WORLD TRADE  
ORGANIZATION  TN/RL/W/245 
24 November 2009 
 (09-5893) 
Negotiating Group on Rules Original:   English 
  
 
FRAMEWORK OF THE DISCIPLINES ON FISHERIES SUBSIDIES 
 
Communication from the Republic of Korea
 
  
The following communication, dated 23 November  2009, is being circulated at the request 
of the Delegation of Korea.    
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Introduction 
 
1. The Republic of Korea would like to make the following written contribution in an effort to 
assist the Negotiating Group on Rules in developi ng a framework of the disciplines on fisheries 
subsidies.  Korea has delayed the submission of th is contribution to the Negotiating Group on Rules, 
out of due respect for the Chair's intention to th oroughly discuss the roadmap before dealing with the 
new proposals of Members.  Considering that th e discussion on the roadmap is coming to a close, 
Korea finds now to be the appropriate time for this  submission.  Korea expects that this contribution 
will be considered promptly, in due course, as Members move forward to the next stage of the 
discussions.  
2. The Chair's roadmap, like the draft text, begins with the presumption that all subsidies in the 
fisheries sector should be prohibited with very lim ited exceptions.  This is manifestly inconsistent 
with the concepts and principles of the Agreem ent on Subsidies and Countervailing Measures ("SCM 
Agreement"), which identifies as prohibited only thos e subsidies that are unarguably harmful and for 
which a consensus in this regard has long existed in the international community.  Designating now a 
wide range of subsidies as prohibited in the A nnex would run the risk of undermining the basic 
structure and principles of the SCM Agreement. 
3. The reason that consensus has been impossibl e to achieve is largely due to discussions 
proceeding on a misunderstanding of the mandates fo r negotiations.  Only when Members return to 
the combined mandates of the Doha and Hong Kong Mini sterial Declarations will we be able to find a 
way forward. 
Doha and Hong Kong mandates  
 
4. The Doha Ministerial Declaration provided in paragraph 28 that discussions on clarifying and 
improving disciplines under the SCM Agreement were  to move forward "while preserving the basic 
concepts, principles and effectiveness of these Agreem ents and their instruments and objectives."  The 
Ministers further noted that, "in the context of th ese negotiations, participants should also aim to 
clarify and improve WTO disciplines on fisheries subsidies."   
5. The Ministers then explicitly cross-referenced negotiations on Trade and the Environment.  
However, paragraph 31 of the Declaration, which de als with Trade and Environment, made clear that TN/RL/W/245 
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  "fisheries subsidies form part of the negotiations  provided for in paragraph 28."  Thus, it is 
inescapable that negotiators were being instructed to clarify and improve the disciplines on fisheries 
subsidies within the overall context of the nego tiations under the SCM Agre ement wherein the basic 
concepts, principles and effectiveness of th e SCM Agreement were to be maintained. 
6. In the Hong Kong Ministerial Declaration, para graph 9 of Annex D, the cross-reference to 
trade and environment is reiterated along with the "broad agreement that the Group should strengthen 
disciplines on subsidies in the fisheries sector, including  through the prohibition of certain forms of 
fisheries subsidies that contribute to overcapacity and over-fishing (emphasis added)."  The Ministers 
then called upon negotiators to work  at clarifying the nature and extent of these disciplines, including 
their transparency and enforceability.   
Problems of the current approach  
 
