WORLD TRADE  
ORGANIZATION  TN/RL/W/218 
21 February 2008 
 (08-0775) 
Negotiating Group on Rules Original:   English 
   
WTO DISCIPLINES ON FISHERIES SUBSIDIES:   
ELEMENTS OF THE CHAIR'S DRAFT 
 
Communication from New Zealand
 
 
 
 The following communication, dated 18 February 2008, is being circulated at the request of 
the Delegation of New Zealand.    
_______________ 
 
  In the interests of keeping the Rules Negotia ting Group informed of related events outside 
the WTO, we attach the Workshop Report of UNEP, WWF, ICTSD and OCEANA concerning the WTO Disciplines on Fisheries Subsidies.  This Report is provided for the information of Members.   TN/RL/W/218 
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  WTO DISCIPLINES ON FISHERIES SUBSIDIES: 
ELEMENTS OF THE CHAIR'S DRAFT 
 
29 January 2008 - Geneva, Switzerland 
 
WORKSHOP REPORT 
 
 
I. INTRODUCTION 
1. This one-day workshop, hosted by UNEP and WWF in collaboration with ICTSD and 
Oceana, was held at the International Environm ent House in Geneva on 29 January 2008.  The 
workshop was convened in response to multiple requests from WTO delegations for a forum to 
examine the draft text on fisheries subsidies proposed by the chair of the WTO Negotiating Group on Rules on 30 November 2007 ("Chair's draft").
1  The workshop was the latest  in a series of conferences 
and workshops organized by the sponsors jointly and individually, and built in particular on a 
symposium organized by UNEP and WWF in Marc h 2007 focused on sustainability criteria for 
fisheries subsidies (see TN/RL/W/207 (2 April 2007)).    2. The workshop was held back-to-back with  a session on fisheries subsidies of the WTO 
Negotiating Group on Rules - the second following the in troduction of the Chair's Draft.  The meeting 
thus came at a critical moment, with government s and stakeholders now directly focused on the 
historic opportunity for the WTO to adopt groundbreaking new rules on fisheries subsidies.   
 3. Workshop participants included more than  90 Geneva-based and capital-based officials 
from 35 national governments (including officials from trade and fisheries agen cies), as well as from 
the FAO, the OECD, and from six non-government or ganizations.  The workshop offered a forum for 
informal dialogue outside of the official WTO negotia ting context.  Participants were all invited to 
speak in their personal capacities under "Chatham House Rules".  The workshop was presided by 
Ms. Anja von Moltke of UNEP, Mr. Gordon Shep herd of WWF, and Mr. Ricardo Melendez Ortiz 
of ICTSD.    4. This summary report has been prepared under th e responsibility of the organizers.  It provides 
a synthesis of the main issues ra ised and discussed by participants.  Although it has been reviewed by 
all participants, it is not intended as a consensus document.  The workshop agenda and materials 
prepared by some of the presenters are available at http://www.unep.ch/etb/areas/fisherySub.php and 
http://www.panda.org/trade .   
 II. MAIN POINTS OF DISCUSSION 
A. T
HE PROPOSED PROHIBITIONS AND EXCEPTIONS  
5. The impacts of direct and indirect subsidies on fisheries resources, world trade, and prices are 
widely understood, as is the problem of poor transparen cy with regard to fisheries subsidies.  In this 
context, Articles I and II of the Chair's draft establis h the "prohibition of certain fisheries subsidies" 
and certain "general exceptions" thereto.  The draf t prohibitions are presented as a specific, but broad 
list that covers subsidies to fishing capital and operating costs, price and income supports, certain 
subsidies related to fisheries infrastructure and processing, and subsidies to IUU fishing, among others.    
                                                     
 
1 WTO Doc. No. TN/RL/W/213 (30 Nov 2007), Annex VIII.    TN/RL/W/218 
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  6. The quality of the overall ban proposed by the Chair's draft was discussed briefly.  While one 
participant expressed disappointment about the Chai r's text being unbalanced, and suggested that 
proper fisheries management can prevent subsidies fr om leading to overcapacity or overfishing, many 
participants felt that the broad approach taken by th e Chair's draft is appropriate and necessary in light 
of the unprecedented crisis of depletion confronting fisheries worldwide.  Effective management still 
remains the exception, rather than the rule in mo st fisheries.  Even with perfect management, 
subsidies can distort trade, reduce economic flexibility , and create social contexts in which effective 
management faces political obstacles.    7. The Chair's draft defines fisheries subsid ies in a manner that is intended to exclude 
aquaculture.  In practice, however, there can be  some overlap in the activities associated with 
aquaculture and those associated with marine wild cap ture fishing.  For example, wild fish may be 
caught specifically for use as a feed stock for aquaculture.  In the case of marine "ranching", juvenile 
wild fish may be trapped and then raised in a pa rtly controlled environment.  The Chair's text may 
require some clarification in order to avoid ambiguity concerning such cases.  It was also noted that 
the Chair's draft excludes inland fisheries, which is a category known to include a number of major 
transboundary fisheries and fisheries whose products enter international trade.   
 8. The Chair's draft does not prohibit subsidies to marketing of fish products .  Such subsidies (as 
well as subsidies to downstream processing) may ha ve significant competitive implications, especially 
for developing countries.   
 
