TN/RL/GEN/165
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Organization
TN/RL/GEN/165
22 April 2010
(10-2098)
Negotiating Group on Rules / Original: English
FISHERIES SUBSIDIES—ARTICLES I.2, II, IV AND V
Communication from the United States
The following communication, dated 21 April 2010, is being circulated at the request of the Delegation of the United States.
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Introduction
1.The United States strongly supports the overall structure and level of ambition in the Chair's November 2007 text, including a broad prohibition as the core discipline, together with narrowly tailored exceptions and appropriate and effective special and differential treatment for developing Members. For most of the past year, the Negotiating Group on Rules has had a constructive discussion of questions in the Chair's "roadmap," based on that text.
2.While many differences on fundamental questions remain, the discussions have revealed broad support for the overall framework and architecture of the Chair's text.[1] In addition, there appears to be broad support for some provisions in the text that are important complements to the core prohibition. Among these complementary provisions are Article I.2 (a prohibition on subsidies affecting fish that are "unequivocally overfished"), Article IV (a "general discipline" on fisheries subsidies) and Article V (fisheries management). Consistent with the Chair's encouragement to provide textual proposals, the United States offers the following suggestions to clarify and expand on how these complementary provisions would work, with an aim of ensuring that they could be effectively implemented. We also provide some suggestions on ways to tighten and streamline the "general exceptions" in Article II.
3.Our consideration of these provisions has underscored, once again, the landmark nature of the Group's work. This is true on a technical as well as on a policy level. We are seeking to integrate, for the first time and in an entirely new agreement, terminology and concepts from two very different worlds: the complex world of global fisheries and the WTO rules system. This effort is inherently challenging, and these provisions will undoubtedly require additional technical work. All Members, however, agree that for an agreement to be effective, its provisions must be sufficiently clear for Members to implement and for a panel to apply if a dispute arises. This contribution is intended as a first step toward stimulating discussion on how to advance that goal.
4.The premise of this proposal is that the Chair's text retains its current level of ambition and its architecture.
Explanation of the proposal
5.Article I.2: The Group's discussions so far have revealed broad agreement that a subsidy should not contribute to further pressure on fish stocks that are already in poor condition, even if the subsidy is not among those specifically prohibited in Article I.1. The attached proposal provides some clarifications to the text that in our view would make it easier to implement effectively. The clarifications include: (1) elaborating on the biological conditions of the fish stock in question that would trigger application of the prohibition; (b) removal of the implication (in the term "unequivocally" overfished) that there can be no element of scientific ambiguity concerning the stock conditions; and (3) definitions of certain key terms ("fishing activity,""fish stocks").
6.Article II (General Exceptions): We have sought to tighten the drafting of some of the exceptions to the prohibition to prevent their being used to create unintended loopholes. For example, a subsidy to lessen the "environmental impact" of fishing, as in the current text, could be read as covering subsidies for energy-efficient engines, which would enhance fishing capacity; we have therefore limited the exception to subsidies lessening the impact of fishing on "marine habitat." We have also proposed to replace the references in the current text that emphasize vessel characteristics as the measure of capacity ("gross tonnage, volume of fish hold, engine power, or any other basis") with a less limited definition more in line with the understanding of capacity among fisheries expert, as reflected in continuing work in the UN Food and Agriculture Organization (FAO) and other international fisheries bodies.
7.As noted in the attachment, we have deleted the language in the Chair's text under ArticleII(c) (exceptions to Article I.1(c) for subsidies for, e.g., retraining, re-education and early retirement) because we believe that these subsidies should not be prohibited in the first place. In our view, as a drafting matter they would be better addressed through an appropriately targeted definition of the kinds of "personnel costs" that should be prohibited in Article I.1(c), rather than through an exception in Article II. In this context, Members should also have a fuller discussion concerning what other types of "social safety net" provisions should not be prohibited.
8.We note that exceptions for "disaster relief" are now placed in Article I.1 ("Except . . . in the exceptional case of natural disaster relief, the following subsidies . . . shall be prohibited"). While we have not come to a firm view, disaster relief may be covered more appropriately in Article II. We have not addressed the disaster relief exception in this submission, but may have further thoughts as to its scope and placement as technical discussions of the text continue.
9.Article IV (General Discipline): We have sought to provide further elaboration concerning how the general discipline in the Chair's text should operate. Subsidies that are covered by Articles II (General Exceptions) and III (Special and Differential Treatment of Developing Country Members) would be actionable under Article IV, as well as under the provisions of the existing Agreement on Subsidies and Countervailing Measures (ASCM).
