1. The Ad Hoc Meeting of Intergovernmental Organizations on Programmes of Work Related to Subsidies in Fisheries took place at FAO Headquarters in Rome on 21 and 22 May 2001.
2. Representatives from the following intergovernmental organizations participated at the meeting. Food and Agriculture Organization of the United Nations (FAO), United Nations Environment Programme (UNEP), World Trade Organisation (WTO), Organization for Economic Cooperation and Development (OECD) and Southern Africa Development Community (SADC). The names of the participants are listed in Appendix B.
3. The Ad Hoc Meeting was opened by Mr Ichiro Nomura, the Assistant Director-General of the FAO Fisheries Department. In welcoming the participants Mr Nomura reviewed the background to the Fisheries Department's involvement in work on subsidies in fisheries and described recent activities and their outcome. He informed the meeting that the FAO Committee on Fisheries (COFI) reviewed the report adopted by the FAO Expert Consultation on Economic Incentives and Responsible Fisheries (Rome, Italy, 28 November - 1 December 2000) and recommended, inter alia, that FAO's work on subsidies in fisheries should be closely coordinated with, and complementary to, the work being carried out by other intergovernmental organizations. COFI also recommended that FAO, as a global multi-disciplinary organisation, should take a lead role in the promotion of such cooperation. Mr Nomura pointed out that the decision to organize the Ad Hoc Meeting was a direct follow up to such a recommendation and invited those present to share information about their respective organisation's work programmes on subsidies and identify areas for future collaboration amongst the secretariats of the intergovernmental organizations present.
4. The Ad Hoc Meeting elected Mr Ulf Wijkström, Chief of the Fishery Development Planning Service, FAO Fisheries Department, as its Chairperson.
5. The Ad Hoc Meeting adopted the Agenda as contained in Appendix A to this report.
6. Asia-Pacific Economic Cooperation (APEC) was established in 1989 in response to the growing interdependence among Asia-Pacific economies. Begun as an informal dialogue group, APEC has since become the primary regional vehicle for promoting open trade and practical economic cooperation. Its goal is to advance Asia-Pacific economic dynamism and sense of community. Today, APEC's 21 member economies had a combined Gross Domestic Product of over US$18 trillion in 1999 and 43.85 percent of global trade.
7. The Fisheries Working Group (FWG) was created by the APEC Senior Officials Meeting in 1991. It aimed to promote:
8. During 2000, the FWG has been working towards completing Part II, on non-tariff measures, of the project "Trade and Investment Liberalisation in Fisheries". This project was originally designed in 1996 as a self-funded study to include tariff, non-tariff measures (NTMs) and subsidies, including investment liberalisation. The FWG also has been assuming responsibility for two projects arising from the Early Voluntary Sectoral Liberalisation (EVSL) initiative in the fisheries sector. One of the projects is Study into the Nature and Extent of Subsidies in the Fisheries Sector in APEC Member Economies. The study will identify government progress and policies, which might lead to dispute under the WTO Subsidies and Countervailing Measures Agreement. The other project is A Study to Reduce Impediments to Early Voluntary Sectoral Liberalisation in the Fisheries Sector, aiming at developing a policy model to eliminate barriers to EVSL. In addition, the FWG completed the project Free Trade and Investment in the Fisheries Sector of the Asia Pacific Region: Economic Analysis of Tariffs in 1999. This project fairly assesses the qualitative and quantitative economic impacts of tariff removal in the fisheries sector in the Asia Pacific Region.
9. The Eleventh Annual Meeting of the FWG was held in Seattle, USA, from 17 to 21 July 2000. This meeting included for the first time a Business Forum hosted by the USA and sessions on gender issues, fisheries management and aquaculture along with the normal business of the meeting.
