3 - Economic Analysis of Exemptions and Administered Prices

Summary

The evolving context for analyzing domestic support is assessed in this chapter with focus on issues that have attracted particular analytical attention. The first issues relate to the potential of green box decoupled income support and other exempted direct payments, particularly by the EU and the United States, to have trade-distorting or production effects, and the compliance of such measures with policy-specific exemption criteria and conditions. The second issues arises around calculation of MPS under the Agriculture Agreement versus economic support, compliance of MPS with AMS commitments, economic implications of compliance, the eventual infeasibility of providing support by means of administered prices, and the legal consequences for developing countries of excessive MPS resulting from acquisition at administered prices of public stocks for food security purposes. These and other dimensions of domestic support under the Agreement’s rules offer scope for further analysis to underpin members’ policy choices.