Bridges Trade BioRes • Volume 2 • Number 14 • 26th September 2002
WTO Members Split on Future of ‘Green Box’
WTO Members Split on Future of ‘Green Box’
At the 23-25 September informal negotiating session of the WTO Committee on Agriculture (CoA) on domestic support, no progress was made on the most contentious farm subsidy issues. These include the question of whether the so-called ‘Green Box’ should be made more flexible or be tightened. In his conclusion, CoA special session Chair Stuart Harbinson reportedly called on Members to “switch their mindsets from portrayal of maximising national positions” to an “effort to compromise and bridging gaps.”
Following on from discussions held at the 4-5 September intersessional consultation on domestic support (see BRIDGES Weekly, 13 September 2002), WTO Members continued talks on the future of the international agricultural subsidy regime, largely categorised in the so-called Amber Box (clearly trade distortive subsidies), Green Box (non, or at most minimally, trade-distorting support) and Blue Box (direct payments under production-limiting programmes). Public spending targeting non-trade issues such as food security, structural adjustment or environmental conservation generally fall under the Green Box.
“Deadlock” between Cairns and ‘Multifunctionality’ Group?
At the Fourth WTO Ministerial Conference in Doha last year, Members committed themselves to “significantly reduce” trade-distorting support as these are seen as means of market support which harm other Members’ trade opportunities. ‘Ambitious’ liberalisers, such as those from the Cairns Group of agriculture exporters (including Australia, Canada, Argentina, Brazil, Thailand, Indonesia and others), want to go even further, calling for the Blue Box, which they also consider trade distorting, to be scrapped. Additionally, they proposed to restrict the use of income support schemes under the Green Box, arguing that those payments distort trade through cutting farmers’ costs, reducing risks for those that would otherwise go out of business and sustaining supply.
More ‘cautious’ Members, like those from the ‘Friends of Multifunctionality’ group including the EC, Japan and Switzerland, however, made it clear that they would only negotiate additional reductions in trade-distortive support if the Blue Box was maintained and more flexibility was given on the application of the Green Box. The EC et al. also declared that they were not prepared to submit specific proposals on domestic support unless Members agreed to negotiate additional rules on non-trade concerns related to agriculture and other issues, such as labelling, the precautionary principle and geographical indications.
Members such as the EC and Japan take the view that agriculture fulfils a ‘multifunctional’ role since in addition to producing food and fibres, it also has a number of other functions related to public goods such as the protection of the environment, rural development and food security. Others, however, are concerned that the inclusion of non-trade concerns might lead to trade distortions. “If they want to address non-trade concerns like the need to maintain rural populations, that’s fine, just put it in the green box in a way that doesn’t distort trade, ” said David Hegwood, special trade advisor to the US Secretary of Agriculture on the side-lines of the CoA meeting. “Just don’t make other countries pay for your beautiful countryside,” he added.
Green Box Support
In terms of detail, Switzerland proposed to allow for “payments compensating extra costs accruing from higher production standards” under programmes addressing “non-producer concerns”, such as animal welfare imposed by consumers and voters. Furthermore, a number of developing countries asked for more flexibility for their developmental concerns including food security and rural development.
The Cairns Group and some others, however, expressed concern that many of the proposals advocating greater leeway would add new trade-distorting subsidies to the Green Box. Instead, the Group and some developing countries such as India demanded overall caps on Green Box spending (e.g. 5 percent of annual agricultural production), limits on specific types of programmes, or removing some income support programmes from the Box. Cairns Group member Canada furthermore suggested to tighten the applicability of the Green Box, for instance by requiring the amount of compensatory payments under environmental programmes to be “less than the extra costs involved in complying with the government programme” and that it should “not be related to or based on the volume of production.”
The Agriculture Committee is holding a regular session on 26 September, followed by a formal special session on 27 September where the Chair will present a summary report of the 23-25 September informal special session.
ICTSD reporting; “Swiss See Deadlock Looming In Farm Reform Talks,” REUTERS, 23 September 2002; ” Swiss Negotiator Warns Of Deadlock In WTO Agriculture Liberalisation Talks,” WTO REPORTER, 24 September 2002; “Japanese Official Sets Out Position In Farm Talks, Criticises US, Cairns Group,” WTO REPORTER, 25 September 2002; “US says green boy rules adequate to address non-trade farm talk worries,” WTO REPORTER, 26 September 2002.