WORLD TRADE  
ORGANIZATION  TN/RL/GEN/134 
24 April 2006 
 (06-1897) 
Negotiating Group on Rules Original:   English 
  
 
FISHERIES SUBSIDIES 
  
Submission of the European Communities 
 
 
 
 The following communication, dated 20 April 2006,  is being circulated at the request of the 
Delegation of the European Commission.   The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(06)/ 117), also be circulated as a formal document. 
 
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Introduction 
 Over the last few months, the Rules Group h as done much good work to clarify the main 
problem areas which have to be addressed in any ne w disciplines on fisheries subsidies. Following the 
Hong Kong ministerial, Members have been asked to make their text-based propo sals so that the work 
of the Group can intensify so that the timeframe fo reseen can be met. In that spirit, the European 
Communities is determined to make a full contri bution to the work of the Group with a simple, 
transparent and comprehensive proposal which addresses the problem of overfishing. 
 It seems therefore obvious that the most effec tive way of addressing this problem is to ban the 
most problematic subsidies, i.e. those that relate to  capacity in the context of the construction of new 
vessels and treatment of subsidies given for the modernisation of existing vessels. The guiding 
principle must be that public aid can under  no circumstances contribute to overcapacity.  
Proposal 
 The EC agrees with the view expressed by so me Members that new disciplines for fisheries 
subsidies must be simple, transparent and enforceable . On the basis of its previous submissions to the 
Group
1, the EC is proposing elements of a future te xt that prohibits subsidies contributing to 
overcapacity.  
 A very important aspect of the present proposal is the introduction of an effective 
transparency and enforcement mechanism with regard  to fisheries subsidies.  This can be achieved 
either through an effective WTO control system of notification and review or, alternatively, through 
an enforcement system implemented domestically whic h has equivalent effect to the WTO one. In this 
context, the Community considers that the Group of  Experts concept which is already mentioned in 
the current Agreement on Subsidies and Counterva iling Measures is one that can be effectively 
utilised here. 
                                                      
1 TN/RL/W/82 of 23 April 2003 and TN/RL/GEN/39 of 12 May 2005 TN/RL/GEN/134 
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   Significantly, the proposal addresses to what extent disciplines should apply to developing 
countries. The EC recognises the legitimate concerns  of developing countries  with regard to the 
development of their fisheries industries, ra nging from poverty reduction and food security to 
legitimate development needs.  The EC is propos ing that developing countries should be exempted 
from fisheries subsidies disciplines for an appropri ate period of time. In this context, the EC 
appreciates the contributions made by other Members to devising a system which would allow special 
treatment for developing countries.  In the EC pr oposal on this matter, the aim is to provide as 
generous a treatment as possible while leaving the system simple and effective. 
 Lastly, the proposal does no t touch upon the issue of de minimis  subsidies, but this is an issue 
the EC referred to in its proposal on transparency and enforcement of 2005. Other Members have also 
raised this issue and this is one that w ill need to be addressed in the near future. 
Conclusion 
 In a recent submission, a group of Members has set out their views concerning the principles 
that should guide Members when devel oping new fisheries subsidies disciplines
2. The EC considers 
that the present proposal is fully in line with the pr inciples that are set out in that submission. Finally, 
the EC is also convinced that this negotiating te xt complies with the guidance provided by Ministers 
in Hong Kong on further work on fisheries subsidies.  
 
                                                      
2 TN/RL/W/196 of 22 November 2005, paragraph 14.  TN/RL/GEN/134 
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  Annex  - New Articles in the Agreement on Subsidies and Countervailing Measures on Fisheries 
subsidies. In the text below, the body of Articles is referred to as “the Annex”. This is without 
prejudice to the final architectu re of the fisheries disciplines. 
 
Article 1 
Scope and Definitions  
 
1. The Annex covers any fisheries subsidy, i.e. subsidies as defined in Article 1.1 of the SCM 
Agreement that are granted to enterprises e ngaged in marine wild capture fisheries.  
 2. Fisheries subsidies shall encompass any subs idy programme and/or the disbursements made 
under such programme as well as ad hoc subsidies. 
 
