Faculty of Economics
WTO-Consistent Trade-Related Measures to Address IUU Fishing - Developing Country Issues.
Document AUS:IUU/2000/17. 2000. 9 p.
This paper reviews IUU fishing trade-related issues for the
developing countries and their needs in combating IUU fishing. Discussions are
given on WTO consistent transparent and nondiscriminatory trade-related measures
in combating IUU fishing in perspective of developing countries. Fish trade
liberalization can lead to undesirable social and economic impact in developing
countries where fish resources are still relatively more abundant if there is a
lack of effective fishery management and regulation. Lack of effective fishery
management and regulation in developing countries results in IUU fishing in
their fishing jurisdictions. There is a need to strengthen capability in fishery
management and regulation in developing countries. IUU fishing should be clearly
defined and identifiable. Unless being equally effective in fishery regulation,
trade-related measures in curbing IUU fishing may not be WTO consistent in
perspective of developing countries.
PREPARATION OF THIS REPORT
This paper has been prepared as one in a series of specialist background papers for the Expert Consultation on Illegal, Unreported and Unregulated Fishing Organized by the Government of Australia in Cooperation with FAO, Sydney, Australia, 15-19 May 2000. It is expected that this series of papers and the expert consultation will contribute to the elaboration of an international plan of action (IPOA) to deal effectively with all forms of illegal, unreported and unregulated (IUU) fishing, the development of which is being undertaken in accordance with a decision of the 1999 FAO Ministerial Meeting on the Implementation of the Code of Conduct for Responsible Fisheries.
IUU fishing in coastal state jurisdictions is more relevant to developing countries. Lack of capability in effective resource management and regulation lead to overfishing and resource degradation. There is a need in strengthening developing country capability in fishery resource management and regulation.
While enjoying foreign exchanges from fish export, developing countries may have been exporting their fishery resource abundance at an underpaid value. Fishing costs accrue to the fishermen do not reflect the true cost of fishery resources. An individual fisherman has not taken into account the social cost of fishing. Such cost underestimation can lead to overfishing and resource degradation. Development in fish trade without proper management on fishery resources can be a net social loss, not a gain to developing countries. Fish trade liberalization can lead to undesirable social and economic impact and bring about over exploitation and depleted fishery resources.
Relevant Articles in GATT 1994 for WTO consistent trade-related measures in combating IUU fishing in developing countries are Article III National Treatment on Internal Taxation and Regulation, Article VIII Fees and Formalities connected with importation and Exportation, Article X Publication and Administration of Trade Regulations, Article XI General Elimination of Quantitative Restrictions, Article XIII Non-discriminatory Administration of Quantitative Restriction, and Article XX General Exemptions.
Relevant Agreements to be considered for WTO consistent trade-related measures in combating IUU fishing in developing countries are Agreement on Technical Barrier to Trade, Agreement on Preshipment Inspection, Agreement on Rules of Origins, Agreement on Import Licensing Procedures, and Agreement on Subsidies and Countervailing Measures.
Article XX allows the adoption of IPOA to take measures in combating IUU fishing for conservation of depleting fishery resources. Nevertheless the trade-related measures must be non-discriminated between countries where same conditions prevail. Lack of effective fishery management and regulation in developing countries may impede actions to effectively curb IUU fishing.
IUU fishing has to be clearly defined and identifiable. Unless being equally effective in fishery regulation, trade-related measures in curbing IUU fishing may not be WTO consistent in perspective of developing countries.
SUGGESTIONS FOR THE IPOA TEXT
In the short-term (0 - 3 years), there should be collaboration between FAO and WTO in adoption of IPOA to ensure that trade-related measures are WTO consistent. The proposal of Japan and Korea in the establishment of a separate group on negotiation on fish and fish products should be considered. Developing countries involve in fish trade, being owner of fishery resources, fishing, processing and trading should have a significant play in that negotiation group. At the same time strengthening capability in fishery management and regulation in developing countries should immediately be undertaken. Without a satisfactory fishery management and regulation in developing countries, it can be difficult to fulfill to objective of IPOA on combating IUU fishing. Financial and technical assistance and human resource development are needed for effective fishery management and regulation in developing countries. The assistance can be on building up capacity in fishery management and regulation as well as relocating excess capacity out of the fishing sector.
