LDCs should support the global agenda on fisheries subsidies

11 November 2015

The year 2015 is a pivotal one in regards to trade and sustainability related issues, such as fisheries. LDCs should seek to harness this opportunity to advance an agenda that balances their developmental imperatives with preservation of the environment.

The year 2015 is evolving into a pivotal year with respect to international norm creation on a host of environmental and international trade related disciplines. This is evidenced in the outcomes of the United Nations Sustainable Development Summit and an anticipated ‘step forward’ at the UN Climate Change Conference scheduled to take place in Paris, where the international community will seek to establish a successor framework agreement to the Kyoto Protocol. The 10th Ministerial Conference of the WTO, carded for Nairobi in December, can also play a leading role in advancing the twin agendas of ecological and economic sustainability.

LDCs and the sustainable fisheries agenda

While the WTO does not have a specific mandate to establish rules on the environment, WTO members have launched negotiations, the outcomes of which can confer positive impacts on the environmental, as well as economic prospects of developing and least developed countries (LDCs). These negotiations relate to the establishment of an Environmental Goods Agreement (EGA) as well as the promulgation of new disciplines on subsidies that contribute to overfishing and over-capacity and the prohibition of harmful fisheries practices.

In recognising that the WTO does not have cross-cutting competence with respect to environmental management, the Marrakech Agreement establishing the WTO, inter alia mandates the “optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with the respective needs and concerns [of countries] at different levels of economic development.” WTO members in general, and LDCs in particular, should therefore see Nairobi as an opportunity to build on Sustainable Development Goal 14 viz. ‘Conserve and sustainably use the oceans, seas and marine resources for Sustainable Development.’

Goal 14.4 of the SDGs commits the international community to "effectively regulate harvesting and end overfishing, Illegal, Unregulated and Unreported (IUU) and destructive fishing practices and implement science based management plans." This statement of intent reflects a growing consensus around the need to curtail the deployment of harmful subsidies that provide incentives for unsustainable practices. Historically, developed countries have been the main source of unsustainable and harmful subsidies. However, future rules will also impact on the ability of developing countries, including LDCs to provide support to nascent fisheries sectors, including to ‘small scale’ fisheries. The main challenge that confronts WTO negotiators is finding the appropriate balance between, on the one hand, disciplining the use of subsidies that result in overcapacity and resource depletion and, on the other, protecting the needs of developing and least developed countries (LDCs). 

The deployment of capacity enhancing subsidies pose the twin risks of creating an unequal playing field between subsidising and non-subsidising countries, and more importantly, posing an existential threat to marine ecology and ecosystems.[1] In view of the assessed risks attributable to harmful subsidies, the Doha ministerial conference launched negotiations to ‘clarify and improve’ WTO disciplines on fisheries subsidies. Four years later, at the Hong Kong ministerial conference in 2005, WTO members agreed to strengthen disciplines, including through a prohibition of certain forms of fisheries subsidies that contribute to ‘overcapacity and overfishing’.

The challenge now facing negotiators is to develop stronger rules while respecting the important policy concerns of WTO members, particularly LDCs. More precisely, the challenge for the membership continues to be the balancing of ecological sustainability and trade concerns with flexibilities for developing countries which do not deploy capacity enhancing subsidies.

 In 2007, the chairman of the WTO rules negotiations issued a draft text on fisheries subsidies, which proposed prohibitions that sought to curtail capacity enhancing subsidies and simultaneously provide flexibilities for developing and LDCs. Of particular interest to LDCs is the carte-blanche exemption proposed under Article 3.1 of the draft chairman’s text. This proposal aims to confer unconditional relief from the listed prohibition and the unconditional right to subsidise their industries.

In the lead up to the 10th Ministerial Conference, WTO members have not been able to move beyond the gateway negotiating issues of agriculture and industrial goods to tackle fisheries subsidies. Hence, members remain broadly divided on the sequencing of fisheries negotiations, the overall level of ambition, and even the role of the WTO as it relates to disciplining the application of fisheries subsidies. In the absence of consensus on a more comprehensive menu of prohibitions and flexibilities, WTO members should seek to make progress wherever possible. In this regard, there appears to be a high degree of convergence on the prohibition of subsidies that impact on vessels engaged in IUU fishing. This general approach has been endorsed by the international community in Sustainable Development Goal 14.6, which aims by 2020 to ‘prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing’, and to ‘eliminate subsidies that contribute to illegal, unreported and unregulated fishing’. Goal 14.6 further urges countries to ‘refrain from introducing new [such] subsidies, recognising that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation’.