10.In our proposal, Article IV.1 sets out the basic discipline. Similar to the Chair's text, no Member shall "cause harm" through the use of any subsidy to the relevant fish stocks, including overfishing and overcapacity with respect to those stocks. We have, however, modified the Chair's text in several respects.[2]
11.First, the Chair's text appears to limit the "interest" of a complaining Member to an interest in stocks that are shared with another Member, either because they are straddling or highly migratory stocks with a range extending into another Member's Exclusive Economic Zone (EEZs), or because the Member has an identifiable "fishing interest" through quota allocations or other fishing rights. While this provision could cover many commercially significant stocks, we are concerned that it could be too restrictive, given the limitation in the definition of "fish stock" to particular geographical or other management units. There appear to be many situations in which a Member that was not actually engaged in fishing for a particular stock would nevertheless have an interest in ensuring that subsidies were not contributing to overfishing or overcapacity with regard to the stock. For example, a Member's overfishing of one stock could result in its fleet going elsewhere to put pressure on other stocks that are shared by another Member, resulting in a spiral of overfishing and overcapacity. A Member could also have a demonstrable interest if it has a substantial trade interest, i.e., it imports or produces fish or fish products from the stock that is subject to overfishing or overcapacity, or fish or fish products that are directly competitive or substitutable and do not benefit from subsidies.[3] At the same time, we agree that the provision should not be completely open-ended. We have therefore required that a Member have a "demonstrable" (i.e., more than abstract) interest and given some guidance as to the kind of interest that would be "demonstrable."
12.Second, in Article IV.2, we have sought to give more guidance as to what situations would constitute evidence of "harm," such as evidence that overcapacity or overfishing is developing. We also provide examples of factors that are commonly recognized in fisheries literature as being indicators of overcapacity or overfishing.[4] Under this scenario, the complaining Member has the burden of demonstrating that harm has occurred and that the subsidy in question causes harm.
13.Third, we believe that in certain situations harm can be deemed to exist, regardless of whether an affirmative demonstration of evidence of overfishing or overcapacity has been made under IV.2. In Article IV.3, we identify two such situations: (1) there is no valid scientific assessment establishing a sustainable allowable catch for the stock; and (2) the subsidizing Member has not implemented a management plan for the stock that is designed to achieve a sustainable allowable catch throughout the duration of subsidization. In those cases, the burden would shift to the subsidizing Member to demonstrate that the subsidy in question has not caused harm.
14.Attribution of a subsidy to the Member conferring it. We suggest that the Chair's current IV.2 be moved to a separate article because it should apply to the entire agreement, not just Article IV.
15.Article V (Fisheries Management): Using the framework of the Chair's text, we have sought to set forth the core elements of a fisheries management system that would be a prerequisite for access to the use of subsidies under Article II or Article III.2(b). These elements are based on the FAO Code of Conduct for Responsible Fisheries, and we believe that they reflect the common understanding among fisheries managers. We believe that they represent the minimum elements needed in order to utilize subsidies under Articles II and III.2(b).
16.We have also provided for Committee review of Members' management systems, with provision for seeking the views of the FAO, the International Council for the Exploration of the Sea (ICES) or other recognized international fisheries organizations concerning scientific and technical matters.[5]
17.We note that our proposal does not draw a distinction between management conditions that should apply in a Member's domestic fisheries and those that should apply in international fisheries, i.e., those that involve stocks shared with other Members and managed through a regional fisheries management organization. In our view, compliance with the same basic conditions, such as scientific stock assessments, capacity assessments, measures to bring capacity and effort into line with stock conditions and so on – should be required before subsidies are provided, regardless of where the fishing is conducted. To that end, we have clarified that fishing subject to Article V includes all fishing conducted by a Member's flag vessels, including on the high seas. However, we have not specifically attempted to address the relationship between these management disciplines and requirements that are imposed by the regional fisheries management organizations themselves, which may vary significantly in terms of their robustness and effectiveness. We look forward to further discussion of this important issue.[6]
TN/RL/GEN/165
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Text Proposal – Articles I.2, II, IV and V
I.2In addition to the subsidies prohibited in paragraph 1, any subsidy referred to in paragraphs 1 and 2 of Article 1 [of the ASCM] that is provided or usedfor fishing activity[7] affecting marine wild capture fish stocks[8] thatare manifestly overfished[9]shall be prohibited.
Article II
General Exceptions
Subject to compliance with Article V, the following subsidies shall not be prohibited under Article I:
(a)A subsidy exclusively for improving the safety of a fishing or service vessel or its crew, such as a subsidy for life boats, other life saving equipment or safety training, provided that:
(1)the subsidy is not used for new vessel construction or vessel acquisition;
(2)the subsidy does not result in an increase in fishing capacity[10] of any fishing or service vessel;
(3)the subsidy does not result in the continuation in operation of any fishing or service vessel where such continued operation otherwise is inconsistent with generally accepted commercial practices within the relevant industry; and
(4)the subsidy is used to further compliance with safety requirements imposed by law.
(b)A subsidy exclusively for one of the following purposes:
(1)adopting gear for selective fishing techniques[11];
(2)reducing the impact of fishing activity on the marine habitat, such as incentives to avoid bycatch or fishing that harms vulnerable marine ecosystems; or
(3) covering expenses for actions taken towards complying with a fishery conservation and management regime, such as the costs of equipment for providing electronic catch reports, vessel monitoring systems, and observers;
provided that the subsidy results in neither an increase in the fishing capacity of any fishing or service vessel, nor the continuation in operation of any such vessel where such continued operation otherwise is inconsistent with generally accepted commercial practices within the relevant industry.
