WTO: UNEP video on fisheries subsidies

Some of you may have already seen the short documentary that UNEP has posted on YOUTUBE on fisheries subsidies and the WTO. The title of the video is "Caught Out - The way forward inf fisheries subsidies negotiations"

I will quote some of the statements made by two individuals representing two key actors in the ongoing discussions on fisheries subsidies at the WTO. Here are their names and the sentences that I found were important:

Pascal LAMY, Director General of the WTO:

"Fisheries subsidies is one area where the connexion between sustainability, environmental protection and trade opening can support each other. A sort of win-win-win relationship which is what we are trying to do between UNEP and WTO."

"What was achieved in Doha and then in Hong Kong is an agreement, a mandate, that WTO Members should negotiate strict disciplines on fisheries subsidies."

Achim STEINER Executive Director UNEP:

"The negotiations on fisheries where unusual from start since, unlike in any other trade negotiations, there was an environmental outcome set as an objective from the beginning."

Both speakers point to the environmental dimension of the negotiations. Mr Steiner goes even further and asserts that "...an environmental outcome [was] set as an objective from the beginning".

This statement is somewhat debatable. In my view there is nothing in the main Doha Ministerial Declaration, and more specifically in Paragraph 28, which would point to an explicit environmental outcome with the rang of objective, in relation to fisheries subsidies.

It is true that there is a cross-reference to Article 31 "Trade and Environment", but this article refers mainly to relationships between WTO and Multilateral Environmental Agreement (MEAs), exchange of information between WTO and MEA's Secretariats and tariff reductions in environmental goods. Though I miss a clear reference to an objective, as it is the case in the three aforementioned items, for the fisheries subsidies negotiations.

In my view, the setting of environmental objectives came only with the Hong Kong declaration. The language of this declaration (Paragraph I.9. in Annex D) is clear in terms of setting environmental objectives "[...] the Group should strengthen disciplines on subsidies in the fisheries sector, including through the prohibition of certain forms of fisheries subsidies that contribute to overcapacity and over-fishing, [...]"

This was not the case in what Mr Steiner calls "the beginning", i.e. the Doha Declaration. I copy here Paragraph 28:

"In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. We note that fisheries subsidies are also referred to in paragraph 31."

Here is the link to the video:

http://www.youtube.com/watch?v=ol6XR3S_-UI

WTO: the Worldbank enters the fray of fisheries subsidies and the WTO

On 18 November 2009 the Worldbank announced the release of a document titled "Concluding Doha: it matters". The paper advocates a rapid conclusion of the ongoing negotiations.

Besides explaining the benefits, in terms of market access, that WTO Members would reap from the completion of the Round the Worldbank notes that:

"On the environmental front...there will be benefits from disciplining subsidies that encourage overfishing and from lowering tariffs on technologies that can reduce global warming. Over 75 % of global fish stocks - crucial for food security in many developing countries - are overexploited with a resulting loss for the world economy of USD 50 billion."

This statement by the Worldbank comforts the view, held by many, that new rules in fisheries subsidies will solve, first and foremost environmental problems. An outsider could then ask the question: why has this subject been placed under the Rules chapter negotiations and not under the "Trade and Environment" chapter?

Curiosly enough a similar question could be asked about fish products. They are being put in the same basket as cars, computers or wash-machines when it comes to negotiating reductions on import tariffs. Fish products are covered by the so called NAMA negotiations (Non-Agricultural Market Access) negotiations.

(Note that marine mammals appear to fall under the so called agricultural products. I noticed this when reading Canada's request for consultations (the first step of in a WTO legal challenge) on the EU's trade ban on seal's products. Among the violation invoked by Canada there is one that concerns the WTO's agreement on Agriculture, i.e. Article 4.2 of the Agriculture Agreement prohibiting

Here is the link to the Wolrdbank announcement:

http://go.worldbank.org/DMB9K1PKC0

And for those interested Canada's request for consultations with the EU on the latter's ban on trade of seal's products has WTO references WT/DS400/1, G/L/909, G/TBT/D/36, G/AG/GEN/87 and is dated 4 November 2009. Note also that Norway and Iceland joined Canada against the EU.

USA: Congress discussing a bill on subsidies to the fisheries industry (2)

In this post I will comment on some of the written statements presented by witnesses at the hearing.

I will start with the statement by Mr. Nikolao Pula, Director, Office of Insular Affairs, Department of the Interior. When reading Mr. Pula’s statement I thought that, when touching WTO issues, his intervention could be summarized as follows: “Coordination between U.S. agencies works!” and “How to avoid the (ugly?) word subsidies”.

I copy here the relevant passages of his statement:

In the introduction Mr Pula said:

“Also, the United States is working to eliminate practices in ongoing World Trade Organization (WTO) negotiations that have for decades let to over-capacity and over-fishing, particularly with regard to the build-up of foreign fishing fleets. This legislation could have implications for that important effort.”

