Amb. Santiago Wills (Colombia)

WTO Fisheries Subsidies Agreement negotiations — the Chair’s May 11 text and the road to the July 15 virtual TNC meeting with trade ministers

On May 11, Ambassador Santiago Wills of Colombia, the Chair of the Negotiating Group on Rules responsible for the ongoing fisheries subsidies negotiations presented a a Draft Consolidated Chair Text to a meeting of the heads of delegation. The news release from the WTO, “Fishing subsidies negotiations chair introduces new text in run-up to July ministerial,” 11May 2021, https://www.wto.org/english/news_e/news21_e/fish_11may21_e.htm, is copied below.

“The chair of the fisheries subsidies negotiations, Ambassador Santiago Wills of Colombia, introduced on 11 May a new draft text aimed at bringing members closer to agreement ahead of the 15 July meeting of ministers. The text is based on members’ collective work and proposes landing zones to curb harmful fisheries subsidies and ensure the sustainability of the world’s oceans.

“‘The aim of this new draft text is to serve as the basis for work toward a clean text to present to a meeting of ministers on 15 July,’ the chair told heads of delegations at a meeting of the Negotiating Group on Rules. ‘This leaves us just two months to finish. The shared sense of urgency is palpable, and we need to harness that sense to finally agree to the compromise landing zones that will represent the ambitious and balanced outcome that ministers in Buenos Aires mandated us to find, to make a substantial and tangible contribution to the health of our shared oceans.’ The new draft text is available here. View the chair’s statement here.

“Under the mandate from the WTO’s 11th Ministerial Conference held in Buenos Aires in 2017 and the UN Sustainable Development Goal Target 14.6, negotiators have been given the task of securing agreement on disciplines to eliminate subsidies for illegal, unreported and unregulated fishing and to prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, with special and differential treatment being an integral part of the negotiations.

“The chair noted that the draft reflects language from WTO members, whether reflected in proposals, or a facilitator’s work, or expressed during meetings and consultations. The whole text is up for discussion and it will ultimately be up to members to resolve the issues that remain open, he said.

“Members will have the opportunity next week to identify key issues they find the most difficult to agree on and then will convene in weekly meetings starting 24 May. Each week will be dedicated to a specific issue in the text.

“’I know it will not be easy. Nothing is easy when 164 members need to reach consensus, but it is doable. The good thing is that we have a complete text in front of us on which we can engage,’ the chair said. ‘Now it’s time to sprint for the finish line.’”

Draft Consolidated Chair Text and Explanatory Note

The draft consolidated chair text is nine pages in length and consists of an introductory page, eleven articles and sixteen footnotes. See Fisheries Subsidies, Draft Consolidated Chair Text, TN/RL/W/276, 11 May 2021, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/TN/RL/W276.pdf&Open=True. Amb. Wills explanatory note is 26 pages and goes through both an introduction, a review of preliminary matters, a detailed discussion of each article and sub-article noting changes from prior drafts, and ends with a review of the work program going forward. See Fisheries Subsidies, Draft Consolidated Chair Text, Chair’s Explanatory Note Accompanying TN/RL/W/276, TN/RL/W/276/Add.1, 11 May 2021, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/TN/RL/W276A1.pdf&Open=True. The text and explanatory note are embedded below.

W276

W276A1

The Chair’s explanation of modifications to earlier texts is useful to understand where major differences continue. Some of the issues with significant differences of views remaining or where attention needs to be focused in the coming weeks include:

