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AGRICULTURE NEGOTIATIONS: BACKGROUNDER
Update Phase 2: export subsidies, etc

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UPDATED 10 OCTOBER 2002

Contents
> In a nutshell
Proposals received in Phase 1
Proposals received in Phase 2
Alliances table
INTRODUCTION
Phase 1
Export subsidies, competition and restrictions
Market access
Domestic support: amber, blue and green boxes
Developing countries
Transition economies
Non-trade concerns
Animal welfare and food quality
The peace clause

Phase 2
Tariffs and quotas
Domestic support: amber, blue and green boxes
> Export subsidies and restrictions
State trading
Food security
Food safety
Rural development
Geographical indications
Safeguards
Environment
Trade preferences
Food aid
Consumer information and labelling
Sectoral initiatives
Development box, single commodity producers, small island developing states, special and differential treatment
Additional issues (food aid, the Green Box, tariff quota expansion)

Modalities 2002–2003
Exports
Market access
Domestic support


Data
Statistics

This briefing document explains current agricultural issues raised before and in the current negotiations. It has been prepared by the Information and Media Relations Division of the WTO Secretariat to help public understanding about the agriculture negotiations. It is not an official record of the negotiations.


Export subsidies back to top

See also Phase 1. One proposal involves a 50% reduction in export subsidies as an immediate downpayment, followed by eliminating subsidies completely in three years (for developed countries) or six years (for developing countries).

The proposal from five developing countries is similar but with more emphasis on flexibilities for developing countries. It includes expanding the types of export subsidies that developing countries are currently allowed under Article 9.4 of the Agriculture Agreement. This group’s proposed formula would continue reductions at the same pace as under the present agreement while negotiations continue, followed by complete elimination within three years of the negotiations’ end or 2006, whichever is earlier — with a longer deadline for developing countries.

These proposals received some support, and some opposition, particularly over the complete elimination of export subsidies.

An alternative proposal includes “rebalancing” — more moderate reductions on some products in return for steeper reductions on other products, with the possibility of raised ceilings — without eliminating export subsidies. Again, this idea has received both support and opposition, some countries predicting that with rebalancing the products they most need to export will face competition from the highest subsidies.

Some countries emphasize matching measures on imports with those on exports. Subsidy reductions would be gradual and not lead to elimination. To match the concept of bound tariffs, export subsidies would be bound per unit (e.g. per ton).

Many countries say other forms of export subsidies (such as food aid, subsidized export credit — see below — and insurance, trading by state enterprises) should be disciplined, and say they will elaborate on this later. Even among the countries that agree on the need to tackle these, there is a difference of opinion as to whether these other forms are a serious as direct export subsidies.

Some smaller developing countries argue that export subsidies should be eliminated but over a longer period of time to help them adjust to higher food import bills. They are calling for stronger measures to help net food-importing developing countries and least developed countries adjust.

Papers or “non-papers” from: The Cairns Group, five developing countries (Nicaragua, Panama, Peru, Venezuela and Zimbabwe), Switzerland, Japan.

 
 
Export credits back to top

See also Phase 1. Most delegations who spoke in the negotiations say subsidized export credit (along with export guarantees and insurance, various forms of food aid, activities of state trading enterprises) could be used to circumvent export subsidy commitments. They called for disciplines on the subsidy portion of theses measures.

Some say that export subsidy reductions should be negotiated as part of a package that also includes disciplines and reductions in subsidized credit. Others argue that export subsidies are far more serious.

Countries taking a more cautious view of this say they are in favour of disciplines along the lines of those being developed in the OECD, but also argue that export credits do not contain large amounts of subsidies and are useful for food security in importing countries suffering from financial crises or food supply problems.

Papers or “non-papers” from: The EU, US, and Australia.

 
 
Export taxes and restrictions back to top

See also Phase 1. Most participants agree that some disciplines are needed to ensure supplies are available for importing countries. Among the issues that have been raised:

Symmetry between imports and exports: Some countries argue that the disciplines in this subject should be seen as part of balancing measures on the imports with those on exports. Others disagree.

Supporting domestic processing: Several developing countries say taxes or restrictions on raw materials exports are sometimes needed in order to promote domestic processing industries, particularly when importing developed countries charge higher tariffs on processed products than on raw materials (“tariff escalation”). Some countries argue that getting rid of tariff escalation is a better solution.

Prohibited products and national security: Some countries say some restrictions are needed to prevent exports of hazardous and other prohibited products, and for national security reasons. Others disagree.

Papers or “non-papers” from: Japan, and the US.

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The second phase consists of detailed discussions on the many issues raised in the first phase, organized topic by topic. The meetings are largely “informal”, meaning that there is no official record except for chairperson’s summaries presented at the formal meetings. Papers presented so far have not been official WTO documents. Despite the increased complexity, developing countries continue to participate actively.