WORLD TRADE
ORGANIZATIONWT/CTE/W/167/Add.1
19 June 2001
(01-3057)
Committee on Trade and Environment Original:  English
ENVIRONMENTAL BENEFITS OF REMOVING TRADE RESTRICTIONS
AND DISTORTIONS:  THE FISHERIES SECTOR
Item 6 of the work programme
Note by the Secretariat
Addendum
1. This Note has been prepared in response to the request of the Committee on Trade and
Environment (CTE) to keep it informed of the ongoing  work related to fisheries and trade.  The Note
updates Section III of WT/CTE/W/167, of 16 October 2 000, in order to provide a survey of the state of
play of international discussions and recent work on sustainable fisheries management in relevant
international fora, particularly with respect to subsidies.1
STATE OF PLAY OF INTERNATIONAL ANALYSIS AND DISCUSSIONS
A. W ORK IN INTERNATIONAL ORGANIZATIONS
2. This section reviews the work in APEC, FAO, OECD and UNEP.  Discussions in the CTE
continue to benefit from presentations and papers on the work of these organizations.
1. APEC2
3. Fishing is one of the major economic activities in the Asia-Pacific region.  In many countries
it forms a major part of the economic base, and in some of the smaller Pacific Island states it providesthe only realistic opportunity for their future economic growth and prosperity.  Against this backdrop,
close cooperation is needed, particularly in the exchange of scientific and research data, in order to
ensure that management decisions are based on the best scientific information available.  Such
cooperation among APEC Members will help to promote long term optimum economic utilization,
based on sustainable management practices. In th is way a sound basis will be provided for
improvements in intra-Pacific regional trade.
4. The Fisheries Work Project seeks to maximize the benefits that APEC Members can draw
from their fisheries resources through improved cooperation.
5. Members of the APEC Fisheries Work Project therefore agree that:
                                                     
1 The Secretariat has prepared this Note in cooperation with several international fora working on
fisheries and is grateful for contributions from APEC, FAO, OECD, UNEP, as well as WWF and ICTSD.  The
Secretariat takes full responsibility for any errors in the Note and is prepared to revise it in the light of further
information.
2 This information was obtained from the APEC website:  www.apecsec.org.sg.WT/CTE/W/167/Add.1
Page 2
− The cooperation endeavour of APEC Members is especially important given the significance
of fisheries resources to their economies and the global significance of the Pacific Oceanfisheries resources;
− The optimum utilization of, and trade in, fisheries resources needs to be based on sustainable
fisheries management practices;
− Due to the increasing economic interdependence of APEC Members in the exploitation,
processing and trade in fisheries products, it is recognized that for the full economic potential
and prosperity to be realized, ongoing cooperation will be essential.
6. The APEC Fisheries Working Group (FWG) therefore seeks:
− To facilitate and encourage cooperation in promoting fisheries in the Pacific by
complementing and assisting work being done by appropriate international and regionalfisheries organizations in the Pacific including other APEC working groups and the PECC
task force on fisheries;
− To enhance dialogue and strengthen cooperation among APEC Members where there are
fisheries management and related issues requiring international cooperation, both withinExclusive Economic Zones (EEZs) and/or 200 mile zones, and on the high seas.  This requires
cooperation to ensure through an appropriate framework the provision of catch and fishing
effort statistics to support management regimes;
− The development of fisheries resources and the promotion of trade through enhanced training
and education programs in fisheries management and marketing, improvements in value
adding and technology transfers, and cooperation in human resources development generally;
− The development of regional cooperation and trade facilitation for fish and fish products to
promote economic growth in the region;  and
− To encourage private sector participation and cooperation, as appropriate, in Fisheries Work
Project activities.
7. In 1999, the FWG completed the project "Free Trade and Investment in the Fisheries Sector of
the Asia-Pacific Region: Economic Analysis of Tariffs".  This project assesses the qualitative and
quantitative economic impacts of tariff removal in the fisheries sector in the Asia-Pacific Region.  Theoutcome is available at:  www.apecsec.org.sg.