  • whether the agreement will apply to fuel subsidies to fishing and fishing related activities at sea that are not “specific” within the meaning of Art. 2 of the Agreement on Subsidies and Countervailing Measures (Art. 1.2);
  • special and differential treatment provisions under Articles 3 (prohibition on subsidies to illegal, unreported and unregulated fishing (Art. 3.8)), 4 (prohibition on subsidies concerning overfished stocks (Art. 4.4)) and 5 (prohibition on subsidies concerning overcapacity and overfishing (Art. 5.5 Alt.1 and Alt. 2));
  • whether disciplines in Article 5 extend to “subsidies for a vessel not flying the flag of the subsidizing Member” (Art. 5.4);
  • specific provisions for least developed country Members (Art. 6);
  • fleshing out Article 7 on technical assistance and capacity building to developing and least developed countries;
  • what additional notification requirements are mandatory or subject to an “extent possible” exception under Article 8;
  • a range of institutional arrangement provisions under Art. 9 depending on whether the agreement is to be an annex to the Agreement on Subsidies and Countervailing Measures or a stand-alone agreement.

To get a true grasp of the range of issues that still need addressing, a careful review of the Chair’s Explanatory Note is required. It is clear that major differences remain on a very large number of topics and many issues go to whether any agreement will truly address the sustainable development goal at the heart of the negotiations. Moreover, there are areas not yet addressed.

For example, looking at Articles 9 (institutional arrangements) and 10 (dispute settlement), there are several issues identified that do not appear in the draft articles such as when the agreement will come into effect and whether some types of disputes will be excluded and whether specific remedies for violations are needed. Paragraphs 129-132 of the Explanatory Note are copied below and review these matters.

“129. Before concluding my remarks on this provision, I would like to highlight one critical institutional issue that has not been discussed in full, which is entry into force. As you know, it could take many months if not years for a new WTO instrument to enter into force. This gap – as well as anything that Members may decide to do during this period, such as a provisional application of this instrument – could affect how we see certain issues. Now that we are in the endgame mode, I would urge you to turn your minds to this issue.

Article 10: Dispute settlement

“130. Dispute settlement, covered in Article 10, also depends on whether the disciplines become an annex to the SCM Agreement or a standalone agreement. This is because Article 30 of the SCM Agreement already provides for application of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and special and additional rules for prohibited subsidies in Article 4 of the SCM Agreement. If the fisheries subsidies disciplines are annexed to the SCM Agreement, these existing rules of the Agreement would apply to the disciplines, unless we specifically decided to depart from them. The current text in Article 10 was added in 126/Rev.1 to reflect this default position.

“131. This text has remained unchanged since then, but this does not mean that we have not been discussing this. In fact, so far in 2021 alone, we have held dedicated sessions on various aspects of dispute settlement, such as non-violation claims and standard of review. And the views exchanged in those meetings were very helpful. In particular, there appears to be a general acceptance that the DSU and Article 4 of the SCM Agreement should be the starting point, and that we should not be inventing new dispute settlement rules for the fisheries subsidies disciplines. Reflecting this understanding, this Article is unbracketed in the new text.

“132. This is not meant to imply that there was full convergence on this provision, or that no more work is needed on it. In fact, during our recent meetings on dispute settlement, some Members wanted to specifically exclude non-violation claims or set a separate standard of review. In addition, I am well aware of the views that fisheries-subsidies-specific remedies and/or countermeasures could be crafted. Removing the square brackets here only means that Article 4 of the SCM Agreement and the DSU are a starting point, on which we can build as needed.”

An active schedule leading up to the July 15 virtual TNC meeting with trade ministers

The Chair on page 26 of his Explanatory Note outlines next steps. With only eight weeks until the virtual TNC meeting with trade ministers to see if a final agreement on fisheries subsidies can be reached, not surprisingly Amb. Wills outlines a very busy schedule of meetings essentially requiring focus and heads of delegation and capital involvement every week. The level of activity is explained in paragraphs 142-146 of Amb. Wills’ Explanatory Note, copied below.

“142. As I said during the last TNC meetings, I will be calling on all of you to engage intensively, in a compromise-seeking, convergence-oriented mode, aimed at quickly finding acceptable landing zones. I also ask you to give these negotiations priority, and to be ready to meet at short notice and in a range of different configurations – be it bilateral meetings, small-group consultations, confessionals, or plenary sessions, including with the engagement of the DG as appropriate – as well as bilateral consultations. If needed, we also need to be ready to work nights and weekends to get this done.

