Amb. Santiago Wills

An early test for the incoming WTO Director-General — helping Members get the Fisheries Subsidies negotiations to a conclusion

· February 22, 2021 · Fisheries Subsidies negotiations · , , , , · No Comments

Dr. Ngozi Okonjo-Iweala in her statement to the WTO membership during the virtual Special Session of the General Council on February 15 after the Members appointed her the next Director-General made clear that an early deliverable for the WTO was completion of the Fisheries Subsidies negotiations which have been going on since the end of 2001 and were due to have been completed in 2020. See February 16, 2021, Special Session of the General Council at WTO appoints Dr. Ngozi Okonjo-Iweala as the seventh Director-General, https://currentthoughtsontrade.com/2021/02/16/special-session-of-the-general-council-at-wto-appoints-dr-ngozi-okonjo-iweala-as-the-seventh-director-general/.

The Chair of the Negotiating Group on Rules, Amb. Santiago Wills of Colombia, has held two sets of meetings so far in 2021, one in January and one just last week. See WTO Negotiations on Fisheries Subsidies, WTO members resume work on fisheries subsidies negotiations using latest revised text, 22 January 2021, https://www.wto.org/english/news_e/news21_e/fish_22jan21_e.htm; Inside U.S. Trade’s World Trade Online, Fisheries talks chair: Divides remain, but members have what they need for a deal, February 19, 2021, https://insidetrade.com/daily-news/fisheries-talks-chair-divides-remain-members-have-what-they-need-deal. The press releases following the meetings indicate that there has been little movement in fact in 2021 on the host of major issues that remain for Members to resolve. A review of the second revision of the draft text that was released on December 18, 2020 and the Chair’s explanatory note that accompanied the second draft make clear that Members remain divided on a huge array of issues. See RD/TN/RL/126/Rev.2 and RD/TN/RL/126/Rev.2/Add.1.

For example, there is still no agreement on whether the scope of the agreement will cover fuel subsidies (Article 1.2).

Similarly there is not currently agreement on whether the definition of “fishing related activities” in Article 2(c) include coverage of provisions “of personnel, fuel, gear and other supplies at sea”.

Article 3 which deals with the “prohibition on subsidies to illegal, unreported and unregulated fishing” (IUU) consists of nine sub-articles, many of which remain bracketed whether it revolves around which entity can make a finding of IUU activity, whether leniency will be provided for non-serious violations and which violations will always be addressed, the length of sanctions, the level of transparency and obligations of Members, and whether there are exceptions (special and differential treatment (S&DT)) from the prohibitions on IUU. As is true throughout the revised draft, there are deep divides on the special and differential treatment provisions reflecting the concerns expressed by Members like the U.S. and EU on the overbreadth of Members seeking such treatment and the views of Members like India who view such S&DT as applicable to all who claim developing country status.

Article 4 addresses prohibition on subsidies concerning overfished stocks, there continues to be disagreement, inter alia, on when a fish stock is overfished (two alternatives provided) and on what S&DT will be provided.

Article 5 addresses the prohibition on subsidies concerning overcapacity and overfishing contains. Article 5 contains seven sub-articles, a number of which maintain brackets including on “non-recovery of payments under government-to-government access agreements” (Art. 5.3.2), for subsidies provided to a vessel “not flying the flag of the subsidizing member” (Art. 5.4) on whether there will be a provision for “capping” (Art. 5.5) or a “list of non-harmful subsidies” (Art. 5.6) or for S&DT language (Art. 5.7). Art. 5.3 also deals in part with subsidies for fishing or fishing activities outside of a Member’s territory, obviously a very important and contentious issue.

Article 6 dealing with “specific provisions for LDC Members” has not been discussed and remains in brackets but reflects the proposal put forward by LDC Members.

Article 7 is for technical assistance and capacity building. While bracketed, the proposal has not received significant opposition at this point and appears to be largely non-controversial.

On Articles 8-10 (notification and transparency, institutional arrangements, dispute settlement), discussions are ongoing as to what needs to be notified and ability of Members to request additional information. Articles 9 and 10 depend on whether the fisheries subsidies agreement is treated as a stand-alone Agreement or is treated as an Annex to the Subsidies and Countervailing Measures Agreement. If an Annex, dispute settlement is already provided for; if treated as a stand alone Agreement, then there will need to be an article providing for dispute settlement.

