Description

A special levy is a non-tax levy on certain export goods.

Unlike an export tax, the special levy is not intended to finance general government expenditure but rather to benefit the group on which the special levy was imposed. This must be a homogeneous group, in other words it must be distinct from the taxpayer community by virtue of common circumstances or a common interest. The group benefit is particularly difficult to prove in the case of a special levy on exports that initially reduces the competitiveness of the exporters. Consumers and processors may benefit from lower prices at the beginning.

Article XI of GATT 1994 prohibits all forms of export restrictions except "duties, taxes, or other charges". Export restrictions imposed temporarily in order to meet critical shortages in foods or other essential products are another exception. However, expressions such as ‘temporary’, ‘critical’, and ‘shortage’ are not specifically defined.

According to Article 12 of the Agreement of Agriculture, AoA "any Member institutes any new export prohibition or restriction on foodstuffs in accordance with paragraph 2(a) of Article XI of GATT 1994, the Member shall observe the following provisions: (a) the Member instituting the export prohibition or restriction shall give due consideration to the effects of such prohibition or restriction on importing Members’ food security; (b) before any Member institutes an export prohibition or restriction, it shall give notice in writing, as far in advance as practicable, to the Committee on Agriculture (...) and shall consult, upon request, with any other Member having a substantial interest as an importer with respect to any matter related to the measure in question."

The provisions of this Article shall not apply to any developing country member, unless the measure is taken by a developing country member which is a net-food exporter of the specific foodstuff concerned.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Clearly recognisable product characteristics
• Close cooperation and knowledge sharing with research institutions
• Compatible regional and world trade law (WTO conformity)
• Consumer protection and/ or animal welfare is ensured
• Constant market surveying and forecasting
• Efficient customs administration
• Market price information systems

Possible Negative Effects

• Market distortion and economic losses
• Loss of income for domestic farmers (loss of producer surplus) and exporters due to lower domestic prices and fewer exports
• Sales markets and trading partners may be lost and could be difficult to win back in the future
• Production in the sector of the product concerned drops due to lower prices, endangering food and nutrition security in the medium and long term