TN/RL/GEN/201 /Rev.1  
 
2 December  2019 
(19-8302) Page: 1/1 
Negotiating Group on Rules  Original: English  
 
PROHIBITING SUBSIDIE S TO FISHING VESSELS  NOT FLYING THE MEMB ER'S FLAG  
Submission of Argentina, Australia , Indonesia, Japan,  New Zealand, the United  States  and Uruguay  
Revision  
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Members appear to broadly converge around the need to address subsidies for industrial fishing, and to 
prohibit subsidies contributing to illegal, unreported, and unregulated (IUU) fishing. One area that Members 
have yet to address explicitly, that is linked to both industrial fishing and IUU fishing activity , is the impact 
that subsidies can have on fishing activity by vessels that are owned by nationals of a WTO Member but 
are not flying the subsidizing Member 's flag. The well -documented practice of registering and fishing under 
a Flag of Convenience (FOC), combined with the practice of flag -hopping between FOCs, enables fishing 
vessels to evade monitoring, control, and surveillance measures by flag states and regional fisheries 
management organizations (RFMOs) and to engage in IUU fishing and overfishing. Fl eets also use FOCs to 
flag to countries that have little capacity or ability to exercise adequate control over distant fishing activity, 
creating an enabling environment for IUU fishing and other harmful fishing activity.  
A prohibition on subsidies to vess els that are not flying the flag of the subsidizing WTO Member could have 
far-reaching beneficial impacts. The majority of companies employing FOCs are located in countries that 
collectively also have the largest distant water fleets fishing across the glo be; removing subsidies to the 
estimated 15% of fishing vessels flying a FOC or listed as "flag unknown" would remove artificial distortions 
and potentially harmful incentives currently affecting the fishing economy. Banning subsidies to vessels 
not flying the subsidizing WTO Member 's flag would also place responsibility for fishing activity firmly back 
in the jurisdiction of the subsidizing Member, and enable WTO Members to contribute to the enforcement, 
legal, and prosecutorial tools available to counter i llegal fishing activity. A prohibition on subsidies to 
vessels not flying the subsidizing WTO Member 's flag would complement other prohibitions, particularly 
the proposal to prohibit subsidies contingent upon fishing in areas beyond national jurisdiction 
(RD/TN/RL/91/Rev.1).  
We also note that the issue of reflagging has been raised in these negotiations previously, including most 
recently in Japan 's paper (RD/TN/RL/99, para. 5), and text is included in the "Scope" section of 
RL/274/Rev.6: "Article 2.3 [For the purposes of this instrument, a subsidy shall be attributable to the 
Member granting it, regardless of the flag of the vessel involved [benefitting from the subsidy] [or the 
application of rules of origin to the fish involved.]]"  
Proposed Text : 
 
X. No Member shall grant or maintain any of the following subsidies within the meaning of 
Article 1.1 of the SCM Agreement that are specific within the meaning of Article 2 of the SCM 
Agreement:  
   
[…..]  
 
X.X Subsidies for a vessel not flying the flag of the subsidizing Member.  
 
* A limited transition period may be necessary to allow for a Member to address a flagging arrangement 
under an existing access arrangement.  
 
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