European Economic Community - Subsidies on Export of Wheat Flour
EEC Wheat Flour Subsidies (Source: GATT Analytical Index)
|Products at issue
|Type of product
Key legal aspects
|Fumihiko Suzuki (Japan)
|D.E. Hobson (Canada), R. Lempen (Switzerland)
|No of Pages (total / legal reasoning)
|42 (and 35 annex)
|Request for consultations
|Request for conciliation
|Request for establishment
|Outcome of the proceedings
|SCM/42 (21/03/1983) EEC – Subsidies on Exports of Wheat Flour – Report of the Panel: EEC export refunds for wheat flour must be considered as a form of subsidy which was subject to the provisions of Article XVI of the General Agreement as interpreted and applied by the Code. It was evident to the Panel that the EEC share of world exports of wheat flour has increased considerably over the period under consideration when application of EEC export subsidies was the general practice, while the share of the US and other suppliers has decreased. The Panel found however that it was unable to conclude as to whether the increased share has resulted in the EEC "having more than an equitable share" in terms of Article 10, in light of the highly artificial levels and conditions of trade in wheat flour, the complexity of developments in the markets, including the interplay of a number of special factors, the relative importance of which it was impossible to assess, and, most importantly, the difficulties inherent in the concept of "more than-equitable share". The Panel concluded that, despite the considerable increase in EEC exports, market displacement in the sense of Article 10:2(a) was not evident in the seventeen markets examined by the Panel. With regard to price undercutting in the sense of Article 10:3, the Panel found that, on the basis of available information there was not sufficient ground to reach a definite conclusion as to whether the EEC had granted export subsidies on export of wheat flour in a manner which resulted in prices materially below those of other suppliers to the same markets. The Panel was not convinced, however, that the application of EEC export subsidies had not caused undue disturbance to the normal commercial interests of the United States in the sense of Article XVI:2, to the extent that it may well have resulted in reduced sales opportunities for the United States. The Panel considered it desirable that the EEC, bearing in mind the provisions of Article XVI:2, make greater efforts to limit the use of subsidies on the exports of wheat flour. The Panel considered that there were a number of practical aspects of the application of the export refund which might be examined to this end. Finally, from a broader economic and trade policy perspective, the Panel considered the situation as regards export subsidies and other aspects of trade in wheat flour to be highly unsatisfactory and was concerned over what this implied for the effectiveness of the legal provisions in this area. The artificial level and conditions of much of the trade in this product typified the current problems and prospective risks. In this connexion it found it anomalous, for instance, that the EEC which without the application of export subsidies would generally not be in a position to export substantial quantities of wheat flour, had over time increased its share of the world market to become by far the largest exporter. The Panel considered that certain problems might be reduced by improved transparency and possibly other forms of multilateral co-operation in either the IWC or the GATT. It was of the view, however, that solutions to the problem of export subsidies in this area could only be found in making the pertinent provisions of the Code more operational, stringent and effective in application. Areas which deserve attention in this regard are, inter alia: (i) a clearer and common understanding of the concept of "more than equitable share", and rendering the concept more operational. (ii) consideration of whether international understandings relating to sales on other than commercial terms adequately complement and support intended disciplines on export subsidies.
SCM/M/70 (30/01/1995) Minutes of SCM Meeting (27-28/10/1994) Panel Report had been circulated and examined at various meetings. EC: "This Report had been linked to other reports pending before this Committee in the past. The EC was not at the origin of this linkage but as it has been made the EC would like to see a global solution to the problem."
Subsequent discussions in SCM Committee after Panel report, as reflected in documents SCM/M/14, SCM/M/18, SCM/M/31, SCM/M/32, SCM/M/34, SCM/M/Spec/9, SCM/M/Spec 20.