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Know WTO Agriculture Negotiations on Export Subsidies

New Delhi (ABC Live): WTO Agriculture Negotiations on Export Subsidies : Some countries were proposing the total elimination of all forms of export subsidies, in some cases with a deep reductions right at the start of the next period as a “downpayment”. Others were prepared to negotiate further progressive reductions without going so far as the subsidies’ complete elimination, and without any “downpayment”.

Many (but not all) developing countries argue that their domestic producers are handicapped if they have to face imports whose prices are depressed because of export subsidies, or if they face greater competition in their export markets for the same reason. This group includes countries that are net food importers and also want help to adjust if world prices rise as a result of the negotiations.

In addition, many countries would like to extend and improve the rules for preventing governments getting around (“circumventing”) their commitments on export subsidies — including the use of state trading enterprises, food aid and subsidized export credits.

Some countries, such as India, propose additional flexibility for developing countries to allow subsidies on some products to increase when subsidies on other products are reduced.

Several developing countries complain that the rules are unequal. They object in particular to the fact that developed countries are allowed to continue to spend large amounts on export subsidies while developing countries cannot because they lack the funds, and because only those countries that originally subsidized exports were allowed to continue subsidizing — albeit at reduced levels. One group of developing countries compares the effect of various types of export subsidies with “dumping” that harms their farmers. As a result of all of these concerns, some proposals envisage sharply different terms for developing countries. ASEAN and India, for example, propose scrapping all developed countries’ export subsidies while allowing developing countries to subsidize for specific purposes such a marketing. Some developing countries say they should be allowed to retain high tariff barriers or to adjust their current tariff limits, in order to protect their farmers — unless export subsidies in rich countries are substantially reduced. Some other developing countries counter that the barriers would also hurt developing countries that want to export to fellow-developing countries.

Who can subsidize exports?

25 WTO members can subsidize exports, but only for products on which they have commitments to reduce the subsidies. Those without commitments cannot subsidize agricultural exports at all. Some among the 25 have decided to greatly reduce their subsidies or drop them completely. In brackets are the numbers of products involved for each country.

Australia (5)
Brazil (16)
Bulgaria (44)
Canada (11)
Colombia (18)
Cyprus (9)
Czech Rep (16)
EU (20)
Hungary (16)
Iceland (2)
Indonesia (1)
Israel (6)
Mexico (5)
New Zealand (1)
Norway (11)
Panama (1)
Poland (17)
Romania (13)
Slovak Rep (17)
S Africa (62)
Switzerland-Liechtenstein (5)
Turkey (44)
United States (13)
Uruguay (3)
Venezuela (72)

The agreement includes certain temporary exemptions for developing countries, allowing them to            subsidize marketing, cost reduction and transport (Art 9.4)

For more details, see WTO Secretariat background paper “Export subsidies” TN/AG/S/8, downloadable here

Proposals containing positions on export subsides and competition submitted in Phase 1

(see also proposals on developing countries and on non-trade concerns)

  • Cairns Group: export competition G/AG/NG/W/11
  • 11 developing countries: special and differential treatment and a development box G/AG/NG/W/13
  • US: a comprehensive proposal G/AG/NG/W/15
  • EU: export competition (focusing on credit, food aid, and state trading enterprises) G/AG/NG/W/34
  • ASEAN: special and differential treatment for developing countries in world agricultural trade G/AG/NG/W/55
  • EU: comprehensive negotiating proposal G/AG/NG/W/90
  • Japan: proposal G/AG/NG/W/91
  • Switzerland: proposal G/AG/NG/W/94
  • Mauritius: proposal G/AG/NG/W96
  • Rep of Korea: proposal G/AG/NG/W/98
  • Mali: proposal G/AG/NG/W/99
  • Norway: proposal G/AG/NG/W/101
  • India: proposal G/AG/NG/W/102
  • Poland: proposal G/AG/NG/W/103
  • “Mercosur+”: state trading enterprises G/AG/NG/W/104
  • Morocco: proposal G/AG/NG/W/105
  • Turkey: proposal G/AG/NG/W/106
  • Egypt: proposal G/AG/NG/W/107
  • Nigeria: proposal G/AG/NG/W/130
  • Congo, Dem Rep: proposal G/AG/NG/W/135
  • Kenya: proposal G/AG/NG/W/136
  • Senegal: preliminary positions G/AG/NG/W/137
  • Mexico: proposal G/AG/NG/W/138
  • Mercosur, Bolivia, Chile, Costa Rica, Guatemala, India, Malaysia: export credits G/AG/NG/W/139
  • Jordan: proposal G/AG/NG/W/140
  • African Group: joint proposal G/AG/NG/W/142
  • Namibia: proposal G/AG/NG/W/143
  • A group of Latin American countries in Mercosur and the Cairns Group also submitted a discussion paper on export subsidies: G/AG/NG/W/38.
  • Croatiaincluded export subsidies in its discussion paper G/AG/NG/W/141

Export restrictions and taxes

A number of importing countries, for example Japan, say their food supplies could be disrupted if exporting countries restrict or tax exports. They propose disciplines on export restrictions, for example converting them to taxes that would then be reduced (similar to “tariffication” of import restrictions). Switzerland proposes eliminating these completely, but with some flexibility for developing countries.

The Cairns Group of net exporters has submitted a similar proposal, but linked it to reductions in “tariff escalation” — i.e. higher duties on processed products, which hamper the development of processing industries in countries that produce raw materials. The group also proposes flexibility for developing countries.

Proposals that mention export restrictions submitted in Phase 1

  • US: comprehensive proposal G/AG/NG/W/15
  • Japan: proposal G/AG/NG/W/91
  • Cairns Group: export restrictions and taxes G/AG/NG/W/93
  • Switzerland: proposal G/AG/NG/W/94
  • Rep of Korea: proposal G/AG/NG/W/98
  • Congo, Dem Rep: proposal G/AG/NG/W/135
  • Jordan: proposal G/AG/NG/W/140

About Dr. Sriniwas Vasudeva

Dr. Sriniwas Vasudeva has completed his Research in Agriculture in 2006 and Reports Agriculture News for ABC Live.

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