WTO deal would end agriculture export subsidies

by World Grain Staff
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BRUSSELS, BELGIUM — The 10th World Trade Organization (WTO) Ministerial Conferenceagreed on Dec. 19 to a global trade deal that benefits developing countries in Africa and around the world by eliminatingexport subsidies in agriculture. E.U. producers will for the first time see a level playing field in export competition, a key priority for E.U. negotiators, the European Commission said.

After a week of negotiations, decisions have been made to improve rules on agricultural trade. Furthermore, the deal opens up opportunities for the poorest and most vulnerable developing countries to integrate better into the global trading system. The E.U. team, led by Cecilia Malmström, commissioner for trade, and Phil Hogan, commissioner for agriculture, was at the forefront of efforts to broker a deal. Ministers also mapped out the future direction for WTO trade negotiations and started a debate on new issues that the organization should address.

“This is a square deal for E.U. agriculture, for farmers in the developing world, and in particular for the least developed countries,” said Hogan. “We have delivered on our objectives outlined ahead of the negotiations. In recent years, the E.U. has led the way in agreeing to renounce the use of export subsidies. Now, for the first time, there are binding disciplines on subsidies such as export credits, where our competitors are subsidizing trade worth billions every year. These new binding controls will level the playing field for E.U. exporters. Also, our competitors will not be able to circumvent these rules through use of state trading enterprises - a key demand for the E.U. We have also achieved our objectives on food aid and the special safeguard mechanism. The food aid deal will mean less displacement of local African production, which means it’s good for African farmers and good for the Migration agenda.”

The deal includes:

-Stopping the use of subsidies and other schemes supporting agricultural exports.

-Ensuring that food aid for developing countries is given in a way which does not distort local markets.

-Seeking to simplify the conditions that exporters from the poorest countries have to meet, so that their products benefit from trade agreements (so-called rules of origin). It also gives more opportunities for businesses from the poorest countries to provide services in the WTO's 164 member countries.

For European producers and exporters, the deal brings new opportunities by creating a more level playing field toward both developed and emerging economies. Specifically, it will benefit E.U. farmers by ensuring an end to export subsidies in key sectors such as wheat flour, sugar and dairy, the WTO said.

Grain Producers Australia (GPA) Chairman Andrew Weidemann said that while the grain industry has suffered less from export subsidy-induced market distortions in recent years, closing the door to stop any recurrence was important, as was the formal acknowledgment that the world is better off without them.

“This is an issue that dogged the world grain trade, producers, exporters and importing countries for decades, causing enormous problems,” Weidemann said.  “Export subsidies on wheat in particular caused overproduction in some countries, hampered local production in others and completely distorted market signals of supply and demand.”

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