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When the Peace Ends: The Vulnerability of EC and US Agricultural Subsidies to WTO Legal Challenge

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  • Richard H. Steinberg
  • Timothy E. Josling

Abstract

Article 13 of the WTO Agreement on Agriculture, known as the 'Peace Clause', precludes most WTO dispute settlement challenges against a country that is complying with the Agreement's liberalization commitments -- until 1 January 2004, when the Peace Clause will expire. This article evaluates the strength of the main legal theories likely to be used in challenges to EC and US agricultural subsidies after expiry of the Peace Clause, and then employs economic techniques (regression analysis and equilibrium modeling) to meaningfully apply the soundest legal theories to economic data about agriculture trade. We conclude that when the Peace Clause expires, many commodity-specific EC and US agricultural subsidies will be vulnerable to legal challenge under Articles 6.3(a)--(c) and 6.4 of the WTO Agreement on Subsidies and Countervailing Measures. The remedy would require that such subsidies be withdrawn or that appropriate steps be taken to remove their adverse effects. Non-subsidizing developing countries can be expected to bargain in the shadow of this legal vulnerability, demanding that the Community and the United States commit to further subsidy reductions and a shift toward tariffs-and-decoupled-payments systems, in exchange for extension of the Peace Clause. Copyright Oxford University Press 2003, Oxford University Press.

Suggested Citation

  • Richard H. Steinberg & Timothy E. Josling, 2003. "When the Peace Ends: The Vulnerability of EC and US Agricultural Subsidies to WTO Legal Challenge," Journal of International Economic Law, Oxford University Press, vol. 6(2), pages 369-417, June.
  • Handle: RePEc:oup:jieclw:v:6:y:2003:i:2:p:369-417
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    Citations

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    Cited by:

    1. Sumner, Daniel A. & Barichello, Richard R. & Paggi, Mechel S., 2004. "Economic Analysis In Disputes Over Trade Remedy And Related Measures In Agriculture, With Examples From Recent Cases," Working Papers 15845, University of British Columbia, Food and Resource Economics.
    2. Giovanni Anania, 2007. "Multilateral trade negotiations, preferential trade agreements and European Union’s agricultural policies," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, July.
    3. Anania, Giovanni, 2007. "Multilateral Negotiations, Preferential Trade Agreements and the CAP. What's Ahead?," Working Papers 7283, TRADEAG - Agricultural Trade Agreements.
    4. Joseph A. McMahon, 2007. "Trade Policy Reform Through Litigation La voie judiciaire pour réformer les politiques commerciales Reform der Handelspolitik durch Rechtsstreitigkeiten," EuroChoices, The Agricultural Economics Society, vol. 6(2), pages 42-47, August.
    5. Alan Swinbank, 2008. "Potential WTO Challenges to the CAP†," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 445-456, December.
    6. Mejía Cubillos, Javier, 2012. ""Agro, Ingreso Seguro" en perspectiva: Un análisis de políticas públicas ["Agro, Ingreso Seguro" in a public policy analysis perspective]," MPRA Paper 39998, University Library of Munich, Germany.
    7. Embaye, Weldensie T. & Bergtold, Jason S., 2017. "Effect of Crop Insurance Subsidy on Total Farm Productivity of Kansas Farms, US," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258107, Agricultural and Applied Economics Association.
    8. Tim Josling & Dale E. Hathaway, 2004. "This Far and No Farther? Nudging Agricultural Reform Forward," Policy Briefs PB04-01, Peterson Institute for International Economics.
    9. Robert Grosse & Jonas Gamso & Roy C. Nelson, 2021. "China’s Rise, World Order, and the Implications for International Business," Management International Review, Springer, vol. 61(1), pages 1-26, March.
    10. Paggi, Mechel S., 2003. "Trade Policy Developments Affecting Cotton," Agricultural Outlook Forum 2003 33214, United States Department of Agriculture, Agricultural Outlook Forum.

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