And here is what he stated in the conclusion:

“The Administration is supportive of efforts to strengthen the economy of American Samoa, but has several concerns regarding the implementation of H.R. 3583. First, the Administration is actively working in the WTO to strengthen the rules regarding fisheries, and the proposed legislation may have implications for that effort.“

So, the Department of the Interior seems to have coordinated this statement with the Office of the US Trade Represenative (and with NOAA and NMFS?).

This statement appears to have been carefully, and cleverly, drafted avoiding the ignominious and embarrassing (so it seems for the Obama Administration) word “subsidies”, especially in combination with the word “fisheries”.

Notice how Mr Pula referred to WTO negotiations on fisheries subsidies:

“…the United States the United States is working to eliminate practices in ongoing World Trade Organization (WTO) negotiations that have for decades let to over-capacity and over-fishing, particularly with regard to the build-up of foreign fishing fleets. “

Subsidies have become “practices” !

And:

“First, the Administration is actively working in the WTO to strengthen the rules regarding fisheries, and the proposed legislation may have implications for that effort. “

The WTO is strengthening the rules regarding…fisheries! Mr. Pula stopped short of adding the awkward and distressing word “subsidies”.

I do not think this was an oversight. Reflecting on this way of putting things to the Committee I thought that perhaps Mr. Fula was right. As negotiations seem to develop I would not be surprised if the WTO, perhaps unwillingly, would contribute to an strengthening of fisheries management of WTO Members willing to subsidise their fishing industry (see my post of 24/10/09).

NORWAY: monetising the benefit of compulsory supply to a coastal region

In a previous post on Norway I was discussing something called the "leveringsplikt", I.e. The obligation imposed on vessel owners to supply companies in a particular geographic area.

In the official regulations it is stated that this landing obligation is intended to guarantee a stable supply of raw material to processing companies from the cod trawlers' fleet. The fish to be delivered under this obligation has been harvested under special quotas in specific areas. Among some of the interesting features of this system we find a price setting system. It would be complicated to give a short explanation in this post, so I will leave it for now.

What I want to discuss in this post is that vessel owners that are are subject to this duty to supply a specific area can buy back, or should we say, redeem themselves from such duty. In other words, they can pay a sum of money to the local authorities and in exchange of it, land the fish in the place of their choosing.

There are examples of such redemption of the landing obligation.

In 2008 an agreement was reached between a fishing company, "Giske Havfiske", and the commune of Hasvik. The company agreed to pay NOK 17.5 million (USD 3 million) to Sorvaer Kystfiskeinvest AS. This company, owned by a holding company in which the commune of Hasvik has a 49 % stake, will administer the funds received from "Giske Havfiske".

Among other provisions of the settlement, as reported by the press, it is worth mentioning that Sorvaer Kystfiskeinvest SA will invest in vessels and in the purchase of ownership shares in vessels over 80 feet.

The above settlement was backed by the Norwegian Fisheries Directorate and Ms Pedersen, who was the Fisheries Minister at that time, expressed her satisfaction for the solution reached.

I found thus a very good example of the monetisation of this subsidy, which consists in fact of a regulatory intervention by the government but which comes down to the provision of a good to a private company.

Readers will argue that the companies in the areas benefiting from such compulsory deliveries do buy the raw material and that fishing fleets under this obligation got their quota on condition that the harvest should be landed in a particular area.

Apart from the fact that, from an international trade perspective, one can construe this obligation as an export restriction, one can also ask oneself the question whether such landing obligation constitutes a subsidy in the sense of the WTO's Subsidies and Countervailing Measures (SCM) Agreement.

Well, to begin with the government is directing a private company to supply a good to a number of companies that are located in a specific geographical area. Or put differently, the latter companies have a guaranteed supply of goods (raw material). In the absence of such landing obligation it could happen that the processing companies would have to buy this raw material at a higher price and it could even happen that no fish would be landed in the areas concerned.

The Giske Havfiske case help us to get a flavour of the amount of the subsidy that is being provided by the government to the processing industry in the Hasvik commune.

Clearly the supply obligation was considered by Giske Havfike as something that prevents it from getting the best price from the fish it harvest and it is ready to make a direct payment to the commune in other to elude this obligation.

Here is an article from FiskarenFiskeribladet (in Norwegian) on the issue:

http://fiskeribladet.no/default.asp?side=101&lesmer=7765

And here one from Finmark Dagblad (in Norwegian):

http://www.finnmarkdagblad.no/nyheter/article3595752.ece

USA: Congress discussing a bill on subsidies to the fisheries industry

Last week, on 4 November 2009, the House Natural Resources Committee, Subcommittee on Insular Affairs, Oceans and Wildlife, led by Del. Madeleine Z. Bordallo (D-GU), held a legislative hearing on the following bill:

• H.R. 3583 (Faleomavaega): To provide for a subsidy to sellers and buyers of fish directly delivered to American Samoa from vessels with United States fisheries endorsements that manufacture for the United States. "American Samoa Protection of Industry, Resources and Employment Act"

Among other items the bill proposes payments amounting to USD 200 per metric ton to processors buying tuna and to USD 200 per metric ton to US vessels, fishing under the authority of Western Pacific Regional Fishery Management Council or areas covered by the United States South Pacific Tuna Treaty, or which has an American Samoa Longline Limited Access Permit (issued pursuant to the Fishery Management Plan for Pelagic Fisheries of the Western Pacific Region).

