WTO Agreements on Agriculture (AOA)

WTO's Trade Agreement on Food and Agriculture Products

1. WTO’s Trade Agreements in Food &
Agricultural Products Faizah Farook
Anupama A

2. •The World Trade Organization (WTO) is an intergovernmental
organization that is concerned with the regulation of
international trade between nations.

• The WTO officially commenced on 1 January 1995 under the
Marrakesh Agreement, signed by 123 nations on 15 April 1994,
replacing the General Agreement on Tariffs and Trade (GATT),
which commenced in 1948.

• It is the largest international economic organization in the world.
•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.

4. •The Agreement on Agriculture is one of the key agreements within the WTO
system.

•The Agreement on Agriculture applies to agricultural products.

•Agricultural products are defined in Annex 1 of the Agreement on
Agriculture.

•The definition of agricultural product covers not only basic agricultural
products such as wheat, milk and live animals, but the products derived from
them such as bread, butter, oil and meat, as well as all processed agricultural
products such as chocolate, yoghurt and sausages. The coverage also includes
wines, spirits and tobacco products, fibres such as cotton, wool and silk, and
raw animal skins destined for leather production.

•The implementation of the Agreement on Agriculture started with effect
from 1.1.1995.
Agreement on Agriculture

6. The WTO Agriculture Agreement provides a framework for the
long-term reform of agricultural trade and domestic policies,
with the aim of leading to fairer competition and a less
distorted sector.
The Agreement covers:

I.Market access — the use of trade restrictions, such as
tariffs on imports

II.Domestic support — the use of subsidies and other
support programmes that directly stimulate production
and distort trade

III. Export competition — the use of export subsidies and
other government support programmes that subsidize
exports.

7. I.Domestic Support
•The first pillar of the Agreement on Agriculture is "domestic
support".

•Domestic support means subsidies.

•There are 2 types of domestic support (subsidies):





•AoA divides domestic support into two categories:


 Direct Support:-Directly stimulate production & trade of
agricultural products
 Indirect Support:-Don’t affect product & trade directly
trade-distorting
non-trade-distorting (or minimally trade-
distorting).

8. The WTO Agreement on Agriculture includes the
classification of subsidies by "boxes“ .They are

Amber Box (most directly linked to production levels)
Blue Box (production-limiting programmes that still
distort trade)
Green Box (minimal distortion)
Developmental Box

9. WTO BOX SUBSIDIES
GREEN BOX BLUE BOX AMBER BOX DEVELOPMENTAL BOX
•Non-trade disorting
subsidy

•They include
environmental
protection and
regional
developmental
programmes

•Green box subsidies
are allowed without
limits

•No restiction

•They cause minimal
distortion

•Govt funded


•Production
limiting subsidies

•Non-trade
disorting subsidy

•Blue box is having
an upper limit

•No restriction by
WTO

•These are
generally given to
farmers of
developed
countries

•No limit for small
developing or
LDCs


•Trade-Disorting
subsidy
•All domestic
support measures
considered to
distort
production and
trade
•These include
measures to
support prices or
subsidies directly
related to
production
quantities.






•Also known as
Standard &
Differential Box
•For developing
countries
•To promote food
security and rural
development
•For the protection
of staple products
through
exemptions from
commitments,
higher tariffs
•To a prohibition of
dumping of farm
products by
developed
countries and the
establishment of a
food security fund



•De-Minimis level
•WTO restricts
•Beyond a limit
subsidies cannot
be given

10. II. Market Access
•Market access simply means the right which exporters
have to access a foreign market.

•In practice “market access” refers to the ways in which
that protection can be implemented.

•In the WTO framework it is a legalistic term indicating
the government-imposed conditions under which a
product may enter a country and be released for free
circulation within that country under normal conditions.

11. •A tariff is a trade barrier that takes the form of a government tax
imposed on goods (usually imports and occasionally on exports)
when they cross borders.

•Tariffication is the process of conversion of all non-tariff market
protection measures into the tariff equivalent.

•The tariff equivalent to a non-tariff barrier is the difference between
the average domestic price and the average world market price.

•A tariff-rate quota (TRQ) is a two-levelled tariff whereby the tariff
rate charged depends on the volume of imports.

•TRQs usually generate a “quota rent”. In fact, the right to import
within the quota results in a profit over and above the profit available
in normal trade.

12. •A Special Safeguard Mechanism (SSM) would allow
developing countries to impose additional safeguard duties in
the event of an abnormal surge in imports or the entry of
unusually cheap imports.

•The special safeguards provisions for agriculture differ from
the general safeguards. In agriculture, unlike with normal
safeguards:
i.higher safeguard duties can be triggered automatically
when import volumes rise above a certain level, or if
prices fall below a certain level; and
ii.it is not necessary to demonstrate that serious injury is
being caused to the domestic industry.

•The special agricultural safeguards can only be used on
products that were tariffied.

13. III. Export Subsidies
•These can be in the form of subsidy on inputs of agriculture,
making export cheaper or can be other incentives for exports
such as import duty remission.

•Food Aid – General and specific commitments to prevent or
minimize potential for food aid to displace trade and domestic
production.

•Export Credit – Export credit guarantee, insurance and
reinsurance programs should be self-financing and cover long
term operating costs and losses.

14. References:

•https://www.wto.org/

•https://en.wikipedia.org/wiki/Agreement_on_Agriculture

•https://www.youtube.com/watch?v=x_NNpuCXTog

15. THANK
YOU