WORLD TRADE  
ORGANIZATION  TN/RL/W/212 
29 June 2007 
 (07-2767) 
Negotiating Group on Rules Original:   English 
  
 
FISHERIES SUBSIDIES: "FISHERIES ADVERSE EFFECTS" 
AND "S&D" TREATMENT 
 
Paper from Brazil
 
 
  The following communication, dated 29 June 2007,  is being circulated at the request of the 
Delegation of Brazil.   
 
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1. Brazil welcomes the debate on fisheries subsid ies at the Negotiating Group on Rules (NGR) 
meetings, in particular regarding special and differe ntial treatment (S&D).  In order to contribute to 
the discussions on the subject, Brazil presents this document in an effort to reaffirm some of our key 
principles regarding the fisheries negotiations  and S&DT for developing countries.   
2. This document is an attempt to respond to  the call of the Chair of the NGR for 
"brainstorming" on S&DT issues.   TN/RL/W/212 
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  "Fisheries Adverse Effects" 
 
The concept of "fisheries adverse effects" was cons idered, for the first time, in the last version 
of the Brazilian proposal on fisheries subsidies (TN/ RL/GEN/79/Rev.4).  In brief, the discipline sets 
specific adverse effects to the fishing sector ("fi shery adverse effects"), keeping the fundamental 
principle of the SCM Agreement by which no Memb er should cause, through the use of any subsidy, 
adverse effects to the interests of other Members.    
In that sense, Brazil proposes that the structure of  the new disciplines in fisheries subsidies be 
based on a broad prohibition, with specific excepti ons and provisions for special and differential 
treatment ("S&D") considered under some parameters of fisheries sustainabil ity ("fisheries adverse 
effects") – basically, the existence of fisheries management practices and the respect for certain 
fishery indicators, under the scope of a national fisheries management system.    
Based on the Hong Kong Declaration, the premise that guided the proposed legal structure is 
that the subsidies to be prohibited in the new disciplines should address "over-fishing" and 
"overcapacity".  Since the distortions that justifie d the negotiating mandate for fisheries subsidies are 
related to the level of production, the fisheries subsidies that directly distort production should be 
prohibited, while subsidies with negligible risks of  causing adverse effects to the fisheries resources 
could be granted, subject to regular transpar ency and control mechanisms (notification and 
monitoring).   
 
Brazil considers that the concept of "fisheries a dverse effects" could be an effective criterion 
to ensure that the "exception" and S&D subsid ies do not cause over-fishing.  There is, however, 
considerable debate regarding the most adequate st ructure for the "fisheries management systems", in 
order to guarantee that they are effective.  Ther e is no binding multilateral rule that determines such 
structure nor a general international provision to  asses the effectiveness of those systems.  
Nevertheless, there is enough inte rnational experience to help countries structure their fisheries 
management systems and control the effectiveness of their mechanisms (such as the FAO Code of 
Conduct for Responsible Fisheries).  In that sen se, Brazil understands that the new rules should 
provide for the observance of the best internationa l practices, setting only certain minimum criteria to 
guide Members.  Attempts of establishing a strict and universal standard for such systems within the 
WTO framework may compromise the legitimacy of  the new disciplines and extend them beyond the 
mandate of the WTO.    
As Members have experienced with other WTO Agreements (such as the Agreement on 
Technical Barriers to Trade), it should not be cons idered overly intrusive for the WTO to proceed 
with an analysis of the underlying scientific and technical criteria of national fisheries management 
system in case of occurrence of a claim of adver se effects to the fisheries resources ("fishery adverse 
effects").  Brazil understands that each country shou ld structure and make operational their fisheries 
management systems, based on international practices  and the best scientific information available.  
Upon the initiative of a Member, the Organization w ould be able to evaluate if the Member in 
question has fulfilled its obligations, on the basis of sc ientific and technical criteria provided for in the 
new disciplines.   
 
In that sense, Brazil considers that the choice of  "capacity" as the sole parameter for verifying 
the occurrence of fisheries adverse effects is cont roversial and imprecise.  Not only does this concept 
find little consensus among specialists in the matter, but more importantly there is no direct relation 
between a vessel’s physical feature and over-fishing.   
 
