The agreement has been criticized by civil society groups for reducing tariff protection for smallholder farmers, a key source of income in developing countries, while allowing rich countries to further subsidize domestic agriculture. The first pillar of the agricultural agreement is “domestic support”. The AoA divides domestic support into two categories: trade-distorting measures and measures that do not distort trade (or that distort trade the little). The WTO Agreement on Agriculture, negotiated in the Uruguay Round (1986-1994), includes the classification of subsidies according to “boxes” according to the consequences of production and trade: amber (most directly related to production levels), blue (production-limiting programmes that still distort trade) and green (minimal distortion). [3] While yellow box payments had to be reduced, green box payments were exempted from reduction obligations. Detailed rules on green box payments are set out in Annex 2 of the AoA. However, all must meet the “essential requirement” of paragraph 1 so as not to cause more than a minimal distortion of trade or production and must be provided through a government-funded programme that does not include consumer transfers or price support to producers. [1] Introduction to agricultural trade in the WTO Links to the agricultural part of the WTO Guide “Understanding the WTO” The CAP is also affected by agricultural concessions granted to a large number of countries under several multilateral and bilateral agreements, as well as by unilateral derogations granted under the Generalised System of Preferences (GSP). These preferential agreements explain the high level of EU agricultural imports from developing countries (3.2.10, Table VI). The Agriculture Agreement prohibits agricultural export subsidies unless such subsidies are included in a schedule of commitments by member states. If listed, the agreement requires WTO members to reduce both the amount of money they spend on export subsidies and the amounts of exports that receive subsidies.

On the basis of 1986-90 averages as a baseline, industrialized countries agreed to reduce the value of export subsidies by 36% over the six years from 1995 on or after 10 years for developing countries). Developed countries have also agreed to reduce the volume of subsidized exports by 21 per cent over the six years (14 per cent over 10 years for developing countries). The least developed countries do not need to make cuts. The main criticism of policies that support domestic prices or subsidize production is that they encourage overproduction. This displaces imports or leads to cheap export subsidies and dumping on world markets. The Agriculture Accord distinguishes between support programs that directly stimulate production and those that are not supposed to have a direct effect. The Member Transparency Toolkit includes information on notification formats and a manual on reporting obligations, as well as links to member engagement lists and other resources to support member transparency in agriculture. To be eligible, green box subsidies must not distort trade or at most lead to minimal distortions (paragraph 1).

They must be financed by the state (not by higher prices for consumers) and must not include price support. For example, import barriers and domestic subsidies can make harvesting in a country`s domestic market more expensive. Higher prices can encourage overproduction. If the surplus is to be sold on world markets, where prices are lower, export subsidies are needed. .