Assessing The 2002 Proposals Of The United States, Canada And The Cairns Group For The Wto Discipline On Domestic Support

The United States, Canada and the Cairns Group proposed disciplines on distorting domestic support in agriculture at the WTO Committee on Agriculture in July and September 2002. This paper assesses the key features of the 2002 proposals: green box provisions, blue box provisions, de minimis exemptions, the starting point for reductions, the nature of the reduction commitment, the depth of cuts, the implementation period for cuts, down payments, overall caps, and special and differential treatment of developing countries. The maximum distorting support (the sum of the maximum de minimis support and any entitlement to AMS or Total AMS that remains after reduction) is calculated for the United States, the European Union, Brazil, and Canada, based on projected values of production at the end point of implementation. The 2002 proposals of the United States, Canada and the Cairns Group are similar in seeking to reduce or eliminate blue box support and to reduce support over five years in developed countries. The proposal of the Cairns Group is found to be extremely ambitious, allowing no support other than green box support in developed countries, combined with a reduced scope for exempting support on green box grounds. Developing countries could still provide distorting support up to de minimis levels. Canada's proposal would also require the elimination of AMS entitlements but is less extreme in that all Members could provide deminimis support as under present rules. Canada's proposal would improve the classification of green box and non-product-specific support, make green box support immune to the threat of countervail, and cap the sum of amber, blue and some green support. The U.S. proposal is found to be only modestly ambitious, perpetuating Members' AMS entitlements, albeit at lower, more harmonized levels. No change is proposed in the rules for classifying support in the green box or as non-product-specific versus product-specific, which would continue to exempt large amounts from commitment. The Cairns Group proposal would extend considerable leeway to developing countries as special and differential treatment, while the Canadian and U.S. proposals seek to discipline distorting support wherever it is provided. Altogether, Canada's proposal would appear to be more practical and more equitable and hence perhaps more effective than the proposals of the Cairns Group and the United States in bringing about substantial reductions in trade-distorting domestic support.