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home>trade topics>agriculture>negotiations>backgrounder > domestic support

Issues covered by the WTO’s committees and agreements

AGRICULTURE NEGOTIATIONS: BACKGROUNDER

Phase 1:

Domestic support — amber, blue and green boxes

In WTO terminology, subsidies in general are identified by “boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden). In 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 programmes that limit production. There are also exemptions for developing countries (sometimes called an “S&D box”).

UPDATED 2 OCTOBER 2001

Contents
> In a nutshell
> Proposals received in Phase 1
> 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 and ‘multifunctionality’
>
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
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.

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The ‘amber box’ 

For agriculture, all domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box. The total value of these measures must be reduced. Various proposals deal with how much further these subsidies should be reduced, and whether limits should be set for specific products rather than having overall “aggregate” limits.

 

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Amber box: who can use it?

30 WTO members have commitments to reduce their trade-distorting domestic supports in the amber box (i.e to reduce the “total aggregate measurement of support” or AMS). Members without these commitments have to keep within 5% of the value of production (i.e. the “de minimis” level) — 10% in the case of developing countries.

Argentina
Australia
Brazil
Bulgaria
Canada
Colombia
Costa Rica
Cyprus
Czech Republic
EU
Hungary
Iceland
Israel
Japan
Jordan
Korea
Mexico
Morocco
New Zealand
Norway
Papua New Guinea
Poland
Slovak Republic
Slovenia
South Africa
Switzerland-Liechtenstein
Thailand
Tunisia
United States
Venezuela

For more details, see WTO Secretariat background paper “Domestic Support” G/AG/NG/S/1, downloadable here

 

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The ‘green box’  

In order to qualify for the “green box”, a subsidy must not distort trade, or at most cause minimal distortion. These subsidies 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 directed at particular products, and include direct income supports for farmers that are not related to (are “decoupled” from) current production levels or prices. “Green box” subsidies are therefore allowed without limits, provided they comply with relevant criteria. They also include environmental protection and regional development programmes (for details, see Article 6 and Annex 2 of the Agriculture Agreement). Canada has proposed setting limits on all “boxes” combined, which would mean limits on green box subsidies as well.

Some countries say they would like to review the domestic subsidies listed in the green box because they believe that some of these, in certain circumstances, could have an influence on production or prices. Some others have said that the green box should not be changed because it is already satisfactory. Some say the green box should be expanded to cover additional types of subsidies.

 

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The ‘blue box’  

The blue box is an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal (“de minimis”) levels. It covers payments directly linked to acreage or animal numbers, but under schemes which also limit production by imposing production quotas or requiring farmers to set aside part of their land. Countries using these subsidies — and there are only a handful — say they distort trade less than alternative amber box subsidies. Currently, the only members notifying the WTO that they are using or have used the blue box are: the EU, Iceland, Norway, Japan, the Slovak Republic, Slovenia, and the US (now no longer using the box).

At the moment, the blue box is a permanent provision of the agreement. Some countries want it scrapped because the payments are only partly decoupled from production, or they are proposing commitments to reduce the use of these subsidies. Others say the blue box is an important tool for supporting and reforming agriculture, and for achieving certain “non-trade” objectives, and argue that it should not be restricted as it distorts trade less than other types of support (see non-trade concerns). The EU says it is ready to negotiate additional reductions in amber box support so long as the concepts of the blue and green boxes are maintained.

 

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Proposals containing positions on domestic support submitted in Phase 1 
(see also proposals on developing countries and on non-trade concerns)

  • 11 developing countries: Green Box/Annex 2 subsidies G/AG/NG/W/14
  • US: a comprehensive proposal G/AG/NG/W/15
  • US: discussion note on domestic support reform G/AG/NG/W/16
  • EU: the blue box and other support measures to agriculture G/AG/NG/W/17
  • Cairns Group: domestic support G/AG/NG/W/35
  • ASEAN: special and differential treatment for developing countries in world agricultural trade G/AG/NG/W/55
  • 12 transition economies: domestic support — additional flexibility for transition economies G/AG/NG/W/56
  • EU: comprehensive negotiating proposal G/AG/NG/W/90
  • Japan: proposal G/AG/NG/W/91
  • Canada: domestic support G/AG/NG/W/92
  • Switzerland: proposal G/AG/NG/W/94
  • Swaziland: market access under special and differential treatment for small developing countries G/AG/NG/W/95
  • Mauritius: proposal G/AG/NG/W96
  • Rep of Korea: proposal G/AG/NG/W/98
  • Mali: proposal G/AG/NG/W/99
  • Norway: proposal G/AG/NG/W/101
  • India: proposal G/AG/NG/W/102
  • Poland: proposal G/AG/NG/W/103
  • Morocco: proposal G/AG/NG/W/105
  • Turkey: proposal G/AG/NG/W/106
  • Egypt: proposal G/AG/NG/W/107
  • Nigeria: proposal G/AG/NG/W/130
  • Congo, Dem Rep: proposal G/NG/W/135
  • Kenya: proposal G/AG/NG/W/136
  • Senegal: preliminary positions G/AG/NG/W/137
  • Mexico: proposal G/AG/NG/W/138
  • Jordan: proposal G/AG/NG/W/140
  • African Group: joint proposal G/AG/NG/W/142
  • Namibia: proposal G/AG/NG/W/143
  • Croatia included domestic support in its discussion paper G/AG/NG/W/141

 

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