AGREEMENT ON AGRICULTURE

Why in news?

No agreement on re negotiating Agreement on Agriculture in Ministerial Conference of WTO in Abu Dhabi 2024.

 BACKGROUND

The Agreement on Agriculture (AoA) is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995.

The WTO AoA is based on 3 pillars:

The Agreement on Agriculture consists of three pillars — domestic support, market access, and export subsidies.

DOMESTIC SUPPORT

De minimus limits for subsidies

Developed countries 5% of value of agricultural output

Developing countries 10% of value of agricultural output (At 1986-87 price levels)

CLASSIFICATION OF SUSIDIES

Green Box:

Subsidies which do not distort trade / which minimally distort trade which are decoupled with production come under this category.These are not subject to de minimus limits.

Eg: Subsidies for disease control, research and development un agriculture, Direct Benefit Transfer,

Amber Box:

Subsidies which directly affect production and distort trade come under Amber Box. These are subject to de minimus limits. Eg: Subsidies on inputs, MSP

Blue Box:

These are subsidies which are trade distorting , but are subject to certain conditions such those which limit production. These are not subject to de minimus limits.

 MARKET ACCESS

Tariffication: Converting non tariff barriers to trade such as quotas to tariff barriers

Tariff Reduction:

Developed countries: Reduce 36% by 6 years (i.e by 2001)

Developing Countries: Reduce 24% by 10 years (i.e by 2005)

Least Developed Countries: No restrictions

Preferential Access Through Tariff Rate Quotas

These are the mechanism by which some product can come into the country at zero or reduced tariff – up to a maximum quantity(i.e quota), thereafter all imports over this volume can have a much higher tariff applied

The quota can’t be less than 5% of domestic consumption.

 EXPORT SUBSIDIES

Required developed countries to reduce export subsidies by at least 36% (by value) or by 21% (by volume) over six years below 1986-90 levels

For developing countries, the agreement required cuts were 24% (by value) and 14% (by volume) over ten years below 1986-90 levels.

BALI MINISTERIAL CONFERENCE 2013 : PEACE CLAUSE

Under this developing countries are allowed to violate the de minimus limits for their public stock holding programmes and food security provided

-they report details regarding procurement, storage,distribution etc to WTO

-the commodities are not exported.

This peace clause was valid till 2017 initially but was later extended indefinitely after negotiations.