ANALYZING THE
IMPACT OF THE CHAIR'S PROPOSED OCOF DISCIPLINES
UNDER THE ADDITIONAL PROVISIONS ON FISHERIES SUBSIDIES
ON THE SUSTAINABILITY OF GLOBAL MARINE FISH STOCKS
COMMUNICATION FROM INDIA
The
following communication, dated 11 July 2024, is being circulated at the request
of the delegation of India.
_______________
1 INTRODUCTION
1. As mandated by Sustainable
Development Goal 14.6, negotiations on the overcapacity and overfishing (OCOF)
pillar are guided by the objective of conserving global marine resources by
prohibiting certain forms of fisheries subsidies that contribute to OCOF.
Ensuring the sustainability of the global marine ecosystem has, therefore, been
the primary driver of the OCOF subsidy negotiations.
2. In order to accomplish its
sustainability objective, the OCOF subsidy disciplines must rein in the
activities of large-scale industrial fishing fleets involved in deep-sea and
distant-water fishing (DWF). These fleets have historically exploited and depleted
the fisheries resources and benefited from substantial government support and
subsidies for their extensive operations. At the same time, the OCOF
disciplines should not curtail the aspirations of smaller players looking to
expand their fishing capabilities and develop their fisheries sector.
3. This submission highlights potential
issues with the latest draft text proposed by the Chair, _TN/RL/W/279 (hereinafter 'W/279'), which is largely based
on a hastily concluded compromise during the closing stages of the 13th
Ministerial Conference (MC-13). It illustrates how the draft text could
undermine the sustainability goals of the OCOF pillar by failing to effectively
discipline states that have historically subsidized their fisheries sector to
develop large-scale industrial fishing capabilities. To this end, the
submission focuses on two aspects of W/279: the two-tiered demonstration
requirement under the sustainability clause and the disciplines on distant
water fishing nations (DWFNs).
2 TWO-TIERED DEMONSTRATION REQUIREMENT
UNDER THE SUSTAINABILITY TEST
2.1 ARTICLE A.1.1 OF W/279 IN A NUTSHELL
4. Article A.1.1 of W/279 provides a
carve-out from the OCOF subsidy prohibition if measures are implemented to
maintain the stock at a biologically sustainable level (BSL). This is referred
to as the sustainability test or the effects-based carve-out. It is rooted in
the understanding that effective fisheries management can mitigate the harmful
effects of subsidies on the health of fish stocks.
5. However, unlike the previous
iterations of the OCOF disciplines, such as _WT/MIN(21)/W/5 and _WT/MIN(22)/W/20, W/279 stipulates a peer review of
Members' fisheries management practices, modelled on the Trade Policy Review
Mechanism of the WTO. To elaborate, the Chair's draft text requires Members to
notify the WTO of their measures to maintain the fish stocks at BSL. This is
called the demonstration requirement and is two-tiered in nature. The first tier comprises all WTO
Members, barring developing country Members falling under the second tier. The
second tier comprises developing country Members who are neither among the top
ten subsidisers of marine capture fisheries nor significantly engaged in DWF.
Both the first and second-tier Members have to annually notify the WTO of their
i) fish stock status, ii) conservation and management measures, iii) catch data, and iv) fleet
capacity. In addition, the notification obligation of Members in the first tier
gets triggered forthwith or within six months of introducing a new subsidy
programme. Further, Members in the first tier have to provide an explanation
regarding how their fisheries management measures would ensure, or could
reasonably be expected to ensure, that the fish stocks are maintained at BSL.
This two-tiered demonstration requirement's objective is to enable other
Members to effectively evaluate whether the subsidy concerned is supplemented
by adequate measures to maintain the fish stock at BSL.
2.2 PROBLEMS WITH THE TWO-TIERED
DEMONSTRATION REQUIREMENT
6. Article A.1.1 of W/279 provides the
biggest loophole to continue unsustainable fishing operations. The following
discussion highlights how Article A.1.1 actively encourages historical
subsidizers who have built the necessary capacities to fish on a large and
industrial scale.
i._
Article A.1.1(a) of W/279 permits
the largest subsidizing countries to continue their subsidies, subject to
meeting the sustainability test and fulfilling the corresponding notification
requirements under Articles A.1.1(a) and (c). While most major fishing nations
have established mechanisms to make such notifications, many developing
countries operating on a smaller scale lack the requisite capacity to do so.
