As a result of the Uruguay Round, Article XVI of GATT 1947 has been replaced and is no longer applied to agricultural exports. The Agreement on Agriculture (AoA)(31) allows WTO Members to use agricultural export subsidies in ways not provided by the general rule in the Agreement on Subsidies and Countervailing Measures (SCM Agreement)(32). As provided in the AoA’s Preamble, its two long-term aims are: (1) “to provide for substantial progressive reductions in agricultural support and protection sustained over an agreed period of time, resulting in correcting and preventing restrictions and distortions in world agricultural markets;(33)” and (2) which should be initiated “through the establishment of strengthened and more operationally effective GATT rules and disciplines.(34)”

      Articles 3, 8, 9, 10 and 11 of the AoA limit WTO Members’ ability to subsidize their export products to defined ways(35). Most importantly, the “reduction commitments” standard replaced the “equitable share” standard. WTO Members have an obligation to progressively reduce export subsidies in specified products according to their commitments(36). As a result, Article 3.3 prohibits subsidization in excess of the budgetary outlay and quantity commitment levels written in the schedules(37). In addition, Article 8 forbids any country to subsidize any other export products not supplied in the commitments(38). The AoA also stipulates types of payments which are included in the reduction commitments under Article 9.1. One type of such payments under Article 9.1(c) is a payment on exports which is “financed by virtue of governmental action, whether or not a charge on the public account is involved.”(39) The “reduction commitments” standard enables parties to ascertain and renew the concrete proof to determine if a country is over-subsidizing in export products.

        Early on, most WTO Members believed provisions in the AoA would reduce export subsidies on agricultural trade because its provisions were supposed to be much stronger than those in GATT. From 1996 to 1998, however, agricultural export subsidies in many countries did not decrease according to the reduction commitments. On the contrary, they increased so greatly that many scholars questioned the effectiveness of this standard(40). In particular, export subsidization on sugar greatly increased during that interval. According to the USDA, subsidization of exported sugar increased from 692.7 million dollars in 1996, to 890.7 million dollars in 1997, and again to 913.2 million dollars in 1998. (41)

          As seen in this part, the law of agricultural export subsidies has evolved from the “equitable share” standard in GATT to the “reduction commitments” standard in the WTO. Not only has the new standard replaced the old standard’s vague language, but it also provides concrete limitations on exportable subsidized commodities. As a result, it assures exporting countries which are suffering from the over-subsidization that justice will be done when they bring a case before the WTO.