- Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization Agreement on Fisheries Subsidies
Introduction
2.1The proposed treaty action is Australia’s ratification of the Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization Agreement on Fisheries Subsidies (Geneva, 17 June 2022) (the Protocol).
2.2The Protocol would insert the Agreement on Fisheries Subsidies (the Agreement) into Annex 1A of the Marrakesh Agreement Establishing the World Trade Organisation (WTO Agreement). Annex 1A contains the WTO multilateral agreements on trade in goods. The Agreement will be placed after the Agreement on Subsidies and Countervailing Measures (SCM Agreement).
2.3The Agreement, which has been labelled as landmark by the World Trade Organisation (WTO), will provide legally binding rules for fisheries-specific subsidies concerning marine wild capture fishing and fishing related activities at sea. The Agreement does not include aquaculture and inland fishing. The Agreement is said to contribute to ocean sustainability and seeks to address the decline of global marine capture fisheries resources. The NIA notes that this ‘is critical to ensuring global food security and protecting livelihoods.’
2.4Specifically, the Agreement contributes to ocean sustainability through prohibiting subsidies to a vessel or operator that is engaged in illegal, unreported and unregulated (IUU) fishing, in addition to prohibiting subsidies for fishing of overfished stocks and unregulated high seas fishing.
2.5Australia believes it is important to address the sustainability of the world’s global marine capture fisheries resources, particularly in the Pacific region. In addition, Australia seeks to secure an agreement that protects its commercial interests. The Agreement is also ‘consistent with Australian policies and positions relating to healthy oceans, the blue economy and Australian fisheries harvesting policies.’
2.6Australia’s wild capture fisheries production was valued at AUD 1.4 billion in 2021. At the same time, Australia has responsibility for the biodiversity and environmental conditions of a large and remarkable ocean estate which includes globally critical ecosystems like the World Heritage listed Great Barrier Reef, the Ningaloo Coastal Area, and numerous threatened and endangered species.
Background
The WTO and the Fisheries Agreement
2.7The Agreement was adopted at the 12th Ministerial Conference (MC12) on 17June2022.The WTO says that the Agreement ‘marks a major step forward for ocean sustainability by prohibiting harmful fisheries subsidies, which are a key factor in the widespread depletion of the world’s fish stocks.’
2.8The Agreement is hailed as being ‘a historic achievement’ by the WTO and is notable for a number of reasons, with the organisation explaining that:
The Agreement represents a historic achievement for the membership as the first Sustainable Development Goal (SDG) target to be fully met, the first SDG target met through a multilateral agreement, the first WTO agreement to focus on the environment, the first broad, binding, multilateral agreement on ocean sustainability, and only the second agreement reached at the WTO since its inception.
2.9To date, 10 WTO members have submitted acceptance of the Agreement including key partners to Australia: The European Union, the United States and Canada. For the Agreement to enter into force, two-thirds of members must formally accept the Agreement by depositing an instrument of acceptance with the WTO.
2.10Australia is a party to multilateral treaties on international fisheries obligations and cooperation including the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and the 1995 United Nations Fish Stocks Agreement (UNFSA). Australia is part of three Regional Fisheries Management Organisations (RFMOs) which create binding obligations for countries which share in the harvest of highly migratory species, namely the Western and Central Pacific Fisheries Commission (WCPFC), the Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and the Indian Ocean Tuna Commission (IOTC).
2.11Australia is also part of three organisations for non-highly migratory species (straddling stocks) which also have binding obligations, namely the South Pacific Regional Fisheries Management Organisation (SPRFMO), the Southern Indian Ocean Fisheries Agreement (SIOFA) and the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR). In addition, Australia is part of a number of other international and regional fisheries bodies, treaties and arrangements.
Justifications for the treaty action
2.12The Treaty’s National Interest Analysis (NIA) notes that the Agreement reflects the mandate from the 11th WTO Ministerial Conference and United Nations (UN) Sustainable Development Goal Target 14.6:
… to prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU fishing, recognizing that appropriate and effective special and differential treatment for developing country Members and least developed country Members should be an integral part of [the WTO] negotiations.
2.13The Agreement sets out new disciplines for fisheries subsidies which address sustainable fisheries and fishing. This reinforces Australia’s existing sustainable fisheries harvesting policies. The Agreement further seeks to dissuade unsustainable fishing and penalise illegal fishing which will enable stock replenishment.
