WTO decision could be far-reaching

The recent WTO disputes panel decision against United States cotton subsidies could be far-reaching, Trade Negotiations Minister Jim Sutton said today.

Mr Sutton told the Deer New Zealand annual meeting in Taupo that New Zealand was a third party to the case that Brazil had brought against the United States, because the decision could have far-reaching effects on the international trade in other products as well.

"We have not seen a text of the decision yet, as it is not officially available, but media reports on it make it clear that the panel result provides a useful clarification of WTO rules on agricultural subsidies."

Mr Sutton said New Zealand had consistently worked for a reduction of trade distorting subsidies - both by using the existing rules and by seeking to negotiate new disciplines in the Doha Round.

"This comes at a time when it seems we are standing on the brink of what appears to be a major shift in the international trading system. It is a seismic shift equivalent to that of 10 years ago, when for the first time agriculture was included as an integral part of the multilateral negotiations known as the Uruguay Round.

"This time, in the Doha Development Round, the economic superpowers of the World Trade Organisation have recognised that agriculture is a vital part of this round and, as a consequence, have registered a readiness to see an end-date for export subsidies as an integral part of the outcome.

"The significance of this is huge: for more than 50 years, they have been defending the use of export subsidies. Their recognition that export subsidies will have to go in this negotiation is an enormous step."

Mr Sutton said it was likely the United States would appeal the panel decision, and a final result would not be likely for at least a year.

"If the decision is sustained, we can expect it to have a direct impact in major subsidising nations.

"We also hope it will have a useful impact on negotiations underway now. We hope it will encourage the major subsidising countries to accept new disciplines, not just on export subsidies, but on other subsidy programmes as well.

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