The document discusses various scenarios for reforming domestic agricultural support policies through changes to limits on Overall Trade Distorting Support (OTDS) and product-specific caps. It analyzes the impacts of different scenarios on world prices, trade volumes, production, and exports of certain commodities. Key variables include the base years and methodology for calculating value of production, thresholds for developing vs developed countries, timelines for phased reductions, and treatments for special products and cotton. Modeling results are presented to compare outcomes across scenarios. Recommendations emphasize the need for simplified rules, special treatment for developing countries, and properly defined caps to avoid loopholes.

2. World exports- Agricultural products
(billions US$)
Source: WTO

3. Agricultural VoP (historical and projected) as a
share of total world agricultural production
Source: IISD-IFPRI, 2020

4. Food
Products
Exporting
Countries
(1995-2015)

5. Food
Products
Importing
Countries
(1995-2015)

6. Why Domestic Support?
• Creates market distortions
• Give the wrong signals to
producers
• SDGs –Elimination of hunger
• Sustainable production
• Efficient use of scarce natural
resources

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

8. Domestic support (OTDS) in billions of US$
Source: Author’s calculations based on WTO notifications, 2020

9. OTDS as % of total Value of Production
Source: Author’s calculations based on WTO notifications, 2020
0%
10%
20%
30%
40%
50%
60%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Brazil China EU India Japon US

10. Product specific domestic support vs. Non specific
domestic support -Developed countries-
Source: Author’s calculations based on WTO notifications, 2020

11. Product specific domestic support vs. Non specific
domestic support -Developing countries-
Source: Author’s calculations based on WTO notifications, 2020

12. Product-specific support in selected major economies
(amber box and the minimis)
Source: IISD-IFPRI, 2020

13. Proposals and Negotiating Groups
-Domestic Support-

14. Options for Disciplining Agricultural
Domestic Support

15. Recommendations
• Overall limits on domestic support (as a
share of VoP)
• Special and differential treatment to
developing countries (longer phase-in
period and/or a higher initial cap)
• Limits on how much support can be focused
on any one commodity
• Public stockholding programs

16. Modelling Framework
MIRAGRODEP:
• a Computable General Equilibrium (CGE) model,
built upon the MIRAGE model.
• It is a multi-region, multi-sector model, dynamically recursive CGE model;
• Government explicitly represented;
• Main source of data: GTAP 10 (base year 2015).
• Update of agricultural production baseline
• Extensive work on farm policies, based on latest notifications
Key closures:
• Savings defined investments;
• Current account surplus/deficit [net foreign savings] constant in terms of global GDP:
▪ Real exchange rate endogenous
▪ Foreign capital flows stable
• Net Public savings (government surplus/deficit): constant in terms of domestic GDP
▪ Endogenous tax reform
▪ No change in public investment

17. Enhanced farm policy modelling
• Detailed representation of policy instruments
• Payments to outputs
• Payments to intermediate consumption (fertilizer, fuel, feed, seed), including Tax rebate.
• Payment to factor of production: capital, labor, land
• Payment to farm income
• Allocated for tracking individual policies and disciplines
• Endogenous [homogenous] change of policies when policy space is exhausted
• Alternative target possible (e.g. max Farm Income, minimize Sectoral losses, other political economy target)
Tax Amber Box Blue Box Green Box Development
Box
Product Specific
payment
… … … … …
Non Product Specific … … … … …

18. Understanding Scenarios and Baselines

19. Understanding Scenarios and Baselines

20. Several Parameters to be defined
What to do with overall disciplines?
… and Green box?
How to implement Special and Differentiate Treatment
…And Article 6.2?
Fixed or Dynamic value of production?
What parameters to use for overall support and product specific discipline

