WORLD TRADE  
ORGANIZATION  TN/RL/GEN/159 
4 June 2008 
 (08-2620) 
Negotiating Group on Rules Original:   English 
  
 
RELATION BETWEEN ARTICLE I AND ARTICLE V  
OF THE CHAIR'S TEXT 
 
 
Communication from the Republic of Korea and the Separate Customs
 
Territory of Taiwan, Penghu, Kinmen and Matsu  
   The following communication, dated 3 June 2008, is being circulated at the request of the 
Delegations of Korea and the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu. 
 
_______________ 
 
 
I. INTRODUCTION 
 1. During the WWF-UNEP Workshop on Disciplining Fisheries Subsides held on 
1-2 March 2007 (TN/RL/W/207), the Rules Chair pointed out that "the impacts of fisheries subsidies 
on resources and on trade can depend heavily on the c ontext in which subsidies are employed."  The 
Chair's draft text (TN/RL/W/213), however, overl oaded the weight of conservation of fisheries 
resources onto the prohibition of subsidies and did not consider "the context in which they are 
employed."  Further, it included a provision (Article  I of the Fisheries Subsides Annex) that prohibits 
a wide range of fisheries subsidies, although it has never been established that there is an evidence-
based causal link between these subsidies and th e depletion of fisheries resources.    
 
2. During the course of the fisheries subsidies ne gotiations, we and several other Members have 
suggested a failure to implement an effective fish ery management system as "the context" the Chair 
referred to.  They have suggested that with a sound fisheries management measure in place
1, the 
provision of fisheries subsidies may not necessarily lead to over-fishing or overcapacity.  In this 
regard, it was suggested that more weight be placed on the fisheries management system rather than 
on the prohibition of fisheries subsidies.  Possibl e ways to provide incentives for proper fisheries 
management systems were also sought.  
3. On the other hand, it was also recognized that fisheries subsidies have their own legitimate 
social and political policy objectives to pursue.  Thus , one of the negotiation goals should be to strike 
a balance between the two needs; the need for sust ainable fish stocks and the need for fisheries 
subsidies to perform their diverse functions.  
 
4. In view of this and in an effort to help the Negotiating Group on Rules "steadily move from 
[the] first draft Chairman's texts (which were in tended to provoke discussion on the broad parameters 
of possible outcomes to the negotiations) to draft fina l texts (which by nature will have to describe a 
gradually emerging consensus)" as stated in the Chairman's Working Document of 28 May 2008, we 
                                                     
 
1 See TN/RL/W/232 page C-3. TN/RL/GEN/159 
Page 2  
 
  would like to put forward the following proposal to address the issue associated with the relations 
between Article I and Article V .  
 
5. This paper's main focus is the relationship betw een Article I and V , and therefore, is without 
prejudice to our views on other parts of the Chair's draft text.  We will revisit other issues, such as appropriate scope of Article I and II, the exception of small scale fisheries etc, at the later stage.  
 
II. EXPLANATION OF THE PROPOSAL 
 
A. ARTICLE I 
 
6. For the aforementioned reasons, we would lik e to propose to provide a proper linkage 
between Articles I and V .  More specifically, we pr opose that Article I subsidies be prohibited only 
where there is no sufficient reason to believe that their possible negative impacts are controlled by an 
effective fisheries management system.  For this  purpose, we suggest the following two requirements 
regarding the fisheries management system for the s ubsidies listed in Article I to be allowed.  When 
one of these requirements is not met, the subsidi es shall be prohibited.  First, as a substantive 
requirement, a subsidizing Member is required to prop erly maintain all the elements listed in Article V 
in its fisheries management system s.  Second, as a causality requirement, the subsidizing Member is 
required to demonstrate that its provision of fisherie s subsides is not likely to cause over-fishing or 
overcapacity because of its well-functioning fisher ies management system.  In addition, for 
transparency purposes, the Member is required to not ify their scientific assessments on the impacts of 
those subsidies.  
  
7. I.1(h) has been moved to a separate paragra ph since subsidies on IUU should, given their 
nature, be prohibited and no ex emption should be allowed.   
 8. It is also suggested that paragraphs (d) and (e),  which are in nature out of the scope of this 
negotiation, be deleted.
2  In fact, to our best knowledge, no Member has suggested to prohibit those 
subsides during the course of negotiations before the circulation of the Chair's text last November.  
 
