In a meeting that ran a day longer than scheduled, trade ministers of WTO nations agreed to phase out export subsidies for agricultural goods. The commitment would apply at once to industrialized countries, and only a handful of products would be excluded. Developing countries would have the flexibility to cover marketing and transport costs until 2024. WTO director general Roberto Azevêdo said the decision on export subsidies was the “most significant outcome on agriculture” in WTO’s 20 years of existence.
Deutsche Welle said the meeting was “modestly successful,” reaching consensus on agricultural export subsidies but failing to make progress on other issues in the Doha trade round that began in 2001. “The WTO’s declaration at the end of the Nairobi meeting said members remained committed to completing the Doha negotiations. However, it also said that some members were calling for the talks to be modified or scrapped.”
U.S. Trade Representative Michael Froman said, “Our work to secure a global ban on export subsidies will help level the playing field for American farmers and ranchers. The WTO’s actions in this area will put an end to some of the most trade distorting subsidies in existence and demonstrates what is possible when the multilateral trading system comes together to solve a problem.” In a statement, Froman also said WTO members discussed the limitations of the Doha Round, and that Nairobi would mark a turning point for the WTO.
“WTO members – especially developing countries – have consistently demanded action on this issue (export subsidies) due to the enormous distorting potential of these subsidies for domestic production and trade,” said Azevêdo. Some countries currently employ export subsidies. The United States ended direct subsidies years ago. It rewrote the cotton program in 2014 to eliminate indirect benefits such as export credits.
With the action on farm export subsides, the Nairobi package “contains disciplines to ensure that other export policies are not used as a disguised form of subsidies,” said the WTO. “These disciplines include terms to limit the benefits of financing support to agriculture exporters, rules on state enterprises engaging in agriculture trade, and disciplines to ensure that food aid does not negatively affect domestic production.”
Trade ministers also agreed to find a permanent solution by the time they meet in 2017 on the question of government-owned food stockpiles. Developing countries say the stockpiles are important for food security, while developed countries say the stockpiles can be a stealth form of domestic farm subsidies.
The Nairobi package included a ministerial decision on cotton, which calls for cotton from less-developed nations to be given duty- and quota-free entry to developed countries beginning Jan. 1. The ministers called on LDC nations to continue reforms in domestic subsidies. Like the overall agreement, the cotton document calls on developed nations to end export subsidies immediately and gives developing countries more time for reform.
“Notably, subsidies on cotton, a crop widely grown in Africa, have been scrapped,” said The Standard. “This will open up job opportunities and generate wealth for millions of peasant farmers across the continent.” The Standard said developed countries “did not go home empty-handed. Exports subsidies in wheat flour, sugar and dairy … were removed.”