It is well known that overfishing has led
to the collapse of several commercially valuable
fish species and the decline of others.
 In this context, WTO Members
agreed during the WTO Ministerial Conference
held in Doha (Qatar) in November 2000, to
launch negotiations with the aim to "clarify
and improve WTO disciplines on fisheries subsidies,
taking into account the importance of this
sector to developing countries."
For several years, WTO Members have pursued
the issue of fisheries subsidies in the WTO
Committee on Trade and Environment (CTE) which
has the power only to make recommendations.
However, following the Ministerial Conference
in Doha, current negotiations on fisheries
subsidies are taking place in the WTO Negotiating
Group on Rules, which is under the authority
of the WTO Trade Negotiations Committee.
Presently, there are no special WTO provisions
relating specifically to fisheries subsidies.
This means that these subsidies are disciplined
only by the general subsidies rules found
in the current WTO Subsidies Agreement (SCM
There is a heated debate in the Negotiating
Group on Rules on whether and how to clarify
and improve WTO disciplines on fisheries subsidies.
Three approaches have emerged.
The "no need" approach
The first approach could be called "no need
for a special fisheries subsidies regime."
Japan and South Korea, which heavily subsidize
their fisheries, favor this approach. Some
other countries, such as Canada, also favor
this approach, although more discreetly.
These countries are not opposed to a cross-sectoral
modification of certain provisions of the
present SCM Agreement in order to improve
their ability to discipline fisheries subsidies
among other subsidies. These countries are
opposed to the introduction in the SCM Agreement
of special rules which apply only
to fisheries subsidies. They argue that special
fisheries subsidies provisions might lead
to a possible fragmentation of the WTO subsidies
regime and possibly of the entire WTO system.
This approach is based on the idea that the
fisheries sector is not different from other
sectors of the economy and there is thus no
reason to introduce in the SCM Agreement special
provisions relating to fisheries subsidies.
This approach also asserts that the causal
link between subsidies and overexploitation
of fish resources is not proven. According
to Japan, "The possible effects of subsidies
on resources change between different resource
status and fishery management regimes...[and]
lack of effective fishery management brings
over-capacity even without subsidies."  Fisheries management
regimes deal with catch controls (quotas),
effort controls (restrictions on boat size,
engine power and days at sea, etc.) and right-based
structures (permits, individual transferable
quotas, etc.). Therefore, in Japan's view,
it would be unfair if these varying situations
are ignored and certain fisheries subsidies
The "no need" approach does not
address some fundamental issues. First, why
is the present SCM Agreement not employed
as a means for dealing with WTO Members that
are granting prohibited fisheries subsidies
or fisheries subsidies causing adverse trade
 Part of the answer is that
there is very poor disclosure and notification
of fisheries subsidies. Moreover, it is difficult
to find countries that could not be accused
of granting fisheries subsidies, so no government
desires to expose itself to countercharges
by accusing another government. However,
another part of the answer is linked to a
diffuse feeling that the current SCM Agreement
is not adapted to the special context of the
fisheries sector and that lodging a complaint
in this context amounts to skating on thin
ice. Legal and extra-legal costs of such a
complaint are easily identifiable, but the
possible benefits are dubious.
Second, fisheries subsidies contribute to
the inefficiency of management and conservation
regimes. It is likely that excess investments
in harvesting capacity, stimulated by fisheries
subsidies, encourage a tendency to "free ride,"
which undermines effective management. In
the fisheries sector, such behavior assumes
many forms, including non-compliance with
fishing regulations (quota busting), illegal
 or reluctance to accept the
judgments of scientists regarding resource
Third, it does not seem that the ongoing
discussions in the Negotiating Group on Rules
relating to the SCM in general take
a direction that can improve disciplines on
fisheries subsidies through a cross-sectoral
modification of the SCM. A compilation of
general SCM issues currently discussed in
the Negotiating Group on Rules shows that
the majority of topics discussed are not connected
in a particular way with the issue of fisheries
Fourth, few if any fisheries are subject
to management that is sufficiently effective to
ensure that certain kinds of fishing subsidies
will not harm fisheries resources. In addition,
some analyses suggest that certain fishing
subsidies could be harmful even under ideal
Lastly, this debate seems now somewhat superfluous.
