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  • Sanket Das and Bhanu Pratap Samantaray

Special and Differential Treatment to Least Developing Countries under Article 6 of Fisheries Subsid

Introduction

Fisheries is one of the most important and vital areas for Least Developing Countries(LCDs) to achieve food security. Subsidies on fishing should not be a barrier to achieving this objective. LDCs and developing countries account for more than 70% of worldwide marine capture, which has become a primary justification for demanding special and differential treatment for LDCs. These LDCs are responsible for ensuring that fisheries subsidies agreement does not impose an undue burden on the rights of coastal states and other domestic fishing regimes. On the other hand, LDCs have a responsibility to ensure that small-scale global fish producers and those engaged in artisanal fishing are not restricted and that their livelihoods are protected. As a result, special and differential treatment becomes an important aspect of fisheries subsidies agreements.

In this piece, the author discusses the emergence of the fisheries subsidies agreement and delves into Special and Differential Treatment under World Trade Organization and the problem surrounding the same. With this background, the piece attempts to discuss Article 6 of the Fisheries Subsidies Agreement.


Emergence of Fisheries Subsidies Agreement

In 1990, a need to control fisheries subsidies under international trade was realized, not only for greater equitableness, but also to preserve natural resources from depletion. Many reports published during WTO negotiations between 1992 and 1998 suggested that the effectiveness of fisheries management had been harmed by the provision of subsidies to sustain the fishing sector's income. In 1999, the Committee on Trade and Environment addressed the impact and implications of fisheries subsidies on the environment. Furthermore, in 2002, the elimination of subsidies that contribute to illegal, unreported, unregulated fishing and overcapacity was proposed in the United Nations World Summit on Sustainable Development.


Drafting of the Agreement

The group negotiating on disciplines was directed to speed up the process of presenting a thorough draft in the mandate stating the regulation for fisheries subsidies during Hong Kong's sixth ministerial conference in 2005. Moreover, the ratification of the UN Sustainable Development Goals in 2015 gave such discussions a boost, with the goal of eliminating subsidies that contribute to overcapacity, overfishing, and IUU fishing. Furthermore, in 2019, countries ramped up their negotiations on the drafts, debating a number of issues, including special and differential treatment for LDCs and developing countries. Finally, members of the WTO presented a revised fisheries subsidies negotiation draft and agreed to wrap it in the 12th WTO Ministerial Conference, Geneva, 2022. Since it becomes imperative to understand the Special and Differential Treatment under World Trade Organization to the LDCs to better appreciate the discussion on the Fisheries Subsidies Agreement, the author has briefly dealt with the same.

Special and Differential Treatment under World Trade Organization

In the 4th WTO Ministerial Conference, Doha, all special and differential treatment provisions were declared an intrinsic component of WTO agreements, and such provisions were reviewed for effective operation. The provisions of special and differential treatment were reinforced, and constituted an important component of WTO agreements in paragraph 44 of the Doha Declaration of 2001. Further, the Bali Ministerial Conference developed a framework to assess and evaluate the implementation of special and differential treatment provisions. The system will allow members to examine and evaluate all issues of the implementation of special and differential treatment provisions in multilateral WTO agreements. WTO members agree that providing flexibility to developing economies for the fulfilment of WTO obligations and commitments is a good idea, but they disagree with the extent to which these flexibilities have been granted. The members feel that such flexibility under special and differential treatment should be restricted to a certain level, and focus should be on specific needs of the LDCs. However, developing countries backed the treatment, claiming that such exemptions are vital for countries with limited resources and underdeveloped fishing sectors.

Additionally, it is a well-known fact that under the WTO, member nations can choose whether they want to be classified as developing or developed countries, and this decision is subject to the objections of other WTO members. Countries, on the other hand, choose developing country status because it comes with various advantages, such as longer transitional periods and technical help from developed countries.


At this juncture, it is to be noted that the notion of special and differential treatment is based on the fact that most treaties are geared toward developed member countries, which has negative consequences for the poorer or least developed countries. As a result, LDCs have been granted special and differential treatment in order to make international markets accessible and available to them without infringing on their international trade interests. At the same time, it protects LDCs from policies that have a direct impact on their economies. Thus, the main rationale for offering special and differential treatment to the LDCs seems to be their weak economic power and capacities. These advantages and privileges have been given to just those countries with low income levels, who will benefit from special treatment in order to integrate into the international trade. In essence, the claim of WTO status is a self-determinative procedure and the nations who choose to be developing receive discriminatory benefits from privileges that would not otherwise be granted.

Such special and differential treatment is provided to LDCs by developed nations. The concern here is that the developed economies, which are already in a strong position to dominate the international trade market, can potentially abuse poorer countries. Furthermore, the provision of special and differential treatment to LDCs was not desirable for the developed countries. Apart from these, rather than aiding the economic needs of the LDCs, the focus has shifted to assisting them in implementing their trade commitments. Experts also disagree about the degree of differentiation across LDCs, and they reject the "One Size Fits All" approach to special and differential treatment. Also, there are no explicit objectives that serve as a determining element or yardstick for the LDC status of the member nation in the WTO. Having seen the background, the piece now delves into the issues looming around special and differential treatment of LDCs pertaining to fisheries subsidies.


