WORLD TRADE  
ORGANIZATION  TN/RL/GEN/168/Suppl.1 
4 February 2011 
 
 (11-0578) 
Negotiating Group on Rules Original:   English 
  
 
FISHERIES SUBSIDIES – ARTICLES I, II AND IV 
 
Communication from the Republic of Korea
 
 
Additional comments and materials to complement  
Korea's proposal subm itted on 22 September 2010 as  
"Fisheries Subsidies Annex – Articles I, II and IV"  
(TN/RL/GEN/168)  
 
Supplement  
 
  The following communication, dated 31 January 2 011, is being circulated at the request of the 
delegation of Republic of Korea.  
_______________ 
 
 
Explanations Concerning Conceptual Diagram for the Determination of the
 
Existence of Overfished Condition and Adverse Effect  
 
 
1. Attached for Members' reference as Attachment 1 is a diagram to visualize the concept of the 
overfished condition to be regulated by Article I.2 of the Chair's Text and Korea's Proposal of 22 September 2010 and the adverse effect test situati on to be regulated by Article II.1 of the Korea's 
Proposal.  The diagram explains, with scientific da ta, the distinction between the overfished condition 
and the adverse effect situation.  In addition, more  critically, it also shows that confirmation of the 
adverse effect situation caused by overcapacity and over-fishing is both scientifically feasible and 
practically doable. 
2. A diagram like this can be produced for each sep arate fish stock in question in a particular 
maritime zone.  As long as an FMS for the stock and the relevant maritime zone is in place, the data 
for such a diagram can be readily produced and upd ated.  Consequently, a diagram can be prepared 
for a situation existing at a particular point in time (for instance, January 2010) or in a sequential 
mode to reflect the changes or fluctuations during a certain period of time (for instance annual 
changes from January 2005 to January 2010). 
3. The green zone (A) of the diagram indicates a s ituation where the four types of subsidies that 
Korea tentatively included in its adverse effect test in Article II.1 do not cause the alleged adverse 
effect through overcapacity and over-fishing even if th e existence of a subsidy is confirmed.  On the 
other hand, the yellow zone (B) indicates that the fish stock in question is in the condition of the adverse effect arising from overcapacity and over-fi shing.  The remaining question for a reviewing 
panel then seems to be whether a particular subsidy pr ogram (i.e., one of the four types of subsidies in 
Article II.1 of Korea's Proposal) of the responding Member has directly contributed to expanding the fishing effort and whether there are other causes for the confirmed adverse effect situation. TN/RL/GEN/168/Suppl.1 
Page 2  
 
  4. As the existence of a subsidy by nature would m ean increased fishing effort, the inquiry to the 
first question would be relatively straightforward on ce the existence of a subsidy is confirmed.  The 
inquiry to the second question coul d be more substantive;  for instance, a responding Member may 
argue that the adverse effect has been caused by subsidy programs of other Members or by natural 
causes such as natural disaster or marine environm ental changes.  Unless compelling reasons exist 
otherwise (for instance, the adverse effect is prove d to be entirely caused by subsidy programs of 
other Members), it would also be quite difficult fo r the responding Member to entirely insulate itself 
from the causes for the confirmed adverse effect unde r these circumstances.  Consequently, even if 
other subsidy programs of other Members exist or other natural reasons overlap, most probably the 
Panel will find that the challenged subsidy program has contributed or caused the adverse effect in 
any event. 
5. So, all in all, when the fish stock is found to be located in the yellow zone (B) and a subsidy 
program of the responding Member is confirmed, unless compelling explanations are provided by the responding Member, the reviewing panel will determ ine the existence of adverse effect through 
overcapacity and overfishing as a result of the cha llenged subsidy.  The re medy in this situation 
should be withdrawal of the measure, which is effectively the same as the prohibited category 
situation. 
6. On the other hand, if the fish stock is found to be in the red zone (C), this is an overfished 
condition as stipulated by Article II.1 of the Chai r's Text and Korea's Proposal.  Any subsidy of a 
responding Member that affects  the fish stock (or causes such a situation) should be prohibited 
ex ante . 
7. A diagram can be prepared for an individual stoc k.  This may be sufficient for an overfished 
condition test under Article I.2.  As regards adver se effect test proposed by Korea, diagrams for 
multiple representative stocks would ha ve to be prepared and analyzed. 
8. The diagram shows that the adverse effect test  proposed by Korea is practically doable and 
scientifically feasible with a similar degree of analys is as found in the "material injury" test contained 
in the main text of the SCM Agreement.  The diagram also indicates the adverse effect test's 
prospective promotional effect for strengthening  and expanding the FMS.  This is so because 
Members would try to expand the green zone (A) as much as possible through an effective FMS, 
which could then provide them with more le eway in adopting and implementing governmental 
assistance programs. 
 
