INF/TE/SSD/R/11  
 
14 July 2022 
(22-5375) Page: 1/4 
Trade and Environmental Sustainability Structured 
Discussions  Original : English  
 
  
WTO TRADE AND ENVIRONMENTAL SUSTAINABILITY STRUCTURED DISCUSSIONS  
INFORMAL WORKING GROUP ON SUBSIDIES HELD ON 18 MAY 2022 (15:00 -18:00)  
Summary of discussions1 
1  Introductory remarks by the facilitator  
1.1.  The facilitator  of the Working Group on Subsidies Sveinn K. Einarsson  (Iceland)  recalled that 
in the TESSD Ministerial Statement (WT/MIN(21)/6/Rev.2), co -sponsors had agreed to support 
continued discussions on the environmental effects and trade impacts of relevant subsi dies and the 
role of the WTO in addressing these. Further, the TESSD Work Plan for 2022 had presented three 
guiding questions for discussions on subsidies: (i) how the environmental effects and trade impacts 
of relevant subsidies c ould be identified ; (ii) what information exist ed to better understand these 
impacts and where information gaps exist ed; and (iii) what opportunities exist ed to address the 
environmental impacts of subsidies at the WTO.  
1.2.  The facilitator recalled that the International Institute fo r Sustainable Development (IISD) had 
made two overview presentations on fossil fuel subsidies and agricultural subsidies at the previous 
TESSD meeting on 31 March and 11 April 2022. On fossil fuel subsidies, research had indicated that 
subsidies for fossil fuels globally largely exceeded those for renewable energy. The presentation on 
agricultural subsidies had provided  estimates on the amounts of global subsidies, their g lobal and 
specific environmental impacts, and opportunities to repurpose these towards more positive 
environmental outcomes. Several Members had expressed interest in different types of subsidies 
which could be covered and had pointed to specific challenge s arising from those .  
2  Presentation by the Organisation for Economic Co -operation and Development (OECD)  
2.1.  The representative of the  Organisation for Economic Co -operation and Development (OECD)  
provided  an overview of the OECD Inventory of Support Measures for Fossil Fuels, methodologies 
for evaluating fossil fuel subsidies  and highlighted existing information and information gaps relating 
to fossil fuel subsidies . According to the OECD, the following questions need ed to be addressed when 
assessing fossil fu el subsides: (i) What constitutes  a fossil fuel subsidy?  (ii) How can the extent to 
which a government intervention confer s a benefit to fossil fuel users or producers  be measured ? 
(iii) What  kind of  subsidies can be  considered "inefficient "? and (iv) to what extent do fossil fuel 
subsidies  encourage "wasteful consumption "? Based on peer review by Peru, Italy, Germany and 
Mexico , the OECD noted that  there were different views regarding what  constitute d an inefficient 
subsidy , which in turn  posed challenges to  collective commitment s to fossil fuel subsidy reforms  
(FFSR) .  
2.2.  According to the OECD, FFSR could make use of  current ly available tools, including the OECD 
Inventory of Support Measures for Fossil Fuels, which identifie d, document ed, and esti mated 
individual policy measures  that support ed the production and consumption of fossil fuels.  This 
database cover ed more than 1,300 individual measures (mostly direct budgetary transfers and tax 
expenditures).  It was suggested  that reporting on intervention which benefit ted fossil fuel users and 
 
1 This summary, prepared and circulated under the facilitators' responsibility, is being shared with a 
view to providing delegations with a record of the discussions. It provides a non -exhaustive, illustrative review 
of the issues addressed by Members at the meeting.  INF/TE/SSD/R/11  
 
