News : WTO could net fishing deal, envoy says

Tuesday, February 20, 2024

WTO could net fishing deal, envoy says

Feb 20, 2024

With help from Doug Palmer and Camille Gijs

QUICK FIX

— Iceland’s ambassador to the WTO said economies could agree on a resolution to curb harmful fishing subsidies next week, leaving several contentious disputes unresolved ahead of the 13th Ministerial Conference from Feb. 26-29 in the United Arab Emirates.

— Also at the WTO, the European Union wants to coordinate work on industrial subsidies on the heels of Washington’s Inflation Reduction Act, which sought to spur investment in green energy.

— The U.S. awarded a New York-based chipmaker $1.5 billion as the Biden administration moves to boost domestic chip production, the Commerce Department said.

It’s Tuesday, Feb. 20. Welcome to Morning Trade! I don’t know about you, but I’m adopting Sweden’s foreign policy position when it comes to the great Squishmallows and Build-A-Bear wars of 2024. That’s got to be the most cuddly legal battle of this generation.

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Driving the day

A man phones with his mobile while entering the World Trade Organization headquarters in Geneva.

A man phones with his mobile while entering the World Trade Organization headquarters in Geneva on April 12, 2022. | Fabrice Coffrini/AFP via Getty Images

NEW WTO FISH DEAL WITHIN REACH: World Trade Organization members could agree next week on a second, more comprehensive agreement to curb harmful fishing subsidies, the head of the negotiations said on Monday.

“We have really narrowed things down,” Iceland’s Ambassador to the WTO, Einar Gunnarsson, told reporters during a briefing on the latest draft text. “I believe that we have every possibility to deliver a meaningful outcome and bring these very long-running fisheries subsidies negotiations to a close at last.”

Still, that means trade ministers will have to resolve a handful of tough remaining issues at the WTO’s 13th Ministerial Conference, which starts next Monday in Abu Dhabi in the United Arab Emirates. Those include:

— How to discipline certain subsidies for distant water fishing.

— Which developing countries would, along with the WTO’s Least-Developed Country members, be exempt from subsidy cuts under the agreement.

— What is the length of the transition period for non-exempt developing country members to meet any subsidy cuts required by the agreement.

— Whether to exempt subsidies granted for small-scale or “artisanal” fishing within 12 miles of a country’s baseline, or within 200 miles.

— How to treat any large industrialized fishing nation such as China that officially is a developing country, but is not claiming developing country status under the pact.

— How to handle the U.S. demand for a provision requiring increased transparency around the use of forced labor in the seafood sector.

— What to do about certain fuel subsidies that are not specifically targeted at the fishing sector, but still benefit vessel operators.

Gunnarsson goes into further detail in a note to members on the draft text.

No dispute settlement deal: It’s increasingly clear that no final agreement on reforming the WTO’s dispute settlement system is expected. That leaves the fishing agreement as the biggest new deliverable that could come out of the meeting, as well as a possible extension of the nearly 26-year-old moratorium on e-commerce tariffs.

WTO CHIEF UNDECIDED ON SECOND TERM: In the rush to prepare for MC13, current WTO Director-General Ngozi Okonjo-Iweala said she hasn’t stopped to think about whether to run for a second term when her first term expires in August 2025.

“This thought hasn’t even crossed my mind,” the WTO chief told our Brussels colleague Camille Gijs in an interview on Monday. Read more here on her expectations ahead of MC13.

MC13 draft documents drop: Draft documents for the ministerial landed over the long weekend. Click here to see them, although most of the closely watched topics are still empty, including how to handle India’s demand for a permanent solution on public stockholding.

BRUSSELS CORNER

European flags are pictured outside the Berlaymont.

European flags are pictured outside the Berlaymont which houses the headquarters of the European Commission, the executive branch of the European Union, on April 18, 2023. | James Arthur Gekiere/AFP via Getty Images

EU WANTS TO PUT INDUSTRIAL SUBSIDIES ON WTO TABLE: Still stunned by Washington’s Inflation Reduction Act, the European Union wants to coordinate work on industrial subsidies at the World Trade Organization, a senior Commission official said.