Comments from the delegation of the Republic of Korea regarding the
 
Fisheries Management System in Fisheries Subsidies Annex  
  9. In Korea's view, it seems that Members' con sensus has been steadily building concerning the 
importance and usefulness of the Fisheries Management System ("FMS") in the operation of the 
Fisheries Subsidies Annex.  As much as prohibiti ng certain types of subsidies is important in 
achieving the objectives of the Annex, enhancing the e ffectiveness of the FMS seems to be equally, if 
not more, important in achieving the objectives in the long run. 
10. As an initial matter, it should be noted that current prohibited subsidy categories does not 
necessarily help conserve fish stocks in all in stances, because Members can always continue to 
provide a subsidy under a program relying upon the "specificity" defense even if its program clearly 
falls under one of the prohibited categories.  The current Article I.1 of the Chair's Text opens door for continued provision of prohibited subsidies as long as the providing government can distribute them  TN/RL/GEN/168/Suppl.1 
 Page 3 
 
 
  broadly enough beyond the fisheries industry.  Thus , an argument can be made that prohibition alone 
may be far from guaranteeing the desire d conservation of the fish stocks. 
11. Instead, it is the FMS that can actually conserve  the fish stocks.  There may be problems and 
obstacles for the administration and operation of the FMS at a reliable level, but it seems to be the 
only mechanism designed to conserve the fish stoc ks.  Future discussions therefore should focus on 
how to introduce a framework which fosters the est ablishment, development and spread of the FMS 
through the Annex. 
12. One suggestion to achieve the goal is to provide  incentives to Members so as to guide them in 
such a direction.  By way of example, Members wi th an effective and reliable FMS may be rewarded 
with favorable treatment in the operation of the Annex.   Korea's proposal for the adverse effect test in 
September 2010 where a reviewing panel can accord  proper evidentiary weight on the relevant FMS 
is an attempt to implement such an idea. 
13. At the same time, it is also true that th e FMS includes various elements of technical 
complexities and that some Members would have diff iculty in fulfilling all the requirements in a short 
time frame.  Thus, Members may consider adopti ng a bifurcated approach to the FMS, where 
mandatory elements  for an FMS and additional elements  for an FMS are to be separately listed.  For 
instance, in order for a Member to satisfy its oblig ation to administer and operate an FMS under many 
provisions of the Annex (such as Articles II or V of the Chair's Text), all mandatory elements  should 
be included or accounted for in an applicable FMS.   An effective FMS would mean an FMS where all 
mandatory elements  are properly put in place and faithfully implemented. 
14. If, on the other hand, some Member s decide to adopt and implement additional elements  in 
their FMS, they may expect more favorable treat ment under the Annex, for instance more favorable 
consideration from a reviewing panel in the course of an adverse effect test as envisioned in Article II 
of Korea's proposal of September 2010.  It is also po ssible that even in this instance an a dverse effect 
is nonetheless found because of the significant negati ve effect (overcapacity and overfishing) flowing 
from the challenged subsidy.  But this possibility of more favorable consideration may provide a 
long-term incentive for Members to adopt, by degrees, additional elements  for the FMS. 
15. Attachment 2 of this document includes lists for mandatory elements  and additional elements .  
The lists provided by Korea are merely indicativ e and Members can determine which elements should 
be included in which category through future discussi ons.  The lists are prepared for now based on the 
idea that Members may prefer to distinguish core elements of the FMS from non-core elements and 
treat them differently in the Annex. 
16. Conceptually, the mandatory elements  are those that should be implemented by all Members.  
The S&D treatment and resort to general exceptions  should be conditioned on an FMS that includes 
and implements all mandatory elements .  The fact that developing Members account for roughly 
70 per cent of the global catch of fish in term of we ight evidences that collective management effort is 
essential to avoid a possible "all-loser" situation that arises from the ultimate depletion of fish stocks.  
More importantly, major fishing powers whether th ey are developed or developing Members are 
strongly recommended to implement the mandatory elements . 
17. But at the same time, there are developing Members that require special consideration in view 
of their basic needs of development as elaborated in proposals submitted by some developing Members.  A more flexible approach should be devised for these developing Members including the 
possibility of lessening some of mandatory elements  in certain circumstances.  Members should also 
explore ways to ensure meaningful technical assist ance and capacity building to help these developing 
Members implement the mandatory elements  ultimately.  Future discussions of the Members may 
further elaborate on these issues TN/RL/GEN/168/Suppl.1 
Page 4  
 
