WTO disciplines on fisheries subsidies: A historic step towards sustainability?

Journal of International Economic Law

Volumn 6, Issue 4, 2003, Pages 879-921

  Chang, Seung Wha ^a  

^a Seoul National University   (South Korea)

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EID: 0347595253     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/6.4.879     Document Type: Review

References (156)

1. The 'Friends of Fish' is an informal term referring to a group of WTO Members who have spoken for a special WTO discipline on fisheries subsidies.
2. In February 1999, the FAO's Committee on Fisheries adopted the IPOA with the aim of reducing overcapacity in the fishing industry. It calls on countries to 'reduce and progressively eliminate' subsidies that contribute to overcapacity. International Plan of Action for the Management of Fishing Capacity (IPOA), adopted by the 23rd Session of the FAO Committee on Fisheries, Rome, 15-19 February 1999, paras 25 & 26, http://www.fao.org/fi/ipa/capace.asp (visited 8 August 2003).
3. See, e.g., David Schorr, 'Fisheries Subsidies and the WTO', in Gary P. Sampson and W. Bradnee Chambers (eds), Trade, Environment and the Millennium, 2nd edn (Tokyo: United Nations University Press, 1999) 182-83.
4. For a detailed description of these proposals, see Part II. For other proposals to address fish stock depletion under non-WTO institutional settings, see, e.g., David Schorr, 'Towards Rational Disciplines on Subsidies to the Fisheries Sector: A Call for New International Rules and Mechanisms', in The Footprint of Distant Water Fleets on World Fisheries, WWF Discussion Paper, Washington, DC, (September 1998) 158, 164-66 (introducing six proposals); Gareth Porter, Fisheries Subsidies, Overfishing and Trade, UNEP (Environment and Trade Series No 16) 72-74. In fact, a few international environmental instruments have provisions on fisheries subsidies from an environmental perspective. See, e.g., Convention on Biological Diversity (CBD), done at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4: 31 I.L.M. 818; UN Convention on the Law of the Sea (including the related Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks), adopted 10 December 1982, entered into force 16 November 1994, http://www.globelaw.com/LawSea/lsconts.htm (visited 8 August 2003); The FAO Code of Conduct for Responsible Fisheries; adopted by the 28th Session of the FAO Conference, 31 October 1995, http://www.fao.org/fi/agreem/codecond/ficonde.asp (visited 8 August 2003); Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), Washington DC, 3 March 1973, entered into force 1 July 1975, http://www.cites.org/eng/disc/text.html (visited 8 August 2003); and Agenda 21, adopted at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, 3-14 June 1992, http://habitat.igo.org/agenda21/index.htm (visited 8 August 2003). Although many of these touch on the overcapacity and overexploitation issues, none provides for legally binding specific obligations to curb fisheries subsidies. See Schorr, above n 3, at 204, footnote 23. This paper will not address them further.
5. For a detailed description of these proposals, see Part II. For other proposals to address fish stock depletion under non-WTO institutional settings, see, e.g., David Schorr, 'Towards Rational Disciplines on Subsidies to the Fisheries Sector: A Call for New International Rules and Mechanisms', in The Footprint of Distant Water Fleets on World Fisheries, WWF Discussion Paper, Washington, DC, (September 1998) 158, 164-66 (introducing six proposals); Gareth Porter, Fisheries Subsidies, Overfishing and Trade, UNEP (Environment and Trade Series No 16) 72-74. In fact, a few international environmental instruments have provisions on fisheries subsidies from an environmental perspective. See, e.g., Convention on Biological Diversity (CBD), done at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4: 31 I.L.M. 818; UN Convention on the Law of the Sea (including the related Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks), adopted 10 December 1982, entered into force 16 November 1994, http://www.globelaw.com/LawSea/lsconts.htm (visited 8 August 2003); The FAO Code of Conduct for Responsible Fisheries; adopted by the 28th Session of the FAO Conference, 31 October 1995, http://www.fao.org/fi/agreem/codecond/ficonde.asp (visited 8 August 2003); Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), Washington DC, 3 March 1973, entered into force 1 July 1975, http://www.cites.org/eng/disc/text.html (visited 8 August 2003); and Agenda 21, adopted at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, 3-14 June 1992, http://habitat.igo.org/agenda21/index.htm (visited 8 August 2003). Although many of these touch on the overcapacity and overexploitation issues, none provides for legally binding specific obligations to curb fisheries subsidies. See Schorr, above n 3, at 204, footnote 23. This paper will not address them further.