The first versions of the Brazilian proposal did mention the fishing capacity of the Members, 
that should be evaluated jointly with their eff ective production.  These two dimensions sought to 
capture not only the fishing potential of each fl eet ("capacity"), but specially the volume actually  TN/RL/W/212 
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  fished ("production").  The capacity of a fleet (physical:  aggregate gross tonnage, volume of fish 
hold, engine power, etc;  and productive:  autonomy of the vessel, number of times that it leaves to the sea, etc) will always be a static and potential pa rameter, that can find no direct relation with the 
sustainability of its activities.  Brazil understands th at the distortions which justified the negotiating 
mandate for fisheries subsidies - equally reflected  by overcapacity and over-fishing - are not properly 
captured by the concept of "capacity" alone.   
 
Moreover, criteria based on the capacity bring implicit "ex ante" considerations.  Based on 
our own experience in discussing the matter, Brazil belie ves that such an "ex an te" approach threatens 
the workability of the new rules.  The concept of  "fishery adverse effect " implies an "ex post" 
verification – a more "WTO like" practice that consider s the real impacts of the subsidization.  In that 
sense, the strength of the notification and monitori ng provisions that accompany proposals based in 
fishery adverse effects should be ensured.     Special and Differential Treatment ("S&D") 
 
Since the beginning of fisheries subsidies negotiations, Brazil has defended that the 
provisions on special and differential treatment (S &D) should envisage substantive flexibility to the 
general prohibition, bearing in mind certain parame ters.  To Brazil, new disciplines in fisheries 
subsidies without substantial concession on "policy space" in S&D are not acceptable.  On the one 
hand, such concession should be followed by precise c onditionalities, so that it is not characterized as 
a "blank check".  On the other hand, Brazil cons iders it essential to guarantee that developing 
countries will have the right for constructing or modernizing their domestic fleet (a sector that, 
oftentimes, is still incipient in those countries) .  Therefore, effective S&D should go beyond 
temporary concessions, such as extensions of the period for implementation of the new rules or 
technical support provisions.   
 
The nature of the conditionalities applied to special and differential treatment should be a core 
issue in the architecture of the fu ture rules that will apply to developing countries.  Criteria based on 
static parameters (for example the size of the vessel ) do not seem to be the answer for determining the 
scope of the S&D provisions.  They also could turn out to be inconsistent, due to vessels’ growing 
efficiency.  In that sense, Brazil, as well as Argent ina, presented proposals that consider subsidies 
given to enhance the fisheries’ capacity in de veloping countries upon parameters linked to both 
overcapacity and over-fishing.    
As previously mentioned, Brazil favors the fi sheries managing systems approach in dealing 
with limits for S&D.  Brazil does not believe that  "capacity" alone would be an effective parameter 
since it does not capture entirely the distortions in  production, which is intended to be addressed by 
the new disciplines.    
With regards to the question of the burden to  developing countries of the information and 
notification requirements, it is worth mentioning that only those countries availing themselves of the 
"exceptions" or the "S&D" treatment provisions woul d be subject to full transparency clauses.  The 
core principle for any exception to the broad prohibi tion, horizontal or S&D, is that such exceptions 
represent negligible risks of causing fisheries adverse effects.  Moreover, Brazil would be prepared to 
consider a "de minimis" clause, providing for a wa iver for countries with recognized low incidence on 
overcapacity and over-fishing.   
 
In this regard, the premise behind the idea of allowing flexibility for developing countries to 
grant generally prohibited subsidies is that the program  will not cause fisheries adverse effects.  Such 
flexibility shall, hence, be based on a sustainable exploration of the fisheries resources, under the 
scope of a national fisheries management system.  Regardless of the particular structure of the a TN/RL/W/212 
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  national fisheries management system, it shall be based on statistic data and a minimum scientific 
evaluation.  In that sense, any developing country that implements fishery subsidy programs must 
already have a fisheries managing system in place and, therefore, be able to provide information 
gathered to implement the "exception" program.    
 