Article 2  
Prohibited Subsidies 
 
1. The following subsidies shall be prohibited : 
(a) Subsidies for the construction of new fishing vessels, 
 
(b) Subsidies for the renovation of existing vessels, and  (c) Subsidies for the permanent transfer of fishing vessels to other countries including 
through the creation of joint ventures with partners of those countries. 
   
Article 3 
Permitted Subsidies 
 
1. The following subsidies are permitted: 
 (a) Subsidies contingent upon a reduction in fishi ng capacity or that are provided for the 
specific purpose of mitigating the negati ve social and economic consequences of 
reductions in capacity;  
(b) Subject to a non increase in capacity, subsidies that are granted in the context of 
conservation measures, for product development, for modernisation of vessels including improved working conditions and safety on board, and subsidies that 
promote more environmentally friendly fishing operations. 
 
2. Subsidies covered by paragraph 1 of this Article sha ll not be subject to Article 2 of this Annex  
and Parts III and V of the SCM Agreement. 
  TN/RL/GEN/134 
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  Article 4 
Review 
 
1. Articles 2 and 3 shall be review ed after five years beginning with the date of the entry into 
force of this Agreement and thereafter every five years. 
2. The Permanent Group of Experts established under Article 24.3 of the SCM Agreement shall 
periodically review the subsidisation practices of  Members to which this Annex applies and produce a 
comprehensive report thereon on a biannual basis .  The report of the PGE shall be published 
forthwith. Upon request by any Member, the subsid isation practices of a developing country Member 
shall also be subject to a review. 
 
Article 5 
Transparency 
 
1. Subsidies for which Article 3 is being invoked  shall be notified prior to the adoption of the 
programme or, in case of an ad hoc grant, prior to the commitment. 
2.  All other subsidies shall be notified no lat er than upon the date of adoption of the programme, 
or in case of an ad hoc grant, the date of commitment.  
3. Members shall, upon request by any Member, provide translations in an official language of 
the WTO of the documents covered by a specific notif ication or, in case of voluminous documents, of 
summaries of such documents. 
4
. Subparagraphs 1 to 3 of this Ar ticle shall not apply to a Member that has notified to the WTO 
that it has transposed the provisions of this Artic le into its domestic legal system. Without prejudice to 
Article 30 of the SCM Agreement, the Permanent Group of Experts established under Article 24.3 of 
the SCM Agreement shall examine within 9 mont hs from the date of notification whether the 
transposition and enforcement are adequate. The examina tion shall be conducted on the basis of a 
notification by the Member concerned of its dom estic legislation and relevant administrative 
procedures as well as any amendments thereof having regard to the following criteria:  
a) the implementation of a rigorous and ti mely reporting system for subsidies to the 
fisheries sector given by all levels of govern ment to the relevant body within the WTO 
Member;   
b)  the existence of an ex-post monitoring mec hanism of the subsidies that are granted to 
the fisheries sector, including the publication of periodic ex-post reports; 
5. The Secretariat shall make publicly availabl e any notifications in accordance with the 
provisions of this Agreement, upon receipt thereof. 
6. A breach in notification procedures rend ers the subsidy concerned prohibited and any 
amounts already disbursed shall be recovered.  
7.  The procedural provisions of this Article  will also apply to developing country Members. The 
PGE will assess within one year from the entry into force of this Article which transitional 
arrangements are required in this respect, taking par ticular account of the institutional and financial 
resource constraints of and the need for flexi bility for LDCs/small and vulnerable economies. 
  TN/RL/GEN/134 
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  Article 6 
Developing Country Members 
 
1. Except where provided otherwise, the provis ions of this Annex do not apply to a developing 
country Member for as long as such Member does not, as from the entry into force of this Annex, 
increase its fishing capacity, to an extent that it is an impediment to the sustainable exploitation of fishery resources worldwide. 
2. Any Member can refer the matt er whether such an impediment is taking place or is imminent, 
as the case may be, to the Permanent Group of Experts established under Article 24.3 of the SCM 
Agreement 
 
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