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Abstract

The impact of domestic support on trade is likely to become an increasingly important issue in the WTO negotiations on agriculture. Domestic support expenditures are increasing and existing disciplines on forms and levels of support are weak. While a shift from market price support to output subsidies should be less trade distorting, such support may not be minimally distorting as required under the so-called green-box criteria. Proposals submitted by WTO members could further expand permissible support measures and weaken disciplines on their use. In some cases, most notably support provided in pursuit of environmental objectives, there may be a contradiction between the aims of support measures and the requirement that these should be minimally trade distorting. Clearer policy criteria and stronger disciplines are needed in order to avoid future trade disputes on agricultural support.

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