Skip to main content
SHARE

The World Trade Organization's rotating group of five independent subsidy experts - the so-called Permanent Group of Experts (PGE) - is unique. It cannot, however, be considered a roaring success.

This obscure group of trade lawyers and academics, "highly qualified in the field of subsidies and trade relations," has no counterpart at the World Trade Organization (WTO). Only two other standing bodies of experts exist at the WTO - the Technical Committee on Customs Valuation and the Textiles Monitoring Body - and, unlike the PGE, both consist of representatives from member governments, not independent experts.

Yet, in its 11 years of existence, the PGE has never met, nor fulfilled any of the tasks assigned to it under the WTO's subsidies agreement, the Agreement on Subsidies and Countervailing Measures (ASCM). Members typically serve their entire five-year term without any contact with either the WTO's Secretariat or its Members.

Indeed, most delegates dealing with subsidies at the WTO would have trouble listing the current composition of the group. "People want to be members of the PGE just to put it on their CV," said one delegate in an interview. "Delegations, however, are not very much interested in them."

The ASCM (Articles 24.3 and 24.4) lists three possible roles for the PGE: to provide, at the request of a dispute settlement panel, a binding ruling on whether a particular practice brought before that panel constitutes a prohibited subsidy; to provide, at the request of the Committee on Subsidies and Countervailing Measures (SCM Committee), an advisory opinion on the existence and nature of a subsidy; and finally, at the request of a WTO Member, to provide a confidential advisory opinion on the nature of any subsidy proposed to be introduced or currently maintained by that Member.

The PGE's creation was seen as "an innovation", a means to add credibility to sensitive and complex rules on subsidies, said one drafter of the Uruguay Round agreements. But with hindsight, each of the reasons given for its conception appears flawed.

It was considered a resource for Members, especially developing countries, in need of help to determine whether their subsidy programs were in line with the WTO's subsidies agreement. In particular, it was thought that the PGE would be used to review so-called non-actionable subsidies, i.e. subsidies to research and development, regional development or environmental enhancement which would receive a "green light" under the ASCM. However, this category of subsidy was listed provisionally for five years, and expired at the end of 1999.

It is questionable, however, whether Members would have turned to the PGE to evaluate their subsidies, even had the non-actionable subsidies category been renewed. Members appear reluctant to allow outsiders to pick through sensitive budget material, despite the fact that the PGE's reports would remain confidential.

While the SCM Committee can turn to the PGE for an advisory opinion on a member's subsidy, this would upset the "dynamic" that exists within the WTO, said Marco Bronckers, a former member of the PGE. "Whoever the PGE endorses suddenly gains the upper hand in the discussion, and that would eliminate or reduce the political give and take," Mr. Bronckers explained. Should members fail to reach a compromise, they can turn to the dispute settlement mechanism, which allows the disputing parties to elect their own panel of experts to decide on the matter.

Delegates have echoed this assessment. "If there is some confusion over a member's subsidies, let's go to a panel," said one delegate to the SCM Committee. "And if the panel is working, why would they go to the PGE? Maybe they thought the PGE would be a nice idea, but actually the dynamics show that it is irrelevant."

Given this widely-held feeling that the PGE has become irrelevant, eyebrows were raised this year when the European Commission (EC) proposed an expanded role for the group within the negotiations on fisheries subsidies. That proposal suggested that the PGE could produce a biannual review of members' fisheries subsidies. More controversially, a member could refer a developing country's subsidy to the PGE if they felt that it posed a threat to "sustainable exploitation."

The basic premise behind the EC proposal has, nevertheless, been broadly endorsed: rules on fisheries subsidies will only be effective if subsidy practices are transparent and obligations are enforceable. Members are already notoriously slack in fulfilling existing obligations to notify other members of their subsidy practices. Without stronger rules, there is little reason to believe that the situation would change with respect to rules on fisheries subsidies.

But the EC's suggestion that the PGE be handed the task of monitoring and determining the sustainability of developing country fisheries practices has been denounced. The World Wildlife Fund, for one, called the EU proposal "doubly troubling."

"For starters, it posits a WTO rule that turns on a sensitive and complex question of environmental policy - precisely the kind of the judgment that the WWF has repeatedly argued lies beyond the competence and legitimate authority of the WTO. Then, the EC would give the power to make this judgment to a body consisting entirely of trade experts," according to a statement issued by the WWF in June 2006.

One delegate from a large developing-country said in an interview that the proposal further "contaminated" the fisheries negotiations which were already deeply fractured. "The EC wants us to sign a blank cheque and wait for the future for the PGE to decide about whether we are violating sustainable levels of catching. No way."

For its part, the EC maintains the proposal should be considered preliminary; conceding that further discussion needs to be held on where the members would be drawn from and what qualifications would be required.

David Schorr, a Senior Fellow at the WWF, suggests the creation of a Permanent Group of Fisheries Experts. "It needs to be something interdisciplinary and something that has ownership from the fisheries management world," said Mr. Schorr. He proposes that it be established in cooperation with regional fisheries management bodies and inter-governmental organizations such as the FAO and UNEP, with the majority of the group's members drawn from these bodies.

As for the PGE as it currently stands, there have been no recommendations from Members to eliminate the group, a move that would require formal amendment procedures. In fact, the SCM Committee has recently had trouble agreeing on new members to the group. Two of the five seats to the PGE are currently vacant, and the Committee has been unable to reach a consensus on replacements. "There are more candidates than places, and there is no political will to solve the questions and to really field discussions and consultations," said a delegate.