   
Comments from the delegation of the Republic of Korea regarding the
 
Regulation of the IUU Fishing in Fisheries Subsidies Annex  
  Distinct Problems Concerning Regulation of IUU Fishing 
18. In the course of the present negotiations, many  Members have confirmed that the illegal, 
unreported or unregulated fishing ("IUU fishing" ) is one of the significant reasons of global 
overcapacity and over-fishing.  As such, introduc ing a mechanism to effectively regulate the IUU 
fishing should remain to be one of the essential objectives of the current negotiations. 
19. The Chair's Text includes the IUU fishing as one of the prohibited subsidy categories along 
with other seven subsidy types.  This approach of the Chair's Text, however, fails to see the important 
distinction between the IUU fishing and other prohibition categories. 
20. Conceptually, in Korea's view there is no such  subsidy as "subsidies for the IUU fishing" in 
the first place.  It is hard to imagine that a Member would subsidize the IUU fishing because, by 
definition, the IUU fishing connotes fishing activities occurring in contravention of the laws and 
regulation.  Therefore, prohibiting "subsidies for the IUU fishing" misses the point and would be unable to address the IUU fishing problem adequately. 
21. More than anything else, the problem of the curre nt approach is that it is virtually impossible 
for a Member to identify subsidies for the IUU fishi ng, if any, and repeal them in a timely fashion 
when the present Annex comes into force.  As i ndicated above, a subsidy for the IUU fishing has 
nothing to do with the governmental program;  rather  such a subsidy only co mes into existence when 
a recipient of a governmental support somehow e ngages in the IUU fishing.  Consequently, an 
otherwise permissible governmental measure or po licy could become a prohibited subsidy simply 
because some (or even one) of the recipients are engaged in the IUU fishing by violating applicable 
laws and regulations, the consequence of which is co mplete withdrawal of the program in its entirety. 
22. If Members are not able to confirm which program s of theirs would be implicated from this 
provision in advance with a reliable degree of certa inty, they would be unable to implement the 
obligation under the Annex in good faith.  It is doubtful whether a legal norm that cannot expect 
participants' good faith implementation of thei r obligation could survive in the long run. 
23. Furthermore, under the current scheme Members would be forced to appear in a panel 
proceeding as a respondent simply because there are some violators of their domestic laws and 
regulation.  As the remedy under the prohibition s ubsidy is the withdrawal of the measure, other 
law-abiding beneficiaries of a program which is  permitted under the Annex (for instance, because it 
does not fall under the prohibited category or because  it satisfies the general exception requirements) 
would all stand to be deprived of their legitimate governmental assistance.  Arguably, this would be 
unfair to the majority of beneficiaries and this systemic unfairness would raise a question about the 
long-term viability of the norm. 
Suggestion for Future Discussion 
24. Given the significant magnitude of the IUU fi shing, the new Fisheries Subsidies Annex 
should include a provision that can effectively deter and sanction the IUU fishing in the future.  The new provision should be taken out from Article I a nd placed in a different article or formulated as 
a stand-alone provision.  TN/RL/GEN/168/Suppl.1 
 Page 5 
 
