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Green Box Subsidies

In WTO terminology, subsidies in general are identified by “boxes” which are given the colors of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden). Green Box subsidies  include the amounts spent on Government services such as research, disease control, and infrastructure and food security. This also includes the subsidies given to the farmers that directly don’t affect production such as for restructuring the agriculture. Since they are permitted in WTO regime, the most developed countries have kept providing subsidies to their farmers.

The Green Box contains fixed payments to producers for environmental programs, so long as the payments are “decoupled” from current production levels.

All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box The provisions excepts 5% of agricultural production for developed countries, 10% for developing countries. The Amber box subsidies with conditions designed to reduce distortion are placed in Blue Box. They include the direct payment to the farmers to reduce production.

Blue Box contains subsidies which can be increased without limit, so long as payments are linked to production-limiting programs.

 

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