The above payments would be financed by a tax of 6.25% on transhipment of tuna to non-US vessels operating in the above mentioned areas or to non-Samoan processors.

Personally I find that this bill could create some problems for the US.

First of all the subsidy could be discriminatory as it would benefit US vessels only. Furthermore the transhipment tax is tantamount to an export tax. Remember that the US has recently launched dispute settlement proceedings against China for putting barriers to exports of raw materials.

Secondly this bill is in stark contrast with the US position in the ongoing negotiations on fisheries subsidies. Indeed the US appears to be supporting the draft negotiating text which includes prohibitions on subsidies to the processing industry and income and price support subsidies (such as the proposed USD 200 essel payment for each ton delivered to the processing industry in American Samoa.

I will come back on this remarkable bill.

Here is the link to the hearing at the U.S. Congress:

http://resourcescommittee.house.gov/index.php?option=com_jcalpro&Itemid=27&extmode=view&extid=305

WTO: reporting on the last "informal" negotiating meeting on fisheries subsidies

For those interested.

Hereunder is the link to the latest report by ICTSD on the ongoing negotiations on fisheries subsidies:

http://ictsd.org/i/news/bridgesweekly/58554/

ANGOLA: new boats for small-scale fishermen

When hearing the words "fisheries subsidies" one thinks, in most instances, of money given to fishermen. But this is only a way to provide subsidies to fishermen. A transfer of goods (as written in the definition of a subsidy in Article 1 of the WTO Agreement) is also a subsidy.

In Angola the government is now handing over boats to fishermen so that they can increase their harvest and have better livelihoods.

Here is the link to a press article in AngolaPress (in Portuguese) commenting on this announcement:


http://www.portalangop.co.ao/motix/pt_pt/noticias/sociedade/2009/9/43/Vice-ministro-das-pescas-entrega-embarcacoes-Chitatela,eceefbec-0b90-4bec-b41c-6984c2ecccdf.html

UK: Isle of Man stops (for now) with subsidies for the purchase of vessels, engines and whinches

Reading the news posted in the website www.fishupdate.com I discovered that the Isle of Man was giving subsidies to its fishermen for capital investments in the fleet. But I also learned that the Isle of Man authorities are stopping, at least for now, with such subsidies.

In the official announcement posted in the Isle of Man Government one can read:

"The Isle of Man is the only country in Northern Europe that continues with vessel grants of this nature, and evidence from the UK, where a similar Scheme was abolished over 20 years ago, indicates that young skippers still manage to progress into the industry."

Did the Isle of Man Government suddenly realise that such subsidies could become prohibited at the WTO? Nevertheless I do not now what would be the consequences of such prohibition on this "country".

Is the Isle of Man member of the WTO because the UK is a member of this organisation? And because the UK is member to the EU, who would be the defendant if litigation would take place against the Isle of Man?

 Here is the link to the article in www.fishupdate.com:

http://www.fishupdate.com/news/fullstory.php/aid/12968/DAFF_Announces_Temporary_Closure_of_Support_Schemes.html

And here the official announcement:

http://www.gov.im/daff/animals/fish/seafishing/ViewNews.gov?page=lib/news/daff/daffannouncestem.xml&menuid=11570

USA: "charitable" fisheries subsidies and the WTO

The Gloucester Times published a few days ago an article titled "Leader urges federal action". The article discusses, among other things, how the introduction of the so called "catch shares" is taking place.

In the article there was a reference to:

"[…] groups of cooperative organized fishermen on Cape Cod, who are receiving subsidies from the Pew Environment Group, […]

This seems to confirm what I wrote in my post of 1st June 2009 "USA: public private partnership in subsidies for the fishing sector", namely that US fishermen are being subsidised with public and private money.

Now, from a WTO perspective one could ask whether this would be a "prohibited" subsidy according to the draft text presented by the Chair of the negotiating group, Ambassador Valles Galmes, in November 2007 (document TN/RL/W/213 of 30 Nov. 2007).

The answer would be …perhaps not. Why? Because Ambassador Valles' draft text includes an exception for this type of subsidy. Article II e) of the draft text reads as follows:

"Nothing in Article I shall prevent governments from making user-specific allocations to individuals and groups under limited access privileges and other exclusive quota programmes".

So, if "user specific allocations" cover allocations for the introduction of catch shares, then such private subsidies, which by the way are tolerated by the US authorities, could be exempted from a prohibition.

Here is the link to the article in the Gloucester Times:

http://www.gloucestertimes.com/punews/local_story_300220512.html?keyword=topstory