Subsidies in the EU and the WTO - Dissertation Example

        EU has been known for its persistently notorious subsidy programs for farmers and agricultural producers ever since the 1960s though they weren’t so sophisticated as they are now while GATT has been known for acting to discourage individual governments and trade blocs from granting subsidies to people in any form. Yet EU’s actions in granting subsidies didn’t attract much attention at the beginning till some other countries like the US began to feel the pinch by way of heavy dumping of subsidized farm products on their borders.

In the sixties, such subsidies were basically intended to supplement nutrition for children and adults. 1970s weren’t any different though towards the end of the decade many such subsidies assumed the first characteristics of what’s known as “an obvious effort at dumping”. This means EU governments under its customs union banner began to increase the number of subsidies to both dairy farmers and agricultural producers. WTO’s evolution beginning from the GATT in 1947 onwards was marked by haphazard developments concerning efforts to create a unified international framework for trade.

However, its efforts weren’t that important with regard to subsidies because there wasn’t a dispute settlement mechanism as such. Above all GATT wasn’t approached by member governments with the same intensity as it’s now. In fact, GATT in the seventies was seen as a mere international institution with little or no powers and authority to enforce its decisions over the individual members. Thus the decade under GATT was marked by scurried efforts of individual governments to make quicker gains at the expense of their trading partners by giving free subsidies to producers.

For instance, in the 1970s EU with its smaller membership and the US had been rattled by the burgeoning Japanese economy. Japan was not only encouraging dumping but also effectively able to set in place a number of barriers against free imports.