the boat or GPS systems etc. on the boats. This should
therefore be part of the Special and Differential Treatment. Some members are
debating the possibility of providing a transitional period for countries to
adapt to measures of responsible fishing. Time period is one aspect that is
appreciated; however, the technical and financial assistance to implement
effective and responsible fisheries measures is even more critical.
Members need to be cautious about the acceptance of unilateral IUU
measures that may be used by some as a disguised restriction to favour their
own fishing vessels over others, should such liberty be provided. The EU
proposal also makes a reference to generally accepted standards. At present the
EU and the United States impose unilateral measures in relation to IUU. The EU
applies trade related measures to combat IUU in the form of yellow card
(identification of non-cooperating countries) and a ban on imports from the
particular country. These are applied broadly to all fish and all fleet of a
particular country regardless of the IUU fishing that triggered the
identification, which means it is more likely to have a disproportionate impact
on small-scale fisheries. The US IUU trade related measures are designed to
target only fleet, species and product type directly tied to IUU that has given
rise to the identification. As such the EU system is more opaque then the US
system. (Hosch G, 2016)). It is therefore imperative for members to ensure that
while developing the disciplines of fisheries subsidies, unilateral measures
such as that of the EU are not multilateralized. As such these measures should
not be used as a disguised restriction to trade while setting disciplines on
fisheries subsidies.
On the issue of IUU and the maritime boundaries,
the ACP proposal is the one that should be favored as it carves out the EEZ.
There cannot be a presumption that within the EEZ the Member States are
committing IUU or encouraging such practices. Member States are the owners of
their EEZ and have their national and sub-regional collaboration and management
measures in place to combat IUU. This again is an issue of management that
should be discussed in the relevant forums outside the WTO. Under the UNCLOS,
coastal states have a sovereign right over their EEZ and have the obligation to
manage the resources. Members need to be cognizant of their legally binding
rights under the UNCLOS in relation to their EEZ and these rights must not be
compromised or diluted. The Agreements Establishing the RFMOs and the
resolutions passed by the RFMOs, for example the resolutions of the WCPFC and
the IOTC, recognize the sovereign right of a coastal state over its EEZ in
managing its fish resources. Another strategy that is clear in the fisheries
negotiations is that the developed countries are
aiming to limit the sovereign rights of Member States in their EEZs.
On the issue of transparency, the proposals of New
Zealand, Pakistan and Iceland, require members to submit information which is
beyond the existing notification requirements under the ASCM. The highly
ambitious transparency obligations proposed by New Zealand, Pakistan and
Iceland are mirrored in the Trans Pacific Partnership (TPP) Agreement. The
proposal of the ACCPU also has a similar expanded list, which is not favorable
to the developing countries.
Given that the discussions are on fisheries
subsidies, the transparency obligations should be in accordance with Article
25.3 of the ASCM. The latter requires information pertaining to the form of
subsidy, the subsidy per unit, or in case where this is not possible, the total
amount or the annual amount budgeted for that subsidy (indicating, if possible,
the average subsidy per unit in the previous year), the policy objectives and
or purpose of a subsidy, duration of a subsidy and/or any other time-limits
attached to it and statistical data permitting an assessment of the trade
effects of a subsidy. Furthermore, footnote 34 of the ASCM also recognizes that
nothing in this notification provision requires the provision of confidential
information, including confidential business information.
New Zealand, Iceland and Pakistan’s proposal on
transparency goes beyond the ASCM. The additional information required is part
of fisheries management. Information related to management should be discussed
in the RFMO. This includes the information related to “vessel and operators
fishing in areas beyond national jurisdiction for which subsidy is granted”,
“the catch data by species”, “the fleet capacity in the fishery”, “the status
of the stock for which the subsidy is granted, “the conservation and management
measures in place for the relevant fish stock” and the EU’s inclusion of a
“fishing capacity management plan.” The transparency obligation requires data
on the export and import per species. The data may also be used by member
countries for commercial interests. As such as per the ASCM, a qualifier has to
be included in the text to ensure that the privacy laws of the Member States are
respected and that commercially confidential information is not subjected to
the disciplines.
