WORLD TRADE  
ORGANIZATION  TN/RL/GEN/79/Rev.1 
21 February 2006 
 (06-0735) 
Negotiating Group on Rules Original:   English 
  
 
POSSIBLE DISCIPLINES ON FISHERIES SUBSIDIES 
 
Paper from Brazil
 
 
Revision  
 
  The following communication, dated 20 February 2006, is being circulated at the request of 
the Delegation of Brazil.  
 The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05) /281/Rev.1), also be circulated as a formal 
document.   
_______________ 
 
 
1. Brazil welcomes the broad discussion at the Negotiating Group on Rules (NGR) meeting in 
November 2005 on the Brazilian contribution to the discussion on the framework for disciplines on fisheries subsidies.  This submission constitutes an improved version of document TN/RL/GEN/79, so 
as to incorporate comments made by Members and to  further develop some of the suggested ideas put 
forward in the previous submissions.  In order to help focus the debate, this proposal contains only 
suggested legal draft.  This legal draft is a wo rk in progress and does not constitute Brazil's final 
position on the matter.   
ANNEX VIII TO THE AGREEM ENT ON SUBSIDIES AND 
COUNTERVAILING MEASURES 
 
Article 1  
Definitions and coverage  
 
1.1 For the purpose of fisheries subsidies, the provisions of the Agreement on Subsidies and 
Countervailling Measures (ASCM) shall apply subject to the provisions of this Annex.  1.2 This Annex shall not apply to inland fisheries, understood as any fishery in the internal waters 
of a Member.  “Internal waters” mean all waters, other than lawfully claimed archipelagic waters, 
landward of the baseline from which the territorial sea is measured.  
1.3 This Annex shall not apply to aquaculture, provided that there is no capture fisheries 
involved.  “Aquaculture” means the business of raisi ng marine or freshwater fish or shellfish under 
controlled conditions.  If capture fisheries are i nvolved in aquaculture, any governmental actions 
involved with capture fisheries are subject to the disciplines of this Annex.  TN/RL/GEN/79/Rev.1 
Page 2  
 
   
1.4 This Annex covers any subsidy ─ as defined in Article 1.1 of the ASCM ─ given to or on 
behalf, directly or indirectly, of fishing interests (referred to as “fisheries subsidies”).  For the purpose 
of this Annex, “fishing interests” are the interests of any company and/or person linked in fact or in 
law to capture fisheries activities.  Any such fisher y subsidy that is not generally available shall be 
deemed to be specific in the sense of Article 2 of the ASCM. 
 
1.4.1 Any government-to-government payment for access by domestic fleets to foreign 
Economic Exclusive Zone (“EEZ”) fisheries (“foreign access rights”) or to quotas or any other rights established by any Regional Fishery Management Organization (RFMO) is specifically covered by the definition of fisheries subsidies provided for in paragraph 1.4 
above.  
 
1.4.2 Notwithstanding Article 1.1 (iii) of the AS CM, the provision of goods and services by 
a government under the form of general infrastructur e shall be subject to the provisions of this 
Annex. 
 
1.4.3 “Public services of fisheries resource management” shall not be considered a fishery 
subsidy.  “Public services” are all services supplie d in the exercise of governmental authority.  
A “service supplied in the exer cise of governmental authority”  means any service which is 
supplied neither on a commercial basis nor in  competition with other services suppliers.  
“Public services of fisheries resource management” are any governmental public service 
supplied with the objective of improving the mana gement of fisheries resources, provided that 
those public services do not involve expenditu res or revenue foregone in relation to 
programmes which provide services or benefits to fishing interests or fishing communities. 
 1.5 For the purpose of this Annex, “production-di storting effects” include any negative effect a 
fishery subsidy may have on the sustainability of fishing resources on a country basis.  For fisheries 
that are subject to RFMOs, a “negative effect to the sustainability of fishing resources” occurs when 
the quotas or other rights established by those RFMOs ar e exceeded in 5% or mo re.  For fisheries that 
are not subject to RFMOs, a “negative effect to the sustainability of fishing resources” means an 
annual volume catch for a specific specie that exceed s 3% of the average of the most recent volume 
catch data covering three years made available by  a competent international organization (an RFMO 
or a multilateral organization). 
 1.6 For the purpose of this Annex, RFMOs are intern ational organizations or conventions which: 
 
(a) are the only international fishery entity that can carry out managerial activities over 
specific fisheries in a determined area; 
(b) have a working relationship with th e Food and Agriculture Organization (FAO); 
(c) are open to new entrants; (d) publish a list of all conservation measures in force; (e) have specific procedures to deal with ille gal, unreported and unregulated fishing (“IUU 
fishing”
1); 
(f) have a decision-making process in accordan ce with an agreement, convention or 
procedure; 
(g) have been functioning for at least 3 (three) years. 
 1.7 For the purpose of this Annex, fisheries subs idies shall encompass any subsidy programme 
and/or the disbursements made under such programme. 
 