6. For a detailed description of these proposals, see Part II. For other proposals to address fish stock depletion under non-WTO institutional settings, see, e.g., David Schorr, 'Towards Rational Disciplines on Subsidies to the Fisheries Sector: A Call for New International Rules and Mechanisms', in The Footprint of Distant Water Fleets on World Fisheries, WWF Discussion Paper, Washington, DC, (September 1998) 158, 164-66 (introducing six proposals); Gareth Porter, Fisheries Subsidies, Overfishing and Trade, UNEP (Environment and Trade Series No 16) 72-74. In fact, a few international environmental instruments have provisions on fisheries subsidies from an environmental perspective. See, e.g., Convention on Biological Diversity (CBD), done at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4: 31 I.L.M. 818; UN Convention on the Law of the Sea (including the related Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks), adopted 10 December 1982, entered into force 16 November 1994, http://www.globelaw.com/LawSea/lsconts.htm (visited 8 August 2003); The FAO Code of Conduct for Responsible Fisheries; adopted by the 28th Session of the FAO Conference, 31 October 1995, http://www.fao.org/fi/agreem/codecond/ficonde.asp (visited 8 August 2003); Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), Washington DC, 3 March 1973, entered into force 1 July 1975, http://www.cites.org/eng/disc/text.html (visited 8 August 2003); and Agenda 21, adopted at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, 3-14 June 1992, http://habitat.igo.org/agenda21/index.htm (visited 8 August 2003). Although many of these touch on the overcapacity and overexploitation issues, none provides for legally binding specific obligations to curb fisheries subsidies. See Schorr, above n 3, at 204, footnote 23. This paper will not address them further.
7. For a detailed description of these proposals, see Part II. For other proposals to address fish stock depletion under non-WTO institutional settings, see, e.g., David Schorr, 'Towards Rational Disciplines on Subsidies to the Fisheries Sector: A Call for New International Rules and Mechanisms', in The Footprint of Distant Water Fleets on World Fisheries, WWF Discussion Paper, Washington, DC, (September 1998) 158, 164-66 (introducing six proposals); Gareth Porter, Fisheries Subsidies, Overfishing and Trade, UNEP (Environment and Trade Series No 16) 72-74. In fact, a few international environmental instruments have provisions on fisheries subsidies from an environmental perspective. See, e.g., Convention on Biological Diversity (CBD), done at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4: 31 I.L.M. 818; UN Convention on the Law of the Sea (including the related Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks), adopted 10 December 1982, entered into force 16 November 1994, http://www.globelaw.com/LawSea/lsconts.htm (visited 8 August 2003); The FAO Code of Conduct for Responsible Fisheries; adopted by the 28th Session of the FAO Conference, 31 October 1995, http://www.fao.org/fi/agreem/codecond/ficonde.asp (visited 8 August 2003); Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), Washington DC, 3 March 1973, entered into force 1 July 1975, http://www.cites.org/eng/disc/text.html (visited 8 August 2003); and Agenda 21, adopted at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, 3-14 June 1992, http://habitat.igo.org/agenda21/index.htm (visited 8 August 2003). Although many of these touch on the overcapacity and overexploitation issues, none provides for legally binding specific obligations to curb fisheries subsidies. See Schorr, above n 3, at 204, footnote 23. This paper will not address them further.
8. For a detailed description of these proposals, see Part II. For other proposals to address fish stock depletion under non-WTO institutional settings, see, e.g., David Schorr, 'Towards Rational Disciplines on Subsidies to the Fisheries Sector: A Call for New International Rules and Mechanisms', in The Footprint of Distant Water Fleets on World Fisheries, WWF Discussion Paper, Washington, DC, (September 1998) 158, 164-66 (introducing six proposals); Gareth Porter, Fisheries Subsidies, Overfishing and Trade, UNEP (Environment and Trade Series No 16) 72-74. In fact, a few international environmental instruments have provisions on fisheries subsidies from an environmental perspective. See, e.g., Convention on Biological Diversity (CBD), done at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4: 31 I.L.M. 818; UN Convention on the Law of the Sea (including the related Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks), adopted 10 December 1982, entered into force 16 November 1994, http://www.globelaw.com/LawSea/lsconts.htm (visited 8 August 2003); The FAO Code of Conduct for Responsible Fisheries; adopted by the 28th Session of the FAO Conference, 31 October 1995, http://www.fao.org/fi/agreem/codecond/ficonde.asp (visited 8 August 2003); Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), Washington DC, 3 March 1973, entered into force 1 July 1975, http://www.cites.org/eng/disc/text.html (visited 8 August 2003); and Agenda 21, adopted at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, 3-14 June 1992, http://habitat.igo.org/agenda21/index.htm (visited 8 August 2003). Although many of these touch on the overcapacity and overexploitation issues, none provides for legally binding specific obligations to curb fisheries subsidies. See Schorr, above n 3, at 204, footnote 23. This paper will not address them further.
9. For a detailed description of these proposals, see Part II. For other proposals to address fish stock depletion under non-WTO institutional settings, see, e.g., David Schorr, 'Towards Rational Disciplines on Subsidies to the Fisheries Sector: A Call for New International Rules and Mechanisms', in The Footprint of Distant Water Fleets on World Fisheries, WWF Discussion Paper, Washington, DC, (September 1998) 158, 164-66 (introducing six proposals); Gareth Porter, Fisheries Subsidies, Overfishing and Trade, UNEP (Environment and Trade Series No 16) 72-74. In fact, a few international environmental instruments have provisions on fisheries subsidies from an environmental perspective. See, e.g., Convention on Biological Diversity (CBD), done at Rio de Janeiro, 5 June 1992, UNEP/Bio.Div./N7-INC5/4: 31 I.L.M. 818; UN Convention on the Law of the Sea (including the related Agreement on the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks), adopted 10 December 1982, entered into force 16 November 1994, http://www.globelaw.com/LawSea/lsconts.htm (visited 8 August 2003); The FAO Code of Conduct for Responsible Fisheries; adopted by the 28th Session of the FAO Conference, 31 October 1995, http://www.fao.org/fi/agreem/codecond/ficonde.asp (visited 8 August 2003); Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), Washington DC, 3 March 1973, entered into force 1 July 1975, http://www.cites.org/eng/disc/text.html (visited 8 August 2003); and Agenda 21, adopted at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, 3-14 June 1992, http://habitat.igo.org/agenda21/index.htm (visited 8 August 2003). Although many of these touch on the overcapacity and overexploitation issues, none provides for legally binding specific obligations to curb fisheries subsidies. See Schorr, above n 3, at 204, footnote 23. This paper will not address them further.
