WTO: INDIA notifies subsidies to the WTO

In the previous post a presented questions from CANADA and the US on the subsidy notification to the WTO by Korea.

I had a look at the WTO website to see whether other WTO Members had made notification recently. India was one of these Members. The document reference is G/SCM/N/186/IND of 18 October 2010. The first paragraph of the 2 page long notification of INDIA reads as follows:

The following notification constitutes the Government of Republic of India's new notification of information on programmes granted or maintained at the central government level in India.  In general, the period to which the following information applies is for the Financial Years 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09.

INDIA notifies only those subsidies "maintained at the central governement level", meaning that if subsidies are granted at state or subfederal level, these are not included in the notification.

Also interesting to note is that India is making the notification for a period covering five fiscal years. My reading of the WTO Agreement on Subsidies and Countervailing Measures, Article 25, is that WTO "Members agree that, without prejudice to the provisions of paragraph 1 of Article XVI of GATT 1994, their notifications of subsidies shall be submitted not later than 30 June of each year and shall conform to the provisions of paragraphs 2 through 6."

Finally, I was struck by the fact that India's notification concerns only one "subsidy programme", i.e. "Preferential tax policies for certain enterprises".  I found nothing in the notification concerning the "subsidy assistance programmes" maintained by India's Marine Products Export Development Authority (MPEDA).

WTO: subsidies notifications - Republic of Korea - (the US puts questions on fish subsidies)

Here are the questions put by the US and the corresponding replies by Korea. The WTO document reference is G/SCM/Q2/KOR/37, of 15 October 2010.

Reading through the replies I was struck by the fact that Korea is planning subsidies for the construction of "long range" fishing vessels.

Question 1

According to publicly available sources, the Korea Fisheries Association said the fuel subsidy provided by the government to the fishing industry is the most important program, accounting for up to 50 per cent of total fisheries subsidies. Please describe the nature and operation of this program, and the amounts provided under the program during the period covered by the new and full notification.

Reply

The following information is without prejudice to whether the program is covered by Article 25.2 of the SCM Agreement. For the nature and operation of the program, Article 106-2 of the Act on the Restriction of Special Tax Treatment provides as follows.

Article 106-2 (Abatement or Exemption of Value-Added Tax, etc. on Petroleum Products for Agriculture, Forestry, Fisheries, and Coastal Passenger Ships)

(1) Among the following petroleum products (referring to the petroleum products under the Petroleum and Petroleum Substitute Fuel Business Act; hereafter referred to as "tax-free petroleum" in this Article), the value-added tax on the supplies delivered on or before June 30, 2012 and the individual consumption tax, the traffic, energy and environment tax, the education tax, and the driving tax on the supplies released from a manufacturing place or a bonded area on or before the afore-stated date shall be reduced or exempted as prescribed by Presidential Decree, while the value-added tax on the supplies delivered during the period between July 1, 2012 and December 31, 2012 and the individual consumption tax, the traffic, energy and environment tax, the education tax, and the driving tax on the supplies released from a manufacturing place or a bonded area during the afore-stated period shall be abated by 75/100 of each tax under the conditions as prescribed by Presidential Decree:

1. Petroleum products required by a farmer, a forestry person, or a fishery person specified by Presidential Decree (hereafter referred to as "farmer, forester, or fisherman" in this Article) for the purposes of agriculture, forestry, or fisheries, which are prescribed by Presidential Decree; and

2. Petroleum products supplied directly to the Korea Shipping Association established pursuant to the Korea Shipping Association Act for the use in passenger ships operating on coastal waters.

(2) In cases where certain petroleum products delivered to a petroleum distributor (hereafter referred to as a "petroleum distributor" in this Article) prescribed by Presidential Decree, including a gas station, with the value-added tax, the individual consumption tax, the traffic, energy and environment tax, the education tax, and the driving tax already levied thereon and supplied to a farmer, forester, or fisher falls under paragraph (1) 1, the petroleum distributor may file an application under the conditions as prescribed by Presidential Decree to have the refund of the tax amount otherwise exempted or have the tax amount payable or collectible reduced by the amount.