This places a disproportionate burden on the latter and fails to hold
accountable those states engaged in large-scale, industrial and unsustainable
fishing practices. Moreover, during the negotiations, developing countries have
consistently emphasized their capacity constraints in notifying subsidies under
Article 25 of the Agreement on Subsidies and Countervailing Measures (SCM
Agreement).
ii._ The inclusion under tier 1 of
developing country Members that are among the ten largest providers of
fisheries subsidies by annual aggregate level of fisheries subsidies is
problematic. Developing countries with substantial fishing populations,
extensive coastlines, or exclusive economic zones (EEZ) naturally provide
higher aggregate subsidies. Holding states accountable based solely on their
total subsidy value overlooks the intensity of subsidization. Therefore, any
bifurcation of developing country Members should consider factors such as
subsidy per fisher or subsidy per square kilometre of EEZ, which better reflect
the intensity of subsidies. In addition to the above issues, presented below are certain other
problems with the Chair's two‑tiered demonstration requirement:
7. Including
the two-tiered demonstration requirement with respect to the OCOF pillar seems to create an anomaly between
the overfished and OCOF pillars. To elaborate, the sustainability test is also
incorporated under the overfished pillar of the Agreement on Fisheries
Subsidies (AFS). Article 4.3 of the AFS provides an exemption from the
prohibition of subsidies regarding overfished stocks provided that "such
subsidies or other measures are implemented to rebuild the stock to a
biologically sustainable level". This is supplemented with a best
endeavours transparency commitment under the AFS, requiring Members to notify
the WTO "to the extent possible" of their i) fish
stock status, ii) conservation
and management measures, iii) information
regarding subsidised vessels, and iv) catch data.
By contrast, the sustainability test under the OCOF pillar of W/279 entails a
stronger transparency commitment and a peer review of Members' fisheries
management systems. This leads to a situation where there is stricter scrutiny
of fisheries management for OCOF subsidies compared to subsidies for overfished
stocks, despite the latter having a more severe impact on the health of fish
stocks.
i._ As mentioned, Article A.1.2 of W/279
proposes a peer review of Members' fisheries management measures. However, the
WTO is not a fisheries management organization and, therefore, does not have
the competence to assess the effectiveness of Members' fisheries management
measures. Further, developing countries lack the capacity to effectively
examine the subsidies notifications and conservation and management measures of
the traditional big subsidizers.
ii._ Article A.1.1 introduces ambiguity
and lack of clarity through Footnote 3, which provides additional details on
the sustainability carve-out. The footnote permits an escape clause by
providing that "the biologically sustainable level of stocks may be
influenced by factors beyond the control of the subsidizing Member." This
provision offers enough flexibility for advanced industrial fishing nations to
evade the imposed regulations.
3 DISCIPLINES ON DISTANT WATER FISHING
NATIONS
8. There has been a significant
dilution in the Chair's text as regards the disciplines on DWFNs. Article
A.2(a) of the Chair's previous draft text (_WT/MIN(24)/W/10) (hereinafter 'W/10'), circulated
ahead of MC-13, prohibited all subsidies contingent upon or tied to actual or
anticipated fishing in areas beyond the subsidising Member's national
jurisdiction (hereinafter 'ABNJ). These subsidies were prohibited regardless of
whether they contributed to OCOF. Further, unlike the prohibition of subsidies
contributing to OCOF under Article A.1, this prohibition was not accompanied by
a sustainability-linked carve-out.
9. However, under Article A.2(a) of
W/279, the prohibition of subsidies contingent upon or tied to actual or
anticipated fishing in ABNJ has been made a best endeavours commitment,
qualified by the phrase 'to the greatest extent possible'. Furthermore, unlike
Article A.2(a) of W/10, the sustainability carve-out has now been extended to
the prohibition under Article A.2(b) of W/279. Compared to the requirements in
Article A.1.1(a) of W/10, the only extra condition in Article A.2(b) of W/279
for utilizing the sustainability carve-out is to disclose the subsidy amount
specifically designated for DWF. This is a clear dilution from the hard prohibition under Article A.2(a)
of W/10. Notably, DWF
subsidies now face less stringent disciplines than even tier 1 Members under
Article A.1.1. This leniency is likely to result in DWFNs refraining from
reducing subsidies, thereby perpetuating unsustainable fishing practices in the
EEZ of small island developing states.
10. Historically, advanced industrial
fishing nations have heavily subsidized their DWF industry, allowing it to
flourish. These countries would be permitted to continue subsidising their DWF
fleets solely for the purpose of ABNJ fishing by demonstrating their fisheries
management systems. By contrast, developing countries are still in the nascent
stages of developing their industrial fishing capabilities and do not have
equally robust fisheries management frameworks. Consequently, the Chair's proposed text would
prove more onerous for developing countries than for the existing advanced
industrial fishing nations, thereby running counter to the principle of common
but differentiated responsibilities and respective capabilities.
11. In sum, DWF fishing subsidies have
been given a clean chit in the maximum manner possible. DWF is not possible
without large-scale, industrial-scale fishing capacity. When DWF is the primary
contributor to unsustainable fishing, such lenient treatment is tantamount to
turning the sustainability objective upside-down.
4 CONCLUSION
12. The current draft text proposed by
the Chair raises significant concerns about its ability to effectively regulate
states that have historically subsidized their fisheries sector, leading to
massive industrial fishing capacities. The two-tiered demonstration requirement
and the dilution of disciplines on DWFNs present significant loopholes that may
perpetuate unsustainable fishing operations, particularly by large-scale
industrial fishing nations. It is essential to carefully review these aspects
of the current draft text to ensure that it effectively aligns with the
sustainability goals of the OCOF pillar without unfairly burdening developing
countries.
__________