Fisheries Subsidies negotiations

The fisheries subsidies negotiations — U.S. comments from December 2 meeting add clarity to the inability to achieve an agreement and the lack of “like-mindedness” among Members

Yesterday’s post reviewed the fact that the Chair of the Rules Negotiations had at the December 14 Trade Negotiating Committee and Heads of Delegations meeting indicated that WTO Members would not meet the deadline for finalizing a fisheries subsidies negotiation — the end of 2020. See December 15, 2020, The fisheries subsidies negotiations – failure by WTO Members to deliver an agreement by the end of 2020, https://currentthoughtsontrade.com/2020/12/15/the-fisheries-subsidies-negotiations-failure-by-wto-members-to-deliver-an-agreement-by-the-end-of-2020/.

The TNC and HOD meeting occurred twelve days after the conclusion of the latest round of negotiations on fisheries subsidies on December 2. The WTO press release on those talks described the issues being discussed by Members and the Chair’s intended path forward. See WTO, NEGOTIATIONS ON FISHERIES SUBSIDIES 2 DECEMBER 2020, WTO members conclude cluster of fisheries subsidies meetings, https://www.wto.org/english/news_e/news20_e/fish_02dec20_e.htm.

“On 2 December, at the conclusion of two days of meetings at the level of heads of delegation, the chair of the Negotiating Group on Rules, Ambassador Santiago Wills of Colombia, said he will continue his consultations with WTO members on the next steps in the negotiations.

“During the meetings, delegations responded to questions posed by the chair about determinations of illegal, unreported or unregulated (IUU) fishing; sustainability considerations in the prohibition of subsidies contributing to overcapacity and overfishing; and special and differential treatment for developing and least-developed countries.

“Prior to this meeting, members have been involved in almost continuous “intersessional” discussions after the last cluster of meetings on 2-6 November to discuss many of the key parts of the revised text that the chair introduced on 2 November, including dispute settlement; subsidy disciplines in the areas of IUU fishing, overfished stocks, and overfishing and overcapacity; and special and differential treatment. The ‘Friend of the Chair’, Ambassador Didier Chambovey of Switzerland, also continued his consultations on special and differential treatment and reported back to members.

“The chair noted that much progress has been made this year in spite of the challenges brought on by the COVID-19 crisis, with members conducting intensive negotiations on the basis of a single consolidated draft document, issued in June and now in its second version. The chair said he will continue consultations in the coming days, ahead of the meeting of the General Council on 16-17 December, on how members would like to move negotiations forward.”

U.S. Ambassador Dennis Shea provided comments during the December 2nd session. His comments reflect the substantial distance that remains in reaching agreement. See WTO Fisheries Subsidies Negotiations – HoDs-Level meeting on Article on Overcapacity and Overfishing and Special & Differential Treatment, Statement of U.S. Ambassador Dennis Shea (excerpts), December 2, 2020, https://geneva.usmission.gov/2020/12/03/us-statement-by-ambassador-dennis-shea-wto-fisheries-subsidies-negotiations/. His comments provide insight into just how far away from an agreement Members are, reflecting the lack of “like-mindedness” and the challenge of whether special and differential treatment should be limited to actual need and temporary or is a “right” for any Member declaring themselves a developing country. After nineteen years of negotiations, it is numbing to see how fundamental issues are not agreed to. Below are the excerpts of Ambassador Shea’s comments available from the U.S. Mission in Geneva’s website.

“We have listened carefully to the interventions today, some of which are not encouraging. We continue to see wide divergences in position – including with some Members categorically rejecting objective sustainability criteria in our discipline despite our clear sustainability mandate. This speaks volumes to the need for a capping approach as the solution. In other words, with some unwilling to eliminate obviously harmful subsidies, let’s look at reducing the numbers.


“Capping would provide the flexibility that Members continue to call for, as needed to allow Members to sustainably develop their fisheries sectors, while limiting and reducing the provision of harmful fisheries subsidies. We urge you, Chair, to give appropriate time to discussion of the capping approach, including filling in the placeholder currently in the revised consolidated text.

“Turning to your questions for this session, we do believe that you have asked the right question, which was whether there are any Members here who categorically assert the right to subsidize unsustainable fishing. Based on what we heard this morning, it remains unclear. It might be a question of language, or burden of proof. If we have misunderstood, and at least some Members are not opposed to considering sustainability, what is the sustainability test to which those Members are willing to submit?

“At the same time, it seems other Members wish to give themselves wide berth to avoid any sustainability accountability. If this is the case, then your text should clearly show two options for future high-level decision-making on the approach that will garner consensus.

“With respect to the drafting of the general prohibition on subsidies to fishing that contribute to overcapacity and overfishing, we agree with what was expressed by others, in terms of bringing the sustainability test back as an objective threshold for what is meant when we refer to ‘contributing to overcapacity and overfishing.’ We believe this prior approach, which included reference to the rate of fishing and fishing capacity, is an important standard to clearly include as a threshold issue in the text of the general prohibition. We also agree with others that the inclusion of sustainability language presents a good faith effort to strike a balance and give Members policy space.

“As to the list of subsidies in this article, this must be an open, illustrative list, as others have noted. A closed list lends itself to calls for exceptions and exclusions, which will take us even further away from making progress on this discipline.

“Regarding any special and differential treatment when it comes to this overcapacity and overfishing area, Chair, you have again asked the right questions. Members have indicated a need for appropriate and effective SDT. Members have indicated their desire to grow their fisheries in a sustainable manner. We ask those Members what measures do they have, or would they put in place, to ensure that current or future subsidization would be done in a sustainable manner? A close consideration of this issue might help to unlock roadblocks throughout this text.

“Unfortunately what this conversation today has also illustrated, is that we are nowhere near knowing even some basic parameters of what ‘appropriate and effective SDT’ would look like in a negotiation that is predicated on sustainability.

“The number of hours this group has now spent on discussing SDT carve-outs, exceptions and flexibilities has been unparalleled. We doubt that doing this before we even know the disciplines, is a good use of time.
And in the context of focusing only on the most harmful of subsidies for our discipline, we question the need for any SDT. But as we have noted in the past, we are willing to consider it on a needs-based, transition-period approach, for the overfishing and overcapacity area only.

“And one other point I would like to make while I have the floor: I hear Members refer to SDT as a right, an entitlement. Or that we need to account for past subsidies in a future discipline and therefore focus solely on the ‘polluter pays’ concept. How do these assertions hold water when we are talking about the sustainability of a finite, shared natural resource? How can we all secure the livelihoods of our fishing communities, or the resources so greatly needed for food security, if harmful fisheries subsidies are provided which in turn leads to resource collapse and in essence, food insecurity? This is not only counter-intuitive, but runs against the experience of the last fifty years– and certainly nothing we should be supporting through WTO rules.

“Again, we would ask the question of how wholesale carve-outs are in-line with our mandate? Furthermore, to those who are seeking SDT to grow their capacity, we ask those Members to also explain how that is in line with the mandate, particularly if these same Members are resisting any kind of sustainability threshold for such growth? Instead of destroying any possibility of a coherent agreement, why can’t we consider a more tailored approach to addressing policy space of small producers, such as that set out in our cap proposal?”

Comment

The fisheries subsidies negotiations have from the beginning been limited to wild caught fish, thus excluding aquaculture. Also excluded are fish caught in inland lakes and rivers. There has been huge growth in developing countries of aquaculture over the last 20 years much developed for international trade. Countries with lots of small fishing operations have had concerns about protecting such small scale operators who largely fish relatively close to shore. The needs of these fishing populations has been a topic during the negotiations. But the fundamental challenge is stopping the creation of excess capacity and resulting overfishing happening in the oceans and seas of the world.

The challenge for sustainability of wild caught fish was laid out in the WTO Factsheet on the fisheries subsidies negotiations. WTO, Factsheet: Negotiations on fisheries subsidies, https://www.wto.org/english/tratop_e/rulesneg_e/fish_e/fish_intro_e.htm.

Fish stocks and subsidies

“According to the latest data from the UN Food and Agriculture Organization, fish stocks are at risk of collapsing in many parts of the world due to overexploitation. It is estimated that 34% of global stocks
are overfished compared with 10% in 1974, meaning they are being exploited at a pace where the fish population cannot replenish itself. Declining fish stocks threaten to worsen poverty and endanger coastal
communities that rely on fishing. Roughly 39 million people depend on capture fisheries for their livelihood. Healthy seas are also important for food security, with fish providing 20% of animal protein needs on
average for 3.3 billion people.

“In theory, fishing should be held in check by its very environment: low fish stocks should mean fishing takes more time and costs more money. The problem, however, is that very often state funding keeps unprofitable fishing fleets at sea. Global fisheries subsidies are estimated to range from USD 14 billion to USD 54 billion per year.”

The problem of overfishing is a global problem, and it has been getting worse over time. Addressing the serious problem of overfishing has been one of the goals articulated by nations as part of the UN’s Sustainable Development Goals. The UN Food and Agriculture Organization monitors the challenges faces the world from overfishing. A report in June from the FAO noted that the problem of overfishing is particularly acute in developing countries which don’t have good management systems in place to prevent/reduce overfishing. See, e.g., Reuters, June 8, 2020, Overfishing on the rise as global consumption climbs: U.N. agency, https://www.reuters.com/article/us-food-fao-fish/overfishing-on-the-rise-as-global-consumption-climbs-u-n-agency-idUSKBN23F1CD (“The FAO said in a biennial report that tackling the issue would require several
measures including stronger political will and improved monitoring as fish stocks in areas with less-developed management were in poor shape. ‘While developed countries are improving the way they manage their fisheries, developing countries face a worsening situation,’ the FAO said.); Food and Agriculture Organization of the United Nations, 2020, The State of World Fisheries ad Aquaculture, Sustainability in Action, http://www.fao.org/3/ca9229en/CA9229EN.pdf (“The 2020 edition of The State of World Fisheries
and Aquaculture continues to demonstrate the significant and growing role of fisheries and aquaculture in providing food, nutrition and employment. It also shows the major challenges ahead despite the progress made on a number of fronts. For example, there is growing evidence that when fisheries are properly managed, stocks are consistently above target levels or rebuilding, giving credibility to the fishery managers and governments around the world that are willing to take strong action. However, the report also
demonstrates that the successes achieved in some countries and regions have not been sufficient to reverse the global trend of overfished stocks, indicating that in places where fisheries management is not in place, or is ineffective, the status of fish stocks is poor and deteriorating. This unequal progress highlights the urgent need to replicate and re-adapt successful policies and measures in the light of the realities and needs of
specific fisheries. It calls for new mechanisms to support the effective implementation of policy and management regulations for sustainable fisheries and ecosystems, as the only solution to ensure fisheries around the world are sustainable.” (page vi))

Subsidies to fishing fleets and other parts of the fisheries system are major contributors to overcapacity in the fishing fleets of the world and to overfishing around the world. The WTO’s role in the SDG 14.6 is to get multilateral rules that will reduce the excess capacity and permit sustainable fishing practices. Sustainable development in the handling of the oceans will mean greater long-term opportunities for people engaged in fishing for generations to come and ensure a stable supply of protein from the seas.