"Artisanal"/"Small-Scale" Fisheries 
 
The concepts of "artisanal" and "small-scale" ha ve been continuously discussed in the context 
of the NGR fisheries subsidies negotiations, particularly given the difficulty in finding a common 
ground for the definition of such activities.  Even specialized international organizations diverge on 
artisanal and small-scale fisheries definitions and do not provide the WTO negotiators with a 
satisfactory solution.    
There appears to be some convergence, however, about the nature of those activities, relating 
to the subsistence and livelihood of the fishermen and/or their families.  Nonetheless, the most 
appropriate criteria to characterize "subsistence" a nd "livelihood" do not seem to be entirely clear to 
Members.    
Brazil considers that such criteria should be essentially related to the nature and of the 
activities and how they are performed:  in-shore ba sed fishery;  with non-automatic net-retriever 
devices;  carried out by fishermen (on an individual basis or organized in associations) and/or their 
families;  encompassing both family livelihood and small profit trade;  with no major employee-
employer relationship on the activities carried out.    
In the last version of its proposal, Brazil abando ned direct reference to the terms "artisanal" 
and "small-scale", seeking to avoid misunderstandings  over the different existing definitions for each 
of the concepts in Member countries.  When t ackling the possibility of de veloping countries (S&D 
clause) to subsidize such activities, the Brazilian proposal lays down the above-mentioned criteria, 
determining the nature of the activities subject to receive governmental aid.    
The proposed criteria intend to avoid static pa rameters, such as the size of the vessels.  
Although Brazil is not opposed to the idea of relying on physical characteristics of vessels, the use of 
such criteria alone may give rise to unwarranted consequences due to the multiplicity of standards 
found in the legislation and practices of the Member s.  Moreover such approach risks falling into an 
excessively broad common ground that would most likely embrace small-scale commercial fisheries.  A definition based on the nature of the activity seems  to be more comprehensive and adjustable to 
Members’ different legal structures.  Moreover, as al ready stated, there is no direct and necessary link 
between a vessel’s physical feature, on the one  hand, and overfishing,  on the other.   
 
In that sense, it is important to consider some key physical features, such as net-retriever 
devices, to complement the definition.  Brazil unders tands that non-mechanized fishery should be one 
of the main criteria to characterize the nature of the activities subject to receive this kind of S&D 
subsidies.   
 
Due to the difficulties faced by all countries to  control and monitor their artisanal or small-
scale fisheries, the exceptions to the broad prohibitio n cannot include activities with significant risk of 
causing fisheries adverse effects - "over-fishing" a nd "overcapacity".  In other words, non-mechanized 
artisanal or small-scale fisheries are less likely to  harm the sustainability of the fisheries resources 
and, therefore, could be considered as an exception to the general rule.  The same reasoning may not 
apply to mechanized fisheries.  The inclusion of su ch fisheries in the definition of "small-scale" could 
not be considered as a broad exception to the pr ohibition and would requir e certain conditionalities 
and transparency mechanisms.    TN/RL/W/212 
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  The premise of negligible risk of "fisheries adverse effects", which forms the basis of the 
permission to subsidize non-mechanized artisanal and small-scale fisheries, could set the ground for a horizontal exception, applied to all Memb ers, developed and developing ones.   
 
An analysis of the scope and nature of such  an exception brings the issue of mechanized 
fishery to the centre of the debate.  Brazil considers that there is a "trade-off" between the breadth of 
the activities covered by the "artisanal" and "sma ll-scale" definition and the range of Members 
eligible for a "carve-out" from disciplines for subs idies to such fisheries,  as well as the degree of 
conditionally to be attached to the "carve-out".    
Under a wider definition, that includes mechaniz ed small-scale fishery in the exception to the 
prohibition (as part of the characterization of "small- scale"), the activity would need to be subjected to 
strict limits and parameters, attached to transparen cy and monitoring mechanisms (notification).  Such 
conditionalities, however, would most likely hinder many developing countries' capacity to provide 
support to artisanal and small-scale activities.   
 
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