NEGOTIATING GROUP ON RULES – FISHERIES SUBSIDIES

communication from the chair

Dear colleagues,

I hope you all had a pleasant and restful summer break.

My report below focuses on the process and substance of the fisheries subsidies negotiations that took place from the circulation of document _TN/RL/W/279 (document 279) up to the 22-23 July General Council. Much of this report is based on communications that I circulated to you by email in the lead-up to the July General Council meeting.

As you will recall, on 10 July 2024, under my responsibility as Chair of the Negotiating Group on Rules, I circulated a revised draft of the Additional Provisions on Fisheries Subsidies in document 279 and two draft General Council decisions in documents _TN/RL/W/280 (document 280) and _TN/RL/W/281 (document 281). This was done in response to the strong desire and widespread call of the vast majority of Members since MC13 to conclude the fisheries subsidies negotiations by the July General Council based on the draft text that I had circulated in _TN/RL/W/278 (document 278) in April. Circulating document 279 at that time also preserved the opportunity to inscribe it on the agenda of the 22-23 July General Council so that Members could further engage in the negotiating process with a view to building consensus on the text, with potentially some adjustments that enjoyed an increased level of convergence before the General Council.

Most of the amendments in document 279 compared to document 278 were inspired by the so called "floating text", which a diverse and sizeable group of Members had developed on their own during the final hours in Abu Dhabi. In addition, document 279 contained proposals from me, as Chair, concerning the length of the transition periods for developing country Members and LDC Members. These proposals were based on my reflections following the two small group consultations held on 9 July on the two transition periods, recognizing that negotiations on the specifics would continue. Document 279 also included a handful of technical adjustments, both for greater clarity and to avoid causing unintended consequences for some developing country Members. More details on the changes are contained in document _TN/RL/W/279/Add.1.

In addition to inviting Members to evaluate the substance of the revised draft text, I encouraged Members to review the text in any or all our three working languages from a technical and linguistic perspective – what I call quality control – and share any suggestions for technical or linguistic corrections or clarifications with the Secretariat by 19 July. I thank those Members who have thus far provided technical and linguistic suggestions on the draft text.

Subsequently, given that items on the General Council's agenda may be requested only by Members, on 11 July, I requested, through the delegation of Iceland, that the Additional Provisions on Fisheries Subsidies be included on the agenda of the July General Council for decision. Accordingly, on 11 July, the above documents were circulated as draft General Council decisions (on Additional Provisions on Fisheries Subsidies in _WT/GC/W/943 and on Notification of Annual Aggregate Level of Fisheries Subsidies in _WT/GC/W/944) and placed on the agenda of the July General Council.[1]

The circulation of these documents and their inclusion on the agenda of the July General Council did not imply consensus. Instead, as I noted above, this was done with the aim of providing Members with the necessary space and time to conduct a substantive assessment – including through engagement in the Negotiating Group on Rules (NGR) and the Trade Negotiations Committee (TNC) – to endeavour to seek convergence in the time remaining before the July General Council.

Following the circulation of document 279, I organised four in-person small group meetings on Friday, 12 July. All interested delegations were invited to attend these meetings, and to ensure transparency and inclusiveness, the meetings could be followed online. The objective of these small group meetings was for me to introduce document 279 along with the details of the specific changes it contained compared to the previous version of the Additional Provisions on Fisheries Subsidies circulated in document 278. Members were invited to share their initial assessment of document 279 and comment on whether they were in a position to join a consensus on the text as it was or potentially with some further adjustments. Members were also asked to express their views on how our work could be best organized to facilitate building convergence in the run-up to the July General Council.

At the meeting of the Trade Negotiations Committee (TNC) on Monday, 15 July[2], I reported on the four small group meetings held on Friday, 12 July, and shared my assessment of the state of play and next steps. Among others matters, I noted that the overwhelming majority of Members generally considered that the text, potentially with some adjustments, could serve as the basis for reaching a final agreement by the July General Council. I also noted that a few Members raised some fundamental issues and concerns and that it seemed questionable that the text offered a path to consensus for them. Nevertheless, I urged Members to find a way to address the fundamental differences and work in earnest to find a middle ground that could be reconciled with the views of the Membership at large. I also encouraged Members to look at the approach holistically, and recognizing that a compromise, by definition, would be uncomfortable for everyone, for very different reasons.

At the TNC meeting, Members shared their assessment of the situation and their suggestions on the way forward. Members' interventions reinforced the broad support for concluding the negotiations before the July General Council and provided valuable insights into the remaining gaps and areas needing further work.

