Agriculture Agreement

  • Agriculture has been exempted from GATTsince the US applied for a waiver in 1955.
    • It was accepted, since the US threatened that if it wasn’t, it would leave GATT
      • This was since the US/EU were poor after the second world war
      • To encourage food production, they introduced price stability measures
        • they should have exited, but they didn’t
    • This was meant to be a temporary waiver, but wasn’t
    • Since then, it Agriculture has been outside of the GATT agreement
  • As such, whilst other areas have increasingly become liberalised, and regulated, the Agricultural area still has high tariffs, subsidies, and other protections.
  • In Europe, the subsidies were so great (and production tied) that there were “mountains of butter and lakes of wine” – the AG agreement tried to solve some of these issues


  • Developed countries(esp. US, EU, Japan) protect their agriculture industries even though they are inefficient. Their arguments include:
    • food security
    • protection of employment
    • the “culture” of the countryside
    • the “culture” of the cuisine
    • Stability of real estate market
  • The Cairns Group(Australia + BRICS-India + developing countries) want access into these large markets, since they can produce agricultural products extremely efficiently
  • There is a small sub-field of developing countries which are net food importers(e.g. Egypt) which would be in a difficult place
    • If European protectionism decreases, the world price is set to increase, putting these countries in a worse position.
  • The focus of the Uruguay Roundwas agricultural negotiations
    • For the first time, there was a comprehensive Agricultural trade agreement, focussing on:
      • market access through tariff reductions
      • regulating domestic support
      • targeting export subsidies
  • Agricultural negotiations almost stalled the Uruguay Round, and the French were about to derail negotiations
    • The last minute Blair Housenegotiation put the negotiations back on track
      • They couldn’t agree on banning subsidies, or applying SCV measures, but they did agree on classifying different “boxes” of subsidies

The Agreement on Agriculture

  • The preamble states the following goals:
    • […] to establish a fair and market oriented agricultural trading system […] committed to achieving specific binding commitments in […] market access; domestic support, export competition and SPS […]

  • There is an exclusive, but comprehensive list of goods which this agreement applies to (Article 2; Annex 1)

Market Access

  • Noting that current industrial good tariffs are around 4%, the tariffs for agriculture are astounding, with some being as high as 800%.
  • The commitments are to reduce, ON AVERAGE tariffs by:
  • The fact that these are on average is significant:
    • E.g. dairy has been reduced by 26%, cut flowers by 48%
  • Export subsidyreduction is:
    • Developed – 36% by value or 21% by volume in 6 years
    • Developing – 24% by value or 14% by volume in 10 years
    • LDC – no requirement

Domestic Support (Box System, Article 6)

  • Which box is it?
    • Blue
      • Negatively coupled to production (a subsidy not to produce)
        • These are not capped (Art. 6:5:a; 6:5:b)
    • Green (Annex 2), most important e.g.:
      • Subsidy decoupled from output (Annex 2 Art. 6:b) and prices (A2 Art. 6:c)
      • Food Security and Aid (A2 Art. 3, 4)
      • Environmental programs (A2 Art. 12)
        • These are un-actionable (Art 13)
        • If they are minimally trade restrictive (A2 Art. 1)
      • However, Art. 13has expired (since it was only valid during the implementation period), therefore, for green box measures to be un-actionable, they must fit within the blue box, or be capped
      • Thus, the SCM Agreementwould apply to such subsidies, making these agricultural subsidies extremely strictly regulated
          • Although a case has not yet tested this
    • Amber
      • All other subsidies
        • These are to be reduced with reference to a base year
  • Note, there are also export subsidies, capped under Art. 3 and de minimis subsidies, exempted under Art. 6:4:a)
  • Subsidies have not really decreased, but, rather, they are shifting to Blue Box subsidies
    • Further, changes are with regards to a base year where subsidies were especially high (’86-’88)
  • Summary of box system:
    • Blue
      • Not required to be scheduled
    • Green
      • No longer exists, because they expired, now must fit into another category
    • Amber
      • Scheduled, subject to reductions

Conflict of Laws: The SCM Agreement and the AG Agreement

  • Originally, thanks to Article 13, during the implementation period (which ended in 2003), subsidies that were fine by the Agricultural Agreement were not actionable under the SCM agreement, although they were counterveilable
  • Further, Green Box subsidies were not actionable, and not counterveilable
  • Now, since Article 13 has expired, all subsidies under the Agriculture Agreement may be challenged under the SCM agreement
    • Absurdly, making agricultural subsidies more difficult to establish than industrial subsidies

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