ROUGH SAILING FOR FISHERIES SUBSIDY TALKS

Divisions among WTO Members marked discussions last week on a set of potential multilateral disciplines on fisheries subsidy spending.

The talks marked the first formal meeting of the Doha Round negotiating group on rules to discuss the draft consolidated text on fisheries subsidies tabled by Chair Ambassador Guillermo Valles Games (Uruguay) last November.

Particularly contentious were proposed provisions for banning certain kinds of payments and according special and differential treatment to developing countries. This was unsurprising, since the two issues have in recent months been the principal cleavage among Members. India was especially vocal in arguing that the conservation requirements developing countries had to fulfil in order to make ordinarily-prohibited payments were so onerous as to render the rules useless.

Valles Games' text would ban several types of fisheries subsidy payments, particularly those that encourage overfishing through enhancing fishing capacity and creating other incentives to fish. In doing so, he appeared to be searching for an acceptable middle ground between supporters of a 'top-down' blanket ban on fisheries subsidy payments (with negotiated exceptions), and countries that want a 'bottom-up' ban only on specific kinds of subsidies. "I am only a militant for consensus," the chair said during the 30 January - 1 February talks.

While Valles Games called the recent meetings fruitful, sources close to the negotiations say his text met resistance on a range of issues, and that strong divergences were apparent. Members such as Japan, the EU, Norway, Korea, Taiwan and India called for a new draft text as soon as possible - albeit with very different ideas in mind for what they want that text to look like.

Some delegates said that calling for a revised draft was not helpful, since countries doing so were not providing the chair with the tools necessary to amend it. More negotiations on the issue are needed before a new version is circulated, these delegates insisted. Chair Valles Games echoed this sentiment, and encouraged more contributions from Members.

Sources say that the call for a revised text so soon reflects differences elsewhere in the rules negotiations, especially on anti-dumping, an issue on which a separate text by Valles Games has proved deeply divisive. "When people are calling for a new text and they have only discussed three issues, that is the larger issues coming into play," one concluded.

Prohibited subsidies: same divisions

Prohibited subsidies, permitted subsidies, and special and differential treatment for developing countries were the only three of the eight articles in the text discussed at the recent meeting.

On the prohibitions (Article I), Members fell into their usual camps. Brazil, Iceland, Pakistan, the US, Argentina, New Zealand, and Ecuador, expressed support for the chair's approach. They called the level of disciplines "groundbreaking", ambitious, and a good basis for negotiations.

Australia, another supporter of a broad-based ban, suggested that the list of prohibitions in Valles Games' text might not go far enough.

At the other end of the spectrum, countries including Japan, the EU, Taiwan, Norway, and Canada said that the prohibitions went too far. Japan said that the text lacked balance, and called for permitting subsidies for bait, fuel, insurance, and port infrastructure. The EU, though less categorical, expressed similar concerns, pointing to the effect of high oil prices on small fishermen. Taiwan said that the prohibitions went well beyond the Doha mandate to deal with payments that cause overfishing; Canada pointed to an OECD report suggesting that two-thirds of fisheries subsidies were beneficial.

Small and vulnerable economies, including the Solomon Islands, Thailand and El Salvador, urged the chair to remove developing country subsidies for fish processing and port infrastructure off the prohibited list.

Valles Games challenged delegates opposed to his approach to explain how the listed prohibited subsidies do not promote overcapacity fishing.

Small-scale fishermen attract large-scale attention

As for the subsidies that Valles Games' text permitted, the EU, Japan, Canada, Norway, Korea, Taiwan and Hong Kong urged allowing all Members to be allowed to subsidise small-scale fishermen in ways currently permitted for developing countries alone. They argued that such fishermen were among the most vulnerable populations in developed countries as well as poor ones.

The EU argued that governments need space to provide small fishing communities with the assistance necessary to develop their sectors and subsist; Korea encouraged members to look at small-scale fishing from a social welfare perspective. Canada called for exempting its programmes for small-scale fishing in aboriginal communities.