In the medium-term (3 - 6 years) the system of certificate of non-IUU fishing can be established, on a non-discriminatory basis among developing countries. It is expected that such system will made possible more trade-related measures in combating IUU fishing in developing countries.
In the long-term (more than 6 years) with the efficient fishery management and regulation among the developing countries, trade-related measures in combating IUU fishing can be developed in the global context.
1. IUU FISHING AND TRADE-RELATED ISSUES FOR THE DEVELOPING COUNTRIES
1. IUU fishing as reported in Kevin Brays paper on A Global Review of Illegal, Unreported and Unregulated (IUU) Fishing has been found in fisheries jurisdiction of the coastal states, Regional Fisheries Bodies (RFB), and the high seas. More relevant to the developing countries are those in the jurisdiction of the coastal states. For the Small Island Developing States (SIDs) where RFB has been established the jurisdiction of the RFB concerns. Due to the limited capability for high seas fishery, developing countries concern less on IUU fishing in high seas.
2. Limited budget allocated to fishery management does not allow an adequate data collection for stock assessment. Lack of data hinders the accuracy in determination on total allowable catch and number of fishing vessels.
3. Multi-species and multi-gear fisheries are often found in tropical waters, adding complicated issues in fishery management.
4. High price in the international market and fishery resource degradation in the fishing grounds where developed countries usually fish have resulted in increasing fishing effort, including IUU fishing, in fisheries jurisdictions of the developing countries where resources are relatively more abundant. Lack of capability in pursuing an effective fishery resource management of the developing countries can lead to overfishing and resource degradation. There is a need in strengthening developing country capability in fishery resource management.
5. Without a suitable management, high fish price induced more fishing effort. Fishermen adjust their fishing according to the market demand and availability of the resources. Development in the fishing sector outpaces fishery management in developing countries. Illegal, unreported and unregulated fishing is often found in their jurisdictions. A number of fishing vessels is not properly registered, illegally fishing. Even those registered, may have unreported fishing. There are difficulties in administering effective fishery regulations.
6. The high fish price driving force given in the international market is dominated by consumers demand. Main buyers in international fish markets are few while sellers are numerous. The buyers determine prices. Such price reflects strong demand from the buyers, and less on the cost of fishing.
7. While resources are abundant, fishing costs will be low leaving the fishermen a high net margin, leading to more fishing effort. Depleting fishery resources leads to a higher cost of fishing and lower margin to the fishermen. Nevertheless investment in fishing requires some sunk costs. Fishery entry is easy while exit is difficult. An option for the fishermen is migration to new fishing ground where resources are more abundant, perhaps in fishery jurisdiction of the neighboring countries. Cooperation through RFB can assist in a better management at the regional level.
8. Fishing costs accrue to the fishermen do not reflect the true cost of fishery resources. Overfishing today leads to less abundant resource in the future, and a higher cost of fishing for the next generation, not for today fishermen. An individual fisherman has not taken into account social cost of fishing. Such cost underestimation also leads to overfishing. Market fails in reflecting true cost of fishery resources.
9. Fish prices as determined in the international market are determined by the buyers. Fishing costs do not take into account social cost of fishery resources. While enjoying foreign exchanges from fish export, developing countries may have been exporting their fishery resource abundance at an underpaid value, perhaps an actual loss to the countries. IUU fishing in developing country jurisdiction worsen the situation. Development in fish trade without proper management on fishery resources can be a net social loss, not a gain to the developing countries.
10. In the preparations for the 1999 Ministerial Conference, WTO, two leading fishing countries from Asia, Japan and Korea, proposed a separate negotiation group for fishery products.
