International Trade Distorting Agricultural Subsidies: Legal and Policy Analysis

The WTO is no longer a privileged club of countries, it has transformed into a global trade system and its rules are not just internal and institutional but represent a world trade order. Free trade has expanded to many parts of the world, swallowing up countries that, a decade ago, never could be considered part of a world trade system. One example is Russia which followed socialistic ideals in the past but is now on the verge of gaining access to the WTO. Other countries of the former Soviet Union, including Uzbekistan, are rushing to join the club while others, lucky countries like Kyrgyzstan, have reached the dream of being accepted. At the same, the WTO is not a panacea for developing countries to eliminate poverty and boost economic development. WTO rules are far from being fair. They carry the egoistic, national interests of member countries and reflect the classic Ricardo idea: when everyone is able to follow their own narrow financial interests others pursuing the same can benefit. Obviously, there are other criticisms and disadvantages, but as yet there is no alternative to the WTO. The WTO is currently the most effective tribunal for international dispute resolution. The International Court of Justice, the United Nations\u27 dispute settlement mechanism, looks helpless compared to the dispute settlement body of the WTO. The WTO is the first brick in universal globalization; countries are bound by the same rules and part of one mechanism. This explains the tendency toward expanding the WTO to govern human rights issues, which, in my opinion, is completely wrong and inconsistent with the pure economic purpose of the WTO. Under the shining facade of the WTO, numerous remaining controversies contribute to continuous stagnation of least-developed countries -- especially those whose main export assets are agriculture products. Agriculture subsidization is the most sensitive controversy. The disproportionate trade liberalization of industrial and agriculture products threatens the perspective of economic globalization. The mystery of subsidies is inconsistent with WTO rules and prohibited in the trade of industrial goods, but remains unresolved in agriculture. The focus of this research is the economic and legal perception of agriculture subsidies from an international trade perspective. The four chapters of this thesis cover the economic and legal issues of agricultural subsidization with concrete examples where those subsidies are applied. The first chapter provides general, introductory information about agriculture subsidies and discusses the economic mechanism of subsidization in agriculture, as well as other fields of a country\u27s economy. There are three main questions in this chapter: Why are countries addicted to subsidies? How does this addiction destroy the healthy structure of a market economy? How does subsidization lead to an oversupply of agriculture products? This chapter is divided into related subchapters. The second chapter offers a necessary explanation of the regulation of subsidies under the GA TT /WTO system. This chapter is divided into two subparts that discuss the regulatory mechanism of the previous GATT and the present WTO. My main goals are to show the gradual progression m the legal understanding of the distorting effects of agricultural subsidies and explain their classifications. The third chapter examines developed countries\u27 regulation of subsidies as well as their approach to reducing and eliminating subsidization. The two key-players in the WTO, the US and the EU, will be covered in separate subchapters discussing their agricultural policies, their export and domestic subsidization and their reforms to reduce or eliminate subsidies. The final chapter of my thesis focuses on the developing world. My goal is to analyze the position of developing countries in agricultural trade, with an emphasis on countries in transition, especially Uzbekistan. In the last subchapter, I will analyze the agricultural sector of Uzbekistan and provide proposals for agricultural reforms that could increase agricultural output, without subsidies, while being consistent with WTO requirements in case Uzbekistan becomes a WTO member nation. In the conclusion I will attempt to summarize my research