7. In Korea's view, the negotiations have not seriously addressed the mandates of the two 
Ministerial Declarations.  Instead of starting fro m a position wherein the basic concepts, principles 
and effectiveness of the SCM rules are to form the framework for these efforts to clarify and improve 
the disciplines of fisheries subsidi es, the focus has been on compiling lists of prohibited subsidies in a 
fashion that ignores and contradicts many year s of experience with how prohibited subsidies 
disciplines are structured and implemented.   
8. One of the bedrock principles must be that subsidies are not prohibited unless it is 
unambiguously clear that they cause harm.  Thus, Me mbers wishing to expand the list of prohibited 
subsidies beyond those for which there is a clear cons ensus must demonstrate that such subsidies have 
indisputably negative impacts on fisheries stocks.   
9. Another issue concerns an article in the main te xt of the SCM Agreement that should relate to 
the annex on fisheries subsidies.  Korea consid ers it legally inappropriate to make Article 3.1 
(prohibited subsidies) of the SCM Agreement a reference point for the entire annex on fisheries 
subsidies.  The envisaged annex on fisheries subs idies deals not only with prohibited subsidies but 
also with a number of other disciplines, including other subsidies regulated on the basis of 
overcapacity and over-fishing tests and of promoting the use of fisheries management schemes.  A 
new article should be inserted in an appropriate place in the main text of the SCM Agreement, 
properly referring to the annex on fisheries subsidies.   Similar adjustments will have to be considered 
to make the proposed annex compatible with the basic structure and principles of the SCM 
Agreement.  
10. In addition, Korea wishes to point out sev eral misunderstandings on the Hong Kong mandate 
in the Chair's roadmap.  In paragraph 3 of the Ch air's roadmap, instead of  discussing the disciplines 
that may be including  prohibited subsidies, Members are invite d to go down a road where "the central 
focus of these negotiations is the strengthening of disciplines, in particular  through a prohibition." 
The Chair has substituted "in particular" in place of  "including" and completely changed the meaning 
of the mandate.  "Including" means it is intended that  there should be a broad set of rules that include 
prohibited subsidies as merely one among many elem ents.  On the other hand, using "in particular" 
implies that prohibited subsidies are the focus of the whol e exercise rather than just one portion of it.    
11. In paragraph 5 and throughout the proposed ro admap there are references to disciplines on 
"overcapacity or overfishing."  The Hong Kong Declaration called for a possible prohibition on 
fisheries subsidies that contribute to "overcapacity and over-fishing." The incorrect use of the 
disjunctive rather than the conjunctive is noteworthy.   The focus must be on both elements together 
and, ultimately, on over-fishing.   TN/RL/W/245 
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  Principle for disciplines specific to fisheries subsidies 
 
12. In light of the Doha and Hong Kong mandates,  new disciplines for the fisheries subsidies 
should conform to the basic concepts and princi ples of the SCM Agreement, which, among other 
things, require a rigorous examination of (i) the exis tence of a subsidy, (ii) specificity and (iii) the 
adverse effect.  In the case of the first two require ments, there seems to be no reason to deviate from 
the general rule of the SCM Agreement, even for fi sheries subsidies, as the Chair's text acknowledges.  
13. As regards the third requirement, namely, the adverse effect test, it is clearly necessary to 
adjust the subject matter of the test.  The starting point of the negotiations on fisheries subsidies was a 
wide recognition among Members that in light of the straddling and migrating nature of fishery 
resources and the current depletion or overexploitation of certain fish stocks, the adverse trade effect 
test employed in the current SCM Agreement would be  inappropriate to address the issue of fisheries 
subsidies.  Thus, a new test based on a subsidy's e ffect on the overcapacity and over-fishing of fishery 
resources rather than its trade effect1 was considered to be necessary.  
14. In this regard, only those subsidies whose unar guably negative effect on the sustainability of 
fisheries resources are demonstrated during the rules negotiations should be prohibited without 
requiring the proposed adverse effects test.  Wit hout sufficient scientific and empirical evidence, 
many Members were unconvinced about the existen ce of a clear-cut causal relationship between the 
subject subsidies and overcapacity and over-fishing.  This demonstrates the necessity and usefulness 
of the adverse effects test for the fisheries s ubsidies other than the clearly defined prohibited 
subsidies. 
Differentiated disciplines  
 
A.  BOX I ("RED BOX"):  SUBSIDIES TO BE PROHIBITED EX ANTE  WITHOUT A 
FURTHER OVERCAPACITY/OVER-FISHING TEST  
 
15. The SCM Agreement lists the two types of subsidies that are prohibited in light of 
international consensus due to their obvious advers e trade effects.  For these subsidies, no separate 
adverse trade effect test is needed since ther e was agreement during the negotiations that they 
definitely have adverse trade effects, detrimenta l to the interests of other Members, and should 
therefore be prohibited ex ante .   
16. Likewise, there may be certain subsidies whose adverse effects on the sustainability of fishery 
resources to the extent of leading to overcapacity and over-fishing is so obvious that they should be 
prohibited outright.  In the past negotiations of the Negotiating Group, a variety of subsidies were 
suggested for prohibition.  As the Chair recogni zed in his roadmap, there was no convergence of 
opinions as to which subsidies should be prohibited a nd which subsidies should not.  In the view of 
Korea, however, a certain limited number of subs idies received more recognition than others among 
the participants in the Group as requiring outrigh t prohibition because of their intrinsic damaging 
nature. 
                                                      