10. The forum on Business and Private Sector Participation provided an opportunity for APEC economies to discuss issues of common interest with the US industry and the International Coalition of Fisheries Associations (ICFA) and from Universities. Industry interests included:
These were issues that industry felt APEC could develop in cooperation with FAO. Other suggestions included support for Hazard Analysis and Critical Control Point (HACCP) and technologies to mitigate seabird by-catch.
11. In relation to fisheries management, the meeting took note of reports from a number of key conferences on fisheries management that had been held in APEC member economies and from FAO. A number of suggestions were made for the agenda items on fisheries management for FWG12 and they included algae blooms, differences between the US and EU HACCP systems, and joint issues for the FWG and MRCWG. It was agreed that fisheries management in terms of the role described above was an important aspect of the FWG work programme.
12. Every two years the Committee on Fisheries of FAO (COFI) meets and discusses inter alia the work programme for the Fisheries Department (FI). The proposals made by COFI are integrated into the Organization's two year work-programme and approved by the FAO Conference. COFI meets next early in 2003.
13. FAO's work in fisheries is carried out by FI staff, by consultants, and - when the subject is of high urgency and much importance to members - in meetings of experts and/or representatives of Members of FAO.
14. During its last meeting in February 2001, COFI recommended that the Fisheries Department continue its investigations into the nature and effect of subsidies in the fisheries sector. In particular, COFI specified that a second Expert Consultation should be held on subsidies, to be followed by a technical consultation, that is by a meeting of representatives of Member governments to review and discuss the Fisheries Department findings and recommendations. The full text of the report approved by COFI concerning the work of FAO in fisheries subsidies is reproduced in Appendix C.
15. The Fisheries Department is now elaborating the work programme that should lead up to the second Expert Consultation (EC) on fisheries subsidies. At this time it seems likely that the Expert Consultation will focus on a study of how recipients of subsidies modify their economic activities on receipt of subsidies. Preliminary search for literature on this subject shows that little is available. Therefore, most likely, the Expert Consultation must be preceded by investigations aimed at providing empirical data. A suitable research method must be developed. Once such a method has been defined the intention is to ask Members to carry out the investigations using a common research method. The Fisheries Department is continuing its surveys of the profitability of selected fisheries in various parts of the world. These surveys are now incorporating a method intended to establish the importance of government financial transfers (revenue increasing, cost reducing) for the profitability of these fisheries.
16. FAO invited representatives of the intergovernmental organizations present to assist in the preparations for the Expert Consultation. In particular, the organizations were invited to (i) participate in and advise on the development of a methodology for field studies; (ii) in peer reviewing the reports of field studies; and, (iii) to participate in an observer capacity in the EC.
17. The work on fisheries carried out by the OECD Secretariat is decided and monitored by its Committee for Fisheries. The Committee meets twice a year. As the Fisheries Department is small, most of the information and case studies material is provided by the fisheries administrations in OECD member countries. Only occasionally does OECD employ consultants in the field of fisheries. Synthesising and analysing member input is undertaken by staff in the Fisheries Department.
18. In 2000, the OECD Committee for Fisheries finished its study entitled "Transition to Responsible Fisheries: Economic and Policy Implications". This study includes an analysis of government financial transfers and resource sustainability, and covers data for the years 1996 and 1997. The study yielded much improved information on financial transfers to the industry, and revealed that transfers under the heading of "general services" accounted for roughly three quarter of all transfers to the sector, the remaining one quarter being direct transfers (revenue enhancing or cost reducing).
19. Given the relatively large amounts of government funds being spent on `services' the OECD's Committee for Fisheries has embarked on a study of `management costs' for marine capture fisheries.
20. The OECD Committee has subsequently decided to provide the OECD Secretariat, annually, with information on government transfers to the sector. These will be published each year in "Review of Fisheries in OECD Countries - Statistical Update".
