Vessels with flags of all shapes and colors sail in Svalbard waters chasing cod. For a long time, this went on with hardly any friction at all. However, when Great Britain left the EU, the fight over fishing rights around Svalbard resurfaced.

Norwegian authorities argue that the Svalbard Treaty only applies in the 12 Nautic miles from land zone, and that further out, the Law of the Sea applies, granting Norway sovereign rights.

In 1975, coastal states were granted the right to a 200 miles exclusive economic zone. When Norway requested support from its allies to create such a zone around Svalbard, it faced resistance.

In 1977, Norway chose to establish a fisheries protection zone around Svalbard with quotas granted to countries that had historically fished in these waters. This was to avoid conflict with other states about the interpretation of the Svalbard Treaty applied to the ocean areas.

“This has worked for a long time, however, today we risk conflict. Brexit ripped open old wounds”, says Professor Geir Ulfstein at the Institute of Public Law at the University of Oslo.

May cause trouble on land

Following Brexit, the EU and Great Britain divided the historic EU quota amongst themselves. Following on from this, the EU made it clear that it is of the opinion that the Svalbard Treaty applies in the 200 miles’ zone off the coast of Svalbard.

The understanding that the treaty partners may set their own quotas for fisheries if Norway does not provide equal treatment in the fisheries protection zone opens up a risky play about Svalbard, argue Geir Ulfstein, Tore Henriksen and Alf Håkon Hoel in an article published on Rett24.no.

“Then the implication will be that every time other states disagree with quotas, they can set their own quotas. And if all countries are to set their own quotas, that would be a recipe for chaos, over-fishing and depletion of the fish stock”, Geir Ulfstein says to High North News.

Can the cod issue with the EU have consequences for the Svalbard Treaty too?

“It may have consequences for the treaty itself. In this conflict, it is all about fish qoutas, however, if the EU and other countries argue that Norway alone cannot set the quotas, that can be considered a threat against sovereignty over the archipelago too. A signal that one does not accept Norwegian regulations, that one does not agree with Norwegian regulations, one can do as one pleases. That would be a worst-case scenario. It is currently only about fisheries in the 200 miles’ zone around Svalbard”, Ulfstein responds.

If Norway has dreaded conflict regarding the ocean around Svalbard, why then did the authorities chose to disregard the cod quota about which the EU and Great Britain agreed?

“That is probably a question of whether or not Norway had a choice, as the EU and Great Britain were operating on their own. So far, the conflict only applies to the EU as nothing has come from Great Britain yet. The Norwegian line is based on historic fisheries and still applies to the countries that remain”, Ulfstein explains.

All about respect

State Secretary Eivind Vad Petersson at the Norwegian Ministry of Foreign Affairs says the cod conflicts is about respecting Norwegian sovereign rights and Norway’s right to regulate in Norwegian areas.

“The Svalbard Treaty does not regulate fisheries in the fish protection zone around Svalbard. When the EU has granted itself quotas in the fish protection zone all of its own, that is a violation of Norway’s sovereign rights according to the UN Law of the Seas”, he says.

After the cod conflict, the EU has also criticized Norway and Russia for grating more cod quotas in their joint areas in the Barents Sea than what is sustainable, despite the Norwegian-Russian governance being based on scientific advice from the International Council on Marine Research.

The State Secretary says the cod stock in the Barents Sea is one of the world’s best governed fish stocks in the world.

“The EU approach undermines responsible resource management. It serves no one in the longer term, nor the EU”, Petersson says.

Crowbar

Nils Kristian Sørheim Nilsen is Director of the North Norway European Office in Brussels.

He says there is much that goes to indicate that the EU wants to test jurisdiction around the Svalbard Treaty. At the same time, this is quite likely a political game from the EU’s side. Great Britain takes its quota with it when leaving the EU, and the EU has a too large fishing fleet and too small quotas for starters.

“At the end of the day, Norway regulates fisheries in the protection zone”

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The United States, along with allies and partners, imposed sanctions and export restrictions following Russia’s annexation of Crimea, its election interference, and attempts on the lives of regime opponents. The sanctions are likely to be a topic of discussion during President Joe Biden’s summit with his Russian counterpart Vladimir Putin on June 16 in Geneva.

To mitigate the impact of the sanctions, Moscow pursued a policy of import substitutionto offset losing access to vital components for its civilian and military manufacturing sectors. For instance, Russia was reliant on Ukrainian manufacturers like Motor Sich and Zorya-Mashproekt for marine and aircraft engines. These companies not only provided key inputs for Russia’s own military capabilities, but also for those systems that Russia exported to other nations.