1 Of course, in addition to the new test, the conve ntional trade effect test should still be valid and 
applicable for fisheries subsidies.  More specifically , even when a certain fisheries subsidy programme is 
maintained in accordance with  the additional disciplines on fisheries subsidies, the programme should continue 
to remain under the purview of general subsidy rules. TN/RL/W/245 
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  17. In the view of Korea, these subsidies could be prohibited outright under the new disciplines, 
subject to the consensus of all the participan ts.  The subsidies that are to be prohibited ex ante  could 
be those of which the benefits are conferred, for example, on:
2  
 (i) any vessel engaged in illegal, unreported or unregulated fishing3; 
 (ii) the transfer of fishing vessels to third countries;  
 (iii) the further transfer of access rights; or 
 (iv) the acquisition or construction of  new fishing vessels and fishing vessel 
modifications, resulting in capacity enhancements.  
 For these subsidies, no separate adverse effect test would be needed as this box prohibits subsidies ex 
ante.  Again, the above list is simply illustrative a nd depends much on the outcome of the discussions 
among Members to confirm the consensus as to what  fisheries subsidies should be designated as 
prohibited.  B.  BOX II ("AMBER BOX"): SUBSIDIES TO BE PROSCRIBED SUBJECT TO AN 
OVERCAPACITY AND OVER-FISHING TEST  
 
18. Subsidies other than those falling under the Red Box shall be proscribed only if they are 
determined to be causing overcapacity and over-fishi ng.  Here, an overcapacity and over-fishing test 
is required as a first step, in line with the ge neral discipline of the SCM Agreement on actionable 
subsidies.  The subsidies should be proscribed onl y when scientific and objective examinations on the 
effects of the challenged fisheries subsidies demo nstrate that the subsidies in question result in 
overcapacity and over-fishing.  
19. For instance, a proposed regulation of subsidi es conferred on operating costs, including fuel, 
warrants more detailed and comprehensive discussions among Members.  It can be agreed that fuel 
subsidy has the potential, but not the certaint y, to lead to overcapacity and over-fishing.
4 At the same 
time, however, it may also be true that categorical pr ohibition of fuel subsidy in its entirety, simple as 
it may be, would cause substantia lly negative impact on the livelihood of the Members' fishing 
households that have been traditio nally dependent upon such measure s.  Any proposed regulation on 
the fuel subsidy, therefore, should be tailored dow n to address these conflicting interests.  In this 
                                                      