8. In 2000, the FWG worked towards completing Part II, on non-tariff measures, of the project
"Trade and Investment Liberalization in Fisheries (TILF)."  This project was originally designed in
1996 as a four-part study to cover tariff, non-tariff measures (NTMs) and subsidies, including
investment liberalization.
9. In 2000, APEC also undertook a Study into the Nature and Extent of Subsidies in the Fisheries
Sector of APEC Member Economies .  The background to the study is the APEC Early Voluntary
Sectoral Liberalisation proposal for fish and fish products.  The proposal required, inter alia,  that
Member Economies eliminate subsidies contrary to the WTO Agreement on Subsidies and
Countervailing Measures (SCM).  It was subsequently proposed that a study be undertaken to assistMember Economies to identify such subsidies. The study is available at:  www.apecsec.org.sg.
10. There were 5 formal requirements for the study:  (i) a comprehensive inventory of generic
types of subsidisation employed globally in the fisheries sector, including multi-sectoral subsidies
applying also to fisheries;  (ii) an inventory list and categorisation of subsidies in the fisheries sector of
APEC economies;  (iii) an inventory of policy objectives underpinning subsidies;  (iv) an assessmentof subsidies in light of the SCM Agreement, which differentiates between “prohibited,” “actionable,”
and “non-actionable” subsidies; and (v) three case studies illuminating the impacts of subsidies.
11. The main findings and conclusions from this research can be summarized as follows:WT/CTE/W/167/Add.1
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12. An inventory of subsidies and support programmes in the fisheries sector of APEC shows 162
entries across the 19 APEC economies for which in formation was obtained.  The study identified
financial transfers in six categories, or "modalities":
• Direct Assistance to Fishers and Fisheries Workers;
• Lending Support Programmes;
• Tax Preferences and Insurance Support Programmes;
• Capital and Infrastructure Support Programmes;
• Marketing and Price Support Programmes;  and
• Fisheries Management and Conservation Programmes.
13. The overall profile of transfers shows that the most favoured in APEC are those using
Management and Conservation , and Capital and Infrastructure  modalities, applied to capture
fisheries.  The next most favoured are the same modalities but applied to aquaculture.  There are
scarcely any subsidies in the Direct Assistance  modality, and very few for fish processing applications
regardless of modality.
14. The overall profile of subsidies in terms of concentrations in the fisheries sector within APEC
remains relatively the same, regardless of whether drawn on the basis of the number of programmes in
each category, or on the number of APEC economies represented by programmes in each category.
This suggests a considerable harmony of policies and programmes in the fisheries sector across APEC.
There is some evidence that a major structural shift may be under way in terms of the “mix” of
programme modalities.  Newer programmes appear to favour Management and Conservation , whereas
older ones appear to have been more Capital and Infrastructure  oriented.
15. The research team has endeavoured to estimate the dollar value of APEC subsidies in the
fisheries sector according to how they relate to the broad policy objectives set out in four quadrants as
identified in Exhibit 1.  The quantification of the total dollar value of all APEC programmes and
subsidies is estimated at approximately US$12.6 billion.  Of this sum, the best estimate is that
programmes and subsidies that would fall unambiguously into Quadrants (1) and (2) (which includes
such programmes and subsidies as Management and Conservation Programmes Applied to CaptureFisheries, and Loan Guarantees Applied to Aquaculture) would amount to US$4.2 billion.
