Commitments by the European Union and the United States to Reduce Agricultural Export Subsidies

Pursuant to a congressional request, GAO reviewed the European Union's (EU) and the U.S.' agricultural export subsidy programs, focusing on: (1) EU and U.S. compliance with the World Trade Organization's (WTO) Agreement on Agriculture commitments to reduce agricultural export subsidies; and (2) EU and U.S. plans regarding the future use of agricultural export subsidies.

GAO noted that: (1) to date, the European Union and the United States have complied with their WTO Agreement on Agriculture schedule of annual commitments to gradually reduce export subsidies for categories of agricultural goods; (2) for most agricultural categories, the European Union and the United States are below the maximum annual levels set by their schedules; (3) for a few categories, however, the European Union and the United States exceeded their annual commitments for 1 year; (4) according to the European Union and the United States officials, in these cases, each country carried forward unused agricultural export subsidies from previous years to maintain compliance with their schedules; (5) the European Union and the United States differ on their future plans regarding agricultural export subsidies; (6) the European Union recently adopted a new agricultural policy that plans further cuts in the domestic market prices of dairy products, beef, and cereals between the years 2000 and 2007, which would facilitate reductions in its agricultural export subsidies; (7) the United States has announced that it will seek the elimination of all agricultural export subsidies in the 1999 WTO talks; (8) these two trading partners expect the WTO negotiations to link cuts in agricultural export subsidies with changes in other trading practices; and (9) for example, the European Union plans to tie cuts in export credit guarantee programs with reductions in agricultural export subsidies, and both partners will seek more transparency in the activities of state trading enterprises as part of export subsidy reduction negotiations.