11. As fishery products are renewable but can be depleted without proper management, Japan proposed that there should be a separate negotiation group to establish rules and disciplines for adequate fishery resource conservation and management, at a global level and independently from other non-agricultural products.
12. In Preparation for the 1999 Ministerial Conference, in Negotiations on Forestry and Fishery Products 25 June 1999, the Permanent Mission of Japan proposed that trade liberalization without proper measures on fishery resource management could lead to increase in trade of fishery products, thus an overfishing. It should be the role of WTO to identify negative fishery subsidy and find the solutions for sustainable fishery resource utilization while positive subsidy contributing to sustainable fishery should be allowed. Japan put the emphasis on stable supply of fish and social, economic and cultural roles and functions of fisheries and fishing communities.
13. In Preparations for the 1999 Ministerial Conference, in Proposal foe Separate Negotiation Group on Forestry and Fishery Products 7 October 1999, Permanent Mission of Korea proposed that fishery sector served an important role in maintaining social cohesion in poor areas...Fishery resources are susceptible to quick depletion when coordinated efforts to conserve them are absent.... Too ambitious liberalization may bring disturbing consequences to self-reliant poor fishermen and undesirable social difficulties. There is a lack of this awareness in multilateral trade negotiation. Korea proposes a separate negotiation group for fishery products, to be comprehensive and balance of interests between importing and exporting countries.
14. Trade liberalization in fishery products without proper management in the fishing sector can lead to undesirable social and economic impact. It can bring about over exploitation in fishery resources and thus, resource depletion.
15. There has been a proposal from two developing countries - Peru and Philippines together with five developed countries - Australia, Iceland, New Zealand, Norway and United States agreeing on elimination of fishery subsidies that lead to excess capacity. The seven countries suggest that this is a win-win achievement. Committee on Trade and Environment (CTE) has showed interest in tackle the problem under Article 25 of the Agreement on Subsidies and Countervailing Measures (SCM).
2. THE NEEDS OF DEVELOPING COUNTRIES IN COMBATING IUU FISHING
16. As mentioned earlier, market failure in fishing sector hinders the optimum fishery resource utilization, leading to overfishing and resource depletion. Policy failure is the other hindrance. The policy failure can be the negative fishery subsidy, which is more often found in developed countries. In developing countries, lack of proper fishery management is more familiar. Such lack can exist as the inefficiency in fishery resource management and the incorrect fishery policy. Inefficient fishery resource management is the outcome of the inadequacy and low degree of accuracy in data for management (partly due to IUU fishing); lack of appropriate management regime; inefficient MCS and VMS; weak penalty; and lack of finance, personnel, and technical support. For developing countries, these lacks prevail in their jurisdictions, not to mention the regional jurisdictions and the high seas. Combating IUU fishing in developing countries begin from their jurisdictions. There is a need for correcting such hindrances. It will be better if the attempts can all take place more or less simultaneously in order to lessen the problem of fleet migration from one fishing ground to the other. An International Plan of Action (IPOA) can be of assistance at this point.
17. In its first report to WTO 1996 Ministerial Conference, the Committee on Trade and Environment (CTE) emphasized that trade and environment are both important for policy making and must be supportive to promote sustainable development. Dealing with the environmental policies, WTO has focused only on trade-related issues. Fish is a resource base product and is environment-related while it is also an important trading commodity. Too rapid trade liberalization can lead to fishery resource depletion. Trade liberalization can lead to IUU fishing. There is a need to establish an international unit in meeting the developing country needs for combating IUU fishing.
18. Building capacity in effective fishery management is important for developing countries in combating IUU fishing. Improvement in data collection and data system is necessary for a better management planning. Management has to be more effective. It is important that their MCS and VMS be improved in order to lessen IUU fishing. There are needs in human resource development as well as financial support and technical assistance.
