Port Standards, NTMs for Market Access in relation to Fisheries Subsidies Disciplines at the WTO

1.0    Introduction 

The FAO Agreement on Port State Measures to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (the Agreement) was adopted by the FAO Conference in 2009. The main purpose of the Agreement is to prevent, deter and eliminate illegal, unreported and unregulated (IUU) fishing through the implementation of robust port State measures.

The Agreement envisages that parties, in their capacities as port States, will apply the Agreement in an effective manner to foreign vessels when seeking entry to ports or while they are in port. The application of the measures set out in the Agreement will, inter alia, contribute to harmonized port State measures, enhanced regional and international cooperation and block the flow of IUU-caught fish into national and international markets.

In other words, the Port State Measures (PSM) are requirements established or interventions undertaken by port states which a foreign fishing vessel must comply with or is subjected to as a condition for use of ports within the port state. National PSM would typically include requirements related to prior notification of port entry, use of designated ports, restrictions on port entry and landing/transshipment of fish, restrictions on supplies and services, documentation requirements and port inspections, as well as related measures, such as IUU vessel listing, trade-related measures and sanctions. Many of these measures have in recent years seen their inclusion and development in international instruments. In other words PSMA is an agreement that demands global standards on Port Management.

To date there are 51 countries that have signed onto the PSMA. Refer to Table 1.

Table 1: List of Countries that that have signed the PSMA.

2.0   PSMA and Economic Market Access Linkages

The PSMA can be viewed as the implementation of minimum Port standards by members.  This can have a similar implication to trade in goods standards in relation to that of SPS and TBT in the context of the WTO. An area in which developing countries are still struggling to have equivalence and conformity assessment for products. The PSMA aims to have harmonized global standards for Ports.

It is also important in this analysis to understand the definition of the components of a Port. The PSMA provides that “Port includes offshore terminals and other installation for landing, transshipping, packaging, processing, refueling or resupplying”.  Article 3 of the PSMA states that each party shall in its capacity as a port state apply the agreement in respect of vessels not entitled to fly its flag that are seeking entry to its ports except for: a) vessels of a neighboring state engaged in artisanal fishing for subsistence, provided that the Port state and the flag State cooperate to ensure that such vessels do not engage in in IUU fishing or fishing related activities in support of such fishing and b) container vessels that are not carrying fish, or if carrying fish, only fish that have been previously landed, provided there are no clear grounds for suspecting that such vessels have engaged in fishing related activities in support of IUU fishing.

Article 3.2. of PSMA states that a party may, in its capacity as a port state, decide not to apply this agreement to vessels chartered by its nationals exclusively for fishing in areas under its national jurisdiction and operating under authority therein. Such vessels shall be subject to measures by the party which are effective as measure applied in relation to vessels entitled to fly its flag.

From the above it is evident that the PSMA aims impose the minimum standards of Port compliance to foreign vessels as opposed to domestic vessels.

In order to understand the PSMA and its economic linkages it is important to understand the market for “Port Landing” i.e the returns from port landings.  The OECD divides returns from Port landings of OECD countries into three (i) Foreign Landings in Domestic Port (FLDP), (ii) National Landings in Foreign Ports (NLFP) and (iii) National Landings in Domestic Ports (NLDP).

Figure 1 and 2 shows that the developed countries (including the Friends of Fish) enjoy a higher returns from NLDP. This simply implies that landing from their own vessels or vessels flagged by these countries. In 2012 the returns from NLDP for the countries were as follows: Australia (USD 1 billion), Norway (USD 2billion), Iceland (USD 1 billion), New Zealand (USD 0.4billion), Spain (USD 2 billion), Sweden (USD 1 billion), Argentina (USD 2 billion), Japan (USD 12 billion), Korea (USD 4 billion) and USA (USD 0.45 billion). In 2013, some of these economies experienced a decline in the NLDP. This could be a result of the increase in National Landing in Foreign Ports (NLFP). Korea, Sweden, Spain, Iceland and Norway were economies that experienced an increase in NLFP.  Figure 2 also shows that between 2012-2013, only Iceland and Norway experienced an increase in foreign landing in domestic port (FLDP). In other words, the foreign vessels from the rest of the world involved in fishing do not utilize the ports of the selected group of countries in the analysis including the Friends of Fish. An assumption could be that the vessels from the rest of the world would either be landing fish in their home country (domestic port) or other countries that may be providing port services at a cheaper price.

Figure 1: Port Landings in 2012

Source: Data from OECD

Figure 2: Port Landing in 2013

3.0 Economic Implications for PSMA

1    The PSMA provides for an explicit definition of a Port which includes offshore terminals and other installation for landing, transshipping, packaging, processing, refueling or resupplying. As such the PSMA aims to set a minimum standards on port facilities which entails offshore terminal, landing facilities, transshipping, packaging, processing, refueling and resupplying facilities. These are sectors for economic activity on its own.  As such should a member country that is a party to the PSMA implement the agreement it has to ensure that its “Port” facilities meet the minimum criteria stipulated in order for a vessel to offload and also to utilize the facilities. Each service at the port is associated with a monetary return.

2)      For developed countries, they are in a position to adhere to the minimum standards set in relation to its Port infrastructure, however, for developing countries it will further constrain itself in relation to meeting standards and criteria. Linking this to IUU, should a member not meet the PSMA requirements, the vessels would not offload fish in their Ports thus the developed countries will benefit in relation to foreign vessels landing in domestic port (FLDP). From the figure above the FLDP is currently low in developed countries. For the developing countries, the NLFP is likely to increase. In other words, access to the fish resources for processing and exports will be with the developed countries. In practice, countries normally have a requirement for countries to offload fish which is then used by domestic industry for processing.

3)      In addition, the group of the “Friends of Fish” have the largest vessel capacity (refer to the data in excel sheet). The PSMA carves out the standard to be applied to national flagged vessels. In other words, the developed countries would benefit from imposing the measure on other vessels and not their own. Two effects are likely to emerge, the developed countries will exempt its own vessels from PSMA where it may not meet the requirements and secondly in order to attract offloading from the rest of the world into its own Ports and at the same time discouraging the portion of its own vessels from utilizing Ports of developing countries, a minimum standards has been set through the PSMA.  (This is similar to TBT and SPS requirements when exporting a product in developed countries. In this case it is about landing of fish in the Ports)

4.0   Way Forward

Noting that the PSMA has economic interest in the market Port landings, developing countries need to ensure the Special Requirements of Developing countries under Article 21 is given full recognition in so far as the implementation of the PSMA is concerned.

Article 21 of the PSMA provides for “Special Requirements of Developing Countries”.  It states that “parties shall give full recognition to the special requirements of developing states” Article 21.2 states that “parties shall give due regard to the special requirements of developing Port state parties, in particular the least developing and small island developing states, to ensure that a disproportionate burden resulting from the implementation of this agreement is not transferred directly or indirectly to them. In cases where a transfer of disproportionate burden has been demonstrated, parties shall cooperate to facilitate the implementation by the relevant developing states parties of the specific obligation under the agreement.”

Article 21.4 further provides that parties shall cooperate to establish appropriate funding mechanisms to assist developing states to implement the agreement. 

From the above and on the basis of facts, the developed countries have used a strategy to ensure that it maintains and further increases its global returns from Port landings.  Should countries bind into the agreement it will have to meet the minimum standards as per the PSMA.  A possible way to remedy the implications would be for developing countries that are intending to sign onto the agreement to firstly request for sufficient technical and financial assistance to improve the standards of its Ports to the required level. This is to ensure that the developing countries remain efficient and are competitive.