The upcoming WTO Ministerial in late November will provide yet another opportunity to address and reform agricultural domestic support. The domestic support pillar has been at the heart of the agricultural negotiations since they began in 2000, but it has proven challenging to achieve consensus on how to advance reforms. In fact, domestic support levels remain high and have risen in recent years. This presentation introduces a recent report by IFPRI researchers that suggests that new disciplines could both reduce distortions and provide significant protection in the event of a subsidy war by reducing "leakage" in domestic support disciplines. Summary of the event: https://www.ifpri.org/event/disciplining-domestic-support Access to the report: https://www.ifpri.org/publication/harmonizing-and-reducing-trade-distorting-domestic-support-analysis-impacts-new-domestic More on the topic: https://www.ifpri.org/publication/road-wto-twelfth-ministerial-conference-latin-american-and-caribbean-perspective

1. Disciplining Domestic Support
Joe Glauber, David Laborde, Valeria Piñeiro
Markets, Trade and Institution Division
International Food Policy Research Institute
30 November 2021

2. Disciplining Domestic Support
Existing disciplines
New Disciplines

3. Key Question
Assess the impact on agricultural markets if WTO members
were to use their full domestic support entitlements under
current WTO rules.
Outline
 Evolution of trade-distorting domestic support
 Using MIRAGRODEP model, project baseline spending for 2030
compared to a scenario where members maximize their entitlements
 Examine the impact on selected indicators (prices, volume of
production, farm income and national income) under the scenario

4. Domestic Support categories according to the
Uruguay Round’s Agreement on Agriculture

5. Trade-Distorting Domestic Support for selected members
as percent of the Value of Production
0.2 0.8 1.9 2.7 3 4.2
8.1 9.7 9.7
12.9
49
0
10
20
30
40
50
60
Percentage
Source: Authors’ calculations based on most recent WTO notifications
Trade-distorting support equals amber + de minimis + Art. 6.5 + Art. 6.2

6. Evolution of Trade-Distorting Domestic Support
as percent of the Value of Production
0
5
10
15
20
25
30
EU
Japan
US
Source: WTO notifications. Includes AMS + de minimis + Art. 6.5 + Art 6.2
0
2
4
6
8
10
12
14
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Brazil
China
India

7. Impact of maximum use of entitlements on domestic
support levels (USD billions)
0
200
400
600
800
1000
1200
1400
1600
2017 2030 baseline 2030 scenario
USD
Billions
Art 6.2
Blue
Amber
164
246
1,344
Source: MIRAGRODEP simulations

8. Projected impact on production in 2030 due to maximum
use of domestic support entitlements
6
4
6 6 7
10
13
4 -1
8 9
13
8
5
7 6 5
1 1 1
7 7
14
12
7
5
-5
0
5
10
15
20
25
30
35
Percentage
change,
scenario
compared
to
baseline
Source: MIRAGRODEP simulations

9. Projected impact on world prices due to maximum use of
domestic support entitlements
-7
-9 -8
-3
-7
-5
-8
-10
-9
-11
-6
-13
-6
-9
-3 -3
-2
-2
-1 -1
-8 -8
-7
-15
-13
-11
-9
-7
-5
-3
-1
Percentage
change,
scenario
compared
to
baseline

10. Projected impact on farm income in 2030 due to
maximum use of domestic support entitlements
15
9
16 15
18
21
12
25
8
-5
19 18
22
25
22
18
20 19
13
3 3 3
18 16
25
28
-10
-5
0
5
10
15
20
25
30
Percentage
change,
scenario
compared
to
baseline
78
Source: MIRAGRODEP simulations

11. Domestic support as a percent of national GDP
assuming maximum use of domestic support
entitlements
0
1
2
3
4
5
6
Percentage
change,
scenario
compared
to
baseline
Baseline Scenario
Source: MIRAGRODEP simulations

12. Disciplining Domestic Support
Existing disciplines
New Disciplines

13. Key Question
Assess the impact on agricultural markets of new WTO
disciplines based on the concept of OTDS
Outline
 Apply the concept of Overall Trade Distorting Support to Amber box
and Blue box policies
 Using MIRAGRODEP model applying the new discipline to existing
policies, until 2030
 Examine the impact on selected indicators (prices, volume of
production, farm income and national income) under the scenario
 Explore the role of expanding the coverage of OTDS to include Art.
6.2, and limiting the risk of concentration with product specific cap.
 Consequences of new discipline in the context of rising subsidies

14. Summary of scenarios under business-as-usual baseline
and alternative disciplines
Scenario Description
0
Current baseline under the AoA
Disciplines on amber box; exemptions for measures under Articles 6.2 and 6.5
OTDS
OTDS = AMS + de minimis support (sum of product-specific and non-product specific) + Art 6.5 <
10% VoP [Developed countries];
OTDS <17% VoP [China];
OTDS < 20% VoP [Developing countries]
OTDS-Half
OTDS = AMS + de minimis support (sum of product-specific and non-product specific) + Art 6.5 <
5% VoP [Developed countries];
OTDS < 8.5% VoP [China];
OTDS< 10% VoP [Developing countries]
OTDS-6.2
DS = AMS + de minimis support (sum of product-specific and non-product specific) + Art 6.5 + Art 6.2 <
10% VoP [Developed countries];
OTDS < 17% VoP [China];
OTDS< 20% VoP [developing]
OTDS-Half-6.2
DS = AMS + de minimis support (sum of product-specific and non-product specific) + Art 6.5 + Art 6.2 <
5% VoP [developed];
OTDS < 8.5% VoP [China];
OTDS < 10% VoP [developing]
OTDS-Half-PS
Scenario OTDS-Half with product-specific caps < 10% VoP for that commodity [developed]; < 17% VoP
[China]; < 20% VoP [developing]

15. 2030 global level of support by box
Source: MIRAGRODEP simulations

16. Impacts on agricultural production volumes at the global
and regional level (valued at constant prices)
Source: MIRAGRODEP simulations

17. Impacts on world agricultural prices
Source: MIRAGRODEP simulations

18. Impacts on agricultural exports
Source: MIRAGRODEP simulations

19. The role of anti-concentration provision : Impacts on
agricultural production
Source: MIRAGRODEP simulations

20. New Disciplines in the context of rising subsidies
Source: MIRAGRODEP simulations
Impact on world agricultural prices
2030 global level of support by box
Source: MIRAGRODEP simulations

21. Conclusions
• Lots of progress made in reducing domestic support
• But levels remain high and current rules allow members much flexibility to increase
support
Current disciplines generate a lot of “water”
• Closes current loopholes and exemptions
• Harmonizes support relative to the value of production
Explore new disciplines that concentrate on reducing all forms
of trade distorting support
• Have minimal impacts on current applied levels of support
• Prevent a backsliding
• Provide a framework for the future reforms
Proposed disciplines will