WORLD TRADE  
ORGANIZATION  TN/RL/W/172 
22 February 2005 
 
 (05-0743) 
Negotiating Group on Rules Original:   English 
  
 
CONTRIBUTION TO THE DISCUSSION ON THE FRAMEWORK 
FOR THE DISCIPLINES ON THE FISHERIES SUBSIDIES 
 
Communication from Japan;  the Republic of Korea;  and the Separate Customs Territory
 
of Taiwan, Penghu, Kinmen and Matsu  
 
 
 The following communication, dated 21 February 2005, is being circulated at the request of 
the Delegations of Japan;  the Republic of Korea;  and the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu. 
 
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I. INTRODUCTION 
1. Since the adoption of the July package on 1 August 2004, the negotiation in the rules group 
has largely focused on the structure of the potential new disciplines fo r fisheries subsidies.  At the 
November meeting, six countries (Argentina;  Ch ile;  Ecuador;  New Zealand;  Peru and the 
Philippines) in their proposal (TN/RL/W/166) trum peted the merits of the top-down approach based 
on a broad ban coupled with narrowly defined excepti ons.  This ex ante comp rehensive prohibition on 
subsidies that benefit the fishery industry, with some exceptions, practically means that fisheries 
subsidies should be banned simply because of their ex istence without any effect test.  This approach 
can hardly constitute an adequate  framework for the potential new rules for fisheries subsidies. 
 
2. The six countries, predicting that consensus will eventually be found around the top-down 
approach, suggested to start with a prohibition on subsidies that benefit the fishing industry  (para. 8).  
This proposition that subsidies that benefit the fishing industry should be prohibited needs to be 
examined closely because the appropriateness of the top-down approach depends on the soundness of 
this proposition.  A subsidy, whether it be a fish ery subsidy or otherwise,  by definition, confers 
benefit to the recipient.  Currently, the only subsid ies that are prohibited merely because they provide 
benefit to the recipient without an adverse effect  test are the subsidies within the meaning of 
Article 3.1 of the ASCM which are prohibited because they are deemed to be trade distorting per se .  
Now, the six countries are proposing to treat fish eries subsidies the same way as the prohibited 
subsidies within the meaning of Article 3.1 of the ASCM.  It has never been established that fisheries 
subsidies in general distort trade per se.   To the contrary, there are many benign or noble fisheries 
subsidies.  The top-down approach as advocated by the six countries is misplaced, and we do not 
believe consensus will be found ar ound such an approach as it is, in  our view, fundamentally wrong. 
 3. Besides, this negotiating group is bound by the mandate provided in paragraph 28 of the Doha 
Ministerial Declaration, which clearly set out that the negotiations, including in the area of fisheries 
subsidies, should “aim at clarifying and improving disciplines under the Agreements on 
Implementation of Article VI of the GATT 1994 and on Subsidies and C ountervailing Measures, 
while preserving the basic concepts, princi ples and effectiveness of these Agreements  and their 
instruments and objectives, and taking into account  the needs of developing and least-developed TN/RL/W/172 
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 participants”.  It means that any new disciplines fo r the fisheries subsidies should conform to the basic 
concepts and principles of the current ASCM, whic h, among other things, requires an adverse effect 
test.  To introduce any new discipline prohibiting subs idies that benefit the fishing industry totally 
disregarding the adverse effect test would exceed the mandate given by the Ministers. 
 II. DEMERITS OF BROAD-BAN APPROACH 
4. The broad-ban approach as described above has, in our view, the following demerits: 
 
Inconsistency with the basic principles of the ASCM  
5. The current ASCM takes a positive-list approach, prohibiting only two types of severely trade 
distorting subsidies under Article 3.  By contrast, the broad-ban approach advocated by the six countries is based on a negative-list approach, gene rally forbidding fisheries subsidies without any 
test on adverse effect of the subsidies.  This constitutes a significant discrepancy with the basic 
principles of the ASCM. 
 
Lack of flexibility for future policy needs 
 
6. The broad-ban approach unduly restricts policy tools needed for coping with a changing 
environment.  Flexibility should be maintained in order to adequately respond to the future policy 
needs, such as structural adjustme nt of the fishery sector, achievement of sustainable fishery, the 
livelihood of fishermen, food security, etc. 
 
Race for exceptions 
 
7. Under the broad-ban approach, the negotiating memb ers will be forced to try to include their 
wish list in the exception box as dictated by their poli cy needs.  The negotiations will then be plagued 
by a “race for exceptions” as was th e case with the steel negotiations which had been conducted until 
recently under the auspicious of the OECD without success.  
Inequity with other sectors 
 
8. The top-down approach, by eliminating the effect test in relation to the fishery subsidies, 
would differentiate fisheries from other sectors which are disciplined on the basis of the adverse trade 
effect test.  Under the mandate of para 28 of th e Doha Ministerial Declaration, the potential new 
disciplines for the fisheries subsidies should be based on a test of the adverse effect of subsidies either 
on resources or on trade. 
 
