Introduction

 The Agreement on Agriculture (AoA) is an agreement under WTO which comprises specific commitments to reduce support and protection in the areas of domestic support, export subsidies and market access. The Agreement also takes into account non-trade concerns, including food security and the need to protect the environment, and provides special and differential treatment for developing countries, including an improvement in the opportunities and terms of access for agricultural products of particular export interest to Members.

DOMESTIC SUPPORT

Under this agreement, the countries have to comply with reduction commitments such as to limit their Total Aggregate Measure of Support (AMS) within specified limits. The developed countries have to limit their domestic support (covered under amber box subsidies) within 5% and developing countries to limit within 10% of total agriculture production. The de minimis level or domestic support subsidies of total agriculture production to be calculated from base year 1986 –1988. The domestic support subsidies are categorized into three boxes that are as follows:

• Amber Box: It contains all domestic support measures that are mean to distort trade practices in agriculture. All these types of supports are subject to limits which are termed as ‘de minimis’ levels.

• Blue Box: It includes subsidies that are linked to one product, but that do not increase according to production levels. At present there are no limits on spending on blue box subsidies.

• Green Box: These are subsidies which causes no or little trade distortion in agriculture sector. They tend to be programs that are not targeted at particular products and not include direct income supports for farmers. They may include environmental protection, regional development, R&D or farmer training programs etc. “Green box” subsidies are therefore allowed without limits.

Special and Differential Treatment (SDT) are available for developing and least developed country members.

• These include purchases for and sales from food security stocks at administered prices provided that the subsidy to producers is included in calculation of AMS.

• Developing countries are permitted untargeted subsidized food distribution to meet requirements of the urban and rural poor.

• Developing countries may also provide investment subsidies that are generally available to agriculture and agricultural input subsidies generally available to low income and resource poor farmers in these countries.

• As of now, least developed countries are completely exempted from all kinds of reduction commitments under AoA of WTO.

• Developing countries may also be given 10 years exemption period from implementing reduction commitments under AoA of WTO.

MARKET ACCESS

This includes provisions related to tariffication, tariff reduction and trade facilitation in agriculture products. Tariffication means that all non-tariff barriers such as quotas, variable levies, minimum import prices, discretionary licensing, state trading measures, voluntary restraint agreements etc. need to be abolished and converted into an equivalent tariff.

Developed countries have to reduce tariffs by 36% originating from tariffication with minimum rate of reduction of 15% for each tariff item over a 6 year period.

Developing countries are required to reduce tariffs by 24% originating from tariffication in next 10 years.

Special Safeguard provision allows the imposition of additional duties when there are either import surges above a particular level or particularly low import prices as compared to 1986-88 levels.

EXPORT SUBSIDIES

• Developed Countries: These countries have to reduce their export subsidies expenditure by 36% and volume by 21% in next 6 years from 1986 – 1990 levels.

• Developing Countries: These countries have to reduce their export subsidies expenditure by 24% and volume by 14% in next 10 years from 1986 – 1990 levels.

Proposed benefits of AoA for India

The Agreement is perceived as likely to create opportunities for agricultural exports for developing nations. For that to happen the industrialised countries have to substantially reduce their subsidies and provide increased market access. However, the OECD countries have increased their total support to agriculture from US$308 bn in 1986-88 to US$361 bn in 1999. Reduction of their subsidies will naturally raise the prices of agricultural products in the world market and this will make exports more competitive. Also liberalisation measures in agriculture world-wide will create market openings which will be available to us provided we rise up to make use of the opportunities.

But India opposes some of provisions of this agreement for some non trade concerns such as food security or to protect environment, etc. India also opposes the base year level of 1986-1988 and wants it to change on periodic basis or domestic support calculation may be inflation adjusted as it hampers food security programme.

India want to increase limit of reduction commitment under Amber box subsidies from current 10% or demand exemption for developing countries as given for least developed countries.

Peace Clause

It was come into force in 2013 at 9th WTO Ministerial Conference at Bali. According to it agricultural subsidies committed under AoA cannot be challenged until the permanent solution for subsidies is in place before 2017. It means this clause will be expired in 2017 or by 11th Ministerial Conference in 2017 if no permanent solution is reached. Till 10th Ministerial Conference at Nairobi no solution has been found for agriculture subsidies under AoA.