Glossary
Aggregate measure of
support (AMS): An index that measures the monetary
value of the extent of government support to a sector. The AMS, as
defined in the Agreement on Agriculture, includes both budgetary
outlays as well as revenue transfers from consumers to producers as
a result of policies that distort market prices. The AMS includes
actual or calculated amounts of direct payments to producers (such
as loan deficiency payments), input subsidies (on irrigation water,
for example), the estimated value of revenue transferred from
consumers to producers as a result of policies that distort market
prices (market price supports), and interest subsidies on commodity
loan programs. The AMS differs from the broader agricultural
support measure, the Producer Subsidy Equivalent, by excluding
estimated benefits (or costs) of certain noncommodity specific
policies (e.g., research and environmental programs), and by using
special WTO-defined measures of direct payments and market price
supports.
Agreement on
Agriculture: Part of the Uruguay Round Agreement
covering issues related to agriculture (e.g., market access, export
subsidies, and internal support).
Amber box
policies: An expression that developed during the
General Agreement on Tariffs and Trade (GATT) trade negotiations
using a traffic light analogy to rank policies. The traffic light
analogy was that an amber policy be subject to careful review and
reduction over time. Amber box policies include policies such as
market price support, payments related to current production or
prices, and input subsidies.
Applied
tariff: The tariff actually levied on an
imported good, generally lower than the bound tariff. May also
refer to a means of administering a tariff-rate quota (TRQ) in
which the importing country chooses not to charge the over-quota
tariff on imports in excess of the quota volume. All imports are
charged the lower in-quota tariff. Thus, the TRQ is administered as
if it were a tariff at the lower, in-quota rate rather than as a
two-part tariff-rate quota. However, the importing country
maintains the right to apply the higher, over-quota rate at
will.
Blue box
policies: An expression that developed during the
General Agreement on Tariffs and Trade (GATT) trade negotiations
using a traffic light analogy to rank policies. The traffic light
analogy was that an amber policy could be converted to a blue
policy that could eventually become "green." Blue box policies were
seen as acceptable, but temporary, or transition policies that
would help pave the way for further reforms over time. Blue box
policies represent the set of provisions in the Agreement on
Agriculture that exempts from reduction commitments, those program
payments received under production-limiting programs-if they are
based on fixed area and yields, a fixed number of head of
livestock, or if they are made on 85 percent or less of base level
of production. Under the Doha Round, the United States has sought
to redefine and broaden the blue box to include policies based on
fixed area and yields, a fixed number of head of livestock, or made
on 85 percent or less of base level of production, even if they do
not include a production-limiting component.
Bound tariff
rates: Tariff rates resulting from the General
Agreement on Tariffs and Trade (GATT) or World Trade Organization
(WTO) negotiations or accessions that are incorporated as part of a
country's schedule of concessions. Bound rates are enforceable
under Article II of GATT. If a WTO contracting party raises a
tariff above the bound rate, the affected countries have the right
to retaliate against an equivalent value of the offending country's
exports or receive compensation, usually in the form of reduced
tariffs on other products they export to the offending country.
Cairns Group: The Cairns Group is a
coalition of 19 agricultural exporting countries (Argentina,
Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica,
Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay,
Peru, the Philippines, South Africa, Thailand, and Uruguay). A
diverse coalition bringing together developed and developing
countries from Latin America, Africa, and the Asia-Pacific region,
the Cairns Group has been influential in the agricultural
negotiations since its formation in 1986. The group has continued
to play a key role in pressing WTO members to meet the far-reaching
mandate set in the Doha Development Agenda.
Ceiling binding: In cases where an
existing tariff was not already bound, developing countries were
allowed to establish ceiling bindings. These ceiling bindings could
result in tariffs that were higher than the existing applied rate.
The ceiling bindings took effect on the first day of implementation
of the WTO Agreement on Agriculture.
Country schedules: The official
schedules of subsidy commitments and tariff bindings as agreed to
under GATT for member countries.
Decoupled: Payments to farmers that
are not linked to current levels of production, prices, or resource
use. When payments are decoupled, farmers make production decisions
based on expected market returns. Under the WTO Agreement on
Agriculture, for policies to be considered decoupled no production
shall be required in order for producers to receive the
payment.
De minimis
rule: Minimal amounts of domestic support are
excluded from each country's total Aggregate Measure of Support
(AMS) ceilings. These include specific commodity support if
it is less than 5 percent of the commodity's value of production
and nonspecific commodity support if the total is less than 5
percent of the value of total agricultural output.