“We have an interest in seeing what can be done to contain the subsidy races, what can be done to try to develop a more modern and updated framework of rules,” said Ignacio García Bercero, director for multilateral affairs at the European Commission’s Directorate General for Trade.

Remind me: U.S. President Joe Biden’s Inflation Reduction Act in 2022 has sought to spur investment in homegrown green energy, sparking concerns of discrimination against foreign – and European – suppliers. In 2020, Brussels agreed with the U.S. and Japan on ways to improve the WTO rules against harmful subsidies, but there has been little progress.

“You can also understand why this generates concerns in Europe,” García Bercero told his American counterpart, Greg Burton, in charge of economic affairs at the U.S. mission in Brussels. “Apart from the economic impact per country, it raises a more fundamental question: Why should the European Union stick to the rules when others don’t?”

Washington’s response: On the critical minerals agreement, “the discussions between the U.S. and EU have not been closed, the door remains open,” said Burton. “So I wouldn't agree with your characterization of ‘refused’ … That is still a discussion.”

U.S. UNVEILS $1.5 BILLION FOR CHIPMAKER: The U.S. announced a preliminary CHIPS award of $1.5 billion to New York-based chipmaker GlobalFoundries on Monday, as part of the Biden administration’s plan to strengthen the domestic supply chain.

The funding aims to bolster GlobalFoundries, the world's third-largest contract chipmaker. The award is expected to support projects that will create more than 10,000 jobs and includes $10 million for workforce development, according to the Commerce Department.

“I wrote my CHIPS and Science law with upstate New York as my North Star,” said Senate Majority Leader Chuck Schumer, who sponsored the act, per Christine Mui.

Legacy issue: The GlobalFoundries fabs getting funding all make legacy semiconductors, those produced using older processes but key to the defense, consumer electronics and automotive industries.

COMPETITION CORNER

CHINA URGES AGAINST WESTERN DECOUPLING: Chinese Foreign Minister Wang Yi warned the world's second-largest economy can't be sliced out of world trade during an appearance at the Munich Security Conference, writes Joshua Posaner.

"Those who attempt to shut China out in the name of de-risking will make a historical mistake,” Wang said in Munich, adding that the U.S. should remove its “illegal unilateral sanctions,” according to a statement.

On forced labor: Wang reiterated China's rejection of accusations of forced labor in the Western Xinjiang region. He spoke of “fabricated information from different parties” with the aim “to stop the development of China.”

TRUDEAU WANTS END TO LUMBER SPAT: Prime Minister Justin Trudeau suggested the ongoing feud over Canadian softwood lumber does nothing to help America’s housing affordability crisis, speaking in front of a Winnipeg business audience on Friday.

But the dispute is “almost impossible” for any president to solve because the American lumber lobby is “extremely influential” in Washington, Trudeau said.

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International Overnight

— Conflict in the Red Sea continues to disrupt global trade, according to a DataPoint from Paroma Soni.

— President Joe Biden plans to host Kenyan president William Ruto for a state visit in late May to discuss ways to bolster trade and investment among other issues, the White House announced.

— USTR Katherine Tai on Friday suggested the growing U.S. agricultural trade deficit was due more to the strong U.S. dollar than the failure to open new markets, Doug writes.

— The U.S. and Mexico announced the successful resolution of a rapid response mechanism labor matter at Asiaway Automotive Components Mexico in San Luis Potosí.

— Tai will travel to Honolulu on Thursday, her office said. She and Sen. Mazie Hirono (D-Hawaii) “will participate [in] a small business roundtable discussion.”

— The U.S. asked Mexico to review if workers at an RV Fresh Foods facility in Michoacán are being denied the right to freedom of association and collective bargaining, USTR said.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com, gbade@politico.com and ahawkins@politico.com. Follow us @POLITICOPro and @Morning_Trade.