WTO and Agriculture

Agriculture plays a fundamental role in feeding the population. It also occupies a special position in world trade, which led to a dedicated agreement: the WTO Agreement on Agriculture.

In the 1980s, industrialised countries’ massive market interventions in agriculture led to overproduction. The surplus products were put on world markets at subsidised prices, which distorted international trade. This entailed significant expenses for the developed countries while also destroying the market for agricultural products from developing countries. This environment made it increasingly important to create an agreement that would set binding rules for members’ domestic agricultural support. Disciplines in the agricultural sector were therefore integrated into the WTO/GATT rules at the end of the Uruguay Round in 1995.  

WTO Agreement on Agriculture 

The WTO Agreement on Agriculture aims to reform agricultural trade to create more competitive market conditions and fair trade rules. The agreement consists of general rules, applying to all WTO members, which provide for significant, progressive reductions in agricultural support and border protection. In addition, individual members have undertaken specific commitments on domestic support and border protection, which are set out in documents known as schedules of commitments. The Agriculture Committee monitors compliance with and implementation of the general rules from the agreement and the schedules of commitments. 

The Agreement on Agriculture rests on the following three pillars:

1. Domestic support
2. Market access 
3. Export competition

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Detailed information on the three pillars of teh WTO Agreement on Agriculture

1. Domestic support

The Agreement on Agriculture divides domestic support into different categories, known as boxes. In the case of trade-distorting measures (Amber Box), a ceiling and a reduction have been agreed. All countries are granted a minimum level of trade-distorting support that they do not have to reduce (de minimus support), provided that the support remains within a certain percentage of the value of production. Payments that do not distort trade, or do so only minimally (Green Box), can be granted indefinitely. Payments that distort trade but have a production-limiting effect (Blue Box) are not capped either. 

2. Market access

With regard to market access, the countries have undertaken to convert all border protection measures into tariffs and to reduce tariffs on agricultural products. In return, the Agreement on Agriculture provides for a Special Safeguard Mechanism (SSG), which allows a temporary increase in tariffs on imports of certain agricultural products in extreme cases. Members may only make use of the SSG if they have reserved this right for the relevant tariff line in their schedules of commitments. Switzerland is one of the members that has done this. 

3. Export competition

The third pillar, export competition, includes the following categories: export subsidies, export credits, international food aid and state trading enterprises. The Agreement on Agriculture restricted the permitted expenditure for export subsidies and some other export measures. Export subsidies have been banned since the 2015 WTO Ministerial Conference in Nairobi. 

The Committee on Agriculture and WTO notifications

The Committee on Agriculture monitors the implementation of the obligations arising from the Agreement. The Committee on Agriculture, which includes representatives of all WTO members, meets three to four times a year. This forum allows member countries to ask each other questions concerning compliance with the Agreement on Agriculture. Each member must notify the Committee regularly about the extent of their domestic support measures applied within one of the three pillars. These notifications serve as a basis for reviewing the commitments. The notifications are sent to the WTO Secretariat and then made available to all other member countries and the public.

Notification search

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Swiss agriculture

The WTO Uruguay Round helped shape the development of Swiss agricultural policy in the 1990s, resulting in a stronger market orientation [FAB1] and in particular shifting domestic market support to direct payments. Today, Switzerland provides a large part of its domestic agricultural support through measures that meet the Green Box criteria of not distorting trade or doing so only minimally. Switzerland's trade-distorting payments have decreased significantly over the decades. Switzerland still allocated almost CHF 3.1 billion in the Amber Box after the transition period in 2000, while this figure fell to only CHF 1.4 billion by 2018. Switzerland does not notify any measures within the Blue Box.

* The jump in the market price support line between 2013 and 2014 is due to an adjustment in the calculation method.

In the area of market access, on the other hand, Switzerland has not undertaken any tariff reductions for agricultural products. The reform steps specified by the WTO in this pillar include in particular the introduction of the ‘underfill mechanism’, which provides for special monitoring of members’ fill rates of tariff rate quotas. 

The decision of the 2015 Ministerial Conference in Nairobi obliged Switzerland to abolish its export subsidies. There was a transitional period until 2020 to implement this decision. Switzerland implemented the ministerial decision within the deadline and has not notified any export subsidies since 1 January 2019.

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Links

WTO's Agriculture

WTO's Agriculture Committee

Last modification 05.01.2023