The
conceptual framework back
to topThe
proliferation of export subsidies in the years leading to
the Uruguay Round was one of the key issues that were
addressed in the agricultural negotiations. While under
the GATT 1947 export subsidies for industrial products
have been prohibited all along, in the case of
agricultural primary products such subsidies were only
subject to limited disciplines (Article XVI of GATT)
which moreover did not prove to be operational.
The
right to use export subsidies is now limited to four
situations: (i) export subsidies subject to
product-specific reduction commitments within the limits
specified in the schedule of the WTO Member concerned;
(ii) any excess of budgetary outlays for export subsidies
or subsidized export volume over the limits specified in
the schedule which is covered by the “downstream
flexibility” provision of Article 9.2(b) of the
Agreement on Agriculture; (iii) export subsidies
consistent with the special and differential treatment
provision for developing country Members (Article 9.4 of
the Agreement); and (iv) export subsidies other than
those subject to reduction commitments provided that they
are in conformity with the anti-circumvention disciplines
of Article 10 of the Agreement on Agriculture. In
all other cases, the use of export subsidies for
agricultural products is prohibited (Articles 3.3, 8 and
10 of the Agreement).
Reduction
commitments back
to top
Definition
of measures
Under
the Agreement on Agriculture export subsidies are defined
as referring to “subsidies contingent on export
performance, including the export subsidies listed in
detail in Article 9 of [the] Agreement”. As
specified in more detail in Article 9.1 of the Agreement,
this list covers most of the export subsidy practices
which are prevalent in the agricultural sector, notably:
- direct
export subsidies contingent on export
performance;
- sales
of non-commercial stocks of agricultural products
for export at prices lower than comparable prices
for such goods on the domestic market;
- producer
financed subsidies such as government programmes
which require a levy on all production which is
then used to subsidise the export of a certain
portion of that production;
- cost
reduction measures such as subsidies to reduce
the cost of marketing goods for export: this can
include upgrading and handling costs and the
costs of international freight, for example;
- internal
transport subsidies applying to exports only,
such as those designed to bring exportable
produce to one central point for shipping; and
- subsidies
on incorporated products, i.e. subsidies on
agricultural products such as wheat contingent on
their incorporation in export products such as
biscuits.
All
such export subsidies are subject to reduction
commitments, expressed in terms of both the volume of
subsidized exports and the budgetary outlays for these
subsidies.
Product
categories
The
reduction commitments are shown in the schedules of WTO
Members on a product-specific basis. For this purpose,
the universe of agricultural products was initially
divided into 23 products or product groups, such as
wheat, coarse grains, sugar, beef, butter, cheese and
oilseeds. Some Members took commitments on a more
disaggregated level. The volume and budgetary outlay
commitments for each product or group of products
specified in a Member’s schedule are individually
binding. The reduction commitments on “incorporated
products” (last item in the Article 9 list) are
expressed in terms of budgetary outlays only. The
ceilings specified in the schedules must be respected in
each year of the implementation period although limited
“over-shooting” in the second to fifth year of
implementation is permitted (“downstream
flexibility”). By the last year of the
implementation period, Members must be within their final
export subsidy ceilings.
Rates
of cut
Developed
country Members are required to reduce, in equal annual
steps over a period of 6 years, the base-period volume of
subsidized exports by 21 per cent and the corresponding
budgetary outlays for export subsidies by 36 per cent. In
the case of developing country Members, the required cuts
are 14 per cent over 10 years with respect to volumes,
and 24 per cent over the same period with respect to
budgetary outlays.
Developing
countries may, during the implementation period, make use
of a special and differential treatment provision of the
Agreement (Article 9.4) which allows them to grant
marketing cost subsidies and internal transport
subsidies, provided that these are not applied in a
manner that would circumvent export subsidy reduction
commitments.
All
in all, 25 Members (counting the EC as one) have export
subsidy reduction commitments specified in their
schedules, with a total of 428 individual reduction
commitments.
Products
with no specific reduction commitment back
to top
The
Agreement on Agriculture prohibits the use of Article 9.1
export subsidies on any agricultural product which is not
subject to a reduction commitment as specified in the
relevant part of the Member’s schedule (with the
exception, during the implementation, period of those
benefiting from special and differential treatment).
Anti-circumvention back
to top
In
addition to the provisions directly related to the
reduction commitments, the Agreement on Agriculture
contains provisions which are designed to prevent the use
of export subsidies that are not specifically listed in
Article 9 of the Agreement in such a way as to circumvent
reduction on other export subsidy commitments (Article
10). The anti-circumvention provisions include a
definition of food aid in order that transactions claimed
to be food aid, but not meeting the criteria in the
Agreement, cannot be used to undermine commitments. Food
aid that meets the specified criteria is not considered
to be subsidised export hence is not limited by the
Agreement on Agriculture. The Agreement also calls for
the development of internationally agreed disciplines on
export credits and similar measures in recognition that
such measures could also be used to circumvent
commitments. Any Member which claims that any quantity
exported in excess of a reduction commitment level is not
subsidized must establish that no export subsidy, whether
listed in Article 9 or not, has been granted in respect
of the quantity of exports in question.
Notification
obligations back
to top
All
Members must notify the Committee on Agriculture annually
with respect to export subsidies. For the vast majority
of Members — those without reduction commitments
— this involves only a statement to the effect that
export subsidies on agricultural products have not been
used (or a listing of those measures that may be used by
developing country Members under Article 9.4 of the
Agreement if this has been the case). For Members with
reduction commitments in their schedules, the annual
notification must contain the annual use of subsidies in
terms of both volume and budgetary outlays.
In
addition, as part of the anti-circumvention provisions,
Members must notify the use of food aid on an annual
basis if such aid is granted. Likewise, total exports of
agricultural products must be notified by Members with
reduction commitments as well as by a number of other
“significant exporters” as defined by the
Committee.
As
in other areas, the export subsidy notifications form
part of the basis for reviewing the progress in the
implementation of the commitments by the Committee on
Agriculture.
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