rules and the resistance to take the measures necessary for a green-growth development strategy provided by special and differential treatment (S&DT) or the Common but Differentiated Responsibility (CBDR) at the climate change negotiations.

# **5.1 Natural Resources**

Market imperfections and institutional failures, both of which impede the full internalization of the true social value of the environment, have often been aggravated by government interventions. This phenomenon has been amply documented by the so-called ‘perverse subsidies’ including energy subsidies, water subsidies, almost all fishing subsidies, and most recently subsidies for bio-fuels. Credit and fiscal incentives for activities such as livestock and land conversion in forest areas contribute to a loss of biological diversity that can be exacerbated by trade. As with all market imperfections, second-best theory would call for the removal of subsidies accorded to the oil industries and the costing of fossil-fuel extraction (fracking, deterioration of physical infrastructure, contamination of aquifers) that would go a long way towards raising the profitability of other, more efficient, renewable energies.<sup>23</sup> But most of these subsidies which have global implications for a green-growth development strategy regrettably continue to be “non-actionable” under the GATT.

Particularly interesting is the case of fisheries, a natural resource that shares some of the same characteristics as climate, but that has the advantage of being “observable” since fish stocks have been known to be declining since the early seventies. Resolving the overexploitation of fisheries requires: (i) improvement in the management of fisheries by giving/selling secure and enforceable rights to fisherman to solve the openaccess problem; (ii) reform the subsidy system which boils down to eliminating virtually all subsidies to the industry.<sup>24</sup> After the failed Seattle negotiations where fishery subsidies were prominent on the agenda, they reappeared in article 28 of the Doha ministerial “...participants shall also aim to clarify and improve WTO disciplines on fishery subsidies, taking into account the importance of this sector for developing countries”. Three years into the negotiations, major fishing countries who had developed a dominant position in the industry acquiesced that most subsidies were indeed harmful as the Hong Kong SAR, China ministerial recognized explicitly that governments should strengthen disciplines on subsidies including through “the prohibition of certain fisheries subsidies that contribute to overcapacity and over-fishing”, subject to S&DT for developing countries (Von Moltke,2011, p. 154). But progress on defining _de minimis_ rules for S&DT to exclude the large fishing nations (China, Peru and others) met with fierce resistance and no agreement could be reached. In the end, the compensation issue in fisheries has proved as resistant as resolving the application of Common but Differentiated Responsibility (CBDR) under Kyoto has so far proved elusive.

> 23 Worldwide, according to the International Energy Agency (2011),  subsidies to renewable energies are estimated at 67$billion and the corresponding figure for consumption subsidies for fossil fuels (including for biofuels) at 400$ billion. Across the EU where taxation is decided at the national level, the gap in the price of electricity is still around 4 to 1 (Nordstrom (2009)).

> 24 Worldwide, fisheries account for 170 million jobs and generate revenues of around $85 billion per year with subsidies in the 25-35$ billion range, all of which (except those for management) contribute directly or indirectly to overexploitation. About 37% of fish catch is traded internationally.  Details in Von Moltke (2011, chps. 1 and 2)

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