                                                     
 
 1 According to the definition set out by the International Plan of Action (IPOA) of the FAO.  TN/RL/GEN/79/Rev.1 
 Page 3 
 
 
   
Article 2  
Non-Actionable Subsidies 
 
2.1 The following subsidies shall be considered as non-actionable, provided that they have no 
trade-distorting or production-distorting effects: 
 
(a)  subsidies that are designed to improve con servation and the sustainable use of fisheries 
resources.  The following subsidies shall be c onsidered to fall within the scope of this 
sub-paragraph: 
 
(i) subsidies to research activities undertaken  to improve fisheries management or 
environmental protection; 
(ii) subsidies for compliance with interna tional safety or sanitary standards;  or 
(iii) subsidies for the adoption of enviro nmentally preferable gear or techniques 
according to multilateral standards. 
(b)  subsidies for capacity reduction (buyback, decommissioning among others), provided 
that, in addition to the conditions set out in the caput  of this paragraph, such subsidies 
require and ensure that engines and equipm ents are not re-employed in the fishing 
activity. Moreover, fishing li censes associated with the d ecommissioned vessels have to 
be withdrawn; 
(c)  subsidies aimed at fishermen retraining; 
(d)  subsidies to facilitate movement of labor out of the fishery sector; 
(e)  subsidies to compensate for suspension of fishing activity; and 
(f)  subsidies to early retirement schemes. 
 
The following subsidies shall be considered as non -actionable, provided that, in addition to the 
conditions set out in the caput  of this paragraph, they do not involve fisheries that are “patently at 
risk”2: 
 
(a)  subsidies to small scale fishing3 and to artisanal fishing4; 
(b)  subsidies to fishing port facilities; and 
(c)  subsidies to processing facilities for fisheries products. 
 2.2 The same remedies provided for in Article 9 of  the ASCM shall apply to subsidies falling 
under this Article.  
                                                     
 
 2 A fishery is to be considered "patently at risk" if any of the following conditions apply: 
• the status of exploitation is considered  “overexp loited”, “depleted”, or “recovering” according to the 
FAO; or 
• the status of exploitation or of the target species is deemed equivalent to the foregoing by a competent 
regional or international authority having jurisdiction over the fishery. 
 3 Small-scale fishing encompasses activities carried  out by vessels with to tal length not exceeding 
24 meters.  
 4 Artisanal fishing encompasses: 
I) fishing activities performed at an in-shore basis with  non-automatic net-retriever devices, provided that: 
 (a) the activities are carried out on an individual  basis (including, but not necessarily, the family 
members);  (b) the basic scope of the activities encompasses both family livelihood and a small profit trade; and 
 (c) there is no employer-employee relationship on the activities carried out; or 
Subsidies granted to fishermen associations shall fulfil the same conditions of this item in order to be considered 
non-actionable subsidies. 
(II) traditional fishing communities. TN/RL/GEN/79/Rev.1 
Page 4  
 
   
Article 3  
Prohibited subsidies  
 
3.1 In addition to those subsidies already prohibited under Article 3 of the ASCM, any fishery 
subsidy not falling within the scope of Articles 2 and 5 of this Annex shall be considered as a 
prohibited subsidy.  3.2 In case of natural disasters, the prohibition of paragraph 1 above could be temporarily 
suspended, so as to enable governments to provide  short-term emergency relief and to implement 
recovery adjustment programmes.  Under no circum stance shall this exceptional suspension of the 
prohibition be used to justify in creased fishing capacity beyond the statu quo ante . 
 3.3 Subject to the provisions of Article 5.4 of th is Annex, payments made to governments of 
developing country Members for buying access to EEZ fisheries resources of such developing country 
Member or to the quotas or any other rights established by any RFMO to such developing country 
Member shall not fall under the prohibition of paragraph 1 above.  3.4 The same remedies provided for in Article 4 of  the ASCM shall apply to subsidies falling 
under this Article.  
 
Article 4  
Prevention of circumvention  
 
4.1 Rules of origin (preferential or non-preferential), the flag of a vessel and government-to-
government payments (as defined in Article 1.4.1 of this Annex), among others, shall not be used as a 
means to circumvent Members obligations and respon sibilities under the provisions of this Annex.   
  
