Not all the reports coming out of World Trade Organization head offices are gloom-filled accounts of cancelled negotiations.
Last week, WTO director general Pascal Lamy used the annual World Trader Report to indicate that production-distorting agricultural subsidies have actually declined in the 20 years since organization members decided to include agriculture in the trade rules regime.
“Recent directions in agriculture support policies combined with advances at the sixth ministerial conference in Hong Kong suggest that despite the difficulties ahead and contested views about the appropriate pace of change, trends towards the reduction of trade-distorting agricultural policies are a cause for some optimism,” said the report.
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It said that while the dollar value of what are called “producer subsidy equivalents” has remained in the $230 to $280 billion US range per year since 1986, the impact of that support has declined because of inflation.
“If one considers the magnitude of support as a share of agricultural production, there has been a decline from 39 percent in 1986 to 30 percent in 2004.”
The WTO also notes that across its membership, domestic agricultural subsidies have declined and use of export subsidies has fallen.
However, the report complains that not all WTO members are up front about the subsidies they use and there are no clear definitions of what subsidies are.
“One lesson from the analysis that I believe deserves particular attention concerns the extraordinary paucity of reliable and systematic information on subsidies,” Lamy said in his forward to the report.
“Even in the WTO, many governments are remiss in meeting their notification obligations.
“It is simply impossible to make good policy or to forge mutually beneficial international co-operation in the absence of information.”
The WTO analysis on how export subsidies are used also raises doubts about whether countries use state monopoly traders to hide export subsidies.
“A major concern with exporting state-trading enterprises, especially if granted single desk status, relates to the exercise of market power,” said the report, which reflects the complaints levelled against such STEs as the Canadian Wheat Board.
“Hidden export subsidies may be given through a combination of price discrimination between domestic and export markets and price pooling after all sales have been effected …. However, the question whether state-trading enterprises indeed subsidize exports is not easily answered and much depends on the market structure that would replace an STE after its hypothetical elimination.”
It said policies such as providing state traders with lower interest rates on borrowed money or underwriting losses also confer advantages.
While that analysis appears to reflect the views of CWB critics such as the United States and the European Union that the mere existence of monopoly trading powers are trade distorting, Canada’s traditional defence is that STEs should be judged by their performance and not their structure.
The CWB has been judged a fair trader in many trade challenge cases.
