Wheat Flour

Wheat Flour

Wheat flour in Global Commerce Policy

In this regard, a definition of this issue is as follows: this case was based on a complaint in 1982 by the United States that the European Economic Community (EEC) subsidies on exports of wheat flour were not applied in accordance with Article 10:1 of the Tokyo Round Subsidies Code, one of the Tokyo Round agreements. The United States also alleged that the subsidies provided by the EEC resulted in prices below those of other suppliers to the same market, in contravention of Article 10:3, and that they nullified and impaired benefits accruing to the United States and caused serious prejudice to its interests. The facts were that EEC export refunds on wheat flour were part of the internal single market mechanism. The entries on trade policy are here. A threshold price for wheat flour was established each year which served as the internal price standard. The EEC trade regime for wheat flour provided for import and export licensing as well as import levies and export refunds under certain conditions and in a prescribed manner. The entries on trade policy are here. A variable levy equal to the gap between the import price and the threshold price was charged on imports of wheat flour. The entries on trade policy are here. Export refunds could be granted to cover the difference between the price for wheat flour in the EEC and that obtaining on third markets. The funding of the export refund on wheat flour was made from the same budget allocation as that for the export refund on wheat in the natural state. The first part of the case was concerned with the meaning of “more than an equitable share”. The entries on trade policy are here. An important question was therefore the selection of the representative period to assess whether a signatory had obtained more than an equitable market share. The United States supplied a detailed statistical account to support its case. The entries on trade policy are here. It had selected the three marketing years before the establishment of the Common Agricultural Policy in 1962, since in its view only this could give a true picture. The entries on trade policy in the Encyclopedia are here. On this basis, the EEC had increased its market share from 29% to 75%, and that of all other major exporters had fallen. This displacement had resulted from the export subsidies which made price undercutting possible. The panel’s conclusions were that (a) EEC export refunds for wheat flour were a subsidy in terms of Article XVI (Subsidies) of the GATT, (b) the EEC share of world exports of wheat flour had increased considerably, and that the share of the United States and others had decreased, (c) in the light of the many factors to be considered, a ruling on whether this had resulted in “more than an equitable share” was not possible, (d) market displacement in the sense of Article 10:2(a) of the Subsidies Code, under which the effect of an export subsidy has to be taken into account, was not evident, (e) there was insufficient evidence concerning price undercutting, (f) the EEC export refunds had caused undue disturbance to the normal commercial interests of the United States, and (g) the EEC should make greater efforts to limit the use of subsidies on the exports of wheat flour. The panel also expressed concern, from a broader economic and trade policy perspective, about the effectiveness of the legal provisions regarding export subsidies and other aspects of trade in wheat flour. The entries on trade policy are here. It found it anomalous that the EEC, which would not be able to export substantial quantities of wheat flour without subsidies, had become the world’s largest exporter. The entries on trade policy are here. It suggested that a clearer understanding of the concept of “more than an equitable share” was needed to make the concept more operational. The entries on trade policy are here. It also questioned whether international understandings on sales on non-commercial terms adequately complemented the intended disciplines on export subsidies. See also equitable share of the market.[1]

Wheat flourin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.


Notes and References

  1. Dictionary of Trade Policy, “Wheat flour” entry (OAS)

See Also





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