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Insights on Fisheries Subsidies negotiations

Radika Kumar Email: r.kumar@commonwealth.int Disclaimer: views expressed are in personal capacity and not of the organizations

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The Economics of Fisheries and Management Existing Fisheries related instrument History of the Fisheries Subsidies Negotiations Current Fisheries text (June 2021) Way Forward .

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The holders of fisheries resources  = major fishing areas = major share of the EEZ fishing area= providers of fishing  license=mostly small island states, LDCs. Vessel Owners =fish extraction capacity = vessel capacity in tonnage, technology but not enough raw fish= demanders of fishing licenses=fisheries access.  Example EU, China, New Zealand The current suppliers of marine capture in fisheries = marine producers. = are suppliers of marine capture as processors of fish in international fish trade market and also demanders of fishing  license=fisheries access example India and others. These include developing countries and also countries that would want to move up the global value chain to expand fisheries sector.

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Retention of Subsidies The access to fisheries resources is determined by the issuance of licenses by the holders of the resources i.e. suppliers of fish resource in the ocean. These are countries that set the price of the licensing. With subsidies, the marine producers who are also demanders of fisheries resources are able to compete with the holders of large vessel capacity and thus competition in the fish resource extraction market is maintained

Removal of Subsidies The major marine producers that are demanders of fish resources, once subsidies are eliminated would exit the fisheries market for extraction.  The suppliers of fish resource extraction, the license holders will only have a few players to sell the fish licenses too. The vessel holders with non-specific subsidies will remain in the market for resource extraction, thus becoming the price setters, extractors and controlling the fish value chain. Thus, creating an oligopolistic market structure

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History of Fisheries Subsidies: WTO Context

2001:  Launch of Doha Negotiation: Fisheries Subsidies rules to be clarified and improved 2005:  Hong Kong Ministerial Conference –prohibition of certain forms of fisheries subsidies that contribute to overcapacity and overfishing 2016:  SDG 14.6  prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the WTO fisheries subsidies negotiation 2017:  Mandates plus SDG 14.6 2018:  MC11: No outcome, but members agreed to work towards work programme with possible conclusion in 2019.

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Diagram, venn diagram

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Implementation of Code of Conduct for Responsible fishing

Voluntary Guidelines on Flag State Responsibilities

Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries-

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Management issues: Binding and non-binding issues

UNCLOS – “EEZ sovereignty” UN Fish Stock Agreement Agreement on Port State Measures to prevent, deter and eliminate IUU fishing Voluntary Guidelines for Flag State Performance Agreement to Promote Compliance with International Conservation and Management by Fishing Vessels on the High Seas FAO Code of Conduct of Responsible fishing Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries- (which involves standards on catch certification requirements for small scale and artisanal fisheries). Guidelines on Fishing Vessel Registry International Plan of Action-IUU International Plan of Action-Capacity Private Standards regarded as “generally accepted standards” have a possibility.

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Fisheries Subsidies and Trade Agreement on Subsidies and  Countervailing Measures

Agreement on Subsidies and Countervailing Measures (ASCM). Article 1- three conditions for prohibition of a subsidy. Financial contribution by a government or any public body within the territory of a member which involves: ( i ) direct transfer of funds (such as grants, loans and equity infusion), potential direct transfer of funds or liabilities (such as loan guarantees); (ii) government revenue that is forgone or not collected. (iii) goods or services provided by the government, other than general infrastructure or purchased goods; governments payment to a funding mechanism, or for entrusting or directing a private entity to carry out similar functions which would not normally be vested by the government.

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2017: TN/RL/GEN/181/Rev.1: European Union TN/RL/GEN/187/Rev.2: Argentina, Columbia, Costa Rica, Panama, Peru, Uruguay TN/RL/GEN/191: Norway TN/RL/GEN 192:  African Caribbean Pacific (ACP) TN/RL/GEN/193:  Least Developed Countries TN/RL/GEN/195: China TN/RL/GEN/196:  Phillipines TN/RL/W/274 titled: Working document on Prohibited Subsidies Relating to IUU Fishing and Overfished stocks.  2019: TN/RL/GEN/Rev.2: Argentina, Australia, USA and Uruguay TN/RL/GEN/198: Canada 2020: TN/RL/GEN/200/Rev.1: India New Chairs Text

Close up of pages of an open book in a bright studio

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Analysis of the Current Chairs Text: as at 30 June 2022 .

