Uganda set to benefit from EU agriculture export subsidies cut

Ugandan farmers are set to enjoy an extra market share after the European Union committed to cut agricultural export subsidies in early 2018, in line with a 2015 World Trade Organisation (WTO) landmark ministerial decision made in Nairobi, Kenya, to eliminate farm export subsidies.

The EU ranks second in Uganda’s export destination, with exports valued at US$443 million in 2015. Most of the exports are agricultural exports such as horticulture products and coffee.

In a statement, chair of the WTO agricultural committee, Alf Vederhus, said the EU is the second member to initiate the process of eliminating subsidies after Australia, giving chance to African countries like Uganda to export agriculture goods at competitive prices as long as they meet standards.

“The EU submitted, as part of the draft goods schedule for its 28 member states, a change of commitments incorporating the implementation of the landmark 2015 decision by WTO members to eliminate farm export subsidies,” Mr Vederlus said.

The EU’s 28-member states have issued a draft schedule showing that export subsidy cuts will take effect by the beginning of February if members don’t raise any objections.

Export subsidies entail credit and guarantee schemes extended to EU traders to make their products cheaper in foreign markets. The incentives include forex loss compensation, freight cost refund and total tax refund on exportable products.

The export subsidies are offered in addition to domestic support which is given to farmers to lower the production cost. Over the past decades export subsidies have enabled EU exporters to grow market share for its products in developing countries while exerting downward pressure on world market prices.

Under the 2015 Decision, WTO members agreed to abolish agricultural export subsidies and set disciplines on export measures with equivalent effect, levelling the playing field for farmers around the world.

The decision, apart from eliminating farming export subsidies, also introduced new rules regarding other types of farming export support, including export credits.