21. In 2000 the Committee for Fisheries started its 2000-2002 programme of work including work on market liberalisation, fisheries management costs and economic and social sustainability indicators. The objectives of the study on market liberalisation are to provide an overview of world and regional fish trade flows, issues and problems. In addition the study will analyse how fisheries trade and production are likely to be affected by reductions in present tariff levels and by changes in non-tariff barriers, mainly for OECD countries. Furthermore the study explores the effects of changes in restrictions on investment, access to services, subsidies in the fisheries sector, as well as other relevant factors. So far the Committee has concentrated on gathering information on the various issues covered by the study and has proceeded to consider a first draft of a preliminary assessment paper.
22. Insofar government financial transfers are considered as non-tariff barrier to trade these are included in the analysis. To assist the Committee in advancing its understanding of the linkages and effects between GFT, on the one hand, and trade and resource sustainability on the other, a consultant (Prof. Hannesson) provided a report scooping out these elements. In conclusion the Committee found the analytical framework a useful way forward and decided to further explore situations where a supply response to a change in policy instrument was likely. These would include in particular aquaculture, fisheries in third country waters and on the high seas, and under exploited fisheries with developments potential.
23. SADC2 member countries have established a secretariat for their marine fisheries work within the Fisheries Ministry in Namibia. The SADC unit is staffed by four professional staff: two economists, two development planners and a biologist.
24. Fisheries subsidies are not known to be a problem in SADC countries. Fisheries within SADC countries are not subsidised in the classical way. Subsidies by other fishing nations do however have an effect on fishing in the SADC countries. These effects tend to differ in SADC countries with well-developed commercial industries and those with artisanal fisheries. In general the effects tend to be negative and either tend to distort markets or stifle the development of national fishing enterprises.
25. A Fisheries Protocol is being negotiated in SADC and although the Draft does not touch on subsidies perse it is very clear on sustainable fishing and the generation and use of best scientific advise. In this context reference is made e.g. to the 1982 UN Convention on the Law of the SEA (UNCLOS) and the FAO "Code of Conduct." In the draft article on "Principles" it is stated that "Since living aquatic resources are national assets, member States have the duty to take appropriate measures to regulate their use and protect the resources against over-exploitation, whilst creating on enabling environment and building capacity for the sustainable utilisation of these resources. Member States are furthermore encouraged to adapt their fisheries and other relevant legislation in line with UNCLOS, the UN Implementation agreement and the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing vessels on the High Seas.
26. On access agreements it is stated that "Member States should co-operate in the establishment of harmonised minimum terms and conditions for access by "non-SADC flag fishing vessels." It is further stipulated that member States may consider the joint negotiation of foreign fishing access agreements with a regional or sub-regional dimension, in particular with regards to highly migratory species. Read together with a statement on the management of resources (sub-article 9 of draft article 3) "Member States shall adopt measures to prevent the deployment of excess fishing capacity from outside the SADC region if such capacity would adversely impact upon the fish resources of member States" it is clear that SADC is aware of the detrimental effect such developments will have and intends to co-operate to mitigate any such detrimental effects. SADC countries clearly want to create an environment in the region for resources to be harvested sustainable and for the common good of the SADC region. It may be concluded that subsidies per se, within SADC are not an issue, as subsidies do not exist in the same way it exists in developed countries. These "outside" subsidies however does impact on SADC economies, especially those countries that have commercial fishing industries competing with its export products on the world market. These subsidies that are of relevance can be listed as follows and its effects noted:
(i) "Purchasing" of access rights, either through direct payment or linking development aid to access rights. One of the problems with these arrangements is the lack of capacity usually found in the developing countries to control the distant water vessels and to ensure that the stipulations of the agreement are being honoured. Another fundamental problem is the short-term nature of such access agreements that tempt distant water operators to extract as much as possible from the resource in as short a time as possible. In the process it is usually only the valuable species that gets processed, less valuable species that could contribute to food security in the developing country, gets dumped at sea. In general it is likely that the proceeds from the sale of access rights has less of an impact on the development of local capacity to utilise national resources that would ideally be the case. The competition from the subsidised distant water vessels and the effect the increased effort on the national resources would tend to make it more and more difficult for nationals to enter fishing, profitably.
