When the Peace Ends: The Vulnerability of EC and US Agricultural Subsidies to WTO Legal Challenge
Richard H. Steinberg
University of California, Los Angeles (UCLA) - School of Law
Timothy E. Josling
Stanford University - The European Forum, Institute for International Studies
UCLA, School of Law Research Paper Series No. 03-10; Stanford Law School, Public Law Research Paper No. 58
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 challenges under Article 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 The remedy would require that such subsidies be withdrawn or that appropriate steps be taken to remove their adverse effects.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 tariff-and-decoupled-payments systems, in exchange for extension of the Peace Clause.
Number of Pages in PDF File: 50
JEL Classification: C0, C1, C4, F0, F1, F13, K0, K4, Q0, Q1, Q17
Date posted: June 11, 2003
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