The broad basis of Special and Differential Treatment should not only
provide differentiated timelines for developed and developing countries but
must include additional flexibilities to ensure the development of the
fisheries sector. As per the WT/COMTD/W/196, there is a six- fold typology to Special and Differential
Treatment. This includes the provisions aimed at increasing trade opportunities
to developing country members, provisions under which WTO members should
safeguard the interests of developing country member, flexibility of
commitments of action, and use of policy instruments, transitional time-period,
technical assistance and provisions in relation to LDC members.
The SDT sought to be incorporated in the WTO
fisheries disciplines, is also an integral element in other binding and
non-binding agreements as discussed in Section I. These are called “Special
Requirements of Developing Countries”. In the RFMOs, members recognize SDT with
the term of “disproportionate burden”. In several RFMO resolutions on
development of measures, the Special and Differential Treatment of developing
countries is taken into account. The WCPFC Resolution on the special requirements
of developing countries lists a number of areas for technical and financial
assistance for developing countries in relation to fisheries. These also extend
to enhanced market access for fish and fish products from the developed
countries.
Some of the fisheries texts that are currently
under discussion have accommodated different levels of SDT. However, some are
more burdensome linking it to management. As a result it is futile in terms of
its operationalization. The EU SDT is stringent and links conditions to
management practises and plans of countries. The attempt of the EU is to
discipline fisheries management within the WTO. The Indonesian proposal on SDT
also follows a similar path. Such stringent conditions would make it impossible
for small economies with limited resources to develop their fisheries sector.
Through such stringent linkages, the EU and Indonesian proposals are aiming to
limit the entry of fishers from countries into their fisheries sector. As
discussed previously, there are relevant international organizations that deal
with management measures more effectively and the WTO is not the appropriate
forum to this effect. This reflects a pure market deterrent strategy by the
proponents.
The ACP proposal of SDT has a pro-development agenda for the fisheries
sector, mindful of the special needs of the developing and least developed
countries. The ACP proposal provides for transition periods for the
implementation of the reporting and regulatory obligations. In tandem with
this, the LDC proposal recognizes the rights of developing countries under the
UNCLOS and therefore allows for developing countries to grant and maintain
subsidies for (i) fishing activities related exclusively to artisanal and small
scale fisheries or the subsistence and livelihood of the fishermen and their
families. It also allows for the granting and maintaining of subsidies for
fishing activities which exclusively exploit fish stock within the EEZ of the
Member granting the subsidy; and for fishing activities, which exclusively
exploit quotas or any other rights, established by an RFMO or a regional
fisheries management arrangement. In relation to the RFMO quotas and its
exclusion, the ACP proposal is similarly aligned with the LDC proposal.
The ACP proposal also carves out small scale
commercial fishing. The ACP has further enhanced the SDT on account of the
capacity constraints of developing countries and LDCs. It requires the
developed countries, developing countries in a position to do so and relevant agencies,
to provide targeted technical assistance and capacity building to developing
countries, in particular LDCs and small, vulnerable economies (SVEs). SDT is
further provided in the form of establishing reporting mechanisms and
regulations to prevent unreported and unregulated fishing, conducting stock
assessment and assistance to provide Monitoring, Control and Surveillance of
stock as well as assistance in research and development.
The pro-development stance of the ACP proposal is strengthened by the
inclusion that the operationalization of disciplines on fisheries subsidies
should not impede the ability of developing countries and LDCs to develop and
diversify their fisheries sector. This is a critical element in the text to
avoid the notion of IUU measures being used as a disguised restriction to trade
in light of the unilateral IUU measures implemented by developed countries. It
also seeks to avoid repeating those mistakes in fisheries subsidies
negotiations, which resulted in asymmetries and imbalances in the Agreement on
Agriculture.
Comments
Post a Comment