Trade Policy WTO (Negotiations, Regular Work, Leadership)

Domestic Support in the WTO Agriculture Negotiations: Outcomes for MC12

This study reviews the significant efforts to improve the rules governing trade distorting domestic support in global agriculture trade negotiations. It pays particular attention to the concerns that current agricultural trade distorting support undermines food security, especially in developing and least developed countries.

The paper seeks to advance the understanding of Domestic Support negotiation issues in the context of the World Trade Organization multilateral negotiations. The Agreement on Agriculture, concluded as a part of the Uruguay Round in 1994, contains the provisions governing trade distorting domestic support. A summary and explanation of these rules are elaborated.

In Article 20 of the Agreement on Agriculture (AoA), WTO members agreed to pursue the long-term objective of reducing distortions affecting the global agricultural system through continuing reform of agricultural trade rules. The paper presents a summary of the evolution of domestic support expenditure and entitlements since the conclusion of the Uruguay AoA. It briefly reviews the efforts, at each WTO Ministerial Conference since 2001, to agree to further disciplines on trade distorting domestic support. The paper pays particular attention to the submissions tabled since the last WTO Ministerial in Buenos Aires, presenting a summary of the key elements and the essential dimensions of the continuing impasse in the negotiations. The domestic support negotiation issues are also appraised from the standpoint of many developing countries, including taking into consideration the implications of COVID-19 for their negotiating positions.

The paper emphasizes the need to correct critical imbalances in the current rules, to reduce the flexibility to provide trade distorting product specific domestic support and to promoting stricter adherence to the rules in all areas of the agriculture agreement. The growth in total trade distorting entitlements due to the growth in agricultural output in some specific member countries and the relative increase in domestic support notifications in the Green Box, especially paragraphs 5 to 13 of Annex 2 of the AoA associated with direct payments are also singled out for reform attention.

Four approaches to an agreement on trade distorting domestic support, reflecting different levels of ambition and possibility, are proffered for consideration by WTO members. An agreement on all or some of the elements would go a far way in advancing the goal of achieving a fair and market-oriented agricultural trading system. One that facilitates establishment of inclusive, sustainable and competitive food and agricultural systems that advance food security.