Article 1: Scope Article 2: Definition Article 3: Prohibition of Subsidies to illegal, unreported and unregulated fishing. Article 4: Prohibition of Subsidies concerning Overfished Stock Article 5: Prohibition on Subsidies concerning Overfishing and Overcapacity Article 6: Specific Provisions for LDCs Article 7: Technical Assistance and Capacity Building Article 8: Notification and Transparency Article 9: Institutional Arrangements Article 10: Dispute Settlement Article 11: Final Provisions

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Article 1: Scope – Application/Coverage

Article 1.1:  The scope of the fisheries subsidies is aligned to the SCM agreement of article 1 and 2 and is limited to marine capture fishing and fishing  related activities at sea . It excludes the aquaculture and inland fisheries which is an improvement from previous 2017 scope.  Article 1.2:  Article 1.2 is important as it also covers the non-specific subsidies which in previous experience for example in the Agriculture negotiations were excluded. However,  carve out for small fisher folks need to apply in SDT .

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Art. 2a. Fish means  “all species of living marine resources”  whether processed of not. (Note:  Use of living marine resources covers the exploitation of marine species by man for food, feed, fertilizer or the production of other products of value or use, and includes activities such as fishing, mariculture and hunting.  (i.e., those concerning fish, shellfish, sea turtles, and marine mammals).  Reflection: does it mean fish plus other marine resources?? Article: Fishing related activities  at sea :  important to ensure not all activities in the value chain are included in the mix. Article 2d.  "vessel" means any vessel, ship of another type or boat used for, equipped to be used for, or intended to be used for, fishing or fishing related activities;  ( One of the concerns are small vessels that may be used to offload fish from the   motherships that may not be able to anchor at a port. This is revenue for many small states). More clarify  on this. [The definitions are inspired from General Provisions Article 1 of PSMA agreement].

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Article 3: Prohibition on illegal, unreported and unregulated fishing (IUU)

Subsidies are completely prohibited for IUU activities. In IUU determination:  Coastal State Responsibility Flag State Responsibility RFMO responsibility  Understand what flagging of vessel implies? Domestic vessels flagged by own member country. Example: Thailand vessel flagged Thailand flag meaning registered in Thailand. Foreign vessels that have domestic flag. Example, China vessel registered in Thailand so using Thailand flag. So in this case if a violation is done then the flag state is Thailand that needs to prove this. Currently as the language is this has an implication, for foreign vessels that are using the domestic flag for small state. What if a violation happens then how will the flag state in this case prove. Who will be liable in this case. The flag state or the foreign vessel state that is subsidizing.

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Recommendation:  Clarity in language and also SDT for technical and financial assistance to enhance capacity to ensure that small states have the capacity to make such determination. The Article on IUU in relation to disciplining the violation has elements of Flag State Responsibility, Coastal State Responsibility, Port State Responsibility which are all on the management side of the fisheries resources and dealt with either in UNCLOS or FAO voluntary guidelines. Capacity Building and Technical Assistance in key for Flag States, Port States and Coastal states to be developed first and foremost before taking commitments. Members: small states and coastal states must be provided with technical assistance and capacity to be able to properly regulate and also report.  Article 3.8: Only provides for transition period and that to for 2 years which is insufficient. The SDT in the WTO is not limited to only transition period but much more. Caution should be exercised for 12 nautical miles carve out and only for two years. Most of small states vessels and low income and poorer resource fishermen may not be able to comply as well.  Also the UNCLOS rights over 200 nautical miles of EEZ is also compromised here.  In future those countries that may want to expand would need to comply with such obligations. Those that already have the capacity are already at an advantage.

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Article 4: Prohibition of Subsidies Concerning Overfished Stock & SDT Recommendation

Overfished Stock It states that subsidies are prohibited for overfished stock. If a member would like to grant the subsidy then it has to provide evidence  of rebuilding of stock to a biological sustainable level.  To determine the biological level footnote 9 expands on it to state that  a biologically sustainable level is the level determined by a coastal Member having jurisdiction over the area where the fishing or fishing related activity is taking place, using reference points such as maximum sustainable yield (MSY), or other reference points based on indicators such as [level of depletion, or level of or trend in time series data on catch per unit effort, commensurate with the data available for the fishery]; or by a relevant RFMO/A in areas and for species under its competence. This is difficult to determine and developing countries  do not have the  resources to take such level of analysis, only countries with capacity will do so. Giving the competitive advantage.  4.4 gives exemption to low income resource poor fisherman but only for 2 years. T ransition period is not enough. Further assistance on capacity building to determine overfished stock is required. Sustainability is environment, economics together. (Include in SDT)

