Compatibility of result-based agri-environmental schemes with the WTO framework Lars Brink Workshop on result-based environmental schemes AgriFood Economics Centre and Royal Swedish Academy of Agriculture and Forestry 12 November 2014 Lund, Sweden [email protected]
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Result-based agri-environmental payments and the WTO rules
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Compatibility of result-based
agri-environmental schemes with the
WTO framework
Lars Brink
Workshop on result-based environmental schemesAgriFood Economics Centre and Royal Swedish Academy of Agriculture and Forestry12 November 2014 Lund, Sweden [email protected]
– Substantial reductions in support and protection • Taking into account non-trade concerns: environment• Doha: substantial reductions in trade-distorting support
– Domestic support• Not border measures: tariffs, export subsidies, etc.• Two kinds of domestic support
– Not limited: green box, blue box, Article 6.2– Limited: everything else
– Measure support in particular ways• AMSs Aggregate Measurements of Support
– Administered prices– Payments, subsidies
WTO Agreement on Agriculture
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– Support for environment without any agr. production
• May fall outside of Agreement on Agriculture
– Support for environment with agricultural production
• Joint production of environment and agriculture
• Support in favour of agricultural producers
– Green box measures not subject to AMS calculation
• No ceiling limit on green box support if measure meets– Fundamental requirement: no or minimal production effects
– Two basic criteria: funded by government; not price support
– Policy-specific criteria
“… in favour of agricultural producers”
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Blue box measures
Development
programs
Non-exempt
measures
Non-green
measures
Green box
measures
… measures in favor of agricultural producers Art. 6.1
Art. 6.1 Annex 2
Art. 6.2
Art. 6.5
Blue box measures
Development
programs
Non-exempt
measures
Current
Total AMSmust
not exceed
Non-green
measures
Green box
measures
… measures in favor of agricultural producers
Blue box payments
Development support
Green box support
Bound
Total AMS
Art. 3.2; 6.3
Blue box measures
Development
programs
Non-exempt
measures
NPS AMS
Product 1 PS AMS
Product 2 PS AMS
Current
Total AMS
etc.
Bound
Total AMS
Calculate
AMSs
must
not exceed
Non-green
measures
Green box
measures
… measures in favor of agricultural producers
Blue box payments
Green box support
Development support
Annex 3
Annex 3.1
Annex 3.6
Non-green
measures
Blue box measures
Development
programs
Non-exempt
measures
NPS AMS
Product 1 PS AMS
Product 2 PS AMS
… measures in favor of agricultural producers
Blue box payments
Green box support
Development support
Current
Total AMS
etc.
de minimis AMSs
> 5% VOP?
Calculate
AMSs
must
not exceed
> 5% VOP?
> 5% VOP?
Green box
measures
no
no
no
yes
yes
yes
Bound
Total AMS
Art. 6.4
– Expenditures– General services
– Public stockholding for food security
– Domestic food aid
– Payments– Direct payments to producers
– Decoupled income support
– Income insurance
– Crop insurance
– Producer retirement
– Resource retirement
– Investment aids
– Environmental programs
– Regional assistance programs
Sets of policy-specific green box criteria
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• Para. 12: Payments under environmental programs
– (a) Eligibility for such payments shall be determined as part of a clearly-defined government environmental or conservation program and be dependent on the fulfilment of specific conditions under the government program, including conditions related to production methods or inputs.
– (b) The amount of payment shall be limited to the extra costs or loss of income involved in complying with the government program. (emphasis added)
Annex 2 of Agreement on Agriculture
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– Did EU regulation inspire URAA wording or vice versa?
• Predates 1994 Uruguay Round Agreement on Agriculture URAA
– Regulations go beyond “extra costs or loss of income”
– Reg’n allows selection by tender or calls for proposals
• Use as measurement of extra costs or loss of income?
“… extra costs or loss of income”
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746/96 “additional costs” and “incentive component”
1257/1999 “additional costs”, “income foregone”, and “incentive”
1698/2005 & 1974/2006 “additional costs and income foregone” and “transaction costs”
74/2009 silent on these words
1305/2013 “additional costs and income foregone” and “transaction costs”
Blandford, D. and T. Josling. 2007. Should the green box be modified? IPC Discussion Paper, International Food and Agricultural Trade Policy Council. Washington, DC.
Brink, L. 2009. WTO constraints on domestic support in agriculture: past and future. Canadian Journal of Agricultural Economics 57(1): 1-21. DOI: 10.1111/j.1744-7976.2008.01135.x
Brink, L. 2011. The WTO Disciplines on domestic support. In WTO Disciplines on Agricultural Support: Seeking a Fair Basis for Trade, ed. D. Orden, D. Blandford and T. Josling. Cambridge: Cambridge University Press.
Josling, T. and A. Swinbank. 2011. European Union. In WTO Disciplines on Agricultural Support: Seeking a Fair Basis for Trade, ed. D. Orden, D. Blandford and T. Josling. Cambridge: Cambridge University Press.
Meléndez-Ortiz, R., C. Bellman, and J. Hepburn (ed.). 2009. Agricultural Subsidies in the WTO Green Box: Ensuring Coherence with Sustainable Development Goals. Cambridge: Cambridge University Press.