FISH @ THE WTO: SUBSIDIES, MARKET ACCESS AND ANTI-DUMPING

As talks heat up in the weeks before the WTO Hong Kong Ministerial Conference in December, fisheries-related issues have cropped up in draft texts submitted by the chairs of two WTO negotiating groups for inclusion in the draft Hong Kong Ministerial Declaration. The text put forwarded by the Chair of the Negotiating Group on Rules refers to the need to strengthen disciplines on subsidies that contribute to overcapacity and overfishing, while the status report by the Negotiating Group on Non-Agricultural Market Access (NAMA) points to progress on sectoral agreements, including fish. Meanwhile, Ecuador initiated WTO dispute proceedings against the US for the anti-dumping duties it imposed on shrimp imports from Ecuador.

General consensus on draft text on fisheries subsidies disciplines

At an informal meeting of the Negotiating Group on Rules on 22 November, WTO Members discussed the revised text on fisheries subsidies presented by Rules Group Chair Ambassador Guillermo Valles Galmes of Uruguay. The text, which the Chair submitted to WTO Director-General Pascal Lamy, states that there is "broad agreement" that the group aims to "strengthen disciplines on subsidies in the fisheries sector, including through the identification and prohibition of subsidies that may contribute to overcapacity and over-fishing". It also calls on "participants to promptly undertake further detailed work to, inter alia, establish the nature and extent of those disciplines, including transparency and enforceability". Moreover, at India's request, the text also includes a reference to "appropriate and effective" special and differential treatment (S&D) as an "integral part" of the negotiations, taking into account the sector's importance to "development priorities, poverty reduction, and livelihood and food security concerns".

The text expands on previous draft versions, which many Members felt were too short to reflect the progress that has been made, by simply calling on Members to "strengthen disciplines on subsidies in the fisheries sector, including through the identification and prohibition of subsidies that may contribute to overcapacity and over-fishing, taking into account the special needs of developing and least-developed Members". However, the text does not include a proposal by Japan, Korea and Chinese Taipei to state that the disciplines must "preserve the basic concepts and principles of the Agreement on Subsidies and Countervailing Measures (SCM)". This proposal was rejected by other Members who argued that the mandate for fisheries subsidies negotiations was to amend those very principles. Members also failed to agree on the timeline for moving to text-based negotiations

While sources suggested that the vast majority of Members were happy with the new draft, the Friends of Fish -- a loosely defined group of countries such as New Zealand, Chile, Peru and the US which support a broad ban on fisheries subsidies with exemptions -- would have preferred an even stronger call for disciplining fisheries subsidies. Nonetheless, they felt that the draft text submitted to the TNC was balanced and acceptable. The very fact that Japan and Korea agreed to a text that expresses broad agreement for strengthening disciplines on fisheries subsidies was regarded by some as a major step forward, given the countries' initial reluctance to negotiate fisheries-specific subsidies at all.

Environmental groups pointed to the recognition in the text that subsidies which contribute to overcapacity and over-fishing need disciplining as a significant step in the right direction, in particular given that some Members had earlier tried to limit the Rules negotiations only to subsidies that were directly trade-distorting. However, WWF called on governments to be even clearer by noting "the strong convergence of views in favour of a new SCM red light that effectively bans fishing subsidies contributing to excess fishing capacity and overfishing" and urged them to continue with a "deeper parallel discussion of S&D provisions".

Prospects for a sectoral agreement on market access for fish are weak

The progress report submitted to Pascal Lamy by the NAMA Group Chair Ambassador Stefan Johannesson of Iceland notes the good progress made on the sectoral tariff component of the negotiations based on a "critical mass" approach, and identifies fish as one of the sectors concerned (along with forest products among others). According to this approach, a "critical mass" of major fish producing, importing and exporting countries could agree to a sector-specific agreement that would liberalise fish trade separately from the general agreement on market access for non-agricultural goods (see Bridges Trade BioRes, 28 October 2005). Several countries, including the US, Canada, Iceland, New Zealand, Norway, Singapore and Thailand, have in the past proposed to eliminate or substantially reduce tariffs and address unjustified non-tariff barriers within the fish sector (TN/MA/W/63; TN/MA/W/18; TN/MA/W/9). Other countries including South Korea and Chinese Taipei are firmly opposed to liberalising trade in fish products on a sectoral basis (TN/MA/W6/Add.; TN/MA/W/19/Add.2).

