WTO ends subsidies on ag exports

WTO ends subsidies on ag exports

Change includes ending subsidies immediately for some countries and phasing them out for others

The World Trade Organization on Dec. 19 agreed to eliminate subsidies for farm exports, marking the "most significant outcome on agriculture" in the organization's 20-year history, according to WTO Director General Roberto Azevêdo.

"WTO members — especially developing countries — have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade," he said. "Today's decision tackles the issue once and for all."

WTO Director General Roberto Azevêdo at the Tenth Ministerial Conference in Nairobi. (WTO photo)

A number of countries are currently using export subsidies to support agriculture exports, WTO said. The legally-binding decision would eliminate these subsidies and prevent governments from reverting to trade-distorting export support in the future.

Under the decision, developed members have committed to remove export subsidies immediately, except for a handful of agriculture products, and developing countries will do so by 2018.

Developing members will keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023, and the poorest and food-importing countries would enjoy additional time to cut export subsidies.

The decision contains disciplines to ensure that other export policies are not used as a disguised form of subsidies. These disciplines include terms to limit the benefits of financing support to agriculture exporters, rules on state enterprises engaging in agriculture trade, and disciplines to ensure that food aid does not negatively affect domestic production. Developing countries are given longer time to implement these rules.

In response to the decision, House Agriculture Committee Chairman Mike Conaway, R-Texas, said there is concern that the agreement allows developing countries to continue to use export subsidies for transportation and marketing for another eight years, "even though the United States has held the position that the authority of countries to offer these sorts of subsidies expired back in 2004," he said.

"We need to ensure that these kinds of export subsidies are no longer permitted to harm U.S. farmers and ranchers. The agreement reached in Nairobi at least assigns a definitive date to ending these subsidies. But, the success of this aspect of the agreement will ultimately be measured by its rigorous and full enforcement."

Stockpiling, cotton decisions >>

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Stockpiling, cotton decisions
Ministers also adopted a Ministerial Decision on Public Stockholding for Food Security Purposes.

Under the Bali Ministerial Decision of 2013, developing countries are allowed to continue food stockpile programs, which are otherwise in risk of breaching the WTO's domestic subsidy cap, until a permanent solution is found by the 11th Ministerial Conference in 2017.

On cotton, a Ministerial Decision stresses the importance of the cotton sector to least developed countries. The decision includes three agriculture elements: market access, domestic support and export competition.

On market access, the decision calls for cotton from LDCs to be given duty-free and quota-free access to the markets of developed countries — and to those of developing countries declaring that they are able to do so — from 1 January 2016.

The domestic support part of the cotton decision acknowledges members' reforms in their domestic cotton policies and stresses that more efforts remain to be made. On export competition for cotton, the decision mandates that developed countries prohibit cotton export subsidies immediately and developing countries do so at a later date.

Conaway also commented on those changes. "While I appreciate the recognition of [U.S. efforts to reform domestic cotton policy], I am disappointed that some acknowledgment was not made concerning the deeply harmful impacts that China and India's domestic cotton policies are having upon cotton farmers around the world," he said.

"I will continue to shine a bright light on the harmful, and in some cases illegal, trading practices of China, India, and other trading partners because they deny America's farmers and ranchers the level playing field they have so often been promised and certainly deserve."

More details on the decision can be found on the WTO website.

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