19. Since market price does not reflect true cost of fishery resources. The high margin allowed by high export price and low fishing cost should be reduced taking into account the social cost of fishing. On this point economic instruments, beside the conventional command and control, can be introduced for fishery management. Such economic instruments are based on polluter pay principle. They attempt to rectify market failure using adjusted price mechanism for more efficient resource utilization. Included in economic instruments are property rights, market creation, fiscal instruments, charge systems, financial instruments, liability systems, and bonds and deposit refund systems. These instruments can incur a higher fishing cost to individual fisherman, to reflect the social cost of fishing. They can be internally employed. Revenues from applying economic instruments fall to the coastal states. Nevertheless coastal states may be reluctant in applying economic instruments since their export prices can be less competitive in the short run, though there is a gain from a better sustainable resource utilization in the long run. Global recognition on the social cost of fishing and collaboration in rectification of the underestimated fishing costs can lessen the problem.
20. However economic instruments are not possible to be exercised on IUU fishing since such fishing are off record. There needs to be measures for the record. For an example resource tax may be applied on fishery product. Improvement in port state control is needed, at least for the sake of record on the catches. A portion of revenue from resource taxes can be allocated to the local authority to induce cooperation in tax administration.
21. Rules of Origin have mainly been for the preference of a lower import duty. They may also be applied on import of fishery products in an attempt to curb IUU fishing. Import of fishery products should have a certificate of its origin. Tax differentiation can be applied. Tax exemption can be given to the import fish and fish products from Legal, Reported, and Regulated fishing. Import duty should be lower for the import with a certification of origin. Escalation tax is still a problem for fishery products. Lower import duty for the product certified as Legal, Reported, and Regulated can be considered.
22. Resource tax can otherwise be collected from export of fish and fish products. As aforementioned cost of fishing is underestimated leading to overfishing in developing countries. Export tax can decrease the price competitiveness of the developing countries in the international market. Nevertheless the tax revenue will be accrue to developing countries while the exporters are forced to realize the social cost of fishing. Export with certificate on legally, reported, and regulated fishing can be exempted from this export tax. Those without the certificate, according to WTO rules may or may not be IUU fishing should be subjected to export tax.
23. The documentation on not being IUU fishing can be complicated and impede the willingness to cooperate among developing countries.
3. WTO CONSISTENT TRANSPARENT AND NON-DISCRIMINATORY TRADE-RELATED MEASURES IN COMBATING IUU FISHING
3.1 WTO Agreement
24. WTO Agreement consists of the Agreement on Establishing the WTO, Agreement on Trade in Goods, General Agreement on Trade in Services, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Dispute Settlement Understanding (DSU), Trade Review Policy Mechanism (TPRM), and Plurilateral Trade Agreements.
25. Agreement on Trade in Goods consists of GATT 1994 and Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS), Textiles and Clothing, Technical Barriers to Trade (TBT), Trade-Related Investment Measures, Antidumping, Customs Valuation, Preshipment Inspection (PSI), Rules of Origin, Import Licensing Procedures, Subsidies and Countervailing Duties, and Safeguards.
26. General Agreement on Tariffs and Trade 1994, known as GATT 1994 comprises of the original GATT 1947 and all rectification, amendments, and modifications as agreed by GATT contracting parties in the Uruguay Round, a set of Understandings in 1994, and the Marrakesh Protocol.
27. GATT objectives are to increase standards of living, ensure full employment, increase real income and effective demand, develop full use of word resources, and expand production and exchange of goods. These objectives are to be fulfilled through the reciprocal and mutually advantageous arrangements among contracting countries to substantially reduce tariffs and other barriers to trade and eliminate discriminatory treatment in international commerce.
28. Important Articles in GATT 1994 are as follows.
29. Article I General Most-Favored-Nation Treatment requires that any advantage favor, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties. According to this article any trade preference given to fish and fish products to curb IUU fishing must be treated equally among WTO contracting countries.
30. Article III National Treatment on Internal Taxation and Regulation requires those imported products not to be subjected to the internal taxes/charges in excess to the like domestic products. Tax differentiation on fish and fish product without a certificate of non-IUU fishing may not be WTO consistent if internally there cannot be a documentation system for like domestic products. It seems to be difficult for developing countries to have an effective fishery regulation and documentation issuance in curbing IUU fishing.
