GLOBAL SUBSIDIES INITIATIVE

Although the GSI has been in existence only since the end of 2005, its roots stretch back many years. The Earth Council, in collaboration with the Dutch Institute for Research on Public Expenditures (IRPE) in early 1995 initiated work on perverse subsides , focusing on four sectors: agriculture, energy, transport and water. This first phase was under the general direction of Earth Council Board member, Emile van Lennep, and was supported by various departments of the Dutch Government. Its results were discussed by a panel of the World Bank in mid 1996, and published in March 1997 in a report entitled Subsidizing Unsustainable Development: undermining the Earth with public funds. The key conclusion of the report is that, though subsidies can provide important and useful economic incentives, in practice many subsidies no longer serve their original purposes. Far too many subsidies encourage development that is unsustainable in both environmental and economic terms and tend to be economically inefficient, trade distorting, environmentally destructive, and socially inequitable.

While this publication set out the grounds for preoccupation with the present pattern of subsidies, it did little to suggest how the more perverse of these might be dismantled. An attempt was made to go further with both analysis and advocacy on subsidy matters, and the Earth Council President, Maurice Strong, proposed a broad initiative – the Van Lennep Initiative, named after the initiator of this work, who passed away in 1996. Initially, it was difficult to attract support to this initiative. However, the issue of subsidies neither receded, nor did it move towards resolution.

Two factors contributed to bringing subsidies back to the table. The first was the Doha Round of multilateral trade negotiations, launched by the World Trade Organization (WTO) at its Ministerial Conference in Qatar in November 2001. Before the Round stalled, dismantling or redirecting agriculture subsidies provided the core of the negotiating mandate. The Round also included a range of other subsidies-related negotiations, eg. on fisheries subsidies, on service subsidies, and on the rules governing countervailing measures and other trade remedies.

The second factor was the World Summit on Sustainable Development (WSSD), held in Johannesburg in September 2002, ten years after the Rio Summit and twenty after the original United Nations Conference on the Human Environment in Stockholm. The Plan of Implementation adopted at the WSSD calls for action on subsidies that undermine sustainable development, especially in the fields of energy (para. 19p and g), agriculture (paras 86c and 91b) and fisheries (para 30f), and makes the specific link to the Doha agenda, calling upon the WTO to target subsidies that undermine sustainable development and distort trade as a matter of priority.

Following WSSD, the Earth Council teamed with the International Institute for Sustainable Development to relaunch the Van Lennep Initiative. IISD has a long record of policy research on subsidy issues. In 1998, IISD published Perverse Subsidies: Tax $s Undercutting our Economies and Environments Alike, co-authored by Norman Myers and Jennifer Kent. IISD is also the publisher of Subsidy Watch, an electronic news bulletin that tracks subsidy matters.

In December 2005, the IISD launched the Global Subsidies Initiative (GSI), marking the latest and most ambitious phase of the IISD's work on subsidies. The project is dedicated to stimulating new research, encouraging public debate and awareness, and providing policy-makers with the tools needed for constructive reform.