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