2 This list is illustrative at the moment.  As the main focus of this paper lies on the issue of structuring 
the framework for the disciplines on fisheries subsidies, the current list of subsidies falling under this category is 
without prejudice to Korea's ultimate position on what subsidies should be contained in this box.  It is the same 
for the other lists in this paper. 
3 The terms "illegal fishing", "unreported fishing" and "unregulated fishing" shall have the same 
meaning as those terms in paragraph 3 of the Internationa l Plan of Action to Prevent, Deter and Eliminate Illegal 
Unreported and Unregulated Fishing of the United Nations Food and Agricultural Organization. 
4 Korea also brings to the attenti on of Members the hidden effects of the inherent fuel price difference 
among Members.  Statistics show a wide variance in domestic fuel prices among Members depending on , inter 
alia, respective sources of fuel (domestic production or import) and domestic tax policies (high taxation or low 
taxation).  We fully agree that a fuel  subsidy of a Member leads to a low fuel price, which may then cause over-
exploitation in the fisheries stock.  In other words, it is  the low fuel price rather than the associated subsidies 
that causes the over-exploitation.  If this is the case, the inherently low fuel prices of some Members made 
possible through various outside factors (even in the co mplete absence of any subsidy) would also cause a 
similar level of harm to global fisheries stocks.  Thus, ignoring this fundamental reality and focusing on the fuel 
subsidy alone would fail to address the real concern and probably would prevent the introduction of an effective 
scheme to deal with low fuel prices on a global scale.  It would also prevent the achievement of fair competition in fisheries among Members if the conditions of the comp etition are affected by different outside factors that 
sometimes have nothing to do with any subsidization.  Af ter all, it may be the case that a subsidy portion could 
account for a mere fraction of the total fuel price prevailing in a certain Memb er's market.  In this respect, Korea 
notes that the low fuel price itself as well as fuel subsidies should be adequately taken into account in addressing 
this particular concern about the impact of cheap fuel on over-exploitation.  TN/RL/W/245 
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  context, regulation of the fuel subsidies could also  be based on an objective and scientific assessment 
of the alleged overcapacity and over-fishing arising from the subsidy granting measure.5 
20. In reality, however, particular  subsidies among those that do not fall under Box I may carry a 
more conspicuous negative effect on fish stocks.  Recognizing the relatively higher potential of the 
adverse effects of certain subsidies, it may be  suggested that these subs idies create a rebuttable 
presumption of causing overcapacity and over-fishing, unless demonstrated otherwise.  An example 
of a subsidy falling under this category would be a subsidy for the price support.  Further discussions 
among Members may determine what else can be included in this category. 
21. In situations where a fisheries management sy stem has been established by a Member or 
Members, overcapacity and over-fishing may be cons idered as not being present if the system could 
effectively reduce or negate any potentially adverse e ffects of the subsidy on fish stocks.  In reality, it 
would not be practical to require Members to est ablish a perfectly operating fisheries management 
system.  Instead, a panel and the Appellate Body in  a particular case will be able to review the 
structure and effectiveness of the fisheries mana gement system in the case and accord appropriate 
evidentiary weight under the circumstances, including a determination on whether the fisheries 
management system can disconnect a possible causa l relationship between the subject subsidy and 
overcapacity and over-fishing, in the course of resolving the dispute.  
22. It should be noted that several studies from va rious international organizations, including the 
OECD and UNEP, have found the link between the fish eries management system and fish stock to be 
empirically relevant.6 
23. Members should give further consideration to ho w they wish to define fisheries management 
systems for purposes of these new disciplines.  Korea believes that such a system should include an 
effective means of identifying maximum sustainable yield (MSY), vessel registration, allowable catch 
quotas, effective enforcement, monitoring and surv eillance, and effective penalties for violation.7  
24. In Korea's view, reference to fisheries management systems is the most constructive element 
of the new rules regime.  The focus must be on the sustainable use and conservation of fisheries 
resources.  If effective fisheries management syst ems are in place, the ability of Members to work 
with their coastal communities will be sustained at the same time that the fish stocks are being 
preserved.  Korea is convinced that focus on this positive element is the b est way towards building 
consensus that will achieve the desired goal of sustai nable fisheries.  If Members truly wish to move 
forward in developing rules that are important to  the multilateral efforts to maintain sustainable 
fisheries, a sharper focus on ways to use new rule s to encourage an effective fisheries management 
system is required.  
                                                      