According to one trade source, the prospects for a sectoral fish agreement are low given the EU's current resistance to join an agreement because of its current focus on reaching a general formula for tariff cuts on all non-agricultural goods. As the EU represents over 30 percent of global fish trade, an agreement cannot reach the critical mass necessary without the EU's participation. Although the EU is reluctant to move faster on the liberalisation on fish than on other non-agricultural products, it does not support Japan's call for a so-called "negative" sectoral agreement which would cut tariffs on fish products less than other goods that are subjected to the general formula for tariff cuts that the NAMA Group will eventually agree upon.

The countries advocating a sectoral agreement on fish trade, two of which (US and New Zealand) belong to the "Friends of Fish" in the context of fisheries subsidies negotiations, argue for the liberalisation of fish trade due to its potential contribution to the economic development of poor countries. They note that developing countries account for more than half of the world's exports in fish products and developed countries represent more than 80 percent of imports. Their joint submission quotes FAO statistics that show that in 2003, value of exports of fish products from developing countries exceeded the combined total net value of exports of coffee, cocoa, bananas, rubber, sugar, tea and rice. In contrast, Japan has argued in the past that Members should retain the flexibility to set tariffs based on their fisheries managements schemes. For its part, Korea has warned that tariff elimination would provide an incentive for increased fishing efforts, which would likely lead to over-fishing in exporting countries without proper management schemes.

Ecuador challenges US shrimp duties at WTO

Ecuador on 15 November initiated WTO dispute proceedings against the US for its anti-dumping duties on Ecuadorian shrimp imports, alleging that the method used by the US to calculate the duties contravenes WTO rules (G/ADP/D63/1; G/L/762; WT/DS335/1). Under the WTO Anti-dumping Agreement, a WTO Member can impose anti-dumping duties on an imported product if they find that the company exporting the product charges less for it in the market of the importing country than in the exporting country. To determine the anti-dumping margin, i.e. the difference between those two prices to determine the level of the duty to be imposed, the US Department of Commerce used a methodology known as "zeroing", a process that has been challenged in previous disputes between the US and countries, such as Canada, the EU, Japan, Mexico and Thailand, and that has been consistently ruled against by the WTO's Dispute Settlement Body. Under this process, investigators treat transactions with negative dumping margins as having margins equal to zero in determining weighted average antidumping margins. For example, if a good was sold for US$100 in the home market and US$70 in the foreign market, a 30 percent value would be applied, but if the good was sold for US$130 in the foreign market, a zero value would be applied. Thus, when aggregating these translations, a dumping margin of US$30 would be found. Ecuador has argued that this process led to artificial and inflated anti-dumping margins.

The anti-dumping duties under discussion were imposed on imports of certain non-canned warmwater shrimp and prawn from Brazil, China, Ecuador, India, Thailand and Vietnam for materially injuring the domestic industry in the USA. The US has recently been criticised for upholding anti-dumping duties on imports from Thailand and India in spite of impacts of the tsunami on those countries' shrimp industries (see Bridges Trade BioRes, 11 November 2005).

In the Negotiating Group on Rules, developing and developed countries, including Brazil, Chile, Columbia, Costa Rica, Hong Kong, Israel, Japan, Korea, Switzerland and Thailand, have jointly submitted concrete proposals that would impose stricter disciplines on anti-dumping methodologies such as zeroing. Some sources suggest that non-tariff barriers such as anti-dumping measures, standards and rules of origin can play an even more significant role as possible market access barriers than tariffs.

ICTSD Reporting; "Ecuador Initiates WTO Dispute Proceedings Against U.S. for AD Duties on Shrimp Imports", WTO Reporter, 17 November 2005; "Liberalising Fisheries Markets: Scope and Effects" OECD 2003. OECD 2003; FISHSTAT Plus, FAO Fisheries Department, Fishery information, Data and Statistics Unit; "Fishing Subsidies: Global Challenges and World Trade", WWF Position Statement, 19 October 2005.