10. The draft Seattle Ministerial Declaration reads in relevant part: Subsidies and Countervailing Measures: ... In the context of these negotiations, the areas to be considered shall include, inter alia, certain subsidies that may contribute to over-capacity in fisheries, and over-fishing or cause other adverse effects to the interests of Members. The work on fisheries subsidies shall be carried out in cooperation with the FAO and drawing also on relevant work under way within other intergovernmental bodies, including regional fisheries management organizations. It shall consist of (i) the identification and examination of subsidies which contribute to over-capacity in fisheries and over-fishing, or have trade-distorting effects, and (ii) the clarification and strengthening, as appropriate of disciplines under the SCM Agreement with respect to such subsidies.... Draft Ministerial Declaration as discussed in Green Room, 3 December 1999, available from Inside US Trade, document number: iwp998151, document date: 3 December 1999.
11. Ministerial Declaration at Ministerial Conference, Fourth Session, Doha, 9-14 November 2001, WT/MIN(01)/DEC/W/1, adopted on 14 November 2001.
12. Paragraph 28 of the Ministerial Declaration reads: In the light of experience and of the increasing application of these instruments by Members, we agree to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies and Countervailing Measures, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants. In the initial phase of the negotiations, participants will indicate the provisions, including disciplines on trade-distorting practices, that they seek to clarify and improve in the subsequent phase. In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. We note that fisheries subsidies are also referred to in paragraph 31. Ibid.
13. For detailed descriptions of these proposals, see Part II.
14. David Schorr also expresses the same view on this point. Above n 3, at 198.
15. Article 6.1 (a) five percent test may be viewed as falling under the exception in that this introduces a quantitative test without requiring the existence of trade distortions. Above n 3, at 196. It should be noted that it is merely a presumption clause. That is, a satisfaction of such a quantitative threshold renders no more than a presumption of serious prejudice to another nation's trade interests. If a subsidizing country rebuts this presumption with affirmative evidence showing the non-existence of trade distortions, then this presumption is reversed. In this sense, this five percent presumption rule should not be viewed as a discipline of subsidies without regard to their trade impact. Also, this presumption rule expired as of 1 January 2001. The fact that the Uruguay Round negotiators allowed only a limited time period for this presumption rule implicitly indicates their willingness to revisit this rule after some actual applications.
16. See, e.g., Submission from Argentina, Chile, Iceland, New Zealand, Norway, and Peru, Subsidies in the Fisheries Sector: Possible Categorizations, TN/RL/W/58 (10 February 2003), Negotiating Group on Rules.
17. Note by the Secretariat, GATT/WTO Rules on Subsidies and Aids Granted in the Fishing Industry, WT/CTE/W/80, (9 March 1998) para 31.
18. Note by the Secretariat, Environmental Benefits of Removing Trade Restrictions and Distortions: The Fisheries Sector, WT/CTE/W/167, (16 October 2000) para 75.
19. Matteo J. Milazzo, Reexamining Subsidies in World Fisheries, World Bank Technical Paper No 406, Fisheries Series, (Washington, DC, World Bank, 1997).
20. Above n 3, at 197.
21. See, e.g., UNEP Workshop on the Impacts of Trade-Related Policies on Fisheries and Measures for Sustainable Fisheries Management, March 2002 ('UNEP Workshop'), Annotation II, at 5, footnote 4 and accompanying text (categorizing six types of subsidies to be used to further analyze the impacts of subsidies on fish resources).
22. Ibid, at 4.
23. See, e.g., Communication from the United States, Environmentally-Harmful and Trade-Distorting Subsidies in Fisheries, WTO CTE, WT/CTE/W/154 (4 July 2000).
24. See Porter, above n 4, at 15-19.
25. For an approach proposed by Matteo Milazzo, see above n 14, footnote 136 and accompanying text.
26. A less drastic proposal is the so-called 'matrix approach' that comprehensively takes into account the various elements of fisheries subsidies that impact fish resources and gives a parameter score to each of the elements so as to ultimately prohibit those subsidies that exceed a certain threshold score. See UNEP Workshop, above n 16, at 5, footnote 5 (presenting the following parameters; whether the fishery is open access, whether property rights have been allocated to fishers and whether effort and output controls are weak or strong).
27. See Submissions from Argentina, Chile, Iceland, New Zealand, Norway, and Peru, above n 11.
28. See Communication from the United States, Possible Approaches to Improved Disciplines on Fisheries Subsidies, TN/RL/W/77 (19 March 2003).
29. Ibid, para 3.
30. Ibid, paras 5-6.
31. Ibid, para 7.
32. Communication from Chile, Possible Approaches to Improved Disciplines on Fisheries Subsidies, TN/RL/W/115 (10 June 2003).
