WILL FISH BE ON THE HONG KONG MENU?

Concerns regarding the lack of progress in the fisheries subsidies debate were heard in WTO corridors during the 11-15 July meeting of the Negotiating Group on Rules. Doubts were raised whether fisheries subsidies would make it onto the table at the Hong Kong Ministerial Conference, since strong forces within the WTO's Membership -- notably Korea, Japan and Chinese Taipei -- would like to see the issue dropped. Nonetheless, the meeting tried to address disagreement when looking at specific topics including special and differential (S&D) treatment, illegal, unreported and unregulated fishing (IUU) and aquaculture.

Outcome depends on agriculture and NAMA

As the Rules Group was meeting for the last time before the WTO summer break, delegates suggested that subsequent results depended upon the outcomes in the agriculture and non-agricultural market access (NAMA) negotiations, on which movement has been sluggish (see BRIDGES Weekly, 20 July 2005) -- a connection that Chair Ambassador Guillermo Valles Galmés of Uruguay also highlighted in his report to the Trade Negotiations Committee (TN/RL/13). With regards to the discussions on fisheries subsidies the report said that "participants are now engaged in a very constructive dialogue, and that proponents have been submitting an increasing number of more precise papers", even if technical work remained to be done. However, some delegations felt that while the factual description provided by the Chair was valuable, the document could have more usefully given much-needed guidance on a way forward for the Rules Group's fisheries negotiation and highlighted the need to take advantage of political momentum in negotiations.

Brazil proposal seen as development supportive

Brazil's presentation of its paper (TN/RL/GEN/56) led to a substantive debate on how to incorporate S&D treatment for developing countries into the crafting of the new rules. As concrete S&D treatment proposals, Brazil suggested that developing countries that are members of a regional fisheries management organisation (RFMO) should be allowed to maintain certain capacity enhancing subsidies as long as the enhancement does not extend beyond the "sustainable level of exploitation defined by the limits established under the RFMO". Other subsidies permitted for developing countries would include payments from other governments for access to their national waters. Responding to questions received regarding its earlier submission (see BRIDGES Trade BioRes, 15 April 2005), Brazil sought to establish a common understanding of concepts, such as small-scale and artisanal fisheries, that had been mentioned in the Rules Group discussions for some time, but lacked a clear definition.

According to Brazil's new submission, classification of fisheries subsidies should be "based both on their design and effects, according to the context in which they are provided". In order to improve transparency, the paper put forward a detailed notification requirement and states that any subsidy not notified "would be presumed prohibited". In addition, it includes a non-exhaustive list of subsidies that they regard as not trade or production distorting to be included in the 'green box' ('non-actionable' subsidies that cannot be challenged under WTO rules). In addition to subsidies for conservation, research to improve fisheries management and the reduction of fishing fleet capacity (previously suggested by the US), the green box list also includes subsidies to artisanal and small-scale fisheries for stocks that are not "patently at risk". To determine which fisheries are "patently at risk", Brazil suggested using fish stock assessments by the UN Food and Agriculture Programme (FAO). In addition, the paper suggested prohibiting all subsidies not included in the green box, slating them for elimination in a 'red box' category. For least-developed countries, however, subsidies ordinarily in the red box would be deemed actionable for ten years where they could only be challenged if they were trade distorting.

Old divisions persist

The debate following Brazil's presentation demonstrated that divisions persist between the 'Friends of Fish', a loosely defined group of countries including Australia, Argentina, Chile, Ecuador, New Zealand, Philippines, Peru, Norway, Iceland and the US, which support a broad ban on fisheries subsidies with certain exemptions (a so called 'top-down approach'), and Japan, Korea and Chinese Taipei, which prefer rules crafted around a list of prohibited subsidies (referred to as a 'bottom-up approach') (see BRIDGES Trade BioRes, 10 June 2005). Chinese Taipei expressed strong reservations about the Brazilian submission's proposed prohibition of all subsidies not falling into the green box, arguing that this indirectly implied a blanket ban. Australia welcomed Brazil's submission but expressed concern that including too many subsidies in the green box, thereby exempting them from disciplines, might undermine the effects of the new rules.

Brazil responded that it was willing to discuss the proposal further, and urged Members to produce specific text in submissions if they wanted to see concrete results on fisheries subsidies by the Hong Kong Ministerial in December. However, sources suggest that members of the Friends of Fish -- the original demandeurs of the negotiations on fisheries subsidies -- feel that it may be too early for such submissions given that a common understanding of key concepts has not been established.

Different solutions proposed for IUU fishing

Specifically addressing Japan's concern about illegal, unreported and unregulated (IUU) fishing activities, Brazil proposed that all of a Member country's green box subsidies should become challengeable under WTO rules if a single vessel registered in that country was found to be engaged in such activities by a RFMO. However, Japan contended that such an approach would penalise innocent fishermen who have not been involved in IUU fishing. Several delegations shared Japan's concerns on the IUU issue and pointed out that Brazil's paper would adversely affect developing countries, since they are generally less able to enforce efficient management.

Addressing the link between IUU fishing and fisheries subsidies, Japan presented a paper (TN/RL/GEN/47) arguing that subsidies for overseas transfers of fishing vessels may lead to IUU fishing. In response, members of the Friends of Fish group noted it would be better for negotiations to tackle fisheries subsidies in general rather than try to establish the ones that might directly or indirectly lead to IUU fishing. In addition, while delegates acknowledged the importance of IUU fishing, some questioned whether the WTO was the appropriate forum for handling the issue.

Aquaculture subsidies introduced into debate

Members also discussed a submission from Australia, Ecuador and New Zealand (TN/RL/GEN/54) that raised general questions on subsidies to aquaculture. Many Members expressed doubt whether such subsidies would fall under the mandate of the negotiations but were willing to discuss the extent to which aquaculture affects wild capture fisheries through the use of juveniles and fish feed. Members, however, seemed less open to discuss trade-distorting aspects of aquaculture under the fisheries subsidies mandate and stressed the importance of the sector for developing countries. China reiterated its view that any new rules decided by the group should not apply to inland fisheries and aquaculture (see BRIDGES Trade BioRes, 15 May 2003).

As the group ran out of time during discussions, the Chair said the submission would be the first item on the agenda at the upcoming meeting. The next meeting will also debate a late proposal by Fiji, Papua New Guinea and the Solomon Islands (TN/RL/GEN/57). Recalling the importance of access fees and artisanal fishing for small vulnerable coastal states identified in a previous submission (see Bridges Weekly, 28 July 2003) the paper states that these, as well as development assistance to developing coastal states, "should not be subject to subsidies disciplines". It also raises the question on whether the WTO is the appropriate forum for handling subsidies that are solely production and not trade distorting.

The next meeting of the Negotiating Group on Rules is scheduled for 26 September 2005.

ICTSD reporting.