(c)A subsidy provided or used for a vessel decommissioning programme,[12] provided that:
(1)any vessel subject to the programme is scrapped or otherwise permanently and effectively prevented from being used for fishing anywhere in the world;
(2)any fish harvesting rights[13] associated with such a vessel in the fishery that is the subject of the programme are permanently revoked and may not be reassigned;
(3)the owner of such a vessel and the holder of any such fish harvesting rights are required to relinquish
(i)any claim associated with that vessel; and
(ii)any harvesting rights that could qualify the owner or holder for any present or future harvesting rights in the fishery to which the programme applies; and
(4)the fisheries management system in place in the fishery to which the programme applies includes management control measures and enforcement mechanisms designed to prevent overfishing in the fishery.[14]
(d)A subsidy providedto an individual or a group for the purpose of acquiring user-specific allocations under limited access privileges.[15]
Article IV
General Discipline on the Use of Fisheries Subsidies
IV.1.No Member shall cause, through the use of any subsidy referred to in paragraphs 1 and 2 of Article 1 [of the ASCM], harm to a fish stock in which another Member has a demonstrable interest.[16]
IV.2.Harm in the sense of paragraph 1 exists where:
(a)The capacity of the subsidizing Member's fleet actively fishing the relevant stock is above the level necessary to harvest a sustainable allowable catch[17]; or
(b)The subsidizing Member's rate of harvest of the relevant stock is above the level necessary to harvest a sustainable allowable catch.
In determining the presence of such situations, the following factors may be considered: (i) a significant decrease in catches or landings; (ii) a significant decline in catches per unit of fishing effort; (iii) a significant increase in the percentage of juvenile or smaller fish in the composition of the catch of all vessels; or (iv) a significant decrease in the length of the fishing season.
IV.3.Harm in the sense of paragraph 1 shall be deemed to have been caused by the subsidy in question where:
(a)Neither the subsidizing Member nor an international fisheries organization has conducted a scientific assessment, within a reasonable period prior to granting the subsidy, that establishes a sustainable allowable catch for the relevant stock; or
(b)The subsidizing Member has not implemented a management plan for the relevant stock that includes measures to control fishing effort and capacity and is designed to achieve a sustainable allowable catch throughout the duration of subsidization of the stock.
IV.4.Notwithstanding paragraph 3, a subsidy shall not be found to have caused harm if the subsidizing Member demonstrates that the subsidy has not resulted in the situations identified in paragraphs 2 (a) and (b).
Article IV bis
Attribution of Subsidy to the Member Conferring It
Any subsidy referred to in this Annex shall be attributable to the Member conferring it, regardless of the flag of the vessel that the subsidy recipient uses or the origin of the fish that are harvested by that vessel.
Article V
Fisheries Management
V.1Any Member granting or maintaining any subsidy referred to in Article II or ArticleIII.2(b) shall operate a fisheries management system that regulates marine wild capture fishing subject to its national fisheries jurisdiction[18], and that is designed to prevent overfishing and overcapacity and to promote the recovery of overfished stocks.
(a)The management system shall be based on internationally-recognized best practices for fisheries management and conservation as reflected in the relevant provisions of international instruments aimed at ensuring the sustainable use and conservation of marine species.[19]
(b)The management system shall include, at a minimum:
(i)regular scientific assessments of fish stocks;
(ii)regular assessments of the capacity of the Member's fishing fleets, and a plan for managing capacity consistent with the FAO International Plan of Action for the Management of Fishing Capacity;
(iii)legally binding measures regulating fishing effort that are designed to maintain populations of harvested species at levels no lower than necessary to produce a sustainable allowable catch, taking into account ecosystem interactions where applicable;
(iv)mechanisms for the regular collection of and readily available public access to data on catches (including discards) in sufficient detail to allow sound analysis of trends in fishing effort and stock health;
(v)requirements that all vessels have licenses and be registered in a national registry and, where applicable, international registry, that are readily available to the public; and
(vi)in the case of shared, straddling, highly migratory and discrete high seas stocks, measures requiring cooperation with other parties and cooperating non-parties in the fishery and the relevant regional fisheries management organization.
(c)A Member referred to in paragraph 1 shall ensure that judicial, quasi-judicial or administrative proceedings, in accordance with its law, are available to ensure compliance with its management system.
V. 2.(a) Each Member shall notify to the Committee any laws, regulations, and administrative procedures relating to marine fisheries management, including any modifications thereto, in accordance with the provisions of Article VI.4.
(b) A Member referred to in paragraph 1 shall notify to the Committee information as to the operation of its management system, including the results of fish stock and fleet capacity assessments performed. The Committee shall conduct an examination of the management system within six months of such notification. To facilitate this examination, the Committee shall seek the views of the relevant bodies of the FAO, the International Council for the Exploration of the Sea (ICES) or the relevant regional fisheries management organization concerning scientific and technical matters, unless the Committee decides not to seek such views.