9. The US, in its proposal TN/RL/W/77, proposed the prohibition of fisheries subsidies that 
“directly promote overcapacity or overfishing or that have other direct trade distorting effects”.  The 
EC suggested in TN/RL/W/82 to prohibit the fisher y subsidies that “enhance fishing capacity.”  Also, 
Japan proposed prohibiting fisheri es subsidies that are related with “IUU fishery or construction of 
fishing vessels engaging in poorly managed fishery” .  Even though these proposals contain different 
formulations with regard to the issue of prohibition of fisheries subsidies, they all have one thing in 
common – namely, they expand the scope of prohibition of subsidies.  Therefore, a reasonable starting 
point of the discussion would be the expansion of prohibited subsidies (red bo x) based on an adverse 
effect test.   TN/RL/W/172 
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 III. Major issues for the future framework 
Government support not subject to the ASCM 
 
10. It is important to note that the potential new disciplines for the fisheries subsidies shall be a 
subset of the ASCM.  Therefore, if governmental  support for a certain fishery activity does not fall 
under the coverage of the ASCM, it should not be  the subject of such disciplines on fisheries 
subsidies.  11. In this context, general infrastructure such as construction of fishing ports, sewage facilities 
for the fishing communities and coastal protectio n facilities against storms and waves should be 
outside the scope of the new disciplines for fisheries subsidies by reason of Article 1 and Article 2 of 
the ASCM.  
Expansion of prohibited subsidies under the current ASCM 
 
12. One of the misstatements often heard is that the bottom-up approach would lead to weaker 
disciplines than the current rules.  The fact that the bottom-up appro ach intends to add to the current 
list of prohibited subsidies whic h is limited to export subsidies and import substitution subsidies 
disproves such a claim.    13. Fisheries subsidies which are to be deemed to  directly cause serious harm to the resources 
should be treated as prohibited subsidies.  At th e same time, a transitional period should also be 
allowed for the fishery sector to ad apt to the new environment.  The following types of subsidies may 
be candidates for the prohibited subsidies.  
(i) Subsidies for the construction of ne w fishing vessels resulting in capacity 
enhancement 
(ii) Subsidies for fishing vessel modification for capacity enhancement. 
(iii) Subsidies for shipbuilding yards for fishing vessels 
(iv) Subsidies for overseas transfers of fish ing vessels to non-CPCs (contracting 
parties, cooperating non-contracting parties, entities or fishing entities) of RFMOs (regional fisheries management organizations) 
(v) Subsidies relating to IUU fishing 
 
Restoration of green box 
 
14. The following government programs which have  positive effects on fish stock recovery, 
social security, welfare and R&D should be permitted as non-actionable: 
 
(i) Fishing vessel decommissioning with vessel  scrapping and withdrawal of fishing 
license 
(ii) Resource enhancement and protection of environment (artificial reef, ocean 
ranching, fingerlings release, fishing ground clean-up, etc.) 
(iii) Expenditure for fisheries resource management 
(iv) R&D for the sustainable fishery (dev elopment of environmentally friendly 
fishing gear and technology, stock sampling and assessment, etc.) 
(v) Retraining of fishermen and early retirement schemes 
(vi) Assistance for the fishermen in terms of  social safety net (crew insurance, 
disaster relief, compensation for su spension of fishing activity, etc.) 
 TN/RL/W/172 
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 Consideration of resource management 
 
15. There is a widespread understanding of the im portance of resource management in achieving 
sustainable fisheries.  However, opinions diffe r on whether resource management falls under the 
competence of the WTO.  Even so, in light of paragraphs 28 and 31 of th e Doha mandate, we should 
not fail to address important factors such as pr oper resource conservation and management for 
sustainable development.  We also should consid er the positive aspects of dealing with the resource 
management issue within the WTO.  It will make  members more concerned about and committed to 
resource management.  Small-scale fisheries  
16. Each country has a different fishery environmen t in terms of the level of development and 
stock status.  In some countries, large-scale commerc ial fisheries and small-sc ale subsistence fisheries 
co-exist.  Also, there are vulnerable fishery sectors or groups of fishermen in each country.  Given this 
situation, it would be desirable to allow flexibilit y for each country’s domestic  small-scale subsistence 
fisheries to ensure adequate protection for the vul nerable fishermen.  At the same time, devices to 
prevent loopholes must be put in place.  17. However, there is no agreed definition of sma ll-scale fisheries and each country has its own 
criteria based on the circumstances surrounding its fisher y sector.  Therefore, we perceive the need to 
discuss the issue of definition of small-scale fisherie s eligible for exception to prohibition, and ways 
to prevent loopholes.  
S&D for developing countries 
 
18. In accordance with the Doha mandate, special c onsideration should be given to the concerns 
and needs of developing countries by allowing some flexibility in the application of the prohibited subsidy category.  
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