AGREEMENT ON AGRICULTURE

Introduction
The Agreement on Agriculture (AoA) is a key component of the multilateral trading
system governed by the World Trade Organization (WTO). It was negotiated during
the Uruguay Round of trade talks (1986-1994) and came into force on January 1,
1995. The AoA represents the first significant attempt to bring discipline to
agricultural trade, a sector historically shielded by a variety of trade-distorting
policies such as subsidies, tariffs, and quotas.
The primary goal of the AoA is to establish a fair and market-oriented agricultural
trading system. This is achieved by reducing barriers to trade, eliminating subsidies
that distort trade, and improving transparency and predictability in agricultural
policies across WTO member states.
Main Pillars of the Agreement on Agriculture
The AoA is structured around three key pillars:
1. Market Access
2. Domestic Support
3. Export Competition
1. Market Access
Market access relates to the conditions under which agricultural products can enter
the markets of WTO member countries. Historically, this sector was protected
through non-tariff barriers like quotas and import bans, which were opaque and
difficult to challenge. The AoA made several important changes in this area:
● Tariffication Process:
All non-tariff barriers (such as quotas and import bans) were converted into
tariff equivalents. This process, known as tariffication, made barriers more
transparent and easier to quantify.
● Tariff Reduction Commitments:
Developed countries agreed to reduce their tariffs on agricultural
products by an average of 36% over six years, with a minimum
reduction of 15% per [Link] countries committed to
reducing tariffs by 24% over ten years. Least-developed countries
(LDCs) were exempted from reduction commitments but had to bind
their existing tariffs.
● Tariff-Rate Quotas (TRQs):
To ensure continued access to markets despite tariff protections, the
AoA introduced Tariff-Rate Quotas (TRQs). These quotas allow a
specific quantity of imports at lower tariff rates, with higher tariffs
applied to quantities exceeding the quota.
● Special Safeguard (SSG) Provision:
The AoA provides an additional protective measure known as the
Special Safeguard (SSG). This provision allows countries to impose
temporary higher tariffs in the event of a surge in imports or a drop in
 domestic prices. However, only a limited number of WTO members
(those that underwent tariffication) can use the SSG.
2. Domestic Support
Domestic support covers government subsidies provided to farmers that can distort
production and trade. The AoA categorizes domestic support into three "boxes",
depending on the level of trade distortion they cause:
● Green Box:
Includes subsidies that cause little or no distortion to trade and do not
affect production decisions. These subsidies are allowed without any
limitation.
Examples of Green Box measures include government funding for
research, environmental programs, disaster relief, and infrastructure
development.
● Amber Box:
This category includes subsidies that are considered to distort
production and trade. Amber Box subsidies must be reduced according
to specific commitments.
Developed countries agreed to reduce these subsidies by 20% over six
years, while developing countries were required to cut them by 13.3%
over ten years.
Examples include direct payments to farmers linked to current levels of
production or prices.
● Blue Box:
Blue Box subsidies are considered less trade-distorting than Amber Box
measures because they are tied to programs that limit production.
Such programs may, for example, cap the number of acres a farmer
can plant or restrict the number of livestock they can raise.
No reduction commitments apply to Blue Box subsidies, provided they
are linked to production-limiting programs.

● De Minimis Rule:
Under this provision, countries are allowed a certain threshold of trade-
distorting subsidies without the need to reduce them. For developed
countries, this threshold is 5% of the value of agricultural production,
and for developing countries, it is 10%.
3. Export Competition
The third pillar of the AoA focuses on eliminating export subsidies and other
practices that distort agricultural trade by artificially boosting the competitiveness of
a country’s exports. These export subsidies have been a major issue because they
allow countries to sell agricultural products at prices below the cost of production,
disrupting global markets.
 ● Reduction of Export Subsidies:
Developed countries committed to reducing the value of export
subsidies by 36% and the volume of subsidized exports by 21% over
six years.
Developing countries committed to reducing the value of export
subsidies by 24% and the volume of subsidized exports by 14% over
ten years.
● Disciplines on Export Credits and Food Aid:
The AoA also includes provisions to prevent disguised export
subsidies, such as export credits and food aid, which can distort
markets.
● Nairobi Ministerial Conference (2015):
At the WTO's Nairobi Ministerial Conference, members agreed to a
landmark decision to eliminate export subsidies entirely for agricultural
products. Developed countries were required to do this immediately,
while developing countries were given additional time.
Special and Differential Treatment (S&DT)
The AoA recognizes the unique challenges faced by developing countries and least-
developed countries (LDCs) and provides them with certain flexibilities, referred to as
Special and Differential Treatment (S&DT).
● Lower Reduction Commitments:
Developing countries are required to make smaller cuts in tariffs and
subsidies compared to developed countries.
● Longer Implementation Periods:
Developing countries have up to ten years to implement their
commitments, while least-developed countries are exempt from
making reduction commitments altogether.
● Special Provisions for Food Security:
Developing countries have the option to provide domestic support to
enhance food security, which can include subsidies for public
stockholding programs.
Criticism of the Agreement on Agriculture
Despite its role in liberalizing agricultural trade, the AoA has faced several criticisms,
particularly from developing countries:
1. Imbalance in Commitments:
Developing countries argue that the AoA disproportionately benefits
developed countries, as they can continue to provide substantial
support to their farmers through Green Box and Blue Box measures.
2. Food Security Concerns:
Some developing countries have expressed concerns that the reduction
in domestic support and import barriers might negatively impact their
 ability to achieve food security and protect their small farmers.
3. Developed Country Practices:
Developed countries, particularly the European Union and the United
States, have been accused of exploiting loopholes to continue
supporting their agricultural sectors, while developing countries
struggle to provide adequate support to their farmers within the AoA’s
limits.
Conclusion
The Agreement on Agriculture represents a significant step toward reducing trade-
distorting practices in global agricultural markets and promoting a more open and
competitive system. However, the balance of benefits remains a contentious issue,
with developing countries calling for further reforms to address inequalities in the
global agricultural trade system.
Efforts to reform the AoA continue, particularly through the Doha Development Round
of trade negotiations, which aim to address the remaining concerns of developing
countries and ensure that agricultural trade contributes to global economic
development and food security