Sustainbility Issues in proposed fisheries disciplines on Special and Differential Treatment & key issues for Small Island states Presentation for ICTSD and UNEP Meeting on Fisheries, Trade and Development 16 th June 2010 By Manleen Dugal, Technical Advisor (Trade Policy), Diplomatic Mission of Pacific Islands Forum to the WTO

Outline Links between sustainability and permissible subsidies in the proposed disciplines, especially the Chairs text The case of artisanal and subsistence sector The case of small scale fisheries The case of industrial fisheries Special characteristics of small and vulnerable economies The SVEs proposal for additional flexibilities (Jan 2010)

Links between Sustainability and Permissible subsidies in proposed WTO disciplines PRINCIPLE for proposed Special and Differential Treatment Provisions in the Chair’s Text and several Members’ proposals: Conditioning non-prohibited subsidies for developing countries on ‘sustainability criterion’, including management-related and/or other limitations based on geographical parameters and/or capacity indicators such as vessel size & measures for domestic fishing capacity. Exceptions to the Principle: ‘Carte Blanche’ exemption for Least-Developed Country Members from the prohibition clause contained in Article 3.1(c) of the ASCM and Article I of fisheries annex. Subsidies to port infrastructure, other physical facilities, income support and price support for fishers and fishers' products, permitted as long as fisheries management conditions are fulfilled. NOTE General exemptions can also be invoked based on fisheries-management conditions

Artisanal and Small-scale Fisheries The sustainable development challenge is most relevant when it comes to artisanal or subsistence sector. A universal definition for artisanal and small scale fisheries does not exist, which complicates the crafting of WTO rules. Refers broadly to small, underdeveloped, and often severely impoverished fishing communities whose basic survival depends on their ability to continue benefiting from local fisheries. 95% of the 200 million people involved in fishing are small- scale fishers, processors and traders. More than 90% of people working in small-scale fisheries are in developing countries.

Artisanal and Small-scale Fisheries Of the 70% share of world fish produced and consumed by developing countries, small-scale fishers account for 70% of that production. Small-scale fishers’ share of the fish produced and consumed by developing countries is expected to increase to 80% (from 70%) in 2020 SVEs are of the view that there should be a clear distinction between artisanal and small scale fisheries and appropriate exemptions should be designed for both. The small scale fisheries sector plays the role of a social safety net provider contributing heavily to food, nutrition and livelihood security. In its role as an economic driver, the small-scale fishing sector is an important cash generator, has strong multiplier effects and is sometimes export focused.

Artisanal and Small-scale Fisheries In the majority of SVE small scale fisheries, there is a small profit trade involved, in some cases small-scale is a part of a small productive chain and in several instances these small fisheries may also be organized into fishing cooperatives. Thus, the development of artisanal/small scale fisheries is a rational undertaking for governments and other organisations in the region. These fisheries are a key entry point for investing in poverty reduction and human development

‘ Built-in’ sustainability criterion in proposed definitions and treatment for subsistence/artisanal fisheries ( Chair’s text, Annex VIII, TN/RL/W/213): Subsistence/artisanal sector defined by two criterion: (1) Marine wild capture fishing performed on an ‘inshore basis’, i.e. in the territorial sea (12 nautical miles) (2) Conducted with non-mechanized net-retrieval All subsidies are permissible under the following conditions: (1)Activities carried out on their own behalf by fishworkers, on an individual basis which may include family members, or organized in associations; (2) The catch is consumed principally by the fishworkers and their families and the activities do not go beyond a ‘small-profit’ trade; (3) There is no major employer-employee relationship in the activities carried out Non-binding/Indicative management conditionality apply

‘ Built-in’ sustainability criterion in proposed definitions and treatment for subsistence/artisanal fisheries ( Chair’s text, Annex VIII, TN/RL/W/213): Subsistence/artisanal sector defined by two criterion: (1) Marine wild capture fishing performed on an ‘inshore basis’, i.e. in the territorial sea (12 nautical miles) (2) Conducted with non-mechanized net-retrieval All subsidies are permissible under the following conditions: (1)Activities carried out on their own behalf by fishworkers, on an individual basis which may include family members, or organized in associations; (2) The catch is consumed principally by the fishworkers and their families and the activities do not go beyond a ‘small-profit’ trade; (3) There is no major employer-employee relationship in the activities carried out Non-binding/Indicative management conditionality apply

