Implications of Fisheries Subsidies Negotiations on Global Sourcing Provision for the Interim Economic Partnership Agreement and the Product Specific Rules of Origin in PACER Plus

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In 2018, the members of the World Trade Organization have been intensifying negotiations on fisheries subsidies. There are several proposals under discussions including the consolidated text from 2017.

Impact of WTO Fisheries Subsidies and I-EPA Global Sourcing Provision

The Pacific region in particular countries that are benefiting from the global sourcing provisions of the Interim Economic Partnership Agreement between the EU and the Pacific will be affected by the fisheries subsidies outcomes. Furthermore, countries that may consider future accession to the Interim Economic Partnership agreement to benefit from the Global Sourcing provisions of the I-EPA in relation to fisheries also has to exercise vigilance too.

The global sourcing provision is simply a rules of origin provision whereby a country could source fish from anywhere, as long as the fish is processed onshore, it is deemed to be originating product of the Pacific country that is exporting it and therefore would be subject to duty free and quota free market entry into the EU market. The initial rationale for global sourcing provision is to encourage development of the Pacific small island states.  The interim economic partnership agreement provides for global sourcing provisions but it does not discipline subsidies on fisheries. As such the Pacific countries are able to develop their fisheries sector through provision of subsidies and also it would benefit those countries that have domesticated their fishing vessels and those that are in the process of doing that. Moreover, for other small pacific states, such rules of origin would be impetus for foreign direct investment under joint venture and partnership.  

In the event of an outcome on fisheries subsidies elimination at the WTO and depending on the magnitude of commitments undertaken by developing countries, there will be an effect on the operationalization of the global sourcing provisions under I-EPA. There are certain proponents that aim at disciplining capacity enhancing subsidies, this could well be applicable for those that are actual contributors to fisheries resource depletion but not necessarily for the Pacific. If a discipline as such is undertaken across developing countries, then small pacific states would not be able to develop their own fisheries sector and therefore, even when the global sourcing provisions under the I-EPA for the Pacific countries may seem lucrative it will never be operationalized. In other words, the Pacific region losing out on global sourcing provisions.






Pacific Agreement on Closer Economic Relations and WTO Fisheries Subsidies.

In the context of PACER Plus negotiations, under the Rules of Origin criteria, the Pacific has a CC (Chapter level) or optional RVC of 40[1] for chapter heading 1604 (canned tuna). This is similar to a global sourcing provision however, if the Pacific small island states are not cautious in relation to the commitments and engagement in the WTO fisheries negotiations, in the event of an adverse outcome, it may well again not be able to operationalize the rules of origin provision on fisheries under PACER Plus. The PACER Plus agreement does not have provisions on disciplines in relation to fisheries subsidies in the regional agreement. As a result a global sourcing type of RoO under PACER Plus at present would benefit the region.

Recommendation:

Within the WTO, the small island states in the Pacific region could demand a special carve out in relation to the provisions of the fisheries subsidies agreement at the WTO for I-EPA and PACER Plus. In other words, any commitments in the disciplines on fisheries subsidies shall not directly or indirectly have adverse effect

(i)                The global sourcing provisions of the Interim Economic Partnership between the Pacific and the EU and
(ii)                The Product Specific Rules of Origin for fisheries under the Pacific Agreement on Closer Economic relations.

[1] (http://dfat.gov.au/trade/agreements/not-yet-in-force/pacer/Documents/pacer-plus-chapter-3.pdf),

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