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  producers would be  a first step to enhance transparency. Periodic peer reviews (or self -reported 
progress) could also be a useful tool to enhance transparency.  
3  Presentation by the Unite d Nations Environment Programme (UNEP)  
3.1.  The representative of the United Nations Environment Programme (UNEP) presented  a joint 
report  with the Food and Agricultural Organization of the United Nations (FAO) and the 
United  Nations Development Programme (UNDP) titled "A multi -billion -dollar opportunity: 
Repurposing agricultural support to transform food systems". According to the report, f ood systems 
support ed the achievement of at least 12 Sustainable Development Goals (SDGs), including 
eliminating poverty (SDG 1) and food insecurity and malnutrition (SDG 2). However,  government 
agricultural support policies were not fit for today 's food s ystems . The report  focused on public policy 
measures targeting agricultural producers, both in the form of price incentives and fiscal subsidies.   
3.2.  Global  agricultural support average d around US D 650 billion every year. Support varied 
significantly by country and the impacts of removing agricultural support  measures  would not be 
uniform across countries or even groups of countries.  Governments adopt ed a range of measures to 
support agriculture  to bolster economic growth, reduce poverty and improve food security. However, 
in many cases , agricultural policies ha d incentivized farming practices, production systems and 
commodities that were potentially harmful to the environment, nutrition and health, working against 
efforts towards a sustai nable, resilient and inclusive food system.  According to the report, price 
incentives or coupled subsidies ( on inputs such as pesticide or fertilizers or output subsidies 
e.g. those identified as emission -intensive commodities)  were the m ost trade -distorti ve and 
environmentally and socially harmful , while  de-coupled subsidies and general sector support were 
the least distorting. It was underlined that no 'one-size-fits-all' strategy  existed for repurposing 
agricultural support . Any such effort w ould be dependent on a range of factors and country -specific 
circumstances.  Further, such strategies need ed to consider ways to mitigate negative impacts, 
especially for vulnerable groups .  
3.3.  Several Members took the floor to present questions and comments. One Mem ber asked 
whether the  OECD collect ed data across the complete value chain  or limit ed its data collection only 
to the upstream stages of exploitation and extraction . Another Member enquired  whether "price 
support" mentioned in the UNEP report was based on the OECD price support estimates, or if UNEP 
had conducted a separate analysis . The representative of the OECD responded by noting that data 
was collected across the complete value  chain as far as possible including, for instance, from 
budgetary reports. However, many measures were not well documented and therefore  some 
measures were not accounted for. The representative of the UNEP mentioned that price support 
estimates used in the report were similar to those of OECD, but still displa yed some differences as 
they were based on FAO-OECD -World Bank data sources.  
4  Exchange of views by Members  
• How could the environmental effects and trade impacts of relevant subsidies be identified?  
• What information  existed to better understand these impact s and where were there 
information gaps?  
4.1.  Fourteen  Members  took the floor under this item .2 Most Members agreed that this working 
group could play a  positive role in demonstrating  the impact that subsidies can have on the 
environment. Some Members  underlined  that discussions  on agricultural subsidies in TESSD should 
complement existing WTO disciplines on subsidies, ongoing work in specialized committees such as 
the Special Session of the  Committee on Agriculture  (COA-SS), as well as  parallel discussions on 
FFSR. One Member noted that the ongoing work on agricultural subsidies at the COA was technically 
different from the discussions taking place in TESSD and would not, in principle, duplicate the work . 
This Membe r suggested that some of the discussions taking place in TESSD c ould support ongoing 
work in the COA-SS.  
 
2 Australia , Brazil, Canada, China,  Colombia, Costa Rica,  European Union, Japan, New Zealand, 
Parag uay, Saudi Arabia, Switzerland,  United Kingdom , and United States . INF/TE/SSD/R/11  
 