“143. I appreciate and count on your flexibility on the substance and process, as we head into this very intensive phase of our work. Though we should remain flexible, I understand from many of you that a calendar of activities would be useful for your preparation, especially if you require input from capitals. Therefore, I intend to organize thematic weeks starting the week of 24 May as follows:
“• Each week will be dedicated to a specific pillar or pillars from the text.
“• The first two days of each week would be for consultations. This would be an opportunity for Members to reach out to me, and for me to reach out to Members, in respect of particular issues regarding that week’s theme.
“• The rest of each week would be dedicated to meetings in various configurations. This is where flexibility would be required given that the form of meetings would depend on each topic.
“• I can assure you that the principles of transparency and inclusiveness will be respected. And in this regard, I plan to give transparency briefings each week.

“144. An outline of this structure, including the themes for each week, will be circulated shortly. I hope that you will find this calendar of activities useful in terms of your planning.

“145. To help my thinking in structuring specific topics of discussion, I would like to start by first touching base with each of you before we start work during the thematic weeks. Therefore, on 20 and 21 May I intend to hold brief HoDs plus one, in-person, 10-minute confessional style meetings with interested delegations. The idea is for you to identify up to three issues in the text that are the toughest for your delegation. These meetings will be short and to the point; all you have to do is come with your list of those three tough issues and share it with me. Further details, including how to schedule a slot, will be communicated shortly.

“146. I look forward to engaging with all of you during this final stage of these negotiations. I know it will not be easy. Nothing is easy when 164 Members need to reach consensus, but it is doable. The good thing is that we have a complete text in front of us on which we can engage. I am sure no delegation will be entirely happy with the text – you will all find something you don’t like, in addition to things that you do like. Let us now figure out those key issues that require further teasing out in Geneva so that we can present something to Ministers that provides them with clean and straightforward options in July. As I said at the last TNC, the Negotiating Group on Rules has come a long way. Your leadership and willingness to engage over the last year has led us to this point. Now it’s time to sprint for the finish line.”

Conclusion

Ambassador Wills has laid out a very aggressive work program to conclude an agreement that has been being negotiated for twenty years. With fundamental differences among WTO Members on how ambitious an outcome is desired, the challenges, even with the revised text and hard work undertaken in the last year, remain steep.

In my last post, I indicated that in my view the TRIPS waiver proposal and controversy surrounding how to achieve equitable access to COVID-19 vaccines was likely to suck a lot of the oxygen out of the WTO for other issues. See May 10, 2021,  World Trade Organization — possible deliverables for the 12th Ministerial Conference to be held in Geneva November 30-December 3, 2021, https://currentthoughtsontrade.com/2021/05/10/world-trade-organization-possible-deliverables-for-the-12th-ministerial-conference-to-be-held-in-geneva-november-30-december-3-2021/ . Hopefully that assessment will prove to be inaccurate. The world needs WTO Members to achieve a meaningful outcome on the fisheries subsidies negotiations. We should know in a few weeks whether Members can walk (efforts to achieve vaccine equity) and chew gum (fisheries subsidies negotiations) at the same time.

World Trade Organization — possible deliverables for the 12th Ministerial Conference to be held in Geneva November 30-December 3, 2021

