Deal on export subsidies to boost local agriculture

A World Trade Organization (WTO) decision that requires member nations to remove export subsidies for farm products will support the development of local agriculture, according to an official.

Thomas Darmawan, chairman of the fishery division at the Indonesian Employers Association (Apindo), said he welcomed the WTO deal, as it would push Indonesia to abolish illegal costs that have burdened fishery product exporters.

“As the government will no longer be able to subsidize local fishermen, Indonesia must work on its high-cost economy to keep prices of its fishery products competitive compared to those of countries with a low-cost economy,” he told The Jakarta Post on Monday.

The decision, which was agreed during the WTO’s five-day ministerial conference in Kenya last week, expects developed member nations to immediately remove export subsidies — except for a handful of agriculture products — and will see developing nations to do so by 2018.

Named after the city where the conference took place, the “Nairobi Package”, however, allows developing member countries to still cover marketing and transportation costs for agricultural exports until the end of 2023, while the poorest and food-importing countries will enjoy additional time to curb export subsidies.

Thomas said there had to be a clear definition on what would and would not be considered a subsidy, reiterating that fishermen empowerment should not be counted as a subsidy.

In 2013, the United States, which accounts for almost half of Indonesia’s shrimp export market, accused Indonesia — along with China, Ecuador, India, Malaysia and Vietnam — of providing subsidies to its shrimp farmers.

Later, however, the US Department of Commerce found Indonesia was not proven to have given considerable subsidies to its shrimp farmers, while India was.

Thomas signaled that the removal of export subsidies on shrimps would help Indonesian producers compete fairly with shrimp producers from other nations.

Indonesia exported 96,748 tons of shrimp in the first half of this year, with 59,007 tons going to the US, according to Apindo data.

India, which previously was the fifth-largest exporter to the US, became the largest exporter last year, surpassing Indonesia, according to Thomas.

Separately, Indonesian Cacao Association (Askindo) chairman Zulhefi Sikumbang said export subsidies were still needed by small cocoa farmers, who were now marginalized by the growing number of big foreign companies.

According to Zulhefi, Indonesia currently exported only 10 percent of its cocoa beans, with the local cocoa processing industry controlled by large foreign companies.

He said that subsidies for small farmers were needed, as most large companies passed the government’s 10 percent value-added tax on raw materials on to the small farmers.

Meanwhile, WTO director-general Roberto Azevêdo previously hailed the deal to abolish export subsidies for farm exports as the “most significant outcome on agriculture”, the WTO announced on its website. 

Banning export subsidies was originally proposed by developing member nations in response to what they saw as huge subsidies granted to farmers in developed nations.

US domestic agricultural subsidies have surged from an average of US$33,437 per farmer in 2008 to $57,000 this year, according to data from the Trade Ministry.

The figure is far higher than the subsidies given by China and India to their respective subsistence farmers, amounting to $192 and between $120 and $200 per farmer, respectively.

Commenting on the deal, Mahmud Syaltout, an international trade law and policy expert with the University of Indonesia, said developing nations now had three years to effectively develop their agricultural export commodities, before the deal fully applied to them.

“The thing is that developed nations have actually gradually reduced their agricultural subsidies at a time when their agricultural products are already globally competitive,” he said. 

The 10th WTO ministerial conference in Kenya also closed deals to continue talks on public stockholding and special safeguard measures between developed and developing nations. However, the conference failed to resume the Doha round talks, which have been stalled for 14 years.

Source:, 23/12/15
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2 komentar:

  1. I think that policy will be difficult to implement in the reality. Because Agro cultural is the most value for the developing countries to have a bergaining position in international forum.

  2. Yeah I agree with that. Nobody from the developing countries to reduce the barrier of import agricultural productions.