U.S. WTO Domestic
Support Reduction Commitments and Notifications
Under the Uruguay Round Agreement on Agriculture (URAA), the United
States and other countries agreed to keep the total value of trade-distorting
domestic support to farmers from exceeding predetermined ceiling
levels for the years 1995-2000. Ceilings were established for each
country based on their level of trade-distorting domestic support
in the base period 1986-88. (See USAWTOBase.xls.)
Under the URAA, ceilings declined from 97 percent of 1986-88 base
levels in 1995 to 80 percent in 2000 for developed countries. Countries
also agreed to notify the World Trade Organization (WTO) about the
current level of support for each year in the implementation period,
1995 to 2000.
Expenditures on all agricultural programs are reported to the
WTO (see ClassificationUSprograms.xls).
These WTO notifications include trade distorting amber
box support, Payments under production-limiting programs
(blue
box payments), and minimally distorting programs that are exempt
from reduction commitments (green
box expenditures).
A measure of the amount of trade distorting domestic support
is defined by the URAA. The annual level of such support, called
the "aggregate measurement of support" (AMS), is measured
as the sum of certain trade distorting commodity-specific and non-commodity
specific farm program benefits, as defined in the URAA. These AMS
benefits include those from direct government payments as well as
market price supports that are provided to farmers based on the
level of current production, price, resource use, or inputs ("coupled"
benefits).
Commodity-specific domestic supports are those benefits
arising from programs implemented using unique commodity-specific
provisions. Examples are commodity support prices, commodity loan
rates, and payment rates that are announced for each commodity for
each crop year. (See NonExempt.xls.)
The total amount of a commodity's benefits from such programs is
included in the calculation of the country's overall AMS if the
value is greater than 5 percent of the value of production of that
commodity (10 percent in the case of developing countries). Otherwise,
the commodity benefits are excluded from the AMS (the de minimis
exclusion provision in Paragraph 4, Article 6 of the URAA).
Non-commodity specific domestic supports are benefits to
agriculture arising from a set of generic provisions that are equally
available to many commodity producers. An example would be an irrigation
assistance program in which participation is not based on type of
crop. Crop insurance that makes the same program options available
to all eligible crops is also non-commodity specific. The subtotal
of all non-commodity specific program benefits in a year is included
in a country's AMS total only if the value exceeds 5 percent of
the value of all production (the de minimis level).
Green box policies are exempt. Some program benefits are
explicitly exempt from inclusion in the AMS if they meet certain
criteria. Exempt benefits include those that accrue to agriculture
in general or that are assumed to accomplish certain desirable national
objectives without significantly distorting production or trade.
Examples of exempt policies include food aid, conservation and environmental
programs, and certain direct payment programs that transfer income
to farmers without regard to the farmer's level of current production,
input use, or price received ("decoupled" payments, such
as 1996 Farm Act production flexibility contract payments).
Blue box policies are exempt from inclusion in the current total
AMS. The United States has not used this exemption since passage
of the 1996 Farm Act, when the blue box deficiency payment program
was eliminated. Authority for acreage restrictions was not authorized
in the 1996 Farm Act.
U.S. notification on domestic support is well below WTO ceilings.
ERS works with other USDA agencies to prepare the annual report
of U.S. domestic support for agriculture for transmission to the
World Trade Organization. The United States had considerable flexibility
during the first 3 years of the URAA in meeting the needs of producers
while still satisfying WTO commitments. However, the AMS rose to
85 percent of the ceiling in 1999. (See TotalUSA.xls.)
For Additional Information See:
World Trade Organization (WTO) Briefing
Room. Contains a wide variety of information about all aspects
of the Agreement on Agriculture and issues related
to the current round of world trade negotiations.
WTO Agricultural Trade Policy Commitments Database.
Contains data on implementation of commitments in agricultural policy
by WTO members.
Copies of an individual country's notification to the WTO can
be downloaded from the WTO website. For instructions, see the More Info tab in the ERS WTO Domestic Support Notifications database.
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