9. In the case of the original Article I.2, neither sufficiently clear rationale for its necessity nor 
clear-cut interpretative gauge for "an unequivocally  over-fished condition" h as been presented and as 
such it is apparent that this provision is unoperati onal.  Therefore, this provision should remain 
deleted until we have a better understa nding of this proposed paragraph.  
 10. Finally, the exception to subsidies on natural disast er relief as contained in the footnote to the 
chapeau of Article I.1 has been moved to Article II (general exception), but the language remains 
basically the same.  
B. ARTICLE II 
 11. The title of Article II is suggested to be sli ghtly changed in order to make clearer its 
relationship with Article I. 
 12. We suggest deleting the linkage between Article  II and Article V by taking out the phrase "and 
subject to the provision of Article V" from the chapeau of Article II.  The reasoning is the following: 
the current Chair's text allows the granting of s ubsidies in Article II only when a Member maintains 
its fisheries management system in accordance with Article V .  In our view, however, most subsides 
listed in Article II are not intended to support Member 's domestic fish production but to contribute to 
promoting sound fisheries practices or otherwise to have beneficial social functions, such as safety, 
                                                     
 
2 See TN/RL/W/232 page C-4, 5.  TN/RL/GEN/159 
 Page 3 
 
 
  not linked to fishing capacity.  Because of this, th ese subsidies should not be discouraged but rather 
encouraged.  There seems to be no logical linkage between Articles II and V .  However, we are open 
to discussion on this issue and, therefore, a bracket  is placed in the phrase proposed to be deleted. 
 
13. In the case of the original Article II(e) excepti on, no sufficient reasons for its necessity have 
been introduced so far.  It seems that no legal and practical implications of this paragraph have been 
fully understood by Members.  Therefore, until Me mbers fully appreciate the rationale for this 
provision, we suggest that Article II(e) remains deleted. 
 
 TN/RL/GEN/159 
Page 4  
 
  Annex – Suggested Modifications to Articles I and II of the Chair's Draft Text
 
 
 
Article I 
 
Prohibition of Certain Fisheries Subsidies  
 
I.1 Except as provided for in Articles II and III, or in the exceptional case of natural disaster 
relief3, the following subsidies within the meaning of pa ragraph 1 of Article 1, to the extent they are 
specific within the meaning of paragraph 2 of Article 1, shall be prohibited where a subsidizing 
Member fails to properly maintain all the elements in  Article V in its fisheries management system or 
a subsidizing Member fails to demonstrate, for exam ple, through the peer review stipulated in Article 
V, that its fishery management system is likely to  prevent over-fishing or overcapacity in light of the 
objective, design, and intended function of the system:  
  (a) Subsidies the benefits of which are conf erred on the acquisition, construction, repair, 
renewal, renovation, modernization, or any other modification of fishing vessels
4 or 
service vessels5, including subsidies to boat build ing or shipbuilding facilities for 
these purposes. 
  (b) Subsidies the benefits of which are conferred on transfer of fishing or service vessels 
to third countries, including through the creation of joint enterprises with third 
country partners. 
 
 (c) Subsidies the benefits of which are c onferred on operating costs of fishing or service 
vessels (including license fees or similar char ges, fuel, ice, bait, personnel, social 
charges, insurance, gear, and at-sea support);  or of landing, handling or in- or near-port processing activities for products of marine wild capture fishing;  or subsidies to cover operating losses of such vessels or activities. 
 
 (d)
 Subsidies in respect of, or in the form of, port infrastructure or other physical port  
facilities exclusively or predominantly for activities related to marine wild capture 
fishing (for example, fish landing facilities, fish storage facilities, and in - or near -port 
fish processing facilities).  
 
 (e)  Income support for natural or legal perso ns engaged in marine wild capture fishing.  
  (d) Price support for products of marine wild capture fishing.    
                                                     
 
3 Subsidies referred to in this provision shall not be  prohibited when limited to the relief of a partic ular 
natural disaster, provided that the subsidies are directly re lated to the effects of that disaster, are limited to the 
affected geographic area, are time -limited, and in the case of reconstruction subsidies, only restore the affected 
area, the affecte d fishery, and/or the affected fleet to its pre -disaster state, up to a sustainable level of fishing 
capacity as established through a science -based assessment of the post -disaster status of the fishery.  Any such 
subsidies are subject to the provisions of  Article VI.  
4 For the purposes of this Agreement, the term "fishi ng vessels" refers to vessels used for marine wild 
capture fishing and/or on-board processing of the products thereof. 
5 For the purposes of this Agreement, the term "servi ce vessels" refers to vessels used to tranship the 
products of marine wild capture fishing from fishing ve ssels to on-shore facilities;  and vessels used for at-sea 
refuelling, provisioning and other servicing of fishing vessels.  TN/RL/GEN/159 
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   (e) Subsidies arising from the further transfer, by a payer Member government, of access 
rights that it has acquired from another Memb er government to fisheries within the 
jurisdiction of such other Member.6 
  (h)
 Subsidies the benefits of which are conf erred on any vessel engaged in illegal, 
unreported or unregulated fishing.  
 I.2 In any case, subsidies the benefits of whic h are conferred on any vessel engaged in illegal, 
unreported or unregulated fishing7 shall be prohibited . In addition to the prohibitions listed in 
paragraph 1, any subsidy referred to in paragraphs 1 and 2 of Article 1 the benefits of which are 
conferred on any fishing vessel o r fishing activity affecting fish st ocks that are in an unequivocally 
overfished condition shall be prohibited.   
 I.3 For the purpose of paragraph 1, a subsidizing Member shall, in its notification of subsidies 
referred to in that paragraph made in accordance w ith Article 25, or in the information it supplies in 
accordance with Article V, include  science-based assessments that demonstrate possible impacts of 
those subsides on marine fish stocks and/or the prev entive effects of its fisheries management system 
on them.  
 