(ii) Subsidies to sell off excess capacity from developed countries to developing countries. The effect is in fact simple. Eccles capacity remains excess especially if global excess exists. The compensation received by beneficiaries often gets reinvested in fisheries and thus does not solve the problem at all.
27. UNEP's work programme is established by its Governing Council3. UNEP's work in fisheries falls under one, or more, of the following three main Governing Council decisions:
28. UNEP co-sponsored with the World Wide Fund (WWF) a workshop on "The Role of Trade Policies in the Fishing Sector" in June 1997 to discuss the relationship between fishery subsidies, trade distortions and the problems of fisheries resource sustainability (UNEP - World Wide Fund, 1997). A study commissioned by UNEP contributes to the analytical framework for consideration of fisheries subsidies. This study calls for the reform of fishery subsidies of multilateral rules to discipline subsidies in the fisheries sector would facilitate adjustment to sustainable management. The options proposed are: a fishery subsidies agreement within the WTO framework; a protocol on fisheries subsidies within the framework of an existing multilateral environmental agreement; or a stand-alone agreement on fishing subsidies or fishing over-capacity. This initial work has been updated in a forthcoming UNEP study and discussed at a workshop organized and convened by UNEP in Geneva on 12 February 2001. Following the project supported by UNEP in Uganda to assess the environmental impacts of trade liberalization on the fisheries sector in the country, two projects are currently being implemented in Argentina and Senegal. Furthermore, two studies in the latter two countries focusing on the impact of subsidies on fisheries have been prepared and presented at the Workshop. These studies have been revised based on comments provided by government officials and participants attending the Workshop and will be published and released this year.
29. The Workshop which provided a platform for transparent and open dialogue, was convened in close collaboration with the WTO, with the participation of FAO, OECD and the European Commission. It was attended by trade and environment officials and non-governmental Organization such as The World Wide Fund (WWF), The World Conservation Union (IUCN) and The International Centre for Trade and Sustainable Development (ICTSD). As a follow-up to this Workshop, UNEP has been encouraged to convene similar events. With the financial support from interested governments and foundations, UNEP is planning to convene another workshop later this year. UNEP is currently exploring possible collaboration with WTO, OECD and FAO for organising and convening this workshop.
30. The WTO is the legal and institutional foundation of the multilateral trading system. It shall facilitate the implementation, administration and operation and further the objectives of the WTO Agreements and provides the forum for negotiations, debate and adjudication concerning Members' multilateral trade relations. Decisions are taken by consensus. The principle role of the WTO Secretariat is to support and facilitate the work of the Members.
31. Some 30 GATT/WTO agreements apply to international trade in industrial products and therefore also to trade in fish and fish products, which are excluded from the Agreement on Agriculture. One of these agreements is the Agreement on Subsidies and Countervailing Measures, under which a "subsidy committee" is established. However in recent years, the Committee on Trade and Environment (CTE) has been the main forum for discussion of fishery subsidies. The aim of the work of this Committee, as decided by Ministers, is to make international trade and environmental policies mutually supportive.
32. Item 6 of the CTE work programme is: "The effect of environmental measures on market access, especially in relation to developing countries, in particular to the least developed among them, and the environmental benefits of removing trade restrictions and distortions". With regard to the complementarities that exist between sound trade policy-making and sound environmental policy-making, the CTE has pursued discussions on the environmental benefits that may arise from enhancing existing market opportunities for developing countries, and on whether and how the removal of trade restrictions and distortions, such as subsidies, amongst others, have the potential to yield benefits for both the multilateral trading system and the environment (referred to as win-win-win situations: benefits for trade and the environment as well as for development). Recognition has been given in the CTE to the fact that, for the most part, it is fisheries management, not trade, which plays the crucial role in determining sustainable resource use. Therefore, considering that the situation of fisheries world-wide needs to be addressed through enhanced fisheries management, addressing all factors which have an impact on stocks, the potential contribution of the WTO, which has a trade mandate, would be in the area of examining the trade distortions that impact upon this sector.
