Vicente Paolo B. Yu III Darlan Fonseca-Marti

1. Reflecting Sustainable Development and Special and Differential Treatment for Developing Countries in the Context of New WTO Fisheries Subsidies RulesPresentation Promoting Development and Sustainability in Fishery Subsidies Disciplines:An Informal Dialogue on Select Technical Issues30 June 2005UNEPIEH Room 3, Geneva, Switzerland Vicente Paolo B. Yu III Darlan Fonseca-Marti The views presented are personal and do not reflect the official position of the South Centre, UNEP, or the Member States of either organization.

2. Global fisheries crisis is a given More than ¾ of commercially valuable fish stocks are now overexploited, fully exploited, significantly depleted, or slowly recovering from overexploitation Poses grave risks not only to global ecosystem but also to food security and livelihood of peoples Doha negotiating mandate on fisheries subsidies: Take place in WTO rules negotiations (Para. 28 DMD) Take into account needs of developing and LDCs and importance of fisheries sector to these countries (Para. 28 DMD) Enhance mutual supportiveness of trade and environment (Para. 31 DMD) Introduction

3. Sustainable Development and Developing Countries • Environmental protection, economic development, and social development are the three co-equal elements of sustainable development • In WTO context, sustainable development would include: • S&D treatment (including policy flexibility) with respect to WTO rules and obligations • Support for achieving developing countries’ development objectives through, inter alia, expansion of market access opportunities for their exports and provision of adequate technical and financial assistance to ensure that trade policies and activities reflect environmental sustainability considerations

4. Fisheries and Developing Countries • Fisheries as a source of livelihood – est. 95% of 30 million people directly dependent on fishing for their livelihood live in developing countries; contributes to subsistence and livelihood of the poor in developing countries • Fisheries contribute to food security – 76% of fish production in 2002 was used for human consumption; in many developing countries, fish constitute 50% or more of animal protein intake • Fisheries as a source of export earnings – Fish products are single most valuable agricultural export of developing countries; fish exports as share of agricultural exports of a specific developing country can go as high as 99% (Maldives, Seychelles); many developing countries are dependent on fish exports as major export earning sources

5. Multifunctionality of coastal areas – coastal ecosystems provide very important ecological or cultural benefits for developing countries; mangroves and coral reefs provide storm or tsunami protection, economic benefits from fishing or tourism, etc. Strategic importance of fisheries – viable fisheries can provide developing countries with long-term economic development benefits Fisheries and Developing Countries

6. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 1 • S&D is a fundamental part of the MTS and its legal framework • Providing a fair playing field for all WTO Members by adjusting rules to take different implementation capacities and levels of development into account; • Providing developing countries with sufficient options and choices in the context of the MTS to enable them to adopt and implement trade policies consistent with their development needs and priorities • S&D in the SCM Agreement • Has not been very effective and easy to use for developing countries • Considered as a limited and conditional exception to the general SCM obligations

7. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 2 • Possible elements for fisheries subsidies-specific S&D • Policy flexibility to adopt measures (including subsidies) designed to enable developing countries’ fisheries sectors to take advantage of possible increase market access opportunities in other WO Members’ markets while at the same time ensuring that their fisheries are managed in a sustainable manner • Policy space to support fishing activities with a view to promoting sustainable development-oriented policy objectives • Policy flexibility and the resources needed to conserve, sustainable manage and develop fisheries resources in their waters • Positive measures that would require WTO Members to provide technical cooperation and financial assistance to developing countries seeking to put in place effective and sustainable fisheries resource conservation and management regimes.

8. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 3 • Options to make S&D operational in fisheries subsidies negotiations* • Clarifying the definition of a “subsidy” • Establishing a “prior authorization” regime for S&D fisheries subsidies • Adopting a positive list of fisheries subsidies that developing countries may provide under S&D • Using a “de minimis” approach • Adopting a Sustainable Development-based S&D Eligibility criteria approach * These options are neither exhaustive nor mutually exclusive

9. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 4 • Clarifying the Definition of a “Subsidy” • Define “subsidy” as only government-to-industry so as to government-to-government payments such as access fees from the definition • Provide qualitative parameters in the definition so as to exclude public investment in fishery-related infrastructure • Implications • Might be difficult to craft at technical level to delineate which government transfers are relevant only for developing countries  hence not provide S&D • Might not be able to provide effective disciplines against subsidies that have negative effects on fish trade, fish stocks and the environment  could leave many harmful subsidies totally unregulated

10. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 5 • Prior authorization regime for S&D fisheries subsidies • Developing countries to first obtain prior authorization from SCM committee to be able to provide S&D fisheries subsidies (list of S&D fisheries subsidies could be drawn up beforehand) • As part of the authorization procedure, other WTO Members in the SCM committee could ask requesting Member to provide information about, inter alia, the condition of the fishery and the management scheme; or WTO Members could agree on a list of automatically authorized S&D fisheries subsidies that developing countries may apply subject to the provision of advance notification • Implications • Could risk forcing SCM committee to undertake own assessment of the quality and appropriateness of a Member’s fishery policy (which might be beyond the committee’s mandate or technical competence) • Could impose a significant administrative burden on Members (especially developing) and the WTO Secretariat • Complexity of the procedure could render it difficult to comply with for developing countries

11. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 6 • Positive List approach • WTO Members agree on a positive and exhaustive list of S&D fisheries subsidies that developing countries may apply without need for any prior authorization or notification. The list could be linked to developing country policy objectives such as food security, subsistence or artisanal fishing, and emergency actions • Implications • May be easy to implement and manage • May pose considerable negotiating burden on developing countries • Negotiations could result in overly restrictive list that would not cover the full range of policy instruments that developing countries may wish to apply in line with their development priorities • Unless subject to certain conditions, it could still lead to over-capacity and fish stock depletion. These conditions could be: (i) placing a cap on S&D fisheries subsidies that may be provided; or (ii) conditioning continued provision of S&D subsidies after a given period on the results of a fish stock impact assessment mechanism (perhaps done by a competent and agreed-upon IGO, and the results of which would be accepted by WTO as binding)

12. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 7 • De Minimis approach • WTO Members could agree on a “de minimis” level of S&D fisheries subsidies that developing countries may provide in addition to those that may be provided under any Green Box. These S&D fisheries subsidies could be drawn from: (i) a positive list of allowed S&D subsidies, (ii) all subsidies outside of the Green Box; or (iii) all subsidies outside of a negative list of prohibited subsidies • Implications • May still lead to overinvestment and overcapacity because provision of S&D fisheries subsidies would not be matched to the environmental state of the fish stock • Dependent on the availability of information about overall production and amount of subsidies maintained over a given period • Will require a more effective notification mechanism than at present, which may pose burdens for developing countries

13. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 8 • SD-based S&D eligibility criteria • Eligibility criteria for developing countries wishing to provide fisheries subsidies under S&D could be developed • Only developing countries • Fish stocks are not overexploited, depleted or recovering – based on possible international assessment by competent IGO • Existence of a national fisheries resource management regime – based on agreed-upon international instruments developed by competent IGO or RFMO • Individual share of total global fish exports does not exceed a specified and agreed-upon percentage – could be patterned after existing SCM model such as export competitiveness (3.25% of given product, Art. 27.6), GATT model (“equitable share” GATT Art. XVI:3), or current percentage share of developing country with highest share of fish exports • Allowable S&D fisheries subsidies for developing countries meeting eligibility criteria: • All fisheries subsidies that are outside of Green Box; or • An agreed-upon positive list of S&D fisheries subsidies outside of Green Box • Transitioning out of S&D • SCM committee reviews implementation in the event of non-compliance with eligibility criteria • Transition period could be provided for phase-out of S&D fisheries subsidies • Implications • May render S&D inoperational for developing countries who may lack of capacity to meet the eligibility criteria  a “de minimis” amount of fisheries subsidies could be allowed for developing countries without having to comply with eligibility criteria • May create additional procedural layer for developing countries to access S&D  information requirements in eligibility criteria could be made more simple • Renders S&D conditional rather than automatic • May provide a way of matching both environmental and development concerns of developing countries in the fisheries subsidies negotiations

14. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 9 • Preserving benefits of S&D for S&D beneficiaries • WTO Members might need to look at how to ensure that the applicable by developing countries S&D fishieries subsidies are not made subject to WTO dispute settlement challenge • WTO Members could also look at how to ensure that benefits of S&D for developing countries are not negated by the imposition of countervailing measures by other WTO Members

15. Sustainable Development-based S&D in Fisheries Subsidies Negotiations 10 • Positive measures for technical assistance and capacity building • S&D in fisheries subsidies could also include commitments or obligations on WTO Members to provide substantial, long-term and effective technical and financial assistance and capacity-building support to assist developing countries develop and implement effective fisheries resource management systems

16. Transitioning out of S&D The timeframe for transitioning out of the provision of fisheries subsidies S&D could be based on the achievement by the developing country concerned of agreed-upon development criteria rather than the expiration of a specified period, e.g.: (i) reaching an agreed-upon level of economic development; (ii) reaching an environmental state of fisheries resources beyond which further extraction would lead to overexploitation Sustainable Development-based S&D in Fisheries Subsidies Negotiations 11

17. Vicente Paolo B. Yu III Team Leader, Institutional Governance and New Issues Darlan Fonseca-Marti Project Officer for Non-Agricultural Market Access Trade and Development Programme South Centre Chemin du Champ d’Anier 17 1211 Geneva 19 Switzerland Tel.: (41)(22)791 8050 Fax: (41)(22)798 8531 Email: yu@southcentre.org Website: www.southcentre.org Thank You