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  4.2.  Members broadly supported hav ing discuss ions on  subsidies relating to agriculture. A number 
of Members noted that industrial subsidies should also be discussed in TESSD. Challenges faced by 
developing countries were also raised , with one Member emphasizing that environment  measures 
should not become an obstacle to trade through burdensome requirements , and another Member 
noting that many developing coun tries d id not have the capacity to subsidize agriculture. One 
Member, however, noted that discussions on FFSR should take place under the respective initiative . 
4.3.  According to one Member, a subsidy was considered  harmful if negative environmental impacts 
increas ed due to the existence of the subsidy . Assessing the environmental impact of subsidies 
should also  consider the related regulatory framework  and account for development and social 
impacts. Another Member h ighlighted that  non-trade or production distorting agricultural subsidies 
could also produce net -negative environmental effects.  It noted that Members  would benefit from a 
broad and transparent debate o n the complex issues relat ing to sustainability in agr iculture in 
TESSD . A Member stated that TESSD co-sponsors should consider how environmental measures 
negatively impact ed trade and were burdensome to developing countries.  
4.4.  A Member stated that it saw no reason to prioritize subsidies in agriculture over i ndustrial 
subsidies. In its view , industrial subsidies that led to overcapacity had a large effect on trade and 
the environment, particularly in emissions -intensive sectors such as steel. While reducing the 
harmful effects of agricultural subsidies was imp ortant to achieve the SDGs and realize a sustainable 
food system, the Member noted that the agricultural sector needed to stabilize food production to 
eradicate hunger . Another Member also noted that  the use of fossil fuels in industrial processes was 
one major source of emissions .  
4.5.  Two Members stressed the importance of transparency. One Member  stated that increased 
transparency on all kinds of subsidies , including fossil fuel subsidies and agriculture subsidies , was 
crucial to assess the tangible impact  of policies on the environment. Another  Member noted that 
transparency was a fundamental first step in enhancing understanding of environmentally harmful  
subsidies . Evidence -based analysis of their effects c ould help to improve subsidy design and 
minimi ze negative externalities.  
4.6.  One Member noted that  methodologies for addressing the  concept of fossil fuel subsidies  
internationally  could be construed to mean anything up and down the supply chain that could 
potenti ally encourage the production or consumption of fossil fuels. These broad understandings 
undermine d the goal of such a discussion, which was to look at those subsidies that appl ied directly 
to the production or consumption of fossil fuels.  
4.7.  Two Members hig hlighted the role that TESSD c ould play in examining agricultural subsidies . 
One Member  suggest ed that TESSD could be a forum to examine existing studies relating to 
agricultural subsidies and the environment that ha d been undertaken by international insti tutions , 
as well as current practices adopted by Members.   
4.8.  A Member suggested that the OECD develop a list based on data contained in its inventory.  
This list could be a useful place to start or promote further domestic policy work. The list could be 
purely factual, highlighting  the most common measures, or perhaps group ing measures  by those 
that could be identif ied as the most environmentally harmful or trade distorting.  
4.9.  A Member emphasized that discussions on agricultural subsidies for  sustainable agriculture 
should  take into account each country's  climatic and geographical conditions in the design, adoption 
and implementation of policies . Further, s ustainability in agricu lture should  consider the role of 
technical standards. According to this Member, s ome Members ha d been imposing non -tariff barriers 
that were not rooted on scientific -evidence by international standard -setting organizations, as 
mandated by the SPS Agreemen t. It also noted that d eveloping countries d id not have the same 
fiscal capacity to subsidize their agricultural sector s.  
4.10.   A Member  stated that data  was important to advocate for change by demonstrating  the 
negative effects of fossil fuel subsidies. Noting  that the OECD inventory was a valuable tool to 
understand the current status of fossil fuel subsidies, it stated that TESSD  could enhance 
transparency regarding fossil fuel subsid ies. INF/TE/SSD/R/11  
 
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  5  Concluding remarks by the Facilitator  
5.1.  The facilitator thank ed Members  for their intervention s, which  highlighted opportunities to 
discuss a broad number of sectors to which discussion on subsidies would be relevant. He also  
emphasized that Members should ensure that assessments were inclusive and targeted. The 
facilitator  concluded the meeting by  encourag ing Members to focus on highlighting areas where 
TESSD could  contribute the most to these debates, in particular , for developing countries so that 
they c ould both engage and benefit from these discussions.  
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