Domestic Support Provisions of WTO Framework Agreement Clarified

Mark Lange, NCC’s President and CEO said the WTO Framework Agreement’s requirement for reducing domestic support by 20% has been widely misunderstood and misreported by the media. Lange explained that there is a requirement for a 20% reduction, but it is not applicable to the prevailing $19.1 billion amber box ceiling. The relevant number for the 20% reduction is approximately $49 billion, comprised of amber box payments, plus product-specific and non-product-specific de minimis and blue box payments. Under the Framework Agreement, the U.S. would have, for the first time, access to the blue box, which is currently available only to the EU.

"References to various boxes and de minimis allocations provide ample opportunity for misunderstanding," Lange said. "However, statements from Ambassadors Robert Zoellick and Allen Johnson following the Framework’s adoption, together with a review by the NCC, suggest that there is sufficient structural flexibility in the way cuts can be made to maintain an effective farm program." Lange went on to caution that this reduction requirement is characterized as a first-year installment and it will be up to U.S. negotiators to ensure that any cuts beyond the first year continue to move global subsidies toward harmony and are not unfair to U.S. agriculture.

Lange said, "It is not the domestic subsidy provisions of the Framework Agreement that are the source of our concern. We continue to be troubled by the specific references to cotton."