33. According to Chilean proposal, the following, inter alia, are prohibited subsidies: subsidies designed to transfer a country's ships for operation 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 factors; subsidies that generate positive discrimination in the tax treatment of the economic activity of operators involved in the capture, processing and/or marketing of fisheries resources; subsidies that result in positive discrimination in access to credit.
34. I b i d.
35. I b i d.
36. The Chilean paper illustrates the following subsidies as falling under this category: subsidies of a social nature, the final purpose of which is to resolve problems affecting small-scale fisheries, for the benefit of coastal communities and with a view to improving quality of life; subsidies relating to fisheries management, including research and administrative and other measures, the sole purpose of which is to ensure the sustainability of hydro-biological resources and their environment.
37. I b i d.
38. I b i d.
39. Submission of the European Communities to the Negotiating Group on Rules - Fisheries Subsidies, TN/RL/W/82 (23 April 2003).
40. The EC's submission illustrates the following types of these subsidies that should be prohibited: subsidies for marine fishing fleet renewal (e.g. construction of vessels, increase in fishing capacity); and 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 EC recognizes that a short transitional period could be needed to allow the fishing industry to adapt to the new situation. Ibid, at 2.
41. According to the EC, the following types of fisheries subsidies are non-actionable: 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. However, any such modernization must not increase the ability of the vessel to catch fish; subsidies to fishermen and vessel owners who have to temporarily stop 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; subsidies for the scrapping of vessels and the withdrawal of capacity.
42. Ibid, at 3.
43. Ibid, at 4.
44. Ibid, at 2.
45. Oral Statement by the Representative of New Zealand on behalf of eight Members (Australia, Chile, Ecuador, Iceland, New Zealand, Peru, Philippines, and the United States) at the 6 May 2002 Meeting for Negotiating Group on Rules (summarized in Note by the Secretariat, Summary Report of the Meeting Held on 6 and 8 May 2002, TN/RL/M/2 (11 June 2002)).
46. See Submission from Argentina, Chile, Iceland, New Zealand, Norway, and Peru, above n 11, at 1; Communication from US, above n 23, para 4; Communication from Chile, above n 27, at 1.
47. Note by the Secretariat, Summary Report of the Meeting Held on a and 8 May 2002, TN/RL/M/2, (11 June 2002) para 13.
48. Communication from Chile, above n 27, para 2.
49. Communication from US, above n 23, para 4; Communication from Chile, above n 27, paras 45.
50. Submission from New Zealand, Fisheries Subsidies, Limitations of Existing Subsidy Disciplines, TN/RL/W/12 (4 July 2002) (summarized in Note by the Secretariat, Summary Report of the Meeting Held on 8 and 10 July 2002, TN/RL/M/3 (1 August 2002), para 13).
51. Section E of this Part below discusses this issue in more detail.
52. See Final Affirmative Countervailing Duty Determination, Certain Fresh Atlantic Groundfish from Canada, 51 Fed. Reg. 10,041, 10,041-42 (1986); Panel Report, United States Imposition of Countervailing Duties on Imports of Chilled Atlantic Salmon from Norway, GATT Doc. SCM/153, adopted 4 December 1992, in Pierre Pescatore, William Davey, and Andreas Lowenfeld, 2 Handbook of WTO/GATT Dispute Settlement (1995) 883.
53. See Final Affirmative Countervailing Duty Determination, Certain Fresh Atlantic Groundfish from Canada, 51 Fed. Reg. 10,041, 10,041-42 (1986); Panel Report, United States Imposition of Countervailing Duties on Imports of Chilled Atlantic Salmon from Norway, GATT Doc. SCM/153, adopted 4 December 1992, in Pierre Pescatore, William Davey, and Andreas Lowenfeld, 2 Handbook of WTO/GATT Dispute Settlement (1995) 883.
54. See Final Affirmative Countervailing Duty Determination, Certain Fresh Atlantic Groundfish from Canada, 51 Fed. Reg. 10,041, 10,041-42 (1986); Panel Report, United States Imposition of Countervailing Duties on Imports of Chilled Atlantic Salmon from Norway, GATT Doc. SCM/153, adopted 4 December 1992, in Pierre Pescatore, William Davey, and Andreas Lowenfeld, 2 Handbook of WTO/GATT Dispute Settlement (1995) 883.
55. Whether this peculiarity can solely justify an adoption of special sectoral disciplines will be discussed later in section E (Actionable Subsidies).
56. At least a Member suggests that the Negotiating Group on Rules examine this question in advance of discussing special disciplines. See Communication from Canada, Improved Disciplines under the Agreement on Subsidies and Countervailing Measures and the Anti-dumping Agreement, WTO Negotiating Group on Rules, TN/RL/W/1 (15 April 2002), at 2.
57. See, e.g., above n 3, at 188, Table 6.1.
58. See, e.g., Panel Report, Canada - Export Credits and Loan Guarantees for Regional Aircraft, WT/DS 222/R, adopted on 27 March 2002; Panel Report, US - Treating Export Restraints as Subsidies, WT/DS194/R, adopted on 2 August 2001. The author served as a panelist for the former case.
59. See, e.g., Panel Report, Canada - Export Credits and Loan Guarantees for Regional Aircraft, WT/DS 222/R, adopted on 27 March 2002; Panel Report, US - Treating Export Restraints as Subsidies, WT/DS194/R, adopted on 2 August 2001. The author served as a panelist for the former case.
