WTO AGREEMENTS ON AGRICULTURE

to establish a fair and market-oriented agricultural trading system. The reform programme comprises specific commitments to reduce support and protection in the areas of domestic support, export subsidies and market access, ( the three components of agreement on agriculture) and through the establishment of strengthened and more operationally effective GATT rules and disciplines. The Agreement also takes into account non-trade concerns, including food security and the need to protect the environment, and provides special and differential treatment for developing countries, including an improvement in the opportunities and terms of access for agricultural products of particular export interest to these embers. T!" AG#"" "$T establishes a number of generally applicable rules %ith regard to trade-related agricultural measures, primarily in the areas of market access, domestic support and export competition. These rules relate to country-specific commitments to improve market access and reduce trade-distorting subsidies %hich are contained in the individual country schedules of the &T' embers and constitute an integral part of the GATT. the Agreement on Agriculture itself originated in (ruguay round the concessions and commitments embers are to undertake are on market access, domestic support ( the amber,blu ) green boxes) and export subsidies* 'verall, the results of the negotiations provide a frame%ork for the long-term reform of agricultural trade and domestic policies over the years to come. +t makes a decisive move to%ards the ob,ective of increased market orientation in agricultural trade.

The rules governing agricultural trade are strengthened %hich %ill lead to improved predictability and stability for importing and exporting countries alike. The agricultural package also addresses many other issues of vital economic and political importance to many embers. These include provisions that encourage the use of less trade-distorting domestic support policies to maintain the rural economy, that allo% actions to be taken to ease any ad,ustment burden, and also the introduction of tightly prescribed provisions that allo% some flexibility in the implementation of commitments. -pecific concerns of developing countries have been addressed including the concerns of net-food importing countries and least ./ The agricultural package provides for commitments in the area of market access, domestic support and export competition. The text of the Agricultural Agreement is mirrored in the GATT -chedules of legal commitments relating to individual countries +n the area of market access, non-tariff border measures are replaced by tariffs that provide substantially the same level of protection. - -uch measures include 0uantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing procedures, voluntary export restraint agreements and non-tariff measures maintained through state-trading enterprises. All similar border measures other than 1normal customs duties2 are also no longer permitted. Tariffs resulting from this 1tariffication2 process, as %ell as other tariffs on agricultural products, are to be reduced by an average 34 per cent in the case of developed countries and 56 per cent in the case of developing countries, %ith minimum reductions for each tariff line being re0uired. #eductions are to be undertaken over six years in the case of developed countries and over ten years in the

case of developing countries. 7east-developed countries are not re0uired to reduce -tariff rates)or 8asically in A#9"T A//"-- member countries have to maintain a minimum level of imports for agriculture commodities %here minimum current access should not be less than 3 per cent of domestic consumption. These minimum access are to be expanded to : per cent over the implementation period. .' "-T+/ -(;;'#T or -(8-+.<. 8y this %e mean measures that support farmers but should not support distortion of %orld trade and this is done thru TAMS: total aggregate measurement support = reduction commitments, members have been re0uired to reduce TA - by 5>? over the last six years TA - includes specific agri product subsidy and agricultural sector subsidies as a %hole .omestic support measures that have, at most, a minimal impact on trade (1green box2 policies) are exempted from reduction commitments. -uch policies include general government services, for example in the areas of research, disease control, infrastructure and food security. direct payments under environmental programmes and under regional assistance programmes.( blue box) +n addition to the green box policies, other policies need not be included in the Total Aggregate easurement of -upport (Total A -) reduction commitments. These policies are direct payments under production-limiting programmes, (blue box)certain government assistance measures to encourage agricultural and rural development in developing countries and other support %hich makes up only a lo% proportion (: per cent in the case of

