VietNam Business: subsidies

Friday, December 24, 2010

WTO calls on US to cut farm subsidies

GENEVA – The World Trade Organization called on US Wednesday to cut its farm subsidies, saying that they were so "considerable" that they could affect market prices.

In a report analysing Washington 's policies since 2007, the trade body said that while promoting its exports, the United States should also reduce "distorting measures ... including ... support for agriculture."

The WTO noted that support granted to the sector under the multi-billion-dollar 2008 Farm Act are mostly "linked to prices and or production."

Thanks to this support, "producers of cereals, oilseeds, and cotton are effectively insulated from market prices while sugar and dairy have market price support programmes," said the WTO.

"The large size of the agriculture sector means that the absolute amount of support is considerable, varies from one year to another depending on prices, and can affect world prices," it added.

Brazil also hit out against the US ' farm policies during the WTO's examination of Washington 's trade policies every two years.

"Agriculture accounts for only 0.8 percent of US GDP and it employs just 1.4 percent of its labour force," noted Roberto Azevedo, Brazil 's envoy to the WTO.

"Nevertheless, this sector displays a considerable arsenal of trade-restrictive and distorting measures."

Azevedo pointed out that most of the subsidies are concentrated on crops such as cotton soybeans and rice.

"When prices drop, those subsidies will be in place again precisely at the moment when they will provoke the largest distortions and most damage to producers elsewhere," he charged.

Washington 's subsidies to its agriculture sector is a key sticking point holding up long-stalled Doha negotiations for a new global free trade deal.

Its support for cotton producers has been judged illegal by the WTO, in a complaint brought by Brazil .

Brazil however agreed to not apply reprisals after both countries decided to wait for the new Farm bill in 2012 to see what modifications would be made.

Monday, November 15, 2010

Europe claims victory in Boeing subsidy row

A Boeing 787 Dreamliner aircraft is seen at the Farnborough Airshow in Hampshire on July 18, 2010

Photo: AFP

GENEVA - European leaders have claimed victory after the World Trade Organization was said to have judged massive US subsidies to Boeing illegal.

The report, which has not been published, reportedly stated that billions of dollars in US aid to the aircraft manufacturer were illegal, prompting officials from the European Union, France and Boeing's arch-rival Airbus to claim victory.

"Boeing benefits from billions of dollars in government subsidies that have been judged illegal by the WTO," said Airbus spokesman Rainer Ohler.

European Union trade commissioner Karel De Gucht said the WTO findings "support the EU's view" of the decade-long dispute.

The complaint was brought to the WTO by the European Union, part of a long-running transatlantic spat over subsidies to the aerospace sector.

It came a year after the WTO rapped the EU for illegally providing subsidies to Airbus, a unit of the European Aeronautic Defence and Space Company.

Under WTO rules, the interim ruling is meant to be held confidential until the global trade body publishes the full report by its panel of dispute settlement arbitrators.

But both sides were keen to spin their version of events as details poured into the public domain.

In a statement, Boeing said the WTO had issued a "massive rejection" of European claims that it received tens-of-billions of dollars in illegal subsidies.

"Nothing in today's public reports on the European case against the US even begins to compare to the 20 billion dollars in illegal subsidies that the WTO found last June that Airbus/EADS has received," Boeing said.

The EU had claimed Boeing received about US$23 billion of subsidies masked as defense research.

But there was some hope that the ruling could pave the way for a deal to end the often bitter dispute over aid.

Airbus called on its US rival to end the row and negotiate new funding rules for the aerospace industry.

"Now that both reports are available, it's time to stop blaming each other and to start assuming our responsibilities," said Airbus's Ohler.

"It's only when we stop these contentious suits and start negotiations that we'll be able to define new equitable rules of the game which will govern the future of the world's aerospace industry, a matter which is much more important than a transatlantic dispute," he added.

The EU likewise insisted that it is time to negotiate a settlement.

"Only negotiations at the highest political level can lead to a real solution," said European Union trade spokesman John Clancy reiterating the EU position that the new report "provides momentum in that direction."

Brussels brought its case to the WTO on October 6, 2004 -- the same day that Washington complained against EU subsidies to Airbus. It had therefore been frustrated by the time lag between the rulings on the two cases.

In Washington, US lawmakers aligned with either Airbus or Boeing voiced divergent views.

US Senator Richard Shelby of Alabama, a state where the European firm Airbus manufactures, noted that a WTO preliminary confidential report "confirmed that Boeing has in fact received subsides for aircraft development."

"Today's preliminary ruling clearly states that Boeing was involved in practices prohibited by the World Trade Organization," said Shelby, seen as an ally of Airbus parent EADS.

"While the confidential nature of this report will allow Boeing supporters to attempt to spin the facts in the media, it is clear that they can no longer rationally claim that this trade dispute is one sided."

But Representative Todd Tiahrt and Senator Sam Brownback of Kansas said the cases of Boeing and Airbus are quite different.

"None of the alleged subsidies to Boeing have anywhere near the market distorting effects of the launch aid the EU provided to Airbus," the two lawmakers said.

"The alleged US subsidies of standard economic development tools pale in comparison to the systematic EU strategy to take over the aviation industry."

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