On May 3, 2021, the WTO held a Trade Negotiations Committee (“TNC”) session combined with an informal session of the Heads of Delegation in Geneva. Because the WTO over time has eliminated the immediate release of statements of the Chair of the TNC and the Chairs of different negotiating groups who provide updates on the status of negotiations, there is very limited public information on the meeting at the present time. The WTO released a news release on the meeting entitled “Members discuss contours of potential MC12 deliverables”. See TNC and Heads of Delegation Meeting, Members discuss contours of potential MC12 deliverables, May 3, 2021, https://www.wto.org/english/news_e/news21_e/hod_03may21_e.htm. A review of WTO documents listed on the WTO website reveals that Director-General Ngozi Okonjo-Iweala provided a seven page Chair’s statement at the meeting, although the document is not publicly available. See JOB/TNC/91. There was at least one other statement made by chairs of negotiating groups, though the statement is not publicly available. See Council for Trade in Services – Special Session – Report by Ambassador Zhanar Altzhanova, Chair of the CTS Special Session, to the informal TNC and HODs meeting – 3 May 2021, JOB/SERV/307, May 4, 2021. One would assume there were reports on the fisheries subsidies negotiations, on agriculture and on various Joint Statement Initiatives though there is no listing of any such statements.

Copied below is the May 3 WTO news release.

“Heads of WTO member delegations today exchanged views about issues on which they can realistically reach agreements in the run-up to the 12th Ministerial Conference (MC12) later this year, and what needs to happen to make such deals possible. Fisheries subsidies, agriculture and the COVID-19 pandemic featured prominently in the discussions, with several members stressing that delivering concrete negotiated results was critical for the WTO’s credibility. The 3 May gathering was both a formal session of the Trade Negotiations Committee and an informal meeting of Heads of Delegation.

“Summing up members’ interventions at the end of the day, WTO Director-General Ngozi Okonjo-Iweala said what she had heard matched what she had been told in her own consultations: ‘Views are coalescing around the most feasible priorities for delivery between now and MC12 — although of course there are gaps on how we get there and on the content of prospective results.’

“She said three concrete deliverables stood out: an agreement to curb harmful fisheries subsidies; outcomes on agriculture, with a focus on food security; and a framework that would better equip the WTO to support efforts against the COVID-19 pandemic and future health crises.

“Looking to the weeks and months ahead, the Director-General expressed hope that by July members would be able to finalize an agreement on fisheries subsidies and achieve clarity about what can be delivered by MC12, scheduled to run from 30 November to 3 December in Geneva.

“On fisheries subsidies, she urged members to exercise the necessary flexibility to overcome the remaining hurdles. With ministerial involvement likely required to finalize an agreement in July, she called on delegations to work with the chair of the negotiations, Ambassador Santiago Wills of Colombia, to prepare a draft negotiating text with a minimal number of outstanding issues for ministers to resolve. ‘We are almost there, we can see the light at the end of the tunnel,’ she said, stressing she stood ready to help members and the chair translate increased flexibility into an agreement.

“Noting that for many members, meaningful outcomes on agriculture were necessary to make MC12 a success, DG Okonjo-Iweala said that the pandemic, and rising hunger around the world, made a strong case for a WTO ‘food security package’. Elements for a prospective package included public stockholding, the proposed exemption from export restrictions of World Food Programme humanitarian purchases, domestic support and transparency, with some delegations also raising cotton and the special safeguard mechanism.

“The Director-General welcomed the view expressed by many delegations that MC12 can deliver concrete responses on trade and health. The WTO’s spotlight on export restrictions and the need to increase vaccine production volumes was gaining attention and engagement from leaders, she said.

“Reporting on a 14 April event where vaccine manufacturers, international organizations, civil society and members looked at how the WTO could contribute to efforts to combat the global scarcity of COVID-19 vaccines, she said it was clear that underused manufacturing capacity existed in several developing countries.

“DG Okonjo-Iweala praised members’ support to India amid the upsurge in COVID-19 cases there, which followed India’s own exports of a large number of vaccines. ‘That is what the WTO membership should be about — working together, supporting each other,’ she said. She asked members to bring the same sense of common purpose to bear on engaging in text-based negotiations on the TRIPS waiver proposal aimed at finding a pragmatic compromise that works for all.

“With regard to dispute settlement, where many members called for resolution to the impasse over the Appellate Body, the Director-General expressed hope that by MC12 members ‘can reach a shared understanding on the types of reforms needed’.