31. Article VI Anti-dumping and Countervailing Duties. Product of one country cannot be introduced to the other country at the price lower that its normal value. Otherwise the importing country may levy anti-dumping duty on any dumped product at a duty rate not greater than the margin of dumping of such product. In case of fish and fish products price may not reflect true cost of fishing. Usually they are underpriced. This is the gain to the importing countries, buying at a cheaper price. As the price is not differentiated between exporting and the importing countries, this low fish price cannot be considered dumping. Nevertheless, the normal value does not reflect social cost of fishing. The import from developing countries is price competitive due to the abundance of fishery resources that can be soon depleted. Question is whether the import duty can be applied to reflect the true cost of fishing, an objective in the opposite direction to anti-dumping but using the same mean.
32. Article XI General Elimination of Quantitative Restriction. Quantitative restriction other than duties/taxes/charges effective through quotas, import or export licenses are not allowed. There are exceptions in three cases. First, in relief of shortages of foodstuffs and essential products; restrictions necessary to the application of standards and regulations for the classification/grading/marketing of commodities in international trade. Second, restrictions on import of agricultural/fishery product necessary for the government enforcement on restriction of the like domestic product, to remove excess a temporary surplus of the like domestic product by making them available free of charge or at a price lower than the current market level. Third, to restrict relatively quantity of animal product dependent on the imported commodity provided that domestic production of that commodity is negligible. Such quantitative restriction must be equally treated on all contracting countries.
33. Article XVI Subsidies. Any maintaining subsidy must be notified to the contracting countries the extent, nature and estimated effect on import/export quantity. In case of any serious prejudice contracting parties and request for discussion on limiting the subsidization. Export subsidy must be avoided and ceased except for primary product. In case of actions to curb IUU fishing, developing countries need positive subsidy to decrease the excess of fishing effort. It should be made clear that such positive subsidy can be allowed.
34. Article XXIV Territorial Application - Frontier Traffic - Customs Unions and Free-trade Areas allows the formation of custom unions or free-trade areas provided that there will not be any additional tariff and non-tariff barrier against the non-member after the formation. APEC has made progress in Fisheries Working Group (FWG). Similar attempts can be found in other RFBs.
3.2 WTO Consistent Trade-related Measures in Combating IUU Fishing in Perspective of Developing Countries
35. In this section, relevant Articles in GATT 1994 and Agreements will be discussed in term of WTO consistent trade-related measures in combating IUU fishing in perspective of developing countries.
3.2.1 GATT 1994
36. Article III National Treatment on Internal Taxation and Regulation paragraph 4 in GATT 1994 requires that there should not be any differentiation between domestic and imported products. Any trade measure applied to import shall be equally applied to like domestic products. Trade-measure actions to curb IUU fishing cannot only be at the importing point. Developing countries can have difficulty in exercising control market stage of industry chain, taking time in developing the control system. Limited capacity in domestic fishery regulation at all stages from post-harvesting to trans-shipment, landing, processing and export in developing countries may not allow an equal treatment
37. Article VIII Fees and Formalities connected with Importation and Exportation of GATT 1994 states in paragraph 1 (c) that The contracting parties also recognize the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements. Ad Article VIII also states ...the production of certificates of origin should only be required to the extent that is strictly indispensable.
38. In the paper AUS:IUU/2000/6 by Kevin Bray, main problems of the IUU fishing in jurisdictions of coastal states are the lack of effective MCS and VMS and the need of additional resources and technical assistance to curb with IUU fishing. In the jurisdictions of RFB proposed main actions to curb IUU are enhancing MCS and penalty on non-compliance, measures affecting markets and profitability, and enhancing flag state control. Trade-related measures deal with those effecting markets and profitability. Two of the proposed measures are implementation of catch documentation/certification schemes and application of forms of control at the market stage of the fishery industry chain. Import ban on fish and fish product from non-compliance IUU fishing has been recommended. At the early stage of adoption, developing countries may have difficulties in satisfying such documentation requirement.