The inability of WTO Members to reach a meaningful agreement on fisheries subsidies after nineteen years of effort is a sharp reminder that the WTO’s relevance has substantially eroded because of an inability of the Membership to achieve agreement on even self-evident areas of critical importance to global commerce. While many Members are pursuing advancement on other issues (e.g., digital trade/e-commerce) through plurilateral negotiations, some topics — including fisheries subsidies — require multilateral agreements to effectively address the underlying problem. Will 2021 be the charm for finalizing a fisheries subsidies agreement? Hopefully. But the continued wide divergence in views on the needs of Members in the negotiations reflect not a lack of trust but rather, as Amb. Shea stated on December 14, a lack of like-mindedness amongst Members on the purpose and objectives.

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The fisheries subsidies negotiations – failure by WTO Members to deliver an agreement by the end of 2020

Under the UN’s Sustainable Development Goals (“SDGs”), achieving an agreement to address fisheries subsidies which contribute to overfishing and other harmful effects was to be completed by the end of 2020 by the World Trade Organization (“WTO”). In fact tackling fisheries subsidies had been part of the Doha Development Agenda negotiations started at the end of 2001 at the WTO. Thus, negotiations have been underway for nineteen years.

In prior posts, I have reviewed the SDG that encompasses fisheries subsidies and the ongoing efforts at the WTO to achieve a meaningful agreement. See January 13, 2020, Fisheries Subsidies – Will the WTO Members Reach Agreement Before June 2020?, https://currentthoughtsontrade.com/2020/01/13/fisheries-subsidies-will-the-wto-members-reach-agreement-before-june-2020/; June 27, 2020, Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/; June 29, 2020, Update on fisheries subsidies draft consolidated text from June 25, https://currentthoughtsontrade.com/2020/06/29/update-on-fisheries-subsidies-draft-consolidated-text-from-june-25/; November 5, 2020, Revision to draft fisheries subsidies text presented by Chair of the Negotiating Group on Rules at November 2 informal open-ended meeting, https://currentthoughtsontrade.com/2020/11/05/revision-to-draft-fisheries-subsidies-text-presented-by-chair-of-the-negotiating-group-on-rules-at-november-2-informal-open-ended-meeting/.

On December 14th, there was a WTO Trade Negotiations Committee meeting held at Heads of Delegation level. At that meeting, the Chair of the Rules Negotiating Group, Amb. Santiago Wills of Colombia, provided an overview of developments in the fisheries subsidies negotiations and indicated that no agreement would be reached by the end of 2020, although progress was being made. See WTO, Negotiations on Fisheries Subsidies, WTO members committed to keeping up momentum in fisheries subsidies negotiations, 14 December 2020, https://www.wto.org/english/news_e/news20_e/fish_14dec20_e.htm. Amb. Wills is reportedly planning on releasing to parties a second revision to the draft text he originally circulated on June 25. See, e.g., Inside U.S. Trade’s World Trade Online, December 14, 2020, WTO fisheries talks chair makes it official: No agreement in 2020, https://insidetrade.com/daily-news/wto-fisheries-talks-chair-makes-it-official-no-agreement-2020. Neither the June 25 text nor the first revision from November 2 were released to the public. It is unclear if the second revision to be released later this week will be made available to the public or not. Such public release is the norm for WTO texts that are being used for negotiations by the Members. The WTO press release is embedded below and is followed by a factsheet on the negotiations put out by the WTO.

WTO-_-2020-News-items-WTO-members-committed-to-keeping-up-momentum-in-fisheries-subsidies-negotiations

WTO-_-Factsheet_-Negotiations-on-fisheries-subsidies

Deputy Director-General Karl Brauner chaired the TNC meeting on behalf of all DDGs. He noted that all Chairs of negotiating groups had noted the lack of progress in 2020 and urged members to complete the fisheries subsidies in early 2021 among other challenges. WTO, Trade Negotiations Committee and Heads of Delegations Meeting, DDG Brauner urges members to step up efforts in early 2021 to agree on fish, other issues, December 14, 2020, https://www.wto.org/english/news_e/news20_e/tnc_14dec20_e.htm. Specifically, the press release quotes DDG Brauner as saying the following on fisheries subsidies negotiations.

“We note in particular the intensive work on fisheries subsidies.

“As we have just heard from Ambassador Wills, the WTO – that is, you the Members – will not deliver an agreement on fisheries this year.

“I can only agree with the ambassador’s assessment and I am disappointed but not discouraged.

“While we are still short of the finishing line, the negotiations have made considerable concrete progress towards finding a solution that all Members can accept. Renewed engagement, with greater political will and pressure from civil society, can get us there.

“As Ambassador Wills said, meeting our mandate to reach an outcome will require compromise by everyone, on all issues.

“Activity must pick up quickly in the New Year and continue until we deliver. As the Chair said, we will be making a late delivery, and every additional delay will increase the debt that must be paid. I plead to you, nothing that can be done now has to wait for MC12 or any other deadline.”

Of course, while NGOs are anxious for a result and will continue to apply pressure on WTO Members to complete the negotiations, without public access to the text being considered the level of pressure will differ and may reduce the likelihood of an ambitious result.

Neither the statement of Amb. Wills nor of most Members who provided interventions are presently available to the public. However, the EU and the U.S. typically post the statements of their Ambassadors at TNC meetings after the meeting on their websites in Geneva. Below are excerpts from EU Ambassador Joao Aguiar Machado and from U.S. Ambassador Dennis Shea on the fisheries subsidies negotiations.

EU Statement by Ambassador João Aguiar Machado at the WTO Trade Negotiations Committee (TNC), 14December 2020, https://eeas.europa.eu/delegations/world-trade-organization-wto/90563/eu-statement-ambassador-jo%C3%A3o-aguiar-machado-wto-trade-negotiations-committee-tnc-14-december_en (emphasis in original).

“Starting with fisheries subsidies, I would like to thank the Chair, Ambassador Wills for his report and his efforts to guide us in the negotiating process. Under his stewardship, we have made significant progress: his text provides a basis for a deal and we have clarified a number of technical issues.

“It is nonetheless deeply regrettable that we will not meet our mandated deadline. There are reasons for this. The pandemic is a very real, physical constraint on the process, particularly for developing country delegations. In addition, the WTO lacks a Director General, who normally would have played an instrumental role in brokering compromise. But we should not hide the fact that Members have also not moved enough from their positions and the level of engagement is not yet sufficient.

“The pressure to deliver does remains. In fact, we now need to work even harder to reach agreement to prohibit harmful subsidies as soon as possible, in line with the UN Sustainable Development Goals.

“That means putting sustainability at the center of the new instrument. The prohibitions should reflect the fact that WTO members have committed to the full range of goals under SDG 14, including improving their fisheries management. Sustainability is not a luxury; it is not a nice-to have. It is a must-have for every country who wants to fish not just tomorrow but also the day after tomorrow.

“Turning to special and differential treatment (SDT), I would like to thank Ambassador Chambovey for his efforts as Friend of the Chair.

“Nobody disputes that special and differential treatment is a part of our mandate. But appropriate and effective SDT cannot be carve-outs and exclusions from the disciplines we’re negotiating. Any SDT needs to be seen in the context of our common objective and commitment of safeguarding a shared global resource.

“That is why the EU proposes a needs-based approach with transition periods to give policy space where it’s needed but acknowledge developing countries also have to contribute and have responsibility for combating overfishing and overcapacity and fighting IUU fishing, and even more so when several developing countries are also major fishing nations.

On next steps: the EU remains optimistic that we can reach an agreement soon, but we also need to have a frank look at the way we proceed. In order to identify possible landing zones we need more in-depth discussions. In some cases, these difficult discussions are better to have in smaller, but representative groups. There is a deal to be made. We collectively should aim to conclude this agreement as soon as possible and in any case do so before the next Ministerial Conference.”

WTO Heads of Delegation Meeting, Statement by U.S. Ambassador Dennis C. Shea, Monday, December 14, 2020, https://geneva.usmission.gov/2020/12/14/us-statement-by-ambassador-dennis-shea-at-the-wto-heads-of-delegation-meeting.

“On fish, it is true we have made some progress thanks to the efforts of Santiago Wills with help from Didier Chambovey and despite this year’s unique challenges. But let’s be serious: this negotiation has been ongoing for nearly twenty years, and by that measure, progress is very modest. This is certainly not the timeline of an organization aspiring to be effective and relevant.”

Conclusion

The fisheries subsidies negotiations are the only multilateral negotiations presently underway at the WTO. After sixteen years of limited progress and following the UN adoption of Sustainable Development Goals, the WTO agreed to fulfill the SDG 14.6 by completing negotiations on fisheries subsidies by the end of 2020. As the comments of the Chair and the EU Ambassador make clear 2020 has been an exceptionally challenging year with the limitations on delegations flowing from the COVID-19 pandemic and from the departure of the Director-General Roberto Azevedo at the end of August and no new Director-General yet confirmed. Yet the failure to complete the negotiations this year reflect the widely divergent views of existing WTO Members on their obligations to contribute meaningfully to the solution of a global problem.

Yesterday, I had a post looking at Amb. Shea’s broader comments to the TNC and Heads of Delegations Meeting. See December 14, 2020,   WTO December 14th Heads of Delegation meeting – parting comments of U.S. Ambassador Dennis Shea, https://currentthoughtsontrade.com/2020/12/14/wto-december-14th-heads-of-delegation-meeting-parting-comments-of-u-s-ambassador-dennis-shea/. The second of his three areas where lack of likemindedness was most evident had to do with whether special and differential treatment is a “right” or a temporary departure from full obligations until Members can contribute fully. As reviewed in Amb. Machado’s statement yesterday, this same issue appears to be one of the major barriers to completing the fisheries subsidies agreement.

Finally, as a member of the public with an interest in developments in Geneva, the direction of many negotiations and many delegations to submit documents and draft texts as room documents, job documents or under other nomenclature that prevents the documents from being viewed by the public is unfortunate and contrary to past efforts at greater transparency in fact by the WTO and its Members. By Friday there will be a second revision to the draft text on fisheries subsidies. There has been no other multilateral negotiation at the WTO where such texts have not been treated as public documents. While there has been press leakage of the earlier drafts, transparency should be a core part of the WTO’s interface with the public, not dependent on leakage of restricted documents. Unfortunately, at the WTO, transparency is subject to an ever growing number of exceptions with no apparent internal controls to ensure maximum transparency in fact. For example, for years, statements of Chairs of negotiating groups were released to the public on the day of the TNC meeting as was the statement of the Chair of the TNC. Those statements are now JOB documents and are not released until the release of the minutes are available months later (statements are included as attachments), hence delaying a full understanding of positions of the various chairs for months.