Article 11 covers final provisions and addresses issues such as whether Members will “exercise due restraint” when providing subsidies to fishing or fishing related activities for stocks where the status of the stock (overfished or not) is unknown (Art. 11.2). It also lays out possible exceptions for responding to disasters (and what limits such response shall have)(Art. 11.3) The article also makes clear that the Agreement (or Annex) is not germane to issues of “territoriality or delimitation of maritime jurisdiction” (Art. 11.4).

While the revised draft consolidated text could result in meaningful reform and limitations on harmful subsidies, much of the ongoing debate amongst Members seems to be about how to create exceptions that will permit continued subsidy practices for many Members both within territorial waters and outside of them. The perennial problem within the WTO that reform should be undertaken by others, not by me, is present in the fisheries subsidies negotiations. Can Members demonstrate the ability to come together for the common good? Hard to know as WTO Members have been negotiating for twenty years on fisheries subsidies reform. The Sustainable Development Agenda item 14.6 is designed to help save fishing for all peoples for generations to come. The WTO and the incoming Director-General have an important opportunity to show that global trade can promote sustainability. Let’s hope that a meaningful agreement is yet achievable.

Afterthought

While the revised draft consolidated text provided to Members on December 18, 2020 is clearly a Chairman’s draft, like many drafts in other areas that have routinely be released publicly, the WTO has been slipping into an increased pretense that such texts are “unofficial room documents” and hence not released publicly. While both documents (RD/TN/RL/126/Rev.2 and RD/TN/RL/126/Rev.2/Add. 1) can be found on the internet for those trying to understand the ongoing negotiations, the WTO does not promote transparency and public understanding by pretending that core negotiating documents or draft texts are “unofficial room documents”. Hopefully, the chairs of Committees and leadership within the WTO will correct course and improve transparency in fact and end the misuse of room documents, job documents and other “unofficial” documents which often are the core documents in a negotiation or Committee work.

The WTO Informal Ministerial of January 29, 2021 — hope for progress at the WTO in 2021

· January 30, 2021 · Appellate Body reform, COVID-19, electronic commerce and digital trade, Fisheries Subsidies negotiations, Selection of WTO Director-General, Special and Differential Treatment, WTO Informal Ministerial · , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

Switzerland typically hosts an informal ministerial meeting of WTO trade ministers on the sidelines of the World Economic Forum’s January Davos event. This year both were handled remotely.

The informal ministerial was summarized in ten points by the Swiss Confederation President Guy Parmelin at the end of the event. President Parmelin’s statement is available here, https://www.newsd.admin.ch/newsd/message/attachments/65098.pdf, and is copied below.

“Virtual Informal WTO Ministerial Gathering, 29 January 2021

“Personal Concluding Remarks by the Chair, President of the Swiss Confederation and Head of the Federal Department for Economic Affairs, Education and Research, Guy Parmelin, Switzerland

“29 Ministers and high officials representing a broad spectrum of the WTO membership attended this year’s Informal World Trade Organization (WTO) Ministerial Gathering in virtual format. In concluding and with warm thanks to all participants for their contributions, I would like to summarise the main points from our discussions as follows:

“• Ministers stressed the urgency of the swift appointment of a new WTO Director-General as well as the confirmation of the date and venue of the 12th Ministerial Conference (MC12).

“• Ministers reiterated their determination to maintain a credible multilateral trading system and to restore a climate of mutual trust.

“• Ministers expressed their concerns about the enormous social and economic impact of the COVID-19 crisis. They highlighted the relevance of trade and the role of the WTO in containing the pandemic and promoting recovery. Many Ministers underlined the importance of ensuring the development of as well as an equitable and affordable access to medical goods, including vaccines. They addressed ways and means to achieve these goals, including the implementation of measures facilitating trade, the role of intellectual property and transparency.

“• Ministers regretted that the negotiations on fisheries subsidies could not be completed in accordance with the end-2020 deadline foreseen in SDG 14.6. In light of the significance of this process for the sustainability of global fisheries, Ministers concurred that a comprehensive and effective agreement on fisheries subsidies should be concluded as soon as possible. Ministers agreed to step up efforts with a view to finding mutually acceptable solutions consistent with all the elements of the negotiating mandate.

“• Ministers highlighted the importance of restoring a fully functional WTO dispute settlement system, which is a key pillar of the rules-based multilateral trading system.