39. Nevertheless there is a need in data recording and reporting for effective fishery management plan. The benefit from adopting such documentation/certification schemes can outweigh the cost of undertaking the action. These actions require formalities on import and export. It cannot be expected that the cost will be indispensable. As mentioned earlier, there are needs for financial and technical assistance among developing countries in taking the actions to curb IUU fishing. Cost of properly regulated fishing will not be low but there is still a trade-off between a higher cost and a more sustainable global fishery utilization.
40. At the regional level in AUS:IUU/2000/6 there is a recommendation on refusal to permit landing and trans-shipment of fish without document of the proper origin. An improvement in port state control is necessary for such measure. Landing ports in developing countries are numerous, scatter, and unsystematic; thus difficult to be effectively controlled. Adoption of this action is still a question for developing countries, especially where fishery has been rapidly developed. Economic instrument may be of some assistance at this point. If resource tax can be applied, fishing vessel with identifiable legal, reported and regulated fishing can have an incentive of a lower tax rate or even be granted an exemption, while those without are subjected to a high penalty rate at every stage of catch utilization. The objective here will not be the government revenue, but to induce the existing vessels to fish legally, report their catch, and be under regulation.
41. The aforementioned actions are mainly dealt with the developing countries. It should be noticed that there must simultaneously be actions on curbing IUU fishing in the high seas. It is necessary that there is an IPOA to mandate an international organization taking actions for high seas fishing, turning the open access high seas to be a property of all the nations. IUU fishing in the high seas can lead to undesirable activities in port states of the developing countries.
42. Article X Publication and Administration of Trade Regulations requires that ...no measure imposing restriction on imports shall be enforced before such measure has been officially published...Each country shall administer a uniform, impartial and reasonable manner on all its law, regulations, decisions and rulings. Problem of developing countries lies in the uniform manner on trade regulation in import ban on IUU fishing commodities. Existing infrastructure may impede fulfillment of such requirement on the uniformity.
43. Article XI General Elimination of Quantitative Restrictions does not allow import and export restrictions other than duties, taxes, or other charges.
44. Article XIII Non-discriminatory Administration of Quantitative Restrictions prohibits discriminatory quantitative restriction. According to Articles XI and XIII, import ban on fish and fish products from IUU fishing may not be allowed unless there is a proof that such imports have detrimental impact on fishery resource conservation and management. Once there is a proof that they are catches from IUU fishing, the general exemption in Article XX (g) is applicable. Certificate of origin may be required. For developing countries, lack of effective fishery regulation makes difficult issuance of such certificate.
45. Article XX General Exceptions of GATT 1994 states that 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 or enforcement by any contracting party of measures: ... (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;...
46. The exception in Article XX allows the adoption of IPOA to take measures in combating IUU fishing for the sake of conservation on exhaustible fishery resources. Nevertheless the undertaken measures must be made effective for the imported fish and fish products as well as those domestic ones. It should be noticed that the lack of effective fishery regulation in developing countries might be a hindrance.
47. Combating IUU fishing is an attempt to conserve and manage fishery resources for sustainable utilization. It must be applied to the domestic as well as foreign production and consumption. Discrimination may exist due to different capacity in fishery management, but they will not be discriminated between countries of the same condition. Developing countries may take longer time in building up their capacity in effective fishery management as well as in establishing necessary infrastructure. Eventually the measures adopted to combat IUU fishing will more or less become global one. As long as not being disguised trade barriers, enforcement of actions to curb IUU fishing should be acceptable.
48. Resource tax on fishing is an internal tax to be collected by the coastal states to reflect social cost of fishing. It is WTO consistent. With the higher fishing cost, fishing effort is expected to be lower as the net margin has been decreased. Nevertheless without effective MCS there can be IUU fishing avoiding this tax payment. Record of catches from the point of harvest, trans-shipment, landing, processing, and export must be available to take measures in combating IUU fishing.
