The Agreement on Agriculture Green Box: What You Need to Know

The Agreement on Agriculture (AoA) is a global treaty that was signed in 1994 as part of the World Trade Organization (WTO). It was designed to regulate trade in agricultural goods and services, and to reduce subsidies that distorted the global market.

One of the key provisions of the AoA is the « green box » subsidy. This is a type of subsidy that is deemed to have no or minimal trade-distorting effects, and therefore is allowed under WTO rules. In other words, it is a subsidy that is considered to be non-trade distorting and is not subject to any reduction commitments.

The green box subsidies are classified into three categories:

1. Government services: This includes research, pest and disease control, infrastructure development, and other public services that support agriculture.

2. Direct payments to farmers: These are payments made to farmers that are not related to production, such as environmental or rural development schemes.

3. Income support: This includes subsidies that are linked to production, but are designed to maintain a certain level of income for farmers, rather than to increase production.

To qualify as a green box subsidy, the payment must not be tied to production, or be linked to specific types of crops or activities. Additionally, these subsidies must not exceed certain thresholds, and must be notified to the WTO.

The rationale behind the green box subsidies is that they are supposed to promote sustainable agriculture practices and help farmers adapt to changing market conditions. By providing support for research and development, infrastructure, and income, the subsidies are meant to help farmers stay competitive and improve their livelihoods.

However, critics of the green box subsidies argue that they can still have trade-distorting effects, by allowing farmers to sell their products at lower prices than they would otherwise be able to. Moreover, some countries have accused others of using green box subsidies as a way to disguise their trade-distorting support.

In conclusion, the green box subsidies are an important part of the Agreement on Agriculture, and are meant to provide support for sustainable agriculture practices. However, as with any subsidy, they can have trade-distorting effects, and must be carefully monitored to ensure that they do not distort the global market.