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Article 5: Prohibitions on Subsidies Concerning Overcapacity and Overfishing [5.1]

The article provides for a list of subsidies that are to be prohibited by members in relation to overcapacity and overfishing. The list includes: subsidies to construction, acquisition, modernisation, renovation or upgrading of vessels; subsidies to the purchase of machines and equipment for vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machinery for sorting or cleaning fish);  subsidies to the purchase/costs of fuel, ice, or bait; subsidies to costs of personnel, social charges, or insurance; income support of vessels or operators or the workers they employ; price support of fish caught; subsidies to at-sea support; and subsidies covering operating losses of vessels or fishing or fishing related activities

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Article 5: Prohibitions on Subsidies Concerning Overcapacity and Overfishing

In relation to overfishing and overcapacity, the article provides for positive list of subsidies for prohibition.  For developing countries the provision of some of these subsidies are important for economic reasons as the sector is small. Such as construction, acquisition, modernisation of vessels. The article provides for carve out to the provision but it is conditional if the subsidizing member demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level. To determine the biologically sustainable level the condition  f or the purpose of this paragraph, a biologically sustainable level is the level determined by a coastal Member having jurisdiction over the area where the fishing or fishing related activity is taking place, using reference points such as MSY, or other reference points based on indicators such as [level of depletion, or level of or trend in time series data on catch per unit effort, commensurate with the data available for the fishery]; or by a relevant RFMO/A in areas and for species under its competence. Issue/SDT if this language is accepted . For small developing state it would be difficult to prove such a condition given the capacity it requires to determine such condition. The cost may be huge and as such small states would be unable to develop their sector. So when drafting the SDT specific technical assistance and capacity building must be conditional to this.

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Article 5: Prohibitions on Subsidies Concerning Overcapacity and Overfishing [Alt text to 5.1]

(a) The prohibition under Article 5.1  shall not apply to subsidies granted or maintained by LDC Members for fishing or fishing related activities. The prohibition under Article  5.1 shall not apply to subsidies granted or maintained by developing country Members for fishing or fishing related activities within their territorial sea. The prohibition under Article 5.1 shall apply to subsidies granted or maintained by developing country Members, including LDC Members, for fishing or fishing related activities within their EEZ and the area of competence of RFMO/A if all the following criteria are met: the Member's GNI per capita exceeds US$5,000 12  (based on constant 2010 US dollars) for three consecutive years; the Member's share of the annual global marine capture fish production exceeds 2% as per the most recent published FAO data; the Member engages in distant water fishing 13 ; and the contribution from Agriculture, Forestry and Fishing to the Member 's annual national GDP 14  is less than 10% for the most recent three consecutive years.]     The Alt 1. Is a better formulation compared to 5.3. LDCs are exempted. For developing countries the carve out is for their territorial waters but not EEZ. And the overcapacity applies to developing countries EEZ if certain set of criteria are met together. It also delinks the stringent conditions in relation to the conservation and management measures in the previous text.  Here countries need to also perhaps specify that in limiting the subsidies provision to territoria l waters, they are not in any way compromising their sovereign rights under the UNCLOS on exclusive economic zone. (200 nautical miles). Delinks management  issues: Some policy space.

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In this second alternative, LDCs are exempted as well.(5.5). This must be read in view of the graduation status of LDCs. Reference:  https://www.un.org/development/desa/dpad/least-developed-country-category.html  Carves out low income and resource-poor and livelihood fishing and fishing related activities up to 12 nautical miles. So coastal area is covered but the EEZ is not. One question which countries need to reflect on is whether they are willing to give up their rights under UNCLOS. A formulation should also be stated to make clear that the sovereign rights of countries over EEZ to be maintained . c) provides for  a transition period under which the developing countries can grant the subsidies in 5.1 is for 5 years.  Now looking at the list of developing countries there are difference in the level of development in the WTO.  For example SVEs are also developing countries. One should reflect on how balanced this provision would be and whether in five years the removal of subsidies without building capacity of the sector would be feasible.  Alt (d) provides for condition that  if a developing country member whose share of annual global volume of marine capture fish production does not exceed [0.7%] as per the most recent FAO data and (ii) subsidies to fishing and fishing related activities at sea do not exceed [USD 25 million] annually, deems it necessary to apply for subsidies beyond the period of the transition, then it will need to enter into consultation with the committee which will determine whether an extension of this period is justified, after examining all the relevant needs of the developing country member in question.  This provides for the mechanism however, again countries need to reflect on their capacity to do this.