Russia’s attempts to substitute domestic production for previously imported technologies have been delayed and in many cases have fallen short. The main problem with Russia’s import substitution program is its inability to acquire high-tech machine tools (PDF)from Western suppliers for industrial production.

Subsidiaries of Russia’s United Engine Corporation (UEC) pursued development of advanced marine engines to replace those previously imported from Zorya-Mashproekt but have faced various difficulties. Many of these issues are symptoms of larger problems in the Russian military-industrial complex. For example, Moscow made the decision to write-off debt held by UEC, United Aircraft Corporation, and United Shipbuilding Corporation as a result of years of financial issues and mismanagement. The extent to which the Russian government can continue to prop up the defense industrial base is not clear. Putin has stated recently that renationalization of the industry is one possible path the government could pursue.

What is clear is that the termination of the Russian defense industrial relationship with Ukraine has had cascading effects for Russia’s arms exports. Russia was negotiating deals with both India and Vietnam to export naval vessels, but both prospective sales have encountered problems. In the case of Vietnam, negotiations are currently stalled for lack of engines. India, in contrast, had to acquire marine engines directly from Ukraine in early 2021, separate from Russia, for installation on the vessels. India has separately pursued joint production of marine turbine engines with Rolls-Royce. These workarounds do not bode well for future Russian arms sales.

Recently, Russian officials announced that production for a civil aircraft had been stalled due to Western sanctions. Russia has also used its intelligence services to assist in the pursuit of aircraft engine development. In April, the FBI added an intelligence officer for Russia’s Foreign Intelligence Service, who was working as a UEC executive, to its most-wanted list for allegedly conspiring to steal trade secrets from a Western aerospace company.

Further harming Russian aircraft development and production is the rise of China’s defense industry. Increasingly, China has transitioned from, and even replaced, Russian engines with its own domestically-built ones. The rise of China and other new competitors in the international arms market may challenge Russia’s transition to greater indigenous production because its military-industrial complex partially relies on export orders to sustain itself.

Russia tried to address its engine production challenge by purchasing a Norwegian marine engine facility. For a variety of reasons, Norway’s Ministry of Justice and Public Security announcedin March that it had blocked the sale of Bergen Engines, which produces and maintains marine engines for Norwegian intelligence vessels. The Norwegian facility has been owned by Rolls-Royce for years, but it has struggled to turn a profit. Importantly, the international conglomerate seeking to buy the Norwegian facility was Russia’s Transmashholding, which is not a sanctioned entity like UEC. It is listed neither on the Office of Foreign Asset Control’s Specially Designated Nationals nor its Sectoral Sanctions Identifications List (PDF).

Nevertheless, the Norwegian government stated it blocked the sale due to national security concerns. Norway’s Ministry of Justice highlighted how the sale would have benefitted Russia’s defense industry and that permitting the sale could have allowed it to circumvent Western sanctions. The Norwegian government, as a founding NATO member, did not believe the immediate economic benefits of Bergen Engines’ sale outweighed the security risks inherent in providing military naval engines to its aggressive neighbor.

Like Norway, many countries around the globe are on high alert for Russia’s provocative actions. Norway stood up to Russia and put its security and that of its allies and partners ahead of potential short-term economic benefit. This is an example other countries might follow.

To read the full commentary from The RAND Corporation, please click here.

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“First, an observation: the game must be in play for key players to conclude that they have to join. If negotiations are not under way, there may be a substantial delay in attracting participation.

“Declarations, such as on trade and health, should be turned into formal proposals as soon as possible and should be embraced by all WTO members.

“And if some Members won’t come along or seek to delay — a joint initiative is a practical way to proceed and could then be launched as a priority. The time of testing should not be so long as to make a response to the pandemic arrive too late to be responsive to the current crisis.

“Second, Members can ask the WTO Secretariat for and receive support for evaluations of aspects of WTO reform. For example, on trade and health, Members can —

“Request the Secretariat to upgrade its COVID-19-related trade monitoring activities to collect and publish the best information available, not relying solely on notifications and verification. (This would be a more comprehensive and in-depth activity than that which takes place at present, which in itself was an upgrade from pre-COVID monitoring.)

“Request the Secretariat to work with the WHO, relevant UN agencies and other stakeholders, to highlight trade issues affecting vaccine production and availability, and to propose ways to eliminate obstacles. (This would go beyond existing activities and result in proposals put to the WTO Member- ship).