Dispute
settlement body: To resolve disputes among WTO
members, the WTO established a dispute settlement body (DSB) to
administer dispute settlement provisions and processes (based on
rules and procedures contained in Annex 2 of the WTO legal text).
The DSB is authorized to establish dispute settlement panels, adopt
panel and appellate body reports, maintain surveillance of
implementation of rules and recommendations, as well as authorize
suspension of concessions and other obligations under WTO
agreements.
Dispute
settlement panel: If a WTO member brings a complaint
to the WTO dispute settlement body (DSB), that member can submit a
written request to establish a dispute settlement panel. The panel
examines the matter referred to the DSB and makes recommendations
in its report to the DSB. The WTO Secretariat maintains a list of
qualified governmental and nongovernmental individuals who may be
asked to serve on a panel.
Doha Development
Agenda: The current series of multilateral trade
negotiations begun in January 2002 as agreed at the WTO Ministerial
in Doha, Qatar, in January 2001; also called the Doha Round.
Export
subsidies: Special incentives provided by governments
to encourage increased foreign sales. Subsidies, which are
contingent on export performance, may take the form of cash
payments, disposal of government stocks at below-market prices,
subsidies financed by producers or processors as a result of
government actions such as assessments, marketing subsidies,
transportation and freight subsidies, and subsidies for commodities
contingent on their incorporation in exported products.
Final
Act: Formally called the "Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations,"
the Final Act is the legal document containing the texts of all
provisions agreed upon during the Uruguay Round. The signing and
adoption of the Final Act initiated the transition from the GATT to
the WTO.
Formula-based tariff
reductions: A method of negotiating
tariff reductions using an agreed-upon formula applied to tariff
rates (with limited exceptions being granted for very sensitive
items) by all contracting parties.
G-20:
Coalition of 21 developing countries pushing for a reduction of
trade-distorting farm subsidies and for greater access to
industrialized country markets. The G20, which emerged in August
2003, is currently made up of 21 countries: Argentina, Bolivia,
Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia,
Mexico, Nigeria, Pakistan, Paraguay, the Philippines, South Africa,
Tanzania, Thailand, Uruguay, Venezuela and Zimbabwe.
General Agreement on
Tariffs and Trade (GATT): An international agreement
originally negotiated in 1947 to increase international trade by
reducing tariffs and other trade barriers. The agreement provides a
code of conduct for international commerce and a framework for
periodic multilateral negotiations on trade liberalization and
expansion. The Uruguay Round Trade Agreement updated the General
Agreement and established the World Trade Organization on January
1, 1995, to replace the institutions created by the GATT.
Green box policies:
Domestic or trade policies that are deemed to be minimally trade
distorting and that are excluded from domestic support reduction
commitments in the Uruguay Round Agreement on Agriculture. Examples
are domestic policies dealing with research, extension, inspection
and grading, environmental and conservation programs, disaster
relief, crop insurance, domestic food assistance, food security
stocks, structural adjustment programs, and direct payments not
linked to production. Trade measures or policies, such as export
market promotion, are also exempt (but not export subsidies or
foreign food aid).
In-quota
tariff: The tariff applied on imports within a
quota. The in-quota tariff is less than the over-quota
tariff.
Market failure: Market failure occurs when the market
price of a good does not include the costs or benefits of the
externality (a harmful or beneficial side effect that occurs in the
production, consumption, or distribution of a particular good).
Producers or consumers may have little incentive to alter
activities that contribute to pollution, for example, because the
external costs of pollution do not enter their private costs of
production. Often, government policies in the form of regulations
(such as standards, bans, and restrictions on input use) and
incentive-based mechanisms (such as taxes, subsidies, and
marketable permits) are implemented as corrective measures.
Megatariffs:
Extremely high tariffs that effectively cut off all imports other
than the minimum access amounts granted under the WTO Agreement on
Agriculture agreement. Some well-known examples of megatariffs
resulting from tariffication include the base tariffs calculated
for European Union tariffs on grains, sugar, and dairy products;
U.S. sugar, peanuts, and dairy products; Canadian tariffs on dairy
products and poultry; and Japanese tariffs on wheat, peanuts, and
dairy products.
Modalities: The Agreement on
Agriculture was made up of three components, the text of the
Agreement, the Country Schedules submitted to the WTO that included
base year data and the commitments, and the "modality" documents of
the Negotiating Group on Agriculture, which had no legally binding
force but were agreed to by the negotiating parties as the
suggested set of procedures to use to calculate various indicators
and commitments. In WTO negotiations, modalities refer to the nuts
and bolts-such as formulas or approaches for tariff reductions-that
underpin each country's final commitments.