Article 5  
Special and Differential Treatment of Developing Country Members  
 
5.1 Developing country Members shall be allowed to  maintain or grant the following fisheries 
subsidies, to the extent that such subsidies are subject to the disciplines of Articles 5 and 6 of the 
ASCM and of Article 1.5 of this Annex:  
(a)  Subsidies which increase fishing capacity or effort of Members that are part of a 
RFMO.  Specifically, those subsidies must fall within one or more of the following 
exhaustive list: (i) subsidies to fishing vessel  construction or repair; and 
  (ii) subsidies to vessel modernization or gear acquisition or improvement. 
(b)  Fuel, bait or ice supplied for fishing activities; 
(c)  Assistance to disadvantaged regions with in the territory of a Member given pursuant 
to a general framework of regional development
5 within eligible regions provided 
that: 
(i) each disadvantaged region must be a clearly designated contiguous 
geographical area with a definable economic and administrative identity; 
                                                      
 5 A “general framework of regional development” mean s that regional subsidy programmes are part of 
an internally consistent and generally applicable regi onal development policy and that regional development 
subsidies are not granted in isolated geographical points having no, or virtually no, influence on the 
development of a region.  TN/RL/GEN/79/Rev.1 
 Page 5 
 
 
  (ii) the region is considered as disadvant aged on the basis of neutral and objective 
criteria6, indicating that the region's difficulties arise out of more than 
temporary circumstances;  such criteria must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification; 
  (iii) the criteria shall include a measur ement of economic development which shall 
be based on at least one of the following factors: 
  i.1 one of either income per capita  or household income per capita, or GDP 
per capita, which must not be above 85 per cent of the average for the territory concerned; 
  ii.1 unemployment rate, which must be at least 110 per cent of the average 
for the territory concerned; 
as measured over a three-year period;  such measurement, however, may be a composite one and may include other factors. 
 
5.2 Serious prejudice in the sense of Article 6 of the ASCM shall be deemed to exist in the case 
of: 
 
(a)  Violation of the provision of Article 1.5 of this Annex; 
(b)  subsidies granted to any vessel and/or company involved with the exploitation of 
fisheries "patently at risk"; or 
(c)  subsidies granted to a fleet or a company to cover operating losses. 
 
5.3 Notwithstanding the provisions of paragraph 2, serious prejudice shall not be found if the 
subsidizing Member demonstrates that the subsidy in  question has not resulted in any of the effects 
enumerated in Article 6 of the ASCM and in any of the situations enumerated in Article 5.2 of this 
Annex. 
 
5.4 In case of payments received by the govern ment of the developing country Member for 
access to its EEZ fisheries resources or to its quotas or  any other quantitative limits established by any 
RFMO, the government of the country Member buy ing the access shall abide by the provisions of 
Articles 1.5 and 4 of this Annex;  
5.5 The same remedies provided for in Article 7 of  the ASCM shall apply to subsidies falling 
under this Article. 
 
 
Article 6 
Illegal, unreported and unregulated fishing 
 
6.1 Whenever any vessel and/or company of a Memb er is found to be engaged in IUU fishing 
according to any RFMO, the Member shall demonstrate, within a period of 2 (two) months from the release of the report by any such RFMO, that it took all necessary steps to with draw the licence of that 
vessel and/or company. Additionally, the Member shal l demonstrate, within a period of 6 (six) months 
from the release of the report by any such RFMO, th at it had taken steps to improve its management 
                                                     
 
 6 “Neutral and objective criteria” m eans criteria which do not favour certain regions beyond what is 
appropriate for the elimination or reduction of regi onal disparities within the framework of the regional 
development policy.  In this regard, regional subsidy programmes shall include ceilings on the amount of assistance which can be granted to each subsidized project.  Such ceilings must be differentiated according to 
the different levels of development of assisted regions and must be expressed in terms of investment costs or 
cost of job creation.  Within such ceilings, the distribution of assistance shall be sufficiently broad and even to avoid the predominant use of a subsidy by, or the granting of disproportionately large amounts of subsidy to, 
certain enterprises. TN/RL/GEN/79/Rev.1 
Page 6  
 
  schemes in relation to IUU fishing.  If any of the tw o conditions is not fulfilled, serious prejudice, as 
defined in Article 5.2 of this Annex, shall be deemed to exis t regarding all actionable and non-
actionable fishery subsidies granted and maintained by that Member. 
 
