WTO: Natural (fishery) Resource Subsidies, the next battle at the WTO on fisheries subsidies?

Browsing the WTO website I found a very interesting article titled “Natural Resource Subsidies” by Matthew S. Yeo, Partner, Steptoe & Johnson LLP. This article is published under the section “Discussion forum: World Trade Report 2010 Trade in Natural Resources: Challenges in Global Governance”

In this article the author make numerous references to the a dispute between Canada and the US regarding the pricing of natural resources, the so called Softwood Lumber case.

Interesting to note is that in this dispute Canada maintained that the way fishing rights are allocated (for free, through auctioning, etc) is a matter for the WTO Member and referred to the fact that the US was not asking fishermen to acquire fishing rights through an auction.

In the “softwood lumber” case the following issues, which could be relevant for fisheries, were raised:

1. First, whether the way a government grants harvesting rights constitutes a subsidy. or not.
2. Underlying the first issue emerges the question as whether comparisons can be made between different countries, in other words, whether “cross-border” benchmarks to find and measure “benefit” can be used.
3. And third whether this benefit can be passed on downwards to other parts of the industry.

As I said before this dispute has raised a number of issues that could resurface in the future, either in the context of WTO’s Dispute Settlement or… in the next WTO negotiating round (not this one).

Here under are some of the issues that could be subject to discussion in a re-negotiation (in a perhaps not so distant future) of WTO fisheries subsidies disciplines:

• The right obtained from the government to harvest a natural resource is tantamount to a government financial transfer in the meaning of Article 1 of the Subsidies Agreement… thus “free access” to fisheries resources could be a subsidy to fishermen.
• Pricing a natural resource and benefit: for the determination of a “benefit” the SCM Agreement does not require markets to work perfectly, neither to work equally in all member countries… so, we need to change the SCM Agreement (and its future annex on Fisheries Subsidies) to require the allocation of fishing rights based on a market mechanism.
• Some types of regulatory interventions by the government, even if they have significant trade effects, are shielded from the disciplines of the SCM Agreement... thus regulatory actions such as compulsory domestic landings, export prohibitions, no user-charging or cost recovery in fisheries would not be actionable under the current SCM Agreement.

In sum, will be the future debate on fisheries subsidies target regulatory actions instead of direct financial transfers?

Watch this spot!

Here is the link to the article:

http://www.wto.org/english/res_e/publications_e/wtr10_yeo_e.htm