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International trade

WTO Deadlock Continues Over Farm Subsidies

Strategic Insights

— 1 min read

Agricultural subsidies remain a major stumbling block at the ongoing World Trade Organization (WTO) meeting in Hong Kong, with trade ministers failing to make significant progress towards resolving the issue. Developing countries, including India, are pushing for an end to all export subsidies, including export credits, food aid, and State Trading enterprises, by 2010. The United States has indicated its willingness to eliminate all export subsidies by the same date, but its criteria for farm export support remain unclear. The European Union, however, has yet to indicate an end date for its subsidies.

Key Takeaways:

  • Developing countries, led by India, are demanding an end to all export subsidies, including export credits, food aid, and State Trading enterprises, by 2010.
  • The United States has indicated its willingness to eliminate all export subsidies by 2010, but its criteria for farm export support are unclear.
  • The European Union has yet to indicate an end date for its subsidies, and has insisted on a balanced outcome from the round that includes equal movement in industrial goods and services.
  • The Least Developed Countries (LDC) package, including duty-free and quota-free market access, remains a contentious issue, with the US still objects to certain aspects of the proposal.
  • India has formed a new group on Non-Agricultural Market Access (NAMA) to push for the incorporation of the principle of "less than full reciprocity" in the tariff reduction formula.
  • The G-20 has proposed a 75% cut in the highest agricultural tariffs, while the US has demanded a 90% cut, and the EU has proposed a 60% cut with a cap of 100%.

Statistics:

  • 149 countries are participating in the WTO meeting in Hong Kong.
  • 75% cut in the highest agricultural tariffs proposed by the G-20.
  • 90% cut in the highest agricultural tariffs proposed by the US.
  • 60% cut in the highest agricultural tariffs proposed by the EU.
  • 100% cap on the highest agricultural tariffs proposed by the EU.
  • 70-80% cut in trade-distorting subsidies proposed by the G-20.
  • 75% cut in trade-distorting subsidies proposed by the US.
  • 70% reduction in subsidies proposed by the EU.

Sources:

  • PTI, "Deadlock continues as no movement on farm subsidies at WTO", December 14 [no date mentioned in the original text]
  • PTI, "Indian Commerce Minister Kamal Nath's statement after G-20 meeting", December 14 [no date mentioned in the original text]

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