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Article 6: Specific Provisions for LDC Members

6.1 [Provisions relating to LDC Members shall continue to apply for a transitional period of [X] years after the entry into force of a decision of the UN General Assembly to exclude a Member from the "Least Developed Countries" category.] 6.2 A Member shall exercise due restraint in raising matters involving an LDC Member and solutions explored shall take into consideration the specific situation of the LDC Member involved, if any.      On the above article, given that almost all countries would have graduated from LDC status and it to developing countries then the SDT should ensure it is fair. As such the SDT provision should expand on more specific areas of technical assistance and capacity building and not be generalised.

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Article 7: Technical Assistance and Capacity Building

[Targeted technical assistance and capacity building assistance to developing country Members, including LDC Members and land-locked developing country Members shall be provided  f or the purpose of implementation of the disciplines under this [Instrument]. In support of this assistance, a voluntary WTO funding mechanism shall be established in cooperation with relevant international organizations such as the Food and Agriculture Organization of the United Nations (FAO) and International Fund For Agricultural Development.]   Reflection: Though TA/CB  provision is in the text, this need to be expanded further to specify the kinds of targeted technical assistance and capacity building that would be required.  For example examining the provisions on IUU, Overfished stock, overcapacity and overfishing, if there are nexus to management measures that specific TA/CB needs to be stipulated for example TA/CB on monitoring control and surveillance for better reporting and regulating. TA/CB on determination of MSY/reference points to determined overfished stock and overfishing. TA/CB in relation to research and development.  (Refer to UNCLOS and other guidelines provision on special requirements of developing countries)

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8.1 Without prejudice to Article 25 of the SCM Agreement and in order to strengthen and enhance notifications of fisheries subsidies, and to enable more effective surveillance of the implementation of fisheries subsidies commitments, each Member shall provide the following information as part of its regular notification of fisheries subsidies under Article 25 of the SCM Agreement 15,16 :  type or kind of fishing activity for which the subsidy is provided; and catch data by species in the fishery for which the subsidy is provided; and [to the extent possible,]  provide the following information as part of its regular notification of fisheries subsidies under Article 25 of the SCM Agreement 17 : status of the fish stocks in the fishery for which the subsidy is provided (e.g. overfished, maximally sustainably fished, or underfished) and whether such stocks are shared with any other Member 18  or are managed by an RFMO/A; ii.  conservation and management measures in place for the relevant fish stock; iii.name and identification number of the fishing vessel or vessels benefitting from the subsidy; and iv.  fleet capacity in the fishery for which the subsidy is provided

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Transparency provision must be limited to the Article 25 of the SCM Agreement. From previous experience developing countries and LDCs have had capacity issues when undertaking notification as per Article 25 of SCM. The notification requirement  is in addition to the current SCM notification .  Additionally, information in relation to fishing catch data and also requirements to provide information on the status of fish stocks, CMM measures etc are SCM plus and some of which are usually management measures.  An additional issue is that information that may be confidential in nature should be excluded. This need to be specified. SDT: on technical assistance and capacity building for notification should be made explicit and conditional to the notification and transparency provision. Furthermore, explicit mention must also be made that information that may be confidential in nature with commercial interest, should be excluded.

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11.1 [Nothing in this [Instrument] shall be construed or applied in a manner which will affect the rights of land-locked country Members under public international law.]   11.1 : Comments: This is important and should be extended to all countries and also the  mention more specifically on the retention of sovereign rights of member countries under  UNCLOS. 11.2 Members shall take special care and exercise due restraint when granting subsidies to fishing or fishing related activities regarding stocks the status of which is unknown.

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11.3 Except as provided in Articles 3 and 4, nothing in this [Instrument] shall prevent a Member from  granting a subsidy for disaster 19   relief, provided that the subsidy is:   limited to the relief of a particular disaster;  (b)limited to the affected geographic area;  (c) time-limited; and  (d)  i n the case of reconstruction subsidies, limited to restoring the affected area,  the affected fishery, and/or the affected fleet up to [ a sustainable level of fishing  and/or fishing capacity as established through a scientific-based assessment of  the status of the fishery and in no case beyond ] its pre-disaster level.   Comments  There is some level of exceptions however again the condition to determine the scientific assessment of the status of fish is an issue. Countries will need to develop capacity and thus technical assistance and capacity must be provided before such commitments.