 
Article II 
 
General  Exceptions to Article I  
 
 Notwithstanding the provisions of Article I, [and subject to the provision of Article V]:  
 
 (a) For the purposes of Article I.1(a), subs idies exclusively for improving fishing or 
service vessel and crew safety shall not be prohibited, provided that: 
   (1) such subsidies do not involve new vessel construction or vessel acquisition; 
   (2) such subsidies do not give rise to an y increase in marine wild capture fishing 
capacity of any fishing or service vessel, on the basis of gross tonnage, 
volume of fish hold, engine power, or on any other basis, and do not have the effect of maintaining in operation any such vessel that otherwise would be withdrawn;  and  
 
  (3)  the improvements are undertaken to comply with safety standards.  
  (b) For the purposes of Articles I.1(a) and I.1(c) the following subsidies shall not be 
prohibited: 
 
 subsidies exclusively for:  (1) the adoption of gear for selective fishing 
techniques;  (2) the adoption of other techniques aimed at reducing the 
environmental impact of marine wild capture fishing;  (3) compliance with 
fisheries management regimes aimed at sustainable use and conservation (e.g., devices for Vessel Monitoring Systems);  provided that the subsidies do 
                                                     
 
6 Government-to-gove rnment payments for access to marine fisheries shall not be deemed to be 
subsidies within the meaning of this Agreement. 
7 The terms "illegal fishing", "unreported fishing" and "unregulated fishing" shall have the same 
meaning as in paragraph 3 of the International Plan of Action to Prevent, Deter and Eliminate Illegal Unreported 
and Unregulated Fishing of the United Nations Food and Agricultural Organization.   TN/RL/GEN/159 
Page 6  
 
  not give rise to any increase in the mari ne wild capture fishing capacity of 
any fishing or service vessel, on the b asis of gross tonnage, volume of fish 
hold, engine power, or on any other basis, and do not have the effect of maintaining in operation any such vessel that otherwise would be withdrawn. 
 
 (c) For the purposes of Article I.1(c), subs idies to cover personnel costs shall not be 
interpreted as including: 
   (1) subsidies exclusively for re-education, retraining or redeployment of 
fishworkers
8 into occupations unrelated to marine wild capture fishing or 
directly associated activities;  and 
   (2) subsidies exclusively for early retirement or permanent cessation of 
employment of fishworkers as a result of government policies to reduce marine wild capture fishing capacity or effort.   
 
 (d) Nothing in Article I shall prevent subs idies for vessel decommissioning or capacity 
reduction programmes, provided that: 
   (1) the vessels subject to such programmes are scrapped or otherwise 
permanently and effectively prevented fr om being used for fishing anywhere 
in the world; 
   (2) the fish harvesting rights associated  with such vessels, whether they are 
permits, licences, fish quotas or any other form of harvesting rights, are permanently revoked and may not be reassigned; 
 
  (3) the owners of such vessels, and the holders of such fish harvesting rights, are 
required to relinquish any claim associ ated with such vessels and harvesting 
rights that could qualify such owners and holders for any present or future 
harvesting rights in such fisheries;  and 
 
  (4) the fisheries management system in place includes management control 
measures and enforcement mechanisms d esigned to prevent overfishing in the 
targeted fishery.  Such fishery-speci fic measures may include limited entry 
systems, catch quotas, limits on fishing effort or allocation of exclusive 
quotas to vessels, individuals and/or groups, such as individual transferable 
quotas. 
  (e) Nothing in Article I shall prevent subsid ies on natural disaster relief when they are
 
limited to the relief of a particular natu ral disaster, provided that the subsidies are 
directly related to the effects of that di saster, are limited to the affected geographic 
area, are time-limited, and in the case of reconstruction subsidies, only restore the 
affected area, the affected fishery, and/or th e affected fleet to its pre-disaster state, up 
to a sustainable level of fishing capac ity as established through a science-based 
assessment of the post-disaster status of the fishery.   Nothing in Articl e I shall prevent 
governments from making user -specific allocations to individuals and groups under 
limited access privileges and ot her exclusive quota programmes . 
 
                                                      
8 For the purpose of this Agreement, the term "fishworker" shall refer to an individual employed in 
marine wild capture fishing and/or  directly associated activities.   TN/RL/GEN/159 
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Article V 
 
Fisheries Management  
 
V .1 Any Member granting or maintaining any subsid ies as referred to in Article I, [Article II]  or 
Article III.2(b), shall operate …..   
 
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