IMPLEMENTING APPROPRIATE AND EFFECTIVE SPECIAL AND DIFFERENTIAL TREATMENT UNDER THE ADDITIONAL PROVISIONS ON FISHERIES SUBSIDIES

COMMUNICATION FROM INDIA

The following communication, dated 11 July 2024, is being circulated at the request of the delegation of India.

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1  INTRODUCTION

1.  Sustainable Development Goal (SDG) 14.6 sets out the negotiating mandate for the overcapacity and overfishing (OCOF) pillar. It, inter alia, calls for prohibiting certain forms of subsidies contributing to OCOF while also recognizing that appropriate and effective special and differential treatment (SDT) for developing and least developed countries (LDCs) should be an integral part of the negotiations (emphasis added).

2.  The need to implement appropriate and effective SDT under the OCOF pillar stems from the principle of sustainable development, recognized by the Marrakesh Agreement, that calls for a balance between the environmental, social and economic dimensions of development. It also relates to the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC). Applying the CBDR-RC principle to the OCOF subsidy disciplines implies that large industrial fishing nations, who have historically contributed to the depletion of global marine resources — not just in their waters and on the high seas but also in the exclusive economic zone (EEZ) of other countries where they have access arrangements—should shoulder a greater share of the responsibility than states that have not contributed in the same way. Additionally, the CBDR-RC principle stipulates that the resource constraints and capabilities of developing nations must be considered when determining their responsibilities in a sustainability context.

3.  Several considerations need to be taken into account in order to implement appropriate and effective SDT under the OCOF pillar. These include addressing the needs of small-scale and artisanal fishers, whose livelihoods depend on fishing, and the food security concerns of states that rely on fisheries as a source of nutrition. It is also important to consider the capacity constraints of developing countries and LDCs to establish and maintain effective fisheries management systems to adhere to the disciplines. Additionally, it involves the aspiration of developing coastal States to enhance their fishing capacity and engage in large-scale industrial fishing in the future.

4.  Given this background, this submission highlights key considerations crucial to implementing appropriate and effective SDT under the additional provisions.

2  NEED FOR GREATER POLICY SPACE UNDER THE ADDITIONAL PROVISIONS

5.  At the outset, it is important to note that given the harm posed by fishing regarding overfished stocks and illegal, unreported and unregulated (IUU) activities, Members have agreed to a limited SDT in relation to these pillars. The SDT for developing countries, including LDCs, in relation to the IUU and overfished pillars, is limited to a two-year transition period up to the EEZ from the date of entry into force of the Agreement on Fisheries Subsidies (AFS).^[1]

6.  However, when it comes to the OCOF subsidy disciplines, developing countries demand stronger SDT, given their comparatively less harmful impact on the health of fish stocks. To elaborate, the ultimate objective of the fisheries subsidy disciplines is to preserve the biomass at a biologically sustainable level (BSL), for which Members have already undertaken binding commitments under the overfished pillar, with a limited SDT (Article 4, AFS). For any further disciplines on the measure of fishing capacity or the rate of fishing that would eventually breach BSL, developing countries demand greater policy space in light of socio-economic considerations like food security, livelihood concerns of fishermen and developmental needs.

3  SPECIAL AND DIFFERENTIAL TREATMENT UNDER THE CHAIR'S LATEST DRAFT TEXT

7.  Under the Chair's latest draft text, TN/RL/W/279 (hereinafter 'W/279'), SDT for the OCOF pillar entails an exemption from the obligation to prohibit subsidies contributing to OCOF contained under Article A.1 and comprises the following elements. First, a complete exemption for LDCs. Second, a complete exemption for developing country Members whose volume of production of marine capture fisheries is less than 0.8% of the global production, referred to as the de minimis carve-out. Third, exemption for small-scale and artisanal fishing that is primarily low-income, resource-poor or livelihood in nature. Fourth, developing country Members that do not fall under the de minimis carve-out are provided a transition period from the date of entry into force of the OCOF subsidy disciplines within their EEZ and in the area and for species under the competence of a regional fisheries management organization/arrangement (RFMO/A) to which they are Parties. The text specifies the duration of the transition period for developing countries as 10 years under Article B.3. Following the expiry of the transition period, developing country Members would benefit from a 2-year peace clause, where their subsidy programmes would be exempt from challenge at the WTO. Thereafter, based on sympathetic considerations, as assessed by the Committee on Fisheries Subsidies, developing country Members would be eligible for two 2-year extensions of the peace clause.

8.  This submission highlights the significant shortcomings of the Chair's current draft text with respect to the SDT entitlement of developing country Members not covered by the de minimis carve-out under Article B.2 of W/279.

4  CARVE OUT FOR SMALL-SCALE AND ARTISANAL FISHING AND FISHING-RELATED ACTIVITIES

9.  Small-scale and artisanal fishers are widely considered to engage in more sustainable forms of fishing, and small-scale fishing (SSF) is seen as crucial to achieving sustainability in global marine resources. Therefore, strong SDT in relation to SSF has been a significant demand from developing countries.

10.  The text concerning SDT in relation to small-scale and artisanal fishers has evolved considerably. The Chair's draft text, WT/MIN(24)/W/10, circulated ahead of the 13^th Ministerial Conference (MC13), placed substantial limitations on the scope of SDT for small-scale and artisanal fishers by instituting geographical limits. However, under Article B.4 of W/278 and TN/RL/W/279, these geographical limits have been removed. Notwithstanding this flexibility, SDT for small-scale and artisanal fishers under W/279 continues to be characterized by strict conditions and stringent notification requirements.

