WTO FISHERIES TALKS ADDRESS INFRASTRUCTURE SUBSIDIES

During negotiations on fisheries subsidies in the WTO Negotiating Group on Rules on 26 October, Members discussed subsidies to infrastructure based on a paper submitted by New Zealand which highlighted the need to include subsidies to fisheries infrastructure as a category into the disciplines (TN/RL/GEN/70). Motivated by statistics which indicate that such subsidies account for over 40 percent of industrialised countries' global financial transfers related to fisheries, discussions were polarised between Members that supported the general thrust of the submission and those that were reluctant to make a distinction between general infrastructure subsidies and those related specifically to fisheries.

According to New Zealand, the purpose of this paper was to initiate a dialogue on the category of "subsidies to fisheries infrastructure", as fisheries infrastructure accounts for a substantial proportion of government expenditure on global fisheries. The provision of "general infrastructure" is excluded from the definition of a subsidy in the WTO Agreement on Subsidies and Countervailing Measures (ASCM). In light of this, New Zealand noted that it was important that Members reached a clear understanding of what types of programmes should be treated as fisheries infrastructure as opposed to general infrastructure to then be able to establish how to treat them under new rules. It argued that subsidies that are specific to fisheries infrastructure could have an effect on overfishing and overcapacity and should therefore be prohibited under new disciplines. However, since little detailed information on spending in this area was currently available, the paper begins the negotiating process by trying to identify types of programmes that could be classified as fisheries infrastructure. The submission makes a preliminary attempt to define three sub-categories, namely subsidies to port facilities, subsidies to the development of fishing communities, and subsidies to processing facilities for fisheries products. Programmes whose primary objectives are conservation or research and development are to be treated as separate, non-infrastructure categories.

Does fishery-specific infrastructure exist?

Reactions to the paper followed two general lines of thought. The Friends of Fish -- a loosely defined group of countries including Australia, Argentina, Chile, Ecuador, New Zealand, Philippines, Peru, Norway, Iceland and the US -- saw it as a good starting point for discussing an important category of subsidies that had not previously received much attention while pointing out that more detail was needed. However, Japan, Korea and Chinese Taipei were reluctant to introduce a distinction between subsidies for fisheries infrastructure and general infrastructure subsidies. Citing the example of ports used for multiple purposes, these countries argued that differentiation between general and fisheries-specific subsidies was an impossible exercise in practice. Korea also declared that disciplining the use of infrastructure subsidies would amount to an infringement on countries' sovereign right and political duty to develop their domestic infrastructure.

The EC and China were ambivalent on the issue, in particular with regards to subsidies to port facilities. While in principle they welcomed the consideration of subsidies to fisheries infrastructure, they also pointed to the problem of multiple use of facilities. The EC instead promoted consideration of subsidies at the boat level, rather than for infrastructure. The members of the Friends of Fish responded that addressing fisheries subsidies at the boat level separately from other parts of the value chain missed important parts of the picture, as fish acquired value when landed, processed and presented to the consumer.

Subsidies to develop fishing communities to be protected

The other two sub-categories proposed by New Zealand, subsidies for the development of fishing communities and those to processing facilities, were less controversial than subsidies to ports. While China, Korea, Hong Kong and the EC felt that negotiations would touch on too many aspects beyond fisheries if they also addressed processing facilities, other Members supported the idea of disciplining subsidies in this area. However, Members -- and in particular developing countries -- supported New Zealand's proposal to consider subsidies for the infrastructure development of fishing communities as a suitable candidate for exemption from any prohibited category of fisheries subsidies. While agreeing to this principle, developing country Members stressed the importance of a clear definition of the type of "infrastructure development" and "fishery communities" covered by the exemption. New Zealand's paper only includes the provision of housing and of transport infrastructure for fishermen in the community development category. Indonesia spoke out in favour of expanding the definition to include additional support measures such as subsidised bait and fuel.

Diverging opinions on draft text for Hong Kong

At the end of the meeting, Members discussed what to include into the draft text to be submitted to the Hong Kong Ministerial Conference. In general, Members felt that significant progress had been made in the Negotiating Group over the past year and that this fact ought to be reflected in the Ministerial Declaration. In particular, a consensus on the need for new disciplines on fisheries subsidies has been achieved, overcoming earlier opposition to the negotiations themselves. Members are now looking to Ministers in Hong Kong to edge the process forward by clarifying the areas and outlining a mandate for negotiations for the time following Hong Kong. They felt that work should intensify in 2006 so that new rules can be agreed upon by the end of the year. Negotiations are currently at a more technical stage of discussing specific types of fisheries subsidies. After concluding that stage, they will go back to negotiating the overall structure of the approach on disciplining fisheries subsidies to be adopted. In this context, the debate surrounding the question of whether a top-down approach (i.e. a broad ban of fisheries subsidies with well-specified exemptions as advocated by the Friends of Fish) or a bottom-up approach (that would establish prohibited subsidies on a case-by-case basis as preferred by Japan, Korea and Chinese Taipei) would be reopened. The role of special and differential treatment for developing countries would also be examined at this stage. Only after these questions are resolved could Members turn to text-based negotiations.

Japan and Korea advocated a move to the stage of structural discussions as soon as possible, whereas New Zealand expressed its preference for waiting with these discussions until after Hong Kong. Latin American countries such as Argentina and Chile would like to include specific deadlines for the conclusion of different stages of negotiation into a draft text going to the Ministerial Conference. Chair Ambassador Valles Galmes of Uruguay announced that based upon the conversations of the Group, he would shortly submit a paper to WTO Director-General Pascal Lamy for the November General Council meeting in preparation for Hong Kong. A Rules meeting will be held the week of 28 November.

ICTSD Reporting.