India and China Jointly oppose the trade distorting agriculture subsidies.

TNPSC Current Affairs - September 2017 by TNPSC Guru

India and China Jointly submitted a proposal to the WTO (World Trade Organisation ) for  opposing the trade distorting agriculture subsides given by Developed countries . It is known in WTO Parlance as Aggregate Measurement of Support (AMS) or Amber box Support .

About Aggregate Measurement of Support (Amber Box) and its issues 

• AMS is an important type of subsidy classified under WTO’s Agreement on Agriculture (AoA) given to farmers by government.
• As per the WTO rules, For Developing countries AMS can give upto 10 Per cent of Country’s agricultural GDP  and 5 Per cent for Developed Nations which is called de minimis level of support.
• Developed nations are entitled to provide the de minimis level of support ,but developed nations like US, EU, Canada, and other wealthy nations providing more trade-distorting subsidies to their farmers at levels much higher than the ceiling applicable to developing nations.
• This makes developed nations products cheaper in International market comparing to developing nations products
• So it makes most of the time India breaches the WTO’s de mnimus support level, because based on the WTO de Minimus support, India can give only 10 % of total monetary value of production based on base year 1986-88 to Farmers which is lesser than subsidy given by Developed nation.
• For example in 1986-88 the total monetary value of production of US is 100 crore , So US can give 5% of subsidy to their farmer that means 5 crore of its production.
• For India the total monetary value of production of is 10 crore on 1986-88, so as per WTO Rules India can give 10 % as its subsidy that means 1 crore. It is much lesser than developed nations.
• It  automatically Indian Farmers getting less subsidy comparing to Developed nations and makes developed nation products cheaper than products form developing nations.
• India wants to change the base year around 2000 because India’s production is good comparing to 1986-88.

About WTO’s and Amber Boxes (AMS).

 Objective of WTO is to remove the trade barriers and other deficiency of trade, so that international trade gets smoothen, Global economy gets flourishes and economic balance to be achieved globally.

Amber Box: 

It is a direct support given by government to farmers that directly stimulate production of trade of agriculture product. It create trade distortion because they encourage excessive production

 It consists of two parts product specific subsidy and non –product specific subsidy. Product specific subsidy is a special support given to specific product example , Rice and Non-specific subsidy is for overall agriculture support like electricity, credit, irrigation, seed ,fertilizers and more.

To control the trade distortion  WTO has limit the de minimus (minimul level of support permitted by WTO) support or subsidy given by Developing countries up to 10% and 5 % for Developed Nations from the total value of Agricultural production based on base year (1986-88).