16. However, even accepting that Quadrant (4) is not applicable, the research team could not
estimate for certain that the balance of US$8.4 billion only relates to Quadrant (3).  (This Quadrant
includes such programmes and subsidies as Capital and Infrastructure Programmes Applied to Capture
Fisheries). This is because, exactly as stated in Exhibit 1, such programmes could be taken to act todecrease fish stocks only without consideration of any Fishery Management.  In other words, there
may be offsetting interactions between Quadrant (3) policies, and Quadrants (1) and (2) policies.  The
critical issue remains whether the possible negative effects of some kinds of transfers can be offset by
coherent resource management policies.  Accordingly, the figure of US$8.4 billion represents solely
the theoretical maximum upper potential for Quadrant (3), and cannot be quoted in isolation.  Theperception, by the research team, is that there is a structural shift underway in favour of relatively
more Management and Conservation  modality programmes.  This suggests that the management
context of the fisheries sector within APEC economies is changing in favour of sustainability.  As
well, it should be noted that subsidies could have a different effect in practice from their intended
objective.  Accordingly, there should be no co nclusion that any APEC fisheries subsidies are
necessarily "bad" from these figures.WT/CTE/W/167/Add.1
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Exhibit:  Fishing Effort or Expansion of  Aquaculture Operation Versus Fish Stocks
Decreasing fish
 stocksIncreasing Fish
Stocks
Constraining
Fishing EffortsExpanding
Fishing EffortsQuadrant (1)
Example:
Loan Guarantees
Applied to AquacultureQuadrant (2)
Example:
Management an d
Conservation Programs
Applied to Capture Fisheries
Quadrant (4)
Example:
Not Applicable (N/A)Quadrant (3)
Example:
Capital and Infrastructure
Programs applied to
Capture Fisheries
(Without Consideration of
any Fishery Management)
17. Very few programmes and subsidies would seem to be incompatible with the SCM
Agreement.  Only ten out of 162 are assessed as being potentially "actionable," with a medium or high
risk of challenge.  Of the 162, 29 are viewed as probably "non-actionable".  Of the remaining 133 that
might conceivably be "actionable", 123 have a very low or low risk of challenge.  Accordingly, only
ten programmes are viewed as both conceivably "a ctionable" and with a medium or high risk of
challenge.  The risk of challenge is a major determining factor.  Many more subsidies and programmes
might, in principle, be "actionable", but are too small-scale, excusable as regional development, or are
some form of environmental adjustment, which is exempt.
18. The estimate of dollar values in the APEC study suggests that the ten programmes identified
as least "compatible" with the SCM Agreement carry a total value of approximately US$370 million.This is a surprisingly low proportion of the total US$12.6 billion estimated for the entire APEC
inventory.
19. Case study analysis shows that the effects of subsidies on trade are not always self-evident.
This is because of the distinctive, backward-sloping supply curve in the fisheries sector beyond the
point of maximum sustainable yield (MSY) of the fishery.  Regrettably, even subsidies designed toenhance fish stocks, or vessel buy-back programmes designed to constrain fishing efforts, all of which
are intended to be positive for fisheries sustainability, cannot be guaranteed to have precisely the
intended positive effect.  However, subsidies to expand fishing efforts may turn out to be compatible
with sustainability, provided the point of MSY has not been reached in a given fishery.
20. Of the ten programmes identified as appearing least compatible with the SCM Agreement, no
fewer than six fall into just two positions (out of  18) in the Modality/Applications matrix.  There areWT/CTE/W/167/Add.1
Page 5
three programmes in the category of Capital and Infrastructure  applied to capture fisheries;  and three
in the category of Marketing and Price Supports  applied to fish processing. Accordingly, these two
categories appear to be the least compatible with the SCM Agreement.
21. Conversely, the modalities of Direct Assistance to Fishers  and Management and Conservation
appear to contain no programmes within APEC (regardl ess of area of application) that would appear to
have poor compatibility with the SCM Agreement.  Accordingly, these two categories are assessed as
most compatible with the Agreement.  This is a surprising result in the case of Direct Assistance to
Fishers ;  the explanation lies in the small scale of the APEC programmes in this category, and the fact
that they appear to be acting in practice as a means to adapt to new environments.
22. The results of this research also provide a framework for each economy to review its own
programmes.
2. FAO3
23. The FAO held an Expert Consultation on Economic Incentives and Responsible Fisheries in
Rome, 28 November – 1 December 2000.4  The Consultation defined four sets of subsidies and
recommended that these "Sets of Subsidies" be re ferred to in future discussions and analysis of
subsidies.
