CATEGORIES OF SUBSIDIES

33. Subsidies are defined above for four (4) different sets of governmental assistance. The next two sections of the report make use of “categories” of subsidies when discussing the impacts of subsidies on trade and resource sustainability. The purpose of this section is to explain the relationship between the concepts of “sets” and “categories”.

34. “Sets” and “categories” of subsidies represent two different ways of dividing the universe of subsidies. Why is it useful to define both “sets” and “categories”?

35. “Sets” responds to the need to link the definition of subsidies to the manner in which the term is usually understood, and therefore frequently used in the policy/political debate. “Sets” build on the types, or “modalities” of subsidies.

36. “Categories” responds to the needs of those who study the effects/impacts of subsidies. The criteria for defining categories, as will be seen below, makes use of the primary impact of the subsidy, that is, the impact on the producer.

37. The categories of subsidies are divided into two broad categories: cost-reducing and revenue-enhancing subsidies. In other words, various government interventions (or lack of interventions) are categorized according to whether they primarily tend to either reduce the cost of producing and marketing fish or increase the revenue of producing and marketing fish. However, the effects on costs and revenues of some interventions are either ambiguous or they depend on the other conditions. These are grouped into a broad category named Miscellaneous/Unspecified. Each of these broad categories is then broken down further into subcategories that relate to the form and function in influencing fish production, trade and resource sustainability.

38. Readers should note that some of the subcategories may appear in all four sets of subsidies, and other subcategories may appear on only one or few of the sets. For example, subcategories that include direct government payments to, or on the behalf of, producers would appear in all four sets of subsidies as defined above. Subcategories that include tax exemptions for fuel would appear in Sets 2, 3 and 4 subsidies. Subcategories that include lack of government intervention to prevent environmental damage by producers would appear only in Sets 3 and 4 subsidies. Subcategories that include fishery management measures (such as output and input controls on production) would appear only in Set 4 subsidies.

39. In addition, the subcategories identified for resource sustainability differ from those identified for trade issues. The experts chose to divide the two broad categories into different subcategories and assigned different names to their categories. The experts attempted to identify subcategories that would best facilitate analyses of the impacts of subsidies. Table 1 lists some (not all) of the subcategories used by the experts in the examination of the impacts of subsidies on trade and resource sustainability.

Table 1. Categories of Subsidies related to Impacts on Trade and Resource Sustainability

Trade		Sustainability
Cost Reducing		Cost Reducing
	Investment cost reductions		Capital expansion
	Input price reductions		Labour cost reduction
			Misc. cost reductions
			Tax waivers & deferrals
			Loans & insurance cost reductions
	Market interventions		Market interventions
			Fisheries science and management
Revenue Enhancing		Revenue Enhancing
	Output price increases		Output price supports
			Compensation programs
	Sales promotions		Sales promotions
			Equity infusions
	Trade measures		Trade measures
Miscellaneous/Unspecified		Miscellaneous/Unspecified
	Actions to reduce fishing effort		Fishing capacity reduction programs
	Management and regulatory actions		Fisheries science & management

40. The experts did not assign their respective subcategories to any of the sets of subsidies. However, most of the subcategories fall loosely into Sets 1 and 2.