GLOBAL SUBSIDIES INITIATIVE
Subsidy WatchIssue 7, December 2006
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A new role for the Permanent Group of Experts on Subsidies?
By Damon Vis-Dunbar, editor
The World Trade Organization's rotating group of five independent subsidy experts - the so-called Permanent Group of Experts (PGE) - is unique. It cannot, however, be considered a roaring success.
This obscure group of trade lawyers and academics, "highly qualified in the field of subsidies and trade relations," has no counterpart at the World Trade Organization (WTO).
Also in this issue:
Analysis
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General Motor’s biofuel Hummers
According to a report in FO Licht's World Ethanol & Biofuels Report, the U.S. automaker General Motors (GM) has just announced that, within three years, all versions of the Hummer SUV will run be able to run on biofuels. But the GSI estimates that the benefits to the environment are hardly worth celebrating.
According to GSI calculations, a Hummer H3 4WD would get about the same fuel economy operating on E85 (a blend of 85% ethanol and 15% gasoline) as a GMC Sierra Classic 1500 4WD. Thus, according to U.S.
Commentary
News
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EC proposes raising the de minimis ceiling for fisheries subsidies
A move by the European Commission (EC) to raise the limit on fisheries subsidies that can escape notification requirements has sparked concern among a host of non-governmental organizations.
In November, the EC published draft regulations that would see the de minimis ceiling on state aid to the fisheries sector jump from € 3 000 to € 30 000 per recipient over a three-year period.
Studies
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New global estimate of fisheries subsidies
A report from the Fisheries Economics Research Unit at the University of British Columbia's Fisheries Centre estimates that bottom trawl fleets operating in the high seas receive an average of US$ 152 million a year, consitituting15% of the total landed value of the fleet. The report, "Catching More Bait: A Bottom-up Re-estimation of Global Fisheries Subsidies", compiles a database of fisheries subsidies for 144 maritime countries spanning 1995 to 2005.
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IMF reports on the size and distribution of fuel subsidies in five countries
A working paper from the International Monetary Fund (IMF), "The Magnitude and Distribution of Fuel Subsidies: Evidence from Bolivia, Ghana, Jordan, Mali and Sri Lanka", explores the strain that high oil prices are placing on government budgets. Many governments are reluctant to pass these price increases onto energy users, and so energy price subsidies are absorbing an increasing share of scarce public resources.
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Cato criticizes U.S. dairy policy
The Cato Institute's Center for Trade Policy Studies has taken aim at US government policies toward its dairy industry. A policy briefing, "Milking the Customer: The High Cost of U.S. Dairy Policies", says that the complex array of price supports, dairy market loss payments, federal and state marketing orders, classified pricing, and export subsidies, costs tax-payers some US$ 4 billion a year, provides over 40% of dairy farmers' incomes and depresses world prices.
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Climate Change: Is there Place for a WTO Anti-Subsidy Strategy?
By Marc Benitah*
In a recent article ("A New Agenda for Global Warming"), Joseph Stiglitz, Nobel laureate in economics and former Chief Economist at the World Bank, suggests that Japan, Europe, and the other signatories of Kyoto should immediately bring a WTO subsidy case against the United States for not ratifying the Kyoto Convention and for not taxing adequately CO2 emissions by US firms.
The economic rationale behind Siglitz's proposition is that not paying the cost of damage to the environment is a subsidy, inasmuch as the
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