“The General Council chair, Ambassador Dacio Castillo of Honduras, is consulting on proposals about issues specific to least-developed countries such as the G-90 proposals on special and differential treatment as well as on small economies and areas such as the e-commerce Work Programme, she said.

“She noted that groups of members had signalled a desire to move ahead in areas such as services domestic regulation, e-commerce, investment facilitation, women’s economic empowerment, micro, small, and medium-sized enterprises as well as issues related to trade and climate change.

“For issues not in a position to be concluded this year, the Director-General said members had called for post-MC12 work programmes on multilateral issues relating to agriculture, services, and special and differential treatment as well as in joint statement initiatives in areas including plastics pollution and environmental sustainability.

“DG Okonjo-Iweala said that in the coming days, she would intensify her own outreach with heads of delegation, organizing meetings “in various configurations large and small” to support the chairs of negotiating groups in their efforts to broker compromise among members. She reiterated her commitment to ensuring adequate representation and transparency in these meetings ‘Nothing will be done behind closed doors that people don’t know about,’ she emphasised. She indicated that she would work closely with the General Council chair and the chairs of the negotiating bodies as well as MC12 chair Kazakhstan to conduct these meetings.

“Emphasising the tight timeframe for members to resolve their outstanding differences, the Director-General said the ‘path to July’ would involve a large number of intensive meetings aimed at narrowing gaps. ‘Week in, week out, this is what we will do now.’”

It is often the case that the U.S., European Union and China release their statements at events like the May 3 TNC session. Reviewing the webpages for the three Members’ WTO operations shows a statement only for the EU. See EU Statement at the Trade Negotiations Committee/Heads of Delegation meeting, 3 May 2021, Statement delivered by Ambassador João Aguiar Machado, https://eeas.europa.eu/delegations/world-trade-organization-wto/97682/eu-statement-trade-negotiations-committeeheads-delegation-meeting-3-may-2021_en.

The EU seeks a number of specific outcomes for the 12th Ministerial Conference and emphasizes the need to keep the agenda limited to permit success. The EU’s list starts with the conclusion of the fisheries subsidies agreement negotiations and secondly achieving agreement on trade and health including increasing COVID-19 vaccine production.

“Firstly, on fisheries subsidies; the EU supports the Chair’s efforts to move the negotiations forward and the
Director-General’s involvement and intent to achieve an outcome already in July. With this in mind, we need to
consider how best to use the short time ahead. These negotiations are a test case of the ability of the WTO to
deliver on the Sustainable Development Goals, in this case SDG 14.6. We are already late, well passed the
deadline that Heads of State and Government instructed us, here at the WTO, to deliver. We have full
confidence that Ambassador Wills will find the best way forward for these negotiations.

“Secondly, on trade and health, we must work towards a Ministerial Declaration that brings together key
elements of the Ottawa Group proposal on Trade & Health (export restrictions, transparency, trade facilitation)
as well as progress on the expansion of production capacities through voluntary licensing and, where necessary,
supporting the use of the available TRIPs flexibilities.”

Beyond these two deliverables, the EU looks for an agreed work program for reform of the WTO’s three core functions — negotiations, transparency/monitoring, and dispute settlement. Restoring a functioning two-tier dispute settlement system is the top priority in this area followed by improved notification practices.

The EU supports the various Joint Statement Initiatives and intends to propose additional ones on industrial subsidies, state-owned enterprises, and trade and environment topics.

The EU’s proposal on agriculture differs in part from the summary of views presented by DG Okonjo-Iweala as addressing export restraints, particularly for World Food Programme purchases is a priority while other issues including public stockholding (and other forms of domestic support) is viewed as more appropriate for a work program outcome from the 12th Ministerial.

Developments in the last week

The WTO held a two day General Council meeting on May 5-6 with the big news being the United States’ indication that because of the extraordinary circumstances of the global COVID-19 pandemic, the United States would support the proposed waiver of certain TRIPS obligations on medical goods for the duration of the pandemic, more specifically being willing to enter into text negotiations in the TRIPS Council. See May 6, 2021, COVID-19 vaccines — role of WTO and developments at May 5-6, 2021 General Council meeting on TRIPS Waiver, https://currentthoughtsontrade.com/2021/05/06/covid-19-vaccines-role-of-wto-and-developments-at-may-5-6-2021-general-council-on-trips-waiver/.

