Tied Food Aid: export subsidy in the guise of charity

Abstract

‘Tied’ or ‘in-kind’ international food aid has been criticised as an implicit form of export subsidy that governments use to circumvent export subsidy restrictions. In addition to displacing agricultural exports, food aid is less efficient than untied aid and depresses local agricultural production in recipient countries. I argue that tied food aid is not protected by the Uruguay Round Agreement on Agriculture and could consequently be challenged under the World Trade Organization's dispute settlement mechanism as a prohibited or actionable subsidy contrary to the Subsidies and Countervailing Measures (scm) Agreement. As the USA is both the largest donor of international food aid and most consistently ties its food aid to domestic agricultural producers, this paper focuses on US policy to describe the challenge that might be advanced under the scm Agreement.