60. Panel Report, United States - Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the U.K., WT/DS138/R, adopted on 6 July 1998, as upheld by the Appellate Body Report (WT/DS138/AB/R, 7 June 2000), footnote 69.
61. See, e.g., Panel Report, United States - Preliminary Determinations with Respect to Certain Softwood Lumber from Canada ('US Softwood Lumber'), WT/DS236/R, adopted 27 September 2002, paras 7.60-7.79.
62. The textual language is as follows: (iii) a government provides goods or services other than general infrastructure, or purchases goods;
63. Above n 14, section VII(B).
64. See, e.g., above n 3, at 186 (about the provision of port facilities).
65. A commentator argues that this should be subject to countervailing duty laws. See, e.g., Kenneth S. Komoroski, 'The Failure of Governments to Regulate Industry: A Subsidy under the GATT?', 10 Houston Journal of Int'l Law 189 (1988), 209.
66. Above n 3, at 188, Table 6.1 (about relaxed regulatory requirements); Christopher Stone, Too Many Fishing Boats, Too Few Fish: Can Trade Laws Trim Subsidies and Restore the Balance in Global Fisheries?', Ecology Law Quarterly 24(3) (1997) at 527.
67. Above n 3, at 188, Table 6.1 (about relaxed regulatory requirements); Christopher Stone, Too Many Fishing Boats, Too Few Fish: Can Trade Laws Trim Subsidies and Restore the Balance in Global Fisheries?', Ecology Law Quarterly 24(3) (1997) at 527.
68. For the same line of argument, a commentator opposes an enforcement of countervailing duty laws under the rhetoric of realizing the 'level playing field'. See Richard B. Dagan and Michael S. Knoll, 'Duties to Offset Competitive Advantage', 10 Maryland Journal of Int'l Law and Trade 273 (1986), at 285-87.
69. The Uruguay Round Agreement Act, Statement of Administrative Action, at 25657, in US House Document 103-316, vol 1, at 926-27 (stating that '[t]he examples of particular types of practices falling under each of the categories are not intended to be exhaustive').
70. United States Tax Treatment for 'Foreign Sales Corporations' ('FSC'), (WT/DS/108/R, 8 October 1999, Panel Report), and (WT/DS/108/AB/R, 24 February 2000, Appellate Body Report). The author served as a panelist for this case.
71. For a view that a governmental inaction does not fall under the definition of a subsidy within the meaning of Article 1, see Vinod Rege, 'GATT Law and Environment-Related Issues Affecting the Trade of Developing Countries', 28 Journal of World Trade 95 (1994), at 95, 157.
72. The United States actually imposed countervailing duties on exports of softwoods from Canada, while determining that the Canadian government's failure to impose optimal level of stumpage charges against the Canadian lumber industry constitutes a 'subsidy'. See, e.g., Softwood Lumber from Canada, Investigation No. 701-TA-312 (Final), USITC Publication 2530 (July 1992). This US measure eventually became subject to the WTO dispute settlement. See Panel Report, US Softwood Lumber, above n 50. In this case, however, a legal battle arose as to whether the contested measure constitutes 'provision of goods', not 'revenue forgone'.
73. See Stone, above n 55, at 528. David Schorr put this under 'uncertain/possibly' category. Above n 3, at 188, Table 6.1.
74. WTO Appellate Body Report, United States Tax Treatment for 'Foreign Sales Corporations' (FSC), above n 58, para 90.
75. WTO Appellate Body, United States - Tax Treatment for 'Foreign Sales Corporations' ('FSC'), Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted on 14 January 2002, para 98.
76. Panel Report, US Softwood Lumber, above n 50, paras 7.6-7.30.
77. Ibid, paras 7.31-7.59.
78. Some environmental experts on fisheries subsidies argue that this forgone resource rent constitutes 'provision of goods or services'. See e.g., Stone, above n 55, at 528.
79. Even a leading environmental expert on fisheries subsidies, Gareth Porter, agrees that 'it is extremely unlikely that the WTO will agree to include implicit subsidies within the scope of a subsidy removal agreement, because ... the precedent would raise many difficult issues in all sectors.' Gareth Porter, 'Fisheries Subsidies and Overfishing: Towards a Structured Discussion', UNEP, Geneva, at 17.
80. The author names this a 'transnational subsidy' since a financial contribution is made across the national territory in this case. Transnational subsidies may take various forms (e.g. unilateral, cross or circular subsidies). If Country (A) grants a subsidy to nationals of Country (B), it is unilateral. If Countries (A) and (B) cross-subsidize each other's nationals, it is a cross-subsidy. Lastly, assume that Country (A) subsidizes nationals of Country (B), Country (B) subsidizes nationals of Country (C), and Country (C) does the same for nationals of Country (A). It is circular. These various forms of transnational subsidies are likely to occur in this globalized world economy.
81. Above n 3, at 188, Table 1.
82. In the US FSC compliance review panel, for which the author served as a panelist, the panel actually encountered this issue about transnational subsidies when reviewing the WTO conformity of the US Exclusion of Extraterritorial Income Act. However, the panel exercised the judicial economy and did not tackle this issue. Panel Report, United States - Tax Treatment for 'Foreign Sales Corporations', Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/RW, adopted on 14 January 2002, paras. 8.160-8.163 (using a different term, e.g. 'extended' subsidies).