The major countries within the EU have come out opposing the U.S. change of position on the waiver proposal and have urged the United States to remove export restrictions on vaccines and raw materials and other inputs, See The Hill, EU leaders criticize Biden push to waive COVID-19 vaccine patents: Not a ‘magic bullet’, May 8, 2021, https://thehill.com/policy/international/europe/552459-eu-leaders-criticize-biden-push-to-waive-covid-19-patents-not-a; Euronews, EU leaders urge US to end COVID-19 vaccine export limits amid patents controversy, 8 May 2021, https://www.euronews.com/2021/05/07/european-leaders-urge-u-s-britain-to-match-eu-generosity-on-vaccine-exports. Not surprisingly, the move was also criticized by the pharmaceutical and biotech industries. See, e.g., McDonnell Boehnen Hulbert & Berghoff LLP – JDSupra, BIO & IPO Issue Statements on Biden Administration’s Support for Proposed WTO Waiver, May 7, 2021, https://www.jdsupra.com/legalnews/bio-ipo-issue-statements-on-biden-3271048/.

There have been additional announcements by the WHO on vaccines receiving emergency use authorization (first of two Chinese vaccines was approved on May 7, 2021; a second is pending), additional vaccine producers have reached agreements with COVAX for supplying vaccines once their vaccines are approved by the WHO (Moderna, Novavax), and increased production targets by major COVID-19 producers (e.g., Pfizer raised its target for 2021 to 3 billion doses from 2.5 billion and increased 2022 from 3 billion doses to 4 billion doses; Moderna increases production forecast for 2021 to 800 million to 1 billion and is making investments to increase production in 2022 to 3 billion doses). See, e.g., World Health Organization, WHO lists additional COVID-19 vaccine for emergency use and issues interim policy recommendations, 7 May 2021, https://www.who.int/news/item/07-05-2021-who-lists-additional-covid-19-vaccine-for-emergency-use-and-issues-interim-policy-recommendations; Gavi, Gavi signs agreement with Moderna to secure doses on behalf of COVAX Facility, 3 May 2021, https://www.gavi.org/news/media-room/gavi-signs-agreement-moderna-secure-doses-behalf-covax-facility; Gavi, Gavi signs agreement with Novavax to secure doses on behalf of COVAX Facility, 6 May 2021,https://www.gavi.org/news/media-room/gavi-signs-agreement-novavax-secure-doses-behalf-covax-facility; Wall Street Journal, Pfizer Lifts Covid-19 Vaccine Production Targets for 2021, 2022, May 7, 2021, https://www.wsj.com/articles/pfizer-lifts-covid-19-vaccine-production-targets-for-2021-2022-11620425904; Moderna, Moderna Reports First Quarter Fiscal Year 2021 Financial Results and Provides Business Updates, May 6, 2021, https://investors.modernatx.com/news-releases/news-release-details/moderna-reports-first-quarter-fiscal-year-2021-financial-results

What is clear is that the increased attention that will be paid by WTO Members on the waiver proposal within the TRIPS Council will likely suck a lot of oxygen out of the WTO in the coming months for other negotiating issues, many of which remain controversial in their own right. Any text based agreement on a TRIPS waiver is unlikely until close to the 12th Ministerial (and unlikely then if EU opposition remains or the U.S. is unable to achieve acceptable text). Thus, the remaining months before the 12th Ministerial Conference will present some major challenges to the WTO Members in their efforts to come up with achievements to keep the WTO relevant going forward. The U.S. move also creates a division with European allies and appears to have been taken without consultation with those allies ahead of last week’s announcement — a departure from the Biden Administration’s approach to date.