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(a) This [Instrument], including any findings, recommendations, and awards with respect to this [Instrument], shall have no legal implications regarding territorial claims or delimitation of maritime boundaries. A panel established pursuant to [Article 10 of this Instrument] shall not entertain any claim that would require it to address any issues of territorial claims or delimitation of maritime boundaries that is contested by a party or a third party.   Reflection  Does this sufficiently cover the protection of UNCLOS rights or should this be made specific.

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Fisheries Subsidies Negotiations and SDG 14.6 has to balance the economic, social and environmental aspects which make the three pillars of SDG. The development dimension also need to be maintained. Doha and Hongkong Ministerial. The text requires further strengthening of SDT provisions. It is not limited to transition period  but also must ensure :  measures to increase trading opportunities for developing countries, provisions requiring all WTO members to safeguard the trade interests of developing countries, support to help developing countries build the capacity to carry out WTO work, handle disputes, and implement technical standards, and provisions related to least-developed country (LDC) Members.

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Depending on the commitment on each of the provision the SDT must be expanded accordingly. For example for IUU: SDT on proper reporting and regulating with MCS, e-reporting assistance etc. For Overfished stock: SDT on proper stock assessment evaluation For Overfishing and Overcapacity: SDT on assessment and also ensuring future development of the sector of small states and LDCs are not hampered. Also important to ensure that rights of members countries in international agreements are not compromised. Also reflect on whether this is a subsidy only discussion or management too. How will this implicate negotiations in other forums including future policy space.

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Application on Fisheries Assessment:  tinyurl.com/9mh5hxz5 2. Documents SDT document:  https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/COMTD/W258.pdf&Open=True 3.  https://www.researchgate.net/profile/Radika-Kumar/research Effects of Fisheries subsidies negotiations on fish production and interest rates. The effectiveness of fisheries subsidies as trade policy tool to achieving sustainable development goals at the WTO. Fisheries subsidies negotiations at the WTO: Small Bait for Large Catch The Effect of Fisheries Subsidies Index on socio-economic development for “Friends of Fish” and its implication on WTO Fisheries Subsidies discipline. Fisheries Subsidies Negotiations at the WTO: The Real Catch 4. Personal Blog:  https://subsidiesfisheries.blogspot.com/

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 In this second alternative, LDCs are exempted as well.(5.5). This must be read in view of the graduation status of LDCs. Reference:  https://www.un.org/development/desa/dpad/least-developed-country-category.html  Carves out low income and resource-poor and livelihood fishing and fishing related activities up to 12 nautical miles. So coastal area is covered but the EEZ is not. One question which countries need to reflect on is whether they are willing to give up their rights under UNCLOS. A formulation should also be stated to make clear that the sovereign rights of countries over EEZ to be maintained . c) provides for  a transition period under which the developing countries can grant the subsidies in 5.1 is for 5 years.  Now looking at the list of developing countries there are difference in the level of development in the WTO.  For example SVEs are also developing countries. One should reflect on how balanced this provision would be and whether in five years the removal of subsidies without building capacity of the sector would be feasible.  Alt (d) provides for condition that  if a developing country member whose share of annual global volume of marine capture fish production does not exceed [0.7%] as per the most recent FAO data and (ii) subsidies to fishing and fishing related activities at sea do not exceed [USD 25 million] annually, deems it necessary to apply for subsidies beyond the period of the transition, then it will need to enter into consultation with the committee which will determine whether an extension of this period is justified, after examining all the relevant needs of the developing country member in question.  This provides for the mechanism however, again countries need to reflect on their capacity to do this.

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 Application on Fisheries Assessment:  tinyurl.com/9mh5hxz5 2. Documents SDT document:  https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/COMTD/W258.pdf&Open=True 3.  https://www.researchgate.net/profile/Radika-Kumar/research Effects of Fisheries subsidies negotiations on fish production and interest rates. The effectiveness of fisheries subsidies as trade policy tool to achieving sustainable development goals at the WTO. Fisheries subsidies negotiations at the WTO: Small Bait for Large Catch The Effect of Fisheries Subsidies Index on socio-economic development for “Friends of Fish” and its implication on WTO Fisheries Subsidies discipline. Fisheries Subsidies Negotiations at the WTO: The Real Catch 4. Personal Blog:  https://subsidiesfisheries.blogspot.com/

Insights on Fisheries Subsidies negotiations

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