 
  25. The new provision should directly address the IUU fishing in a more practical and effective 
manner.  For instance, Members should ensure th at fishworkers engaged in the IUU fishing are 
penalized by forfeiting any benefit they have r eceived from an otherwise legitimate governmental 
program.  Also, participants in the IUU fishing s hould be blacklisted so as to remain ineligible, at 
least for a certain period of time, for any similar benefit from the same or similar governmental 
programs.  In addition, Members' laws and regul ations along with statistics and data for such 
enforcement and penalty imposition should be regularly reported for a peer review.  In short, a 
positive and practical approach is required in this respect. 
26. At the same time, Members may consider providing for more incentives for effective 
regulation of the IUU fishing.  In the light of this , the regulation of the IUU fishing may be designated 
as one of the elements of a viable FMS to be introduc ed in the Annex.  Members striving to satisfy the 
requirements of the FMS to enjoy the FMS-cond itioned safe harbors (such as S&D treatment an 
general exception) of the Annex will probably enha nce their effort to detect and punish the IUU 
fishing within their jurisdiction.  As noted above, the list of mandatory elements  for an FMS 
suggested by Korea includes regulation of the IUU fishing as one of the core features of any FMS. 
 TN/RL/GEN/168/Suppl.1 
Page 6  
 
  Attachment 1  
 
 
Conceptual Diagram for the Determination of Overfished
  
Condition and Adverse Effect  
 
  
Biomass
(or 
CPUE)
BMS
Y
BMSY
2
fMSYFishing effort
Overfishing0Adverse Effect 
Absent Despite 
Certain Subsidies 
(SeeArticle II of 
Korea’s Proposal )
Adverse Effect 
Confirmed 
Overfished Condition 
(SeeArticle I.2 of 
Chair’s Text)
Yield
MSY
Fishing effort
OverfishingfMSY0A
B
C
AB CGreen
Yellow
Red
Green Yellow Red
Biomass
(or 
CPUE)
BMS
Y
BMSY
2
fMSYFishing effort
Overfishing0Adverse Effect 
Absent Despite 
Certain Subsidies 
(SeeArticle II of 
Korea’s Proposal )
Adverse Effect 
Confirmed 
Overfished Condition 
(SeeArticle I.2 of 
Chair’s Text)
Yield
MSY
Fishing effort
OverfishingfMSY0
Biomass
(or 
CPUE)
BMS
Y
BMSY
2BMSY
2
fMSYFishing effort
Overfishing0Adverse Effect 
Absent Despite 
Certain Subsidies 
(SeeArticle II of 
Korea’s Proposal )
Adverse Effect 
Confirmed 
Overfished Condition 
(SeeArticle I.2 of 
Chair’s Text)
Yield
MSY
Fishing effort
OverfishingfMSY0A
B
C
AB CGreen
Yellow
Red
Green Yellow Red
 
 
 
 
    
  TN/RL/GEN/168/Suppl.1 
 Page 7 
 
 
  Attachment 2 
 
 
Mandatory Elements of FMS1 
 
 
(i) Regular scientific assessments of fish stocks including precautionary reference 
points2 or their proxies3; 
(ii) Mechanisms for the regular collection of and readily available public access to data 
on catches (including discards), fishing effort and fish size compositions4 in sufficient 
detail to allow sound analysis of trends in fishing effort  intensity5 and stock health; 
(iii) Regular assessments of the capacity of the Member's fishing fleets and a plan for 
managing capacity consistent with the F AO International Plan of Action for the 
Management of Fishing Capacity; 
(iv) Legally binding measures regulating fishing effort that are designed to maintain 
populations of harvested species at levels  no lower than necessary to produce a 
sustainable allowable catch  total allowable catch6, taking into account ecosystem 
interactions where applicable; 
(v) Requirements that all vessels have licenses and be registered in a national registry 
and, where applicable, international registry , that are readily available to the public; 
(vi) A Member referred to in paragraph 1 shall ensure that judicial, quasi -judicial or 
administrative proceedings, in accordance with its law, are available  Judicial and 
administrative measures of a Member  to ensure compliance with its management 
system including an inspection scheme at port and sea7 ; 
(vii) Measures to detect, prevent and eliminate IUU fishing activities8 ;  and 
(viii) In the case of shared, straddling, highly migratory and discrete high seas stocks, 
measures requiring cooperation with other parties and cooperating non-parties in the 
fishery and the relevant regional fisheries management organization. 
                                                      
