Agricultural Export Subsidies, Export Credits, and the World Trade Organization

Publication Date: March 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

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Abstract:

Despite agreement in the World Trade Organization (WTO) to reduce agricultural export subsidies, their use is still substantial for certain commodities and countries. Of $6.6 billion in global export subsidies in 1998, 30% went to dairy, 22% to grains, 19% to meat and 14% to sugar. The European Union (EU) alone accounted for more than 90% of total export subsidy spending, while the United States accounted for 2.2%. Export subsidies are on the agenda of WTO agriculture negotiations where the United States, among others, has proposed their total elimination.

The EU, however, has conditioned further reductions in export subsidies on negotiating multilateral rules to curb the use of officially supported export credit programs (direct credits, credit guarantees, insurance). Export credits may give exporters a competitive advantage, but their subsidy component is estimated to be small. Failure of negotiations in the Organization for Economic Cooperation and Development (OECD) to establish rules for using export credits creates pressure to include this topic on the WTO negotiating agenda. This report will be updated as developments warrant.