83. WTO Committee on Subsidies and Countervailing Measures, Replies to Follow-Up Questions from the United States Regarding the New and Full Notification of Korea, G/SCM/Q2/Kor/20 (25 June 1999), at 3.
84. Statement of the representative of the United States, at the Special Meeting of the WTO Committee on Subsidies and Countervailing Measures held on 4 May 1999, G/SCM/M/21 (21 September 1999) at 4, para 26; Statement of the EC, ibid, para 27.
85. Interestingly, in a final negative countervailing duty determination, the US Department of Commerce determined that the provision of water by the Mexican government at below market prices to all agricultural interests is not an actionable subsidy because agricultural interests were not a specific group of enterprises. John A. Ragosta, 'Natural Resource Subsidies and the Free Trade Agreement: Economic Justice and the Need for Subsidy Discipline', 24 George Washington Journal of International Law and Economics 267 (1990), at 274 (cited in Porter, above n 4, at 63, footnote 150, introducing a US countervailing duty case, Fresh Asparagus from Mexico).
86. Porter, above n 4, at 64; Stone, above n 55, at 151.
87. Above n 13, para 57.
88. Ibid (summarizing the APEC study on the Nature and Extent of Subsidies in the Fisheries Sector of APEC Member Economies). Schorr also argues that many types of fisheries subsidies fall within the 'actionable' category. See Schorr, above n 4, at 152.
89. Communication from US, above n 23, para 4; Communication from Chile, above n 27, para 4.
90. I b i d.
91. The text of footnote 13 reads: The term 'serious prejudice to the interests of another Member' is used in this Agreement in the same sense as it is used in paragraph 1 of Article XVI of GATT 1994, and includes threat of serious prejudice.
92. Note that this language derives from paragraph 1 of Article XVI of GATT 1994, according to the interpretative guidance provided for under footnote 13 of the SCM Agreement. Paragraph 1 of Article XVI of GATT 1994 provides: 1. If any contracting party grants or maintains any subsidy, including any form of income or price support, which operates directly or indirectly to increase exports of any product from, or to reduce imports of any product into, its territory, it shall notify the CONTRACTING PARTIES in writing of the extent and nature of the subsidization, of the estimated effect of the subsidization on the quantity of the affected product or products imported into or exported from its territory and of the circumstances making the subsidization necessary. In any case in which it is determined that serious prejudice to the interests of any other contracting party is caused or threatened by any such subsidization, the contracting party granting the subsidy shall, upon request, discuss with the other contracting party or parties concerned, or with the CONTRACTING PARTIES, the possibility of limiting the subsidization, (emphasis added)
93. David Schorr also agrees that the effectiveness of disciplines under the existing rules depends on the willingness so far unproven of WTO Members to litigate them. Above n 3, at 189.
94. As noted above, in a recent paper the US proposed that a 'dark amber' category be modeled on the now expired Article 6.1 of the SCM Agreement. Communication from the United States, above n 23, para 6. In the general context of negotiations on the ASCM disciplines, Canada already proposed to revive this presumption clause. See Communication from Canada, above n 46, at 1.
95. Stone, above n 55, at 530-31; Porter, above n 4, at 66. David Schorr takes an opposite view. Above n 3, at 187 (arguing that 'many fisheries subsidies arguably cover operating losses sustained by the fishing industry').
96. Stone, above n 55, at 530-31; Porter, above n 4, at 66; Schorr, above n 4, at 153 (stating that 'aggregate subsidies totaling at least 20-25 percent of sectoral revenues suggest that the 5 percent ad valorem test for establishing serious prejudice may not be difficult to meet.').
97. Annex IV to the ASCM provides for calculation methodologies to determine this 5 percent threshold issue, but with many problems of practicality (e.g. firm definition, product definition, unallocated subsidies, and displacement controversies). See Stone, above n 55, at 530, footnote 113.
98. See Communication from Canada, above n 46, at 1.
99. Porter above n 4, at 64.
100. Article 8.2(b) reads in relevant part: assistance to disadvantaged regions within the territory of a Member given pursuant to a general framework of regional development and non-specific (within the meaning of Article 2) within eligible regions ...
101. Article 8.2(b)(ii) reads in relevant part: the region is considered as disadvantaged on the basis of neutral and objective criteria, indicating that the region's difficulties arise out of more than temporary circumstances;
102. Above n 3, at 151; Porter above n 4, at 64.
103. Milazzo also proposes creating a category of green-lighted fisheries subsidies that could be non-actionable. Above n 14, text accompanying footnote 14.
104. In order to say this, one surely needs to assume that WTO Members agreed on the objectives of fisheries subsidies disciplines (e.g. preserving fish stock or prevention of trade distortion). The next section discusses this.
105. This position is taken in the joint proposals by Friends of Fish for Seattle Ministerial Conference as well as Doha Ministerial Conference. See, Communication from Australia, Iceland, New Zealand, Norway, Peru, Philippines, and the United States, Preparations for the 1999 Ministerial Conference (Fisheries Subsidies), WT/GC/W/303, 6 August 1999 ('Fish Friends' Communication for Seattle'), paras 3-5; Submissions from Australia, Chile, Ecuador, Iceland, New Zealand, Peru, Philippines, and the United States, The Doha Mandate to Address Fisheries Subsidies: Issues, TN/KL/W/3, 24 April 2002 ('Fish Friends' Submission for Doha Negotiation I'), para 1.
