The recommendation of the Panel in the dispute between Australia, Brazil and Thailand (complainants) and the EU (respondent) has—as usual—leaked. It’s a victory for the complainants: bq. ” … the WTO tribunal found EU domestic support for sugar indirectly subsidised exports of surplus production and violated the EU’s WTO commitment to limit export subsidies.” (“Financial Times”:http://news.ft.com/cms/s/b730711e-e645-11d8-a0df-00000e2511c8.html) This is an important case because it will help to lock-in the changes that the EU has offered in the Doha round negotiations. The EU has still to fully work through the split among member states over the elimination of the use of export subsidies. At best the determined opposition of France to any change could see the terms eventually agreed by the EU delay the elimination of the payments and introduce opportunities for circumvention. If this case continues to go against the EU in the WTO Appellate Body, France will find it even more difficult to win the battle inside the EU’s councils. The gist of the complaint was that the complex EU sugar policy—which is based on different ‘quotas’ for sugar, only one of which receives direct price support—results in a subsidy on sugar exports from the EU that exceeds the EU’s WTO-scheduled ‘ceiling’ on these payments. The EU permits former colonies in the ‘African, Caribbean and Pacific’ group of developing countries to sell into its high-priced market (although that’s “changing”:http://www.inquit.com/article/266/proposed-eu-sugar-reforms), reaping a considerable margin for their sales over the world price. But, effectively, the EU uses export subsidies to push these import volumes out again on to the depressed world market so that its internal prices can remain high.
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher