WTO Ministerial Section • Volume 7 • Number 23 • 25th June 2003

Rules: New ‘friends of anti-dumping’ proposals; Chile submission on fisheries subsidies

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The WTO Negotiating Group on Rules met from 18-19 June to consider a number of submissions on issues related to anti-dumping, subsidies and countervailing measures. On fisheries subsidies, delegates addressed a new submission by Chile.

Chile submission on fisheries subsidies

Chile — a member of the "Friends of Fish" group, which also includes the US, Argentina, Iceland, New Zealand, Norway and Peru — presented a new proposal on possible approaches to improved disciplines on fisheries subsidies (TN/RL/W/115, searchable at http://docsonline.wto.org). The paper identifies fisheries resources as a classic example of the ‘tragedy of the commons,’ and observes that fisheries subsidies act as a barrier to trade to non-subsidising countries, as these countries cannot participate in the exploitation of shared, and sometimes their own, fishery resources on equal terms. The subsidisation of fleets, allowing them to exploit fish stocks under pressure, also has a negative impact on conservation measures but into place by other WTO Members.

To address these problems, and considering submissions previously made by the US (see BRIDGES Weekly, 26 March 2003) and the EU (see BRIDGES Weekly, 14 May 2003), the paper outlines a "red box" of banned fisheries subsidies, and an "amber box" of subsidies that would be allowed as long as notification requirements were fulfilled. The "red box" would include all subsidies that promote overcapacity and overfishing, such as subsidies to: transfer a country’s ships to the high seas or the local waters of another country; purchase new or used ships; modernise the fleet; and reduce the costs of production factors. Subsidies in the form of positive discrimination in tax treatment or access to credit would also be banned.

The "amber box" would include all other subsidies, not causing injury to other Members, and duly notified. These subsidies would include social subsidies designed to assist small-scale fisheries and coastal communities, and to improve fisheries management to ensure the sustainability of the fisheries. On the notification scheme for the "amber box" subsidies, the paper outlines issues for discussion. First, notifications under the WTO should be complementary with existing schemes under, e.g. the FAO. Second, notification should be mandatory, and as a third point, Chile supported the EU proposal for a scoreboard of notifications made publicly available.

During the Negotiating Group meeting, members of the "Friends of Fish" group supported the proposal from Chile, and Members briefly discussed technical details related to the notification requirement. Japan and Korea, who the Friends of Fish say provide their fishing fleets with substantial capacity-linked subsidies, retained a cautious stance.

New "Friends" papers on anti-dumping

During the Negotiating Group meeting, a group of "Friends of Anti- Dumping Negotiations" — that want to change WTO rules to prevent abuse of anti-dumping measures and burdensome or unnecessary investigations — submitted three proposals on improving the WTO Anti-dumping Agreement. The first "Friends" proposal (TN/RL/W/113), presented by Japan, was on the prohibition of ‘zeroing’ in the calculation of dumping margins. When dumping margins are calculated, zeroing refers to an approach that ignores sales made above the home market price, making the dumping margins higher — and allowing for higher anti-dumping duties to be imposed. The US, which makes use of the zeroing practice, stressed that zeroing should be dealt with in negotiations, not in dispute settlement, referring to a case initiated by the EU against the US in this regard.

The second proposal (TN/RL/W/118), presented by Chile, focussed on price undertakings, encouraging their use as a formal alternative to anti- dumping duties. Price undertakings are less disruptive measures than anti-dumping duties, requiring exporters to raise their export prices to eliminate the harmful effect of dumping. The US expressed concern that price undertakings might be imposed when a party had not chosen this alternative over anti-dumping remedies.

The third proposal, on lesser duty (TN/RL/W/119), focussed on the need to make a mandatory rule banning the anti-dumping duty to exceed what is needed to remove the injury to the domestic industry. The US stressed that such an approach did not reflect the increased burden to parties, including submission of data. Australia and the EU supported the "Friends" proposal, and noted that they use the lesser duty approach. The Negotiating Group also discussed several other anti- dumping proposals and responses to requests for clarification of previous proposals. The US made a proposal on "Further Issues Identified under the Anti-Dumping and Subsidies Agreements for Discussion by the Negotiating Group on Rules," bringing its total number of submissions in this area close to 30.

The next, and final meeting pre-Cancun of the Negotiating Group on Rules, will be held from 21-23 July. An informal meeting is taking place on 25 June to consider the Chair’s report to Cancun on the status of discussions. The Trade Negotiations Committee will consider this report on 14 July.

ICTSD reporting.