Agriculture in the WTO: Policy Commitments Made Under the Agreement on Agriculture

Publication Date: May 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Agriculture, forestry and fishing; Trade

Type:

Abstract:

The Uruguay Round (UR) of multilateral trade negotiations, completed in 1994, represented the first significant step toward reforming international agricultural trade. Under the UR negotiations, domestic policies and trade policies were viewed as interconnected. As a result, WTO member countries committed to disciplines in agricultural support in three broad areas -- domestic agricultural support programs, export subsidies, and market access -- often referred to as the three pillars of the Agreement on Agriculture (AA). In addition, members also agreed to provisions concerning the handling of sanitary and phytosanitary measures, dispute settlement procedures, and the continuation of the reform process.

Under the auspices of the UR's AA, WTO member countries agreed to limit and reduce the most distortive domestic support subsidies -- referred to as amber box subsidies and measured by the Aggregate Measure of Support (AMS) index. Several types of indirect subsidies were identified as causing minimal distortion to agricultural production and trade, and were provided exemptions -- green box, blue box, de minimis, and special treatment -- from WTO disciplines. Export subsidies were capped and subject to reductions in both value and volume. In addition, members agreed to improve market access for internationally traded agricultural products by converting non-tariff trade barriers (NTBs) into tariffs (a process called tariffication); binding existing tariffs at January 1, 1995, levels; and reducing tariffs from bound levels with the all-product average tariff being reduced faster than tariffs for individual products. These subsidy and tariff reductions occurred during a six-year implementation period, 1995-2000. Those countries that had used NTBs to restrict imports submitted to a form of tariffication that included quotas and special safeguards offering extra protection from surges in imports for politically sensitive products. Each country's specific commitments are listed in its schedule of concessions.

The AA also recognized the special needs of developing and least-developed countries and provided them with greater flexibility in implementing their policy commitments -- referred to as Special and Differential Treatment. In general, the rates of reduction applied to tariffs and subsidies for developing countries were lower than the rates used by developed countries. In addition, their reduction commitments were implemented over an extended period of time, generally a 10-year period (19942004). Least-developed countries (as defined by the United Nations) were exempt from all reduction commitments, but were required to bind tariffs and domestic support at base-year levels.

To provide for monitoring and compliance of WTO policy commitments, each WTO member country was expected to routinely submit notification reports on the implementation of its various commitments. The WTO's Committee on Agriculture was assigned the duty of reviewing progress in the implementation of individual member commitments based on member notifications.

This report will be updated as events warrant.