Norway argued that small-scale fisheries account for only 7 percent of the country's annual catch. Japan similarly claimed that its small fishermen did not contribute to overfishing. Furthermore, their numbers were declining, Japan noted.

India was particularly vocal on the issue of small-scale fishermen, albeit for different reasons. It stressed that most fishing in India is small-scale and does not contribute to overfishing, and therefore should be exempt from prohibition.

India was objecting to the text's provisions allowing developing countries to make otherwise-banned payments on the condition that they are linked to international-standard fishery management systems that follow practices such as those in UN accords on migratory fish stocks, and a Food and Agriculture Organisation code of conduct on responsible fisheries. In effect, India is arguing that these requirements, though motivated by conservation and sustainability concerns, would effectively make the exceptions impossible to use.

"The proposed WTO rules hold the threat to curtail the ability of developing countries to provide support to their artisan and small fishermen, and encourage fishing in their economic exclusive zone," said Indian commerce department official Jayanta Dasgupta in January to a Chennai audience, according to the Financial Express.

During the talks at the WTO last week, the Indian delegation invited Valles Games to visit the country's fishing villages and witness the situation firsthand.

New Zealand and Chile, among others, were reportedly not convinced by the arguments presented in favour of allowing exceptions for small fishermen in developed countries. Here, New Zealand cited an FAO document claiming that small-scale fishing accounts for significant proportions of developed countries' fishing fleets. In the case of the EU and Japan, small-scale fishermen make up 80 and 90 percent of their fleets, respectively, as cited in the report.

Size matters

As for the text's other provisions for special and differential treatment (S&DT) for developing countries, discussions were dominated by Barbados, the Philippines, Vietnam, and Mauritius on behalf of the African, Caribbean, and Pacific (ACP) group of states, which urged for disciplines to be relaxed, notably on boat length.

The text permits developing countries to provide subsidies based on certain conditions such as the size and capacity of the fishing vessels, currently capped at 10 metres.

Delegates opposed to relaxing the limit argued that doing so would nullify the purpose of the provision, since the average length of a fishing boat is 10-15 metres with a capacity of 20 gross tonnes. "At the end of the day, where do we draw the line and what is appropriate at that line?" said one delegate.

Policy space was another focus of attention. The Solomon Islands, Barbados, and South Africa argued that spending on port infrastructure should not face restrictions, saying that the text's disciplines would limit their policy space for developing fisheries industries.

Not all reactions were critical, however. Barbados, on behalf of the small and vulnerable economies, commended the chair for taking into account the group's needs on special and differential treatment. The Solomon Islands thanked him for exempting access fees from the list of prohibited subsidies. These fees, typically offered by rich country governments to a coastal state in exchange for the right to fish in the latter's waters, are a crucial source of revenue for some coastal countries - a source that they are keen to protect. In the chair's text, government-to-government subsidies are not considered subsidies and are thus not vulnerable to being challenged at the WTO.

Hoping for smoother waters ahead

As negotiators look ahead, they say compromise is necessary for the talks to advance. Valles Games encouraged delegates to be sure that "when the ship reaches the port, it is balanced." But with such strong divergences, delegates are concerned about how the talks will play out.

The EU said that the negotiations were not in a good position because supporters of a broad ban were significantly happier than the other camp, sources report.

The next fisheries subsidy negotiations are scheduled for mid-February, when of the rest of the text will be discussed. Provisions requiring an FAO peer review of fisheries management systems are likely to prove most contentious. Valles Games has asked delegates to consider inviting someone from the FAO to participate, in order to clarify the outside institution's potential role.

The draft text is available online at http://www.wto.org/english/news_e/news07_e/rules_nov07_e.doc.

ICTSD reporting; "India wants to stop proposed WTO rules on fisheries subsidies," FINANCIAL EXPRESS, 18 January 2008.