Measuring Farm Support under the WTO Agreement on Agriculture

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Measuring Farm Support under the WTO Agreement on Agriculture
Measuring Farm Support under the
WTO Agreement on Agriculture
Lars Brink
Workshop on Methodologies for Calculating Agricultural Support
and Agricultural Support in the Countries of the Customs Union
Eurasian Economic Commission
Food and Agriculture Organization of the United Nations
9 July 2013, Moscow, Russian Federation
[email protected]
Domestic support in the WTO
• What is “domestic” about domestic support?
– Support from instruments not applied at the border
• Not tariffs, not export subsidies
• Evolution
– Before WTO: no constraint in GATT
– 1995 WTO Agreement on Agriculture: some constraint
– If Doha conclusion: more constraints
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WTO discipline is a legal construct
• Important distinctions
a.
b.
c.
d.
“Support”: Economics vs Agreement on Agriculture
Measures vs support
Ceiling on support vs level of applied support
WTO accession vs yearly “notification” to WTO
• Applied support in base period became Member’s ceiling on
later years’ applied support
• Colored boxes – do they exist?
– Criteria are the key
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WTO green box = Annex 2
• Exempts some policies from WTO commitment
– No ceiling on support under those policies
• Policy must meet requirements and basic criteria
– No effect on production or trade; no price support
• Each policy type must also meet several other criteria
– General services (para. 2)
• No payments to producers or processors; specially worded criteria
– Payments of many types to producers (paras. 5 - 13)
• Each type must meet its own set of specially worded criteria
– E.g., “decoupled income support” must meet six criteria (para. 6)
– E.g., “investment aids” must meet six other criteria (para. 11)
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… measures in favor of agricultural producers
Non-green
measures
Green box
measures
Development
programs
Blue box measures
Non-exempt
measures
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… measures in favor of agricultural producers
Non-green
measures
Green box
measures
Green box support
Development
programs
Development support
Blue box measures
Blue box payments
Non-exempt
measures
Current
Total AMS
must
not exceed
Bound
Total AMS
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… measures in favor of agricultural producers
Non-green
measures
Green box
measures
Green box support
Development
programs
Development support
Blue box measures
Blue box payments
Non-exempt
measures
Calculate
AMSs
Current
Total AMS
must
not exceed
Bound
Total AMS
NPS AMS
Product 1 PS AMS
Product 2 PS AMS
etc.
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… measures in favor of agricultural producers
Non-green
measures
Green box
measures
Green box support
Development
programs
Development support
Blue box measures
Blue box payments
Non-exempt
measures
Calculate
AMSs
Current
Total AMS
de minimis AMSs
must
not exceed
Bound
Total AMS
no
NPS AMS
yes
> 5% VOP?
no
Product 1 PS AMS
yes
> 5% VOP?
no
Product 2 PS AMS
> 5% VOP?
yes
etc.
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Current Total AMS ≤ Bound Total AMS?
AMS = Aggregate Measurement of Support
• Notification to WTO Committee on Agriculture
• CoAg review
• How did country classify its measures and policies?
• How did country measure its support?
• Outcomes of CoAg review
• Revise notifications, submit additional data
• Some countries’ Current Total AMS exceeds Bound Total AMS
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Example of reporting domestic support
• Russia in 2008
– One of three years in base period for WTO accession
• Reported two kinds of domestic support
– Green box support: Annex 2, Agreement on Agriculture
– AMS support
• Most, but not all, AMS support enters into Current Total AMS
– De minimis exemptions
– No blue box support; no Article 6.2 support
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Green Box notification (Exempt measures)
Russia 2008 example (selected items only) US$ million
Measure type: General services
Paragraph 2(a)
Paragraph 2(d)
Agricultural science and research programs
Federal component
Regional component
271.1
0.2
Federal component
Regional component
6.0
7.5
Extension and advisory services
Measure type: Natural disaster relief
Paragraph 8
Compensation of costs to farms affected by natural calamities
Federal component
Regional component
[Support shown under all other Annex 2 paragraphs]
8.5
[2,129.3]
Grand total
2,422.5
Notes for this presentation:
• Notification must follow WTO document G/AG/2 format; Green Box in Supporting Table DS:1
• Source: document WT/ACC/SPEC/RUS/39 (includes required indication of “Data sources”,
some row headings deviate from Annex 2 wording)
• Placement of a program under a particular paragraph of Annex 2 (Green Box) depends on
the program meeting the specific criteria of the paragraph, not the program name
