APEC Supports the Abolish off Export Subsidies to Accelerate Food Trade

Wayne Chen

Agriculture has been one of the most important (and also controversial) link in FTA/RTA negotiations as well as on the WTO agenda. No doubt that a number of important decision agreed by 163 members on agriculture at the WTO 10th Ministerial Conference was a significant step forward, of which eliminating export subsidies for farm exports was an outcome drew a wide range of attentions.

Primary decisions concluded on agriculture at MC10 are related to Export Competition, Public Stockholding for Food Security, and Special Safeguard Mechanism for Developing Countries. In the regard of Export Competition, the "Nairobi Package" is composed of the elimination of export subsidies, new rules for export credits, and decisions on international food aid and exporting state trading enterprises. As said by the WTO report that "the decision to fully eliminate any form of agricultural export subsidies is an historic decision and constitutes a significant step in the reform of agricultural trade".

According to the WTO Ministerial Decision on Export Competition adopted at MC10, developed members shall immediately remove export subsidies on mostly farm products while developing countries will accomplish the commitment by 2018. Meanwhile, WTO members should refrain from applying export subsidies in a manner that circumvents the requirement to reduce and eliminate all export subsidies, and export subsidies should not exceed the average level of the past five years on a product basis.

Moreover, developing countries will continue to benefit from keeping the flexibility of covering marketing and transport costs for agriculture exports until the end of 2023 (Article 9.4 of the Agreement of Agriculture), and the least developed and food-importing developing countries will enjoy additional time to cut export subsidies.

Considering that extensive subsidies on farm product is not only costly to taxpayers but creating distortions in the economy, and hindering global food trade. In this light, subsidies are recognized as trade barriers and repeal of subsidies will stimulate food trade and enhance food security globally. Poor states that having less developed food industries and financial resources for subsidies will benefit from greater engagement in global and regional food chains.

To support the Ministerial commitment of WTO and in an extend to foster capacity of APEC members, developing economies in particular, to meet the requirement and the time frame to eliminate subsidies, related issues were centered at the 2016 APEC first senior official meetings and 3 initiatives were tabled for discussion.

Discussion and Proposal Document on Fisheries Subsidies

proposed by Peru

 Peru, the 2016 APEC host, is also famous for fishery products, including the fishmeal of which Peru is the biggest exporter in the globe. As a result, the Peruvian initiative is focused on improving awareness of fisheries subsidies, and combating illegal, unreported and unregulated fishing (IUU) to ensure sustainable marine resource management.

Ocean play an essential role to regional economic integration and prosperity in APEC considering that APEC members account for over 65% of global capture fisheries and marine transport is essential to connect people and merchandise in the region. On the other hand, UN also attaches great importance to improving sustainable management of marine resources by combating IUU and eliminating subsidies that contribute over capacity and over-fishing. Moreover, in 2015, UN leaders agreed to "prohibit certain forms of fisheries subsidies,... and refrain from introducing new such subsidies."

To meet the calls of UN and WTO, Peru emphasized that CTI should play a role to raise awareness of eliminating fisheries subsidies, and promote discussion of the Post-Nairobi process. Peru also suggested to host a seminar and incorporated related language in the MRT Declaration as concrete actions of the initiative.

Improving Transparency and Information Sharing on Fisheries Assistance Programs in APEC Economies

proposed by the United States and New Zealand

 Compared to the Peruvian initiative, the US and New Zealand's initiative aims to advance WTO commitment more directly by updating the 2000 APEC compendium of fisheries assistance programs which did stocktaking of fisheries programs in APEC economies. The initiative invites APEC members to review and submit domestic fisheries assistance programs to CTI followed by a peer review process. In so doing, APEC will advance the transparency and reporting fisheries assistance programs in the WTO.

It is an ambitious project that requesting APEC members to submit own polices as well as complete peer review with a few months before an updated compendium complete by the APEC Leaders week of 2016. Intensive bilateral discussion at scheduled meetings and intersessionally are expected for conducting the deliverables. However, the peer review mechanism suggested may impose pressure on developing economies and may undermine the quality of the compendium to be noted by APEC Leaders and Ministers.

Proposal for Progressing WTO Ministers Decision to Eliminate Export Subsidies

proposed by Papua New Guinea

 

Tabled by Papua New Guinea, a developing economy as well as the host of APEC 2018, the proposal aims to establish a mechanism for APEC members to provide information on the elimination of export subsidies. Dissimilar to the peer review mechanism mentioned earlier, PNG's amplifies the WTO commitment and the time frame agreed on abolishing export subsidies. However, in the regard of information exchange, no concrete methods brought up in the proposal which may lead to an unforeseeable outcome for APEC 2016 and beyond.

(Wayne Chen is an Associate Research Fellow at the Chinese Taipei APEC Study Center.)

 

Reference

1.        WTO, 2015, Briefing note: Agriculture issues, https://www.wto.org/english/ thewto_e/minist_e/mc10_e/briefing_notes_e/brief_agriculture_e.htm, accessed 17/6/2016.

2.        APEC, Proposal for Progressing WTO Ministers Decision to Eliminate Export Subsidies, 2016/SOM1/CTI/007.

3.        WTO, 2015, WTO Ministerial Decision on Export Competition, https://www.wto. org/english/thewto_e/minist_e/mc10_e/l980_e.htm, , accessed 17/6/2016.

4.        APEC, Discussion and Proposal Document on Fisheries Subsidy, 2016/SOM1/ CTI/005rev1.

5.        APEC, Improving Transparency and Information Sharing on Fisheries Assistance Programs in APEC Economies, 2016/SOM1/CTI/006.

6.        APEC, Proposal for Progressing WTO Ministers Decision to Eliminate Export Subsidies, 2016/SOM1/CTI/007