(3) A farmer, forester, or fisherman who desires to have tax-free petroleum supplied shall file a report on the current status of agricultural machines, forestry machines, or ships and facilities prescribed by Presidential Decree in possession (hereafter referred to as "agricultural machines, etc." in this Article) and the fact that the person has engaged in agriculture, forestry, or fisheries, under the conditions as prescribed by Presidential Decree, with a cooperative under the Agricultural Cooperatives Act Agricultural Cooperatives Act, a cooperative under the Forestry Cooperatives Act Forestry Cooperatives Act, or a cooperative under the Fisheries Cooperatives Act Fisheries Cooperatives Act(hereafter referred to as a "cooperative acting as an institution responsible for control of tax-free petroleum" in this Article), and shall also file a report on a change within 30 days from the day on which such a change occurs, if any change in the reported matters occurs, such as the acquisition or transfer of an agricultural machine, etc., the death of the farmer, forester, or fisher, and giving up the agricultural, forestry, or fishery business.

(4) A farmer, forester, or fisher who desires to have tax-free petroleum supplied shall obtain a card for purchasing tax-free petroleum or a delivery order prescribed by the Presidential Decree and issued by a cooperative acting as an institution responsible for control of tax-free petroleum (hereafter referred to as "tax-free petroleum purchase cards, etc." in this Article).

The total amount of fuel subsidy provided to the fishing industry was 788 billion won in 2007 and 614 billion won in 2008.

Question 2

The Korean press has reported that Korea plans to allocate 7.09 trillion won (US$6.24 billion) in investment funds and loans to the Korean fisheries industry. The Ministry for Food, Agriculture, Forestry and Fisheries stated that it would also launch 38 new long-range fishing vessels to replace old boats and that up to 1,085 fishing boats will be given light-emitting diodes as fish-luring lights. Please provide further details on these plans and the proposed terms and conditions on the investment funds and loans.

Reply

The following reply contains information for the period not covered by 2009 new and full subsidy notifications which had been circulated in the G/SCM/N/186 … series.

Total amount of funds and loans for the five-year period between 2010 and 2014 was set at 7.12 trillion won including 1.39 trillion won in 2010 (fixed), 1.39 trillion won for 2011, 1.44 trillion won for 2012, 1.44 trillion won for 2013 and 1.46 trillion won for 2014 (estimated and subject to change depending on the final national budget plan of each year).

Under the Old Fishing Vessel Replacement Program, the Korean government provided 16.4 billion won of loan for replacing two vessels in 2010 with condition of 4 per cent interest rate and repayment for seven years after a lapse of three years. The limit of loan was set at 70 per cent of the total construction cost. The other 36 vessels are planned to be replaced during 2011-2014.

"The Program to Support Vessels to Install LED Lights" aims at energy saving and carbon emission reduction. In the program, it is planned to grant 6.5 billion won to 1,085 vessels which will be equipped with LED lights from 2009 to 2013. Each year 1.3 billion is granted to 217 vessels. The government grant is provided to cover 40 per cent of the total installing cost.

WTO: subsidies notifications - Republic of Korea - (Canada puts questions on fish subsidies)

Lack of transparency and opacity are among the biggest problems confronting a number of stakeholders in the current debate on fisheries subsidies.

The very poor record in notifications to the WTO of subsidies to the fisheries sector is one of the issues that a number of governments, NGOs and academia have pointed as main obstacles to have an informed discussion and a clear picture of what are the real effects of subsidies on the fish resources.

Some countries are reporting subsidies to fisheries in the context of WTO Members’ notification obligations under the Agreement on Subsidies and Countervailing measures.

The Republic of Korea is one of them. The last “New and Full Notification” from Korea is dated 7 May 2010 and has the WTO reference G/SCM/N/186/KOR.

The interesting thing about the notification to the WTO is that other countries can asks questions to the notifying Member on the content of the notification.

I copy hereunder the questions that Canada asked to Korea on fisheries subsidies (WTO ref. G/SCM/Q2/KOR/35 of 15 October 2010).

Question re Support for Fishing Activities

The stated purpose of the subsidy is to relieve financial burden and support stable fishing business operations by providing lower rate loans. Canada would like to have more information on the specific types of fishing activities and business operations that this programme supports.

Reply

The loan is given to the fishermen regardless of fishing gear type as long as the fishermen have the rights to fish in accordance with related laws and regulations. This includes fishermen engaged in aquaculture and inland and marine capture fishing activities.

Question re Support for Aquaculture Fishery Development

The policy objective of this programme is to have a stable supply of fishery products by supporting the development of aquaculture fishery under the changing circumstances of domestic and overseas fisheries production environment. Could the Republic of Korea please explain the meaning of "changing circumstances of domestic and overseas fisheries production environment"?

Reply

That may include, for example, changes in demand for fishery products, changes in annual catches in the coastal and off-shore waters, consumers' concern for sanitary condition of fishery products, and environmentally friendly and responsible aquaculture.