2.14The Government said the Agreement has ‘significant strategic value in the Pacific region’ and is a core priority for the Pacific at the WTO. Further justifications for the Agreement include that Australia has been an active proponent and leader of the WTO negotiations on fisheries subsidies that led to the Agreement.
2.15In its submission to the Inquiry, Seafood Industry Australia (SIA) expressed its belief that the Agreement is ‘another rules-based system, building on the important steps in international fisheries trade already established’. SIA submitted that the Agreement has an importance to Australia and globally as seafood is a major source of protein for two million people globally and fisheries and aquaculture employ over 10% of the world’s population, many of whom are women. SIA further notes that seafood is the most globally traded animal protein with a trade value of USD 164 billion in 2021.
2.16SIA noted that the Agreement ‘addresses all the major requirements – IUU, overfished stocks, traceability, and includes measures to implement the Agreement.’ SIA believes that they ‘do not see some of the criticisms [of the Agreement] as significant.’
2.17Professor Margaret A. Young said that: ‘The prohibition on subsidies for illegal, unreported or unregulated “IUU” fishing or fishing of overfished stocks will improve sustainability.’ Taking a different view, Pacific Network on Globalisation (PANG) said that: ‘The current [agreement] fails to meet its mandate and address those most responsible for the current state of global fish stocks.’
Obligations
IUU fishing
2.18Article 3 of the Agreement provides that no member shall grant or maintain any subsidy to a vessel or operator engaged in IUU fishing or fishing related activities in support of IUU fishing. The process of how affirmative determinations of IUU fishing are made are outlined in the Agreement. In its submission, SIA says that there has been significant progress in the last decade countering IUU fishing, however this success has led to IUU catch being more profitable and attractive.
2.19The Asia-Pacific Development, Diplomacy and Defence Dialogue (AP4D) focuses its submission on IUU fishing and says that ‘Australia should accept an obligation to prohibit subsidies that support IUU fishing or overfished stocks.’ Further, AP4D argue that the Agreement ‘should be seen as part of a wider effort by Australia to combat IUU fishing as a whole-of government issue linking security, trade, foreign policy and development cooperation.’
2.20Professor Young notes that there was disagreement in the negotiations of the Agreement regarding the method used to determine that vessels or operators are engaging in IUU fishing and the reliance on RFMOs. Professor Young holds a contrasting view, explaining: ‘I consider it consistent with sovereignty for WTO disciplines to draw on the work and management of RFMOs in seeking to enforce rules on fisheries subsidies, in theory and in practice.’
2.21On Article 3 of the Agreement, PANG submitted that: ‘The onus on the Coastal Member … raises a number of concerns about the capacity of developing and least developed country Members to be able to meet the requirement to make such determinations.’ Australia Fair Trade and Investment Network (AFTINET) similarly says that determinations of IUU fishing are ‘a complicated process’. They go on to say: ‘This requires that developing country states have both capacity and resources to make the determination and supply the information.’
Overfished stocks
2.22Article 4 of the Agreement outlines that no member shall grant or maintain subsidies for fishing or fishing related activities regarding an overfished stock. The definition of when a fish-stock is overfished is outlined in the Agreement. A fish stock is overfished ‘if it is recognized as overfished by the coastal Member under whose jurisdiction the fishing is taking place or by a relevant RFMO/A in areas and for species under its competence, based on best scientific evidence available to it.’
2.23A member may however grant or maintain subsidies for fishing or fishing related activities regarding an overfished stock if these subsidies or other measures are implemented to rebuild the stock to a biologically sustainable level. In a submission to the Inquiry, SIA says that about 33% of global fisheries remain either overfished and/or there is overfishing taking place.
2.24AFTINET said of the Agreement that it ‘is limited in scope and does not cover the full range of measures that contribute to overcapacity and overfishing’. Professor Young explains that: ‘Proposed prohibitions on certain forms of subsidies that contribute to overcapacity and overfishing were deferred for future negotiations.
2.25AFTINET notes a discussion by the International Institute for Sustainable Development that members could not agree on a general rule that would have prohibited subsidies that contribute to overcapacity and overfishing that included an ‘illustrative list of particular subsidy types – which are generally considered the most likely to incentivize overfishing and overcapacity.’ AFTINET advocates for ‘a more direct rule that would prohibit subsidies that contribute to overcapacity and overfishing, and regulate the activities of large trawling vessels conducting subsidised overfishing of fish stocks, including in international waters.’