3.2.2 Agreement on Technical Barriers to Trade
49. In order to make sure that the actions to curb IUU fishing are not disguised trade barriers, according to Agreement on Technical Barriers to Trade constraints of the developing countries in conforming to the international technical regulations and standards on combating IUU fishing should be recognized.
50. Article 11 of this Agreement provided Technical Assistance to Other Members. Developing countries shall be advised on the preparation on actions to curb with IUU fishing and granted technical assistance on request.
51. Article 12 Special and Differential Treatment of Developing Country requires contracting countries to provide differential and more favorable treatment to developing countries taking into account the special development, financial and trade needs. Actions to curb IUU fishing should not create unnecessary obstacles to export from developing countries. This implies the collaboration including the assistance in fishery regulation capacity building for the developing countries. There should be international body and international system in curbing IUU fishing, taking into account the special problems of the developing countries. The trade-related international actions on combating IUU fishing may not be taken into effect until developing countries capability in fishery regulation has been improved to a satisfactory level.
3.2.3 Agreement on Preshipment Inspection
52. This Agreement allows preshipment inspection activities in exporting country. It can be applied for the inspection on catch from IUU fishing. It is important that such preshipment inspection be non-discriminated and transparent. The exporting country can issue Clean Report of Findings to certify that the export is free from IUU fishing. Such preshipment inspection can be useful for recording and reporting on the catch flow. It would be a benefit if developing country can adopt the preshipment inspection, in addition the practice on HACCP and adoption of the competent authority scheme. IPOA can take into account the assistance from developed country and international organization like FAO in building up this capability among developing countries.
3.2.4 Agreement on Rules of Origin
53. As defined in this Agreement rules of origins are those laws, regulations and administrative determinations of general application applied by any member to determine the country of origin of goods provided such rules of origin are not related to contractual or autonomous trade regimes leading to the granting of tariff preferences going beyond the application of paragraph 1 of Article I of GATT 1994. They are addressed for the use of non-preferential commercial policy instrument including MFN treatment, anti-dumping and countervailing duties, safeguard measures, marking origin, and discriminatory quantitative restrictions or tariff quota.
54. Rules of origin may as well be applied in employing the scheme of certificate of origin for curbing IUU fishing. IPOA should take into account the harmonization of the rules. They have to be applied equally in a clear objective to curb IUU fishing.
55. In order not being a disguised trade barrier, this scheme of certificate of origin should not create restrictive, distorting or disruptive effects on international trade. Developing countries have to be capable in administering such scheme. Without the effective internal fishery regulation, such administration can be problems. It is required that the rules of origin will be applied equally for imports, exports and domestic products. Nevertheless provided the assistance and political will for a better fishery conservation and management, this scheme is useful for curbing IUU fishing, from the national jurisdiction of the developing countries to a greater scope of RFB jurisdiction and the high seas.
56. The problem is even more complicated for the multi-species, multi-gear fishery in the developing country tropics. The harmonization of scheme of certificate of origin in lack of capability in developing countries can bring about trade distortion and adverse impact on their international trade.
57. WTO established a Committee on Rules of Origin to consult on matters relating the application of the rules of origin. There is also a Technical Committee on Rules of Origin under the Custom Co-operation Council. IPOA for combating IUU fishing should collaborate with this committee in its work plan on scheme of certificate of origin.
58. It is possible that the control market stage of industry chain for fish and fish products be developed in conjunction to the scheme of certificate of origin. WTO Technical Committee has already been working on product sector basis. Products are classified into three groups: wholly obtained and minimal operations or process, substantial transformation - change in tariff classification, and substantial transformation - supplementary criteria.
3.2.5 Agreement on Import Licensing Procedures
59. In case of import ban and/or differential treatment on fish and fish products from IUU fishing, import licensing may be employed for fish and fish products. According to paragraph 4 of Article 1 in this Agreement, rules and all concerning information on procedures for submission of the application, the administrative body (not more than 3), and the lists of products subject to licensing requirement must be published, at least 21 days prior to the effective date. The import licensing procedures shall be neutral, fair and equitable. Problem of developing countries is the competency is issuing the license in relevance with curbing IUU fishing. Without an acceptable internal fishery regulation, this trade measure may not be possible for developing countries, though it is possible for the developed countries. Import licensing or any similar scheme can be disguised trade barrier if it is adopted in IPOA.
