By Sharon Atieno
Despite the Subsidies and Countervailing Measures (SCM) Agreement of World Trade Organization (WTO) requiring members to submit annual notifications of any subsidies they provide which are specific to a particular enterprise or industry or group of enterprises or industries, the number of WTO members who fail to make notifications on subsidies is increasing.
Between 1995 and 2017, the number has risen from 25 percent to 48 percent, albeit with some intervening fluctuations, the WTO Secretariat notes.
To date 77 WTO members have not submitted subsidy notifications for 2017, 62 members have still not submitted subsidy notifications for 2015, and 55 members still have not submitted subsidy notifications for 2013.
The chair of the SCM Committee in the 30th April meeting declared that the chronic low compliance with the fundamental obligation to notify subsidies constitutes a serious problem in the proper functioning of the agreement.
A recent report by the Organization for Economic Cooperation and Development (OECD) on government subsidies to the aluminium sector sparked calls among some WTO members for a reform of WTO subsidy rules to better take account the activities of state enterprises and state-backed financial lenders.
The report found that total government support for the 17 firms reached up to USD 70 billion over the 2013-17 period, with the top five recipients receiving 85 percent of all support, most of it at the smelting stage.
Speaking at the meeting, several members noted that the extensive and wide-ranging government support for major aluminium producers highlighted in the report underlined the need to beef up WTO disciplines in this sector.
According to Japan, the aluminium sector is continuing to see a significant increase in capacity which is depressing global prices and lowering profit margins for firms; most of the information garnered about the government supports are not from governments themselves but from the company reports of producers, which implies that current WTO transparency rules are not working well.
In addition, Canada said the WTO needs better rules to address the role of state-owned enterprises (SOEs) and their involvement in markets, while Australia said WTO subsidy rules need to take better account of the role of governments as well as the role of SOEs as both recipients and providers of support.
The fisheries sector has also been affected with cases of missing subsidy notifications. 11 WTO members present at the meeting, jointly called on members to meet their commitment at the 11th Ministerial Conference in Buenos Aires to implement existing notification obligations under Article 25.3 of the SCM Agreement, and thus strengthen transparency, with respect to fisheries subsidies.
The 11 include: Argentina, Australia, Canada, the European Union (EU), Iceland, Japan, Korea, New Zealand, Norway, Chinese Taipei and the United States.
The US ambassador Dennis Shea noted that the record of members submitting notifications was abysmal and seemed to be getting worse, with almost half of members failing to submit 2017 notifications.
The 11 are now calling on members to correct course and submit complete subsidy notifications, including information on subsidies to the fisheries sector, by 30th June this year.
Moreover, Canada noted that many members haven’t reported any fisheries subsidies while the EU described the situation as “downright dismal” with only 25 WTO members reporting any fisheries subsidies.
Argentina stressed that complete and precise information on existing fisheries subsidies was necessary so that members can properly address the challenges arising from illegal, unreported and unregulated (IUU) fishing and overfishing.
In order to avoid disputes and ensure proper working of the SCM Agreement, it is essential for WTO members to improve on the timeliness and completeness of subsidy notifications as required.