33. Work is under way mapping out the kinds of support used in the fishing industry. WTO is presently updating Members' notifications related to fisheries, and other sectors, under Article 25 of the Subsidies Agreement. Few countries have submitted notifications related to fisheries - most of those who have done so are European Members. One problem which the CTE is faced with, is the lack of an agreed definition on what exactly constitutes a subsidy for the purpose of the CTE's discussions. The FAO, OECD and UNEP continue to update the CTE on their respective programmes on fisheries subsidies, to assist the CTE in enhancing an understanding of the different types of government support to the fisheries sector and to identify those subsidies that may be harmful to resource sustainability and which distort trade.
34. At the present stage in the preparatory process for the WTO Ministerial Meeting in Qatar it is not known what the agenda will be.
35. The meeting identified a number of opportunities in which collaboration amongst intergovernmental organizations would be useful for all concerned. However, it also noted that collaboration amongst the agencies concerned has been going on for some time. Regularly representatives of the organizations attend each others meetings. Also, there has been cooperation in the preparation of meeting documents. However, the opportunities now identified are of a somewhat different nature. Some of them represent opportunities for participating in the development and execution of established work programmes.
36. The first of these opportunities are country specific studies. The background is that the review of the work programme showed that the organizations present, with the exception of the WTO, engage in country studies. It was agreed that the organizations concerned would keep each other informed of future country studies in order to collaborate in their planning, and execution and use of results.
37. The second opportunity for collaboration is in the planning and execution of a workshop on (some aspects of ) fishery subsidies to be hosted by UNEP in the first week of October 2001. The workshop will precede the October 2001 meeting of the Committee on Trade and Environment in the WTO.
38. A third opportunity for collaboration lies in establishing a data bank on information on subsidies. The meeting concluded that, due to its large membership and secretariat resources, it would be appropriate for FAO to be the centre for such information gathering and storing. This information could be made available on the internet, possibly in a dedicated Web-page. The organisations present, subject to each organisation's rules, regulations and restrictions on information, would forward to FAO appropriate information on subsidies.
39. A fourth opportunity for collaboration is the preparation for the second expert consultation on subsidies in fisheries to be organized by FAO in the second half of 2002. Organisations present agreed to provide advice on methodologies to be used in case studies on the effects of subsidies on producers, and in peer-reviewing the reports of case studies. The organisations present will also be invited to attend the expert consultation in an observer capacity. However, a major challenge is to develop a common methodology.
40. The meeting also suggested that an important mechanism for assuring close cooperation amongst intergovernmental organizations working on fisheries subsidies is to hold on a regular basis, possibly once a year, a coordination meeting of this kind.
41. The Ad Hoc Meeting strongly suggested that present knowledge about subsidies - their magnitude, nature and effects - be made available in an easy to understand form. Such a technical document should be directed to policy makers and managers who are neither fishery specialists nor economists by training. It was recommended that FAO produce such a document for the forthcoming Expert Consultation using, to the extent possible, the experiences available in other Intergovernmental Organizations (IGOs) present at the meeting.
42. The meeting considered what could and should be done to speed up the work on clarifying the role of subsidies as this was seen as a prerequisite for any future arrangement on how to deal with them. Two issues were highlighted:
43. The report was adopted, following an e-mail exchange, on 11 June 2001.
1 The information related to APEC was received after the meeting, as up-sets in international air-traffic, prevented the representative of APEC from participating in the meeting.
2 Angola, Malawi, Mozambique, Namibia, Seychelles, South Africa, Tanzania, Zambia, Zimbabwe.
3 Every two years the Council meets with all members, in intervening years the Council meets with slightly fewer members.