In the light of those interventions, I identified the following topics warranting further discussion in small groups before the July General Council: (a) issues related to LDC graduation; (b) characteristics of artisanal and small-scale fishing; and (c) concerns regarding the strength of the disciplines. Accordingly, I organised four small group meetings from 16 to 18 July to discuss these issues. Below is a summary of the key elements for each issue that emerged from the discussions.

Issues related to LDC graduation

Discussions at the small group meeting on issues related to LDC graduation on 16 July focused on ensuring that Members had the same reading of Article B.1, particularly with respect to the interplay between the transition periods in Article B.1 and Article B.3. At that meeting, I made a visual presentation of how I understand Article B.1 and Article B.3 would interact in different scenarios. This presentation is attached to this report (see Annex) in a slightly modified version compared to what was presented in the small group meeting.[3] The presentation and discussion took place on the basis of the four and the ten years transition periods reflected in document 279, entirely without prejudice to Members' positions on those figures.

The difference between the two transition periods in Article B.1 and Article B.3 is as follows: the transition period in Article B.3 will begin and end on the same dates for all developing country Members to which it applies – non-LDC and non-de minimis developing Members. This period will begin at entry into force of the Additional Provisions, and it will run for the number of years thereafter that is specified in Article B.3. By contrast, the Article B.1 transition period for each Member that graduates from the LDC category will begin and end based on its individual effective date of LDC graduation.

Members who participated in the small group meeting of 16 July all agreed with my reading of the interplay between the transition periods in Article B.1 and Article B.3. It was recognized that under no circumstances would Members that have graduated from the LDC category enjoy a shorter total transition period than other developing Members. This is because such Members, if they were above de minimis and graduated during the transition period in Article B.3, would enjoy the transition period in Article B.1 from the effective date of their LDC graduation, plus any amount of the transition period in Article B.3 that remained thereafter, followed by the two-year peace clause period in Article B.3(b). They would also have the possibility to seek two more two-year extensions of the peace clause as provided for in Article B.3(c). Accordingly, any such Members that graduated after the end of the transition period in Article B.3 would enjoy the transition period in Article B.1 from the effective date of their LDC graduation, again followed by the peace clause period in Article B.3(b) and the possibility to seek extensions of that period as provided for in Article B.3(c).

This reading provides a graduating LDC Member with a transition period of up to 10 years. It was pointed out, however, that this was partly based on the assumption that such an LDC Member would receive the two additional peace clause extensions under Article B.3(c). In response to this feedback, several Members suggested that the extensions under Article B.3(c) could be made unconditional for graduating LDCs. It was also suggested that footnote 20 in document 279 could be further clarified to articulate the general and current understanding of the interplay between the transition periods in Article B.1 and Article B.3.

Characteristics of artisanal and small-scale fishing

Discussions in the small group meeting held on 17 July on artisanal and small-scale fishing as referred to in Article B.4 and footnote 23 underscored that this provision continues to be of high importance to many Members. Most of the discussion at this meeting focused on footnote 23, although some Members also addressed the formulation of Article B.4 itself. Opinions ranged from retaining the earlier phrasing in the footnote of "significantly commercial" in document 278 to using the alternative "industrialised" fishing presented in document 279. Another suggested possibility was to replace "industrialised" with "industrial", to which some delegations responded with an open mind. Other delegations argued that either the first sentence of footnote 23 or the whole footnote should be deleted. It continues to be clear that the final formulation of this provision is likely to impact Members' assessment of the Additional Provisions as a whole.

The strength of the disciplines

I convened two small group meetings on 18 July to discuss the strength of the disciplines: one to discuss subsidies contingent on distant water fishing (DWF) and another to discuss the overall strength of the disciplines.

Members continue to have very strong and irreconcilable negotiating positions on DWF. On one end of the spectrum is the view that a full and unconditional prohibition on subsidies contingent on DWF must be included based on the premise that such subsidies are the most harmful. Members holding this view also believe that Article A.2 in document 279 provides for a weaker discipline than Article A.1 or, at least, that it had been so diluted compared to the earlier reiteration before MC13 as to have become meaningless. At the other end, there is a view that the DWF specific provision should be deleted altogether on the premise that Article A.1 already sufficiently captures harmful subsidies of that type.

However, for the vast majority of Members who participated in the meeting on subsidies to DWF, Article A.2 in document 279 is a viable compromise. These Members see Article A.2 as adding a layer on top of the disciplines in Article A.1, and they consider that the harmfulness of subsidies contingent on DWF is recognized through the wording "refrain, to the greatest extent possible". These Members furthermore noted that subsidies contingent on DWF are subject to additional notification requirements and a dedicated Committee review process with a direct link to the mandated review under Article D.1 after five years of the entry into force. Moreover, the possibility of Committee recommendations on quantitative limitations or reductions of subsidy amounts was recalled.