106. Note by the European Community, Comments by the European Community on the Document of the Secretariat of the Committee on Trade and Environment (WT/CTE/W/80) on Subsidies and Aids Granted in the Fishing Industry, WT/CTE/W/99, 6 November 1998, para 14. See also, Submission by Japan, Japan's Basic Position on the Fishery Subsidy Issue, WT/CTE/W/173, 23 October 2000, paras 3-4.
107. For instance, the so-called 'vessel-buy-back' program falls under this category.
108. Above n 3, at 179, footnote 17 (citing statements by the WTO CTE, Asia Development Bank and UNEP).
109. UNEP Workshop, Annotation I: Background Information (15 March 2002).
110. OECD, Government Financial Transfers and Resource Sustainability (Paris: OECD, 2000) (stating that 'the effects of [government financial] transfers on resource sustainability are difficult to determine, as there are many influences on fish stock that are difficult to disentangle').
111. Ibid (stating that 'most transfers (77 percent) are general services that are devoted to fisheries infrastructure and expenditure on activities, such as research and enforcement, that are essential for ensuring the sustainable use of fish stocks and the aquatic ecosystem').
112. See, e.g., above n 3, at 179.
113. Ibid (citing Milazzo, above n 14; Ronald P. Steenblik, and Paul Wallis, The OECD's Program of Work in the Area of Fishery Policies, Paris: OECD, 1998, Sec. 2.2).
114. Ibid (citing Milazzo, above n 14; Ronald P. Steenblik, and Paul Wallis, The OECD's Program of Work in the Area of Fishery Policies, Paris: OECD, 1998, Sec. 2.2).
115. Above n 13, para 15. See also, Jan-Eirik Sorensen, Fishery Matters in the WTO, with Focus on the Link between Trade and Environment (Speech manuscript for Seminar on Sustainability in World Fisheries, organized by the Korean Ministry of Maritime Affairs and Fisheries, Pusan Korea, 2 April 2001), at 6 (stating that '[r]ecognition 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').
116. See Submission by Japan, Analysis on the Relationship between Fisheries Subsidies and Over-Exploitation of Fisheries Resources, WT/CTE/W/226, 24 April 2003, paras 2-5.
117. Fish Friends' Communication for Seattle, paras 2-3; Fish Friends' Submission for Doha Negotiation I, paras 7-8.
118. Above n 3, at 146-47; Above n 12, Annex II, para 10 (citing FAO, The State of Food and Agriculture (1997) 2930).
119. Above n 3, at 146-47; Above n 12, Annex II, para 10 (citing FAO, The State of Food and Agriculture (1997) 2930).
120. Id; above n 13, at 46; Porter, above n 4, at 58 (admitting that '[t]he extent to which fisheries subsidies distort trade in fish and fish products has never been systematically analyzed'); Above n 3, at 181 (agreeing that 'current empirical knowledge about the trade consequences of fishery subsidies is thin').
121. Food and Agriculture Organization's Committee on Fisheries is conducting a study of various types of fisheries subsidies and their possible impact on trade and resource sustainability. See, Statement of the Representative of the FAO at the UNEP Workshop (Geneva, 15 March 2002); See also above n 13, paras 46 and 65.
122. Above n 13, para 59 (introducing a study by APEC which observes that '[c]ase study analysis shows that the effects of subsidies on trade are not always self-evident').
123. Marc Benitah, The Law of Subsidies under the GATT/WTO System (2001), at 7-10.
124. Above n 39, para 14, (Statements of Iceland, New Zealand) Norway, Chile, United States, Australia, Argentina, Venezuela, and India).
125. See, e.g., Questions from Japan Concerning Papers on the Fisheries Subsidies Issue, TN/RIVW/84 (30 April 2003), Question 1 ('When does the US think members of the Rules Negotiating Group reached a consensus on this goal [of providing better disciplines on subsidies that promote over-capacity and overfishing]?'); Korea's Comments on the Submission from the United States, TN/RL/W/97 (5 May 2003), para 2.
126. For instance, in the 7 May 2003 meeting of the Rules Group, the United States orally answered that the Doha mandate (e.g. Paragraphs 28 and 31) supported this goal setting. Note by the Secretariat, Summary Report of the Meeting Held on 5-7 May 2003, TN/RL/M/8, para 39.
127. Submission of the EC to the Negotiating Group on Rules-Fisheries Subsidies, above n 32, at 2.
128. Paragraph 33 reads in relevant part: The outcome of this work as well as the negotiations carried out under paragraph 31 (i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system) shall not add to or diminish the rights and obligations of members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries, (emphasis added)
129. Moreover; it is uncertain that WTO Members will actually succeed in reaching any agreement on the above negotiating items. The chapeau of Paragraph 31 itself makes it explicit that the WTO Members 'agree to negotiations, without prejudging their outcome'. In light of the negotiating history on the previous work items for the WTO CTE thus far, one cannot be optimistic about the future outcomes of the above negotiations.