Most-favored-nation
(MFN) status: An agreement between countries to
extend the same trading privileges to each other that they extend
to any other country. Under a most-favored-nation agreement, for
example, a country will extend to another country the lowest tariff
rates it applies to any third country. A country is under no
obligation to extend MFN treatment to another country, unless they
are both members of the WTO, or unless MFN is specified in an
agreement between them.
Nonproduct-specific
support: Government support to agriculture that is
not linked to specific commodities or production activities.
Examples include environmental programs, research, and irrigation
subsidies. Also callednoncommodity-specific support.
Nontariff barrier
(NTB): The WTO Agreement on Agriculture defines
prohibited NTBs to include quantitative import restrictions,
variable import levies, minimum import prices, discretionary import
licensing, nontariff measures maintained through state-trading
enterprises, voluntary export restraints, and similar border
measures other than ordinary customs duties. Other NTBs, such as
exchange controls, labeling and health standards, technical
barriers to trade, and sanitary and phytosanitary measures are
still allowed but are disciplined under the Agreement on Technical
Barriers to Trade, the Agreement on the Application of Sanitary and
Phytosanitary Measures, etc.
Notifications: The annual
process by which member countries report to the WTO information on
commitments, changes in policies, and other related matters as
required by the various agreements.
Over-quota tariff: The tariff applied on imports in excess
of the quota volume. The over-quota tariff is greater than
the in-quota tariff.
Overall
Trade-Distorting Domestic Support (OTDS): The sum of
a country's
Aggregate Measure of Support (AMS), 10 percent of the average
total value of agricultural production in the 1995-2000 base period
(5 percent product-specific de minimis and 5 percent
non-product-specific de minimis), and the higher of average
blue box payments as notified to the Committee on Agriculture,
or 5 percent of the average total value of agricultural production,
in the 1995-2000 base period.
Producer Subsidy
Equivalent (PSE): A broadly defined aggregate measure
of support to agriculture that combines into one total value
aggregate, direct payments to producers financed by budgetary
outlays (such as loan deficiency payments), budgetary outlays for
certain other programs assumed to provide benefits to agriculture
(such as research and inspection and environmental programs), and
the estimated value of revenue transfers from consumers to
producers as a result of policies that distort market prices.
Red box
policies: The color coded terminology was originally
applied only to domestic policies. There was no agreement to apply
the "stop" red light to any domestic policies, so the "red box" has
been empty. In the trade policy area, however, the red box might be
considered to contain the quantitative limitations that were
replaced by the tariff-rate-quota system.
Special and
differential treatment: The provision allowing
exports from developing countries to receive preferential access to
developed markets without having to accord the same treatment in
their domestic markets.
Tariff: A tax imposed on commodity
imports by a government. A tariff may be either a fixed charge per
unit of product imported (specific tariff) or a fixed percentage of
value (ad valorem tariff).
Tariff-rate quota (TRQ): A
two-tiered tariff where the tariff rate charged depends on the
volume of imports. A lower (in-quota) tariff is charged on imports
within the quota volume. A higher (over-quota) tariff is charged on
imports in excess of the quota volume.
Tariff reduction schedule: Based on
guidelines contained in the General Agreement on Tariffs and Trade
(GATT) document "Modalities for the Establishment of Specific
Binding Commitments Under the Reform Programme." Each country's
bound tariff rates, reduction schedules for new and existing
tariffs, and market access levels (TRQs) are contained in its
Country Schedules, which are the legal and binding commitments
entered into by each country and form part of the WTO Agreement on
Agriculture.
Tariffication: The process of
converting nontariff trade barriers to bound tariffs. This was done
under the WTO Agreement on Agriculture in order to improve the
transparency of existing agricultural trade barriers and facilitate
their proposed reduction. In the future, countries will not be able
to use nontariff measures to restrict trade.
Trade Promotion Authority: The
legislation authorizing the President to negotiate a trade deal
that can be submitted to Congress for a simple yes-or-no vote
without amendments. Formerly called Fast Track Authority.
Uruguay Round:
GATT/WTO negotiations launched at Punta del Este, Uruguay, in
September 1986 and concluded in Geneva, Switzerland, in December
1993; signed by Ministers in Marrakech, Morocco, in April 1994.