− Set 1 Subsidies are government financial transfers that reduce costs and/or increase revenues
of producers in the short-term;
− Set 2 Subsidies are any government interventions, regardless of whether they involve financial
transfers, that reduce costs and/or increase revenues of producers in the short term;
− Set 3 Subsidies are Set 2 Subsidies plus the short-term benefits to producers that result from
the absence or lack of interventions by government to correct distortions (imperfections) in
production and markets that can potentially affect fisheries resources and trade;  and
− Set 4 Subsidies are government interventions, or the absence of correcting interventions, that
affect the costs and/or revenues of producing and marketing fish and fish products in the
short-, medium-, or long-term.
24. In addition to the "Sets of Subsidies", the experts defined "Categories of Subsidies", which are
divided into two broad headings:  cost-reducing and revenue-enhancing subsidies.  In other words,
various government interventions (or lack of interv entions) are categorized according to whether they
primarily tend to either reduce the cost of producing and marketing fish or increase the revenue of
producing and marketing fish.  However, the effects on costs and revenues of some interventions are
either ambiguous or else they depend on the other conditions.  These are grouped into a broad categorynamed Miscellaneous/Unspecified.  Each of these br oad categories is then broken down further into
subcategories that relate to the form and function of influences on fish production, trade and resource
sustainability.
25. The subcategories identified for resource sustainability differ from those identified for trade
issues.  The experts chose to divide the two broad categories into different subcategories.  Table 1 listssome (not all) of the subcategories used by the e xperts in the examination of the impacts of subsidies
on trade and resource sustainability.
                                                     
3 The FAO provides the CTE with regular briefings on its work, see WT/CTE/W/135;  W/126;
WT/CTE/M/21: pp.15-16;  M/22: p.7;  M/23: p.9;  M/24: p.31;  and M/25: p.25.WT/CTE/W/167/Add.1
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Table 1. Categories of Subsidies related to Impacts on Trade and Resource Sustainability
Trade Sustainability
Cost Reducing Cost Reducing
Investment cost reductions Capital expansion
Input price reductions Labour cost reduction
Misc. cost reductions
Tax waivers & deferrals
Loans & insurance cost reductions
            Market interventions Market interventions
Fisheries science and management
Revenue Enhancing Revenue Enhancing
Output price increases Output price supports
Compensation programs
            Sales promotions Sales promotions
Equity infusions
            Trade measures Trade measures
Miscellaneous/Unspecified Miscellaneous/Unspecified
Actions to reduce fishing effort Fishing capacity reduction programs
Management and regulatory actions Fisheries science & management
Source :  Report of the Expert Consultation on Economic Incentives and Responsible Fisheries, Rome:  FAO
Fisheries Report No. 638, 2000.
26. Given that empirical knowledge of the impact of subsidies on fisheries was considered to be
weak, the Consultation identified priorities for further research.  In respect of the impact on fishery
resources, priority for future study was given to the following categories: 'capital expansion', 'tax
waivers and deferrals', and 'price support'.  With respect to the impact on trade, the experts assigned
priorities to future study of actions that 'reduce the relative price of inputs', 'reduce fishing effort' and
to 'management and regulatory actions'.  The experts also discussed the methods that would be bestsuited to carry out these studies.
27. The Report of the Expert Consultation was reviewed by FAO Members during the 24
th
Session of the FAO Committee on Fisheries (C OFI), Rome, 26 February – 2 March 2001.  The
Committee agreed that future FAO work on fisheries subsidies should aim to determine the
quantitative and qualitative effects of subsidies on trade in fish and fishery products and on thesustainability of fishery resources.  The study of the trade aspect should be of a technical nature and be
closely coordinated with the WTO, as the competent body for trade disciplines.
28. COFI further agreed that FAO work on fisheries subsidies should be closely coordinated with,
and complementary to, the work being carried out by other intergovernmental organisations.  It was
recommended that FAO, as a global and multi-disciplinary organisation, take a lead role in the
promotion of such cooperation and in the coordination of work on fisheries subsidies, and the
relationship with responsible fisheries.
29. COFI agreed that a second Expert Consultation be organised by FAO in the last quarter of
2002, comprised of a wider range of experts having relevant practical and multidisciplinary experience
in fisheries management and trade issues.  Governments will be consulted in the selection of the
                                                                                                                                                                     
4 FAO Fisheries Report  No. 638, Rome 2000 at www.fao.org/FI;  The Report also has been issued as
WT/CTE/W/189.WT/CTE/W/167/Add.1
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experts.  In addition, the Consultation should reflect a regional and topical balance of the issues to be
considered.
30. It was also agreed that the Expert Consultati on would be followed by a Government Technical
Consultation on the issue  in part as a means of quickly disseminating information both to Members
and to other intergovernmental  organisations.
31. To this end, the FAO Fisheries Department organised an Ad Hoc  meeting with
intergovernmental organisations on fisheries on 21 – 22 May 2001, with the participation of
representatives from FAO, OECD, SADC, UNEP and the WTO.5  The meeting reviewed the work
programmes related to fisheries subsides of the attending intergovernmental organisations and
identified opportunities for cooperation in implementation of the respective work programmes.6
3. OECD7
32. As part of its programme of work for 2000-2002, the OECD Committee for Fisheries will
analyze issues relating to fisheries management costs, trade and investment liberalization in fisheries,
and indicators for monitoring sustainable fisheries development.  In addition, the Committee will
continue its work on the Review of Fisheries, a publication which monitors fisheries policies,
including government financial transfers.
33. As part of the work on market liberalization, the Fisheries Committee will explore world and
regional fish trade flows, issues and problems.  This will include an analysis of how fisheries trade and
production are likely to be affected by reductions in present tariff levels and by changes in non-tariff
barriers.  In addition, the study will explore the effects of change on restrictions on investment, access
to services, subsidies in the fisheries sector, as well as other relevant factors.8
34. Work so far on the Market Liberalisation Study has concentrated on collecting and presenting
information related to trade policy instruments including tariff and non-tariff barriers, investments and
services.  This information has been collected on a country by country basis.
35. At its meeting in March 2001, the Committee for Fisheries considered a first draft of a
preliminary assessment of trade policy instruments in use among OECD countries.  In addition the
Committee considered a consultant's report entitled "Effects of Liberalising Trade in Fish, FishingServices and Investment in Fishing Vess els" by Professor Rögnvaldur Hannesson,
9 as well as a first
attempt to provide an analytical classification of trade policy instruments and their effects on trade and
resource sustainability.  Professor Hannesson notes that the most important conclusion emerging from
the paper is the critical role of fisheries management with respect to the effect of market liberalization,
whether for trade in fish products, investment, or trade in fishing services.
36. The Committee for Fisheries is scheduled to meet on 15-17 October 2001 and will consider
further drafts of work underway for the market liberalisation study and a first draft of a synthesisreport for its study on fisheries management costs.
4. UNEP
37. The aim of the UNEP Workshop on Fisheries Subsidies on 12 February 2001 was to build
understanding and consensus on fisheries policy reform in order to contribute to sustainable fisheries
                                                     
5 APEC contributed to this inter-agency process, but was unable to attend the meeting.
6 The Report of the meeting is contained in FAO Fisheries Report  No. 649, www.fao.org/FI.
7 The OECD provides the CTE with regular briefings on its fisheries work, see WT/CTE/M/23;  M/25.
8 OECD (2000),  Transition to Responsible Fisheries: Statement by the OECD Committee for Fisheries .
Directorate for Food Agriculture and Fisheries.  Paris, 26 April.  http://www.oecd.org/agr/fish/index.htm .
9 Available on www.oecd.org/agr/fish , recent publications.WT/CTE/W/167/Add.1
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management.  Over 120 participants from governments, international organizations, experts and NGOs
participated.  The study prepared for this Workshop has been further revised and updated, based on the
outcome of the Workshop and comments received by participants, including both trade and
environment officials.  The study, together with the two country studies undertaken in Argentina and
Senegal, which were also presented at the February Workshop, will be published in 2001.  TheChairman's summary of this Workshop can be accessed along with the other papers prepared for the
meeting at:  www.unep.ch/etu.  The Chairman's summary also has been circulated in the CTE as
WT/CTE/W/187.
