SA has legal grounds for WTO case against subsidies

A report released by global development, advocacy and relief organisation Oxfam International yesterday could spur SA into taking legal action against rich countries that subsidise farm products illegally.

Legal experts consulted by Oxfam conclude in the report that several countries, including SA, could bring multiple cases against the European Union (EU) and the US — and win.

The report showed SA had legal grounds to drag the EU before the World Trade Organisation (WTO) over illegal subsidies for six products, including citrus juice, wine and butter, Hilton Zunckel of trade consultancy Floor Incorporated said yesterday.

SA could also take the US to the world trade body for its illegal subsidisation of maize and sorghum, Zunckel said.

The Oxfam report said that without subsidies last year alone US maize production would have been down 15%,

its exports would have disappeared and

world prices would have been 7% higher.

“Farmers from the likes of Paraguay, Argentina or SA could have gained an extra $4bn,” the report said.

But Zunckel said SA, which is one of the developing countries lobbying vociferously for the elimination of farm subsidies in rich industrialised countries, could have taken action against illegal subsidies some time ago.

A “peace clause” preventing SA and other developing countries challenging illegal farm subsidies at the WTO expired last year.

“SA has been fast asleep by missing these opportunities to date,” said Zunckel in a telephone interview from Geneva, where he is accompanying African cotton negotiators.

“SA is losing revenue with each export cargo,” he said.

Oxfam has warned that the EU and the US must do more to deliver a development deal ahead of a crucial ministerial meeting, otherwise they could end up facing a mountain of litigation because developing countries will be left with little option but to pursue this line of action.

Of the 11 commodities studied by Oxfam, the US and the EU pay out total annual farm subsidies worth $9,3bn and $4,2bn respectively, which help to distort world trade, the organisation said.

Oxfam found that 38 developing countries were suffering from unfair competition as a result.

Source: Carli Lourens SA has WTO case, says Oxfam report Business Day 02 December 2005

For text: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A122240

FMF Policy Bulletin/ 06 December 2005