The Agreement on Agriculture seeks to ensure that agricultural trade is not distorted through the use of subsidies. Agricultural support measures are classified as belonging to two major groups:
domestic support and general support; and
export subsidies.
In WTO non-legal terminology, domestic subsidies to agricultural products are identified by special “boxes” which are given the colours of traffic lights: “Green” meaning permitted because they have no, or minimal, distortive effect on trade; “Amber” meaning possibly legal or illegal because of their tradedistortive nature; and “Blue” meaning possibly trade-distorting but permitted as the measures are linked to production limitation programmes.
Amber Box Measures
All domestic support measures which do not correspond to the exceptional arrangements known as the “Green” and “Blue” boxes, are considered to distort production and trade and therefore fall into the “Amber Box” category.
Green Box Exemption
The subsidies falling under this category are non-actionable (in other words, immune from challenge) by virtue of Article 13 of the Agreement on Agriculture (the Due Restraint or “peace clause” provision). In particular, the domestic support measures that fully conform to the provisions of Annex 2 to the Agreement on Agriculture are considered non-actionable subsidies for purposes of countervailing duties during the implementation period of the Agreement on Agriculture.
Blue Box Measures
The “Blue Box” exemption category is contained in Article 6.5 of the Agreement on Agriculture. It covers any support measure that would normally be in the “Amber Box”, but which is placed in the “Blue Box” if the support also requires farmers to limit their production.
“Blue Box” subsidies are considered to be possibly trade-distorting but permitted under the Agreement on Agriculture. This means that they are not immune from challenge through WTO dispute settlement proceedings or under unilateral and multilateral remedies.