Bridges Weekly Trade News Digest • Volume 6 • Number 36 • 24th October 2002
Brazil And India Argue For Flexibility For Developing Countries Via Investment Agreement Amendments
MORE JOIN THE FRAY ON AUSTRALIA-BRAZIL VS. EC SUGAR SUBSIDIES
16 countries — mostly members of the African, Caribbean and Pacific (ACP) group — have requested third-party status in the simmering dispute between Australia and Brazil, on the one hand, and the EC, on the other, over the latter’s export subsidies for sugar (see BRIDGES Weekly, 2 October 2002). In addition to providing export subsidies to European sugar producers, the EC imports approximately 1.6 million tonnes of sugar per year from the ACP at preferential market access rates: an arrangement that ACP states see as potentially under threat from the dispute. Australia and Brazil say that the high prices for sugar produced in the EC’s domestic market allow European producers to sell out of quota sugar on the world market at prices below the cost of production. Brazil further charges that the EC’s export subsidy programme effectively transfers the cost of the ACP preferential trade arrangement to other countries like itself. In the event the dispute is not resolved by the end of November, Brazil and Argentina will have the right to initiate a dispute with a WTO dispute settlement panel. Colombia has joined on the side of Brazil and Australia, while Barbados, Belize, Congo, Cote d’Ivoire, Fiji, Guyana, Jamaica, Kenya, Madagascar, Malawi, Mauritius, Swaziland, Tanzania and Zimbabwe have sided with the EC. Due to its concerns in export subsidies, Canada has also indicated its interest as a third party to the dispute.
"More states take sides in WTO sugar battle," REUTERS, 18 October 2002; "WTO Sugar Dispute Attracts Interest As 16 Countries Request to Participate," WTO REPORTER, 21 October 2002.
US UNLIKELY TO FILE AG DISPUTES AFTER ‘PEACE CLAUSE’ EXPIRATION
According to sources, US officials said on 17 October that their government had no plans to formally challenge trading partners’ WTO non- compliant agricultural subsidies after the expiration of the so- called ‘peace clause’ at the end of 2003. The ‘peace clause’ [Article 13 of the Agreement on Agriculture (AoA)] provides that under certain circumstances, farm subsidies that comply with AoA disciplines are exempted from being challenged under WTO agreements — i.e. the Subsidies and Countervailing Measures Agreement — until 31 December 2003. However, senior trade advisor at the US Agriculture Department (USDA), Robert Spitzer, pointed out that his department continued to be concerned about certain Members’ agricultural subsidies, as in the case of China for its cotton subsidies. Nevertheless, no specific subsidy practices had so far been identified which were to be addressed after the ‘peace clause’ expiration, officials pointed out. Sources indicate the US is likely to urge other WTO Members to agree to let the ‘peace clause’ expire as provided for in the AoA. Other Members such as the EC, however, are advocating for an extension of the clause. Several members of the Cairns Group of agriculture exporters — notably Argentina and Brazil– have been stressing that they may initiate dispute settlement proceedings against the subsidy programs of the EC et al. after 2003 unless the WTO agriculture negotiations make sufficient progress. Brazil has currently requested formal consultations with the US under the WTO dispute settlement mechanism on the latter’s subsidies to its cotton producers, while both Australia and Brazil have requested consultations on the EC’s export subsidies for sugar.
ICTSD reporting; "Agriculture: US Not Planning to Launch WTO Ag Cases Following Lapse of ‘Peace Clause’ Next Year," WTO REPORTER, 17 October 2002.
In a 9 October submission to the Council for Trade in Goods and the Committee on Trade-Related Investment Measures (TRIMs) (G/C/W/428, available at http://docsonline.wto.org), Brazil and India advocate for amending the TRIMs Agreement with in order to incorporate specific provisions that will provide developing countries with the necessary flexibility to implement development policies. Their submission is in the context of the mandated review of the TRIMs Agreement, as referred to in tiret 40 of the Doha Decision on Implementation. Their paper proposes extending the range of situations in which developing countries are allowed to deviate temporarily from the provisions of TRIMs Article 2 (national treatment). India and Brazil put forward a list of seven instances in which developing countries should be able to use TRIMs, including to "stimulate environment-friendly methods or products and contribute to sustainable development". The next meeting of the Council for Trade in Goods is on 8 November.
ICTSD reporting.