3.2.6 Agreement on Subsidies and Countervailing Measures
60. Subsidies in curbing IUU fishing should be exempted from those subsidy definition in Article 1 of this Agreement on the basis on Article XX (g) in GATT 1994. Capacity building to strengthening capability in fishery management among developing countries is a key for success of curbing IUU fishing. Technical and financial assistance on building such capacity is a requirement. Such subsidy should be made WTO consistent.
61. Positive subsidy aimed at reducing excessive capacity in fishing sector should be allowed. It will lead to fishery resource rehabilitation, a conservation of exhaustible fishery resources.
62. Usual subsidy in fishing sector has been decreasing. This is a negative subsidy which should not be allowed. Developing countries rarely use such subsidy. In the long run this subsidy will lead to depletion in fishery resources and higher fishing cost. If abolished, fishing effort may be decreased. Together with the positive subsidy in relocating the effort out of fishing sector, fish trade can be increased due to lower supply in that country while demand for fish is still strong.
63. Two main problems of fish and fish products are depletion in fishery resources and fishing access in other coastal states and RFBs jurisdictions including the high seas. Main importing countries at present are also main fishing countries. They turn to import since their fishing grounds have been depleted resulting in a high fishing cost. These countries have the interests in fishing access in the fishing ground oh the other country jurisdictions.
64. Fishery resources can migrate and do not necessary be in any specific jurisdiction. Overfishing in one coastal state jurisdiction can impact on others. Fishery resource management and fish trade is closely related. Fish trade liberalization can lead to overfishing and fishery resource depletion in lack of an international fishery resource management.
65. Developing countries have limited capacity in fishing access to other jurisdictions and still have difficulties in efficient fishery resource management. Building capability of developing countries in fishery regulation to combat IUU fishing is a priori requirement, right from their jurisdictions.
66. A separate group for negotiation in fish and fish products can be useful in WTO forum as proposed by Japan and Korea. Interested parties can be those net fish exporters who are interested in fish trade liberalization, developing countries who have abundant fishery resources and are potential fish exporters once the capability has been developed, and developed countries who practice distant fishing and are impact from overfishing.
67. Negotiation on fish trade alone seems not to be much interested among the main contracting parties of WTO. Actually fish trade tends to be more liberal due to limited fishery resources. It is noted that most of import duties on frozen products have already been low, reflecting the need of importing raw materials. Nevertheless tax escalation is still a problem for fish products. A separate group for negotiation on fish and fish products can be made possible on the basis of conservation and management on depleting fishery resources for sustainable utilization and fishing access. Combating IUU fishing has an important implication.
68. Tax escalation in fish products is a problem in fish trade. Under the condition of degraded fishery resources, fish processing should be at its best efficiency in order to minimize loss from the harvests. Developing countries who still have abundant fishery resources have a potential in fish processing and export. Nevertheless such trade liberalization can negatively impact fishery resource abundance. Fishery resources exploitation should be at the optimum sustainable level. Action in curbing IUU fishing is a necessity in prevention on any adverse impact from fish trade liberalization on fishery resource abundance.
69. Nevertheless IUU fishing should be clearly defined and identifiable. Any trade-related measure to be employed in curbing IUU fishing has to be equally treated, for import as well as like domestic products. Lack of effective fishery regulation in developing countries can impede the equal treatment. Certification on non-IUU fishing can be difficult to be adopted among some developing countries due to lack of MCS. Absence of this certification cannot be the proof of IUU fishing. Proof of IUU fishing is required for any trade restriction on IUU fishing products.
70. Unless being equally effective in fishery regulation, trade-related measures in curbing IUU fishing may not be WTO consistent in perspective of developing countries.
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