‘Built-in’ sustainability criterion in proposed definition and treatment for small-scale fisheries (Chair’s text, Annex VIII, TN/RL/W/213): Definitions based on vessel-size criterion: Chair’s text permits Capacity-enhancing subsidies (subsidies for vessel construction, repairs, acquisition) + operating costs (e.g. fuel, bait, insurance, etc) only allowed for decked vessels that are not greater than 10 metres or 34 feet in length or undecked vessels of any length. Previous proposals by Norway (20 metres), Japan (15 metres) Definition based on socio economic criterion: Recent proposal by Brazil, India, China and Mexico (TN/RL/GEN 163) defines small-scale, artisanal as “low income, resource poor or livelihood fishing activities”, on condition that, “Activities are performed by fishworkers on an individual or family basis or employed by associations or micro-enterprises or individual boat owners”

‘Built-in’ sustainability criterion in proposed definition and treatment for industrial fisheries ( Chair’s text, Annex VIII, TN/RL/W/213): Definition for Industrial fishing sector: Vessels exclusively used for marine wild capture fishing activities in respect of identified target stocks within the developing country Members’ Exclusive Economic Zones ("EEZ”). Capacity- enhancing are permissible under the following conditions: Prior scientific stock assessment has been conducted in accordance with relevant international standards, aimed at ensuring that the resulting capacity does not exceed a sustainable level Assessment has been subject to peer review in the relevant body of the United Nations Food and Agriculture Organization ("FAO"), or in another recognised and competent international organisation.

Special characteristics and peculiarities of SVEs in the fisheries context SVEs have a miniscule share of global marine wild capture ( majority less than 0.1 per cent each, as per data by the FAO), nil or low magnitude of subsidies & hence a negligible impact on overcapacity and overfishing. On the other hand, several SVEs are characterised by heavy economic dependence on the fisheries sector. E.g., in terms of value of exports, fish and fish products from the PICs constitute an average of around 30% of total exports. On the other hand, these PICs together constitute less than 0.4% of global marine fisheries catch. In terms of food security, per capita fish consumption in the PICs averages 70 kg per year, compared to the global average of c.a 16 kg of fish per capita p.a. In terms of employment, tuna industry alone accounts for between 8 and 11% of total formal employment to Pacific Island Countries (PICs). The above statistics demonstrate the relative importance of fisheries to the economic survival of these island countries vis-à-vis their minimal contribution to overcapacity and overfishing.

SVEs S&DT proposal: Proposed Textual Revisions to Article III.2(b)(2) of the Chair’s Text PROPOSED TEXTUAL REVISIONS TO ARTICLE III.2(b)(2) OF CHAIR'S TEXT, ANNEX VIII, TN/RL/W/213: (b)In addition, subject to the provisions of Article V: (2)(i) Subsidies referred to in Article I.1(a) and I.1(c) shall not be prohibited provided that they are used exclusively for marine wild capture fishing employing decked vessels not greater than 10 meters or 34 feet in length overall, or undecked vessels of any length. OR (ii) Subsidies referred to in Article I.1(a) and Article I.1(c) should not be prohibited for those developing country Members whose percentage share in world NAMA trade is not more than 0.1 per cent and whose percentage share of global marine wild capture is not more than 1 per cent.

Recapitulation – Part I: State of global fisheries resources More than three quarters of the world's fisheries have been fished to their biological limits or beyond (FAO, WWF, UNEP, 2005) 19 per cent of the major commercial fish stocks monitored by FAO are overfished, 52 % fully exploited, 20 % moderately or underexploited, 8 % depleted and 1% recovering from depletion (FAO, 2009) Marine capture fisheries is an underperforming global asset producing annual economic rent losses (potential loss of net benefits) of $ 50 billion, for the aggregate global fishery, primarily due to the lack of effective fisheries governance (World bank/FAO Sunken Billions Study, 2008). Sustainable benefits are, therefore, in decline, perpetuating a spiral into poverty for many small-scale fishers and communities dependent on fishing.