While the small group discussions were very constructive and helped to clarify certain issues, strong divergences continue to exist. I did note, however, that some Members see value in some fine‑tuning to clarify the relationship between subparagraphs (a) and (b) in Article A.2, a suggestion that some Members also made in the technical/linguistic feedback they provided in the context of the quality control.

At the small group meeting to discuss the overall strength of the disciplines, few, if any, of the Members present noted that they consider that the current formulation of the disciplines represents the optimal way of addressing subsidies that contribute to overcapacity and overfishing. Many Members present at the meeting noted that the current text constitutes a difficult compromise for them after years of exploring different alternatives. Most Members expressed their willingness to conclude the negotiations at the July General Council meeting based on the disciplines as presented in document 279, or those disciplines with very limited tweaks. Many of these Members see the draft Additional Provisions to be a significant improvement over the status quo.

However, some Members present had more concerns about the overall balance of the disciplines and the SDT provisions and sought more material adjustments, including a call for a fundamentally different approach to the disciplines.

Finally, many Members addressed the term "biologically sustainable level" in footnote 3 of document 279. Some felt that the last sentence of that footnote opens a loophole rendering the discipline ineffective and called for its deletion. Others maintained that this is simply a statement of fact. A couple of Members questioned whether the drafting could be clarified.

CONCLUSION

As I mentioned in my report to the General Council, I truly believe that the work undertaken between the circulation of the Chair's text in document 279 on 10 July and the General Council was significant and productive. While consensus was not achieved, the constructive and professional engagement and the willingness to compromise demonstrated by many Members were encouraging. The discussions were frank and useful in deepening our collective understanding of the underlying reasons behind each other's positions. Members carefully listened to each other with open minds and demonstrated an ability to go beyond their well-known negotiating positions in order to find creative solutions to several key issues. These include, but are not limited to:

•        the transition period for LDC Members in Article B.1 and the related provisions on the peace clause;

•      the role and formulation of footnote 23; and

•      the interplay between sub-paragraphs (a) and (b) in Article A.2 on distant water fishing.

The fact that the vast majority of engaged Members restrained themselves to such fine-tuning in the spirit of reaching compromise indicated that there was a genuine attempt by those Members to conclude and take a decision to adopt the text at the July General Council. These Members recognized that in order to reach consensus, various compromises would have to be made and comfort zones would have to be left behind. Many delegations reiterated at the General Council that the draft Additional Provisions in document 279, possibly with some limited tweaks, would provide for a significant improvement over the status quo, in which no disciplines are in place to govern such subsidies.

However, at that meeting, as well as during its lead-up, some Members continued to seek more material adjustments and to raise concerns about the overall balance, with one Member calling for a fundamentally different approach, as elaborated in its documents presented before the General Council (WT/GC/W/945, WT/GC/W/946, WT/GC/W/947).

Therefore, while most Members can agree to the 279 text as is, or with certain fine-tuning, it is apparent that not all Members are on board and that more work needs to be done to identify what would be required to ensure that the Membership can reach consensus. This was clear after the small group meetings I held immediately before the General Council, and consequently I advised Iceland to ask that that the Additional Provisions on Fisheries Subsidies be moved from "decision" to "discussion" on the agenda.

I hope that the summer break has provided all delegations with an opportunity to reflect on next steps and to analyse what they consider to be the consequences for our shared resource if we do not reach an agreement to end subsidies contributing to overcapacity and overfishing. To this end, as we head into the fall, I urge all Members to maintain the considerable momentum we have built thus far and to continue to engage with each other and your senior leaders in capitals to find the political will necessary to achieve a successful conclusion to these negotiations by the end of this year. Do remember that our fish stocks are a finite resource for which the United Nations has, in SDG 14.6, tasked us with tackling subsidies contributing to overcapacity and overfishing. We need to complete this task given the sense of urgency attached to safeguarding the sustainability of our oceans. The status quo cannot be the answer. We have already taken the important first step with the Agreement on Fisheries Subsidies dealing with subsidies to IUU fishing, overfished stocks and fishing in the unregulated high seas. I trust in your goodwill to collectively forge the necessary compromises that can allow us to complete our task through this Agreement.

We are almost there, and I stand ready to work with all of you to bring our negotiations to a successful conclusion before the end of the year. My activities will be limited for the next six weeks due to other work commitments, but I will resume NGR activities after that. In the meantime, I remain available to any member who wishes to consult.

Ambassador Einar Gunnarsson

Chair of the Negotiating Group on Rules