Domestic Support
Domestic support policies were recognized as one source of market and trade distortions in negotiating the Uruguay Round Agreement on Agriculture (AoA). Countries, therefore, agreed to limit domestic policies presumed to be the most trade distorting and to exempt non- or minimally trade-distorting policies from any limitations (see AoA Issues Series: Domestic Support Policies).
Policies were categorized by color according to whether and how they were disciplined. Policies that directly influence production decisions, such as price support policies (amber box policies), were capped and subject to cuts. Support levels from amber box policies are quantified, according to the AoA, by calculation of an aggregate measure of support (AMS), which combines estimated support levels for all commodities into one overall measure.
The AoA exempted three types of domestic programs from reduction commitments. The first type of exempt support is amber box policies deemed to be de minimis—defined as support that is less than 5 percent of the value of production. The second type of domestic program exempt from reduction commitments is expenditures that are entirely government funded and do not vary with prices. This type of support (green box policies)—deemed to have little or no effect on production or trade—includes research programs, domestic food aid, environmental programs, and certain crop insurance and income-support programs. The third type of exemption (blue box policies) includes direct payments that are related to production-limiting programs (e.g., subsidies paid as a result of production quotas or those that require producers to set aside land in order to qualify for subsidies).
In the Doha Ministerial Declaration, members committed to negotiations to achieve "substantial reductions in trade-distorting domestic support." As with market access, negotiators in the Doha talks have agreed that there will be an element of harmonization in the reductions made by developed countries. Specifically, countries with higher levels of permitted amber box trade-distorting domestic support will be subject to deeper cuts. In a departure from the AoA commitments, blue box expenditures will be capped and, along with de minimis support, reduced. Amber box, blue box, and de minimis policies will be aggregated together, named Overall Trade-Distorting Domestic Support (OTDS), and subject to cuts.
As for special and differential treatment for developing countries, there is agreement to provide developing countries with longer implementation periods and lower reduction coefficients for all types of trade-distorting domestic support.
See the AoA Domestic Support section of the recommended readings page for more information regarding domestic-support issues related to the WTO Agreement on Agriculture.
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