Let’s hope that 2021 will see a conclusion to the fisheries subsidies negotiations that are meaningful in fact. And let’s also hope that there is a return to greater transparency.

Revision to draft fisheries subsidies text presented by Chair of the Negotiating Group on Rules at November 2 informal open-ended meeting

In late June, the Chair of the Negotiating Group on Rules presented to the negotiating group a draft consolidated text in a room document, that was not made publicly available. RD/TN/RL/126. In two posts in June, I reviewed developments and the elements of the draft consolidated text based on its publication by Washington Trade Daily on June 26. See June 29, 2020, Update on fisheries subsidies draft consolidated text from June 25, https://currentthoughtsontrade.com/2020/06/29/update-on-fisheries-subsidies-draft-consolidated-text-from-june-25/; June 27, 2020, Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/

The latest round of informal open-ended meetings of the Negotiating Group on Rules (Fisheries Subsidies) occurred this week on November 2-4. On the first day, November 2, the Chair of the Negotiating Group speaking to heads of delegation, presented a revised draft consolidated text. RD/TN/RL/126/Rev. 1. This document has similarly not been released to the public, but was posted in the November 3, 2020 issue of Washington Trade Daily. Reference in this post to the contents of either version of the draft text or the presentation of text itself is based on my review of the documents as printed in the Washington Trade Daily issues noted.

The WTO Secretariat released a press release on November 2 entitled “Fisheries subsidies negotiations chair introduces revised draft consolidated text”. Within the body of the press release was a link to “Excerpts from the peaking notes of the Chair of the Negotiating Group on Rules, Ambassador Santiago Wills”. Both documents are embedded below.

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The June draft consolidated text contained ten articles. The first revision released on November 2nd contained eleven (adding Article 11, Final Provisions” and modifying the title of Article 8 to delete “and/or surveillance” leaving “Notification and transparency”).

The articles in the revised draft consolidated text are:

  1. Scope;
  2. Definitions;
  3. Prohibition on subsidies to illegal, unreported and unregulated fishing (“IUU fishing”);
  4. Prohibition on subsidies concerning overfished stocks;
  5. Prohibition on subsidies concerning overcapacity and overfishing;
  6. Specific provisions for LDC members;
  7. Technical assistance and capacity building;
  8. Notification and transparency;
  9. Institutional arrangements;
  10. Dispute settlement;
  11. Final provisions.

The negotiations have always been limited to marine wild capture fishing and don’t cover aquaculture or inland waters. Article 1 is consistent with the intended reach of any agreement. There has been no change to the text of Article 1. Footnote 1 has been modified from “For greater certainty, this excludes aquaculture and inland fisheries” to read “For greater certainty, aquaculture and inland fisheries are excluded from the scope of this [Instrument].”

Article 2, definitions, has been expanded from just three — “fishing”, “fishing related activities” and “vessel” to five in the revised draft by adding a definition for “fish” [“means all species of living marine resources, whether processed or not”] and for “operator” [“means the owner of the vessel, or any person on board, who is in charge of or directs or controls the vessel”]. “Operator” had previously been defined as part of footnote 2 to Art. 3.1

Prohibiting subsidies on IUU fishing is a critical part of the UN sustainable development goal 14.6. Article 3 lays out the prohibition and how the actions of a fishing vessel are determined to be “illegal, unreported or unregulated”. Various Members (coastal, flag State, port State, subsidizing) or regional fisheries management organizations or arrangements (Art. 3.2) can make such findings where the result is “based on positive evidence and follows due process” (Art. 3.3(b)). Most provisions in Article 3 remain unchanged. However, Art. 3.3 is broken into parts in the revised draft. Revised Art. 3.4 deletes the second sentence from the June draft (“The subsidizing Member may refrain from implementing the prohibition under paragraph 3.1 in case of a minor infraction.”), Articles 3.5 and 3.6 from the June draft are Articles 3.6 ad 3.5 in the revised draft. Article 3.3 from the June draft is reproduced below followed by the revised draft:

Art. 3.3 from RD/TN/RL/126 (June 25, 2020)

“3.3 A determination[6] under paragraph 3.2 refers to the final finding by a Member that a vessel [or operator] engaged in IUU fishing, or the final listing of a vessel [or operator] by an RFMO/A as a vessel [or operator] engaged in IUU fishing. [Determinations under subparagraphs 3.2[(a), 3.2(c), and 3.2(e)] shall be based on positive evidence; follow fair, transparent, and non-discriminatory procedures,] including prompt notification to the flag State [or subsidizing Member], if known, through appropriate channels, of the initiation of investigation, [and an opportunity to the flag State or subsidizing Member to provide information to be taken into account in the determination]; [and be in accordance with relevant international law.]”

Art. 3.3 from RD/TN/RL/126/Rev. 1 (November 2, 2020)

“3.3 (a) A determination[6] under paragraph 3.2 refers to the final finding by a Member and/or the final listing by an RFMO/A that a vessel [or operator] has engaged in IUU fishing.
“(b) [The prohibition under paragraph 3.1 shall apply where the determination under subparagraphs 3.2[(a), 3.2(c), and 3.2(e)] is based on positive evidence and follows due process, [in accordance with relevant international law]].
“(c) [If the flag State [or subsidizing Member] is known, a Member shall promptly notify the flag State [or subsidizing Member] of the initiation of an IUU investigation [, and provide an opportunity to the flag State [or subsidizing Member] to provide information to be taken into account in the
determination.]]”

Footnotes to Article 3 are basically unchanged in the revised draft text.

Articles 4 and 5 address the other core objective of UN Sustainable Development Goal 14.6, prohibiting subsidies on overfished stocks, overcapacity and overfishing. Both articles contain exceptions or special and differential treatment for developing and least developed countries (LDCs). Depending on whether advanced developing countries waive such provisions, there will be problems for some Members (including the U.S.) in having such exceptions or S&D provisions included in the text. Specifically, LDCs are exempted from the prohibitions of Art. 5.1 “for fishing or fishing related activities” (revised Art. 5.7(a)) and developing countries “for fishing or fishing related activities at sea within their territorial sea” (revised Art. 5.7(b)). The draft consolidated text attempts to cover some developing and LDC countries despite the above two exceptions where certain criteria are met (revised Art. 5.7(c)). It is assumed that Korea, Singapore and Brazil consistent with their prior statements that they would forego special and differential treatment in future agreements would not be eligible for the exceptions or S&D contained in the draft agreement if the final agreement contains such provisions.

There are no changes for Article 4 between the June draft and the revised draft released on November 2. For Article 5, Article 5.1.1, 5.1.2 and 5.1.3 of the June draft text are now in 5.1.1 and 5.2. Other than renumbering (e.g., old Art. 5.2 is revised Art. 5.3, etc.), the rest of Article 5 is substantively unchanged. The June Art. 5.1.1.-5.1.3 and the November revised 5.1.1 and 5.2 are copied below.

Art. 5.1.1, 5.1.2, and 5.1.3 from RD/TN/RL/126 (June 25, 2020)

“5.1.1 A subsidy contributes to overcapacity or overfishing if it reduces capital costs or operating costs of fishing or fishing related activities at sea regarding a stock that is being fished at a rate of fishing or with a measure of fishing capacity that is greater than would allow the stock to be maintained at a sustainable level.[11]

“5.1.2 For the purposes of this Article:
“(a) capital costs include costs of construction, acquisition, modernization, renovation or upgrading of vessels, purchase of machines and equipment for fishing vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machine for sorting or
cleaning fish); and
“(b) operating costs include costs of fuel, ice, bait, personnel, social charges, insurance, and gear; subsidies that reduce operating costs include, inter alia, income support of vessels or operators or the workers they employ, payments based on the price of fish caught, subsidies for at-sea support, and subsidies to cover operating losses of vessels or fishing or fishing related activities.

“5.1.3 Notwithstanding paragraph 5.1, a Member may grant or maintain the subsidies set out in paragraph 5.1 if the subsidizing Member can demonstrate that it has other policies in place that [effectively ensure] the stock or stocks in the relevant fishery or fisheries are maintained at a sustainable level.”

Art. 5.1.1 and 5.2 from RD/TN/RL/126/Rev. 1 (November 2, 2020)

“5.1.1 For the purpose of paragraph 5.1, subsidies that contribute to overcapacity or overfishing [include]:
“(a) subsidies to construction, acquisition, modernisation, renovation or upgrading of vessels;
“(b) subsidies to the purchase of machines and equipment for vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machinery for sorting or cleaning fish);
“(c) subsidies to the purchase/costs of fuel, ice, or bait;
“(d) subsidies to costs of personnel, social charges, or insurance;
“(e) income support of vessels or operators or the workers they employ;
“(f) price support of fish caught;
“(g) subsidies to at-sea support; and
“(h) subsidies covering operating losses of vessels or fishing or fishing related activities.

“5.2 Notwithstanding paragraph 5.1, a Member may grant or maintain subsidies referred to in paragraph 5.1 if it demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.[11]”

Article 6 has two subparts, one giving LDCs a transition period once a country is no longer an LDC and the other having Members “exercise due restraint in raising matters involving an LDC Member”. There are no changes in the revised draft from the June draft.

Article 7 calls on developed country Members and such developing country Members who indicate being in a position to do so to “provide targeted technical assistance and capacity building assistance” to developing countries and LDCs. There are no changes to the revised draft from the June original draft text.

As noted in my June posts, Articles 8-10 had not been fleshed out in the June draft consolidated text. The November 2 revised draft consolidated text has elements of each of these Articles as well as some material on the new Article 11, Final Provisions. The text is copied below.

“ARTICLE 8: NOTIFICATION AND TRANSPARENCY

“8.1 In order to strengthen and enhance notifications of fisheries subsidies, and to enable more effective surveillance of the implementation of fisheries subsidies commitments, each Member shall [, to the extent possible,] provide the following information as part of its regular notification of fisheries subsidies under Article 25 of the SCM Agreement[15]:
“(a) [PLACEHOLDER – LIST OF SPECIFIC INFORMATION TO BE NOTIFIED]

“8.2 Each Member shall notify [the relevant SCM body/the Committee established under paragraph 9.1] in writing on an annual basis of:
“(a) any list of vessels and operators that it has determined as having been engaged in IUU fishing; and
“(b) where applicable, a list of its fisheries access agreements in force with another government or governmental authority, and such notification shall consist of the titles of the agreements and a list of their parties.