 
Article 7  
Notification  
 
7.1 All fishery subsidies shall be notified.  Any su bsidy at a national level which is not notified, 
or reported on, shall be presumed prohibited in the sen se of Article 3 of this Annex.  It is recognized 
that notification shall not prevent any Member from challenging any fishery subsidies in accordance 
with the provisions of the Dispute Settlement Understanding (DSU) and ot her covered Agreements. 
 7.2 Members shall ensure that their notifications  contain at least the following information: 
 
(a)  identification of fisheries in which s ubsidized fishing takes place under a given 
subsidy programme or disbursement; 
(b)  the status of the fisheries in question;  
(c)  subsidy amounts on a per vessel, per fleet, and per fishery basis;  
(d)  whether the fishery is under management by a RFMO, the nature of the monitoring 
and the quantitative limits applicable to the Member. 
 
7.3 Notifications shall include information about st eps taken to ensure that the notified subsidy 
does not contribute to IUU fishing activities.  7.4 Members shall also provide the Committee of  Subsidies and Countervailing Measures with 
yearly updates of such notifications, in particul ar by supplying information on global expenditure for 
each programme, and on any modification of the prog ramme.  Other Members shall have the right to 
request information about individual cases of subsidization under a notified programme.
7 
 7.5 Upon request of a Member, the Secretariat shall review a notification made pursuant to 
paragraph 4 and, where necessary, may require a dditional information from the subsidizing Member 
concerning the notified programme under review.  Th e Secretariat shall report its findings to the 
Committee.  The Committee shall, upon request, promptly  review the findings of the Secretariat (or, if 
a review by the Secretariat has not been requested, th e notification itself), with a view to determining 
whether the conditions and criteria laid down in Arti cles 2 and 5 of this Annex have not been met.  
The procedure provided for in this paragraph shall be completed at the latest at the first regular 
meeting of the Committee following the notification of  a subsidy programme, provided that at least 2 
(two) months have elapsed between such notificatio n and the regular meeting of the Committee.  The 
review procedure described in this paragraph shall also apply, upon request, to substantial 
modifications of a programme notified in the yearly updates.  7.6 Upon the request of a Member, the determ ination by the Committee referred to in 
paragraph 5, or a failure by the Committee to make  such a determination, as well as the violation, in 
individual cases, of the conditions set out in a notified programme, shall be submitted to binding arbitration.  The arbitration body shall present its  conclusions to the Members within 120 days from 
the date when the matter was referred to the arb itration body.  The DSU shall apply to arbitrations 
conducted under this paragraph. 
 
                                                     
 
 7 It is recognized that nothing in this notifica tion provision requires the provision of confidential 
information, including confidential business information.  TN/RL/GEN/79/Rev.1 
 Page 7 
 
 
  7.7 Members shall notify the Secretariat with re gard to any RFMO falling under the conditions 
established under Article 1.6 of this Annex.  The S ecretariat shall maintain an updated database with 
all available information concerning notified RFMOs.   
Article 8  
Transitional provisions  
 
8.1 From the entry into force of this Annex, there shall be a period of 3 (three) years for Members 
to phase out and eliminate fisheries subsidies that fa ll within the meaning of Article 3 of this Annex 
and that are not currently prohibited according to Ar ticle 3 of the ASCM.  The starting point of the 
reduction shall be the 2003-2005 average of the fish eries subsides prohibited under Article 3 of this 
Annex.  Members shall not be allo wed to adopt new prohibited subsidi es or to extend the scope of any 
existing prohibited subsidy programme, in accordance to Article 3 of this Annex. 
 
8.2 From the entry into force of this Annex, there shall be a period of 5 (five) years for 
developing country Members to phase out and elimin ate fisheries subsidies that fall within the 
meaning of Article 3 of this Annex and that are not  currently prohibited according to Article 3 of the 
ASCM.  The starting point of the reduction shall be  the 2003-2005 average of the fisheries subsides 
prohibited under Article 3 of this Annex.  Memb ers shall not be allowed to adopt new prohibited 
subsidies or to extend the scope of any existi ng prohibited subsidy programme, in accordance to 
Article 3 of this Annex. 
 8.3 For least-developed country Members, fisheries subsidies that are prohibited under Article 3 
of the ASCM and those referred to in Article 3 of this Annex shall be considered actionable fisheries 
subsidies for a period of 10 (ten) years.  If a least-developed country Member deems it necessary to 
apply such subsidies beyond the 10-year period, it sha ll not later than one year before the expiry of 
this period enter into consultation with the Committ ee, which will determine whether an extension of 
this period is justified, after examining all the re levant economic, financial and development needs of 
the least-developed country Member in question.  If  the Committee determines that the extension is 
justified, the least-developed country Member c oncerned shall hold annual consultations with the 
Committee to determine the necessity of maintaining the subsidies.  If no such determination is made 
by the Committee, the least-developed country Me mber shall phase out those fisheries subsidies 
within 3 (three) years from the end of the last authorized period.  
__________