Consider the following statements with reference to lsquo Green Box subsidy rsquo often seen in news...........

Economic Affairs World Trade Organsiation (WTO)

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Consider the following statements with reference to ‘Green Box subsidy’ often seen in news in relation to WTO Affairs

These are the trade distorting subsidies and need to be reduced.
They also include environmental protection and regional development programmes.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

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. need to be reduced), red (forbidden). In agriculture, things are, as usual, more complicated.

Green box subsidies must not distort trade, or at most cause minimal distortion. They have to be government-funded (not by charging consumers higher prices) and must not involve price support.

The Agriculture Agreement has no red box.