WORLD TRADE  
ORGANIZATION  TN/RL/GEN/39 
12 May 2005 
 (05-1929) 
Negotiating Group on Rules Original:   English 
 
PAPER ON FISHERIES 
 
Paper from the European Communities  
   The following communication, dated 11 May 2005, 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(05)/75), also be circulated as a formal document.  
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1. Introduction 
 
 The EC shares the observation made recently by the Chairman of the Group, that negotiations on new rules for fisheries subsidies have significan tly advanced in recent months. Discussions have 
moved on from the question of whether any disciplin es are indeed possible or  even desirable, and 
have increasingly focussed on the extent and form of such disciplines.  This is a very positive 
development, and the EC commends members for moving so decisively in this very positive direction. 
  There is one crucial aspect, however, which h as so far not received the attention of the Group 
which, in our view, it deserves.  This is the issu e of how any subsidy disciplines which are drawn up 
by the WTO on fisheries subsidies are actually implemented in practice.   
2. Why is special enforcement of fisheries subsidy disciplines so important? 
 
 By the end of these negotiations, there is little doubt that the significant efforts made by 
Members in this Group will result in the drawing up of  a very comprehensive set of rules prohibiting a 
whole range of subsides which are currently allowe d in the fisheries sector.  It would be most 
unfortunate if these extensive efforts remained unr ewarded because effective enforcement of any new 
rules had not been adequately addressed.  It cannot be simply assumed that the creation of a WTO ban on fishery subsidies will automatically result in th e discontinuance of such incentive policies without 
an effective enforcement mechanism. 
  Many may say that proper enforcement has neve r proved easy as the reco rd under the current 
Agreement on Subsidies and Countervailing Measures (ASCM) has clearly shown.  But, from the start of these negotiations, we have been breaking new ground.  The aim is to create special sectoral 
rules for fish within the framework of the ASCM and the reason for this special treatment is that what 
is at stake is nothing less than the survival of many  of our fish stocks and, most importantly, of the 
livelihoods of those depending on these resources. It is for that reason that it is worth going the “extra mile” to ensure that any ban that is agreed in these negotiations is faithfully implemented and 
enforced worldwide.  All that is required is th e same will from members as we have witnessed in 
identifying and banning harmful subsidies and a ny difficulties that may exist for the creation of 
effective enforcement and transp arency rules can be overcome. 
 TN/RL/GEN/39 
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 3. “Normal” enforcement mechanisms do  not work for fisheries subsidies? 
 
 The legitimate question arises why the enforc ement mechanisms applicable for WTO rules 
are not sufficient.  For all sectors, the coverage of no tifications is rather poor but it is particularly bad 
in the fisheries sector
1.  This may be due also to the “local” nature of the fisheries sector in many 
countries.  The EC notes that other Members have recognised this lack of transparency in their 
submissions to the Group and argued strongly for means to improve the situation.2 
  Second, effective transparency can help distinguish the distorting from the “virtuous” 
subsidies, i.e. ensure that capacity-enhancing subsid ies are clearly identified as they are particularly 
harmful for the environment.  The difficulty, however, is that the effects of these harmful subsidies 
are not immediately apparent and thus difficult to de tect.  Here, these subsidies lead to overcapacity of 
fishing vessels – an economic effect which takes time to become visible.  This makes it difficult to 
find the “smoking gun”, i.e. the capacity-enhancing subsidy programme and the granting authority.  
This is exacerbated by the fact th at in the fisheries sector the in volvement of granting authorities at 
various levels of government is a common feature.   
 
4. The EC’s experience concerning enforcement 
 
 The EC has, in its first submission on fisheries subsidies
3, already shared with the Group its 
own experience on categorising harmfu l and virtuous fisheries subsidies and the rules that have been 
created to deal with the former.  It may also pr ove useful for members to see how enforcement of 
these rules is administered in the Community.  In fact, for this purpose the EC has put in place an 
elaborate internal state aid control system.   In essence, the system rests on four pillars.   
 
 All aid to the fisheries sector, whether finan ced from national or Community budget, needs to 
comply with the general rules as laid down in the EC’s regulation governing the Structural Fund for 
Fisheries (the Financial Instrument for Fisheries Gu idance), in particular in relation to both the type 
and the allowed rates of aid.  
• First, the principle of pre-notification and author isation: Every subsidy needs to be notified to 
the authority in charge of operating the sy stem (i.e. the European Commission) and 
authorisation obtained before it can be grante d.  If the planned subsidy scheme (programme) 
is not in line with the rules and overall polic y objectives, it will be refused.  Any subsidies 
granted unlawfully which are found incompatible with  the rules must be repaid with interest.  
Transparency is ensured with claims, authorisa tions and rejections published and available on 
the internet
4. 
 
                                                      
1 See e.g. “Environmental Benefits of Removing Trade Restrictions and Distortions: The Fisheries 
Sector”  Item 6 of the work programme,  Note by the Secretariat, WT/CTE/W/167 of 16 October 2002 and 
WT/CT/W/167.Add1, of 19 June 2001; “A Summary of Recent Work on Subsidies in the Fishing Sector” , TC 
SUB/2004/Inf3, FAO Rome 2004; “Environmentally Harmful Subsidies - Policy Issues and Challenges” OECD 
Paris 2003; “ Hard Facts, Hidden Problems. A Review of Current Data on Fi shing Subsidies” A WWF Technical 
Paper. October 2001.  
2 See e.g. “The Doha Mandate to Address Fisheries Subsidies: Issues”,  Submission from Australia, 
Chile, Ecuador, Iceland, New Zealand, Peru, Philippine s and the United States, TN/RL/W/3 of 24 April 2002; 
“Japan’s Basic Position on the Fisheries Subsidies Issue” , TN/RL/W/11 of 2 July 2002. 
3 TN/RL/W/82 of 23 April 2003. 
4 See http://europa.eu.int/comm/fisheries/doc_et_publ/factsheets/legal_texts/stateaids_en.htm .  TN/RL/GEN/39 
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 • Second, the principle of ex post  surveillance:  For any subsid y scheme which is in operation, 
annual reporting requirements ensure full transp arency.  Again as for pre-notifications, the 
system is fully transparent with the results  published and made available on the internet 5. 
 
