DESIGNING DISCIPLINES FOR THE OVERCAPACITY AND OVERFISHING PILLAR:
A CASE FOR INTENSITY-BASED SUBSIDIES APPROACH

COMMUNICATION FROM INDIA

The following communication, dated 5 December 2024, is being circulated at the request of the delegation of India.

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1.  The latest version of the Chair's text (_TN/RL/W/285) (hereinafter W/285) proposes using the annual aggregate level of fisheries subsidies to establish different obligations for Members in terms of Article A.1.1(a) and A.1.1(b). Additionally, this would also be the basis for review provision under Article D.1(a), which entails the potential imposition of quantitative restrictions or reduction commitments on subsidies provided by major subsidizing countries.

2.  The Fisheries Subsidies Agreement, including Additional provisions, is essentially a sustainability agreement. Therefore, it should discipline subsidies that lead to overcapacity and overfishing. The annual aggregate level of fisheries subsidies cannot be the correct measure as these subsidies include beneficial subsidies as well as subsistence subsidies that are linked to livelihood which in no way contribute to overcapacity and overfishing. This approach, while convenient for assessing subsidy flows on a large scale, overlooks the intensity of subsidies and their real impact on sustainability. It fails to reflect the situation of a few countries that have already expanded their fishing capacities and continue to heavily subsidize their large-scale industrial fleets, thereby contributing significantly to overfishing. Conversely, developing countries that have yet to build such capacities and support large fisher populations are placed at a disadvantage. Thus, adopting a "per capita distribution of subsidies" criterion could provide a more accurate and fair basis for managing overfishing and capacity issues, considering both stock sustainability and livelihood concerns.

3.  Countries with a substantial fishing population tend to provide higher aggregate subsidies owing to the large number of fisher populations, even though subsidies per fisher may be minuscule and do not lead to overcapacity and overfishing. In such contexts, the aggregate subsidy metric fails to meet the aim and objective of disciplining 'harmful' subsidies that impact the 'sustainability' of fish stocks. The socioeconomic status of fishing communities varies greatly amongst various countries. The fisher communities in most of the developing countries and LDCs are resource-poor, marginalized and deprived of basic amenities. They need livelihood support for improvements in their socio-economic conditions. The criteria of 'total aggregate subsidies' would inadvertently place disproportionate obligations on countries with a high number of fishers despite the relatively small amount of subsidy provided to each fisher. Under this framework, such countries could face stringent obligations despite their relatively small per capita subsidy exposure, leading to unfair and disproportionate burdens. A fisher majorly undertaking subsistence fishing cannot create overcapacity or indulge in overfishing using such subsidy. On the other hand, a relatively smaller annual aggregate level of subsidy may translate into a much higher subsidy per fisher and contribute to overcapacity and overfishing. Therefore, this paper posits that countries should not be subjected to stricter disciplines based on the total value of their subsidies but rather on the intensity of subsidies provided.

4.  Many countries with large fishing populations, especially developing countries, LDCs and Small Island Developing States provide subsidies to support their artisanal and subsistence fishers, which are crucial for maintaining social and economic stability. An aggregate approach might obscure the importance of these subsidies in promoting local sustainability, as these economies are not characterized by the large-scale commercial operations seen in wealthier nations. Additionally, managing long coastlines and large EEZs requires robust conservation and management frameworks to preserve marine habitats and promote sustainable practices. Subsidies to resource-poor traditional fishing community play a crucial role in offsetting the expenses associated with these management activities and contribute significantly towards sustainability objectives. For example, a developing country with a large population of resource-poor traditional fishers may provide income and insurance support during the fishing ban period, leading to an overall increase in fisheries subsidies. Instead of contributing to overfishing, such support would act as an incentive for conservation by effectively supporting the income and household security needs of the fishers that do not fish during the ban period.

5.  Annual aggregate subsidies provide a broad overview of the total financial support given to the fisheries sector but fail to reveal how this support is distributed among individual fishers. Aggregate figures can obscure disparities in subsidy allocation per fisher across countries. Per fisher subsidy metrics, on the other hand, offer insights into how much financial assistance each fisher receives. This granularity helps identify the level of support reaching different segments of the fishing population. Therefore, using the total value of subsidies as the benchmark runs the risk of pinning responsibility on countries that are not responsible for unsustainable subsidies while exonerating countries that have a small absolute size (or fishing sector) but have a high intensity of subsidization that could be unsustainable. Therefore, a more rational and prudent approach would be to consider the subsidy amount per fisher, as the basis for imposing more rigorous disciplines on Members.

