Agriculture Reference
In-Depth Information
with enforceable dispute setlement powers but also a mandate that included ag-
riculture. he later was institutionalized through the Agreement on Agriculture
(AoA), a document whih established a set of binding obligations on members to
limit - and progressively reduce - the support they provided to their agricultural
sectors. These obligations covered three broad areas. Firstly, support designed to re-
strict
market access
, in the form of tarifs and quotas whih make imports less com-
petitive. Secondly, support in the form
of domestic payments
by governments to
farmers above and beyond what they receive from the market sale of their products.
This has proved a highly contentious area of negotiation and dispute due to the di-
versity of rationales and mehanisms through whih suh payments are made. In the
WTO, key distinctions are made between payments whih distort markets because
they allow farmers to sell their output at below-market prices ('amber box'); those
that distort markets but have quantitative limits on payments, thus reducing their
market-distorting impacts ('blue box'); and payments whih are deined as being
non-market distorting (or 'green box'), suh as compensatory payments for natur-
al disasters, or for farmers to undertake legitimate remedial environmental actions.
Finally, the AoA specifies a set of obligations on members with regards to a third
type of agricultural support, whih is
export subsidies.
These result where govern-
ments oload surplus production by allocating subsidies whih allow this surplus to
be sold on world markets at prices below the cost of production. It is generally re-
garded that export subsidies are the most damaging of all kinds of agricultural sup-
ports, because they facilitate the large-scale dumping of product onto world markets,
with particularly serious effects in terms of their capacities to disrupt smaller, vul-
nerable producer communities.
The incorporation of agriculture into the core of the multilateral trading system
has had significant impact on the global food system, but in ways not necessarily
anticipated at the time the WTO was created. In the early 1990s, many analysts as-
sumed that the inclusion of agriculture in the multilateral system would lead to sig-
nificant and immediate reductions in protection within developed countries (Le Her-
on, 1993; Friedmann, 1994). Suh assumptions, however, proved ill-founded. he best
way to demonstrate this is to examine official statistics of the 'Total Support Estim-
ate' to agriculture in the OECD (Organization for Economic Cooperation and Devel-
opment), expressed as a percentage of total farmgate production (OECD 2010). In
1995, this was 46.93%. Ten years later, in 2005, it had barely hanged - it was 44.26%.
In the following few years it declined substantially (reahing a low of 33.91% by
