AOA

Intro

 The Agreement on Agriculture (AoA) is a WTO treaty that was negotiated during the Uruguay Round of the
General Agreement on Tariffs and Trade (GATT)
 and formally ratified in 1994 at Marrakesh, Morocco.
 the AoA came into effect in 1995.
 3 Part with 21 Articles.
 focuses on reducing the agricultural support and subsidies given to domestic producers by countries.
 It is aimed to remove trade barriers and promote transparent market access and integration of global markets.
 The WTO's Agriculture Committee oversees the implementation of the Agreement and provides a forum for
members to address related concerns.
 the agreement provided for a reduction on provisions of the agreement by –
1. Developed countries within 6 years, that is by 2000.
2. Developing countries within 10 years, that is by 2004.
3. The least developed countries need not comply with this requirement.
 The Agreement covers products that are normally considered part of agriculture but excludes forestry and
fishery products, rubber, sisal, jute, coir and abaca.
 The focus of the AoA is the elimination of "trade-distorting" agricultural subsidies.
 According to the WTO, the overall aim of the Agreement is "to establish a fairer trading system that will
increase market access and improve the livelihoods of farmers around the world."
 The three provisions that the agriculture agreement focuses on are –

1. Market Access
2. Domestic support
3. Export subsidies

Important Provisions

1. Market Access (article 4 of AOA)

 Tariffication: all non-tariff barriers to be abolished and converted to tariffs.
- Non-tariff barriers include quotas, variable levies, minimum import prices, discretionary licensing, state
trading measures, voluntary restraint agreements etc.
 Tariff reduction –

1. Developed countries – to reduce the total tariff including the results of tariffication by 36% with a minimum
cut per product By 15% within six years of implementation of the agreement.
2. Developing countries – To reduce the tariff including the result of tariffication by 24% with a minimum cut
per product by 10% within 10 years of implementation of the agreement.
3. The least developed countries did not have to make any commitments.
4. Some developing countries who are maintaining quantitative restrictions due to balance of payment
problems were allowed to offer ceiling instead of tariffication.
Japan, the Republic of Korea, the Philippines (for rice), and Israel (for sheep meat, Whole milk powder, and
certain kinds of cheese) asked for special treatment until the implementation period of developing and
developed countries.

This head includes improving access to markets by removing trade barriers.

2. Domestic Support (article 6)
 Means the policy support and subsidies given by countries to enhance domestic production.

through the agriculture agreement the WTO all the countries reduce the domestic support in the following
way-

1. Developed countries – to reduce the domestic support by 20% within six years from the implementation of
the agreement.
2. Developing countries – to reduce the domestic support by 13% within 10 years of the implementation of the
agreement.
3. Least developed countries do not have to comply with this cut.
 The domestic support subsidies are categorized into various boxes in the WTO.
a) Green Box: Policies/subsidies which have no or at most minimal, trade-distorting effects on production are
excluded from any reduction commitments-
- Include direct income support to farmers
- Example: Research Funding, Conservation and Environmental programme, disaster relief, inspection
program

b) Amber Box: Subsidies that distort international trade, by making products of a country cheaper as compared
to similar products of another country.
- Example: input subsidies: Subsidy for fertilizers, seeds, electricity, irrigation, Minimum Support Price
- It is capped at 5% of total agriculture production - Developed countries 10% for Developing Countries.

c) Blue Box: subsidies that are tied to limit production by imposing production quotas or encouraging farmers
to set aside land for other purposes.
- For example: subsidies to limit the number of animals
- There is no cap on these subsidies

3. Export Subsidies (article- 9)

 These can result in dumping of highly subsidized (and cheap) products in other countries and damage the
domestic agriculture sector of other countries.
 there are provisions related to member country’s commitments to reduce export subsidies.
 countries have to comply with this provision in the following manner –
1. Developing countries – to reduce the value of export subsidies by 36% and quantity of subsidized Exports
by 21% within 6 years of the implementation of the agreement.
2. Developed countries – to reduce the value of export subsidies by 24% of and the quantity of subsidized
Exports by 14% within 10 years of the implementation of the agreement.
3. Least developed countries do not have to comply with this provision.

 Developed countries are mandated to reduce their export subsidy volume by 21% and expenditure by 36% in
6 years, in equal instalments (from 1986 -1990 levels).
 For developing countries, the percentage cuts are 14% and 24% respectively in equal annual
instalments over 10 years.