9. The link between processing subsidies and incr eased fishing pressure depend on the nature of 
the market relations between fishers and processors (e.g., as vertical integration increases, the impact 
of processing subsidies on fishing enterprises increases).    
10. The silence of the text on subsidies to research and development was attributed to the 
attention of the text to more sensitive issues and it was noted that disputes on this topic would be 
unlikely.  It was also noted that certain kinds of research aimed at mitigating the environmental 
impacts of fishing gear or at industrial developm ent (as distinct from management-oriented general 
research) could have impacts on capacity.    
11. The requirement in the Chair's draft that pr ohibited subsidies be "specific" (Art. I.1) was 
questioned since it could prevent the prohibition from reaching all subsidies that contribute to 
overcapacity or overfishing.  Examples such as subsidies to multipurpose harbours were noted.  
Further clarification is needed as to whether the Chai r's draft would require subsidies to be specific to 
the fishing sector, or rather would impose a broade r specificity test.  For example, would subsidies 
specifically to ship yards (assuming that they co nstruct both fishing and non-fishing vessels) be 
"specific" for purposes of the draft prohibitions?  It was argued that the language of draft Art. I already contained elements of specificity in its descriptions of individual categories of prohibited 
subsidies, and that failure to remove the draft's additional specificity test would be a departure from 
the ASCM's current approach to prohibited subsidies.  Others, however, felt that the systemic 
implications of removing the specificity test for fisheries subsidies might be negative, especially as 
related to subsidies associated with social safety nets, such as  income supports under generally 
available national unemployment programmes.    12. As to the scope of the proposed prohibition on subsidies, it is unclear whether the draft text distinguishes between operating costs and capital costs of infrastructure.  It was noted that harbour 
facilities generally have very high capital costs a nd low marginal operating costs, and thus some 
clarification of the text on this point may be warr anted.  Further clarification is also needed on the 
intention and likely effects of draft Art. II (e) (s ubsidies to "user specific allocations"), which some 
participants found difficult to understand.    TN/RL/W/218 
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  13. Draft Art. I.2 (the prohibition of subsidies affecting "unequivocally overfished" stocks) can be 
seen as an essential "environmental backstop".  Since the terms of the provision as currently drafted would not address subsidies that lead to the overfi shed condition itself, but only subsidies applied 
once that condition is already reached, a suggestion was made to strengthen the language to prohibit 
subsidies to fisheries that are "not unequivocally no t overfished".  It was also noted that the terms 
used in the draft text require further clarification.   It was noted that the term "unequivocally", for 
example, was not defined in the draft.  It was suggested that a determination as to stock status by an FAO peer review body should be deemed suffi cient to satisfy the "unequivocal" condition.  
Questions were also raised about the criteria th at would be used to establish the "unequivocally 
overfished" condition.  The technical distinction betw een the terms "overfished" (which refers to the 
depleted biomass of a stock) and "overfishing" (whi ch refers to unsustainable catch rates), was noted, 
and the suitability of either term to a provision such as draft Art. I.2 was discussed.    14. There appeared a broad sense among participan ts that the exceptions to the prohibitions 
proposed by Chair's draft Art. II cover a number of necessary and desirable subsidy categories.  It was 
noted that the condition that such subsidies not in crease capacity was appropriate and that the manner 
in which the text elaborated the condition was he lpful.  Concern was expressed, however, about the 
potential for these exceptions to be abused, or to have unintended negative consequences.  It was 
suggested that the specification of  the capacity condition in draft Art. II should be broadened to 
capture any subsidy that reduces the operating costs or increases the revenues of fishing enterprises.  
Others felt, however, that all subsidies could be ch aracterized as having such effects.  It was also 
suggested that the specification of the capacity c ondition should include a broad approach to defining 
the "useful life" of vessels.  Still, the genera l question of defining capacity arose several times 
throughout the workshop.  Simple metrics such as number of vessels or vessel size were considered 
inadequate measures of fishing power.    
15. Allowing subsidies that promote environmen tal objectives, as included in Art II, was 
considered appropriate.  Nevert heless, unintended con sequences for resource management, such as 
direct impacts on fishing capacity or effort, would need to be avoided.  The example of creating 
additional capacity through fuel efficien t engines for trawlers was noted.   
 16. Several participants rais ed concerns with the exception for decommissioning programs, 
noting the evidence that su ch programs often fail or have unin tended consequences.  Proposals for 
strengthening draft Art. II(d) included:  (i) re quiring all subsidized decommissioning programs to 
require scrapping of vessels;  (ii) preventing enterprises or individuals receiving decommissioning subsidies from investing in other fishing vessels or rights;  (iii) requiring that decommissioning subsidies lead to demonstrable capacity reductions ;  and (iv) using burden shifting devices.   
 