38. The Workshop, which was convened in close cooperation with the WTO, provided a platform
for transparent and open dialogue between the participants.  The Workshop was attended by trade and
environment Government officials, intergovernmenta l organizations, such as the FAO and OECD, and
non-governmental organizations, such as the World Wide Fund for Nature (WWF), the WorldConservation Union (IUCN), the International Centre for Trade and Sustainable Development
(ICTSD), and the International Collective in Suppor t of Fishworkers (ICSF).  As a follow-up to this
Workshop, UNEP has been encouraged to convene similar events.  If financial support is forthcoming
from interested Governments and foundations, UNEP will convene another workshop later in 2001.
UNEP is exploring closer collaboration with the WTO, OECD and FAO in conducting this workshop.UNEP has also joined the inter-agency process on fisheries, coordinated by FAO, which follows up on
recommendations emanating from the FAO Committee on Fisheries.
B. W
ORK IN NON-GOVERNMENTAL ORGANIZATIONS
39. The World Wide Fund for Nature (WWF) is taking the lead in an international effort to reduce
fisheries subsidies that contribute to over-fishing, under its Endangered Seas Campaign.10  On 28 – 29
November 2000, WWF organised a symposium entitled "Fishing in the Dark:  A Symposium on
Access to Environmental Information and Gove rnment Accountability in Fishing Subsidy
Programmes," in Brussels, which brought together stakeholders interested in reforming fisheries
policies with those interested in promoting government accountability.  WWF has published the
papers presented at this symposium.11  From the perspective of WWF, the symposium provided
support for the following basic conclusions:
• Access to information about fishing subsidies is a critical issue, not only for those seeking
to reduce and reform harmful fishing subsidies, but for all stakeholders concerned with
fisheries management policies.
• Currently, public access to information about fishing subsidies – and structures for public
participation in the setting and administration of fishing subsidies – is far from adequate.
In particular, it is not generally possible to obtain information about the specificapplications of fishing subsidies sufficient to judge their real impacts on fish stocks or on
fishing communities.
• While there are some rules and institutional mechanisms in place to promote access to
information about fishing subsidies, these are in general poorly implemented and are ofteninadequate even on paper.  Current trends are toward building and strengthening these
mechanisms, but there is still little assurance that effective changes will come soon.
• The obstacles to improved transparency are both technical and political.  Significant work
remains to be done to build on existing structures.  But more fundamentally, in manycases a change of institutional culture will be required if real openness is to be achieved.
                                                     
10 See www.panda.org.
11 WWF (2001), Fishing in the Dark , Symposium Proceedings, at: www.fishing-in-the-dark.org.WT/CTE/W/167/Add.1
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40. In a letter to the SCM Committee Members dated 30 April 2001, WWF requested the SCM
Committee at its May meeting to take action to address the continuing failure by many WTO Members
to comply with WTO rules requiring notification of subsidies to the fishery sector under Article 25 of
the SCM Agreement.  In the letter, WWF also offered to brief the SCM Committee on its experience
in promoting the transparency of fishing subsid ies, and to learn from the Committee directly how
members of civil society can support more effective action by the WTO in regard to this matter.
Further to this offer, preparations are underway for a fisheries subsidies workshop for WTO Members
and other interested participants in early July 2001.
41. The International Centre for Trade and Sustainable Development (ICTSD) is continuing its
series of stakeholder policy dialogues on fisheries, sustainable development and trade.  On 23 October
2000, immediately prior to the discussion on fisheries subsidies in the CTE, ICTSD, in cooperation
with IUCN and UNEP, organised a dialogue on "F isheries, International Trade And Sustainable
Development:  Assuring Trade Rules Affecting Fisheries are Supportive of Sustainable Development",
aimed at bridging the gap in discussions in different fora and in constituencies working in these areas.
The dialogue addressed fisheries topics from a broad view, including resource management and
livelihoods, market access and subsidies.  Participants - including fisheries and trade experts from the
UN system, the WTO, major fishing nations and NGOs - welcomed the opportunity for an informaland open exchange of views.
12
__________
                                                     
12 See www.ictsd.org.