WTO Members recognized very early on in the CTE that one of the principal ways in which the WTO could contribute to environmental protection would be through the removal of environmentally harmful trade distortions. In this context, the CTE took up the issue of fisheries subsidies, which after a number of years culminated in the launch of negotiations, as part of the DDA, to “clarify and improve” the WTO rules concerning such subsidies. The demand for the negotiating mandate arose from the conjunction of a high level of subsidization of the sector (estimated at up to 20 per cent of total sectoral revenues), and the depletion of many world fish stocks (with FAO estimating that 75 per cent of world fish stocks are fully — or over —exploited).

Demandeurs argue that subsidization has contributed to structural overcapacity in the sector, as well as overfishing, by reducing the cost of fishing, with the result that too many boats are chasing too few fish. Other participants in the negotiation counter that the factor that determines whether subsidization contributes to overcapacity and overfishing is the adequacy of the fisheries management system that is in place. Ministers at Hong Kong, noting broad agreement among participants to strengthen disciplines, including through a prohibition of certain subsidies contributing to overcapacity and overfishing, called on the participants to intensify their work in this area, taking into account the importance of the fisheries sector to developing Members. Proposals under consideration range from a broad ban of most subsidies to the fisheries sector (including certain downstream activities), subject to specified exceptions; to prohibition of certain listed subsidies, if those subsidies do not meet specified conditions as to management and capacity parameters; and other proposals in between. Within the various proposed general frameworks, participants are discussing a variety of proposals for special and differential treatment for developing Members. In their analysis of the proposals on the table, participants are taking up a number of technical issues related to enforcement of the proposed disciplines, including transparency, surveillance and dispute settlement, and the degree to which WTO rules on fisheries subsidies should incorporate environmental as well as commercial elements.