   
  
TN/RL/GEN/201  
 
7 October 2019 
(19-6471) Page: 1/1 
Negotiating Group on Rules  Original: English  
 
PROHIBITING SUBSIDIE S TO FISHING VESSELS  NOT FLYING THE MEMB ER'S FLAG  
Submission of Argentina, Australia , New Zealand, the United  States , and Uruguay  
The following communication, dated 7 October 2019, is being circulated at the request of the 
delegations of Argentina, Australia, New Zealand, the United  States and Uruguay.  
 
_______________  
 
Members appear to broadly converge around the need to address subsidies for industrial fishing, 
and to prohibit subsidies contributing to illegal, unreported , and unregulated (IUU) fishing. One area 
that Members have yet to address explicitly, that is linked to both industrial fishing and IUU fishing 
activity, is the impact that subsidies can have on fishing activity by vessels that are owned by 
nationals of a  WTO Member but are not flying the subsidizing Member 's flag. The well -documented 
practice of registering and fishing under a Flag of Convenience (FOC), combined with the practice of 
flag-hopping between FOCs, enables fishing vessels to evade monitoring, c ontrol, and surveillance 
measures by flag states and regional fisheries management organizations (RFMOs) and to engage 
in IUU fishing and overfishing. Fleets also use FOCs to flag to countries that have little capacity or 
ability to exercise adequate contr ol over distant fishing activity, creating an enabling environment 
for IUU fishing and other harmful fishing activity.  
A prohibition on subsidies to vessels that are not flying the flag of the subsidizing WTO Member 
could have far -reaching beneficial impac ts. The majority of companies employing FOCs are located 
in countries that collectively also have the largest distant water fleets fishing across the globe; 
removing subsidies to the estimated 15% of fishing vessels flying a FOC or listed as "flag unknown"  
would remove artificial distortions and potentially harmful incentives currently affecting the fishing 
economy. Banning subsidies to vessels not flying the subsidizing WTO Member 's flag would also 
place responsibility for fishing activity firmly back in t he jurisdiction of the subsidizing Member, and 
enable WTO Members to contribute to the enforcement, legal, and prosecutorial tools available to 
counter illegal fishing activity. A prohibition on subsidies to vessels not flying the subsidizing WTO 
Member 's flag would complement other prohibitions, particularly the proposal to prohibit subsidies 
contingent upon fishing in areas beyond national jurisdiction (RD/TN/RL/91/Rev.1).  
We also note that the issue of reflagging has been raised in these negotiations pre viously, including 
most recently in Japan 's paper (RD/TN/RL/99, para. 5), and text is included in the "Scope" section 
of RL/274/Rev.6: "Article 2.3 [For the purposes of this instrument, a subsidy shall be attributable to 
the Member granting it, regardless of the flag of the vessel involved [benefitting from the subsidy] 
[or the application of rules of origin to the fish involved.]]"  
Proposed Text:  
 
X. No Member shall grant or maintain any of the following subsidies within the meaning 
of Article 1.1 of the S CM Agreement that are specific within the meaning of Article 2 of 
the SCM Agreement:  
   
[…..]  
 
X.X Subsidies for a vessel not flying the flag of the subsidizing Member.  
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