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| U.S.
Proposal for Global Agricultural Trade Reform Domestic
Support: |
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The U.S. July 2002 WTO proposal outlines an approach
that brings trade-distorting domestic support – both blue and amber box
support -- in all countries to similar levels, that is, by harmonizing
trade-distorting domestic support at substantially lower levels than what is
currently allowed. This objective is achieved through a specific formula –
reduction of trade-distorting support to 5 percent of a country’s total value
of agriculture production (the 5 percent rule) over a 5-year period.
The following is an illustration of the 5 percent rule:
If Country Y’s total value of agriculture production (VAP) equaled 150 Local Currency Units (LCU) in the 1996 – 1998 base period; then at the end of the implementation period, Country Y’s final allowed level of trade-distorting domestic support would be 7.5 LCU.
If Country X’s total value of agriculture production equaled 250 LCU in the 1996 –1998 base period; then at the end of the implementation period, Country X’s final allowed level of trade-distorting domestic support would be 12.5 LCU.
In this example,
if Country Y’s current allowed level of trade-distorting domestic support is 25 LCU, then Country Y would reduce its ceiling for trade-distorting domestic support from 25 LCU to 7.5 LCU over a 5-year period.
if Country X’s current allowed level of trade-distorting domestic support is 55 LCU, then Country X would reduce its ceiling for trade-distorting domestic support from 55 LCU to 12.5 LCU over a 5-year period.
Main Page: U.S.
Proposal for Global Agricultural Trade Reform
Background on the current round of WTO negotiations
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