It is no longer a question of whether,
but of how international cooperation
to reform fishing subsidies should move forward.
Diplomatic and analytic advances in the past
two years have contributed to broad agreement
that fishing subsidies often contribute to
overcapacity and unsustainable levels of fishing,
in particular in the absence of effective
management systems. Subsidies contributing
to overcapacity, to unsustainable fishing
effort, and to illegal, unreported and unregulated
(IUU) fishing need to be addressed most urgently.
The "traffic light" approach
The second approach could be called the "traffic
lights" approach. It is inspired by the philosophy
of the present SCM Agreement based on the
identification of three boxes, which are given
the colors of traffic lights: red (forbidden
subsidies), green (permitted subsidies), amber
(slow down, which means that subsidies may
be subjected to a complaint on the basis of
their adverse trade effects).
In the fisheries context, the "traffic light"
approach is based on the belief that there
is an emerging consensus among fisheries policy-makers
that effort- and capacity-enhancing subsidies
tend to exacerbate the most fundamental problem
in most fisheries in many parts of the world,
namely the absence of clearly defined and
enforceableharvest rights. This approach
is supported under different versions by the
United States, the European Union, China and
a group of countries called informally "Friends
of the Fish" (Australia, Chile, Ecuador, Iceland,
New Zealand, Peru, Philippines and the United
In the US version of this approach,
 Article 3 of the present SCM
Agreement (which deals with prohibited red
light subsidies) would be expanded in order
to cover those fisheries subsidies that directly
promote overcapacity and overfishing, or have
other direct trade-distorting effects.
As a supplement to the red light category
or independently from it, the United States
would like to consider a dark amber
category of fisheries subsidies. In this
category a subsidy would be presumed to
be harmful unless the subsidizing government
could affirmatively demonstrate that no overcapacity/overfishing
or other adverse trade effects have resulted
from the subsidy.
There is no explicit reference to a "green-light"
category in the US version, although the United
States recognizes that certain government
programs may help to reduce overcapacity and
overfishing, and contribute to fisheries sustainability.
In the Chilean version of this approach,  the red light category contains
all fisheries subsidies of a commercial nature,
directly geared toward lowering costs, increasing
revenues, raising production (by enhancing
capacity), or directly promoting overcapacity
and overfishing. According to Chile, the following
subsidies, inter alia, could be put
in a red light box: subsidies designed to
enable a country's ships to operate on the
high seas or in the local waters of a third
country, subsidies that contribute to the
purchase of ships (whether new or used), subsidies
to help modernize an existing fleet, subsidies
that contribute to reducing the costs of production,
subsidies that generate positive discrimination
in the tax treatment of operators in the fisheries
sector, and subsidies that result in positive
discrimination in access to credit.
Chile proposes that the amber light
category would cover all remaining subsidies
that are not in the red light box. In this
context, Chile proposes that the burden of
proving adverse trade effects would depend
on whether the subsidizing country has fully
met its notification obligations under the
SCM Agreement. In other words, when the subsidizing
Member has failed to notify an amber light
subsidy, it would bear the burden of demonstrating
that this subsidy does not cause trade injury
to the complaining Member. For other subsidies,
even those that may be necessary to preserve
resources and/or social development of communities,
the scenario proposed by Chile fits within
the classical amber light category. This
means that the complaining Member would have
to provide evidence showing adverse trade
effects of such subsidies.
Chile's proposal makes no reference to a
green light category.
In the European version of this approach,  the red light category targets
capacity enhancing subsidies. In the
EU's view, the following types of capacity
enhancing subsidies should be prohibited:
subsidies for marine fishing fleet renewal
(e.g. construction of vessels, increase in
fishing capacity); and subsidies for the permanent
transfer of fishing vessels to third countries,
including through the creation of joint enterprises
with third country partners.
