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This is the amber box with conditions. The conditions are designed to reduce distortions. Any subsidy that would normally be in the amber box, is placed in the blue box if it requires farmers to go for a certain production level.69 These subsidies are nothing but certain direct payments (i.e., direct set-aside payments) made to farmers by the government in the form of assistance programmes to encourage agriculture, rural development, etc.
At present there are no limits on spending on subsidies in the blue box. In
the current negotiations, some countries want to keep blue box as is because they see it as a crucial means of
moving away from distorting the amber box subsidies without causing too much hardship. Others want to set limits or reduction commitments on it while some advocate moving these subsidies into the amber box.
The agricultural subsidies which cause minimal or no distortions to trade are put under the green box.70 They must not involve price support.
This box basically includes all forms of government expenses, which are not targeted at a particular product, and all direct income support programmes to farmers, which are not related to current levels of production or prices. This is a very wide box and includes all government subsidies like—public storage for food security, pest and disease control, research and extension, and some direct payments to farmers that do not stimulate production like restructuring of agriculture, environmental protection, regional development, crop and income insurance, etc.
The green box subsidies are allowed without limits provided they comply with the policy-specific criteria.71 It means, this box is exempt from the calculation under subsidies under the WTO provisions because the subsidies under it are not meant to promote production thus do not distort trade. That is why this box is called ‘production-neutral box’. But the facts tell a different story.72
In the current negotiations, some countries argue that some of the subsidies forwarded under this box (by the developed economies) do seriously distort trade (opposed to the view of minimal distortion as used by Annexure 2)— it is the view of the developing countries. These countries have raised their fingers on the direct payments73 given by the developed countries to their farmers via programmes like income insurance and income-safety schemes,74 environmental protection, etc. Some other countries take the opposite view and argue that the current criteria are adequate, and advocate to make it more flexible (so that it could be increased) to take better care of non-
trade concerns such as environmental protection and animal welfare.