“8.3 A Member may request additional information from the notifying Member regarding the notifications and information provided under paragraphs 1 and 2. The notifying Member shall respond to that request as quickly as possible in writing and in a comprehensive manner. If a Member considers that a notification or information under paragraphs 1 and 2 has not been provided, the Member may bring the matter to the attention of such other Member or to the [Committee].

“ARTICLE 9: [INSTITUTIONAL ARRANGEMENTS]

“[9.1 There is hereby established a [COMMITTEE NAME] composed of representatives from each of the Members. The Committee shall elect its own Chair and shall meet not less than twice a year and otherwise as envisaged by relevant provisions of this [Instrument] at the request of any Member. The Committee shall carry out responsibilities as assigned to it under this [Instrument] or by the Members and it shall afford Members the opportunity of consulting on any matter relating to the operation of this [Instrument] or the furtherance of its objectives. The WTO Secretariat shall act as the secretariat to the Committee.]*

“9.2 Each Member shall, within one year of the date of entry into force of this [Instrument], inform the [Committee] of measures in existence or taken to ensure the implementation and administration of this [Instrument], including the steps taken to implement prohibitions set out in Articles [3, 4 and 5]. Each Member shall also inform the [Committee] of any changes to such measures thereafter. The [Committee] shall review annually the implementation and operation of this [Instrument], taking into account the objectives thereof.

“9.3 Each Member shall, within one year of the date of entry into force of this [Instrument], provide to the [Committee] a description of its fisheries regime with references to its laws, regulations and administrative procedures relevant to this [Instrument], and promptly inform the [Committee] of any modifications thereafter. A Member may meet this obligation by providing to the [Committee] an up-to-date [URL][electronic link] to the Member’s or other appropriate official web page that sets out this information.

“[9.4 The Committee shall examine [frequency] all information provided pursuant to Articles 3 and 8 and this Article.]

“9.5 The [Committee] shall maintain close contact with the relevant international organizations in the field of fisheries management, especially with the Food and Agriculture Organization of the United Nations (FAO) and relevant RFMO/As.

“9.6 Not later than [X] after the date of entry into force of this [Instrument] and periodically thereafter, the [Committee] shall review the operation of this [Instrument] with a view to making all necessary modifications to improve the operation of this [Instrument], taking into account the objectives thereof.

“ARTICLE 10: DISPUTE SETTLEMENT

“[The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding, and Article 4 of the Agreement on Subsidies and Countervailing Measures shall apply to consultations, the settlement of disputes, and remedies under this [Instrument], except as otherwise specifically provided herein.]

“ARTICLE 11: FINAL PROVISIONS

“11.1 Except as provided in Articles [3 and 4], nothing in this [Instrument] shall prevent a Member from granting a subsidy for [natural] disaster relief, provided that the subsidy is:
“(a) limited to the relief of a particular [natural] disaster;
“(b) limited to the affected geographic area;
“(c) time-limited; and
“(d) in the case of reconstruction subsidies, limited to restoring the affected area, the affected fishery, and/or the affected fleet up to [a sustainable level of fishing and/or fishing capacity as established through a scientific-based assessment of the status of the fishery and in no case beyond] its pre-disaster level.

“11.2 (a) This [Instrument], including any findings, recommendations, and awards with respect to this [Instrument], shall have no legal implications regarding territoriality or delimitation of maritime jurisdiction.
“(b) A panel established pursuant to [Article 10 of this Instrument] shall not entertain any claim that would require it to address any issues of territoriality or delimitation of maritime jurisdiction that is contested by a party or a third party.”

Conclusion

It is obviously useful to have progress being made on a draft text, even if it is simply a draft from the Chair of the Negotiating Group. The Chair’s comments at the start of the meeting which are presented above show that the WTO Members remain far from an agreed deal. There remain some important “placeholders” in the draft text as well. In the end, it will be up to Members to decide if they can get past their differences and achieve an agreement that is meaningful in fact and will help the world move towards sustainable development in the handling of the global fish supplies.

The race to become the next WTO Director-General — where the candidates stand on important issues: fisheries subsidies and e-commerce/digital trade

[Updated on August 27 to incorporate comments by Amb. Tudor Ulianovschi of Moldova at a WITA webinar held on August 26.]

The eight candidates for the position of Director-General of the World Trade Organization, in looking at what topics should be moved forward or completed in negotiations were uniformly in support of an early conclusion to the negotiations on fisheries subsidies and on updating the rule book by moving the plurilateral negotiations on e-commerce/digital trade forward to at least a draft document by the twelfth WTO Ministerial Conference in 2021.

Background on fisheries subsidies

Fisheries subsidies have been subject to negotiation within the WTO since the launch of the Doha Development Agenda in December 2001 with limited forward movement in recent years. With the world’s wild caught supply of fish under severe pressure from overfishing, curbing illegal fishing and overfishing through subsidy disciplines became part of the UN’s Sustainable Development Goals in 2015 (Goal 14.6)(SDG). This led WTO Members at the eleventh Ministerial Conference in Buenos Aires to commit to completing the negotiations on fisheries subsidies by the twelfth Ministerial Conference which was scheduled for early June 2020 to permit completion within the time frame laid out in the UN SDG. With the COVID-19 pandemic and the lockdown in Geneva and in many countries, the time frame for completing the fisheries subsidies has slipped, although in late June, the Chair of the Rules Negotiating Group released a draft consolidated text to permit Members to see if a final push to complete negotiations could be made possibly yet in 2020. I have reviewed the fisheries subsidies in a number of prior posts. See, e.g., June 29, 2020, Update on fisheries subsidies draft consolidated text from June 25, https://currentthoughtsontrade.com/2020/06/29/update-on-fisheries-subsidies-draft-consolidated-text-from-june-25/; June 27, 2020, Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/; January 13, 2020, Fisheries Subsidies – Will the WTO Members Reach Agreement Before June 2020? https://currentthoughtsontrade.com/2020/01/13/fisheries-subsidies-will-the-wto-members-reach-agreement-before-june-2020/.

Background on electronic commerce/digit trade

The agenda for the Uruguay Round was established in 1986 with negotiations completed in 1993 and the agreements that created the WTO signed in 1994. At that time, there was little electronic commerce. The driver of world economic growth over the last twenty-five years has increasingly been the rapidly developing technology that permits large amounts of communication and business activity to occur electronically. Music, movies, television, books, magazines have largely gone digital. Consumer purchases of goods and services have increasingly been done digitally. During the COVID-19 pandemic much of the world has depended on electronic communications to buy groceries, handle some medical needs, eliminate in person meetings replaced by virtual meetings and much more.

While the WTO as early as the second Ministerial Conference in 1998 agreed to study issues surrounding electronic commerce to develop rules that might be necessary, the WTO’s efforts have struggled for more than twenty years with periodic agreement to continue the review and extend a moratorium on customs duties on electronic commerce. See, e.g., Work Programme on Electronic Commerce, adopted by the General Council on 25 September 1998, WT/L/274 (30 Sept. 1998); Work Programme on Electronic Commerce, Ministerial Decision of 13 December 2017, WT/Min(17)/65, WT/L/1032 (18 December 2017). These two documents are embedded below.

274

65

At the eleventh Ministerial Conference in Buenos Aires, WTO Members with an interest in particular issues issued Joint Statement Initiatives basically indicating that the group of listed Members were going to move forward developing potential rules on the subject matter of interest, keeping the process open to any Member wishing to participate. One of the Joint Statements was on Electronic Commerce. See JOINT STATEMENT ON ELECTRONIC COMMERCE, WT/MIN(17)/60 (13 December 2017). The statement is embedded below.

60

The JSI on e-commerce has been making good progress under the leadership of Australia, Japan and Singapore. A review of progress from the March 5 General Council meeting minutes is copied below (WT/GC/M/182 at 117):

“47. Australia (Joint Statement Initiative on Electronic Commerce)

“I will first provide a report on negotiations under the Joint Statement Initiative on Electronic Commerce on behalf of the co-convenors: Australia, Japan and Singapore.

“I will start with a short summary of the informal meeting of Ministers on the Ecommerce JSI held in Davos on 24 January.

“At this meeting, Ministers underscored the importance of this initiative both commercially and systemically for the WTO and affirmed their commitment to a high standard outcome, with the participation of as many WTO members as possible.

“Ministers welcomed the good progress achieved over the first year of negotiations, including the range of proposals received, the diversity and growing number of participants, and the strong levels of engagement in negotiating rounds.

“Ministers emphasized the need to keep working hard to ensure substantial progress by MC12 and agreed to develop a consolidated negotiating text by MC12 and a pathway for the future conclusion of the negotiations.

“The Philippines also announced it would join the JSI, bringing the number of signatories to 83, representing over 90% of global trade.

“Since our last report at the December HODS/TNC, we have held an organisational meeting, on 16 December, that set a work plan leading up to MC12.

“We also convened a negotiating round from 11-14 February, which covered electronic transactions, non-discrimination and liability, consumer protection, transparency, domestic regulation, cooperation and telecommunications. These negotiations were structured around revised streamlined texts drawn from proposals made by Members, and made further progress on streamlining text.

“Two more rounds are scheduled before MC12: 17-20 March and 28 April-1 May.

“We look forward to a continuation of the constructive engagement and momentum demonstrated in February with the aim of developing a consolidated negotiating text by MC12.

“The co-convenors continue to ensure this JSI is transparent and inclusive: meetings are open to all WTO Members; and all proposals and reports are available on the WTO’s web portal.”

The JSI group had hoped to have a consolidated draft text by the 12th Ministerial Conference in June this year before the Ministerial Conference was cancelled because of the pandemic. While the COVID-19 pandemic has slowed down progress for a few months, the joint convenors (Australia, Japan and Singapore) remain confident that a draft agreement can be achieved with a roadmap for completion by the 2021 Ministerial. Most documents generated by the JSI group are not publicly available. However, the titles of documents are available publicly. As of August 21, 70 documents are listed as having been submitted by Members on the JSI on electronic commerce. The most recent document is dated August 19 and is titled a “Stocktake text” (INF/ECOM/57). A July 23 document is titled “Facilitator’s note – Services Market Access — List of Proponents’ sectors of interest”).

Statements by the eight candidates seeking to become the next WTO Director-General

What follows are excerpts from candidates’ prepared statements to the General Council, my notes of their responses to questions at their press conferences following meeting with the General Council, and my notes on their comments at webinars hosted by the Washington International Trade Association (WITA) and the Asia Society Policy Institute.

Dr. Jesus Seade Kuri (Mexico)

In his prepared statement to the General Council on July 15, Dr. Seade listed completion of the fisheries subsidies negotiations as an issue to be resolved in the first 100 days of his becoming Director-General. The Joint Statement Initiative (JSI) on E-commerce was one of a number of JSIs announced at the 11th Ministerial Confernce in Buenos Aires in 2017. Dr. Seade included all JSIs as areas where he would be expecting concrete results by June 2021.

