Issues covered by the WTO’s committees and agreements

Modalities. Domestic support

“Intersessional” informal meetings (4–5 September 2002), informal “special session” (23–25 September 2002), formal “special session” (27 September 2002).

The discussions cover: green box, Article 6.2 (special and differential treatment), blue box and amber box.

Each heading contains a list of subheadings such as: general comments; scope/definitions; base periods points; reduction/expansion formulas; transparency and notification; and so on.

Some countries raised “other” domestic support issues such as animal welfare. There were over 200 interventions in the 23–25 September session.

> See details and Phase 1, Phase 2
> Fact sheet:The boxes” in domestic support

During the discussion, developing countries, new members and transition economies repeatedly argued for special and differential treatment.

For the new members that are transition economies, the call is based on the state of their economies and because the new members are still implementing commitments under their membership agreements. Some called for special and differential treatment to be based on “objective criteria” such as the level of development and per capita income, arguing that some “developing countries” are richer and have more developed agriculture sectors than some transition economies.

Some developing countries repeatedly stressed their argument that small vulnerable economies need special treatment, including trade preferences and longer times to adjust.

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Green box 

There are two broad questions:

Is the green box flexible enough to cover non-trade concerns (environmental protection, rural development, animal welfare, etc) and developing countries’ needs?

Several countries called for more flexibility, with one proposing a new paragraph for Annex 2 (which defines the green box) to allow compensation for the costs of applying higher standards such as animal welfare that are imposed by consumers and voters (“non-producer concerns”).

A number of developing countries called for more flexibility for their concerns.

The more ambitious liberalizers expressed concern that many proposals would add trade-distorting subsidies to the green box.

Does the green box distort trade? Several developed and developing countries say “yes” either because of the sheer scale of green box subsidies in some countries, because certain income supports cut farmers’ costs, reduce risks, and sustain supply, or because some programmes have been implemented in a way that distorts (for example base periods used to set supported income levels have been adjusted). One developing country cited the example of a country which spent $1.3 billion on income support for rice farmers in 1999/2000, when that country’s total rice production was worth $1.2 billion.

These countries want green box payments capped overall, specific types of programmes limited, or some income support programmes removed from the green box. Some want to re-examine the condition that these subsidies should be non- or minimally-trade-distorting.

Other countries reject the view that the green box is more than minimally distorting.

Article 6.2
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This deals with developing countries’ exemptions from amber box commitments. Developing countries stressed the need to keep this, and perhaps add additional flexibilities. Particularly vocal are countries using the provision to diversify production away from illicit crops

Blue box
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Some liberalizers have called for the blue box to be phased out in a period to be negotiated. Others propose five years for developed countries and nine years for developing countries — the same as the amber box phase out. They consider the blue box to have been a temporary measure that distorts trade and has outlived its usefulness.

Others vigorously defend the blue box, saying it distorts trade less than the amber box, and is necessary to allow reform to take place in their countries — they see it as a staging post in the move away from the amber box.

Amber box
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The main differences are:

Eliminate or substantially reduce? A number of developed and developing countries want amber box subsidies eventually eliminated in three to five years for developed countries, in a longer period such as nine years for developing countries. This would bring all members down to de minimis levels (5% of agricultural production in developed countries, 10% in developing countries) — several argue that if everyone cuts these subsidies to de minimis levels, the result will be fair and “harmonized” (same for everyone). Some go further. They say de minimis levels should also be scrapped for developed countries. Some proposals include a downpayment, in which half the reduction would be made at the outset.

Others counter that elimination goes beyond the Doha mandate’s aim to “substantially reduce” these trade-distorting subsidies. They say elimination would be too drastic to allow them to continue with the reform process. Some propose two rates of reduction commitments, one for products that are mainly exported and another for those that are mainly for domestic consumption, as a means of differentiating between supports that distort international trade more and those that distort less — a differentiation that some liberalizers reject. The countries advocating a more cautious approach have not proposed figures for the reductions, saying these should be discussed after the basic rules are clearer.

Total AMS limits or AMS limits for specific products? At present reduction commitments are based on “total aggregate measurement of support” (AMS), allowing subsidies to be shifted between products. Most liberalizers want limits set for specific products, perhaps with some flexibility for certain products. Others, including a few seeking more ambitious reductions, prefer the flexibility of the current method because it allows adjustments and prevents subsidies being locked into specific products which might not have comparative advantage.

De minimis: Some developing countries and transition economies want their limits raised (currently transition economies are treated as developed countries). Some others prefer to keep the limits unchanged, some of them objecting to the use of de minimis subsidies to circumvent reduction commitments.

General comments
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Some countries expressed concern that others’ proposals are so ambitious that they would be impossible to implement in their countries and disrupt the reform process. If the reform process is to continue and if the negotiations are to meet the deadlines and mandate set in Doha, then negotiators should stick to the “substantial reduction” mandate and the “architecture” set in the Uruguay Round, they said.

One major trader complained that some proposals were formulated in a way that would force it to make far-reaching changes while other major traders would not have to do much. They added that supports that vary according to market prices and enhance exports should be disciplined under export subsidies.

Others responded by arguing that the worst offenders should expect to have to do most.

Chairperson’s summary
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At the formal meeting on 27 September 2002, chairperson Stuart Harbinson concluded that the current economic climate makes it even more critical to complete the negotiations than when the Doha agenda was launched almost a year ago. “As we all know, agriculture is critical to the negotiations as a whole and so we simply must meet our deadlines. If we do not, the credibility of the round could be undermined.”

The discussion on all three pillars added to the depth of knowledge and understanding of the various positions, he said. But he noted that delegations tended to repeat existing “maximal” positions in key areas, in some cases with “a continuing lack of specificity” (a reference, for example, to the lack of figures in some proposals). This, he said, is “not particularly helpful from the point of view of drafting the ‘overview paper’ towards the end of the year.” But, he added, the negotiators still have a bit more time, including the meetings in November.

“The time has now come to change gear,” he said. “We have prepared assiduously over the last two and a half years. The clock is now running fast and the critical period is upon us. We do not have much time in hand if we are to meet the deadlines of 18 December for the ‘Overview Paper’ and 31 March for establishing modalities.

“In the process we must also change our mindset. We need a more creative approach in which participants start looking actively for compromises and for ways to bridge gaps.”

Common ground exists, he said, but in critical areas much more flexibility is needed. “I therefore, urge you all to reflect deeply and urgently on what your delegation can contribute in order to bring this exercise to a conclusion acceptable to all by the end of next March.”


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