The EU proposal contains a clearly-defined
green light category entitled "Permitted fisheries
subsidies". It is based on the notion that
certain types of subsidies are necessary in
order to reduce fishing capacity and to mitigate
negative social and economic consequences
of the restructuring of the fisheries sector.
According to the EU, this green light category
should include: subsidies to support the retraining
of fishermen; early retirement schemes and
diversification; limited subsidies for modernization
of fishing vessels to improve safety, product
quality or working conditions or to promote
more environmentally friendly fishing methods,
on the condition that any such modernization
must not increase the ability of the vessel
to catch fish; subsidies to fishermen and
vessel owners who have to suspend their fishing
activity, when stoppages are due to unforeseeable
circumstances such as natural disasters, or
in the framework of tie-up schemes linked
to permanent capacity reduction measures in
the context of recovery plans for overexploited
fish stocks; and finally subsidies for the
scrapping of vessels and the withdrawal of
capacity. By definition, these green light
subsidies would be permitted and therefore
not subject to a possible complaint.
The EU proposal does not include an amber
light category. However, unlike the preceding
proposals, it underlines that the EU is prepared
to engage constructively in drawing up rules
which take special account of the distinct
needs of developing countries in fisheries.
In New Zealand's version of this approach,  which is the most recent, the general guiding
principle is the prohibition of all subsidies
causing overcapacity and overfishing, as well
as other trade distortions. In other words,
thered lightcategory would
be the basis of the primary discipline. As
to how construct this red light category,
an obvious approach would be, in New Zealand's
view, to take reduction of fixed or variable
costs, or enhancement of revenues or incomes,
as basic tests. For New Zealand, costs
and revenues (including risk-related support)
can readily be quantified. On the basis on
this extensive test, New Zealand expects that
that the red light category would apply, in
principle, to the full range of programs that
are likely to contribute to overcapacity or
overfishing or other trade distortions.
The green light category (entitled
"Exceptions" in New Zealand's proposal) could
include, for example, management or environmental
programs, transitional programs, and subsidies
on fisheries which take into account the needs
of developing countries. However, this category
would include only limited and defined
New Zealand's proposal does not mention an
amber light category.
The United States has recently signaled its
support for this New Zealand proposal, while
Japan complained that New Zealand's proposal
was not in conformity with the Doha mandate
relating to fisheries subsidies. In the same
vein, the European Union described New Zealand's
proposal as "over the top," while South Korea
and Taiwan also criticized New Zealand's initiative. 
The "special and differential treatment"
The third approach emerging from current
negotiations could be called the "special
and differential treatment approach."
 The other approaches either do not
mention special and differential treatment
for developing countries or confine it implicitly
in the green or amber boxes. Moreover, the
other approaches seem to consider that full
discussion of special and differential provisions
will be useful only after a consensus is reached
on the primary disciplines applicable to all
countries. In this approach however, the special
and differential aspect is at the forefront
and does not constitute a residual category.
The principal idea is that Article 1 of the
SCM Agreement (which contains the technical
definition of a subsidy) would have to exclude
from its scope the following forms of support
that play an important role in developing
countries: 1) Access Fees and Development
Assistance: namely, any access fees and
development assistance granted to small vulnerable
coastal states by developed or more advanced
developing countries to fish in their waters
or to facilitate sustainable management; 2)
Fiscal Incentives to Domestication and
Fisheries Development: namely, incentives
applied by small vulnerable coastal states
for the development and domestication of their
fisheries; and 3) Artisanal Fisheries:
namely, those measures undertaken
by governments of small vulnerable coastal
states to assist their artisanal fisheries
It is no longer a question of whether,
but of how international WTO negotiations
to reform fishing subsidies should move forward.
The most probable outcome of these negotiations
would take the form of a mix between the traffic
light approach and the special and differential
approach. It would also probably include for
the first time in the WTO subsidies regime
the notion of adverse environmental effects
(overcapacity, overfishing, etc.) whereas
traditionally all adverse effects considered
in the WTO subsidies regime have been trade
related (lost market shares, price undercutting,
etc.). In any case, new WTO disciplines relating
to fisheries subsidies are not likely to solve
all fisheries-related problems. A comprehensive
range of complementary solutions will be necessary,
both at the international and national levels.
