OECS trade officers hold urgent talks on withdrawal of government subsidies for export

Participants at discussion meeting.

PRESS RELEASE: Trade officers throughout the OECS concluded urgent talks in Castries on Monday on preparing for a pending withdrawal of government subsidies for export by the end of 2015.

Experts say government subsidies for export have been used to attract foreign investment and help tremendously in employing thousands of people throughout the OECS. However, based on a World Trade Orgainsation (WTO) agreement in 2007, OECS Member States are obligated to remove the export subsidies from their legislation as of 2015.

Despite the pending restrictions, there is some flexibility where OECS Member States can continue to use subsidies after 2015 as long as these subsidies are not based solely on exports.  In addition, OECS Member States can also continue to use subsidies to garner or maintain employment.

Natasha Edwin

Natasha Edwin, Technical attaché  at the OECS Secretariat’s Geneva Mission in Switzerland says her office will further assist OECS countries in ensuring that reformed legislation regarding government subsidies does not breech the WTO rules.

“Our role is to provide support and recommend the way forward for Member States on issues like this one, so its precisely why we decided to have consultations on this 2007 decision which stipulates that Member States are to phase out export subsidies by 2015. In the discussions we acknowledged the importance that Member States put toward continuing to provide subsidies on attracting investment. However it is important to note that Member States can continue to provide subsidies to investors, as long as these subsidies are not contingent or based solely on exports. So while Member States are indeed reforming the legislation they can ensure that the intentions that they provide are not to export but rather they could link to the creation of employment or even attracting investment at the regional level,” Edwin elaborated.

The OECS Secretariat’s Geneva Mission says governments are fully aware of the penalties for breaching the WTO rules under the 2007 decision regarding government subsidies for export. “A member who is in breech is liable to dispute. However, before entering into a full fledged dispute, that member can enter into consultations to address the measures that are found to be in breech of the legislation and so the member is provided with an opportunity to correct the offending legislation,” Edwin explained.

Alicia Stephen of the OECS Secretariat’s Trade Policy Unit OTPU says some Member States have already started the process towards cushioning the impact expected from the phasing out of export subsidies.

Alicia Stephen

“For example by the end of this year one Member State should have legislation in place that is compatible with the WTO agreement on subsidies and countervailing measures. Another Member State is also reviewing new legislation enacted four years ago to ensure that there are no components of that legislation that grant export subsidies. The remaining Member States are going to be part of a process where we are reviewing the OECS model legislation and they will adopt that as far as possible and incorporate it into any review of their fiscal incentives legislation. We would like Member States to ensure that whatever revisions they undertake really result in a regime that is even more attractive than what exists now,” Stephen noted.

Legislative reform, Investment Policy review and Information sharing are the major components of an action plan designed by the OECS Trade Officials to facilitate preparations for the removal of government subsidies for exports from the legislation in OECS Member States by 2015.

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