Other subsidies issues
2.26The Agreement prohibits subsidies for fishing or fishing related activities in the unregulated high seas. The Agreement provides that: ‘No member shall grant or maintain subsidies provided to fishing or fishing related activities outside of the jurisdiction of a coastal Member or a coastal non-Member and outside the competence of a relevant RFMO/A.’ Other issues addressed include members taking special care and exercising due restraint when granting subsidies to vessels not flying that member’s flag. Members must also take special care and exercise due restraint when granting subsidies to fishing or fishing related activities regarding stocks the status of which is unknown.
Least Developed Countries members
2.27The Agreement provides that members ‘shall exercise due restraint in raising matters involving an LDC (least developed countries) member and solutions explored shall take into consideration the specific situation of the LDC Member involved, if any.’ At the WTO, LDC members are recognised as such if they have been designated by the UN. The Agreement also contains two-year “peace clauses” for WTO disputes relating to subsidies granted by developing countries including LDC members for IUU fishing and for fishing of overfished stocks in their exclusive economic zone (EEZ).
2.28AFTINET observed in its submission that: ‘Overfishing impacts most on small developing and least developed countries including the Pacific Islands which rely on small scale fishing and have the least technical and resource capacity for implementation of the agreement’. AFTINET request that a more comprehensive agreement ‘include other appropriate special and differential treatment provisions for developing countries, including effective longer implementation times.’
2.29PANG contended that any agreement like the one in question ‘will have significant ramifications across the Pacific Islands particularly for non-WTO member countries’. PANG says that it ‘is wary of ratifying an incomplete agreement, negotiated in ways that are unfair on developing countries, that contains legal ambiguities’. Taking a different view, SIA submitted that the Agreement ‘enhances the global competitive position of Australia’s important strategic partners in the Western Pacific, Indonesia, and the Indian Ocean Rim.’
Technical assistance and capacity building
2.30Targeted technical assistance and capacity building assistance to developing country members is provided to implement the Agreement. To support this initiative a voluntary WTO funding mechanism will be established. The funding mechanism will be created in cooperation with relevant international organisations such as the Food and Agriculture Organisation of the UN (FAO) and the International Fund for Agricultural Development (IFAD). As noted, AFTINET observe that the technical and capacity building assistance outlined in Article 7 of the Agreement is funded voluntarily.
2.31Australia pledged AUD 2 million to the WTO Fisheries Funding Mechanism. At the time the Assistant Minister for Trade and Tourism, Senator the Hon Don Farrell, said:
Australia is delighted to be the first to make a pledge to the new Fisheries Funding Mechanism. The Fund's establishment signals to the world the urgency of implementing the historic Agreement on Fisheries Subsidies… The Fund will assist developing countries in ensuring their precious fish stocks are in better shape in the future.
2.32PANG said that: ‘The establishment of a fund with only voluntary contributions creates an imbalance between the extensive commitments being undertaken by developing countries and the capacity support needed to be able to meet them.’ In its submission, AP4D noted that ‘Australia can support implementation of the Agreement on Fisheries Subsidies through a capacity needs assessment of partners and targeted programs and human resources development to build expertise.’ AFTINET advocates that the government ‘support mandatory assistance to developing and least developed countries for technical and capacity building to implement the current and more comprehensive agreement.
Notification and transparency
2.33The issue of notifications and transparency is addressed by the Agreement and set out in article 8. Among other obligations it ‘requires Members to notify, as part of the regular notification of fisheries subsidies under the SCM Agreement, information on the type and kind of fishing activity for which a notified subsidy is provided. PANG submitted of Article 8 that: ‘These are burdensome obligations for developing countries’.
Institutional arrangements
2.34A committee on Fisheries Subsidies is established by the Agreement which will be composed of representatives from each of the members.
Dispute settlement
2.35Article 10 of the Agreement provides for dispute settlement through articles XXII and XXIII of the General Agreement on Tariffs and Trade 1994 (GATT) as elaborated and applied by the Dispute Settlement Understanding (DSU) unless otherwise specified in the Agreement. However, the provisions of article 4 of the SCM Agreement apply to consultations and the settlement of disputes under articles 3, 4 and 5 of this Agreement.
