Export Subsidies in the Spotlight at WTO Agriculture Committee Meeting

15 June 2017

Eighteen months after WTO members agreed to eliminate agricultural export subsidies at the global trade body’s tenth ministerial conference in Nairobi, Kenya, the organisation’s regular committee on agriculture met for its special annual review of progress in this area.

A detailed document prepared by the WTO secretariat highlighted Australia’s decision in May to revise its legally-binding “schedules of commitments” to renounce its entitlement to use export subsidies for farm goods – the first such country to do so.

The committee also heard that, of the 18 WTO members with these types of entitlements, New Zealand and Panama have already phased out their use of this instrument. Canada, Israel, South Africa, and Switzerland indicated that they would follow Australia in modifying their legal commitments at the WTO.

The elimination of export subsidies was one of the targets agreed under Sustainable Development Goal (SDG) 2, which focuses on tackling hunger and ensuring food security, among other related issues. Along with SDG 2, there are 16 other Sustainable Development Goals, which were adopted by UN member states in September 2015.

In addition to ending hunger and malnutrition by 2030, the goals set out a suite of shared objectives ranging from overcoming poverty and inequality to supporting gender equality, climate action, ocean conservation and sustainable use, and measures to support sustainable production and consumption patterns. (See Bridges Daily Update, 19 December 2015 and  30 September 2015, respectively)

The committee chair, Norwegian trade official Alf Vederhus, told the meeting that he urged all members “to make all possible efforts” to provide accurate and timely information to help improve the dedicated discussions in this area.

Separate addenda to the secretariat’s background document provided in-depth information on export subsidies and three related areas: export finance, international food aid, and exporting state trading enterprises. All three topics have been seen as affecting local producers and international markets in ways that are comparable to the use of export subsidies.

Compliance with WTO rules

The regular committee meeting also reviewed WTO members’ compliance with other aspects of their agriculture-related commitments.

The discussion came just days after a separate negotiating session of the committee, which explored options for advancing negotiations on new disciplines on agricultural domestic support, market access, and export competition, alongside other issues such as export restrictions. (See Bridges Weekly, 8 June 2017)

Canada’s policies for dairy products prompted numerous questions from trading partners, who worry that a new milk ingredient class could unfairly disadvantage producers elsewhere. Australia, New Zealand, and the US reportedly tabled over 80 questions on the scheme.

Canada has argued that its new milk class initiative is essentially a private sector scheme, in which the government has no direct role. The scheme establishes agreed prices for classes of ingredients such as protein concentrates, skimmed milk, and milk powder.

Officials familiar with the discussion told Bridges that Canada has faced a sustained surplus of skimmed milk, due to high demand from butter manufacturers for butterfat.

Trading partners have also questioned Ottawa’s policies on cheese and butter. The dairy, egg, and poultry industries together constitute Canada’s “supply management” system for farm products, with those goods benefitting from higher levels of border protection, minimum price guarantees, and domestic production controls.

Along with a long-running trade dispute over softwood lumber, and the new US administration’s stated intention to renegotiate the North American Free Trade Agreement (NAFTA), questions over dairy have recently contributed to heightened tensions over trade between Washington and Ottawa. (See Bridges Weekly, 27 April 2017)

India price support draws scrutiny

Responding to questions from Australia and the US, India provided the committee with more details about wheat procured as part of its public food stockholding programmes, specifically under a system of “minimum support prices.” The exchange built on questions and answers in the committee earlier this year regarding the disparity between Indian wheat prices and those seen on global markets. (See Bridges Weekly, 30 March 2017)

The issue is of particular interest to trade negotiators because of an impending December target date for reaching a “permanent solution” to the problems some developing countries say they face in this area under WTO farm subsidy rules. (See Bridges Weekly, 8 June 2017)

Many countries have argued that more transparency is needed so that WTO members can fully understand the problems that developing countries face and design a solution accordingly.

Developing countries that have argued in favour of more flexibility in this area agree that transparency is important, but caution this should not lead to unduly burdensome new requirements being placed on them.

The next meeting of the regular committee on agriculture is slated for 17-18 October.

ICTSD reporting.

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