19 - Improving monitoring and surveillance of green box subsidies  pp. 571-582

Improving monitoring and surveillance of green box subsidies

By Andrea Cerda

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Background

Agricultural trade reform is based on the principle that further agricultural trade liberalization, together with progressive reductions in domestic support, will benefit both developing and developed countries. Pressures in favour of reform come not only from multilateral commitments, but relate also to the domestic setting, where agricultural policies need to take into account economic, political and social considerations.

Domestic pressures in favour of reform differ widely between countries. Developing countries' main concerns focus on the need to design policies aimed at facilitating structural adjustment, providing public goods and correcting market failures. Domestic pressures in developed countries are related to: (i) inconsistencies in traditional agricultural policies, with a huge proportion of subsidies historically being devoted to the same few products without taking into account major changes in their agricultural sectors; (ii) the need to address better issues related to environmental and conservation concerns; and (iii) the need to improve targeting of transfers, in order to keep supporting producers, but in a less production- and trade-distorting way.

As a result of such a wide range of requirements, there are legitimate reasons for ensuring that developing and developed countries are able to provide agricultural support in a way that facilitates reform processes.

The Uruguay Round and the Agreement on Agriculture (AoA) recognized this through the green box, allowing countries to support their producers as long as budgetary expenditures generate no or minimal distortions in production and trade.

Organization for Economic Cooperation and Development (2005), “Decoupling: Illustrating Some Open Questions on the Production Impact of Different Policy Instruments”, AGR/CA/APM(2005)11/FINAL, 3 May, Paris, France, Organisation for Economic Cooperation and Development.
United Nations Food and Agriculture Organisation (2005), “Domestic Support: Trade Related Issues and Empirical Evidence”, Trade Policy Technical Notes No. 5, Rome, Italy, Food and Agricultural Organization.
World Trade Organisation (2004), July Framework, WT/L/579, 2 August, Geneva, Switzerland, World Trade Organization.
World Trade Organisation (2007a), “Improving Monitoring and Surveillance”, Cairns Group Proposal, JOB(07)/88, 13 June, Geneva, Switzerland, World Trade Organization.
World Trade Organisation (2007b), “Improving Monitoring and Surveillance Mechanisms”, Contribution by the G-20, JOB(07)/97, 20 June, Geneva, Switzerland, World Trade Organization.