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Disciplines on Agricultural Subsidies in the WTO Framework

Author: LiXiaoLing
Tutor: ZhuZuoYe
School: East China University of Political Science
Course: International Law
Keywords: Agricultural Export Subsidies Domestic Support Base Period Aggregate Measurement of Support Dispute Settlement Mechanism
CLC: D996.1
Type: PhD thesis
Year: 2007
Downloads: 1089
Quote: 15
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National agricultural policies usually carry political, social or even culturalvalues and objectives, which causes more problems for international trade policy inagriculture sector than any other area of economic endeavor. GATT1947 and theTokyo Round Subsidies Code had been unsuccessful in dealing with the problem.Governments continued to subsidize production and exports of agriculural productswhile protecting home markets from import competition. Based on dozens of years ofGATT experience, the Uruguay Round Agreement on Agriculture (URAA) speciallydesigns a unique system governing the use of agricultural subsidies, which coexistswith Agreement on Subsidies and Counervailing Measures (SCM). Although URAAis a great achievement in the history of international trade in agricultural products forbringing agriculture into the multilateral trading system, URAA only provids aframework for disciplines on agriculural susbsidies. Current disciplines onagricultural subsidies have many disappointments due to the degree of reduction ofagricultural subsidies, drafting of the document and various other reasons, thusweakens the effectiveness of the disciplines. Fundamental reform is needed toestablish "a fair and market-oriented agricultural trading system".Based on the evolutionary process of disciplines on agricultural subsidies, thisdissertation addresses the regulation of agricultural subsidies under current WTO rules, possible results of Doha negotiations, future status of agricultural subsidiesunder the WTO trading system, as well as some issues concerning China. Thisdissertation is composed of three parts: introduction, the text and epilogue, about280,000 words in total.The first chapter addresses negotiations on agricultural subsidies and evolutionof multilateral disciplines in the GATT/WTO framework. This chapter presents adetailed introduction on negotiating history of GATT/WTO disciplines on agriculturalsubsidies and comments on relevant texts and practices in the GATT era. This chapterprobes into the following issues in turn: the reasons for GATT contracting parties orWTO Members to negotiate domestic agricultural policies at the GATT/WTO forumand the complexity of negotiating reduction of agricultural subsidies; GATTnegotiations on agricultural subsidies and relevant provisions in GATT1947 and theTokyo Round Subsidies Code; then finally the progress and focus of ongoing Dohanegotiations on agriculture. Research of this chapter shows that GATT failed toimpose effective disciplines on the reduction of agricultural subsidies, and URAAactually only has limited impact on Members’ agricultural policies. Nevertheless,URAA provides a framework for regulating agricultural subsidies and a basis forcontinuing reform process. The ongoing Doha Round negotiations are one step ofsuch fundamental reform process.The second chapter addresses WTO general disciplines on subsidies. Based onthe text of SCM and disputes settlement practices, this chapter is devoted to theresearch on basic concepts and mechanisms of WTO general subsidies disciplines,such as the concept of "subsidy", disciplines on prohibited and actionable subsidies,and interpretation thereof developed in WTO practices. SCM applies to all products,including agricultural products. Moreover, SCM provides an important context for theinterpretation of undefined concepts in URAA. Research of this chapter shows thatWTO dispute settlement practice tends to apply subsidies disciplines strictly, whichcan be clearly observed in the interpretations of "financial contribution", "public body" and "indirect subsidies", etc. SCM actionable provisions, which for many yearshave nearly been at the idle condition, began to be used in recent cases. Actionableprovisions may be used more frequently to sue agricultural subsidies after the expiryof "Peace Clause".The third chapter addresses URAA disciplines on agricultural export subsidiesfrom basic concepts to basic structure of disciplines, then to specific aspects thereof.This chapter is composed of the following five aspects: the concept of "exportsubsidies" under URAA, the structure of disciplines on export subsidies, reduction ofexport subsidies, prevention of circumvention of export subsidy commitments, andthree types of "disguised" agricultural export subsidies. Based on the research of thischapter, the following aspects on URAA