“Third, Members can

“Propose that the Director General convene a small, representative, ambassador-level group of Friends of Trade and Health to identify how the trading system has performed during the pandemic and to issue preliminary conclusions and recommendations for useful changes in approach within a short, defined timeline.

“Propose that the WTO Secretariat embark now upon the necessary supporting work without delay.

“Propose that the Director General constitute other ‘Friends’ groups to advance consideration of institutional reform and other issues of current importance, and providing possible solutions, such as with respect to the relationship to current and future WTO Agreements of the Paris Accord on Climate Change, the disciplining of fossil fuel subsidies, addressing border adjustments likely with the adoption of carbon taxes, assessing the impact on markets of subsidies and other state interventions, employing trade to reduce income inequality, making the WTO more effective for economic development within and among Member economies, improving the trading system with respect to women in trade, providing WTO support for the African Continental Free Trade Agreement, and more generally strategic foresight.

“G20 Members clearly want to enhance preparedness for future pandemics and other crises. Flexible groups with appropriate balance but able to be nimble and responsive are one way to supplement but not supplant the work of committees and joint statement initiatives (JSIs).

‘Propose that an ad hoc horizontal mechanism be created promptly in the event of crises to address — in real time — trade measures that are of concern. The mechanism, similar to trade policy reviews, but not limited to any single WTO Member’s measures, trade restrictive and trade liberalizing, should be constituted immediately for the current pandemic and economic recovery measures.

“Fourth, Members can

“Propose that the signatories of the Pharmaceutical Agreement providing for duty-free trade be updated (last done in 2010), that major nonsigna-tories join and that essential medical supplies be added to the coverage.

“Propose that the signatories of the Information Technology Agreement review and update its coverage, including adding medical equipment.

“Propose that negotiations on the Environmental Goods Agreement re-start in earnest now, with the addition of services.”

The Ottawa Group agreed to put forward a communication seeking action by WTO Members. Each of Canada and the EU (and likely other members) put out press releases. See, e.g., Government of Canada, November 23, 2020, Minister Ng hosts successful ministerial meeting of the Ottawa Group on WTO reform, https://www.canada.ca/en/global-affairs/news/2020/11/minister-ng-hosts-successful-ministerial-meeting-of-the-ottawa-group-on-wto-reform.html; European Commission, Directorate-General for Trade, 23 November 2020, Ottawa Group proposes a global Trade and Health Initiative, https://trade.ec.europa.eu/doclib/press/index.cfm?id=2215&title=Ottawa-Group-proposes-a-global-Trade-and-Health-Initiative.

The Canadian press release states in part, “As countries face a rise in COVID-19 cases, it is essential that governments minimize disruptions to trade flows in essential medical supplies. Today, members of the Ottawa Group took important steps toward a proposed WTO Trade and Health Initiative, which identifies short-term actions to strenghten supply chains and ensure the free flow of medicines and medical supplies.”

Similarly the European Commission press release stated that –

“Today the Ottawa Group, a group of 13 like-minded World Trade Organisation (WTO) partners including the EU, agreed today on an initiative, calling on the WTO members to increase their cooperation and work toward enhanced global rules to facilitate trade in essential medical goods. The agreement took place as an outcome of the Ottawa Group Ministerial meeting, hosted virtually by Minister Mary Ng of Canada.

“The Ottawa Group members called for immediate actions in response to the coronavirus crisis such as exercising a restraint in using any export restrictions, implementing trade-facilitating measures in the area of customs and services, as well as improving transparency.

“They also called for further cooperation amongst members, and between the WTO and other international organisations.

“The group also encourages WTO members to refrain from imposing tariffs on essential medical goods during the crisis. Such actions are intended to strengthen the resilience of supply chains and contribute to an effective response to a public health emergency. They can serve as a basis for future permanent commitments on trade in essential medical goods.

“Commission Executive Vice President and Commissioner for Trade Valdis Dombrovskis said: ‘We are proud to promote this trade and health initiative. It aims to encourage stronger global cooperation at WTO level, by facilitating trade in healthcare products. This is critical in the current global health crisis and will also help us in future. But the Ottawa Group trade and health initiative is just the first step. Going forward, the EU will work to promote resilient global healthcare systems, as well as accessible and affordable healthcare products universally.’

“The communication will now be submitted later this week to the WTO secretariat, before being presented to the WTO General Council for discussion. It will be used to prepare the 12th Ministerial Conference of the WTO, due to be held in 2021.”

