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AGRICULTURE NEGOTIATIONS: BACKGROUNDER
Update Phase 2: domestic supports — amber, blue and green boxes

Fact sheet:The boxes” in domestic support

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UPDATED 10 OCTOBER 2002

Contents
> In a nutshell
Proposals received in Phase 1
Proposals received in Phase 2
Alliances table
INTRODUCTION
Phase 1
Export subsidies, competition and restrictions
Market access
Domestic support: amber, blue and green boxes
Developing countries
Transition economies
Non-trade concerns
Animal welfare and food quality
The peace clause

Phase 2
Tariffs and quotas
> Domestic support: amber, blue and green boxes
Export subsidies and restrictions
State trading
Food security
Food safety
Rural development
Geographical indications
Safeguards
Environment
Trade preferences
Food aid
Consumer information and labelling
Sectoral initiatives
Development box, single commodity producers, small island developing states, special and differential treatment
Additional issues (food aid, the Green Box, tariff quota expansion)

Modalities 2002–2003
Exports
Market access
Domestic support


Data
Statistics

This briefing document explains current agricultural issues raised before and in the current negotiations. It has been prepared by the Information and Media Relations Division of the WTO Secretariat to help public understanding about the agriculture negotiations. It is not an official record of the negotiations.


Amber box domestic supports back to top

See also Phase 1. Some countries have proposed steeper cuts on higher levels of support, with some disaggregation according to products (current amber box reductions are aggregates over all products). Some countries want amber box subsidies to eventually be eliminated completely.

Some of the discussion was linked to the two other categories of domestic supports, the “blue” and “green” boxes: whether the concepts should be retained, whether the blue box should be restricted or eliminated, whether some green box subsidies should be moved into the amber box because they distort trade. Some spoke of overall caps covering subsidies in all categories.

Amber box details. There has been some discussion of the idea (not accepted by everyone) that some domestic supports have the same effect as export subsidies because the supports vary according to market prices (rising when prices fall, and vice versa), and large proportions of production are exported. Opinions also differed on whether commitments to reduce amber box subsidies should be disaggregated according to product, or stay at total AMS (aggregate measurement of support).

“De minimis” levels (subsidies that fall within small limits). There is a general willingness to look at de minimis levels for developing countries and possibly transition economies (most of these countries are bound by de minimis levels rather than AMS reduction commitments). Proposals include: no change; higher levels for developing countries and/or transition economies; lower levels or abolition for developed countries, etc.

Inflation. Some countries say their AMS commitments have been eroded by inflation. They propose that that inflation should be built into the commitments. Others disagree.

Papers or “non-papers” from: The EU, Australia, and Japan.

 
 
Green box domestic supports
back to top

See also Phase 1. One proposal would maintain the green box as a set of measures that do not distort trade or are minimally distorting. Among the additions would be programmes that reimburse additional costs arising from the protection of animal welfare, and special flexibility for developing countries tackling food security and poverty alleviation.

Another proposal envisages retaining the green box but updating the base periods for “decoupled” income supports, changing threshold levels for income insurance and safety net programmes, and similar adjustments on relief from natural disasters.

Several developing countries propose additional flexibility for their needs, including a “development box” added to the green box.

Some countries are more critical of the green box as it stands, arguing that despite its objectives it does distort trade by encouraging more production and lowering world prices. One country proposes: a quantitative means of measuring whether a policy is “non-distorting”; removing direct payments, decoupled income support, and subsidized income insurance and safety nets; revising criteria for structural adjustment programmes that include factor “retirement”; notification and evaluation criteria for disaster relief, investment aids, environmental programmes, and regional assistance; transparency for food security measures and food aid; and limits on green box spending.

A number of critics of the green box say this proposal is interesting, but would like to examine it further. A number of other members object to capping the green box, arguing that green box measures meet the fundamental criteria of non or minimal distortion.

One of themes taken up, particularly by developing countries, is the view that while individual green box programmes may appear to be non-distorting, the cumulative effect of the large amounts spent does distort for a number of reasons.

Papers or “non-papers” from: Argentina, Cyprus, nine developing countries (Cuba, Dominican Rep, Honduras, Nicaragua, El Salvador, Kenya, Pakistan, Sri Lanka, Zimbabwe), the EU, Japan, and Namibia.

 
 
Blue box domestic supports back to top

See also Phase 1. A number of developed and developing countries favour of getting rid of the blue box (moving it into the amber box). They propose additional disciplines while it is being phased out. These countries see the blue box as an interim or transitional measure to help subsidizing countries move away from amber box subsidies. The counter argument is that the blue box should be preserved — although some members are prepared to discuss modifications — arguing that it distorts less than the amber box and helps make reforms easier to undertake.

Papers or “non-papers” from: The Cairns Group.

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The second phase consists of detailed discussions on the many issues raised in the first phase, organized topic by topic. The meetings are largely “informal”, meaning that there is no official record except for chairperson’s summaries presented at the formal meetings. Papers presented so far have not been official WTO documents. Despite the increased complexity, developing countries continue to participate actively.