Consequences following the expiry of the 'peace clause'
In an article by R.H. Steinberg and T.E Josling in the Journal of International Economic Law the vulnerability of EU and US agricultural subsidies to legal challenge in the WTO once the current 'peace clause' lapses is assessed. The paper concludes that 'when the 'peace clause' expires, many commodity specific EC and US agricultural subsidies will be vulnerable to legal challenge under Article 6.3(a)-(c) and 6.4 of the WTO Agreement on Subsidies and Countervailing Measures'. This would require such subsidies to be withdrawn or for steps to be taken to remove their adverse effects. The paper argues that non-subsidising countries can be expected to bargain in the shadow of this threat to secure a reduction in EU and US agricultural subsidies and a shift over to genuinely non-trade distorting forms of support. The paper notes that 'green box' measures have been except from challenge under the 'peace clause' and that the extent to which 'blue and amber box' measures can be challenged has also been restricted. It notes that export subsidies are the most 'actionable'. The paper expresses the belief that the ending of the 'peace clause' will not open up the flood gates of challenges to 'green box' measures. Nevertheless the article explores in detail the various legal bases for challenging all forms of EU and US agricultural subsidies. It shows that the major problem faced is demonstrating 'causation', that is proving that the specific subsidies under attack cause the economic losses claimed by the challenging party. The article explores various models for demonstrating causation. It concludes, however, that in the case of challenges following the expiry of the 'peace clause' 'large subsidising members might simply ignore adverse dispute settlement decisions'. It cites the EU position in response to the issue of hormones in beef as a case in point, noting how the larger offenders can prefer to accept the sanctions following an unsuccessful defence rather than to change their policy. Against this background the paper argues that 'if … the expiry of the peace clause is seen as a significant threat to the subsidy policies of major countries, then there will be more incentive for competing exporting countries… to bargain in the shadow of its expiry'. However it needs to be borne in mind that the 'peace clause' could be renewed, since both the EU and Japan are arguing strongly for this. Some renewal of the 'peace clause' would appear possible if the major offenders were seen to be making significant concessions in areas of interest to potential complainants. Comment: It should be noted that the EU has dramatically reduced its reliance on the most actionable forms of agricultural support (export subsidies), although the variable pace of reform and currency movements is increasing the EU's need for such measures in certain sectors. ACP countries will need to identify what interests they want to bargain around in the shadow of the potential challenges which could arise with the expiry of the 'peace clause'.
| Main Author: | |
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| Format: | News Item biblioteca |
| Language: | English |
| Published: |
Technical Centre for Agricultural and Rural Cooperation
2003
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| Online Access: | https://hdl.handle.net/10568/52639 http://agritrade.cta.int/Back-issues/Agriculture-monthly-news-update/2003/September-2003 |
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| Summary: | In an article by R.H. Steinberg and T.E
Josling in the
Journal of International Economic Law
the
vulnerability of EU and US agricultural subsidies to legal challenge
in the WTO once the current 'peace clause' lapses is assessed. The
paper concludes that 'when the 'peace clause' expires,
many commodity specific EC and US agricultural subsidies will be
vulnerable to legal challenge under Article 6.3(a)-(c) and 6.4 of
the WTO Agreement on Subsidies and Countervailing Measures'. This
would require such subsidies to be withdrawn or for steps to be
taken to remove their adverse effects. The paper argues that non-subsidising
countries can be expected to bargain in the shadow of this threat
to secure a reduction in EU and US agricultural subsidies and a
shift over to genuinely non-trade distorting forms of support.
The paper notes that 'green box' measures have
been except from challenge under the 'peace clause' and that the
extent to which 'blue and amber box' measures can be challenged
has also been restricted. It notes that export subsidies are the
most 'actionable'.
The paper expresses the belief that the ending
of the 'peace clause' will not open up the flood gates of challenges
to 'green box' measures. Nevertheless the article explores in detail
the various legal bases for challenging all forms of EU and US agricultural
subsidies. It shows that the major problem faced is demonstrating
'causation', that is proving that the specific subsidies under attack
cause the economic losses claimed by the challenging party. The
article explores various models for demonstrating causation.
It concludes, however, that in the case of challenges following
the expiry of the 'peace clause' 'large subsidising members might
simply ignore adverse dispute settlement decisions'. It cites the
EU position in response to the issue of hormones in beef as a case
in point, noting how the larger offenders can prefer to accept the
sanctions following an unsuccessful defence rather than to change
their policy. Against this background the paper argues that 'if
… the expiry of the peace clause is seen as a significant threat
to the subsidy policies of major countries, then there will be more
incentive for competing exporting countries… to bargain in
the shadow of its expiry'. However it needs to be borne in mind
that the 'peace clause' could be renewed, since both the EU and
Japan are arguing strongly for this. Some renewal of the 'peace
clause' would appear possible if the major offenders were seen to
be making significant concessions in areas of interest to potential
complainants.
Comment:
It should be noted that the EU has dramatically reduced its reliance
on the most actionable forms of agricultural support (export subsidies),
although the variable pace of reform and currency movements is increasing
the EU's need for such measures in certain sectors. ACP countries
will need to identify what interests they want to bargain around
in the shadow of the potential challenges which could arise with
the expiry of the 'peace clause'. |
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