A PSE is the subsidy that would be necessary to replace the array of actual farm policies employed in a particular country in order to leave farm income unchanged. Transfers from the government or consumers to farmers happen either through direct payments from the budget or through market price support. Market price support is calculated by comparing an internal producer price to a world reference price. Direct transfers from the budget are calculated from the national budget. However, there are a number of elements in the calculation of the market price support which need to be addressed before the PSE could be used as a negotiating tool in the GATT negotiations.