WTO fisheries negotiations – A few but tough issues to resolve ahead of November 2021 Ministerial Conference (MC12)
The World Trade Organisation (WTO) held a ministerial meeting on 15 July 2021 to discuss the progress of the fisheries subsidies negotiations. The discussions emphasised that the current negotiating text can be used as a basis for finalizing the negotiations ahead of the Ministerial Conference (MC12) in November 2021, committing to set the course of a successful outcome. True to the spirit of the Buenos Aires Ministerial Conference (MC11) in 2017, the ministers adopted a work programme to conclude the negotiations focussing on a fisheries subsidies agreement, which is aimed to deliver on the Sustainable Development Goal 14.6 at the upcoming MC12 in Nov 2021. The SDG 14.6 mandate is:
To prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated (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 fisheries subsidies negotiation.
The scope of the fisheries agreement applies to subsidies that are specific to marine wild capture fishing and fishing related activities at sea and excludes aquaculture and inland fisheries. There are elements of the scope that are of concern to members, and hence not yet resolved, these include fuel subsidies and Special and Differential Treatment (SDT).
The scope covers fuel subsidies to fishing and fishing related activities at sea, though these subsidies are regarded as specific under Article 2 of the Subsidies and Countervailing Measures (SCM) Agreement, the fisheries draft text regard these fuel subsidies as non-specific. This shows that the fisheries agreement will be distinct from the SCM Agreement.
Most developing countries do not agree that a key component of SDT applies only to poor, small-scale, and vulnerable artisanal fishers in developing and least-developed countries. Several developing countries consider that subsidies to large and/or distant water fishing should be the focus of the disciplines. Their view is that subsidies should cover some form of artisanal as well as small-scale fisheries. However, this does not substitute for the normal SDT for developing countries granted under all other WTO multilateral Agreements.
Not all is lost since there is broad willingness to have a fisheries agreement at MC12. There are however technical and political challenges that are impossible to overlook. These include WTO negotiations on enforceable fisheries subsidy provisions that address sustainability issues, which are already referenced by provisions and legal structures in sea and fish international institutions that some members are parties to. These members are bound by regulations in institutions such as UN Fish Stocks Agreement (UNFSA), the UN Convention on the Law of the Sea (UNCLOS), the Port State Measures Agreement (PSMA), the Regional Fisheries Management Organization/Arrangement (RFMO/A), Food and Agriculture Organization (FAO) and the International Plan of Action on Illegal Unregistered and Unregulated Fishing (IPOA-IUU), amongst others.
For example, the United Nations Convention on Straddling Fish Stocks and Highly Migratory Fish Stocks has methods built into the convention intended to prevent overfishing. Further, the United Nations Convention on the Law of the Sea - Article 56 gives the coastal state the exclusive right to manage its resources within the exclusive zone. Similarly, Article 62 encourages the coastal state to arrange for fishing within its exclusive zone by foreign vessels when the coastal state does not have the capacity to harvest the entire allowable catch. Why would the WTO want to duplicate this role?
The provisions and legal structures of the sea and fish international institutions manifests themselves and hinders a meeting of minds in the WTO discussions. As a result, WTO members are not able to reach a fair and balanced text in the key negotiating issues especially on IUU, Overfished Stock, Overfishing and Overcapacity (OFOC). These are the key pillars of the fisheries negotiations where an outcome is expected.
IUU Fishing – The draft text proposes that IUU fishing should be identified for the purposes of imposing subsidy rules, through the IUU vessel list of an RFMO/FAO. However, the text does not resolve other issues raised concerning flag states, port states or subsidizing member determinations in the waters under the jurisdiction of another member. Additionally, the language in the text does not provide the much-needed sovereignty and domestic/national processes of making IUU determinations. The draft text will give the WTO the prerogative to scrutinize how governments make IUU determinations. Consequently, the proposed processes will undermine effective enforcement by domestic states or by national legislations. On the other hand, RFMO procedures provides an opportunity for comments by contracting members and the flag state of the vessel allegedly engaged in IUU activities. WTO members who are parties to RFMO would consent to the listing of vessels since it is done by consensus, but will have challenges of consenting to RFMOs they are not party to and whose listing decisions they therefore do not control. There are also concerns of how much control a subsidising member might have over the operation of this trigger of the subsidy prohibition.
The draft text further proposes that the subsidising member retain the ability to verify, in accordance with the rules of the RFMO and rules of international law; whether a vessel it subsidises was listed based on affirmative determination. WTO members that are parties to the UNFSA are already obliged “not only to cooperate to establish but also to respect all RFMO conservation measures – including of those RFMOs to which they are not members”. Therefore, it is sufficient to conclude that RFMO determination should not be subject to scrutiny of any affirmative determination, as these are regional/national decisions.
Overfished Stocks – There is an important conceptual difference between the process of overfishing and a stock being overfished. Stock may be overfished, but overfishing may not be taking place.