Issues with LDCs

In today’s world, the majority of LDCs rely on the fisheries sector for their livelihood, food security and protein needs. Since these LDCs have wide exclusive economic zones, they are more interested in fisheries subsidies. This is also an important source of income for LDCs. It contributes to national income through its exports. It is a well-established fact that the interests of LDCs in fisheries subsidies have been evaluated in various ways and reasons. Job creation, fisheries livelihood, economic growth, poverty reduction, revenue generation through fisheries licencing, expanding their global catch share, exploit viable stock in international waters for commercial purposes, and so on are some of them. Yet, the fundamental point of disagreement is why each and every LDC should receive the same special and differential treatment when they have an unequal or extremely little part of global trade in fish products. For those LDCs that have a large proportion of global fish capture, tighter norms or disciplines should be implemented. Developing countries who do not meet the specified criteria or have a small proportion of the global fisheries trade may be allowed to provide subsidies for vessel operating costs and all sorts of fishing activities. Another critical problem was the issue related to the scope of subsidy restrictions and exemptions, as well as transparency, capacity-building support, and training requirements for LDCs. Last but not the least, there is the issue related to the subsidies granted to fishing activities that are artisanal, small-scale, or subsistence in nature. These fishing activities should be subject to more flexible laws than large-scale commercial fishing activities because they create less environmental impact.


LDCs in relation to restriction of subsidies

For LDCs, one of the most pressing challenges was the need to restrict subsidies that encourage illicit, unregulated, and unreported fishing, as well as overcapacity. Technical assistance to LDCs is required to ensure that no IUU vessels enter the nation's territorial limits, and such surveillance mechanisms must be in place with LDCs.

The LDCs stressed that any discipline under subsidies should not impede their fisheries industry, particularly at the small-scale commercial or subsistence level, as this would limit the sector's development. Additionally, the LDCs focused on the importance of safeguarding trade and export. They also protect them against tariff increases. This can be accomplished by processing, marketing, and regulation of fisheries subsidies on the international market. On the other hand, LDCs urge that WTO Rules deal with the problem of distant fishing activity in their exclusive economic zones. Subsidies are the main source of distant water fishing. However, it is not a feasible choice for LDCs because of the high costs of vessels & equipment.

Some nations address this argument by charging access fees to LDCs in the territories where they have entered and exploited fishing industries, but this is not sustainable based on present trends of overexploitation of fisheries resources. LDCs with extensive access to ocean frequently lack the capacity to exploit their fisheries resources on the high seas and in their exclusive economic zones. As a result, improving the capacity of LDCs is critical for ensuring sustainability and assisting them in properly harnessing fisheries resources.


Discussing Articles 6 of the Fisheries Subsidies Agreement

Technical support, capacity building, transparency, and other institutional mechanisms for developing nations are all covered by Article 6 of the Fisheries Subsidies Agreement. Article 6 refers to LDCs receiving special and differential treatment, and expressly exempts LDCs from the prohibition imposed by Article 5. Further, Article 6 discusses the transition time after the LDC has graduated from the acquired status. It is identical to Article 5.4(a), and the time period has not yet been determined because it is subject to WTO member country discussions and negotiations. The only variation from Article 5.4(a) is that the transition period will begin when such LDCs graduate.

In addition, Article 6 also requires member nations to use caution when addressing or reporting any issue involving LDCs, as well as when exploring solutions to the problem at hand, taking into account the special status of LDCs. At the same time, this makes LDC members responsible for ensuring that any exemptions from Article 5.1 and subsidies do not contribute to overfishing or overcapacity. Article 5.1.1 qualifies Article 5.1, which mentions permitted subsidies by member countries, provided they are used to maintain stocks and promote bio diversity.

LDCs and other developing nations are likewise exempt from the prohibition in Article 3.1 of the Fisheries Subsidies Agreement. It exempts subsidies provided or retained by developing country Members, including LDCs for low-income, resource-poor, or livelihood fishing or fishing-related activities inside 12 nautical miles of the baselines for a period of two years.


Conclusion

The Fisheries Subsidies Agreement has been the first multilateral trade agreement to be finalized under the WTO, and it has been the top priority of LDCs. It will provide an opportunity to reach a global agreement at last to restrict harmful fisheries subsidies. Moreover, it will also provide an opportunity for the WTO to develop trust in multilateralism as the new disciplines on fisheries subsidies are the only multilateral trade negotiations currently ongoing. The next ministerial meeting should focus on the areas where the parties have reached an agreement, and the issues of subsidies leading to IUUs and overcapacity can be carefully explored. However, the clauses of Article 6 and Article 3, exempting countries from responsibilities are problematic because many major subsidies providers disagree on such broad exemptions. In this regard, India has expressed dissatisfaction with this proposal and has requested a balanced policy space for all concerns, fearing that negotiating along these lines would delink fisheries from other discussions.

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