“• Many participants argued for further progress in agricultural trade policy reform at MC12 and asked for an outcome on domestic support and other issues. The issues of public stockholding and the special safeguard mechanism were highlighted by several Ministers.

“• Many Ministers called for tangible outcomes, by MC12, on the Joint Statement Initiatives. Inter alia finalizing the process on Services Domestic Regulation and making substantial progress on E-commerce and Investment Facilitation as well as on Trade and Women’s Economic Empowerment.

“• The need to reform the WTO was widely acknowledged. A number of Ministers insisted on advancing diverse issues related to the special and differential treatment of developing and least developed countries. Some participants proposed to adjust WTO rules to present-day economic and competitive conditions.

“• Several Ministers supported new initiatives launched in response to global challenges such as the structured discussions on Trade and Environmental Sustainability.

“• Ministers reaffirmed their commitment to engage in the preparations for MC12 in order to advance key issues.”

The participants at this year’s informal ministerial included officials from Argentina, Australia, Brazil, Canada, Chad (coordinator for LDC Group), Chile, China, Egypt, European Union, India, Indonesia, Jamaica (Coordinator ACP Group), Japan, Kazakhstan, Kenya, Korea, Mauritius (Coordinator African Group), Mexico, New Zealand, Norway, Russian Federation, Saudi Arabia, Singapore, South Africa, Switzerland (Chair), Thailand, Turkey, United Kingdom, United States and three officials with WTO roles — H.E. Mr. David Walker (New Zealand), WTO General Council Chair; H.E. Mr. Santiago Wills (Colombia), WTO Chair of the Negotiating Group on Rules, H.E. Mr. Alan Wolff, WTO Deputy Director-General. The full list with titles is embedded below.

List-of-participants-at-virtual-informal-ministerial-1-29-2021-65099

The good news for the informal ministerial was the position taken by the United States representative who reportedly indicated that the United States was actively reviewing the issue of the next Director-General and was intent on actively working on WTO reform. See, e.g., Inside U.S. Trade’s World Trade Online, Biden administration strikes ‘constructive’ tone in first word on WTO approach, January 29, 2021, https://insidetrade.com/daily-news/biden-administration-strikes-%E2%80%98constructive%E2%80%99-tone-first-word-wto-approach; Politico, Biden administration joins call for ‘swift appointment’ of new WTO head, January 29, 2021, https://www.politico.com/news/2021/01/29/biden-world-trade-organization-463820. Under the Trump Administration, the United States had blocked the formation of consensus around Dr. Ngozi Okonjo-Iweala based on the U.S. view that Dr. Okonjo-Iweala did not have a sufficient trade background. See, e.g., January 26, 2021, Letter from variety of former U.S. officials to President Biden urges U.S. support for Dr. Ngozi Okonjo-Iweala as next WTO Director General, https://currentthoughtsontrade.com/2021/01/26/letter-from-variety-of-former-u-s-officials-to-president-biden-urges-u-s-support-for-dr-ngozi-okonjo-iweala-as-next-wto-director-general/. Hopefully, the current review of the issue by the Biden Administration, even ahead of President Biden’s trade team being confirmed by the U.S. Senate, will result in the U.S. joining the support for Dr. Okonjo-Iweala, permitting the WTO to approve a next Director-General.

It was also reported that the United States, consistent with the Biden Administration’s focus on the COVID-19 pandemic and climate change, expressed interest in promoting recovery from the COVID-19 pandemic and concluding an ambitious fisheries subsidies agreement. See Inside U.S. Trade’s World Trade Online, Biden administration strikes ‘constructive’ tone in first word on WTO approach, January 29, 2021, https://insidetrade.com/daily-news/biden-administration-strikes-%E2%80%98constructive%E2%80%99-tone-first-word-wto-approach. Fisheries subsidies negotiations have been going on for some twenty years, and many Members have remained more concerned with keeping their subsidies in place than agreeing to disciplines that would create conditions for sustainable fishing going forward. The Interest in the Biden Administration in working within the WTO on joint steps to promote recovery from the pandemic is different from the approach pursued by the Trump Administration which didn’t want to look at actions possible within the WTO (other than limits on export restraints on agricultural goods) while the world was dealing with the pandemic. The U.S. statement should mean more interest in exploring issues like those raised by the Ottawa Group. See November 27, 2020, The Ottawa Group’s November 23 communication and draft elements of a trade and health initiative, https://currentthoughtsontrade.com/2020/11/27/the-ottawa-groups-november-23-communication-and-draft-elements-of-a-trade-and-health-initiative/.