Even though the draft negotiating text qualifies what overfished stock is, concerns are being raised about whether the subsidy prohibition should apply only to fishing that targets an overfished stock, or whether it should apply only if the subsidies negatively affect a fish stock that is in an overfished condition. For many developing members there are realities of insufficient scientific data to confirm stock status. There are also realities of mixed fisheries and by-catch where vessels/operators catch several species – some overfished, protected, threatened or endangered. Also, developing members oppose any reference to assessment of sustainability measures since determinations of biological sustainability to be subject to WTO scrutiny or dispute settlement should remain at the discretion of members.
Several members have proposed that developing countries’ subsidies to fishing of overfished stocks receive SDT under the disciplines or to permanently exempt subsidies provided by developing countries to fishing of overfished stocks within their territorial waters. They also require subsidies provided by a developing country member to fishing of overfished stocks managed by an RFMO to be removed only after a transition period. Challenges of harmonizing the WTO rules and the international fish and sea obligations will arise where considerations have to be made to subsidies concerning unassessed stocks.
Overfishing and Overcapacity (OFOC) – The OFOC pillar provides that no member shall grant or maintain subsidies to fishing or fishing related activities that contribute to OFOC. The text advances a hybrid (list and effects based) approach to properly outline these activities. The prohibition does not address directly the mandate to prohibit certain forms of fisheries subsidies that contribute to overfishing and overcapacity. It targets activities that contribute to OFOC.
Much of the discussions are based on the exemption of subsidies provided by developing members. There are proposals of exemptions with properly clarified criteria. These exemptions include, but are not limited to the type of subsidy provided, small-scale fishing or artisanal fisheries and the geographic area in which the fishing takes place. There is a strong push from other members to have exemptions to allow developing countries to continue to subsidize small-scale or artisanal fisheries for policy considerations since they contribute substantially to employment, food security and safeguard livelihoods including the marine resources for economic development. However, some members strongly oppose the proposition arguing that small scale and artisanal fisheries should be subject to the same dynamics of overcapacity and overfishing if subsidies granted to them provide incentives for excessive effort.
There remains a challenge in the negotiations on how to define artisanal and small-scale fishing. Many members are of the opinion that such a definition should be the discretion of national jurisdictions since there are national policies in place for such fisheries and therefore it makes sense to exempt them from the WTO scrutiny. Many subsidies enable vessels to stay at sea and fish in situations that would otherwise not be economically viable. Large-scale industrial fishing has wreaked havoc in the waters of other members due to the large subsidies granted over many years for their fishing sectors, especially fuel subsidies that are capacity enhancing. It is clear that artisanal and small-scale fisheries contribute a relatively small portion of global subsidies as compared to large-scale and commercial fisheries and therefore their contribution to capacity enhancing subsidies is insignificant. The biggest contributor to overcapacity and overfishing are subsidies, hence these negotiations.
Notification and transparency – In order to strengthen and enhance the notifications of fisheries subsidies, and to enable more effective surveillance of the implementation of fisheries subsidies commitments, it is proposed that members provide information in addition to regular notification under Article 25 of the SCM Agreement. The information required includes but is not limited to: the type of fishing activity for which the subsidy is provided, the legal basis of such a programme, the duration of the programme, the catch data by species in the fishery for which the subsidy is provided, the status of the fish stocks for which the subsidy is provided (e.g. overfished, maximally sustainably fished, or under fished) and whether such stocks are shared with any other Member or are managed by an RFMO.
An issue of concern is that the WTO will assess the sustainability impact of progammes of other members, and consequently, there is a risk that members may choose to maintain the status quo of not notifying their programmes at all. If a member maintains that its subsidy programme or activity is sustainable, which benchmark or yardstick will be used? Is there an international standard for sustainable level in the fisheries? Over and above, it should be noted that sustainability depends on which side of the fence you are – it remains to be seen how this will play out in the negotiations. The main issue is that the WTO is not an agency mandated to collect catch data, but the FAO is. Hence, if a notification of catch data has been made to the FAO, this notification obligation should be deemed to have been fulfilled.
In conclusion, it is worth noting that the discussions in the July 2021 meeting of ministers emphasised that the WTO should not duplicate the efforts of the existing international sea and fisheries management institutions. The writer, Alan Watts, once said that muddy water is best cleared by leaving it alone. Maybe the WTO should focus on its mandate and leave other international institutions to handle their mandates. With time and fish running out for such a clearly outlined negotiating mandate, the reality is that the gap between the negotiating parties is still too wide. There are many issues that still need to be resolved. How will the WTO rules be able to achieve a fisheries subsidies agreement that complements the obligations of international sea and fisheries management institutions taking into consideration that the mandate of SDG 14.6 is clear. Is it possible for the WTO fisheries subsidies agreement to be achieved without over-stepping the existing mandates of the sea and fisheries management institutions? Which Agreement will take precedence over another? Is the existing SCM Agreement not sufficient to address the fisheries subsidies negotiating mandate? It is yet to be established when the negotiations recommence in Sept 2021 whether a balanced text is within reach or is it just an illusion.
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