export subsidies disciplines shall be paidmore attention: Firstly, the concept of "export subsidies" under URAA and SCM arenot identical; the scope of the former is broader than that of the latter. Currentdisciplines are limited to export subsidies financed by taxpayers; provisions on exportpractices with similar effects are quite scarce. Secondly, URAA adopts a uniquestructure in dealing with export subsidies, which distinguishes types of exportsubsidies and agricultural products receiving export subsidies. Such distinctions arequite important for the design of URAA export subsidies disciplines. However, WTOdispute settlement practice blurs those distinctions, which gives rise to uncertainties inthe application of WTO rules. Finally, although URAA sets quantitative commitmentlevels on export subsidies while strengthens rules at the same time, reductioncommitments are to some extent circumvented on account of systematic defects andabusive unilateral interpretations by WTO members. Results of Doha negotiations, ifsuccessfully concluded, might eliminate agricultural export subsidies eventually.The fourth chapter addresses URAA disciplines on domestic support, includingbasic concepts, classification of domestic support measures, measurement of domesticsupport, implementation of domestic support disciplines, and Doha negotiations ondomestic support. Research of this chapter indicates that URAA disciplines on domestic support are too relaxed to restrain distorting domestic support measureseffectively. Although disciplines can be effectively implemented by resorting to WTOdispute settlement mechanism, the disciplines themselves are less effective against themanipulation of base period and calculation method of AMS, circumvention ofcommitments by changing the form of support measures, etc. Reduction of domesticsupport is one of the key issues in the ongoing Doha negotiations.The fifth chapter presents an analysis on the relationship among WTO rules onagricultural subsidies, i.e. GATT1994, URAA and SCM, and the application of thoserules in WTO disputes. This chapter elaborates the following three issues: theapplication of GATT1994 in WTO disputes on agricultural subsidies, the applicationof URAA and SCM, and the impact of the expiry of "Peace Clause" on WTOdisciplines on agricultural subsidies. Based on WTO dispute settlement reports, it isclear that GATT1994, URAA and SCM shall be interpreted harmoniously and appliedsimultaneously and cumulatively. Research of this chapter finds that the simultaneousand cumulative application of URAA and SCM may impose stricter disciplines onagricultural products than those on industrial products, which is inconsistent with theoriginal purpose of URAA negotiators. The expiry of "Peace Clause" influencesagricultural export subsidies and domestic support measures in different ways. Themost prominent influence is that SCM actionable provisions may serve as animportant legal basis to sue immense amount of agricultural subsidies maintained bydeveloped Members.The sixth chapter inquires into several systematic problems with WTOdisciplines on agricultural subsidies, i.e. the implementation of URAA subsidiesdisciplines, WTO dual systems applying to agricultural subsidies and the future status,the tension between WTO dispute settlement and multilateral trade negotiations, thenewly brought WTO litigation by Canada against U.S. (WT/DS357) and itschallenges to U.S. agriculture policies. Research of this chapter indicates theWeakness of URAA notification and surveillance mechanism, the divergence of URAA and SCM in the approaches to discipline subsidies, and proposes to attachappropriate importance to WTO dispute settlement versus WTO political andmultilateral negotiations. Too rigid dispute settlement reports might underminedomestic political support for the multilateral trading system. This chapter alsopresents an analysis on the new agricultural subsidies case, which may have someimportance influence on the draft of U.S. new farm bill and the ongoing Dohaagriculture negotiations.The epilogue of this dissertation deals with the impacts of WTO agriculturalsubsidies disciplines on China, covering the following three aspects, i.e. China’s WTOcommitments on agricultural subsidies and implementation thereof, review on China’snew farm policies after the year of 2004, impacts of subsidized imported agriculturalProducts on China’s agricultural sector and countermeasures. Taking into account ofChina’s current agricultural policies and comparing with China’s implementation ofrelevant WTO commitments, the last issue is much more urgent. At the end of thischapter, this author proposes several preliminary suggestions on how to tackle theadverse effects caused by the dumping of subsidized imported agricultural products.

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