Other issues flagged in the Swiss President’s concluding remarks are issues of particular interest to some or many countries but not topics of clear agreement. For example, while it is likely that the United States will look for ways to resolve its concerns about longstanding problems in the WTO’s dispute settlement system, particularly around the Appellate Body, it is unlikely that there will be a swift resolution of the U.S. concerns, and hence there will likely be a continued impasse for at least much of 2021 on the return of a functioning two-stage dispute settlement system.

Similarly on domestic support in agriculture and other agriculture issues flagged, certain WTO Members have not supported further liberalization in agriculture while pushing for limits on domestic subsidies and rollback of liberalization commitments undertaken in the Uruguay Round. It is unlikely that there will be forward movement on these issues without greater balance in terms of tariff reductions on major agricultural products. Moreover, as noted in a recent post, other major distortions in agriculture that are not presently identified as domestic subsidies include widespread use of child and forced labor on many agricultural products. See January 25, 2021, Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?, https://currentthoughtsontrade.com/2021/01/25/child-labor-and-forced-labor-in-cotton-production-is-there-a-current-wto-mandate-to-identify-and-quantify-the-distortive-effects/; January 24, 2021, Forced labor and child labor – a continued major distortion in international trade for some products, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/. Such practices should be quantified and the level of potential distortion identified so WTO Members can decide how to address them in ongoing agriculture negotiations.

Progress is being made on Joint Statement Initiatives including e-commerce, services domestic regulation, investment facilitation and women’s empowerment. An open issue for these and topics in the sphere of trade and the environment (e.g., environmental goods agreement) is whether benefits provided by participants will be made available on an MFN basis or limited to participants, with the option of other Members to join in the future. See January 18, 2021, Revisiting the need for MFN treatment for sectoral agreements among the willing, https://currentthoughtsontrade.com/2021/01/18/revisiting-the-need-for-mfn-treatment-for-sectoral-agreements-among-the-willing/. For many Members liberalization could be speeded up if benefits in sectoral agreements go to those participating only while leaving the door open for other Members to join later when they see the value for them.

And on the important topic of WTO reform beyond the items listed above, there is little current agreement on how to deal with industrial subsidies and other practices that lead to massive global excess capacity, or on how to address access to special and differential treatment and many other areas of importance to some or many WTO Members.

Deputy Director-General Alan Wolff provided a statement during the virtual informal ministerial urging WTO Members to make 2021 a year of accomplishments. The WTO press release can be found here. WTO News, DDG Wolff urges WTO ministers to address the pandemic and make 2021 a year of action, 29 January 2021, https://www.wto.org/english/news_e/news21_e/igo_29jan21_e.htm. DDG Wolff’s statement is copied below.

“My thanks to our Swiss hosts and to President Parmelin both for his remarks today and for his very thoughtful address on the occasion of the 25th anniversary celebration of the WTO last November.

“Ministers, you can make 2021 a year of substantial accomplishments at the WTO.

“There has already been a beginning.  In the first action of the year, Members accounting for most of the world’s agricultural exports committed to refrain from imposing export restrictions on purchases made by the World Food Program.

“The anticipated appointment of a new Director-General will bring needed leadership in moving toward concrete results.  But she can succeed only with your active engagement.

“I urge you not to wait for the Twelfth Ministerial Conference, delayed by the pandemic, to move negotiations forward to positive outcomes. 

“There is no reason why the twenty-year negotiation on fisheries subsidies cannot be concluded successfully — without a sacrifice of ambition — in the next few months.  Success hinges on Members’ willingness to accept a significant level of discipline on their own subsidies.  Political decisions and your active engagement will be required to bring about success.

“I urge you to address ‘trade and health’ forcefully and immediately.  Last year, trade made a vitally important contribution in supplying needed medical supplies to deal with COVID-19.  Proposals as to what more can be done must be deliberated now.  Cooperation on trade can accelerate access to vaccines.  There can be no higher priority.

