WTO - Green Box Subsidies Challenged

1. In 2018, WTO members granted total amber box support, which distorts trade, amounting to $62.49 billion. They also provided $6.4 billion in blue box subsidies and $265.49 billion in green box subsidies.

2. Although developing countries are permitted to provide product-specific support up to 10% of production value, and developed members up to 5%, many developed members have exceeded this by utilizing additional Final Bound Aggregate Measurement of Support (FBAMS) allowances under Article 6.3, and Blue and Green Box subsidies. This disproportionately subsidizes their agricultural sectors relative to their size, as indicated by the Value of Production (VoP).

3. Multiple analyses suggest that blue box subsidies and direct payments under the green box often distort trade, despite FBAMS allowances being acknowledged as trade distorting. It's notable that even unutilized Article 6.3 fixed additional FBAMS entitlements can potentially distort trade by supporting agriculture.

4. Considering the evidence provided in the following sections on AMS Entitlements, Blue Box and Green Box, the African Group proposes a draft Ministerial Decision to enforce required disciplines on domestic support specified under Article 6.3, Article 6.5, and Annex 2 of the AoA, continuing their 2021 proposal (Job/AG/203).

5. Recognizing the complexity of food insecurity, Domestic Support for Food Security Purposes, especially product-specific de minimis support, is crucial in responding to severe food crises or emergencies.

6. Only 32 members (counting the EU as 1) enjoy FBAMS entitlements exceeding the de minimis levels, totaling $174.37 billion (2018 USD). Roughly half are developed country members, accounting for 88.81% of total FBAMS entitlements, leaving the remaining 11.19% to developing countries. The other 104 developing countries have zero FBAMS entitlements.

7. In 2018, an additional $33.64 billion was provided as Current Total AMS (CTAMS) beyond the de minimis limits, implying use of additional FBAMS entitlements. Utilization rates of entitlements among various countries, including the US, EU, Norway, Switzerland, Canada, and Japan, have all risen since 2018.

8. The CTAMS, as a percentage of VoP, was excessively high for several countries in 2018, enabling them to use additional policy space disproportionate to the size of their agricultural sector. If the full FBAMS entitlement is considered as a percentage of VoP, it reveals an available policy space to use trade-distorting domestic support that's also disproportionate.

9. FBAMS entitlement distribution in 2018 was heavily skewed among entitlement holders, with six WTO Members accounting for 87.58% of the total. The percentages held by the EU, Japan, US, Russian Federation, Switzerland, and Canada are specified.

Additional Entitlements:

10. The African Group (AG) and Pakistan claim that additional entitlements bias product-specific AMS in two ways: allowing focus on any product, resulting in large concentration in single products and allowing AMS to exceed sector needs as indicated by VoP.

11. AG and Pakistan argue that FBAMS entitlements allow higher absolute domestic support and greater flexibility in product-specific support. They suggest a considerable reduction in trade-distorting domestic support in developed countries should precede further tariff liberalization discussions.

12. AG and Pakistan assert that domestic support is vital for agricultural needs and domestic food security, referencing the increased support during COVID-19 by developed countries. However, they note policy space remains a significant constraint for developing countries, while FBAMS entitlements enable extensive Amber Box support use by developed countries during crises.

Policy Space:

13. Therefore, AG and Pakistan argue for an expanded policy space for developing countries during crises, to support their agricultural production and livelihoods through domestic support, including market price support for strengthening public food distribution programs and non-exempt direct payments.

14. AG and Pakistan also highlight the extensive use of the blue box by the EU, Japan, and Norway, arguing that it allows for more policy space and simultaneous use of Amber Box and Blue Box subsidies on any product, thereby further expanding policy space for unlimited product-specific subsidies.

15. The intent of the Blue Box to limit production and prevent trade distortion is questioned, as it's unclear if Article 6.5(a) and its sub-conditions ensure such measures are "production limiting."

16. The use of the Blue Box as a transition tool for Member countries to shift from trade-distorting Amber Box subsidies to non-trade-distorting Green Box subsidies is also critiqued. Given 28 years since the signing of the AoA, countries using Article 6.5 since 1995 should have accomplished this.

Lastly, there's increasing evidence showing that large amounts of Green Box support, considered non-trade-distorting, actually distort global trade and negatively impact producers in developing and least-developed countries. AG and Pakistan propose a draft decision for the 13th ministerial conference to address these issues.