developed countries and @> per cent in the case of developing countries) #" " 8"# The Total A - covers all support provided on either a productspecific or non-product-specific basis that does not 0ualify for exemption and is to be reduced by 5> per cent (@3.3 per cent for developing countries %ith no reduction for least-developed countries) during the implementation period. embers are re0uired to reduce the value of mainly direct export subsidies to a level 34 per cent belo% the @AB4-A> base period level over the six-year implementation period, and the 0uantity of subsidised exports by 5@ per cent over the same period. +n the case of developing countries, the reductions are t%o-thirds those of developed countries over a ten-year period (itions, there are no commitments on subsidies to reduce the costs of marketing exports of agricultural products or internal transport and freight charges on export shipments. The Agreement on Agriculture provides for some limited flexibility bet%een years in terms of export subsidy reduction commitments and contains provisions aimed at preventing the circumvention of the export subsidy commitments and sets out criteria for food aid donations and the use of export credits. 1;eace2 provisions %ithin the agreement includeC an understanding that certain actions available under the -ubsidies Agreement %ill not be applied %ith respect to green box policies and domestic support and export subsidies %ill be maintained in conformity %ith commitments* an understanding that 1due restraint2 %ill be used in the application of countervailing duty rights under the General Agreement* and setting out limits in terms of the applicability of nullification or impairment actions. These peace provisions %ill apply for a period of A years.

The agreement sets up a committee that %ill monitor the implementation of commitments, and also monitor the follo%-up to the .ecision on easures /oncerning the ;ossible $egative "ffects of the #eform ;rogramme on 7east-.eveloped and $et Dood-+mporting .eveloping /ountries. The package is conceived as part of a continuing process %ith the long-term ob,ective of securing substantial progressive reductions in support and protection. the first five years, %ould take into account non-trade concerns, special and differential treatment for developing countries, the ob,ective to establish a fair and market-oriented agricultural trading system and other concerns and ob,ectives noted in the preamble to the agreement.

(nderstanding

the

boxes

of

&T'

.' "-T+/ -(;;'#T +$ AG#+/(7T(#" The boxes +n &T' terminology, subsidies in general are identified by 1boxes2 %hich are given the colours of traffic lightsC green (permitted), amber (slo% do%n E i.e. be reduced), red (forbidden). +n agriculture, things are, as usual, more complicated. The Agriculture Agreement has no red box, although domestic support exceeding the reduction commitment levels in the amber box is prohibited* and there is a blue box for subsidies that are tied to programme that apply limit production. There are also exemptions for developing countries (sometimes called an 1-). box2, including

provisions in Article 4.5 of the agreement).

Amber box All domestic support measures considered to distort production and trade (%ith some exceptions) fall into the amber box, %hich is defined in Article 4 of the Agriculture Agreement as all domestic supports except those in the blue and green @boxes. These include measures to support prices, or subsidies directly related to production 0uantities. These amber box supports are sub,ect to limitsC 1de minimis2 that means minimal supports are allo%ed (:? of agricultural production for developed countries, @>? for developing countries)* the 3> &T' members that had larger subsidies than the de minimis levels at the beginning of the post-(ruguay #ound reform period are committed to reduce these subsidies. The reduction commitments are expressed in terms of a 1Total Aggregate easurement of -upport2 (Total A -) %hich includes all supports for specified products together %ith supports that are not for specific products, in one single figure. +n the current negotiations, various proposals deal %ith ho% much further these subsidies should be

reduced, and %hether limits should be set for specific products rather than continuing %ith the single overall 1aggregate2 limits. +n the 8lue box This is the 1amber box %ith conditions2 E conditions designed to reduce distortion. Any support that %ould normally be in the amber box, is placed in the blue box if the support also re0uires farmers to limit production (details set out in ;aragraph : of Article 4 of the Agriculture Agreement). At present there are no limits on spending on blue box subsidies. +n the current negotiations, some countries %ant to keep the blue box as it is because they see it as a crucial means of moving a%ay from distorting amber box subsidies %ithout causing too much hardship., some advocating moving these supports into the amber box. Green box The green box is defined in Annex 5 of the Agriculture Agreement. +n order to 0ualify, green box subsidies must not distort trade, or at most cause minimal distortion (paragraph @). They have to be government-funded (not by charging consumers higher prices) and must not involve price support. They tend to be programmes that are not targeted at particular products, and include direct income supports for farmers levels or prices. They also include environmental protection and regional development programmes. 1Green box2

subsidies are therefore allo%ed %ithout limits, provided they comply %ith the policy-specific criteria set out in Annex 5.