130. The next Part will discuss this statement.
131. Article XX reads in relevant part: Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption of enforcement by any contracting party of measures; (b) necessary to protect human, animal or plant life or health; (...) (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;
132. Unadopted Panel Report, United States Restrictions on Imports of Tuna (3 September 1991), DS21/R, Basic Instruments and Selected Documents ('BISD') 39S/155 ('Tuna-Dolphin P); Unadopted Panel Report, United States Restrictions on Imports of Tuna (16 June 1994), DS29/R ('Tuna-Dolphin II'). For instance, the Tuna-Dolphin I panel held that, in order to be saved under Article XX(b), even the environmentally friendly measures at issue must be the least trade-restrictive measures. See Tuna-Dolphin I, para 5.28.
133. Unadopted Panel Report, United States Restrictions on Imports of Tuna (3 September 1991), DS21/R, Basic Instruments and Selected Documents ('BISD') 39S/155 ('Tuna-Dolphin P); Unadopted Panel Report, United States Restrictions on Imports of Tuna (16 June 1994), DS29/R ('Tuna-Dolphin II'). For instance, the Tuna-Dolphin I panel held that, in order to be saved under Article XX(b), even the environmentally friendly measures at issue must be the least trade-restrictive measures. See Tuna-Dolphin I, para 5.28.
134. Unadopted Panel Report, United States Restrictions on Imports of Tuna (3 September 1991), DS21/R, Basic Instruments and Selected Documents ('BISD') 39S/155 ('Tuna-Dolphin P); Unadopted Panel Report, United States Restrictions on Imports of Tuna (16 June 1994), DS29/R ('Tuna-Dolphin II'). For instance, the Tuna-Dolphin I panel held that, in order to be saved under Article XX(b), even the environmentally friendly measures at issue must be the least trade-restrictive measures. See Tuna-Dolphin I, para 5.28.
135. For instance, the preamble of the SPS Agreement provides in relevant part: Desiring to improve the human health, animal health and phytosanitary situation in all Members, (...) Desiring therefore to elaborate rules for the application of the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b).
136. For instance, Article 2(2) of the TBT Agreement recognizes 'human health or safety, animal or plant life or health, or the environment' as one of legitimate objectives.
137. United States - Standards for Reformulated and Conventional Gasoline, Panel Report and Appellate Body Report, adopted on 20 May 1996, WT/DS2/9.
138. United States - Import Prohibition of Certain Shrimp and Shrimp Products, Panel Report, WT/DS58/R, circulated on 15 May 1998 and Appellate Body Report, WT/DS58/AB/R, circulated on 12 October 1998. For compliance review proceedings, see United States - Import Prohibition of Certain Shrimp and Shrimp Products - Recourse to Article 21.5 of the DSU by Malaysia, Panel Report and Appellate Body Report, adopted on 21 November 2001, WT/DS58/RW.
139. United States - Import Prohibition of Certain Shrimp and Shrimp Products, Panel Report, WT/DS58/R, circulated on 15 May 1998 and Appellate Body Report, WT/DS58/AB/R, circulated on 12 October 1998. For compliance review proceedings, see United States - Import Prohibition of Certain Shrimp and Shrimp Products - Recourse to Article 21.5 of the DSU by Malaysia, Panel Report and Appellate Body Report, adopted on 21 November 2001, WT/DS58/RW.
140. Appellate Body Report, European Communities - Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 12 March 2001.
141. See, e.g., Appellate Body Report, United States - Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 12 October 1998, para 164.
142. Although the United States' proposal also carries its concern with trade distortions, it is true that the main concerns of Friends of Fish are currently more focused on environmental aspects than on trade.
143. The former Director of the WTO Trade and Environment Division expresses the same view. See, Jan-Eirik Sorensen, above n 102 (stating that '[t]he WTO is only competent to deal with trade.... The WTO is not an environmental agency.... If the CTE does identify problems, any solutions must continue to uphold the principles of the WTO trading system....').
144. I b i d.
145. Since this policy issue has not yet been fully debated at the Doha Rules negotiations, this paper relies on David Schorr's paper in introducing possible policy arguments in support of the WTO's move towards sustainability by adopting the proposed special disciplines on fisheries subsidies.
146. Above n 3, at 194.
147. Ibid, at 194-95.
148. Ibid, at 194.
149. I b i d.
150. 133 David Schorr himself seems to accept this point. Ibid.
151. Ibid, at 195-96.
152. Ibid, at 195-96.
153. See, e.g., Article 1.3 of the TRIPS Agreement.
154. For a critical assessment of Schorr's argument about Article 6.1, see above n 10.
155. OECD Special Negotiating Group, Negotiating Framework and Main Elements of a New Shipbuilding Agreement, C/WP6/SNG(2002)1, para 2 (24 September 2002); 'Steel-Making Nations Endorse Talks on Stronger Subsidies Disciplines', Inside US Trade (20 December 2002).
156. One may contend that the WTO subsidies regime already has a special discipline on agricultural subsidies. However, while the Agreement on Agriculture maintains a different set of subsidy disciplines, it remains to embrace the 'subsidy' definition of the SCM Agreement and to limit the prohibited subsidies to export subsidies. Article 1(e) of the Agreement on Agriculture defines export subsidies as 'subsidies contingent upon export performance', and such subsidies are prohibited by Articles 3.2, and 810. This shows that even for agricultural products that receive special treatment under the WTO system, the applicable subsidy discipline therein makes no significant departure in its basic concepts, principles, and objectives.