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by the USA, eventually resulted after a few and 10% for developing countries. The aim is
hiccups in the signing of a General Agreement to reduce support to below the de minimus levels
and the 32 WTO members with subsidies that are
on Tariff and Trade (GATT) in Geneva in 1947.
TRADE ARRANGEMENTS Since then, various rounds of negotiations were higher than this committed themselves to reduce
them. The green box contained subsidies that do
completed. The WTO replaced the GATT as the
custodian of international trade. The General
distort trade, and they must be government-funded
Agreement however still remains the WTO’s not directly distort trade. These subsidies must not
umbrella treaty for trade in goods. and exclude price supportive measures. They are
Agricultural trade was included in the usually programmes that are not targeted at specific
Uruguay Round (UR) of the WTO negotiations. products or as the EU calls it, “decoupled” from
The inclusion of agricultural trade posed a major production. Environmental protection measure s
obstacle in the negotiations. After much further fall into this group. It also includes various
negotiating and technical work at the WTO, income insurance programmes and safety net
123 countries, including South Africa, signed programmes.
the Uruguay Round agreement at a meeting in The blue box contains support measures that
Marrakesh, Morocco. require farmers to reduce production. There are
no limits to the amounts spent in the blue box.
THE THREE PILLARS OF Well-known blue-box measures are the set-aside
AGRICULTURAL TRADE schemes for crop production in the USA. The
The agricultural trade negotiations focus on the prevent–plant scheme that US farmers used to
following pillars of trade: get subsidies for, if they did not plant maize in a
particular year, is a good example.
• Market access After the Seattle ministerial meeting had ended
Market access is governed by import tariffs and in chaos in 1999 as anti-globalisation protestors
tariff quotas. All signatories agreed to maximum took to the streets in what is known as the Battle
import tariff levels, the so-called bound rates, and of Seattle, the WTO did all it could to accommo-
to a gradual reduction in import tariffs. Specific date the concerns of developing countries, and
tariffs were set at or below the bound rate. South even named the next draft agenda the Doha Deve-
African import tariffs for agricultural products lopment Agenda. WTO then added a new box,
were fixed at levels far below the bound rates. the so-called “development” box that includes all
Agricultural tariffs are high compared to measure s that promote development of agriculture
industrial tariffs. To facilitate higher market in developing countries. Unfortunately, developing
access for agricultural products, countries had countries lack the funds to spend on subsidies.
to agree to allow specific quantities of products
at lower import tariffs of 25% of the bound rate. • Export subsidies
These market access quotas created problems GATT already prohibited export subsidies for
for some South African agricultural sectors. industrial products in 1947. Export subsidies
proliferated in agriculture. This was one of the key
• Domestic support issues discussed in the Uruguay Round. Export
The biggest obstacle for the Uruguay Round was subsidies are subject to reduction commitments.
the massive support European, American and In December 2015 at the WTO’s 10th ministerial
other countries rendered to their agricultural meeting in Nairobi, members agreed to abolish
sectors. In the UR, domestic support subsidies export subsidies: developed countries immediately,
were divided into a few so-called “boxes”. and developing countries by the end of 2018.
The red box contains so-called forbidden Currently, export subsidies are no longer an issue
support, and the amber box, most domestic of concern for agriculture. However, if international
support measures. These are subject to an allowed agricultural prices drop, we may see countries
minimum, de minimus, of 5% for developed, reintroducing export subsidies.

Volume 21 No 4 December 2019 | 21