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handle is hein.crs/govzxl0001 and id is 1 raw text is: Congressional Research Service ~informing the legislative debate since 1914 Updated June 3, 2019 WTO Disciplines on U.S. Domestic Support for Agriculture Trade is critical to the U.S. agricultural sector: Exports account for about 20% of total U.S. agricultural production. Some commodities-such as cotton, wheat, and soybeans- have export shares of nearly 50% or greater. As a member of the World Trade Organization (WTO), the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy. WTO Disciplines of Domestic Support A farm support program can violate WTO commitments in two principal ways-first, by exceeding spending limits of certain market-distorting programs and, second, by generating distortions that spill over into the international marketplace and cause significant adverse effects. The Agreement on Agriculture (AoA) The WTO's AoA spells out the rules for countries to determine whether their policies for any given year are potentially trade distorting, how to calculate the costs of any distortion, and how to report those costs to the WTO in a public and transparent manner. WTO Classification of Domestic Support The WTO uses a traffic light analogy to group programns. Green box programs are inimally or non-trade distorting and are not subject to any spending limits. Blue box programns are described as miarket-dlistorting but production-limiting. Payments are based on either a fixed area or yield or a fixed nuie of livestock and are md on less than 85% of base production. As such, blue box programs are not subject to spending limits. Amber box programns are the mnost miarket-dlistorting programns and are subject to strict aggregate annual spending limits. They are cumulatively measured by the aggregate mr of support (AMS) subject to the de minimis exemption (explained below). Prohibited programs include certain types of export and ir subsidies and non-tariff trade barriers that are not explicitly included in a country's WTO schedule or identified and accepted in the WTO legal texts. De minimis exemptions are spending that is sufficiently smal (less than 5'. of the value of production)-relative to either the value of a specific product or total production- to be dleemned benign. By leaving no constraint on spending in the green box while imposing limits on AMS spending, the WTO encourages countries to design their domestic farm support programs to be more green box compliant and less market distorting. The majority of U.S. domestic agricultural support outlays have been categorized as green box (Figure 1) and thus not subject to the amber box limit. Under the AoA, U.S. amber box outlays are limited to $19.1 billion annually, subject to de minimis exemptions. Most U.S. commodity support outlays are notified as amber box: either product- or non-product-specific (Figure 2). However, direct payments (DPs) were notified as decoupled, green box income support and were excluded from the amber box limit. DPs were repealed by the 2014 farm bill (P.L. 113-79). Figure I. U.S. Annual WTO Notifications by Category I B $125i Blue Box De Minmis: ProductSpecific De PMirnis: Non Product Sptif Amrbcr ox Green Box 1995 2000 2005 2010 2015 j Source: U.S. annual notifications to the WTO through 2016. Note: PS = product specific; NPS = non-product specific. Since 1995, the United States has stayed within its AMS limits (Figure 2). However, U.S. compliance has hinged on judicious use of the de minimis exemptions in a number of years (e.g., 1999-2001 and 2005) to exclude substantial amber box spending (including crop insurance subsidies) from counting against the AMS limit. Figure 2. U.S. Amber Box Outlays, De Minimis Exemptions, and the Amber Box Spending Limit [25 Billion 2000 2005 2010 2015 Source: U.S. annual notifications to the WTO through 2016. Notes: PS = product specific; NPS = non-product specific. https://csreports cong ress Jo,

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