“1. Within the first hundred days: I will work closely with
members in seeking to i. reach agreement on fisheries subsidies.” (Google translation from French).

“2. Second horizon, towards our MC12 conference, and aware of the fact that its date is not yet fixed, it is important that we look for concrete results
by June 2.021, both in joint initiatives and in issues that aim to give us a more transparent and effective WTO.” (Google translation from French).

At his press conference on July 15 after his meeting with the General Council, Dr. Seade was not asked any questions about the fisheries subsidies negotiations or about the e-commerce JSI.

WITA had a webinar with Dr. Seade on July 7. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-seade/. During the webinar, Dr. Seade was not asked specifically about either the fisheries subsidies negotiations or about the Joint Statement Initiative on E-commerce. However, he was asked a question on whether, if he was selected as the next Director-General, he would encourage plurilateral negotiations. All of the JSIs are plurilateral negotiations open to any Member who wishes to join. Below are my notes on the question asked and Dr. Seade’s response on plurilaterals.

Q: On the role of plurilaterals in the WTO, would you encourage their use if you are selected as the next Director-eneral?

A:  On plurilaterals, Dr. Seade tries to take a pragmatic and historic approach.  Looking at the history of the multilateral trading system, the Tokyo Round created a host of plurilaterals which were powerful to create rules that were accepted by many of the most important countries on a range of subjects (AD, Subsidies) — the so-called Tokyo Round Codes.  It was a great way to move the process of liberalization forward.  In Dr. Seade’s view, the great achievement in the Uruguay Round was to move to substantively universal rules (agriculture and textiles which had previously been outside of GATT rules were brought inside; the Tokyo Round Codes moved to Agreements applicable to all).  The Uruguay Round was possible because there were huge inducements for developing countries to accept services, TRIPs in exchange for textiles and agriculture liberalization.  However, the negotiating environment has changed. It is no longer possible to get liberalization through negotiations just betweenthe U.S. and the EU where the results are then accepted by others (e.g., agriculture). Now negotiations need to include China, India and others who need to be part and where large differences in objectives may make multilateral negotiations more difficult.  Therefore the WTO needs plurilaterals to permit forward movement.  However, the WTO and its Members need to work largely on the basis that any benefits from plurilaterals will be provided to all Members and that the agreement is open to any Member to join later if desired.  In Dr. Seade’s view, if the WTO doesn’t allow use of plurilaterals, progress at the WTO will stop.

Dr. Ngozi Okonjo-Iweala (Nigeria)

Dr. Okonjo-Iweala mentions both concluding the fisheries subsidies negotiations and updating the WTO rules to include rules on e-commerce. She adds the need to bridge the digital divide so that any such rules will have broader application and broader input.

“The WTO appears paralysed at a time when its rule book would greatly benefit from an update to 21st century issues such as e-commerce and the digital economy, the green and circular economies. Issues of women and trade and Micro Small and Medium Enterprises (MSMEs) are important to ensure greater inclusion. Bridging the digital divide to enable Least Developed Countries and other developing countries to participate will be key.”

“My vision is also of a rejuvenated and strengthened WTO that will be confident to tackle effectively ongoing issues such as the fisheries negotiations. With political will, outstanding issues of subsidies that lead to overfishing and unsustainable fishing can be concluded.”

“A rejuvenated WTO must also take on fresh challenges, such as ensuring optimal complementarity between trade and the environment and ensuring that WTO rules best respond to the realities of e-commerce and the opportunities and challenges of the digital economy.”

“Should I be elected, I would work with Members to prioritize delivering a successful MC12 with good outcomes on fisheries, agriculture and other areas. I would also prioritize updating the rulebook * * *.”

During the press conference on July 15 after her meeting with the General Council, Dr. Okonjo-Iweala was asked a question on what progress in negotiations was achievable by the next Ministerial Conference and was also asked a question on how she would work towards ensuring a successful outcome on e-commerce negotiations. My notes on her responses to those questions follow.

On the question of what is achievable by the next Ministerial in 2021 and whether it is best to go after issues one at a time or in a larger grouping, Dr. Okonjo-Iweala indicated that she hoped the WTO Membership would make a decision soon on who should be Director-General so whoever is selected has more time before the next Ministerial. But even if a decision is not made until November 2020, there are some areas that could be ready by the next Ministerial. For example, a fisheries subsidies agreement should be achievable. There was a lot of discussion in the General Council on trust and building trust to move negotiations along. Trust is obviously an important issue. So the WTO may need to sequence issues to build trust by achieving a win or two. Once there are some successes, it should be possible to handle more issues in parallel.

The question on what Dr. Okonjo-Iweala would do as Director-General to see that an agreement on e-commerce was pursued was answered by noting that there was extensive work being done plurilaterally by many Members as one of a number of joint statement initiatives. Dr. Okonjo-Iweala agrees that an agreement on e-commerce is very important, but she notes that there is a digital divide where many poorer countries don’t have the infrastructure to take advantage of e-commerce. The WTO, working with other multilateral organizations, needs to see that resources are put together to help countries address the digital divide. Once the digital divide is addressed, all Members should want to and be able to participate in the e-commerce negotiations, so that the agreement becomes a multilateral one.

WITA had a webinar with Dr. Ngozi Okonjo-Iweala on July 21. https://www.wita.org/event-videos/conversation-with-wto-dg-candidate-dr-ngozi-okonjo-iweala/. During the webinar, Dr. Okonjo-Iweala made an opening statement in which she reviewed the need to generate some early wins for the WTO at the 12th Ministerial Conference including both fisheries subsidies and e-commerce. Dr. Okonjo-Iweala was also asked speciically about e-commerce and digital trade and how to move those talks forward. Below are my notes on those portions of the webinar.

Dr. Okonjo-Iweala stated that the WTO is really at a critical moment, an existential crisis.  She believes that something needs to be done to give a lift to the organization.  Dr. Okonjo-Iweala would focus as Director-General on the next Ministerial Conference and what wins could be obtained at the Conference.  She believes that concluding the fisheries subsidies negotiations with its issues of overcapacity and overfishing should be pursued and could be concluded even before the Ministerial Conference.

Dr. Okonjo-Iweala also believes that the WTO must update the rule book to cover 21st century issues.  As she has noted, the digital economy is driving the world during the COVID-19 pandemic and is of great importance to many Members.  Dr. Okonjo-Iweala believes that the WTO needs to develop rules for e-commerce as e-commerce is the future of much of trade. At the same time, the WTO must address the digital divide so participation and benefits are available to all.

Q: On e-commerce and digital trade, how do you see rules being developed? Should the rules be based on the historic principles of the WTO?

A:  Dr. Okonjo-Iweala believes that ecommerce and digital trade are very important topics. The WTO must ensure two things. First, traditional WTO principles should apply (non-discrimination, etc.).  She believes that it would be important to get many more countries to join the talks. Stated differently, Dr. Okonjo-Iweala believes the WTO should always prefer a multilateral negotiation and agreement. However, sometimes plurilaterals are needed to make progress.  Second, the WTO working with other organizations needs to address the digital divide. In Dr. Okonjo-Iweala’s view, the fact that many developing countries are not participating flows from the fact that they don’t have the infrastructure to engage in e-commerce to a significant extent and hence neither participate in the talks nor gain benefits.  This is the digital divide.  WTO is not a financial institution, so the WTO needs to team with other organizations to help developing countries overcome the digital divide which will permit these Members to then participate in the negotiations.  Dr. Okonjo-Iweala also believes that the level of commitments under an e-commerce agreement will need to vary based on the ability of Members to accept obligations and to contribute.

Mr. Abdel-Hamid Mamdouh (Egypt)

Mr. Mamdouh’s prepared statement to the General Council on July 15 identified both fisheries subsidies and the various Joint Statement Initiatives, including e-commerce, as priorities for movement by the 12th Ministerial Conference (MC12).

“For the immediate future, we need to set clear priorities. MC12 is around the corner and it needs to be a turning point in the direction of the WTO and take it on a different path towards ‘positive territory’. I believe we need to do two things: 1) agree on a reform agenda and 2) achieve concrete progress on issues currently under negotiation.

“On current negotiating subjects, fisheries subsidies come first as the one item expected to be concluded by the end of 2020. It is crucial for our future to have a successful conclusion of the fisheries subsidies negotiations.

“There are also the Joint Statement Initiatives on e-commerce, domestic regulation in services, MSMEs and investment facilitation. These initiatives address pressing issues of importance to many Members and pause new challenges.”

During Mr. Mamdouh’s press conference after his meeting with the General Council, he was asked one question about the agenda for the twelfth Ministerial Conference which resulted in an answer that included pursuing completion of the fisheries subsidies agreement and work on the Joint Statement Initiatives. My notes on Mr. Mamdouh’s response is provided below.

Mr. Mamdouh was asked if there will be enough time to prepare for the next Ministerial to have a positive agenda/outcome. He answered that if the selection process concludes before November, there should be sufficient time. In his view, the next Ministerial needs to be a turning point for the WTO. At MC12, the WTO must have a clear agenda for reform. There is not currently a mainstream focus on reform; issues are being raised ad hoc. Second, the WTO needs to score successes – fisheries subsidies and progress on joint statement initiatives are the likely areas for success.

WITA had a webinar with Mr. Mamdouh on June 23. https://www.wita.org/event-videos/conversation-candidate-hamid-mamdouh/. During the webinar, Mr. Mamdouh was asked a question about e-commerce and was also asked his views on plurilaterals and whether he would support their use if he becomes the next Director-General. As all of the Joint Statement Initiatives involve plurilateral negotiations, the question applies to e-commerce along with the other JSIs. Below are my notes on the questions and Mr. Mamdouh’s responses.

Q: U.S. has raised various issues of importance to them. How do you see elements of a reform agenda getting U.S. support if U.S. concerns are not addressed or included in the agenda?

A: Mr. Mamdouh indicated that U.S. concerns were being examined at the WTO. He took e-commerce as an example. Looking at the e-commerce agenda at the WTO, Mr. Mamdouh is of the view that there needs to be discussions that haven’t taken place at the WTO in a very long time.  Trade issues today are of increased complexity where issues of increased trade liberalization are juxtaposed with regulatory interests. E-commerce/digital trade has a slew of legitimate regulatory issues where Members can have very different perspectives. Examples would include privacy policies, cyber security, localization among others.  In Mr. Mamdouh’s view, these regulatory policy issues are both legitimate and of different importance to different Members.  So the question arises as to how new rules deal with these diversities of Member needs while ensuring rules that respect different needs while ensuring actions by Members are the least trade restrictive  While the Sanitary and Phytosanitary Agreement and Technical Barriers to Trade Agreement are examples of issues with similar types of competing regulatory needs, many of the new issues are as or more complex. These new complex areas are not seeing discussions to date between trade folks, regulators and lawyers to help clarify the needs, challenges and options that may be available to permit WTO progress on fashioning new rules. In Mr. Mamdouh’s view, WTO Members must do a much better job of discussing issues and clarifying them so the options can be taken back home and reviewed to permit Members to get into real negotiations.

