Agricultural liberalization: An appraisal of the provisions and practice of the General Agreement on Tariffs and Trade in the context of export subsidies on primary products
This paper examines currently one of the most contentious provisions in international trade in agriculture: primary product export subsidies. The discussion is within the context of the General Agreement on Tariffs and Trade whereby I consider the provision which deals with this . In attempting to examine the export subsidy provisions of the General Agreement in a juristic study I consider two questions to measure the export subsidy provisions effectiveness. Firstly I consider the provisions nature and form so to understand the type of obligation entered into by the Contracting Parties. Secondly, I consider the Contracting Parties utilization of export subsidies to see whether they honour the obligation and its effect on international agricultural trade. The methodology is an analysis of the export subsidy provision in chronological order. It allows an overall appreciation of the structure finally chosen for the General Agreement, a method of comprehending the Contracting Parties view of the obligation and the elements which measure the obligation. This chronological approach also allows me discussion on the compatability of export subsidies with the aims of the General Agreement so that the paper may comment on the structure for international trade in agriculture. The analysis of the export subsidy provisions takes me back to an era in which agriculture received special treatment. I attempt to understand why this economic tool has been maintained as one of the prime national policies of many Contracting Parties although it is considered a major barrier to the principles of economic liberalism. The initial negotiations show the structure proposed to achieve a liberalization of agricultural trade and with the demise of the Havana Charter the only pillar really left to support such an aim is the discouragement of export subsidies in Article XVI:3 of the General Agreement and Article 10 of the Code on Subsidies. I discuss in very great detail the negotiations of the obligation so as to understand the nature of that obligation. Also, I discuss in great detail the elements which measure that obligation. This is an attempt to understand what the measure is supposed to achieve. The analysis of the measure of the obligation is extensive because from the form of the obligation it is difficult to unravel what it takes for an inequitable share to arise. Although the obligation lacks clarity of purposes and a precision in its language it has remained from the 1950's virtually unaltered. These negotiations show the conflicting approach not between North-South nations but traditional primary exporting nations and industrialized countries in the utilization of such measures. Contracting Parties of every hue use this form of intervention. The paper then moves onto discuss types of intervention which have resulted in dispute settlement procedures under the General Agreement of Tariff and Trade. My analysis initially compares the position between the negotiations and the Panel's findings. This initial analysis also discusses the Panel's methodology in approaching complaints about export subsidy measures. Although support for the provision was well grounded in the initial complaints the results have been overstated. Latter analysis of Panel findings on complaints not only compares the negotiations with the findings but includes discussion on independent research on the primary commodity in question. That analysis shows up the problem of Article XVI:3 and Article 10 not being a norm capable of legally binding obligations. Since the norm is only a broad hortatory statement it requires not only further diplomatic negotiations but must accommodate the intervention which it sanctions. These latter Panel complaints question the possibility of Article XVI:3 and Article 10 to achieve a liberalization of international agricultural trade since the utilization of this type of intervention cannot be restructured under those provisions. This links to further discussion on whether liberalization can occur. The paper finally questions whether agricultural liberalization can occur from such pillars as Article XVI: 3 of the General Agreement and Article 10 of the Code on Subsidies by discussing a link. The link is one of commodity surpluses generated by national autarkic policies which requires export subsidies to dispose of the surplus and results in trade restrictions. The trade restrictions affect particulary on the traditional primary product producers of all Contracting Parties and not the industrialized countries. This link is discussed and it does not lead to a conclusion that the pillar of Article XVI:3 and Article 10 achieve agricultural liberalisation but rather the Contracting Parties are still unable to deal in any framework with international agricultural trade. The operation of the export subsidies provisions of the General Agreement can provide a forum to establish an international framework but it cannot do so unless Contracting Parties wish it to occur. The effectiveness of the provision since it is a broad hortatory statement lies with the Contracting Parties
