The Main Provisions of the Agreement:
Agricultural production and trade was brought under multilateral trading rules in the Uruguay Round (1986-1994), purposely to reform international agricultural trade by reducing the distortions caused by protectionist policies such as tariffs and subsidisation. In order to implement these objectives, WTO member countries were obliged to make quantitative reduction commitments in the three main areas of the agreement, on a country-by-country and commodity-by-commodity basis. The three areas are: market access, domestic support, and export subsidy.

Market access
Restrictions on market access were in the form of tariffs and non-tariff measures. Under the AoA, members were required to remove all non-tariff measures and replace them with their tariff equivalents. These additional tariff levels were to be added to the ordinary tariffs resulting in the total tariffs on the various agricultural products. This is called the tariffication of the non-tariff measures. The tariffs arrived at after tariffication were to be progressively reduced: by 36% over six years (1995-2000) for developed countries, and by 24% over ten years (1995-2004) for developing countries. The Least Developed Countries (LDCs) were not required to undertake any reductions in their tariffs though they were required to bind them against further increases. The agreement provides for a special safeguard clause (SSG) that enables a country that has used the tariffication process, to apply additional tariffs following an import price decline, or sudden import surge.

Domestic support
Under the agreement, all domestic support in favour of agricultural producers is subject to rules. Domestic support measures are categorised under three types:

• Amber Box, or measures that are taken to be trade distorting and have effect on production, such as input subsidies and price support.

• Green box, or measures that are assumed not to have effects on production such as support for research, marketing assistance.

• Blue Box, or measures such as direct payments to farmers to compensate them for programmes to limit production.

Subsidies under the Green Box and the Blue Box were exempted from reduction, while those under the Amber box were to be quantified under the Aggregate Measure of Support (AMS), and reduced: by 20% over six years (1995- 2000) for developed countries and by 13% for developing countries over ten years (1995-2004). Although LDCs are exempted from these reduction commitments, they are required not to raise their level of support beyond the de minimis level (10% of the total value of agricultural production).

Export subsidies
The reduction commitments are in 2 areas: the annual budgetary outlay and the quantity of export covered by the export subsidy. Export subsidies were to be reduced by 36% in value and 21% in volume, for developed countries over a period of six years (1995-2000) and by 24% in value and 14% in volume, for developing countries over ten years (1995-2004).

The imbalances and inequities in the AoA:
The AoA was supposed to discipline the high levels of protection in the developed countries, and by so doing, to offer very substantial benefits in terms of market access to many developing countries, as they have a comparative advantage in agricultural products. In reality, little progress has been made in the reduction of agricultural protection and subsidies in the developed countries. In fact, overall levels of subsidy have increased rather than decreased, through increased use of the Green Box measures which are exempted from reduction under the AoA.
The developed countries especially the US and the EU are determined to maintain and increase their agriculture subsidy levels, as evidenced by the US Farm Bill 2002, which increased agricultural subsidies by almost 80%, with US$180 billion allocated over the next 10 years. The OECD countries spend US$361billion annually subsidising their farmers.
The tariff rates on a number of items of potential interest to the South are still prohibitively high, because tariffs rates were high in the first year of the agreement and developed countries needed to reduce them by only 36% on average, to the end of 2000. For example agricultural tariffs on temperate-zone products such as maize, barley and wheat, were 154%, 197% and 214% respectively in the OECD countries in 1995. Tariff peaks (in other words, goods where the percentage tariff is higher than the agreed average), are prevalent in major food staples, fruits and vegetables, while tariff escalation pervades important product chains like coffee, cocoa and oilseeds, as well as animal products like hides and skins. These limit marketing and diversification opportunities for developing countries .

The Effects of subsidies on developing countries:
The effect of the dumping of subsidy-driven surpluses on developing countries has been devastating in the following ways. They lose;

• Export opportunities and revenues from having their market access blocked in the developed countries using the subsidies.
• Export opportunities in other countries because the subsidising country is exporting to these countries at artificially low prices.
• Their market share in their own domestic market and even their livelihood, due to the inflow of artificially cheap, subsidised imports.

Most developing countries, on the other hand, cannot support and protect their own agricultural sectors properly. Under IMF/WB loan conditionalities, they were forced to reduce or eliminate their subsidies and institutions set up to assist farmers in marketing their products. Now under the AoA; they are unable to increase them beyond the de minimis level. In any case, they have insufficient funds to take advantage of the permissible domestic support.
The AoA offers developing countries no tools to protect themselves against sudden import surges and price shocks, since Special Safeguard measures can only be used on products that were tariffied. Very few developing countries tariffied their products as they did not have non-tariff barriers. The general safeguard is applied only after proving the existence of injury or threat of injury to domestic production, a requirement which is difficult to prove in developing countries, given the dispersed nature of production. Neither can developing countries use countervailing duty, as it is meant to provide defence against specific and occasional cases of subsidies, but developing countries are faced with a structural problem of widespread use of subsidies in the developed countries, within the framework of the existing rules.

The AoA negotiations: From Doha to Cancun:
The Doha Ministerial Declaration launched
“comprehensive negotiations aimed at:
• substantial improvements in market access;
• reduction of, with a view to phasing out, all forms of export subsidies;
• substantial reductions in trade-distorting domestic support”.

It was also agreed that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations.
Modalities for further commitments in agricultural reform were to be agreed by 31st March 2003. (Para 13 &14).This deadline has passed with no agreement reached on the draft modalities.
Neither the draft modalities papers of February 12th 2003 nor the slightly revised version of March 18th 2003, drawn up by Stuart Harbison, the Chairman of the WTO Committee on Agriculture, address the fundamental concerns of developing countries as they do not tackle the structural imbalances and deficiencies in the Agreement. For example, on export subsidies, the draft proposes that half of the export subsidies shall be phased out over 5 years and the other half over nine years. This means that export subsidies, which have such disastrous effects on developing countries will continue for sometime. The reduction commitments for the Blue box and Amber box are insufficient, as they cannot lead to the eventual phasing out of the actual spending on these measures. The text also provides no option to cap the trade-distorting elements of the Green Box measures. Although the Draft includes the concept of strategic products (SP) and the special Safeguard Mechanisms ( SSM) for developing countries, the SP have not as yet been agreed on, and the developed countries are to continue using the SSM for over an unspecified period of time.
For many developing countries, the proposed modalities based on lesser percentages of reduction, spread over longer periods than allowed in the Uruguay Round, are not appropriate for addressing the inequities and imbalances in the AoA as they have failed to offer the flexibility developing countries need to address their development concerns especially food sovereignty and rural development. In accordance with these aspirations, developing countries are therefore calling for:

1. The Unencumbered use of the Special and general Safeguards; and import control Measures by developing countries.
2. The provision of subsidies to small farmers.
3. The elimination of amber, blue and de minimus boxes of subsidies by developed countries and the limiting of their green box subsidies as these have a direct effect on production for export and therefore become trade distorting.
4. The elimination of all forms of export subsidies, credits, tariff peaks and escalation by developed countries and the need for transparency in tariff rate and quota administration.
5. Special and Differential Treatment for developing countries by allowing them to raise tariffs (beyond the bound rates if necessary) on strategic products in accordance with their individual needs.
6. The developed countries to implement The Marrakech Decision that addresses the issue of the negative impact of the implementation of the AoA on Net Food Importing Developing countries and LDCs.

References:

1. Bhagirath Lal Das (2002): The New Work Programme of the WTO. Third World Network
2. Bhagirath Lal Das (1998): The WTO Agreements Deficiencies, Imbalances and Required Changes. Third world Network
3. Martin Khor (2002): The WTO, the Post-Doha Agenda and the Future of the Trade System: A development perspective. Third World network
4. World Trade Organisation (WTO) (2001a) Ministerial Declaration.
5. World Trade Organisation (WTO) TN/AG/W/1/Rev.1 (18th March 2003) : Negotiations on agriculture .First draft of Modalities for The Further commitments.