Q: Plurilaterals can be defined as agreements by like minded countries on topics.  How do you view plurilaterals and would you support them if you were selected as the next Director-General?  Should most favored nation treatment be eliminated for plurilaterals, so the benefits of plurilateral liberalization only goes to those who are participating?

A:  In Mr. Mamdouh’s view, one needs to clarify what is meant by plurilaterals.  Are we talking about plurilateral processes or outcomes?  Mr. Mamdouh views that there are two types of plurilaterals that have been pursued over time. The first is a plurilateral process that produces plurilateral outcomes — that is where the Agreement applies only to the signatories to that agreement. These are like the agreements in Annex 4 to the WTO (civil aircraft, government procurement, dairy and bovine meat). While these can be pursued they are less likely as they require the consent of all Members.  There are also plurilateral negotiations that produce multilateral outcomes. That is, the resulting agreement provides benefits to all even though the agreement was among some of the Members.  These are quite normal and are clearly within the spirit of the WTO.  Practically, Members engaged in plurilaterals will want there to be a critical mass of Members engaged for these types of plurilateral agreements to move forward. Moreover, Mr. Mamdouh noted that there is no requirement that all Members agree to the launch of plurilateral negotiations. That is not a requirement of the WTO and should not be assumed.  On the question of whether plurilateral agreements will opt increasingly to limit benefits to members, Mr. Mamdouh believes that the concept of most favored nation treatment in plurilaterals will undergo a stress test in the coming years as there are issues re reciprocity.    

Amb. Tudor Ulianovschi (Moldova)

On July 16, Amb. Ulianovschi was the first candidate to meet with the General Council. In his prepared statement when Amb. Ulianovschi got to what he thought the immediate priorities for the new Director-General should be, completing the fisheries subsidies negotiations and making progress on Joint Statement Initiatives were two of the priorities listed.

“In terms of immediate priorities for the future Director General of the WTO, the following should be considered (including in the preparation process for MC12):

“2. Build upon the progress achieved already on the fisheries subsidies negotiations and strongly support Members to achieve a negotiated text by MC12;

* * *

“4. Further encouraging and supporting discussions on new and existing Joint Initiatives, particularly: on Elecronic Commerce, Investment Facilitation for Development, Domestic Services Regulation, as well as the dialogs of the informal group on MSMES and SMEs and others.

“5. Promoting negotiations of new commercial disciplines and address issues of the digital environment and new areas of intellectual property.”

During Amb. Ulianovschi’s press conference after his meeting with the General Council, the last question he was asked had Amb. Ulianovschi point to the Joint Statement Initiatives (which include electronic commerce) as a sign Members could make progress on reform issues. Amb. Ulianovschi was not asked specifically about either fisheries subsidies or electronic commerce. My notes on the question asked and Amb. Ulianovschi’s answer are provided below.

Q: The last question asked was about getting the WTO out of crisis; in particular, what is the core factor causing the crisis and how would Mr. Ulianovschi address the factor if he was selected as Director-General.

A: Mr. Ulianovschi answered that this is an existential question for the WTO. The first priority, in his view, to get out of the crisis is for there to be trust among Members. The role of the Director-General is to enhance feelings of trust through confidence building steps. Many issues which have been unresolved for a long time have undermined trust. Joint initiative statement issues are advancing and give hope that the organization is relevant and can deliver. This is a good sign that there is a common purpose among the Members.

WITA held a webinar with Amb. Tudor Ulianovschi on August 26, 2020.  https://www.wita.org/event-videos/conversation-with-tudor-ulianovschi/. During the webinar, Amb. Ulianovschi was asked two questions where his response included views on the fisheries subsidies negotiations and/or on e-commerce/digital trade. My notes on the questions asked and on Amb. Ulianovschi’s responses are provided below.

Q:  If you are the next Director-General, what would be your priorities for the 2021 Ministerial Conference and how would you define success?

A:  In Amb. Ulianovschi’s view, the next Ministerial must show some results.  He believes the top priority would be completing the ongoing negotiations on fisheries subsidies, which is important to fulfill U.N. Sustainable Development Goal 14.6.  He believes that the Members are close to getting language agreed to.  Completing the fisheries subsidies agreement Is just the first step, but it is an important one.  He would also focus on ongoing Joint Statement Initiatives (JSI) such as on  digital trade/e-commerce.   JSIs are plurilateral negotiations as opposed to multilateral ones.  As seen by Members during the COVID-19 pandemic, digital trade is of growing importance.  A key question is how to help least developed countries get involved and get help building the infrastructure so such Members can participate.  Also Members will need to deal with a range of issues surround digital trade such as cybersecurity, privacy, etc.  Amb. Ulianovschi stated that a Ministerial declaration would be expected at the 2021 Ministerial on e-commerce.  He also noted that there are other JSIs as well that are being discussed.  He believes that at the next Ministerial Members should have a clear message of support for small, medium and micro enterprises.  Such enterprises are a huge issue for most Members.  Many of these businesses are being severely challenged by the COVID-19 pandemic and many will likely go bankrupt.  WTO Members need to help identify how the WTO and other organizations can work with them (financial institutions and ICC). 

Q:  You say that business as usual isn’t viable anymore.  What has changed?  If plurilateral work is where we are headed,  do we need to rethink the most favored nation principle?

A:  Amb. Ulianovschi stated that when one looks at the WTO, one sees that there is a lack of trust which in turn has meant there is lack of forward movement on negotiations.  Thus, it is clear that  business as usual isn’t working.  But that recognition doesn’t mean that the organization starts from zero.  What is clear is that things need to change.  The WTO is not responding to 21st century issues which cannot continue if the organization is to maintain relevance.  On the issue of multilateral vs. plurilateral negotiations, the only multilateral negotiation that is proceeding is on fisheries subsidies.  As noted, Amb. Ulianovschi hopes that the fisheries subsidies negotiations will be completed by the next Ministerial in 2021.  Where trust is lacking, he belives Members need to seek progress from the bottom up – finding like-minded Members who are concerned about an issue and willing to negotiate rules on the issue.  Plurilaterals are going on (JSIs are an example).  This is a good sign as plurilaterals show that a number of members are concerned with a topic.  Any plurilateral negotiation must be done in a transparent and inclusive manner.  Based on his discussions with Members, Amb. Ulianovschi knows that there is a large support for keeping MFN applicable to benefits from plurilaterals.

H.E. Yoo Myung-hee (Republic of Korea)

Minister Yoo in her prepared statement to the General Council identified both fisheries subsidies and the JSI on electronic commerce as priorities for the 12th Ministerial.

“MC12 will be a critical milestone of Members’ ability to deliver results and set the agenda for the future. The new Director-General must help make it a success in order to build trust in the WTO.

“A successful outcome on fisheries subsidies will demonstrate the credibility of the WTO and its ability to contribute to global objectives on sustainable development. It will also provide the world with the benefits for
trade and environmental sustainability. I will do everything I can to support these negotiations and bring them swiftly to a successful conclusion, for endorsement by Ministers at MC12.

“Electronic commerce is also an area in which we should work towards tangible outcomes. The COVID-19 pandemic has highlighted the importance of this issue. A comprehensive agreement by next summer may be ambitious, but I think we can take some concrete steps and lay out the path forward for post-MC12 work.”

During Minister Yoo’s press conference after her meeting with the General Council, she was asked questions on how she would restore trust if selected the next Director-General and how she would bring major Members onto issues being considered. Fisheries subsidies and e-commerce are mentioned in one or the other answers. My notes on the questions and answers provided are presented below.

Q: A question was asked as to how Minister Yoo would restore trust if selected as the next Director-General.

A: Minister Yoo noted her experience in negotiating trade deals with all level of countries around the world. She knows what it takes to negotiate and what it takes to bring negotiations to a close. She is confident that she can earn confidence from Members and achieve tangible outcomes. The key is to obtain even a small success at the MC12 (e.g., fisheries subsidies agreement by then) which would help build trust and convince the world that progress can happen at the WTO.

Q: What does it mean for the WTO to be relevant, and how would you bring on major members who may not agree with the issue being considered?

A: Minister Yoo stated that the WTO needs to revitalize its negotiating function and must be able to enforce its rules (by restoring the Appellate Body). Given 21st century realities, the WTO needs to update its rule book and to achieve agreement on issues that have real global effects such as the joint initiative efforts on e-commerce, MSMEs, investments, and other issues. That said, there are open issues from The Doha Development Agenda that are not moving because there are different views on how to move forward. In terms of how you bring members to the negotiating table, part of the answer is to obtain small successes to build trust and momentum.

WITA had a webinar with Minister Yoo on August 11.  https://www.wita.org/event-videos/candidate-h-e-yoo-myung-hee/. During the webinar, Minister Yoo was asked both about the e-commerce negotiations and about the ongoing fisheries subsidies negotiations. My notes on the questions and her responses are provided below.

Q: How important is it to move forward with a WTO reform agenda? In particular digital trade and e-commerce have become much more important to global trade during the pandemic.  How important is it for the WTO to address the lack of rules on digital trade and e-commerce?

A:  Minister Yoo indicated that the negotiations on e-commerce were important before the pandemic and are even more important now. Thus, it is critical to have successful negotiations.  WTO reform is very important generally.  All three pillars of the WTO — negotiations, dispute settlement and notifications and monitoring — need to be strengthened.  The WTO rule book was largely created 25 years ago.  Minister Yoo noted that the world didn’t have the smart phone or even much e-commerce back then.  So the existing WTO rules are limited in their ability to deal with current commercial reality.  It is important that the WTO achieve an agreement on e-commerce to show that the WTO can adapt to 21st century needs.  That said, Minister Yoo cautioned that Members have different views on various aspects of e-commerce.  She believes there are some low hanging fruit — e-signature and trade facilitation issues — that Members could be able to agree on relatively quickly.   However, Minister Yoo also noted that there are difficult issues in e-commerce tied to other government policy objectives — e.g., data transfer, localization — that may take longer to reach agreement on.  In tackling the more difficult set of issues, WTO Members need to look to see if the proposed rule serves a legitimate policy objective of Members.  If yes, then Members need to see if there is a way to achieve the objective in the least trade restrictive manner while facilitating e-commerce.  Considering the full set of issues that are present in the e-commerce talks, it may be too ambitious to achieve an agreement by the 12th Ministerial Conference in 2021.  Hopefully, WTO Members engaged in the talks can achieve a consolidated text by the Ministerial.  And then hopefully Members could agree on a path forward.  Minister Yoo is optimistic that Members will be able to come up with an ambitious agreement.