The pre-Nairobi process

In the weeks leading up to the ministerial conference, there has been a flurry of activity on Fisheries Subsidies with submissions from the EU, Australia, Peru, the LDC group and the African Caribbean Pacific (ACP) group. These submissions follow earlier communications received from New Zealand. While the details of these submissions differ, there appears to be common cause with respect to: (1) the reduction/elimination of subsidies the benefits of which impact on IUU fisheries (2) the reduction/elimination of subsidies the benefits of which are conferred on fishing vessels or activities that negatively impact on overfished stocks; and (3) enhanced transparency provisions. All three elements of common cause feature in the New Zealand submission contained in TN/RL/W/258. The communication from Australia captured in TN/RL/W/266, focuses on transparency and improving monitoring in relation to the notification of subsidies within the meaning of Article 1.1 of the Agreement on Subsidies and Countervailing Measures. Similarly, the submissions issued by the EU under document numbers TN/RL/W/260 and TN/RL/W/263, also address transparency. The LDC group is also elaborating an approach with respect to the three areas of common cause, while providing a framework for special and differential treatment. In its communication, Peru has also proposed measures to discipline IUU and overfished stocks while seeking to introduce more targeted transparency measures.

 

The submission issued on behalf of the ACP on 4 November, consolidates and proposes key disciplines, which enjoy a high degree of convergence throughout the membership. These proposed disciplines inter alia address: the elimination of subsidies that impact on IUU fishing as well as those that impact on overfished stocks. The proposal also provides a middle ground as it relates to notification requirements and a ‘threshold’ which would determine the extent of a Member’s notification commitment.  The ACP proposal as well as the submission by the LDCs, particularly as the latter relates to special and differential treatment provides for contours of a satisfactory outcome for developing countries and in particular, LDCs.

Relevance to LDCs

Finding a multilateral solution on fisheries subsidies is critically important for developing countries, and in particular for LDCs. Fisheries are of multi-dimensional importance to LDCs as they are a source of food security, employment, foreign exchange earnings, nutrition, and play a significant role in the culture and heritage of island and coastal communities. The fact that 87 percent of the world’s marine fish stocks are fully exploited, overexploited or depleted is a growing source of concern to LDCs. Given that island and coastal LDCs disproportionately rely on fisheries, the impact of unsustainable practices will be disproportionately felt by those countries. Hence, island and coastal LDCs should play a leading role in the establishment of new international norms and governance frameworks relating to fisheries.

In light of the precarious state of global fisheries and the emerging consensus by the international community to address practices that contribute to unsustainable harvesting, LDCs have a role to play in ensuring that the rules which emerge are not blunt instruments that would unduly limit their ability to sustainably support and develop marine resources. Additionally, concerns have been raised that new disciplines on fisheries subsidies now being generated through mega-Regional Trade Agreements (RTAs) can have systemic impacts on the harvesting, production and trade of LDC originating fisheries, to the extent that these new rules are accepted and impose as new international best practices. Beyond the systemic impact that RTAs may have on international norms, the proliferation of eco-labeling and other private standards pose opportunities and challenges for LDCs. Utilising multilateral approaches developing countries and LDCs should also seek to consider the potential impact of private standards in the fisheries sector.

To achieve workable outcomes, the WTO LDC Group should seek to monitor and evaluate the systemic impacts of mega-RTAs, as well as coordinate with other members and groups on issues which enjoy a high degree of convergence among the membership, including on the prohibition of subsidies that impact on vessels engaged in IUU fishing.

Given the deep and entrenched divergences on what would constitute an effective outcome to the negotiations, LDCs should concentrate on harvesting low hanging fruits at the 10th WTO Ministerial. These can include the prohibition of subsidies that contribute to IUU fishing as well as transparency measures. However, with respect to transparency, LDCs should insist that any enhanced transparency obligations be applied flexibly and proportionate to their share of the value of global marine wild and conditional on the provision of technical assistance. Finally, all remaining elements of the 2007 draft chair’s text should form the contours of the fisheries subsidies component of the post-Nairobi work programme.

Conclusion

Fisheries form part of the common heritage of humankind and their sustainability should be addressed through a range of internationally supported interventions. For this reason, the WTO membership should seek to seize the opportunity presented by the 10th Ministerial Conference to introduce disciplines on the most egregious forms of subsidies, around which consensus can be built. WTO members should also consider a transparency regime that provides enhanced oversight of the application and trends as it relates to fisheries subsidies. Given that LDCs are not the worst offenders, enhanced transparency rules should apply to LDCs with flexible conditions and only to the extent that they have acquired the capacity to implement new measures.

This year presents a unique opportunity for the WTO membership to support the reshaping of international governance as it concerns both trade measures and environmental sustainability. Least developed countries should seek to harness this opportunity to advance a sustainable development agenda that balances their developmental imperatives with the preservation of the common heritage of humankind.

Author: Stephen Fevrier, International Trade Expert.

 

[1] Trade Hot Topics, Commonwealth Secretariat October/November 2015

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