which must be undertaken by other countries to the underlying supply and demand conditions
which gave rise to the price change in the first instance. Technical discussions will be needed
on the design of this mechanism with respect to trigger levels, duration and the level of
additional duties which would be permitted.
Domestic subsidy commitments
The objective behind Development Box proposals in this area is that developing countries
should not be prevented by AoA rules from pursuing policy interventions designed to
encourage agricultural growth. As discussed earlier, whether current rules do constrain, or are
likely to constrain, countries in the future is a moot point. The objective could be achieved
either by raising the permitted ceiling for trade-distorting (Amber Box) AMS support
expenditures in developing countries or by widening the exemptions granted in Article 6.2.
As in the case of the interdependence between safeguards and bound tariff reductions, there is
an inter-relationship between providing greater room to use trade-distorting subsidies and re-
classifying measures so that they are not deemed to be trade-distorting. To the extent that
developing countries are given greater scope to exempt development supports from AMS
disciplines, there is less need to raise the de minimis thresholds to accommodate these
expenditures. Of the two options, the use of the Article 6.2 exemptions is to be preferred.
The reason is that these policies are more likely to be targeted on improving agricultural
productivity and growth potential. The only danger is that the most useful and effective
agricultural policy interventions are already placed in the Green Box and are thus exempt
from reduction commitments. Any extension of the list might include policies of dubious
effectiveness, which developing countries might be best discouraged from pursuing in their
own better interests. However, some broadening of the exemptions covered by this Article
could be considered (for example, extensions to cover concessional credit, transportation
subsidies or assistance to producer groups or agricultural cooperatives could be made).
An issue for consideration is whether there should be any requirement that any new
extensions, or the current investment subsidies, should be targeted on low income and
resource poor farmers as is currently the case if input subsidies are to be exempt under this
Article. There is currently no definition in the AoA of this category. If food insecure countries
were defined according to objective criteria (see later), it could be agreed that any
developmental measures instituted by these countries would, by definition, be presumed to be
in compliance with the Article 6.2 criterion for low income and resource poor producers. For
other developing countries (presumably the more advanced) a definition (for example, based
on landholding or a national poverty threshold) might be considered.
As very few developing countries have AMS commitments greater than zero, the easiest way
to raise the ceiling on permitted levels of trade-distorting support would be to raise the de
minimis ceiling. While the current (higher) de minimis percentages should be maintained,
there is little justification for seeking to increase them. The justification for maintaining the
higher percentages is in recognition of the much higher levels of trade-distorting support
permitted to developed countries under the current rules. But seeking an increase in these
percentages is not likely to result in a commercially valuable concession, given the fiscal
circumstances of most developing countries. Provided that any really useful promotional
measures are exempted from reduction commitments through mention in Article 6.2, it is
likely over time that the de minimis exemption would mainly shield price support policies.
But as tariff levels fall, bound tariffs will place a ceiling on the extent to which domestic price
support can be provided, further underlining the lack of utility in seeking to raise the de
minimis ceiling. For those few developing countries with non-zero AMS entitlements, Article
18.4, which acknowledges that excessive rates of inflation could adversely affect the ability of
a country to abide by its domestic support commitments, should be strengthened to make sure
that the real value of these entitlements is not eroded. It should also be made clear that the use
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