B. D
ISCIPLINES AND CONDITIONS ON NON-PROHIBITED SUBSIDIES  
17. The "sustainability criteria" contained in vari ous articles of the Chair's draft are recognized as 
a core element of the proposed new fisheries subsid ies disciplines.  The proposed criteria are based in 
widely accepted international norms and practices.  Th ey are also consistent with the sustainability 
criteria recommended by the UNEP-WWF paper th at emerged from the UNEPWWF symposium in 
March 2007.2  Importantly, the proposed criteria draw on principles and concepts found at the core of 
the 2005 FAO Guidelines for the Ecolabelling of Fi sh and Fishery Products from Marine Capture 
Fisheries - guidelines that were the product of ex tensive international negotiation and dialogue.  It 
was, however, noted that the standard of perfo rmance required by ecolabeling may "set the bar" 
                                                      
2 UNEP and WWF 2007, "Sustainability Criteria for Fisheries Subsidies:  Options for the WTO and 
Beyond", 
(http://www.unep.ch/etb/publications/fishierSubs idiesEnvironment/UNEPWWF_FinalRevi09102007.pdf ).    TN/RL/W/218 
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  substantially higher than the criteria proposed for ne w fisheries subsidies rul es, so that the latter 
would impose requirements that would be easier to meet than the former.    18. It was suggested that the Chair's draft might  usefully be streamlined, without reducing its 
level of ambition.  For example, it was suggested that draft Art. V, notwithstanding its apparent 
mandatory language, leaves unclear whether all of its  elements are intended to be mandatory or if 
some are merely illustrative.  Moreover, the re petition of some requirements in several overlapping 
articles could create ambigui ty and raise questions of interpretation.  It was suggested that criteria 
should focus on basic elements of sustainable management, while leaving flexibility for various 
national and local approaches to implement them.  One approach would be to focus on key elements 
such as "science-based as sessment", "science based controls", and "enforcement", along with basic 
elements of management administration, such as ve ssel registries, mandatory licensing, and collection 
of catch data.    19. Some elements of the Chair's draft also may re quire clarification to ensure the effectiveness of 
the sustainability criteria.  Partic ipants discussed the need  to apply criteria on a fishery-byfishery 
basis, and also to ensure that international fisher ies are subject to requirements equivalent to those 
imposed on domestic fisheries.  With regard to th e latter point, some participants felt that compliance 
with existing rules of regional fisheries mana gement bodies should be sufficient, while other 
participants stressed the weakness of many RFMO re gimes, and called for rules that would help move 
beyond the status quo.   
 
20. It was also noted that the basic elements of sustainability criteria for fisheries subsidies need 
to address the biological, industrial, and regulatory cond ition of target fisheries.  Participants noted the 
emphasis placed in the Chair's draft on management-re lated criteria.  In this regard, draft Arts. I.2 
and IV impose obligations that depend in part on  the biological condition of stocks.  Article V, 
however, does not directly impose such conditionalit y, although management -related conditions could 
incorporate biological conditions by reference.  It  was noted that the management conditions in the 
Chair's draft imply certain conditions related to  capacity levels, but that earlier proposals for 
conditions involving explicit caps on capacity were not included.  Some participants viewed this as a 
weakness of the Chair's draft that shoul d be addressed through clarifications.   
 