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Non-Product-Specific AMS notification
Russia 2008 example: (selected items only) US$ million
Measure type
Support
Electric power benefits
43.2
Agricultural input supplying under the leasing contracts
Federal component
Regional component
v
118.5
45.8
Federal component
Regional component
1,157.5
439.1
Soft crediting of agriculture
[All other measure types]
Sum of support from all non-product-specific measure types
= Non-product-specific AMS
[3,792.0]
5,596.1
Notes for this presentation:
• Notification must follow WTO document G/AG/2 format; Non-Product-Specific AMS in
Supporting Table DS:9
• Supporting Table DS:9 feeds into Supporting Table DS:4
• Source: document WT/ACC/SPEC/RUS/39
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Calculating Current Total AMS
Russia 2008 example: (selected items only) US$ million
Description of
basic product
Productspecific AMSs
Value of
AMS/
production (VOP) VOP
De minimis if In CTAMS if
less than 5% more than 5%
Flax and hemp
14.5
23.8
--
14.5
Sheep
27.0
802.6
3.4% De minimis
--
Horse
8.3
155.8
5.3%
--
8.3
362.2
14,818.2
2.4% De minimis
--
Milk
60.8%
[123.3]
[All other
products]
[some are
De minimis]
[35.0]
--
5,596.1
Non-productspecific AMS
5,596.1
99,208.2
5.6%
Sum of all AMSs that are not de minimis = Current Total AMS 5,653.9
Notes for this presentation:
• Notification must follow WTO document G/AG/2 format; calculation of Current Total AMS in
Supporting Table DS:4
• Supporting Table DS:4 uses data from Supporting Tables DS:7 and DS:9
• Source: document WT/ACC/SPEC/RUS/39
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Non-Product-Specific AMS notification
Russia 2008 example: (selected items only) US$ million
Measure type
Support
Electric power benefits
43.2
Agricultural input supplying under the leasing contracts
Federal component
Regional component
118.5
45.8
Federal component
Regional component
1,157.5
439.1
Soft crediting of agriculture
[All other measure types]
Sum of support from all non-product-specific measure types
= Non-product-specific AMS
[3,792.0]
4,949.5
5,596.1
Notes for this presentation:
• Notification must follow WTO document G/AG/2 format; Non-Product-Specific AMS in
Supporting Table DS:9
• Supporting Table DS:9 feeds into Supporting Table DS:4
• Source: document WT/ACC/SPEC/RUS/39
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Calculating Current Total AMS
Russia 2008 example: (selected items only) US$ million
Description of
basic product
Productspecific AMSs
Value of
AMS/
production (VOP) VOP
Flax and hemp
14.5
23.8
--
14.5
Sheep
27.0
802.6
3.4% De minimis
--
Horse
8.3
155.8
5.3%
--
8.3
362.2
14,818.2
2.4% De minimis
--
Milk
[All other
products]
60.8%
De minimis if In CTAMS if
less than 5% more than 5%
[123.3]
[some are
De minimis]
[35.0]
-De minimis
5,596.1
--
Non-productspecific AMS
5,596.1
4,949.5
99,208.2
5.6%
4.99%
Sum of all AMSs that are not de minimis = Current Total AMS 5,653.9
57.8
Notes for this presentation:
• Notification must follow WTO document G/AG/2 format; calculation of Current Total AMS in
Supporting Table DS:4
• Supporting Table DS:4 uses data from Supporting Tables DS:7 and DS:9
• Source: document WT/ACC/SPEC/RUS/39
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WTO and OECD: major differences
– Different policy coverage
• WTO green box different from OECD GSSE General Services Support Estimate
• WTO sum of AMSs different from OECD PSE Producer Support Estimate
• Still, there is good correspondence for some countries
– Different measurement methods
• Market price support MPS
– WTO calculates MPS only if there is an ”administered price”
• Russia: no market price support in AMS; very large in PSE
– Price gap in WTO MPS is very different from OECD MPS
• WTO Current Total AMS exempts de minimis AMSs
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WTO and OECD: different purposes
– OECD
• Monitor policy reform over time
– Also used to compare among countries
• Economics-based measurements
• Consistent methods for all countries
• Informative up-to-date data base
– WTO
• Review implementation of commitment: legal rules matter
• Comparability not a key consideration
– Countries classify and measure support in different ways
• Long time lags in reporting
• Quality of data base depends on what countries report
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Lars Brink
Thank you for your attention!
[email protected]
References
Brink, L. 2011. The WTO Disciplines on Domestic Support. In Orden, D., D. Blandford, and T. Josling (ed.). WTO Disciplines
on Agricultural Support: Seeking a Fair Basis for Trade. Cambridge, Cambridge University Press.
Brink, L., D. Orden and G. Datz. 2013. BRIC Agricultural Policies Through a WTO Lens. Journal of Agricultural Economics
64(1): 197-216.
Orden, D., D. Blandford, T. Josling, and L. Brink. 2011. WTO Disciplines on Agricultural Support: Experience to Date and
Assessment of Doha Proposals. IFPRI Research Brief 16. www.ifpri.org/publications/wto-disciplines-agricultural-support
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