11.  Article B.4(a) of W/279 leaves it up to developing county Members to determine what constitutes small-scale and artisanal fishing as per their own operational definition. This is a relevant flexibility given the varying nature of small-scale and artisanal fishing across WTO Members. However, Footnote 23 imposes a host of undefined and irrational conditionalities in relation to the definition of 'small-scale and artisanal fishing or fishing related activities that are primarily low income, resource-poor or livelihood in nature'. This has the effect of limiting the policy space of developing country Members to determine SSF based on local contexts and realities.

12.  Footnote 23 of W/279 states that 'the activities described in this paragraph do not include industrialised fishing or fishing related activities'. There needs to be further discussion on what the term "industrialised" would entail.

13.  Footnote 23 further outlines several key characteristics that can be used as guidelines when defining 'small-scale and artisanal fishing or fishing-related activities.' These characteristics include the size of the fishing vessel, level of motorization, degree of mechanization, type of fishing gear, on-board refrigeration or storage, labour or crew, ownership, time commitment (full-time, part-time, seasonal), location, distance, and duration of fishing trips, handling of catch, utilization of catch (processing, preservation, value-adding), and integration into the economy or management system. Although developing country Members are not obligated to consider each of these parameters, such a comprehensive list of considerations could subject Members' national operational definitions to closer scrutiny at the WTO, potentially increasing their administrative burden.

14.  In addition, Article B.4 is the only SDT provision with strict notification requirements outlined under Articles B.4.(b). This includes regular notification under Article 25 of the SCM Agreement and Article 8.1 of the AFS, as well as the notification of Members' operational definitions. Developing country Members that do not have the capacity to comply with these requirements would be prevented from subsidizing this category of fishing.

15.  In sum, Article B.4 of W/279 eliminates the purported benefit to SSF and appears to target the most sustainable form of fishing. In so doing, the text fails to appropriately balance the environmental, social and economic dimensions of sustainable development, the underlying principle of the OCOF subsidy negotiations.

5  COMPLETE CARVE-OUT OF THE EEZ

16.  Several developing country Members, have demanded the EEZ be completely carved out from the scope of the OCOF subsidy disciplines. This demand stems from Article 56(1) of the United Nations Convention on the Law of the Sea, which gives the coastal state the sovereign right to explore, exploit, conserve, and manage the fisheries resources within their EEZ. Considering that developing country Members have already committed to strict regulations and limited SDT under the overfished pillar, their ability to provide subsidies in relation to the less harmful OCOF pillar within their EEZ should be protected.

6  APPROPRIATE TRANSITION PERIOD IN RFMO/A WATERS

17.  Article B.3 of W/279 specifies the duration of the transition period as 10 years in EEZ and in area and for species under the competence of an RFMO/A. However the stipulated transition period is not adequate. The demand for an appropriately long transition period in RFMO/A waters can be justified on the following grounds:

i._     Developing countries face challenges in advancing their fishing industries due to limited financial, administrative, and technical capacity. To overcome these obstacles, they require policy flexibility to encourage long-term capital investment in their blue economy. However, it is important to note that subsidies alone are insufficient to drive investment. They must be accompanied by contributions from the beneficiaries and collaboration with financial institutions to secure long-term loans for providing facilities to fishers. This approach mirrors the capital investment models employed by industrial fishing countries. Considering the long-term nature of these investments and related subsidies, longer transition periods become crucial. Furthermore, short transition periods pose the risk of frontloading subsidies, leading to non-repayment and bad loans. Therefore, a longer transition period is critical for ensuring sustainable and inclusive development in the fisheries sector of developing countries. The 25 years is not for complying with the disciplines; rather, it is demanded as a policy space. At present, developing countries do not have the fiscal space to have dedicated resources for fisheries; however, in the future, developing country Members may have the required financial capacity to develop their resources. This will not happen in a short time period. Development requires capital investment with the certainty of the regime. Any investment towards larger operations such as fisheries would be more capital intensive/ longer term in nature, and for this, a short transition period is highly inadequate.

ii._    Developing countries need sufficient time to establish and maintain a robust fisheries management system. This is relevant because, under the hybrid approach, states that have strong conservation and management systems to maintain the fish stock at BSL are exempt from the OCOF subsidy prohibition. Over the years, developed countries have been able to develop robust fisheries management systems, whereas developing countries have lacked the resources to do so. Therefore, while developed countries would not be prevented from providing subsidies contributing to OCOF in view of their strong fisheries management systems, the same would not hold for developing countries with limited capacity to manage their fish stock and document the management. In such a scenario, a longer transition period would give developing countries the policy space needed to develop their fisheries sector while also establishing effective conservation and management systems. UNCLOS also recognises the need for such policy space by providing that the special requirements of developing countries are to be considered when it comes to implementing conservation and management measures for fishing within the EEZ and on the high seas.

7  CONCLUSION

18.  It is essential to stress the necessity of a strong SDT within the OCOF pillar to ensure a balanced approach to sustainable development across environmental, social, and economic dimensions. The current draft text proposed by the Chair stipulates stringent conditionalities and notification obligations for SDT towards small-scale and artisanal fishers, which requires immediate attention to avoid the dilution of their SDT entitlement. Furthermore, it is crucial to exclude the EEZ from the OCOF disciplines to respect the sovereign rights of coastal states as outlined under the UNCLOS. In addition, allowing a longer transition period in waters managed by RFMO/As is vital for developing country Members to effectively adjust to the OCOF subsidy disciplines without jeopardizing their socio-economic development.

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