Bridges Weekly Trade News Digest • Volume 6 • Number 32 • 25th September 2002
Implementation Takes Step Forward With Draft Decision On Developing Country Subsidies
At a special (negotiating) session of the WTO Committee on Subsidies and Countervailing Measures (SCM) on 19 September, industrialised countries said in a draft decision that they were prepared to approve an "early harvest" list of 19 developing countries that could qualify for an extension to maintain their export subsidy programmes under Article 27.4 of the SCM Agreement. The draft decision from the Quad (the US, the EC, Canada and Japan) plus Switzerland and Australia — could be approved at the next formal special SCM meeting. It was for the most part welcomed by developing countries, though some expressed concern that it did not go far enough in covering other areas of export subsidies. A WTO source said that the announcement represented a significant step forward in that it meant that the Committee could do much of its work months before its deadline of 15 December 2002. (WTO Members agreed in Doha last November to grant extensions to qualified programmes for certain developing countries by 15 December this year).
Background
Talks in the Committee have been focused on the mandate outlined in para. 10.6 of the Doha Decision on Implementation (WT/MIN(01)/W/10). This refers to SCM Agreement Article 27.4, which provides that certain developing countries have eight years to phase out export subsidies but may request an extension of this period.
Under the existing rules of SCM Article 27.4, certain Members (least- developed countries and those with less than USD 1,000 per capita GNP) can seek an extension to the export subsidy phase-out deadline (1 January 2003), provided the request is submitted one year prior to the expiration date. This extension is then eligible for renewal based on annual consultations with the SCM Committee, taking into account "all relevant economic, financial and development needs" of the requesting Member. The new procedures adopted at Doha (see document G/SCM/W/471 at http://docsonline.wto.org) allow for an extension mechanism that could run through to the end of 2007. Under these terms, the annual review process would still occur; however, it would be in the form of further notifications submitted by the requesting Member to ensure that certain transparency requirements are met (see BRIDGES Weekly, 19 March 2002).
The "early harvest" lists 19 Members, out of 29 who have submitted extension requests.
At the meeting…
At the 19 September session, feedback from those Members that had requested extensions was generally supportive of the Quad-plus announcement, though there were some reservations raised. The Dominican Republic said the proposal was "a positive contribution," but suggested that the draft Decision clarify that the transition period for the subsidies be extended annually until 2007. This was supported by El Salvador, Jordan, Mauritius, Panama and Uruguay.
Brazil — supported by Thailand, Chile and Turkey — said that while the developed country proposal was a positive move, it should not be seen as creating a precedent for future cases or as creating a special category of developing countries, adding that it would be looking at the inclusion of agricultural products under the qualifying subsidy programmes. Ecuador said that the proposal gave momentum to the work of the Committee, but noted that questions remained on some of the export subsidy programmes. Malaysia expressed concern about the non-inclusion of other programmes and countries from the list.
The countries included in the "early harvest" list are: Antigua and Barbuda, Barbados, Belize, Colombia, Costa Rica, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Jamaica, Jordan, Mauritius, Panama, Papua New Guinea, St. Kitts and Nevis, St. Lucia, St. Vincent & Grenadines, and Uruguay.
Under the Doha Decision, the following export subsidy programmes are eligible:
Programmes eligible for extension pursuant to these procedures, and for which Members shall therefore grant extensions for calendar year 2003 as referred to in 1(c), are export subsidy programmes (i) in the form of full or partial exemptions from import duties and internal taxes, (ii) which were in existence not later than 1 September 2001, and (iii) which are provided by developing country Members (iv) whose share of world merchandise export trade was not greater than 0.10 per cent , (v) whose total Gross National Income ("GNI") for the year 2000 as published by the World Bank was at or below US $ 20 billion, (vi) and who are otherwise eligible to request an extension pursuant to Article 27.4, and (vii) in respect of which these procedures are followed.
SCM special session Chair Amb. Milan Hovorka of the Czech Republic said he would begin informal consultations on the draft decision.
ICTSD reporting.