6.  As an illustrative example, India provides a subsidy of $35 per fisher per year^[1]. This translates to a meagre amount of subsidy, less than $3 per fisher per month, which also accounts for subsidies provided during the fishing ban period. A fisher receiving such a meagre amount of subsidy is unlikely to create overcapacity or engage in overfishing. In fact, Indian fishers, on average, catch about 480 kg^[2] a year or 40 kg a month. Therefore, such traditional fishing practices can be characterized as subsistence fishing. In contrast, historical subsidizers provide subsidies as high as $76000 per fisher per year.^[3] The catch per fisher for historical subsidizers is as high as 237130 kg per year.^[4]

7.  It is important to reiterate that this is the extent of disparity that the Chair's draft text would institutionalize if major subsidizers were subjected to quantitative restrictions or reduction commitments based on the annual aggregate level of subsidies under Article D.1(a) of W/285. A country providing a huge fisher subsidy would likely be exempt from the reduction commitments under Article D.1(a), while a developing country with a meagre amount of per-fisher subsidies and catch per fisher could potentially be subject to reduction commitments.

8.  The global commitment to achieving the Sustainable Development Goals (SDGs), particularly Goal 14 (Life Below Water), calls for the reduction of harmful fisheries subsidies while ensuring that subsidies provided to promote sustainable fishing practices and the livelihoods of vulnerable fishers are not undermined. SDG 14.9 (Support Small Scale Fishers) calls for providing access for small-scale artisanal fishers to marine resources and markets. Adopting a per capita approach to subsidy obligations would better align with the UN SDGs by supporting countries in their efforts to balance environmental sustainability along with the social and economic development of small-scale fishers. In line with SDG 14, the principle of Common But Differentiated Responsibilities-Respective Capabilities (CBDR-RC) recognizes that in order to sustainably manage the resources, historical polluters having higher resource consumption should take the lead in reducing pollution. In this regard, the concept of the "global commons" should be approached on a "Per Capita" basis. Every individual has an equal right to global resources; hence, differentiations should be based on the 'Per Capita' norm for subsidy as well as the catch volume. Similarly, the 'Respective Capabilities' should also be measured in terms of 'Per Capita'. For developing countries and LDCs, the notion of ‘Per Capita’ is the only equitable basis to define and distribute the mitigation burden.

9.  Historical subsidizers owe "subsidy debt" to the developing countries and LDCs. Such subsidizers have historically used much more than their fair share of the global resources (on a per capita basis) and are in debt to the ones who have used far less. Therefore, for equitable reasons, it is pertinent that future disciplines account for per capita subsidization.

10.  The subsidy discipline on 'overcapacity' also needs to consider the important recommendations adopted by the Joint Tuna RFMOs in their meetings called KOBE II (held in San Sebastian, Spain, 23 June  – 3 July  2009) and KOBE III (held in La Jolla, California, 12- 14 July 2011) wherein it is inter alia recommended that each RFMO should consider a scheme for reduction of overcapacity in a way that does not constrain the access to, development of, and benefit from sustainable tuna fisheries, including on the high seas, by developing coastal States, in particular Small Island Developing States, territories, and States with small and vulnerable economies; and Transfer of capacity from developed fishing members to developing coastal fishing members within its area of competence where appropriate. It has also been recommended for implementing, where appropriate, a freeze on fishing capacity on a fishery-by-fishery basis, and such a freeze should not constrain the access to, development of, and benefit from sustainable tuna fisheries by developing coastal States. Thus, per capita subsidies would better reflect the principle of Special and Differential Treatment (SDT), which allows for differentiated treatment based on the development status and capacity of Members.

11.  In view of the foregoing, it is proposed that differential obligations among WTO Members should not be based on the aggregate level of subsidization. Accordingly, Article A.1.1(b)(i) of W/285 should be removed, and only developing countries that are engaged in distant water fishing under Article A.1.1(b) (ii) should fall under tier 1. However, if Members deem it appropriate to provide differential obligations based on the level of subsidization, then the criterion of per fisher subsidy could be used as the basis for imposing higher demonstration obligations on developing nations, as it more accurately represents the intensity of subsidies. After deliberations on this approach, Members could decide on an appropriate threshold level of subsidies per fisher as the basis for obligations under Article A.1.1 (b). Similarly, the possible reduction commitments upon review envisaged under Article D.1 (a) of W/285 should not be targeted at Members based on their aggregate level of subsidization but rather the subsidies provided per fisher.

12.  In conclusion, shifting from aggregate subsidies to per capita subsidies as a key criterion for determining WTO obligations would lead to a more equitable and context-sensitive framework. It would better align with the principle of fairness, thereby avoiding penalizing countries for the size of their fishing populations, and ensuring that subsidies are evaluated based on their actual impact on fishers' livelihoods rather than the aggregate sum. Thus, India proposes the intensity-based subsidies approach as the best way forward.

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ANNEX I

In light of the points mentioned above, and in addition to India's other asks, the following attribution is proposed to suitably incorporate the per capita subsidy in the Chair's text _TN/RL/W/285:

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