July 25, 2006	Tuesday	Jumadi-ul-Sani 28, 1427

GENEVA, July 24: Most governments handing out subsidies to farmers and industry do not reveal the true amounts as required by international rules, the World Trade Organisation said on Monday.

In its annual thematic World Trade Report, published shortly before a key meeting to overcome deadlock on a free-trade deal and agricultural subsidies failed on Monday, the WTO said that its 149-member nations were meant to notify the organisation if they use them.

This is because subsidies can unfairly distort market conditions. Subsidies for agriculture have been a central obstacle in the five years of talks to agree to a so-called Doha Round of tariff cuts.The WTO said that despite the disclosure rules: “Few governments fully meet their notification obligations under the WTO, contributing to a serious lack of information and transparency on the use and effect of subsidies.” It estimated that total subsidies reach an annual $300 billion (238 billion euros), with about $250 billion of that figure spent in 21 rich countries.

The absence of systematic information about spending is aggravated by the lack of common definitions of what constitutes a subsidy, the WTO noted.

Governments use subsidies as tools to build up infrastructure, help struggling industries or foster new ones, promote research, protect the environment, share out income and help poor consumers, the report said.

Some of the objectives can be best achieved by subsidies, which range from direct payments to tax breaks.

But the support can also give exporters an artificial competitive advantage or cushion domestic industries in the face of imports, stoking tension among trading nations, said the WTO.

“While some subsidies can benefit society and can offset the negative externalities of economic activity, other types of government support are clearly more controversial and can be damaging,” said WTO chief Pascal Lamy in a statement.

The current Doha Round talks were launched in the Qatari capital in 2001, marking an effort to level the playing field and use commerce to improve the lot of developing countries, who make up the majority of the WTO's membership.

“One significant part of our Doha Round negotiations involves reducing subsidies which distort trade while encouraging governments to use other forms of support which can facilitate development and environmental protection,” Lamy noted.

In the Doha Round talks, developing countries have demanded deep cuts in the billions of dollars that Washington pays US farmers, for example, because they claim that the spending gives American agribusiness an unfair advantage.

Critics say that reductions proposed by Washington lack real bite, although US negotiators reject this.

European Union farm spending has also come in for criticism. Brussels' negotiators at the WTO counter argue that a major shake-up of the 25-nation bloc's common agricultural policy means that the support it offers is now far less trade-distorting than in the past.

WTO members regularly take one another to the organisation's dispute settlement body if they believe there is foul play, and subsidy cases are often extremely complicated.

A notorious case involved allegations of underhand backing for the shipbuilding industries of the EU and South Korea, with both sides battling to prove that easy credit and other support were illegal.

The EU and United States have also turned to the WTO to try to settle their spat over alleged illegal subsidies for their aircraft giants Airbus and Boeing.—AFP