Addendum (Updated December 14, 2007)
On November 30, 2007, the chair of the Doha Round negotiations group on rules, Ambassador Guillermo Valles Games (Uruguay), circulated a draft text to WTO Members on fisheries subsidies. This draft text took the form of an Annex (Annex VIII), which is inserted in the Agreement on Subsidies and Countervailing Measures, the so-called SCM Agreement. This Annex is considered as an integral part of the SCM. As expected, the draft reflects a mix between the "traffic lights" approach and the "special and differential treatment" approach. Any subsidy referred to in Annex VIII is attributable to the Member conferring it, regardless of the flag of the vessel involved. Moreover, "inland fisheries" in river and deltas are not addressed by Annex VIII, and thus, the draft text uses systematically the expression "marine" capture.
The Traffic Lights Approach
The Red Box (prohibited subsidies)
In the draft text, the Red Box includes:
Subsidies conferred on the acquisition, construction, repair, renewal, renovation, modernization, or any other modification of fishing vessels or service vessels, including subsidies to boat building or shipbuilding facilities for these purposes.
Subsidies conferred on transfer of fishing or service vessels to third countries, including through the creation of joint enterprises with third country partners.
Subsidies conferred on operating costs of fishing or service vessels (e.g. fuel, ice, bait, personnel, social charges, insurance, gear, and at-sea support); subsidies conferred on landing, handling or in- or near-port processing activities for products of marine wild capture fishing; and subsidies to cover operating losses of such vessels or activities.
Subsidies in respect of, or in the form of, port infrastructure or other physical port facilities exclusively or predominantly for activities related to marine wild capture fishing (for example, fish landing facilities, fish storage facilities, and in- or near-port fish processing facilities).
Income support for natural or legal persons engaged in marine wild capture fishing and price support for products of marine wild capture fishing.
Subsidies arising from the further transfer (without adequate compensation) by a payer Member government to its national fishing industry of access rights that it has acquired from another Member government to fisheries within the territorial or EEZ waters of such other Member. However, government-to-government payments for access to marine fisheries are not considered as subsidies.
Subsidies conferred on any vessel engaged in illegal, unreported or unregulated fishing.
Any subsidy conferred on any fishing vessel or fishing activity affecting fish stocks that are in an unequivocally overfished condition.
The Green Box (subsidies not prohibited)
All the following subsidies are not prohibited provided that fisheries management systems are designed by a country or a regional organization to prevent overfishing.
Subsidies exclusively for improving fishing or service vessel and crew safety, provided that
such subsidies do not involve new vessel construction or vessel acquisition and do give rise to any increase in fishing capacity.
Subsidies exclusively for the adoption of selective fishing techniques, for reducing the environmental impact of fishing and for facilitating compliance with fisheries management regimes aimed at sustainable use and conservation (e.g., devices for Vessel Monitoring Systems). Such subsidies must not give rise to any increase in the fishing capacity of any vessel and must not have the effect of maintaining in operation any vessel that otherwise would have been withdrawn.
Subsidies to cover personnel costs exclusively for re-education, retraining or redeployment of fishworkers into occupations unrelated to fishing or directly associated activities; and subsidies exclusively for early retirement or permanent cessation of employment of fishworkers as a result of government policies to reduce fishing capacity or effort.
Subsidies for vessel decommissioning or capacity reduction programmes, provided that
the vessels subject to such programmes are scrapped and the fish harvesting rights associated with such vessels are permanently revoked. Moreover, a fisheries management system in place must include management control measures and enforcement mechanisms designed to prevent overfishing in the targeted fishery.
Limited access privileges to individual and groups and other exclusive quota programmes.
The Amber Box (subsidies subjected to a complaint on the basis of their adverse effects)
No Member shall cause, through the use of any subsidy (whether in red or green boxes or under the special and differential treatment approach) depletion, harm, or creation of overcapacity in respect of straddling or highly migratory fish stocks whose range extends into the EEZ of another Member or stocks in which another Member has identifiable fishing interests.
