WORLD TRADE
ORGANIZATIONWT/GC/W/292
5 August 1999
(99-3314)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Elimination of Trade Distorting and Environmentally
Damaging Subsidies in the Fisheries Sector
Communication from New Zealand
The following communication, dated 27 July 1999, has been received from the Permanent
Mission of New Zealand.
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Proposal
1. That, as part of the upcoming negotiations, a work programme should be initiated to develop
WTO commitments and disciplines directed at the e limination of subsidies that distort trade in fish
products and impact adversely on the conservation and sustainability of global fish stocks.  Action in
this regard would have important trade, environm ent and broader sustainable development benefits.
Background
2. World’s fisheries are facing a crisis, with the main reason being overfishing in the absence of
effective fisheries management regimes.  The immediate cause of the problem is fishing effort far in
excess of what the resource can sustain.  The underlying factors are excess capacity, government
transfers which encourage excessive investment and effort, and the absence of effective management
regimes.
3. With developing countries accounting for over half of world trade in fish and fish products,
subsidies in this sector have an impact not only on the environment but also on development and
trade.  This is an issue the WTO must address in the new negotiations to be launched at Seattle.  In
this regard New Zealand welcomes the proposal from Iceland contained in WT/GC/W/229.
4. Subsidies have been identified as a major cause of excess fishing capacity.1  Many studies
undertaken over the last decade have confirmed and clarified this linkage.  The linkage is direct andclear.  Subsidies of various types have encouraged investment in fishing industries.  This has taken
capacity beyond levels that fish stocks can sustain.  There are now “more fishing vessels which are
more powerful and able to make larger catches”.
2  Pressures to achieve a return on this investment
have, together with operating subsidies, encouraged excessive effort.  Subsidies prop up the
                                                     
1 FAO, Fisheries Department, Marine Fisheries and the Law of the Sea:  A Decade of Change , 1993.
2 Downes and Van Dyke, Fisheries Conservation and Trade Rules:  Ensuring that Trade Law
Promotes Sustainable Fisheries , Greenpeace and CIEL, 1998.WT/GC/W/292
Page 2
profitability of fishing fleets that would otherwise not be economically viable while at the same time
undermining global efforts to move to a more environmentally sustainable regime.3
5. The scale of the subsidies going into fishing industries is immense and explains why
pressures on fish stocks have become so acute.  A study published recently by the World Bank has
estimated that a total of US$14-20 billion of subsidies are being granted each year to the fisheriessector, with at least half of this amount provided by OECD countries alone.
4  These subsidies
represent 20-25 per cent of fisheries revenues.  According to the World Bank analysis, environmental
subsidies account for at most 5 per cent of all subsidies provided worldwide in this sector.
6. The fact that fish is such a heavily traded  commodity means that the nature and scale of
subsidies in this sector present a number of important issues for the multilateral trading system.  In
particular:
- Subsidies offered by industrial nations have a large and distortionary impact on this
trade.
- The environmental impact of overcapacity and heavy overfishing which are driven by
trade-distorting interventions is an important issue in terms of trade and environment
principles.
- Subsidised fishing by wealthier nations limits the ability of developing countries to
develop their own sustainable fishing industries with the benefit of full access to
markets and true market prices.  Corrective action is necessary in order to restore
productivity of these industries.5
7. The problem of overfishing has attracted close scrutiny in a range of international fora,
including the FAO, CSD, OECD, UNEP, UNCTAD and APEC.  The Rome Declaration adopted by
the FAO Ministerial Meeting on Fisheries in March 1999 highlighted the concern that so many of the
world’s major marine fishery resources were subject to overfishing, destructive and wasteful fishingpractices and excess capacity, resulting in reduced yields and economic returns.  There was extended
debate this year in the Commission on Sustainable Development on the specific issue of subsidies to
fishing industries.  The OECD Ministerial Meeting in Paris in May 1999 called for further
examination of the impacts of government financial transfers on fishery resource sustainability,
including over-fishing.
8. Within the WTO, the issue of subsidies in the fisheries sector has in recent years attracted
close attention in the Committee on Trade and Environment.  In 1998 the Secretariat produced, at theCommittee’s request, a detailed paper which describes existing WTO rules and offers an overview of
fishing industry subsidies notified under Article 25 of the Agreement on Subsidies and Countervailing
Measures (SCM Agreement).
6  As agreed at the Committee’s June 1999 session, this paper is currently
being further updated.  It is, however, becoming increasingly apparent that notwithstanding the
important developments in disciplining subsidies agreed during the Uruguay Round in the SCMAgreement, the ongoing use of various fisheries related subsidies on a significant scale continues to
pose a significant threat to sustainable development, given the trade distorting and environmentally
damaging effects arising from such measures.  The Seattle Ministerial offers an excellent opportunity
to address this situation.
                                                     
3 WWF’s Endangered Seas Campaign, Subsidies and Depletion of World Fisheries: Case Studies ,
April 1997.
4 Earlier studies by the FAO concluded that subsidy levels were probably higher than this.
5 Steenblik and Munro, Current International Work on Subsidies in Fisheries: A Survey , October 1998.
6 WT/CTE/W/80 of 9 March 1998.WT/GC/W/292
Page 3
9. The WTO has a clear mandate to address trade-distorting measures, such as subsidies, and an
expertise for elaborating disciplines in this area.  Accordingly, in the context of the negotiations
launched at Seattle, and taking account of activities in FAO and other relevant  international fora, the
WTO should work to build on existing disciplines by developing specific commitments aimed at
securing elimination of fish subsidies that distort trade and impact adversely on the conservation andsustainability of global fish stocks.
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