Agreement on Agriculture

News: The Agreement on Agriculture at the WTO is riddled with deep imbalances, which favour the developed countries and have tilted the rules against many developing countries, a Union Minister has said.

Details:

  • He claimed that it was in favour of developed countries and historical asymmetries and imbalances must be corrected to ensure a rule-based, fair and equitable order.
  • He urged that G33 must strive for positive outcomes on a permanent solution to Public Stockholding (PSH) for food security purposes, finalization of a Special Safeguard Mechanism (SSM) quickly and a balanced outcome on Domestic Support.
  • It is aimed to remove trade barriers and to promote transparent market access and integration of global markets. The WTO’s Agriculture Committee oversees implementation of the Agreement and provides a forum for members to address related concerns.

Three pillars of AoA

Domestic support

  • AoA divides domestic support into two categories: trade-distorting and non-trade-distorting (or minimally trade-distorting). It the classification of subsidies by “boxes” depending on consequences of production and trade:
    • Amber (most directly linked to production levels)
    • Blue (production-limiting programs that still distort trade)
    • Green (minimal distortion)

Market access

  • Market access refers to the reduction of tariff (or non-tariff) barriers to trade by WTO members. The 1995 AoA consists of tariff reductions of:
    • 36% average reduction – developed countries – with a minimum of 15% per-tariff line reduction in next six years.
    • 24% average reduction – developing countries – with a minimum of 10% per-tariff line reduction in next ten years.
  • Least developed countries (LDCs) were exempt from tariff reductions, but they either had to convert non-tariff barriers to tariffs—a process called tariffication—or “bind” their tariffs, creating a ceiling that could not be increased in future.

Export subsidies

  • The AoA required developed countries to reduce export subsidies by at least 36% (by value) or by 21% (by volume) over six years. For developing countries, the agreement required cuts were 24% (by value) and 14% (by volume) over ten years.

Criticism:

  • AoA has been criticized for reducing tariff protections for small farmers, a key source of income in developing countries, while simultaneously allowing rich countries to continue subsidizing agriculture at home.
  • In 2017 India and China jointly submitted a proposal to the WTO calling for the elimination – by developed countries – of the most trade-distorting form of farm subsidies,
  • They are known in WTO parlance as Aggregate Measurement of Support (AMS) or ‘Amber Box’ support as a prerequisite for consideration of other reforms in domestic support negotiations.

Green Box:

  • Subsidies that do not distort trade, or at most cause minimal distortion. They are government-funded and must not involve price support. They also include environmental protection and regional development programmes. “Green box” subsidies are therefore allowed without limits, provided they comply with the policy-specific criteria

Amber Box:

  • All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box as all domestic supports except those in the blue and green boxes. These include measures to support prices, or subsidies directly related to production quantities

Blue Box:

  • This is the “amber box with conditions”. Such conditions are designed to reduce distortion. Any support that would normally be in the amber box is placed in the blue box if the support also requires farmers to limit production. At present, there are no limits on spending on blue box subsidies