• Third, the incorporation of the rules and no tification requirements into domestic law. 
 
• The fourth pillar includes aids that, eith er because the amounts involved are small ( de minimis 
rule), or because, having limited impact, they serve the objectives of conservation and 
sustainable exploitation of fisheries resources, as set out in the EC’s Common Fisheries Policy, do not fall under the general principle of pre-author isation.  It should be  stressed that, for both 
types there is an obligation to in form the Commission of all aids before they enter into force, 
and that ex post  surveillance remains applicable. 
5. Proposal concerning enforcement: domestic or WTO control 
 
 The EU is well aware that the enforcement sy stem which it has established in the Community 
may not be ideal for the other Members to this nego tiation. Nevertheless, in that it is a system which 
is applied to 25 sovereign countries it can at least serve as a guideline for identifying an enforcement 
system for WTO members.  To take account of the differences which exist between Members in 
relation to transparency and enforcement it is propo sed that a choice be provided as to the means by 
which Members demonstrate their adherence to the WTO rules. Essentially, the choice would be 
between a system of enforcement implemented domestically (the “domestic control system”) or one imposed at the WTO level (the “WTO control system ”) – it should be understood of course that the 
substantive rules themselves would be the same, or at least have equivalent effect, for all members 
irrespective of which enforcement a nd transparency route they choose to  follow.  And, of course, it 
would also have to be ensured that any domestic control system was at least as effective as one applied at the multilateral level.    The WTO control system would need to enta il a rigorous and continuous screening at the 
WTO level with requirements for both pre-notifica tion and follow-up reporting of all subsidies given 
by all levels of government.  The pre-notification to the WTO would have to be done in sufficient 
time for other members to examine the proposed subsidy or subsidy scheme (programme) for its 
WTO compatibility.  Such a pre-notification mech anism already exists in other WTO Agreements 
(e.g. Technical Barriers to Trade and the Import Licensing Agreements).  Follow-up reporting could 
be yearly and include, for example, data on the amo unts granted in that year.  Any subsidy which is 
not notified, or reported on, would be presumed prohibited.  
  By contrast, the domestic control system would rely essentially on an ex post monitoring 
system of the subsidies that are granted to th e fisheries sector.  Thus, Members opting for the 
domestic control system would have to put in place a rigorous and timely reporting system for non-
prohibited subsidies (again for subsidies given by all levels of government).  These periodic ex-post 
reports would have to be made readily accessible to the other WTO Members, for instance by placing 
them on a known internet site.  Any subsidies not di sclosed in due time in the domestic control system 
would be deemed prohibited.  This means that th ere would be no presumption of prohibition if the ex-
post reporting requirements were made mandatory u nder domestic law and were strictly respected.  
Members would need to notify changes in legislatio n that constitutes their domestic control system.  
 
 Clearly some form of de-minimis rules shoul d be introduced. It is simply not possible to 
require that all subsidies, irrespective of size, re quire individual transparency and enforcement.  The 
system would soon be overwhelmed by the sheer num bers involved.  Block pre-notification and pre-
                                                     
 
5 See supra  footnote 4. TN/RL/GEN/39 
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 authorisation, as well as follow-up reporting and ex post monitoring, could be envisaged for the 
respective WTO and domestic control systems for de-minimis subsidies.   
6. Special and differential treatment 
  The EC is well aware that some developing count ries would, at least in the short term, face 
great difficulties in setting up a comprehensive dom estic or WTO control system for fisheries 
subsidies, in spite of the de-minimis subsidies rules.   In this context, of course, it should be borne in 
mind that the issues that are being addressed in this  paper are transparency and enforcement and not 
the substantive rules on fisheries subsidies (e.g. prohibition, green box) for which developing 
countries will also require special treatment.  Neve rtheless, it is important that developing countries 
start a process whereby they would ultimately be in  a position to ensure transparency and enforce any 
rules developed in the DDA negotiations.    Perhaps the best way forward here is to c onsider a phase-in period of several years for 
developing countries.  During this phase-in, these  countries should be given special help via an 
intensive programme on how to set up a comprehens ive system for transparency and enforcement 
which could be either WTO based or introduced as a domestic control system.  The Committee on 
Subsidies and Countervailing Measures could be charged with managing this programme which 
should be time framed.  That is not to say that th e Committee could not grant an extension in special 
circumstances but clearly there needs to be some  incentive for developing countries to ensure that 
transparency and enforcement are progr essively and systematically introduced. 
 
7. Anticipated benefits of effective enforcement of new WTO disciplines 
 
 It is evident that the most important bene fit resulting from an effective enforcement of 
fisheries subsidy disciplines is the real contributi on it would make to the promotion of sustainable 
development.  Increased transparency will not only generate knowledge about the types of subsidies 
given but will also provide a much needed insight into the impact of such subsidies both on trade and on the sustainable use of fishery resources.  This in formation would also grea tly enhance the ability of 
governments, the various international organisations , academia and civil society to gauge the effects 
of any fisheries subsidies that may still be  given at the end of this DDA process. 
 
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