21. The ability of developing countries to comply w ith all management requirements in Art. V is 
a matter of particular concern, especially with regard  to small vulnerable economies.  It is clear that 
management practices "on the ground" vary widely  around the world, with examples of successes and 
failures in both developed and de veloping countries.  Management problems in developed countries 
are often found particularly in the small-scale sector.  On balance, it is widely acknowledged that the 
overall level of fisheries management is still fa r from what is required to achieve optimal and 
sustainable fisheries.    22. The question was raised of possible "differen tiation of obligations" in sustainability criteria 
for developing countries, and it was observed that such differentiation is central to the concept 
of S&DT.  Some participants felt,  however, that the basic elements of responsible management should 
be universally required as a precondition to the use of  fisheries subsidies, taking the view that public 
investments in management are necessary if developm ent is to be based on the long-term profitability 
of the fishery sector.  Given that the criteria requi red by the Chair's draft only apply when subsidies 
are being provided, and that the criteria describe a bare minimum level of ad equate management, the 
question was raised whether differentiation is advisabl e, or even whether it is appropriate to exclude 
LDCs from nearly all sustainability criteria, as pr oposed by the Chair's draft.  The importance of 
technical assistance for developing countries to est ablish and maintain management systems, as 
included in Art. III. 4 cannot be underestimated and th e Chair's draft might have  to be strengthened in 
that dimension.   
 TN/RL/W/218 
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  23. The proposal in the Chair's draft for a "peer  review" mechanism involving the FAO (draft 
Arts. III.2(b)(3) & V.1) was also discussed.  Par ticipants welcomed the presence of FAO fisheries 
department staff at the workshop, and several menti oned the need to involve expert organizations such 
as the FAO in assisting the WTO on implementation of sustainability criteria in new fisheries 
subsidies rules.  It was noted that the concep t of FAO participation in an eventual WTO-FAO 
mechanism is consistent with the mission, experti se, and experience of the FA O.  Frequent reference 
was made to the CITES-FAO process through whic h expert FAO panels advise CITES concerning 
proposals for imposing trade controls on marine species that are considered at risk of extinction.  The 
CITES-FAO panels evaluate proposed CITES listings in  accordance with a set of criteria that were 
previously developed by the FAO, and political ly agreed by CITES members.  Based on FAO 
recommendations, CITES parties then vote on the listing proposals at CITES COPs.  This process 
provides a potential starting place for development of  a WTO-FAO mechanism.  To be workable and 
acceptable, however, the proposal for a peer review  mechanism as part of new fisheries subsidies 
rules will need clarification.  Specific questions  about the mechanism included the nature of the 
events that would trigger reviews, the scope and dept h of the reviews, the standards to be applied, and 
the legal implications of the outcomes under WTO rules.   
 24. Several participants voiced discomfort with  the idea of giving an FAO panel a decision 
making role in the administration of WTO rules.  Since the Chair's draft does not currently identify 
the legal results stemming from the peer reviews themselves, clarification of the text may be necessary.  Under the CITES-FAO process, FAO expert panels provide technical advice to CITES, 
but CITES then takes decisions under its own authority.  It was proposed that the peer review process 
could be designed to allow full transparency and consultation, similar to the process previously 
adopted for ASCM Art. 8.  It should not necessar ily be seen only as a mechanism for disputes, nor 
would it have to be a "pre-certification" procedure.    
25. As to the scope of review, it was noted that a WTO-FAO peer review panel would not need to 
reach judgments as detailed as those required of CITES-FAO panels (which must decide whether 
trade is a threat to the survival of a given mari ne species).  A WTO-FAO panel would only be called 
upon to examine basic levels of compliance with a limited number of core sustainability criteria.  
Thus, the depth of research to be considered or conducted by a peer review panel would be 
substantially less than in the CITES-FAO case.  On  the other hand, depending on the trigger to be 
chosen for peer reviews, it is likely that a WTO- FAO panel could be asked to handle many more cases 
than the CITES-FAO panel, which considers only a ha ndful of cases every two years.  This raised 
logistical questions about the funding and organization of an eventual panel.   
 C. S
PECIAL AND DIFFERENTIAL TREATMENT (S&DT) 
26. The Hong Kong mandate puts emphasis on the need for effective S&DT for developing 
countries as an integral part of new fisheries subsidies rules. In this light, Art. III of the Chair's draft is 
of significant interest to most WTO members.  It was noted that the limits and conditions to be placed 
on S&DT should be balanced and realistic, taking in to account both the special needs of developing 
country members and the emergence of increasi ng competition among developing countries for access 
to fisheries resources and markets for fisheries produc ts.  Care must be taken to ensure that S&DT 
simultaneously meets the developmental needs of  developing country members and helps prevent 
