Geneva, Nov 09: A truce over the multi-billion dollar subsidies which the big trading powers pay their farmers may collapse if talks to slash them do not make progress by the year-end. For the past eight years, since the World Trade Organisation (WTO) came into being, members have been prevented by a pact from suing each other in the WTO trade court for the damages which the vast subsidies can cause.

Under the pact, providing a country was abiding by ceilings for state aid agreed in previous free trade negotiations, it could not be charged with causing commercial harm regardless of how much its own farmers were hurting.
But from January 1, ’04 , the so-called peace clause lapses, leaving the US and the European Union, in particular, open to legal assault by angry farm goods exporting countries, such as Australia or Brazil . “The peace clause is going to expire and the EU and the US will both be vulnerable to charges that their subsidies are causing severe problems to some of their trading partners,” said Australia ’s WTO ambassador David Spencer.

Some analysts argue that the looming deadline could focus minds and help trade negotiators forge the deal that has so far eluded them on how to reform world farm trade and cut back subsidies running to some $300bn a year — more than the combined annual total of rich state aid to the developing world.
Efficient exporters, such as New Zealand and Argentina , and poorer states producing mainly for their own markets, such as India , are united in accusing the EU and the US of distorting world trade with their massive farm programmes. Bureau Report