from the EU web site
Brussels -- The EU calls for equal WTO discipline for all forms of trade distorting export subsidization, according to a EU position paper on export competition in agricultural trade. Commenting on the paper, Franz FISCHLER, Commissioner for Agriculture, Rural Development and Fisheries stated: "Whether it is export credit, food aid or state trading enterprises, any of these measures can be used to distort trade. Although they may be used in a manner which is more insidious, less transparent and more trade distorting than export refunds, they are totally uncontrolled: the EU's export refunds are the only form of export measure of which the use has been strictly limited and disciplined under WTO rules. This is inconsistent, and for me the WTO negotiations on agricultural trade offer the opportunity to address this inconsistency." Mr FISCHLER further confirmed that the EU is ready to envisage further limitations on export refunds but he is "not prepared for unilateral disarmement" - all forms of export subsidisation must be made transparent and subject to agreed disciplines"
The document will be formally presented to the "WTO Committee on Agriculture" in its special session on 29 September It highlights the unequal treatment of the different support mechanisms under the present WTO rules and disciplines and draws the attention of all WTO members to certain instruments that can be used to distort export competition, namely:
1. Some officially supported export credits, especially long term export credits, which can be used to expand market share, cut down actual export prices and drive competitors out of a market. All the attempts to cap export credits have so far been unsuccessful, notably due to the lack of willingness to agree on strict disciplines from the main user of export credits. This has resulted in a great deal of flexibility for those WTO members that use this instrument to support their exports.
2. Some WTO members have used food aid donations more as a production and commercial tool to dispose of surpluses and promote sales in foreign markets than as a development tool tailored to the needs of the recipient countries. It is ironic that the amount of food aid given by some countries has recently increased significantly when prices are low whereas they were much lower when prices were high - and food aid was most needed.
3. State-trading enterprises (STEs) can have potentially highly trade distorting practices such as cross-subsidization, price-discrimination and price pooling. The impact of such practices on the trade of some agricultural products is not negligible, since STEs account for about 40% of world trade in wheat and 30% of world trade in dairy products.
The paper calls for a profound analysis of these export promotion tools in order to better assess their impact on trade. It also responds to accusations that export refunds are the only trade distorting form of export subsidization. The EU's use of export subsidies is transparent, fully notified to the WTO and in compliance with the EU WTO obligations. The EU has already brought down expenditure on export refunds from 55% of the total value of agricultural exports in 1992 to 9.4% in 1998.
The position paper concludes that in order to address the export competition issue in a balanced and comprehensive way, new rules and disciplines, including transparency requirements, must be developed to cover all types of support to export. "While the EU has repeatedly made clear we they are willing to negotiate in good faith on a further reduction of export subsidies, we are firmly of the view that greater clarity must be achieved on the other instruments affecting export competition. Stronger rules should be developed for them, too.", Mr FISCHLER said.:
