COFI/2003/8

SUMMARY

This document reports on the conclusions and recommendations reached by the FAO Expert Consultation on Identifying, Assessing and Reporting on Subsidies in the Fishing Industry. The full report is available as document COFI/2003/Inf.12. The Committee is invited to consider the conclusions and recommendations of the Expert Consultation and to advise on whether or not a governmental meeting should be convened to consider subsidies in the fishing industry.

INTRODUCTION

1. During its Twenty-fourth session, the FAO Committee on Fisheries recommended that the Fisheries Department continue its work on subsidies, inter alia by holding an expert consultation, followed by a government consultation. The Committee also suggested that the Fisheries Department work to assess the qualitative and quantitative effects of subsidies.

2. In view of these suggestions the Fisheries Department has undertaken work aiming to develop procedures that would make it possible to evaluate empirically the impact of subsidies on environment, trade, economic development, etc. However, this is a complex task. The Fisheries Department, therefore, decided to divide it into two phases. The first phase would involve identifying subsidies and assessing their costs to the provider and their value to the recipient. This is a prerequisite for the second step. Without the information generated by the first, it would not be possible to determine how the recipients' activities have been modified because of the subsidies and then to evaluate the impact of that modified behaviour on the environment, on trade, on economic development, etc.

3. The first phase has been almost completed. A procedure has been developed for identifying subsidies and for assessing their costs to the provider (generally governments) and their value to recipients (in the fishing industry). The procedure is documented as a "Guide for identifying, assessing and reporting on subsidies in the fisheries sector " (the Guide)¹.

4. The Guide is global in scope. It can be used to identify, assess and report on subsidies in all the sub-sectors of the fishing industry, including fish processing, trade and aquaculture. It is also global in its technical scope. In line with the recommendations of the FAO Expert Consultation on Economic Incentives and Responsible Fisheries (Rome, 28 November - 1 December 2000), the Guide deals with all types of subsidies, from those that are easy to quantify, to those that are quite difficult to assess with respect to their costs to the provider, as well as in determing the value to the recipient.
5. However, the Guide is not normative in respect of subsidies. While it provides guidance for assessing the costs to the provider and the benefits to the recipient, it provides no methodologies for evaluating whether subsidies have impacts on social, economic, environmental, trade or other characteristics of the economies in which they are used. The information generated by the Guide must be further evaluated - and complemented by other types of information - before judgements about impact can be made. The generation of such information and its analysis could be the focus for the next phase of the Fisheries Department's work on fishery subsidies.

THE EXPERT CONSULTATION

6. The FAO Expert Consultation on Identifying, Assessing and Reporting on Subsidies in the Fishing Industry was held at FAO Headquarters, from 3 to 6 December 2002². Fourteen experts from fourteen countries participated.
7. The Expert Consultation conducted a two-day review of the Guide. The experts reviewed inter alia the classification of subsidies and their assessement, and discussed how realistic it would be to base international comparisons on the information generated by the Guide. The Consultation concluded that the Guide was an excellent piece of work, and found that with some minor modifications - which now would be made - it was ready for use. However, it recognized that the various ratios proposed in the Guide would need further work before they could be used as a basis for international comparisons.
8. The Expert Consultation strongly suggested that FAO supports the use of the Guide, and also that it undertakes work aiming to improve the guidance given in respect of how to assess inter alia subsidies that: (i) have both long term and short term effects; (ii) may occur as a consequence of government inactions; and (iii) may be linked to resource pricing.
9. After having completed the review of the Guide, the Expert Consultation discussed on how the second phase of the work should be undertaken. It considered the possibility of applying a `check-list' approach as a means to undertake this work. It concluded, however, that although a check-list might have some merit as means to identify "important" subsidies, it was unlikely that a check-list could be developed to the point where it would substitute for analysis of the impacts of the modified behaviour of fishing enterprises, sparked by subsidies.
10. The Expert Consultation strongly suggested that FAO undertake analytical work on impacts. Moreover, the experts also provided some general advise on how such work could be done, emphasizing the usefulness of undertaking this work mainly by applying known analytical methods to concrete subsidy examples.

SUGGESTED ACTION BY THE COMMITTEE

11. The Committee is invited to review the conclusions and recommendations of the Expert Consultation and to provide guidance with regard to the direction and scope of future work. In addition the Committee is requested to consider whether or not the Fisheries Department should organize a governmental meeting (a "Technical Consultation" in FAO terminology) on the subject of subsidies in the fishery industry - as suggested by the Committee two years ago.

¹ The Guide is reproduced as appendix E in document COFI/2003/Inf.12.

² The Report of the Expert Consultation is available as COFI document COFI/2003/Inf.12