Recap Part II: Role of fishery subsidies Fisheries subsidies contribute significantly to the creation and perpetuation of excess fishing capacity, thereby encourage over- fishing (the ‘production distortion’) and distort trade patterns (the ‘trade distortion’) 90% of all officially reported fishing subsidies are granted by only seven major industrialized countries, which are: Japan, EU, US, Canada, Russia, Korea and Chinese Taipei (WWF, 2009) Subsidies encourage more fishers & drives fishing effort upward, sometimes in an already economically unhealthy fishery, which add to the aggregate costs of catching the limited quantity of fish available. Hence, the decline in net economic benefits (World bank/FAO Sunken Billions Study, 2008). “Overcapacity” and “Over fishing” thus became central tenets of the Hong Kong Declaration in December Task of the Negotiating Group is to identify those subsidies that contribute to overcapacity and overfishing, with a view to determining which of these should and should not be prohibited, while considering at the same time how to effectively address the needs and particularitites of developing Members.

Recap Part III: Doha and Hong Kong mandates Para 9, Annex D of HKD “….strengthen disciplines on subsidies in the fisheries sector, including through the prohibition of certain forms of fisheries subsidies that contribute to overcapacity and over-fishing” Para 9 of the HKD“….Appropriate and effective special and differential treatment for developing and least-developed Members should be an integral part of the fisheries subsidies negotiations, taking into account the importance of this sector to development priorities, poverty reduction, and livelihood and food security concerns; Para 28 - Doha Mandate “clarify and improve disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries”

Recap Part IV: Brief chronology of events in the fisheries subsidies negotiations Dec’07 – May’08: First technical reading (preliminary discussions) of the Chair’s Nov'07 text amongst Members in the Negotiating Group July Chair's Working Document released which provides the full range of opinions expressed by the membership during the first technical reading of the Chair's text (Dec'07-May'08); Jan’09- Dec’09: Chair’s Roadmap Discussions on Fisheries Subsidies. Note: The first technical reading of the Chair's text conducted within the Negotiating Group from Dec'07 - May'08 resulted in the realization that deep divergences existed between Members on fundamental issues relating to the very concepts and structure of the rules. The Chair therefore decided to put aside the text for a while and engage in a second phase of technical discussions based on a roadmap of questions that would revisit the fundamentals and help tackle the very roots of these divergences. This is however with the view to revert to the text at some point and improve the existing legal draft to reflect a new and better consensus. Jan’10 – present: Presentation and discussion of new proposals by Members (alternative views to the Chair’s text). Since Jan'10, new submissions have been made by Korea, the SVEs, Brazil/India/China/Mexico and the US. The next meeting of the Negotiating Group on Rules will be held in July'10 where Members may be given a second opportunity to comment on the US proposal. Work Programme beyond July 2010 and timelines for a potential revised Draft Chair's text will be determined only after the new Chair of the Negotiating Group on Rules is selected.

Fisheries management conditions of the Chair’s text Based on Internationally recognized best practices Measures directed at the management and conservation of fish stocks: Science-based stock assessment Research and other measures related to conservation and stock maintenance and replenishment Measures for controlling fishing capacity, effort and catch Harvesting licenses or fees Vessels registries and Vessel monitoring schemes Establishment and allocation of fishing rights, or allocation of exclusive quotas, and related enforcement measures System for reporting data on effort, catch and discards Species-specific quotas, seasons and other stock management measures;

Fisheries management conditions of the Chair’s text & alternative ideas Adoption and implementation of pertinent domestic legislation and administrative/judicial enforcement mechanisms Transparency provisions: Notifications Peer Review system System of informational ‘enquiry points’ The idea of the 3-tiered approach to management conditionality

Other significant sustainability provisions in current WTO fisheries subsidies negotiations Article I.2, Chair’s text, the famous “Catch-all phrase” The ‘adverse effects/action ability’ clause – Article IV Chair’s Text