Final provisions
2.36The Agreement provides that nothing in the Agreement would prevent a member from granting a subsidy for disaster relief, if certain limitations as outlined in the agreement are met. This provision does not apply to economic or financial crises.
Termination of agreement
2.37The Agreement outlines that if comprehensive disciplines are not adopted within four years of the entry into force of this Agreement, and unless otherwise decided by the General Council, the Agreement will be immediately terminated. The NIA explains that: ‘The object of this article is to ensure that negotiations on further disciplines, particularly in respect of subsidies contributing to overcapacity and overfishing, are completed within a reasonable time frame after the Agreement enters into force.’
Amendment
2.38There are no provisions in the Agreement to govern amendments to the Agreement. The Fisheries Committee may however submit to the Council for Trade in Goods proposals to amend the text of the Agreement. The NIA notes that procedures for the amendment of multilateral agreements under annex 1A of the WTO Agreement are provided under article X of the WTO Agreement. These differ depending on whether an amendment alters the rights and obligations of members.
Implementation
2.39The NIA explains that no changes are required to domestic legislation to implement the agreement and that all obligations can be implemented through administrative procedures. In a submission, SIA note that they ‘agree that the words in parts of the Agreement are not as precise as we would have liked’, Australia has legislation with precise benchmarks and ‘there is an evolving consensus on these concepts – and debate on the WTO Agreement will assist on that development.’
Costs
2.40The NIA says that the financial costs to comply with the Agreement are limited and ‘would be confined to additional paperwork for agencies administering subsidy programs’. This cost would be particularly in relation to the additional eligibility requirements to be set for applicants for subsidy programs. This includes the administrative cost of collating and formatting existing data in the preparation of fisheries subsidy notifications.
Consultation
2.41The NIA explains that public consultation and stakeholder engagement for the Agreement began over twenty years ago in 2001 before the launch of the WTO negotiations. Professor Margaret A. Young submitted that: ‘The reform to rules relating to fisheries subsidies has received strong support from civil society.’ Stakeholders consulted on the Agreement included the Australian Chamber of Commerce and Industry; Atlantis Fisheries Consulting Group; Austral Fisheries; Australian Southern Bluefin Tuna Industry Association; Commonwealth Fisheries Association; Fisheries Research and Development Corporation; MG Kailis Group; Seafood Industry Australia; and Seafood Services Australia.
2.42DFAT also consulted with State and Territory Governments including with the Commonwealth-State/Territory Standing Committee on Treaties (SCOT). The NIA notes that the Agreement will have a minor impact on how State and Territory agencies administer their fisheries-specific subsidy programs and that they have been made aware of this as part of consultations. The proposed change involves the imposition of additional eligibility conditions for applicants.
2.43The NIA explains that: ‘Stakeholders supported Australia’s approach in these negotiations of upholding and not detracting from existing core WTO subsidy definition and disciplines.’ Further, stakeholders were said to have ‘expressed the view that minor infringements needed to be considered in terms of the discipline on subsidies contributing to IUU fishing.’ The NIA says that this is reflected in the Agreement. Stakeholders also ‘noted concerns with impacts of distant water fishing fleets operating close to Australia’s EEZ. The NIA explains that the Agreement prohibits subsidies for unregulated high seas fishing.
Issues
Incomplete Agreement
2.44At the public hearing the Committee observed that the Agreement does not adequately respond to prohibiting subsidies that might go to fisheries where there are issues of overfishing or overcapacity. DFAT noted in response, that the Agreement is not intended to be a complete response to issues relating to fisheries sustainability or fisheries management. DFAT explained that ‘we consider the fisheries subsidies agreement before the committee now to be an important achievement in its own right because of the outcomes it achieves in curbing disciplines.’
2.45On the incomplete nature of the Agreement, DFAT confirmed that: ‘It's correct to say that there are a number of issues relating to subsidies that support overfishing and overcapacity on which WTO members have sought to reach agreement’. DFAT explained that members aspire to the conclusion of further disciplines relating to overfishing and overcapacity, and they are the subject of the second-wave negotiations that are currently taking place. DFAT explained that Australia is invested in this process in cooperation with Pacific partners.
2.46The Committee addressed the next wave of negotiations and their potential length. DFAT noted that inbuilt into this Agreement is a provision that the agreement will be terminated unless the further provisions on addressing subsidies that contribute to overfishing and overcapacity are concluded within four years.