subsidies that contribute to overcapacity or overfishing.   Some participants rema rked that subsidies to 
the value-added post-harvest sector may be especia lly important for the developmental strategies of 
some countries.    
27. Participants discussed the proposed scope of S& DT in the Chair's draft. Several participants 
voiced concern with the sharp limits placed on the ri ght of developing countries to employ subsidies 
to the operating costs of fishing, noting inter alia  the widespread use of fuel subsidies by many 
developing countries.  Other participants, however, felt that S&DT is intended to allow developing  TN/RL/W/218 
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  countries to "catch up" with developed countries in the level of development of their industries, and 
that such a policy goal requires S&DT for subsidi es to capital costs but not necessarily to operating 
costs.    28. The use of vessel length for distinguishing diffe rent levels of S&DT treatment was addressed 
by many participants.  In particular, it was pointed out that above a vessel length of ten meters, the 
draft would not allow subsidies for operating costs.   It was noted that the draft does not state a 
rationale for the use of the vessel length criterion. Se veral participants stated that vessel length has no 
clear relationship to fishing power or to the level of  development of a fishery, and thus would be an 
inappropriate basis for making distinctions aimed at capacity.  Given the history of fisheries depletion 
involving so-called "small scale" fishing, a distinc tion based on vessel length could not be justified on 
the grounds that smaller vessels pose lower threats to  sustainable management.  As technology allows 
smaller and smaller vessels to achieve ocean-going fish ing operations, the relevance of vessel size is 
decreased still further.  Nevertheless, a number of participants indicated that vessel length is an 
important criterion for identifying socially sen sitive subsectors within some national fishing 
industries.   
 29. Other participants noted that a limit on vessel  length could be seen as an "anti-development" 
limit.  Some participants felt that in this regard  it would be desirable to increase the vessel length 
identified in the Chair's draft substantially beyond ten meters as this would reflect current realities in 
many countries whose small scale fisheries sector ha ve vessel size of 20-24 meters.  Others, however, 
noted that as lengths approach twenty or more me ters, vessels capable of industrial scale, distant-
water fishing are increasingly implicated.    30. A related question was the territorial limit placed on some S&DT by draft Art. III.2(b)(3) 
(which allows S&DT for certain subsidies only where used for fishing within the subsidizing 
Member's EEZ).  A number of participants view ed this limit as directly at odds with the 
developmental aspirations of some developing coun tries.  Others also noted that where EEZs are 
contiguous, such a rule could have unintended co nsequences for local fishing operations.  Several 
other participants, however, felt that S&DT should be  restricted to allowing developing countries to 
subsidize the exploitation of their national stocks, and should not extend to th e subsidized exploitation 
of common resources.  It was further noted that a subsidized race for international stocks would be 
especially dangerous wherever those stocks are subj ect to weak or absent management.  The silence 
of the Chair's draft on sustainability criteria for international stocks was again noted.    31. With regard to both the vessel size and terr itoriality issues, several participants noted the 
possible relationship between the strength of sustai nability criteria and the practical need for such 
limits.   
 32. Concern was expressed about the silence of th e S&DT rules as to the onward transfer of 
subsidized vessels to fisheries other than those wh ich qualified the vessels for subsidies.  While the 
text directly prohibits subsidies to the internati onal vessel transfer itself (draft Art.I.1(b)), the non-
subsidized transfer of a vessel whose construction was subsidized is not addressed.   
 
33. The treatment in draft Art. III.3 of subsidi es associated with the acquisition and transfer of 
foreign access rights was seen as a carefully balanced treatment of a contentious and complex issue.  It was pointed out that the Chair's approach app ears consistent with existing WTO law, and would 
promote transparency.  It was clarified that this  provision, even if included under S&DT, would cover 
all agreements involving access to developing c ountry EEZs, whether the distant water fleet nation 
was a developed or a developing state.  Some concern was expressed regarding the trade and environmental impacts of privat e access arrangements, which woul d not fall under the discipline of 
the Chair's draft.  It was noted, however, that the absence of a "subsidy" within the meaning of ASCM 
Art. 1 would make it difficult to address such  issues within the WTO subsidy rules.   TN/RL/W/218 
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  III. CONCLUSIONS AND WAYS FORWARD 
34. The discussion throughout the workshop was positive in tone, and confirmed the continuing 
interest of diverse stakeholders in achieving WTO rules that make a real contribution to sustainable 
fisheries.  Many participants expressed that the workshop had provided a useful forum for an 
unusually detailed discussion of important technical i ssues.  The organizers offe red future assistance, 
for instance by holding similar workshops as the fisheries subsid ies talks progress in the months 
ahead.    
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