21. A full matrix of
scenarios… but
just a few for
today
Description "OTDS" base value Countries 2025 2030 2035
Anti-concentration
clause as % of
product VP Article 6.2
developing 20.0% 15.0% 7.5% none included
developed 20.0% 7.5% 7.5% none
developing 20.0% 15.0% 7.5% x2 threshold included
developed 20.0% 7.5% 7.5% x2 threshold
developing 20.0% 15.0% 10.0% x2 threshold included
developed 20.0% 7.5% 5.0% x2 threshold
developing 15.0% 12.5% 5.0% x2 threshold included
developed 15.0% 7.5% 5.0% x2 threshold
developing 10.0% 7.5% 2.5% x2 threshold included
developed 10.0% 5.0% 2.5% x2 threshold
developing 20.0% 15.0% 10.0% x2 threshold excluded
developed 20.0% 7.5% 5.0% x2 threshold
included
developing 20.0% 15.0% 7.5% x1.5 threshold included
developed 20.0% 7.5% 7.5% x1.5 threshold
developing 20.0% 15.0% 7.5%
developed 20.0% 7.5% 7.5%
developing 20.0% 15.0% 7.5%
developed 20.0% 7.5% 7.5%
developing 20.0% 15.0% 7.5% included
developed 20.0% 7.5% 7.5%
developing 20.0% 15.0% 7.5% included
developed 20.0% 7.5% 7.5%
developing 20.0% 15.0% 7.5% x2 threshold excluded
developed 20.0% 7.5% 7.5% x2 threshold
developing 20.0% 15.0% 7.5% x2 threshold excluded
developed 20.0% 7.5% 7.5% x2 threshold
developing 20.0% 15.0% 7.5% included
developed 20.0% 7.5% 7.5%
S0
no product constraint
rolling average 4 years value of production
of primary products, farm gate value
* tier-approach A
S8
S1+ tier-approach of
concentration clause
rolling average 4 years value of production
of primary products, farm gate value
* tier-approach B
S12
Polluter pay principle
rolling average 4 years value of production
of primary products, farm gate value
S9
Cotton scenario 1
rolling average 4 years value of production
of primary products, farm gate value
S10
Cotton scenario 2
rolling average 4 years value of production
of primary products, farm gate value
x2 threshold, x0 for
cotton
x2 threshold, x1 for
cotton
S11
Polluter pay principle
rolling average 4 years value of production
of primary products, farm gate value
Global OTDS as in S1 but distributed across countries based on the number of farmers at base year
(2015-2018 average) in each country. FAOSTAT:OE series
S7
S1+ tier-approach of
concentration clause
rolling average 4 years value of production
of primary products, farm gate value
rolling average 4 years value of production
of primary products, farm gate value
S6
S1+ change in
concentration clause
Upper Bound / Threshold OTDS
rolling average 4 years value of production
of primary products, farm gate value
rolling average 4 years value of production
of primary products, farm gate value
Core Scenario
S1 + SDT in threshold
S1
S2
S13
"Cairns Scenario" Fixed value of production
S3a
S1 + alternative
threshold
rolling average 4 years value of production
of primary products, farm gate value
S4
S1 + no art 6.2
rolling average 4 years value of production
of primary products, farm gate value
S3b
S1 + alternative
threshold 2
rolling average 4 years value of production
of primary products, farm gate value
S5
S1 with allocation per
farmer

23. Policy Space - OTDS limit and Bound AMS
in 2025- (in millions US$ constant 2011)

24. Domestic Support Scenarios Results.
Impact on World Prices, % changes with respect to the
base in 2025

25. Domestic Support Scenarios Results.
Impact on Volume Trade, % changes with respect to
the base in 2025

26. Domestic Support Scenarios Results.
Impact on Farm Production, % changes with respect to
the base in 2025

27. Domestic Support Scenarios Results.
Impact on Plant Fibers Exports Value, % changes
with respect to the base in 2025

28. Final considerations
• A new era for Special and Differential
Treatment
• Details matter
• Need of simplification → OTDS
• Fixed Value of Production is a very strong
dynamic constraint
• Product cap will need to be properly defined
to avoid loopholes, especially for products of
primary importance for developing countries
• Trade-off between fairness and efficiency?

30. Compliance with DS:1 notifications, 1995–2017
Source: IISD-IFPRI, 2020. Based on data from WTO, 2019.
Note: Compliance is defined based on the annual submission of domestic support (Table DS:1) or every other year for least-developed countries (LDCs). The
quality or completeness of the notifications is not considered above.