Thailand to support export subsidy cuts at global trade meet

5WTO3Thailand pledged to support a trade package that includes an end to subsidies for agricultural exports at the World Trade Organization Ministerial Meeting in Nairobi, Kenya, last week, saying freer trade, especially in agricultural commodities, would help boost the Kingdom’s exports and support more sustainable growth.

The Thai position is in line with that of the Food and Agricultural Organization of the United Nations, which says subsidies distort trade and undermine food security. But the issue remains contentious and pits developed economies, such as those of the United States and the European Union, against developing economies such as those of India, China and Brazil.

Some analysts have called this a “make or break” meeting for the WTO as agreement on such issues have eluded a consensus for many years. The inability of WTO member countries to conclude what is known as the Doha Round of negotiations for a comprehensive global trade regime has resulted in the rise of regional trade agreements such as the Trans Pacific Partnership and the Regional Comprehensive Economic Partnership. The Doha Round was launched in 2001.

Winichai Chaemchaeng, the Deputy Minister of Commerce representing Commerce Minister Apiradi Tantraporn at the meeting, told the Bangkok Post newspaper that tariff cuts are essential to creating more market access for agricultural products and called for the elimination of subsidies as soon as possible.

Developed countries use agricultural subsidies to protect their own farmers against less expensive imports because their costs of production, and consequently their market prices, are much higher.

But that hurts farmers in countries such as Thailand. Winichai said most major economies still heavily subsidized their agricultural products. The European Union, for instance, allocates $70 billion a year on agricultural export subsidies, while the U.S. devotes roughly $40 billion a year to subsidies, he said.

The Kingdom has been the world’s largest exporter of rice for most of the past three decades, as well as among the leaders in sugar, tapioca, pineapples, seafood and other agricultural commodities. In fact, Minister Apiradi said last week the country is on track to meet its target of exporting 10 million tons of rice this year, with 9.3 million tons already shipped so far.

Thailand’s rice shipments rose 66 percent last year from a low in 2013 caused by overpricing relating to a domestic subsidy scheme enacted by the previous government. The current government cancelled the scheme. Export value rose by 23 percent last year to $5.43 billion. The ministry is forecasting exports of only 9 million tons next year, however, on forecasts of weaker world demand.