Agriculture: Talks on Chair's papers on Blue and Green Box subsidies

An informal open-ended agriculture meeting at the WTO Thursday 1 June discussed the Chair's latest reference papers on Blue Box and Green Box subsidies where members appeared to show some flexibility on the technical details but failed to converge on the major points, according to trade officials.

On the Blue Box, members discussed the problems of avoiding support being concentrated on individual products and ensuring that Blue Box payments are less distorting than Amber Box payments.

Significant differences of views were evident on the Green Box. These related to concerns that the support programmes (particularly decoupled income supports) that are converted from Amber or Blue Box supports are truly "Green" (i. e. not or minimally trade-distorting). According to trade officials, there however appeared to be some signs of flexibility on some Green Box criteria as members responded to one another's concerns.

On the issue of concentration in the Blue Box payments, one possible method identified in the Chair's reference paper for avoiding large Blue Box payments being concentrated on specific products, is a "double trigger" in which there would be constraints on the payment going to a product based on:
(1) the payment's share of all Blue Box payments; and (2) the payment as a percentage of the value of production of that product.

According to trade officials, countries that favoured this approach included members of the G-20 and the Cairns Group. Others such as Japan and Korea said that they could look at this but wanted to be sure that some allowance would be made if their production is concentrated in some products.

The US said that it could discuss this, provided that it does not become a "back door" means of further reducing the proposed limit on Blue Box payments at 2.5% of agricultural production.

On product-specific Amber and Blue Box support, partly to deal with concentration, and partly to limit trade-distorting subsidies on a product, members discussed the possibility of a limit on the combination of Amber and Blue Box supports on individual products. Those who spoke were broadly in favour of this.

On cotton, the EU and the US said that they were willing to discuss with the four African proponents of the Cotton Initiative (Benin, Burkina Faso, Chad and Mali) their proposal, which includes a limit on Blue Box supports for cotton that would be one-third of the ceiling on the Blue Box for agriculture as a whole.

The EU though cautioned that its reform of cotton supports depended on its being able to use the Blue Box instead of the more trade-distorting Amber Box supports.

On the Green Box, according to trade officials, Canada agreed to drop its call for a number of Green Box provisions to be amended, i. e. paragraphs 9-13 of Annex 2 of the Agriculture Agreement (the Annex defines the Green Box). This would leave a focus on paragraphs 7 and 8 (which deal with income insurance and safety-net programmes and disaster relief). Canada had called for fuller compensation and other more liberal conditions in order to encourage farmers to come forward, for example, when affected by diseases.

Canada also proposed a solution on how to deal with the G-20's proposal to add "unchanging" to the fixed base periods specified for decoupled income support in paragraph 6 of Annex 2 of the Agriculture Agreement.

"Fixed and unchanging" arises because of fears that if these payments are based on changing base periods, then farmers will expect that their production will be rewarded with extra payments in the next period, which would contradict the notion of decoupling.

Switzerland and others have however questioned whether this means that the base level is fixed forever.

Canada proposed that old programmes can be replaced by new programmes with their own base periods, provided the new ones are clearly different from the old. It also proposed that existing programmes can use altered bases, provided that the relevant periods are in the past, for example, five years previously.

According to trade officials, members signalled some willingness to look at this issue, although with varying degrees of enthusiasm.

The EU reiterated its opposition to wholesale revisions to the Green Box and some others also reiterated their concern for disciplines to ensure that programmes switching into the Green Box from other categories genuinely distort minimally or not at all.

Chairperson Ambassador Crawford Falconer of New Zealand concluded that further work was clearly needed on these issues.