“Consider how the WTO can further contribute to the economic recovery.  Members can take steps to ensure enhanced transparency, work to eliminate unnecessary barriers and agree that new restrictions will not be imposed.  Trade finance must be restored.  The WTO convened the major international financial organizations and banks to address this need in the aftermath of the financial crisis and it can do so now again.

“’Trade and climate’ must be on the WTO agenda.  Carbon border adjustment measures will likely result in conflicts unless Members engage in joint efforts to find mutually beneficial solutions.  The heightened interest of Members in a broad range of other environmental issues such as plastics pollution and the circular economy can be reflected in new agreements.   The WTO can be more visible as a steward of the planet by reviving and concluding the Environmental Goods Agreement. 

“The Joint Statement Initiatives on e-commerce, investment facilitation, and services domestic regulation can bear fruit this year, building on what was achieved with respect to small businesses last year.  In addition, more progress can be made on the economic empowerment of women through international trade.  

“Concerns over income inequality have been growing.  The WTO’s rules-based system needs to be seen not only among countries but also within countries, as responsive to the needs of workers, farmers and all who wish to engage in international trade.  But international trade rules cannot substitute for domestic policy actions to make growth more inclusive.  When large numbers of people are unhappy with how the economy is working for them, trade will often receive undeserved blame.  The WTO is about fairness.  Its work will never be done in pursuit of that objective, but further progress can be made this year.

“There can be an outcome on agriculture — at least a down-payment and a defined work program going forward.

“During 2021, the WTO can likely welcome new WTO Members, as it continues to move towards universal coverage.  Comoros and Bosnia-Herzegovina may be ready, and over a dozen others are making progress.

“Last but not least, ‘WTO reform’ can become a reality, with actions taken to —

“- facilitate rule-making with wide participation,

“- achieve heightened enforcement through binding dispute settlement in a manner agreed by all, and

“- provide a strong mandate for a Secretariat to deliver all needed support to Members and to achieving the mission of the WTO. 

“We should greet this year with optimism and re-dedication.  With your strong engagement, 2021 can be a year to remember for what is achieved.

“Thank you.”

A presentation from the WTO Secretariat to Ministers needs to be positive, forward looking, aspirational and inspirational. DDG Wolff’s statement yesterday provides all of that. The first item mentioned, the joint pledge from 79 WTO Members not to restrict agricultural exports to the UN World Food Programme for humanitarian purposes is a positive for the world but follows the December failure of the WTO General Council to agree to the same by all WTO Members. See January 23, 2021, WTO and the World Food Programme – action by 79 Members after a failed December effort at the General Council, https://currentthoughtsontrade.com/2021/01/23/wto-and-the-world-food-programme-action-by-79-members-after-a-failed-december-effort-at-the-general-council/.

The challenge for the WTO in 2021 will be whether Members can come together in fact to achieve many of the important opportunities and needs in front of the Membership. While the history of the WTO since 1995 and the major divisions among Members at the present time would strongly suggest that 2021 will not achieve many of the things that are needed and possible, hope springs eternal.

U.S. perspective

The Trump Administration did an excellent job of identifying problems with the operation of the WTO whether from the longstanding failures of the dispute settlement system, to the existential challenges to the viability of the WTO from major Members whose economies have not converged to a full market orientation, to the out-of-date rules around special and differential treatment to all who claim developing country status regardless of economic development of individual members, to the need for greater transparency in many areas, including importantly subsidies, to the failure of the WTO to update rules to address changing technology and trade issues.

The Biden Administration has indicated its intention to work within multilateral institutions, including the WTO. Early action by the United States on the Director-General selection issue could provide positive energy to WTO Members in the coming months. There are topics where success can be made in 2021 either multilaterally or plurilaterally. But a lot of what is needed for meaningful WTO reform will be difficult, if not impossible, to achieve in the short term. Hopefully, the Biden team will stay the course to achieve reform that both returns the WTO playing field to the level agreed at the time of concluding the Uruguay Round, finds ways to deal with the massive distortions not presently covered by WTO rules, works with others to bring the WTO into the 21st century and addresses the critical issues for global prosperity and sustainable development.

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

· December 16, 2020 · Fisheries Subsidies negotiations · , , , , · No Comments

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.

.

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

· December 15, 2020 · Fisheries Subsidies negotiations · , , , · No Comments

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.

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

· June 27, 2020 · Fisheries Subsidies negotiations · , , · No Comments

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.