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WTO `peace clause` protecting US, EU farmers expiring
Geneva, Dec 24: The `peace clause` that for nine years has protected the USD 1 billion in daily subsidies paid to farmers in wealthy nations is about to expire, and some countries are threatening to file their first legal challenges to the payments.
“We can be competitive in quality, in quantity and in
packaging, but we cannot compete with the treasuries of big,
rich countries,'' said Alfredo Vicente Chiaradia, Ambassador
of Argentina.
With the World Trade Organisation clause expiring at
the end of the year, the possibility of a series of
multibillion-dollar disputes hangs over subsidies for sugar,
cotton, soybeans and other major commodities.
Such disputes could seriously damage relations as WTO
members struggle to bridge differences in the current
`round' of negotiations that is supposed to lead to a new
global trade treaty by the end of next year.
The 146 WTO nations spend much of their time arguing over
the agricultural payments that developing countries regard as
breaching the general rules on subsidies.
But the clause in effect since the body was created in
1995 has prevented governments from initiating proceedings in
the WTO's dispute-settlement court.
The clause was introduced at the demand of the United
States and the European Union during the Uruguay round of
trade liberalisation negotiations because many of the
subsidies that are allowed by the agreement on agriculture
would be illegal under other WTO rules. These include direct
subsidies on exports and many domestic farm payments.
WTO members have ignored demands from Washington and
Brussels that the clause be extended, and pressure groups
supporting poor nations are cheering its demise.
The clause has encouraged the dumping of agricultural
commodities on world markets, say 30 aid groups.
“The results are devastating for peasant farmers in
developing countries,'' the groups said in an open letter to
the WTO.
The EU, the world's biggest subsidiser, has long insisted
that it needs the clause if countries expect it to make big
concessions as part of the current round of trade
negotiations.
“A comprehensive agreement on agriculture, covering
subsidies, has little- if any- value to those who contribute
most in the absence of a peace clause,'' said Gregor
Kreuzhuber, spokesman for EU Agriculture Commissioner Franz
Fischler.
He said WTO members have to make a strategic choice.
“Either they believe that multilateral negotiations are
the way forward to a fair and market-oriented trading system,
or they believe WTO litigation is the way forward,'' Fischler
said.
Argentina's Chiaradia said many countries are willing to
try negotiating awhile longer before they follow the route of
legal challenges.
“Do not expect a flood of cases immediately after dec.
31, but it is clear that we are studying this and we are going
to keep this under review, and of course the evolution of the
negotiations will be an important element.''
Bureau Report