Q. In the context of which of the following do you sometimes find the terms ‘amber box, blue box and green box’ in the news?

Answer: (a) WTO affairs

In WTO terminology, subsidies in general are identified by “Boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. be reduced), red (forbidden).
In agriculture, things are, as usual, more complicated. The Agriculture Agreement has no Red Box, although domestic support exceeding the reduction commitment levels in the Amber Box is prohibited; and there is a Blue Box for subsidies that are tied to programmes that limit production.
- There are also exemptions for developing countries (sometimes called an “S&D Box or “development box”, including provisions in Article 6.2 of the Agreement).

Amber Box:

Amber box subsidies are those that can distort international trade by making a country’s products cheaper in comparison to those of other countries.
- Examples: Subsidies for inputs such as fertilisers, seeds, electricity, irrigation, and Minimum Support Price (MSP).
According to the WTO, agriculture’s amber box is used for all domestic support measures that are deemed to distort production and trade.
- As a result, the trade agreement requires signatories to commit to reducing trade-distorting domestic supports that fall into the amber box.
Members who do not make these commitments must keep their amber box support within 5-10% of their value of production. (Di Minimus Clause)
- 10% for developing countries
- 5% for developed countries

Blue Box:

It is the “amber box with conditions” — conditions, designed to reduce distortion.
Any support that would normally be in the amber box is placed in the blue box if it requires farmers to limit production.
- These subsidies aim to limit production by imposing production quotas or requiring farmers to set aside part of their land.
At present there are no limits on spending on blue box subsidies.

Green Box:

The green box is defined in Annex 2 of the Agriculture Agreement.
Green Box is domestic support measures that don’t cause trade distortion or at most cause minimal distortion.
The Green box subsidies are government funded without any price support to crops.
- They also include environmental protection and regional development programmes.
“Green box” subsidies are therefore allowed without limits (except in certain circumstances).

Article 6.2 of the Agriculture Agreement allows developing countries additional flexibilities in providing domestic support.
The type of support that fits into the developmental category are measures of assistance, whether direct or indirect, designed to encourage agricultural and rural development and that are an integral part of the development programmes of developing countries.
They include investment subsidies which are generally available to agriculture in developing country members, agricultural input subsidies generally available to low-income or resource-poor producers in developing country members, and domestic support to producers in developing country members to encourage diversification from growing illicit narcotic crops.

As an interim measure, the WTO members agreed on a mechanism called the ‘Peace Clause’ in December 2013 and pledged to negotiate a permanent solution.
Under the Peace Clause, WTO members agreed to refrain from challenging any breach in prescribed ceiling by a developing nation at the dispute settlement forum of the WTO.
This clause will stay till a permanent solution is found to the food stockpiling issue.