The "Special and Differential Treatment" Approach
All the following subsidies are exempted from prohibited subsidies disciplines. These exemptions are conditional on the establishment by developing countries or a regional organization of a fisheries management system designed to prevent overfishing:
Prohibited Subsidies Disciplines do not apply to least-developed country ("LDC") Members
For developing country Members other than LDC Members, prohibited subsidies disciplines do not apply when such subsidies relate exclusively to fishing performed on an inshore basis (i.e., within the territorial waters of the Member) with non-mechanized net-retrieval.
Prohibited subsidies disciplines in respect of port infrastructure or other physical port facilities and in respect of income and price supports do not apply to developing countries.
Subsidies conferred on the acquisition, construction, repair, renewal, renovation, modernization, or any other modification of fishing vessels and subsidies conferred on operating costs of fishing, shall not be prohibited for developing countries provided that they are used exclusively for vessels not greater than 10 meters or 34 feet in length overall, or undecked vessels of any length.
For other types of vessels, subsidies conferred on the acquisition, construction, repair, renewal, renovation, modernization, or any other modification of fishing vessels shall not be prohibited for developing countries provided such vessels are used exclusively within the Exclusive Economic Zones of these developing countries and provided the fished stocks are subject to prior scientific status assessment conducted in accordance with relevant international standards.
Prohibited subsidies disciplines relating to the further transfer by governments to their fishing industry of access rights do not apply when these access rights concern fisheries within the EEZ of a developing country. The agreement pursuant to which the rights have been acquired must be made public and must contain provisions designed to prevent over-fishing.
In conclusion, when the WTO is not notified of fisheries subsidies, the usual burden of proof standard in case of a dispute (burden of proof on the complainant) no longer applies. The draft text shifts the burden of proof in such a scenario on the subsidizing Member that has not notified the WTO about the contested measure. The Member that provides the subsidy will then have to demonstrate that the contested subsidy is not prohibited.
 . Paragraph 28 of the Doha Declaration
which precise title is "Ministerial Declaration
at Ministerial Conference", Fourth Session,
Doha, 9-14 November 2001, WTI MIN(OI)/DECIW/I,
adopted on 14 November 2001.
 . WT/CTE/W/226, Analysis on
the Relationship between Fisheries Subsidies
and Over-exploitation of Fisheries Resources.
Submission by Japan. The most sophisticated
defense of the no-need approach appears
in Seung Wha Chang, " WTO Disciplines
on Fisheries Subsidies: A Historic Step
Towards Sustainability?", Journal of
International Economic Law, Volume 6, Issue
4, December 2003: pp. 879-921
 . Grynberg, R.& M.Tsamenyi.
"Fisheries Subsidies, The WTO and the
Pacific Island Tuna Fisheries", Journal
of World Trade, 32, 6 (1998) 127-45.
 . TN/RL/W/77, Negotiating Group on Rules, Possible Approaches
to Improved Disciplines on Fisheries Subsidies,
Communication from the United States, 19
March 2003. See also document TN/RL/W/21,
15 October 2002.
 . TN/RL/W/115, Negotiating Group on Rules, Possible Approaches
to Improved Disciplines on Fisheries Subsidies,
Communication from Chile , 10 June 2003.
 . TN/RL/W/82, Negotiating Group on Rules, Submission
of the European Communities to the Negotiating
Group on Rules - Fisheries Subsidies,
23 April 2003.
 . TN/RL/W/154, Negotiating Group on Rules, Fisheries
Subsidies: Overcapacity and Overexploitation,
Communication from New Zealand, 26 April
 . WTO Reporter , U.S. Signals Support for
New Zealand Proposal for Ban on Fisheries
Subsidies, April 29, 2004.
 .TN/RL/W/136, 14 July 2003, Communication
from the Delegations of Antigua and Barbuda,
Belize, Fiji Islands, Guyana, the Maldives,
Papua New Guinea, Solomon Islands, St Kitts
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