Taking Stock and Looking Forward on Domestic Support under the WTO Agreement on Agriculture

This paper reviews the domestic support rules of the WTO Agreement on Agriculture (AoA) and evaluates the space they generate for different members to provide different kinds and levels of support subject to and exempt from limits. Economic analysis of support is reviewed, focused on direct payments to producers and market price support (MPS) measured in the AoA compared to economic price support. A global overview presents the major changes in members’ domestic support as revealed by their notifications to the WTO Committee on Agriculture (CoA) for 1995-2016, complemented by selected subsequent information. Key results are a shift toward less-distorting support (recent support in the United States since 2018 one exception), concentration of support among a small number of members, and the rise of China and India as top support providers, along with the European Union, the United States and Japan. The paper summarizes discussion within the CoA over the notified information and other questions about members’ domestic support. It examines the measurement of MPS for wheat and rice in the recent dispute China ‒ Agricultural Producers and for several products for India, including in three ongoing disputes India ‒ Measures Concerning Sugar and Sugarcane. Our assessments highlight the problematic aspects of the AoA measurement. China’s MPS, when measured in line with the dispute settlement ruling, can be accommodated within its limits while hardly constraining its economic support. Conversely, some measurements of India’s MPS are far greater than the economic support provided. Such divergences underlie contention about the consequences of applying the AoA rules. An alternative is considered that more closely tracks economic support by using lagged international border prices as a reference price. Members continue to debate domestic support options. Whether progress can be made is uncertain as they hold fast to longstanding positions on such issues as the rules and limits applying to domestic support as a whole, to cotton support and to the consequences of acquisition at administered prices of public stocks for food security purposes. New policy priorities have gained prominence, most notably climate change, but related also to productivity growth, biosecurity, water management and biodiversity. Governments have the option to address these and other priorities through green box support exempt from limit. More explicit green box specifications might clarify what support policies in the area of mitigating climate change would qualify for exemption. The paper concludes by assessing how the diverse pressures for change affect the potential of the AoA to contribute to a fair and market-oriented agricultural trading system. We summarize the major problematic aspects of the AoA and from these insights suggest options to improve and strengthen the WTO rules and commitments on domestic support.