Agriculture in the WTO Bali Ministerial Agreement
Congressional Research Service 6
beyond the level of supply demanded by the marketplace. Because the resulting surplus
production exceeds market demand, it puts downward pressure on prices. This price distortion
then ripples through domestic and international markets and can lead to further resource
misallocations. As a result, government programs that buy commodities at above-market prices—
whether to bolster incomes of low-income farmers, to build up food security stocks, or for other
purposes—are counted as “amber box” (i.e., market-distorting) domestic support.
Amber box outlays are limited by WTO member commitments spelled out in the Agreement on
Agriculture (and referred to as Aggregate Measure of Support or AMS bounds) and listed in each
country’s member schedule. Most developing countries do not have explicit AMS bounds.
Instead they are limited in amber box domestic support outlays by the de minimis exemption
which allows for support outlays of up to 10% of the value of agricultural production (measured
as an aggregate total and for individual commodities). Several developing countries that operate
food stockholding programs as part of domestic nutrition programs claim that they are unable to
stay within their WTO spending bounds when the additional outlays for food-security
stockholding are included in their amber box. Further, they argue that these food stockpiling
programs are crucial for domestic food security and should therefore be excluded from counting
against any amber box limits.
Since early 2013, a group of developing countries organized collectively as the Group of 33
(G33) and, in this particular instance, headed by India, has been promoting the idea of excluding
from the amber box those outlays used for commodity purchases at above-market prices and then
stockpiled for domestic food security programs. On November 22, 2012, the G33 submitted this
idea as a formal proposal to the WTO.
Although most WTO members agree that food security is a vital issue, particularly for the poor,
some are concerned that making an exception for this particular way of dealing with food
insecurity might both weaken the WTO disciplines that apply to all domestic support (thus
undermining one of the original intents of the WTO) and produce unintended consequences in
other third-party members where food insecurity is also a vital issue.
U.S. Ambassador to the WTO, Michael Punke, spelled out the concerns regarding an above-
market price subsidy on April 11, 2013, when he stated:
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Instead of creating new disciplines to reduce agriculture subsidies, the G33 proposal represents a
step back from existing Uruguay Round disciplines—creating a new loophole for potentially
unlimited trade-distorting subsidies. This new loophole, moreover, will be available only to a few
emerging economies with the cash to use it. Other developing countries will accrue no benefit—
and in fact will pay for the consequences. First, in the immediate term, when the governments
using the program buy up stocks, world prices will go up, making it harder for poorer countries to
meet their food needs. Later comes the inevitable problem of miscalculation. Over the longer
term, the lure of guaranteed prices that are set before the planting season will draw more acres
into production. If recent history is repeated, more stocks will be created than anticipated, and the
surplus then will be dumped onto international and domestic markets—competing with the
products of countries which aren’t subsidizing—and lowering prices that farmers around the
world get for their commodities.
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Statement by U.S. Ambassador to the WTO Michael Punke at a Meeting of the Trade Negotiations Committee at the
WTO, Geneva, Switzerland, April 11, 2013.