Developing countries
2.47At the public hearing, the Committee questioned the capacity of Pacific countries to implement the agreement and raised the issue of the administrative and other compliance burdens on Pacific Islands. DFAT noted that the agreement was concluded by the consensus of all 164 members of the WTO including all Pacific members.
2.48DFAT further explained that the issues relating to how the provisions would operate for developing and least developed members were extensively canvassed over the course of the negotiations. DFAT noted that that developing countries in the WTO are a very large group and include economies such as China and India as well as Pacific nations with 16 of the 25 largest fisheries producers being developing countries.
2.49When questioned about the actual practical capacity of developing nations to act against IUU fishing, DFAT argued that there are existing fisheries arrangements, regional fisheries management organisations including in the Pacific that are well established, under which Pacific Island nations do have the capacity to make determinations about whether IUU fishing is taking place. DFAT noted that a lack of capacity in this area is not an issue that has been raised with Australia by Pacific Island members during negotiations.
2.50In relation to how represented the least developed nations are at the WTO negotiations, DFAT explained that not all Pacific Island countries are members of the WTO but those that are members have quite a strong profile in negotiations. DFAT clarified they spoke to all the Pacific Island members, and they were supportive of concluding this Agreement and a number have moved ahead to ratify it. DFAT said that their assessment is that many developing, and least developed country members are in a position to implement the provisions of the Agreement.
Landmark
2.51On the topic of the landmark nature of the Agreement, the Committee inquired as to any specific areas that may strengthen the harmonisation of the regulatory framework to report and capture data. DFAT said that an important achievement of the Agreement is that it will provide for additional notifications and transparency requirements allowing governments to assess in a way previously not possible, the nature and extent of their supported programs that may have an impact on sustainability and fisheries production.
Sustainability
2.52In terms of sustainability, DFAT said that the Agreement is in line with Australia’s approach to promoting sustainable fisheries management. They said that the Agreement reinforces that sustainability is a good basis on which to design any programs that may be provided for in this area by way of industry support.
Conclusion
2.53The Agreement has been labelled as ‘landmark’ by the WTO and will provide legally binding rules for fisheries-specific subsidies concerning marine wild capture fishing and fishing related activities at sea. The Committee notes and welcomes the fact that the Agreement aims to contribute to ocean sustainability and address the decline of global marine capture fisheries resources to ensure global food security and protect livelihoods.
2.54The Committee notes the high importance of healthy fish stocks for the sake of maintaining and restoring marine environment conditions and biodiversity, which in turn is essential for maintaining a sustainable food source and set of related economic activities. It is the Committee’s view that fish stocks should be well managed, however the Committee notes that in many instances this is not the case, which is a very concerning issue.
2.55It is the Committee’s view that from the perspective of the Sustainable Development Goals (SGD) it would be preferable if countries did not subsidise and make operations viable that are harmful to fish stocks, the environment and biodiversity.
2.56The Committee observes that the Agreement has value in prohibiting subsidies to a vessel or operator that is engaged in illegal, unreported, and unregulated fishing, in addition to subsidies for fishing of overfished stocks and unregulated high seas fishing.
2.57The Committee believes that if the SDGs were delivered in full, this Agreement would have included further provisions towards subsidies that would more comprehensively cover fisheries where there is overfishing or overcapacity, yet understands the reasons why this has not been achieved under this Agreement. The Committee looks forward to news of the second wave of negotiations which will address this matter.
2.58The Committee notes the importance of addressing the sustainability of the world’s global marine capture fisheries resources, especially in the Pacific region, and the importance of assisting Australia’s Pacific neighbours in implementing the Agreement. The Committee notes the value of the Fisheries Funding Mechanism to support the implementation of the Agreement, to which Australia has already committed 2 million AUD, and is the first country to contribute.
2.59The Committee notes support for ratification from Government. At the public hearing the Committee explored key issues relating to the Agreement, including the engagement of developing countries with the Agreement and the incompleteness of the Agreement with respect to overcapacity and overfishing, the role of the Fisheries Funding Mechanism and sustainability. The Committee considers that these issues have been addressed adequately by the Inquiry.
2.60The Committee supports the ratification of the treaty and recommends that binding treaty action be taken.
2.61The Committee supports the Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization Agreement on Fisheries Subsidies and recommends that binding treaty action be taken.
Mr Josh Wilson MP
Chair
6 September 2023