That same day, November 23, the Ottawa Group submitted to the WTO a communication entitled “COVID-19 and beyond: Trade and Health”. WT/GC/223 (24 November 2020). The document is embedded below.

The communication is ten paragraphs plus an Annex which is described as “Draft Elements of a ‘Trade and Health’ Initiative”. The communication reviews the social and economic impact of the COVID-19 pandemic and invites “all WTO Members to start working on a Trade and Health Initiative” referencing the Annex. Paragraph 6 of the communication summarizes the specific actions being proposed.

“6. With this objective in mind, we call on WTO Members to make their utmost efforts to prevent further disruptions in the supply chains of essential medical goods. As set out in the Annex to this Communication, we propose specific actions relating to export restrictions, trade facilitation,
technical regulations, tariffs, transparency and review, and call for the WTO to enhance its cooperation with other relevant international organizations, such as WHO, WCO, OECD as well as G20, given the context of the on-going evaluations of the global response to COVID-19. These proposed actions are not intended to be prescriptive and do not cover the universe of possible
measures that could support trade in essential medical goods. Rather, they reflect emerging best practices and should provide sufficient flexibility to be adapted to differing national circumstances.”

The Ottawa Group is hoping to get the support of all Members on a joint statement early in 2021 on a Trade and Health Initiative which could serve as a starting point for negotiations for new WTO commitments at the 12th Ministerial Conference in the summer of 2021 in Kazakhstan.

On export restrictions, the Annex calls for greater oversight of such restrictions without eliminating them outright.

On customs, services and technical regulations, the Annex calls for Members to share information and experiences on best practices in trade facilitation during a crisis (customs procedures, services (including freight, logistics, distribution and transport)) and on standards and technical requirements looking towards regulatory alignment.

On tariffs, the Annex calls on Members to “make best endeavours to temporarily remove or reduce tariffs on goods that are considered essential to fighting COVID-19 pandemic”.

On transparency and review, the Annex calls on Members to enhance transparency during the pandemic with the aim of identifying supply chain disruptions and avoiding such disruptions.

On the topic of cooperation of the WTO with other organizations, the Annex both encourages the WTO Secretariat to continue it outreach on measures related to COVID-19 and the studies developed by the Secretariat with a focus “on the causes and effects of the disruptions in the supply chains of essential goods and drawing on research of other international organizations.” The WTO Director-General is also encouraged to “intensify cooperation” with other organizations (including the G20) to improve “the analytical capacity of Members to monitor market developments in trade and production of essential medical goods.”

Finally, the Annex asks Members to review the effectiveness of the identified elements at the 12th Ministerial Conference “with a view to adopting possible commitments regarding trade in essential medical goods.”

Conclusion

There have been many communications put forward by different groups of Members at the WTO in the last eight months on actions that would make sense in terms of limiting export restraints on medical goods or avoiding such restraints on agricultural goods, about the need for effective trade facilitation measures to reduce barriers to movement of medical goods, and on other topics related to the COVID-19 pandemic.

The Ottawa Group’s communication from Monday is an effort to come up with an early possible deliverable that could garner broad WTO Member support. As a result it seeks a joint statement with agreement on the statement for early 2021. The Group also provides five draft proposals for such a joint statement. The proposals don’t eliminate existing flexibility (e.g., export restraints) but try to tighten disciplines via increased transparency. The proposals encourage development of best practices on a range of trade facilitation and regulatory alignment issues. The proposals also encourage what is obviously in most Members self-interest — reducing or eliminating tariffs on medical goods during the pandemic. The proposals also call on Members to do a better job on transparency on measure taken during the pandemic with a focus on identifying disruptions to supply chains and addressing the same in short order. Finally, while the WTO already cooperates with other organizations, the proposals point to specific areas where enhanced cooperation would be helpful.

In an organization where Members have a low level of trust in each other, a joint statement on the need for a Trade and Health Initiative such as proposed by the Ottawa Group is probably all that can be achieved in the short term. Something along the lines outlined in the Annex would indeed be a confidence builder if achieved early in 2021. The ability to review developments at the 12th Ministerial and start negotiations on trade in essential medical goods at that time will also be important if accomplished. The more ambitious options presented by DDG Wolff should be considered but realistically are unlikely to either happen or get started ahead of the 12th Ministerial.

Let’s hope that the WTO membership can come together to support the Ottawa Group proposal. The EC has indicated that the Communication will be taken up at the December General Council meeting. That will be an early opportunity to see if there is likely to broad support for the initiative.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, bodog poker review|Most Popular_Congressional

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