WTO members to scrap export subsidies

MEMBERS of the World Trade Organization (WTO), including the Philippines, moved to scrap agricultural export subsidies, providing a fresh whiff of agreement even as the global grouping continued to be divided on the direction of worldwide trade reforms.

WTO Director General Roberto Azevedo said in a statement that the decision was the “most significant outcome on agriculture” since the group was formed 20 years ago.

“WTO members—especially developing countries—have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade,” Azevedo said. “Today’s decision tackles the issue once and for all.”

Gathered in Kenya for the 10th Ministerial Conference of the WTO, the ministers adopted the so-called Nairobi Package that includes a decision on export competition.

The nine-page decision states that WTO members that are developed countries will immediately eliminate their remaining export subsidy entitlements.

Also, members that are developing countries will eliminate their export subsidy entitlements by the end of 2018.

However, developing members may keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023.

As for the poorest and food-importing countries, they are provided additional time to comply with the decision.

The United States and the European Union, among the Philippines’ major trading partners, have in years raised concern about the latter offering support for exporters.

In particular, the EU has described this as a “potentially trade-restrictive” measure. Also, Washington has noted that Manila offered export subsidies to attract investment in the less-developed areas of the country.

According to the WTO, the newly adopted decision—which is legally binding—contains mechanisms to ensure that other export policies are not used as a disguised form of subsidies.

“These disciplines include terms to limit the benefits of financing support to agriculture exporters, rules on state enterprises engaging in agriculture trade, and disciplines to ensure that food aid does not negatively affect domestic production,” the WTO said.

“Developing countries are given longer time to implement these rules,” the group added.