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Agricultural Export Subsidies and Developing Countries' Interests

image of Agricultural Export Subsidies and Developing Countries' Interests

A new impetus has been given to faltering WTO trade discussions by the recent EU mandate supporting the liberalisation of agricultural trade policies and removal of export subsidies on agricultural products, within an environment in which all countries start reforming their trade policies. Until now, discussions have centred on agriculture in general, rather than at specific commodity level. This paper rises to the challenge laid down by the EU in identifying the specific commodities for which developing countries would gain benefit in any subsequent reforms. Agricultural Export Subsidies and Developing Countries’ Interests outlines the nature of export subsidies. It discusses the effect of reform on developing countries, indicating the scale of any changes. The policy implications of removing agricultural support in the EU are given and the consequences for net food exporting and importing countries examined. Finally, the paper considers the impact of EU agricultural policy reform on other policies, such as the Protocols of the Lomé Convention.

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Conclusions

It is evident from the preceding analysis that the EU's export refund scheme has significant effects on world prices of agricultural and food products, and on the export market prospects of many of the developing countries. It is also evident that any attempt to eliminate or reduce these explicit subsidies is likely to require complementary efforts to reduce the incentives to over-production of agricultural goods within the EU. Reform of the EU's policies offers challenges, therefore, to EU policymakers, offering on the one hand the opportunity for reduced budgetary commitments, but on the other the problem of meeting income and other targets for the agriculture sector with reduced production levels.

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