5 By way of example, Korea believes that the a lleged adverse effects from the provision of fuel 
subsidies would vary depending on fishing areas involved.  All things being equal, as the distant water activities 
are more likely to cause overexploitation on a global ba sis than the offshore fisheries activities, Members may 
consider adopting a mechanism in which distant water fisheries and offshore fi sheries are subject to separate and 
different regulation when it comes to fuel subsidies. 
6 OECD, 2006 Financial Support to Fisheries - Implications for sustainable development UNEP, 2004, 
Analyzing the Resources Impact of Fisheries Subsidies:  A Matrix Approach 
7 Elements and requirements to be included in a prospective fisheries management system may vary 
depending on the maritime areas being regulated.  For instance, Members may consider introducing more 
stringent rules with regard to fisheries activities conducted in high seas, as the area is particularly vulnerable to 
over-exploitation.  On the other hand, those applicable to EEZ could be le ss stringent with a lower threshold 
compared to high seas, provided  that the effectiveness of the fisheries management system is still ensured in the 
EEZ as well. TN/RL/W/245 
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  C.  GENERAL EXCEPTIONS 
 25. The Chair's Draft provided that certain subsidi es might be excluded from the new disciplines.  
However, even though the exceptions were denoted as "general," they were in fact not generalized but 
limited to certain subsets of prohibited subsidi es.  While it can be accep ted that the identified 
subsidies will be considered excep tions, to be invoked as affirmative de fences, they need to be made 
more generally applicable, as in the context of Article XX of the GATT. 
26. Korea cannot accept the strict limitations on the possible provision of funds whose sole 
purpose is to enhance vessel and crew safety.  This  is a fundamental human and social issue and has 
been recognized as such since the inception of the GATT.  Depriving a Member of the authority to 
carry out this key func tion would undermine the legitimacy and effectiveness of the fisheries 
subsidies regulation in the long run.  As such, some clarifications can be included to the exception to 
ensure that this fundamental right is to be preserved. 
27. Other General Exceptions should include subsidi es for (1) the adoption of gear for selective 
fishing techniques;  (2) the adoption of other tec hniques aimed at reducing the environmental impact 
of marine wild capture fishing;  and (3) implem entation and compliance with fisheries management 
regimes.  These are the very practices that need to be encouraged.  It makes no sense to restrict the 
applicability of these exceptions to certain subsidy categories, or to  overly constrain the exceptions 
with limiting language. 
28. Some subsidies that have clear socio-economic policy implications should also be included in 
the General Exceptions.  Examples of these subsidies include:  
• re-education, re-training, early retirement or cessation of employment as fish workers 
pursuant to government programmes to reduce marine wild capture fishing capacity;   
• vessel decommissioning provided that they are not a backdoor method of maintaining or 
increasing fishing capacity in replacement vessels or otherwise; 
• port infrastructure or other physical port facilities
8; 
• subsistence and artisanal fisheries, provided that objective quantitative limits are established9; 
or 
• social welfare payments for fish workers a nd fishing communities not related to catches, 
production or other productivity measures. 
 
These subsidies contain distinct socio-economic dimens ions that should be preserved to the extent that 
they do not compromise the objectives of the fisheries subsidies rules.   
Dispute settlement 
 
29. Dispute settlement provides one of the greatest challenges in constructing new fisheries 
disciplines while maintaining consistency with the basic structure and principles of the SCM 
                                                     
 
8 Korea notes that Article 1 of the SCM Agreemen t already stipulates that general infrastructure 
construction or maintenance programmes of a Member do not fall under a subsidy as defined by the article.  To the extent that port facilities infrastructure constitutes a general infrastructure under Article 1 of the SCM 
Agreement, in order to preserve consistency with the overall scheme of the SCM Agreement, Korea is of the 
view that such port infrastructure subsidies should be  more properly categorized as a general exception. 
9 Subsistence and artisanal fisheries activities ar e those conducted on a non-commercial scale and 
mainly aimed at supporting and maintaining the livelihood of the fishing households in the relevant region of a 
Member.  The total amount of catch s hould be subject to an objective quantitative limit, which could be based 
on the average annual amount of such fishing, during a certain designated period of time (such as the most 
recent five years).  TN/RL/W/245 
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  Agreement.  This is because the concept of traditional dispute settlement focuses on bilateral 
assertions of trading rights.  That is fundamentally different from the issue before Members in regard to fisheries subsidies because the interest at stake is a multilateral natural resources matter. 
30. As an enforcement mechanism for those fisher ies subsidies not falling under the prohibited 
category, the Chair's draft does provide for a creativ e and innovative approach in Article IV.  Korea 
supports the basic idea and scheme behind this article of the Chair's text.  We believe that Members 
could further expand and fine-tune the basic idea an d scheme of the Chair's text in a manner that is 
more manageable in actual operation.  For instance,  Members could endeavour to further elaborate the 
definition of key terms used in Article IV of the Chair's text. 
31. Korea notes that the present dispute settleme nt mechanism is one of the remarkable 
achievements of the WTO regime.  In fact, over th e years we have seen panels and the Appellate 
Body, when faced with novel issues in complex litiga tions, interpret relevant covered agreements in 
accordance with international law, develop new juri sprudence within the parameters of the covered 
agreements and successfully resolve the disputes.   
32. Korea is confident that future panels and the Ap pellate Body will be able to handle fisheries 
subsidies disputes in a reliable manner, as long as clear rules and guidelines are provided in the 
revised SCM Agreement.  For inst ance, with respect to the fisheries subsidies falling under the amber 
box, where an overcapacity and over-fishing test is required, panels and the Appellate Body will be 
able to develop new methodologies and jurisprudence in  this regard in order to achieve the objectives 
of the new adverse effects test. 
 
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