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Frequently Asked Questions

What is the WTO? Top
The (WTO) World Trade Organization is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.  
   
How does the WTO promote fair competition? Top
The WTO lays down rules that favour fair competition by discouraging unfair trade practices such as dumping and export subsidies. Though, unfair practices in reality persist in a number of cases e.g. subsidies by developed countries to their farmers.   
   
How does the WTO recognize special needs of developing and the least developed countries?  Top
The WTO recognizes the special needs and problems of developing and the least developed countries in different parts of the world. Special and Differential Treatment (S&DT) for these countries is incorporated in the WTO laws, and rules. This is usually achieved by giving developing and the least developed countries in some cases longer implementation periods and, more flexibility in matter of compliance with the WTO.   
   
What objectives the Agreement on Agriculture (AOA) did try to achieve?  
(1)  To establish a fair and market oriented agricultural trading system. 
(2) To provide for substantial and progressive reduction in agricultural support and export subsidies with a view to remove distortion in the world market. 
 
 
What are the three pillars of AoA? Top
The three pillars of AoA are:
(1) Enhancement of market access
(2) Reduction of domestic support
(3) Elimination of export subsidies 
 
   
How total support extended by a Government to its farmers is measured? Top
The technical term for this purpose is the Aggregate Measurement of Support (AMS). It refers to the annual level of support (expressed in monetary terms)
(a) to help extended producers of the basic agricultural products.
(b) as a non-product-specific support provided in favour of agricultural producers in general. 
 
   
What are different kinds of domestic support? Top
Various kinds of domestic support are provided by types are classified in the form of boxes. Colours of traffic lights: green (permitted), amber (slow down - i.e. be reduced), red (forbidden). In agriculture, things are, as usual, more complicated. The Agricultural trade Agreement has no red box, although domestic support exceeding the reduction commitment levels in the amber box is prohibited; and there is a blue box for subsidies that are tied to programmes that limit production. There are also exemptions for developing countries (sometimes called an "S&D box", including provisions in Article 6.2 of the agreement).   
   
What do you mean by an Amber Box? Top

All domestic support initiatives considered to distort production and trade fall into the “amber box”. Such support is defined in Article 6 of the AoA as all domestic support except those not subject to reduction commitments. These include measures to support prices, or subsidies directly related to production quantities. All kinds of supports are subject to limits: "De minimis" minimal supports are allowed (5% of agricultural production for developed countries, 10% for developing countries); the 30 WTO members that had larger subsidies than the de minimis levels at the beginning of the post-Uruguay Round reform period are committed to reduce these subsidies.

 
What is Blue Box about? Top
This is the "amber box with conditions" - conditions set to reduce distortion. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production. Permitting Certain Kinds of Subsidies.  
   
Describe Green Box? Top
Green box subsidies must not distort trade, or the type of support permitted to be provided is required to be non-distorting (i.e. in Green Box), or at most cause minimal distortion. Though they are government-funded must not involve price support. They tend to be programmes and activities that are not targeted at particular products, and include direct income support for farmers and growers that are not related to present production levels. They also include environmental protection and regional growth programmes. "Green Box" subsidies are therefore, permitted without limitations, provided they comply with the policy-specific criteria.   
   
How is trade distorted?  Top
Trade is distorted if prices are higher or lower than would have been the case had the transaction would taken place in a competition market than normal, or / and if quantities produced, bought, and sold are also higher or lower than normal - i.e. than the levels that would usually exist in a competitive market. For instance, import barriers and domestic subsidies can make crops more costly in a market of a country. The higher prices will result in higher production of crop. If the surplus is to be sold on world markets, where prices are low, then export subsidies are needed. 
As a result, the subsidizing countries can be producing and exporting considerably more than they normally would. Reducing Tariffs in the Uruguay Round 
 
   
What is the level of internal (domestic) support that could be provided by a WTO member to its agricultural sector and which is not required to be included in the calculation of its Current Total AMS? Top
Such support is also referred to as the 'De minimis level of support'. For a developed country member the product specific/non-product specific domestic support which could be provided should not exceed 5% of that country's total value of production of agricultural growth in the relevant year. However, for developing country member the De minimis percentage is 10% that is allowed.   
   
Which export subsidies are subject to reduction commitments under the AoA? Top
These export subsidies are subject to reduction commitments. 
a. The provision by governments or their agencies direct subsidies, including payment in kind to a industry, producer of agricultural, cooperative or any association to producers or to a marketing class contingent on export performance. 
b. Sale for export of non-commercial stocks at a price lower than the price charged to buyer in the local market. 
c. Payments on the export of an agricultural product that are financed by virtue of government action including the payments that are financed from the proceeds of a levy imposed on the agricultural product concern or from which the exported product is to be derived. 
d. Provision of subsidy to review the expenses of exports of agricultural products including handling, up-gradation, transport freight and other processes expenses. 
e. Subsidies on agriculture products contingent on their incorporation in exported schemes. 
 
   
What is Agreement on Sanitary and Phytosanitary (SPS) Measures?  Top
The Agreement on the Application of Sanitary and Phytosanitary Measures entered into force with the establishment of the WTO on January 1st, 1995. It contains a framework of the basic rules and regulations for food safety, animal and plant health standards which directly or indirectly affect international trade. Within this framework it allows countries to set their own standards and criteria, but it also lays down that regulations must be based on scientific lines. Further, these regulations should be applied only to the extent necessary to protect human, animal or plant life. 
Secondly such regulators should not unjustifiably discriminate between/among the countries where similar conditions exist. The member countries to the agreement are encouraged to utilize the international standards, guidelines and recommendations where they exist. However, the members in the agreement might use measures which result in higher standards provided, that there is some solid scientific justification. They can also set higher standards based on the appropriate assessment of risks so long as the approach is consistent and not arbitrary. 
 
   
Describe sanitary and phytosanitary measures? Top
Under mentioned measures are regarded as sanitary and phytosanitary measures which seeks to: 
(i) Protect life, human or animal from risks arising from additives, contaminants, toxins or disease- causing organisms in their food.
(ii) Protect human life from plant or animal-carried diseases.
(iii) Protect animal or plant life from pests, diseases, or disease-causing elements by utilizing all possible available measures.
(iv) Prevent damage to a country from the entry, or spread of diseases. 
 
   
What is the objective of SPS agreement? Top
The establishment of a multilateral framework of rules and disciplines to guide the development, adoption and enforcement of sanitary and phytosanitary measures in a harmonized way so as to minimize their negative effects on the trade.   
   
What is WTO Agreement on TBT? Top
The Agreement on Technical Barriers to Trade, commonly referred to as the TBT Agreement, is an international treaty administered by the WTO. It was last renegotiated during the Uruguay Round of the GATT, with its present form entering into force with the establishment of the WTO at the beginning of 1995. 
This agreement ensure that technical regulations, standards, testing, and certification procedures do not create unnecessary obstacles to trade. The agreement prohibits technical requirements created in order to limit trade, as opposed to technical requirements created for legitimate purposes such as consumer or environmental protection.
 
   
What are “intellectual property rights”? Top
Intellectual property rights can be defined as the rights given to people over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creations for a certain period of time.