WTO Negotiations at Risk of Stalling as EU and US Face Threat of Legal Action

Strategic Insights -

Pressure is mounting on the United States and the European Union to dramatically slash their agricultural subsidies ahead of a crucial meeting of the World Trade Organisation (WTO) in Hong Kong. A new study by Oxfam has found that up to 38 developing nations, including Mexico, Brazil, and Mozambique, could take on the world's richest countries in the WTO if they fail to meet the requirements. The EU's reluctance to move on agriculture protection is causing concern that negotiations may stall.

Key Takeaways:

  • The US and EU are facing a potential barrage of legal action from up to 38 developing nations if they fail to drastically reduce their agricultural subsidies.
  • The WTO has already ruled against European sugar subsidies and US cotton subsidies, and more subsidies covering other farm goods could be affected if the two fail to open their markets.
  • Oxfam has found that the US and EU are paying out almost $18 million per day in subsidies for farm commodities, including maize, rice, milk, and canned peaches and pears.
  • Oxfam executive director Andrew Hewett is pessimistic about the Hong Kong meeting and the possibility of meaningful progress on agricultural reform.
  • The Australian Chamber of Commerce and Industry is urging all nations to agree on cutting trade barriers, particularly those affecting agriculture, at the Hong Kong meeting.
  • Forcing developing nations to cut their agricultural protection levels as deeply as those of rich countries could create serious social, economic, and political disruptions.

Statistics:

  • Up to 38 developing nations could take on the world's richest countries in the WTO if they fail to meet the requirements on agricultural subsidies.
  • The US and EU are paying out almost $18 million per day in subsidies for farm commodities.
  • The EU is unwilling to move far on agriculture protection, causing concern that negotiations may stall.

Sources:

  • L. "US and EU face barrage of legal action over farm subsidies, study finds." Asia Pulse, November 30.
  • Oxfam International. "Oxfam warns of potential trade war over farm subsidies."