1 This list has been modified from the US Textual Proposal contained in Communication from the 
United States  (TN/RL/GEN/165, 22 April 2010). 
2 This addition reflects concerns raised by the Chai r's Text and proposals submitted by certain Member 
such as Communication from Brazil, China, India and Mexico  (TN/RL/GEN/163, 11 February 2010), 
Communication from Norway  (TN/RL/W/231, April 24, 2008) and Communication from Australia  
(TN/RL/GEN/167, 20 September 2010). 
3 This addition attempts to take into account de veloping Members' concerns regarding scientific 
capacity and data availability. 
4 "Fish size compositions" are essential data to conduct scientific assessments of fish stocks. 
5 "Fishing intensity" is a broader concept than "fis hing effort", which covers catchability as well as 
fishing effort. 
6 A "total allowable catch" is a more common terminology in fisheries management to address the 
situation in this paragraph. 
7 "Inspection at port and sea" is one of  the core schemes to ensure compliance. 
8 The regulation of the IUU fishing should be one of the core elements of an FMS.  Members have 
expressed serious concern over the magnitude of the IUU fishing. TN/RL/GEN/168/Suppl.1 
Page 8  
 
  Attachment 2 
 
 
Additional Elements of FMS
 
 
 
(i) Establishment of long-term management obj ectives with specific management actions 
through the creation of a fisheries ma nagement plan or other management 
frameworks9; 
(ii) Mechanisms to ensure regular collection of and readily available public access to data 
on biological samples such as stomach cont ents, otoliths, gonads, as well as data on 
bycatch and discards to allow a more intensive analysis of trends in the stock and ecosystem health
10 ; 
(iii) Research and other relevant activities relate d to stock conservation, maintenance and 
replenishment11; 
(iv) Allocation of exclusive quotas to vessels, individuals and/or groups12; 
(v) Measures to prohibit destructive fishing practices, including high seas bottom fishing 
and high seas driftnet fishing13; 
(vi) Measures to minimize waste, discards, catch by lost or abandoned gear, catch of 
non-target species, and negative impact on associated or dependent species, in particular endangered species, which include r estrictions on the use of fishing gear or 
mesh size and establishment of closed seasons and/or areas
14; 
(vii) Enhancement of transparency in the course of operating a fisheries management 
system and in related decision-making process15; 
(viii) Vessel monitoring system, on-board observers and catch tracking system16; 
(ix) Transhipment control at sea;  and 
(x) Measures to strengthen enforcement of domes tic laws and regulation to prevent or 
eliminate overcapacity and over-fishing.17 
__________ 
                                                      
9 This has been derived from the FAO Code of Conduct for Responsible Fisheries. 
10 This has been modified from Article V. 1 (b)(iv) of the U.S. textual proposal in Communication from 
the United States  (TN/RL/GEN/165, 22 April 2010). 
11 This has been derived from the Chair's Text. 
12 This has been derived from the Chair's Text. 
13 This addition is to reflect concerns raised by Australia in its proposal submitted by Communication 
from Austral ia (TN/RL/GEN/167, 20 September 2010). 
14 This has been derived from the Chair's Text and reflects concerns raised by the FAO Code of 
Conduct for Responsible Fisheries. 
15 This has been derived from the FAO Code of Conduct for Responsible Fisheries. 
16 This has been modified from the Chair's Text. 
17 This addition reflects concerns raised by Norway in its proposal submitted by Communication from 
Norway  (TN/RL/W/231, 24 April 2008).