|
By Parthapratim Pal, The Energy and Resources Institute (TERI), New Delhi
Domestic support in developed countries has led to low international commodity prices. As a result, though many developing countries are low cost producers of agricultural goods, they have not been able to compete with artificially cheap exports from developed countries. The Uruguay Round Agreement on Agriculture (AoA) tried to reduce domestic and export subsidies. However, the AoA did not manage to effectively reduce domestic subsidies in developed countries.
This paper analyses the present state of play of WTO negotiations and evaluates how effective the current WTO provisions will be towards reducing domestic farm subsidies in developed countries. The findings of the paper suggest that the broad framework of subsidy reduction, as outlined in the July Package, can be considered a step in the right direction, but it does not guarantee significant reduction in subsidies.
A simulation using the subsidy reduction formulas mentioned in the draft ministerial text for the Hong Kong meet indicates that due to a significant overhang between actual and committed levels of subsidies in developed countries, the effective rate of reduction of subsidies will be much less than it appears at first glance.
The paper argues that only deep reduction commitments imposed on developed countries will lead to a substantial cut in their trade-distorting domestic supports.
Click here to read the full paper in PDF format.
|
