[Mission 2022] QUIZ – 2022: INSIGHTS STATIC QUIZ, 25 March 2022 – Economy

Solution: c) 

All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box, which is defined as all domestic supports except those in the blue and green boxes. 

These include measures to support prices, or subsidies directly related to production quantities.

These supports are subject to limits: “de minimis” minimal supports are allowed. This threshold is generally 5% of the value of agricultural production for developed countries, 10% for most developing countries.

In order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion. They have to be government-funded (not by charging consumers higher prices) and must not involve price support.

Blue Box is the “amber box with conditions” — conditions designed to reduce distortion. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production.   

Solution: b)  

There are no WTO definitions of “developed” and “developing” countries. Members announce for themselves whether they are “developed” or “developing” countries.

However, other members can challenge the decision of a member to make use of provisions available to developing countries. 

What are the advantages of “developing country” status? 

• Developing country status in the WTO brings certain rights.
• Developing country status ensures special and differential treatment (S&DT) or provisions which allow them more time to implement agreements and commitments, include measures to increase trading opportunities, safeguard their trade interests, and support to build capacity to handle disputes and implement technical standards.

Solution: d) 

The International Plant Protection Convention (IPPC) is an intergovernmental treaty signed by over 180 countries, aiming to protecting the world’s plant resources from the spread and introduction of pests, and promoting safe trade. The Convention introduced International Standards for Phytosanitary Measures (ISPMs) as its main tool to achieve its goals, making it the sole global standard setting organization for plant health.

The IPPC is one of the “Three Sisters” recognized by the World Trade Organization’s (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, along with the Codex Alimentarius Commission for food safety standards and the World Organization for Animal Health (OIE) for animal health standards.

Solution: a)

WTO agreement envisages two kinds of support to agriculture, viz. domestic support and export subsidies. 

The domestic support is further classified into five categories: (a) aggregate measure of support (AMS) which includes product specific and non-product specific support (b) green box support (c) blue box support (d) de minimus support and (e) special and differential (S&D) treatment box. 

Out of these, WTO agreement requires reduction only in AMS and export subsidies, whereas, support under all other heads is exempted. 

AMS includes (a) sum total of subsidies on inputs like fertilizer, water, credit, power etc and (b) market price support measured by calculating the difference between domestic administered market price and external reference price (world price) multiplied by quantity of production eligible to get applied administered price. 

Statement 1 and 2 are under the Green box.

Solution: d)

Countervailing Duties (CVDs) are tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country. CVDs are meant to level the playing field between domestic producers of a product and foreign producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government. 

The World Trade Organization (WTO) permits the imposition of countervailing duty by its member countries.

Countries carry out anti-dumping probes to determine whether their domestic industries have been hurt because of a surge in cheap imports.

As a counter measure, they impose duties under the multilateral regime of the World Trade Organization (WTO).