Q. The terms ‘Agreement on Agriculture’, ‘Agreement on the Application of Sanitary and Phyto-sanitary Measures’ and ‘Peace Clause’ appear in the news frequently in the context of affairs of the

  • Food and Agriculture Organization
  • United Nations Framework Conference on Climate Change
  • World Trade Organization
  • United Nations Environment Programme

Answer: (c) World Trade Organization

Agreement on Agriculture:
  • The Agriculture Agreement (AoA) is a World Trade Organisation treaty aimed at lowering agricultural support and subsidies provided by countries to domestic producers. This agreement focuses on countries lowering agricultural support and subsidies to native producers.
  • Within the WTO, it is one of the most contentious agreements.
  • The Agreement on Agriculture (AoA) is a World Trade Organisation (WTO) treaty that was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and ratified in Marrakesh, Morocco, in 1994. In 1995, the AoA came into operation.
  • Its rules required developing countries to meet their reduction commitments by the year 2000, and developing countries by the year 2004.
  • No reductions were required of the Least Developed Countries.
  • The agreement covers agricultural products, with the exception of forestry and fishing products, as well as rubber, sisal, jute, coir, and abaca.
  • The AoA’s main goal is to get rid of so-called “trade-distorting” agricultural subsidies.
  • The Agreement’s overall goal, according to the World Trade Organisation, is to “create a fairer trading system that will promote market access and improve the livelihoods of farmers around the world.”
  • Three pillars of Agreement on Agriculture:
    • Domestic Support: It calls for reduction in domestic subsidies that distorts free trade and fair price.
      • Under this provision, the Aggregate Measurement of Support (AMS) is to be reduced by 20% over a period of 6 years by developed countries and 13% over a period of 10 years by developing countries.
      • Under this, Subsidies are categorized into: Green Box, Amber Box, and Blue Box
    • Market Access: Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets.
      • Market access requires that tariffs fixed (like custom duties) by individual countries be cut progressively to allow free trade. It also required countries to remove non-tariff barriers and convert them to Tariff duties.
    • Export Subsidy: Subsidy on inputs of agriculture, making export cheaper or other incentives for exports such as import duty remission etc are included under export subsidies.
      • These can result in dumping of highly subsidized (and cheap) products in other countries and damage the domestic agriculture sector of other countries.
WTO Agricultural Subsidies Boxes
Agreement on the Application of Sanitary and Phytosanitary Measures
  • The Agreement on the Application of Sanitary and Phytosanitary Measures, also known as the SPS Agreement or just SPS, is an international treaty of the World Trade Organization (WTO).
  • It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), and entered into force with the establishment of the WTO at the beginning of 1995.
  • Broadly, the sanitary and phytosanitary (“SPS”) measures covered by the agreement are those aimed at the protection of human, animal or plant life or health from certain risks.
  • Under the SPS agreement, the WTO sets constraints on member-states’ policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health (phytosanitation) with respect to imported pests and diseases.
    • There are 3 standards organizations who set standards that WTO members should base their SPS methodologies on. As provided for in Article 3, they are the Codex Alimentarius Commission (Codex), World Organization for Animal Health (OIE) and the Secretariat of the International Plant Protection Convention (IPPC).
  • The SPS agreement is closely linked to the Agreement on Technical Barriers to Trade, which was signed in the same year and has similar goals. The TBT Emerged from the Tokyo Round of WTO negotiations and was negotiated with the aim of ensuring non-discrimination in the adoption and implementation of technical regulations and standards.
Peace Clause
  • It was agreed to at the WTO’s Bali Ministerial meeting in December 2013 that allowed developing countries to breach subsidy limits on food crops subject to certain conditions being met related to notifications on the PSH programmes and food security.
  • The peace clause allows developing countries to breach the subsidy ceiling without being dragged into dispute by members, for rice. However, it comes with tough notification requirements and conditions, all of which are difficult to follow.
  • 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.