Q: Fisheries subsidies negotiations were hopefully going to conclude by this summer before the COVID-19 pandemic delayed negotiations. What are your thoughts on how talks can be brought to a successful conclusion?

A:  Minister Yoo stated that the fisheries subsidies negotiations are important to conclude to show the continued relevance of the WTO. The fisheries subsidies negotiations are the only multilateral talks at the WTO that are active (most others are plurilateral).  Achieving agreement on fisheries subsidies can also contribute to the UN’s sustainable development goals.  For both reasons, concluding the negotiations is very important.  Minister Yoo believes that Members should focus their energies on completing the negotiations by the end of this year so that the agreement can be endorsed by Ministers at the next Ministerial Conference in 2021.  For the next Director-General, the most urgent agenda item is to help facilitate the conclusion of the fisheries subsidies talks by the end of this year or at the very latest by the next Ministerial Conference in 2021.

H.E. Amina C. Mohamed (Kenya)

Minister Mohamed was the last candidate to appear before the General Council on July 16. Minister Mohamed did not address specifically either fisheries subsidies or the Joint Statement Initiative on e-commerce in her prepared statement to the General Council.

Similarly, during Minister Mohamed’s press conference after her meeting with the General Council, she was not asked a question dealing specifically with fisheries subsidies or the Joint Statement Initiative on e-commerce, nor did she include mention of either in answer to any of the questions asked.

WITA had a webinar with H.E. Mohamed on August 6. https://www.wita.org/event-videos/ambassador-amina-mohamed/. During the webinar, Minister Mohamed referenced digital trade in her opening comments and was asked a question about plurilateral negotiations. As noted before all of the Joint Statement Initiatives (including e-commerce) are plurilateral negotiations . My notes on her comments on these issues are provided below.

Opening statement:  Once the world recovers from the pandemic, the WTO will still face challenges of renewal and updating the rules to address global issues such as climate change, the digital revolution, and sustainable development.

Q: on developing new rules at the WTO, it has proven difficult to get agreement among all Members.  This has led to many Members turning to plurilaterals to achieve progress.  What are your views on plurilaterals?  Should MFN treatment of benefits be reconsidered where plurilateral agreements are the basis for liberalization or new rules?

A:  Minister Mohamed noted that plurilateral agreements are not new in the WTO; there were plurilateral agreements in the GATT.  She believes that plurilateral agreements will continue to be pursued and be part of the trading system.  Indeed, Minister Mohamed stated that the completion and/or start of plurilateral negotiations was a “good” that came out of the Nairobi and the Buenos Aires Ministerial Conferences in 2015 and 2017 respectively.  Countries that want to take on additional obligations will come together to negotiate new obligations for themselves.  In this way, plurilaterals complement the multilateral system.  Minister Mohamed stated that once there is a plurilateral agreement, it is important to share the benefits on an MFN basis if you want broad acceptance by Members.  Minister Mohamed had been the chair of the Nairobi Ministerial at which an update to the Information Technology Agreement (ITA2) was agreed to. Before the Ministerial, Minister Mohamed had had to travel to a number of capitals to get agreement to apply benefits on an MFN basis. At the end, the benefits of ITA2 are shared on an MFN basis and the agreement is open to all Members who want to join at a later date.  This led to unanimous acceptance of the ITA2 at Nairobi in 2015.  Minister Mohamed believes that it is important for ongoing plurilateral negotiations to ensure that the benefits are applied on MFN basis and that the agreement is open to all Members.

H.E. Mohammed Al-Tuwaijri (Saudi Arabia)

Minister Al-Tuwaijri was the first candidate to meet with the General Council on July 17. In his prepared statement, Minister Al-Tuwaijri identifies fisheries subsidies and e-commerce as two early deliverables for the WTO at the 12th Ministerial Conference in 2021.

“And finally, concerning the first question on what opportunities and solutions will emerge from current challenges, the existing delay in convening Ministers for the 12th Ministerial Conference may be a blessing in disguise. If we move quickly to take advantage of the opportunity of having an additional year to prepare, we could find and deliver solutions at MC12, particularly on fishery subsidies and electronic commerce and digital trade, which would demonstrate that the WTO can address issues in the public good – that would deliver on your goal of ‘optimal use of the world’s resources in accordance with the objective of sustainable development’ – while recognizing the contribution of e-commerce to economic growth in all markets, which has been emphatically affirmed during the COVID-19 pandemic.

“Although concluding the fishery subsidies negotiations would be a welcome sign that WTO Members can agree on something, we should not exaggerate the impression that this small step will make on our constituents. We need to aim higher, and the DG must work overtime to support a more complete agenda for the future of the WTO by MC12.”

During Minister Al-Tuwaijri’s press conference after meeting with the General Council, one question asked about WTO reform resulted in an answer by the Minister which provided both fisheries subsidies and e-commerce as issues where results by the 12th Ministerial Conference were possible. My notes on the question and Minister Al-Tuwaijri’s answer are provided below.

On the issue of WTO reform, Minister AlTuwaijri recognized that the WTO is a member driven organization. Second, the Director-General has a function to facilitate and to assess, but there is also room to improve the Director-General’s role. For example, the next ministerial (MC12) has been delayed til 2021. The delay provides an opportunity to improve the discussion at MC 12 and the outcomes that are possible. Bringing management and leadership skills to the Director-General position will permit setting goals, metrics for measuring progress in achieving those goals and providing a feedback loop on gaps that need to be addressed. Certain current issues should be achievable, such as fisheries subsidies and e-commerce. In the Minister’s view, COVID-19 and post-pandemic recovery provide the WTO an opportunity to address core needs of Members by doing a performance assessment. Where are the gaps in performance? Why did those gaps develop? How should the WTO proceed to eliminate the gaps? From his business and government experience, Minister Al-Tuwaijri knows that this type of transformation of the WTO to a more goal-oriented organization is possible.

WITA held a webinar with Minister Al-Tuwaijri on August 5, https://www.wita.org/event-videos/director-general-candidate-he-mohammed-al-tuwaijri/. During the webinar, Minister Al-Tuwaijri was asked his views on plurilateral agreements, which include the Joint Statement Initiatives such as the one on e-commerce. My notes on the question and Minister Al-Tuwaijri’s response follows.

Q: Do you see plurilateral negotiations as a good alternative to the lack of progress in multilateral talkes?

A:  Minister Al-Tuwaijri responded that his short answer would be Yes.  Members need to be able to move on where multilateral talks are blocked or not occurring.  So in Minister Al-Tuwaijri’s view plurilateral negotiations and agreements are part of the answer.  Because plurilateral agreements have existed for some time, Minister Al-Tuwaijri is interested in why some Members don’t join the agreement over time if the agreement is open to all and provides MFN benefits.  The answer to the “why” question is important if plurilaterals are to be more effective and lead to the agreements becoming multilateral over time.

The Rt Hon Dr. Liam Fox MP (United Kingdom)

Dr. Fox was the last candidate to appear before the General Council. His prepared statement has a section which reviews what Dr. Fox considers one of the new Director-General’s first tasks, delivering a successful 12th Ministerial Conference in 2021. Among the issues to be addressed are completion of the fisheries subsidies negotiations and progress on the Joint Statement Initiatives, including on e-commerce.

“Now, one of the first tasks for a new DG will be to deliver a successful 12th Ministerial Conference. The contents are, of course, for the members to agree but it is essential that the DG works with members to produce ideas and an agenda that, yes, excites us here at the WTO but is also seen as relevant outside. It must focus on outcomes, not process, helping the real businesses – large, medium, small and micro – upon which real prosperity depends.

“So what are some of our specific challenges?

“Well, despite remaining gaps, members are perhaps closer than they have been in the past to agreeing new rules to discipline harmful fisheries subsidies, and we must push for an outcome as soon as possible to meet the SDG goal set by Leaders. But, this is not just about fish, but about showing that the WTO can take steps on sustainability more generally – an area where members are rightly bringing forward other ideas, and where the public attach great importance.

“I know many members are also keen to make progress on Joint Initiatives on e-commerce, services, MSMEs and investment – these will be an important part of the discussions in the coming months.”

During Dr. Fox’s press conference after his July 17th meeting with the General Council he was asked one question on the types of reform needed. In his answer Dr. Fox mentioned fisheries subsidies as one topic. My notes on the question and his answer are provided below.

The last question inquired into what reform is needed. Dr. Fox articulated that reform should be viewed in three buckets. The first is conceptual reform. By this he means, Members recommitting to the basic principles of the WTO (most favoured nation, national treatment and transparency of commitments). He believes this is what MC 12 needs to focus on. The second is organizational reform. By this Dr. Fox means what does the team look like, the Director-General being first among equals; selecting Secretariat staff that are the most talented and challenging group. The third is policy reform. By that, Dr. Fox means what issues will be addressed — legacy issues and issues to update organization such as fisheries subsidies; resolution of the Appellate Body impasse. Dr. Fox concluded by saying that the Director-General position is a job for a politician and not for a technocrat at this time.

WITA had a webinar with Dr. Fox on July 30, 2020. https://www.wita.org/event-videos/conversation-with-dr-liam-fox/. During the webinar, Dr. Fox referenced each of the fisheries subsidies negotiations and updating the rules to cover e-commerce briefly. My notes on his comments are provided below.

Dr. Fox opined that the fisheries subsidies negotiations and around that the broader question of sustainability are issues which are not being addressed in the best way by the WTO Members.  The WTO and its Members don’t seem interested in using NGOs and young people who have a deep interest in the oceans by including them in the communication process so that there is better understanding that what the WTO is concerned about are issues of interest to the people of the world.  In Dr. Fox’s view, there is a disconnect between what the WTO is doing and what the general public is concerned about that has undermined the sense of joint endeavor that was important in the Uruguay Round.

Dr. Fox reviewed the importance of taking forward issues on e-commerce and trade in services. For Dr. Fox, the key question is how does the WTO bring its rule book up to date particularly on the changes in technology. Once the rule book is brought up to date, then the key is ensuring that all Members comply with the rules.

Conclusion

All eight of the candidates to become the next Director-General of the WTO view the completion of the fisheries subsidies as an important early objective and deliverable to demonstrate the WTO’s continued relevance. An agreement on fisheries subsidies would also help support the UN’s sustainable development goals.

All candidates also understand that there is an urgent need to update the WTO’s rule book with the most obvious example being the lack of agreed rules on electronic commerce and digital trade. All recognize that the role of digital trade has been critical to help countries during the COVID-19 pandemic and will be a critical aspect of global trade in goods and services going forward. The Joint Statement Initiative on e-commerce announced at the 2017 Buenos Aires Ministerial Conference currently has more than 80 WTO Members participating in the negotiations. Those Members account for more than 90% of global e-commerce. Reports from the co-convenors indicate the likelihood that there will be at least a consolidated text available by the next Ministerial Conference to be held in 2021. However, because the JSI is a plurilateral negotiation and not a multilateral one, it is envisioned that benefits will be available on an MFN basis (i.e., to all Members of the WTO whether part of the negotiations or not) and that the agreement will be open to all Members to join as desired.