Question re Support for Old Fishing Vessel and Equipments Replacement

According to the description of the policy objectives, this programme ensures navigational safety through replacement of old vessels and vessel equipments. Could you provide more details as to what type of vessel equipment is supported by this programme? How many and which types of vessels have benefitted from this programme?

Reply

Under this programme, two old pelagic fishing vessels were replaced during 2007-2008 with imported used fishing vessels.

Question re Support for R&D of Environmental Technology Development Projects

Could Korea elaborate on the types of "cutting-edge environmental technologies" that have received support?

Reply

There have been 271 R&D programmes (i.e. "cutting-edge environmental technologies") that have received support under Development of and Support for Environmental Technology Act during 2007-2008, and they are categorized into five sectors as following:

• Core post-processing technologies which are the basis for pollution reduction in various environmental factors

• Preventive anti-pollution technologies such as those used for development of sustainable eco-friendly materials, products and manufacturing process

• Environmental technologies to actively cope with international environmental issues

• Original technologies for environmental fusion area

• Technologies used for combining relevant effective environmental technologies

COLOMBIA: Subsidies to aquaculture, contingent on export

Aquaculture seems to be spared (at least from now) from new disciplines on subsidies to fisheries.

Fish farming has become, over the years, an important source of supply of fish products. This is the case in developed countries (e.g. Norway) and in developing economies (e.g. China, Chile, Vietnam, etc). The growth in this industry is such that we could witness very soon aquaculture overtaking capture  fisheries in terms of supply of fish products for human consumption.

Some countries do realize the key importance of this sector and are providing financial help to fish farmers. A few days ago I stumbled upon a Colombian scheme whereby fish farmers involved in the production of shrimp, tilapia and trout receive subsidies for “inputs”, on condition that they export their produce.

According to the information posted in the website of Colombia’s  “Ministerio de Agricultura y Desarrollo Rural” the programme is funded with COP Colombian Peso 5,000 million (USD 2.8 million).

Here is the link to the aforementioned website (in Spanish) announcing the scheme:

http://www.minagricultura.gov.co/07presupuesto/07a_cin_acuicul.aspx

And here the link to the full text of the scheme:

http://www.acuiculturaldia.com/Documentos/reglamento_tecnico_iae_mayo21_2010.pdf

WTO: reporting on informal negotiating meeting on fisheries subsidies (7)

A few days ago I wrote a post about a REUTERS « alert » quoting the Chair of the negotiating group as he spoke over the “new tone in the talks”.

The ICTSD has published in its website an article on the negotiating meeting which, according to the ICTSD, took place in the week of 4 October 2010.

An interesting feature of the meeting is that, always according to ICTSD, there was a plenary session (on 4 and 5 October) followed by discussions in smaller groups of delegates.

The article mentions that the latest submissions by the BRICs (Brazil, China, India) and Mexico (doc. TN/RL/GEN/163) and by the US (TN/RL/GEN/165) were discussed.

I discussed the BRICs + Mexico’s submission in my post of 13 February 2010. This submission included a proposal to prohibit to developed countries those « subsidies arising from the further transfer, by a payer Member government, of access rights that it has acquired from another Member government to fisheries within the jurisdiction of such other Member.». I wonder how those WTO Members that are very dependent on access fees paid by developed countries did react to this proposal.

I also discussed the US paper in my post of 24 April 2010. I also wonder whether there was some discussion about the suppression by the US of the exceptions for subsidies for retraining for activities other than fishing, re-education and early retirement.

It would also be interesting to know whether the US had, in relation to exceptions for disaster relief , “further thoughts as to its scope and placement as technical discussions of the text continue.” (see paragraph 8 in page 2 of the US submission). 

I imagine that the oil spill (a man-made disaster) in the Gulf of Mexico is providing enough food for thought to US negotiators on the scope and placement of exceptions for “disaster relief”. One suggestion could be to allow for “privately funded subsidies” (such as those requested by the State of Louisiana) to the fisheries sector.

Here is the link to the article by ICTSD:

http://ictsd.org/i/news/bridgesweekly/86991/

WTO: the new Chair of the negotiating group "goes public"

Here is a link to an article by Reuters (8 October 2010) on the latest (informal?) negotiating meeting in Geneva.

The title of the article is "WTO negotiators sense new tone in fish talks"

http://www.alertnet.org/thenews/newsdesk/LDE6971VG.htm