Is there global agreement to reduce export subsidies? (3/3)

 All this week on Table Talk, we are discussing government support and subsidies.

In this final post for the week, we are taking a look at the history of global agreement on reducing export subsidies. This year is the year that WTO Member Organisations have agreed to eliminate export subsidies. Will this happen?

Check up on our previous posts here:

  1. An introduction to agricultural and farm subsidies
  2. Are Australian producers the least subsidised in the world?

1995 | Uruguay Round

The first step towards meaningful rules and commitments on agricultural subsidies were negotiated in the Uruguay Round (1986-94). The World Trade Organisation was created by the Uruguay Round negotiations in 1995 and the key negotiations around agriculture involved the issue of the proliferation of export subsidies. The Agreement on Agriculture came into force on 1 January 1995 and the preamble recognises that the agreed long-term objective of the reform process initiated by the Uruguay Round reform programme is to establish a fair and market-oriented agricultural trading system.

The main commitments focused on market access, domestic support and export subsidies. For the first time, limits on volume and expenditures on export subsidises were put in place. In particular:

  • Developed country Members: required to reduce (in equal annual steps over a period of 6 years) the base-period volume of subsidized exports by 21% and the corresponding budgetary outlays for export subsidies by 36%.
  • Developing country Members: required cuts are 14% over 10 years with respect to volumes, and 24% over the same period with respect to budgetary outlays.

2001 | Doha Round

The Doha Round of Negotiations aimed to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. Here, agreement to phase out export subsidies.

Gado Cartoons

2005 | Hong Kong

At the Hong Kong Minisiterial Council meeting in December 2004, the EU conceded that “export subsidies (where it was the biggest user) might be eliminated provided equivalent disciplines were introduced on export credits and food aid (widely used by the US) and state monopoly marketing boards (used by Canada and Australia).”

Alan Mathews stated,

“The end of one of the most distorting forms of agricultural support seemed in sight. However, it was not to be”.

Negotiations broke down.

2015 | Nairobi

At the World Trade Organisation’s 10th Ministerial Conference in Nairobi in 2015, members agreed that export subsidies for agriculture should be abolished. The agreement from December 19, 2015 states that:

Developed country members shall immediately eliminate their remaining scheduled export subsidy entitlements as of the date of adoption of this decision.

Developing country members shall eliminate their export subsidy entitlements by the end of 2018.

At the conference, the EU agreed to abolish export subsidies and the US agreed to abolish export credits.

World Trade Organisation

Heinz Strubenhoff noted that “This is the final step in a long journey to end an absurd and harmful system of economic policymaking.”

The Australian reported:

“A global agreement to abolish agriculture export subsidies has been hailed by Australian farmers as a landmark deal that will usher in a “golden era” of competition and lift commodity prices.”

We will have to check back in early 2019 to see how member organisations are tracking. We hope you have enjoyed this week’s theme.