Update on fisheries subsidies draft consolidated text from June 25

In my last post, I reviewed the fact that a draft consolidated text on fisheries subsidies had been pulled together by the Chair of the Negotiating Group on Rules (fisheries subsidies) and distributed to members at a meeting on June 25. See Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/

While the document (RD/TN/RL/126) was released as a “room document” and hence not publicly available, a copy of the draft consolidated text was published on June 26 by Washington Trade Daily (pages 2-7 of its June 26th edition). As the Washington Trade Daily article reviews, the Chair has made specific (as is often done on these types of texts but particularly on this draft), nothing is viewed as agreed to regardless of whether text is bracketed or not.

The draft consolidated text has ten articles, although the last three are placeholder titles only awaiting further work. The articles are:

  1. Scope;
  2. Definitions;
  3. Prohibition on subsidies to illegal, unreported and unregulated fishing (“IUU fishing”);
  4. Prohibition on subsidies concerning overfished stocks;
  5. Prohibition on subsidies concerning overcapacity and overfishing;
  6. Specific provisions for LDC members;
  7. Technical assistance and capacity building;
  8. Notification, transparency and/or surveillance;
  9. Institutional arrangements;
  10. Dispute settlement.

The negotiations have always been limited to marine wild capture fishing and don’t cover aquaculture. Article 1 is consistent with the intended reach of any agreement.

Article 2, definitions, has just three — “fishing”, “fishing related activities” and “vessel”.

Prohibiting subsidies on IUU fishing is a critical part of the UN sustainable development goal 14.6. Article 3 lays out the prohibition and how the actions of a fishing vessel are determined to be “illegal, unreported or unregulated”. Various Members (coastal, flag State, port State, subsidizing) or regional fisheries management organizations or arrangements (Art. 3.2) can make such findings “based on positive evidence; follow fair, transparent , and non-discriminatory procedures” (Art. 3.3).

Articles 4 and 5 address the other core objective of UN Sustainable Development Goal 14.6, prohibiting subsidies on overfished stocks, overcapacity and overfishing. Both articles contain exceptions or special and differential treatment for developing and least developed countries (LDCs). Depending on whether advanced developing countries waive such provisions, there will be problems for some Members (including the U.S.) in having such exceptions or S&D provisions included in the text. Specifically, LDCs are exempted from the prohibitions of Art. 5.1 “for fishing or fishing related activities at sea” (Art. 5.6(a)) and developing countries “for fishing or fishing related activities at sea within their territorial sea” (Art. 5.6(b)). The draft consolidated text attempts to cover some developing and LDC countries despite the above two exceptions where certain criteria are met (Art. 5.6(c)). It is assumed that Korea, Singapore and Brazil consistent with their prior statements that they would forego special and differential treatment in future agreements would not be eligible for the exceptions or S&D contained in the draft agreement if the final agreement contains such provisions.

There may also be concerns for some Members with what is and isn’t included within the terms capital costs (Art. 5.1.2.(a)) and operating costs (Art. 5.1.2.(b)) as some may feel the terms cover too much while others may view the terms as permitting significant subsidization to continue.

Art. 5.2 lays out some limitations on subsidies for fishing and fishing related activities beyond a Member’s jurisdiction and will also likely be the subject of close scrutiny as being either too limited or too broad depending on Member views.

Article 6 has two subparts, one giving LDCs a transition period once a country is no longer an LDC and the other having Members “exercise due restraint in raising matters involving an LDC Member”.

Article 7 calls on developed country Members and such developing country Members who indicate being in a position to do so to “provide targeted technical assistance and capacity building assistance” to developing countries and LDCs.

As noted, Articles 8-10 have not been fleshed out in the draft consolidated text.

The next meeting on fisheries subsidies is the July 21st open-ended informal meeting of the negotiating group. The efforts of the Chair and his facilitators to explore options on various key issues and to develop this draft consolidated text are a welcome step in trying to get the fisheries negotiations back on track and over the finish line consistent with Ministers’ decision from the 11th Ministerial Conference and the deadline within the UN Sustainable Development Goals. If an agreement is to be reached before the end of the year, there is an urgent need for Members to step forward and find agreed text. Let’s hope for progress next month.

Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25

The WTO started negotiations on fisheries subsidies as part of the Doha Development Agenda at the end of 2001.

At the 11th WTO Ministerial Conference in Buenos Aires, Argentina in December 2017, WTO members adopted a decision to complete fisheries subsidies negotiations by the next Ministerial Conference. See WT/MIN(17)/64; WT/L/1031:

“FISHERIES SUBSIDIES

“MINISTERIAL DECISION OF 13 DECEMBER 2017

“The Ministerial Conference

Decides as follows:

“1. Building on the progress made since the 10th Ministerial Conference as reflected in documents TN/RL/W/274/Rev.2, RD/TN/RL/29/Rev.3, Members agree to continue to engage constructively in the fisheries subsidies negotiations, with a view to adopting, by the Ministerial Conference in 2019, an agreement on comprehensive and effective disciplines that prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU-fishing recognizing that appropriate and effective special and differential treatment for developing country Members and least developed country Members should be an integral part of these negotiations.

“2. Members re-commit to implementation of existing notification obligations under Article 25.3 of the Agreement on Subsidies and Countervailing Measures thus strengthening transparency with respect to fisheries subsidies.”

In mid-January of this year, I posted a piece that looked at Fisheries Subsidies – Will the WTO Members Reach Agreement Before June 2020?, https://currentthoughtsontrade.com/2020/01/13/fisheries-subsidies-will-the-wto-members-reach-agreement-before-june-2020/. The post included the text of the 11th Ministerial decision on fisheries subsidies and a review of the challenges facing the world from overfishing. WTO Members had been aiming to have a completed agreement by the time of the 12th Ministerial which was scheduled to be held in Kazakhstan in early June of this year.

However, with the restrictions on travel in many parts of the world and with restrictions on in-person meetings at the WTO beginning in March of this year because of the efforts to limit the spread of COVID-19, there has been a lack of forward movement on the fisheries subsidies negotiations. Specifically, the 12th WTO Ministerial was postponed from June 2020 to an unspecified time in 2021, and WTO Members could not agree to conduct negotiations without face-to-face meetings. While this inability to negotiate affected all areas of WTO work and negotiations, it called into question whether the WTO Members would be able to deliver the one aspect of the UN Sustainable Development Goals that was in the WTO’s area of competence and expertise.

Now that face-to-face meetings can occur at the WTO and as Members are gaining experience with virtual meetings, the Chair of the Negotiating Group on Rules (fisheries subsidies), Amb. Santiago Wills of Colombia, held an informal meeting of the heads of delegations and presented both a draft consolidated text and provided extensive introductory remarks. While there is a short press release from the WTO on the meeting, the two documents shared with Members are not publicly available as they were labeled as room documents, despite similar statements and draft text having routinely been released publicly both in the fisheries subsidies negotiations previously but also generally in all multilateral negotiations at the WTO over the last 25 years The press release is titled “Fisheries subsidies negotiations chair introduces draft consolidated text to WTO members,” is dated June 25 (date of the meeting) and can be found here, https://www.wto.org/english/news_e/news20_e/fish_25jun20_e.htm. The draft consolidated text is apparently six pages in length and is in a document coded RD/TN/RL126. The lengthy introductory remarks by the Chair are supposedly twelve pages in length and are in a document coded RD/TN/RL/126/Add.1 (Chair’s Introductory Remarks at HoD Meeting on June 25, 2020). The listing of some of the room documents in the Rules negotiating area that include the two documents from June 25, 2020 is embedded below.

RD-TN-RL-docs-part-1

It is obviously excellent news that a new draft consolidated text has been finally circulated to Members and that the Chair is attempting to see if Members can fulfill the objective of reaching a meaningful agreement on fisheries subsidies by the end of 2020. One meeting is scheduled for July 21 (10 a.m., open-ended Negotiating Group on Rules (Fisheries Subsidies). Presumably other meetings will be scheduled for the remainder of the year. While the WTO is typically in recess during August, Members may decide to have some meetings at least on the topic of selecting a new Director-General and arguably could decide to pursue fisheries subsidies as well in August. If not, I would expect a fairly aggressive program of meetings on fisheries subsidies in the fall and into December to achieve an agreement if possible.

The lack of public access to the draft text and the introductory remarks obviously limits the ability of many stakeholders to understand the level of ambition and the areas of concern that remain in the text. To show the departure from what I would describe as normal WTO procedures, I embed below three documents. The first two are parts of TN/RL/W/232 (the cover letter entitled “Working Document from the Chairman”) and Annex C dealing with Fisheries Subsidies (the Chair’s draft text, along with comments from Members). The third is JOB/RL/6 from 1 December 2016 (WTO document is dated 6 December) and is entitled “CHAIR’S REPORT TO THE INFORMAL MEETING OF HEADS OF DELEGATIONS ON THE RULES NEGOTIATIONS”. Obviously, the draft consolidated text in RD/TN/RL/126 is not substantively different in type of document than the chair’s draft text in TN/RL/W/232 (Annex C). Similarly, the introductory remarks to the HoD meeting on June 25 contained in RD/TN/RL/126/Add.1 would appear to be the same type of information as was contained in JOB/RL/6. The retreat from transparency is worrisome to members of the public and should be to WTO Members.

TNRLW232-00

TNRLW232-03

JobsRL6

Conclusion

WTO Members have been pursuing agreement on fisheries subsidies for nearly nineteen years. During that time, the problems of overfishing and the challenges to the world’s supply of wild caught fish have gotten much worse. With the added incentive of being able to address one of the UN’s Sustainable Development Goals, WTO Members have been attempting to reach an agreement on fisheries subsidies this year. The chair of the Negotiating Group on Rules (fisheries subsidies), working with facilitators, has pulled together a consolidated draft text which has now been given to Members with a renewed work program ahead for negotiators. Whether the new text will actually achieve the sustainable development objective or the literal terms of the 11th Ministerial decision won’t be known til an agreement is reached.

While the development of a draft text is obviously very desirable, the inexplicable move away from transparency to the public by the act of calling the text and introductory comments “room documents” and thus not releasing them is not only unfortunate but will do nothing to help obtain greater public support for the WTO. Hopefully, the coding of the documents as “room documents” will be corrected (or additional copies with different codes created) and the two documents will be released publicly immediately. Time will tell if this lack of transparency is yet another part of the building existential crisis for the organization.