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Consider the following statements regarding Green Box Subsidies under the World Trade Organization:
1. Under WTO, Green Box subsidies can be increased without any financial limitation.
2. Subsidies provided under India's Public Distribution System (PDS) come under Green Box Subsidies.
Which of the statements given above is/are correct?
1. Under WTO, Green Box subsidies can be increased without any financial limitation.
2. Subsidies provided under India's Public Distribution System (PDS) come under Green Box Subsidies.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regardingGreen Box Subsidies under t...
Green Box Subsidies under the World Trade Organization (WTO) are a category of subsidies that are considered to have no or minimal trade-distorting effects and are therefore allowed without limitations. The statements given in the question are as follows:
Statement 1: Under WTO, Green Box subsidies can be increased without any financial limitation.
Statement 2: Subsidies provided under India's Public Distribution System (PDS) come under Green Box Subsidies.
Let's analyze each statement individually:
Statement 1: Under WTO, Green Box subsidies can be increased without any financial limitation.
This statement is incorrect. While it is true that Green Box subsidies are allowed without limitations, it does not mean that they can be increased without any financial limitation. The Green Box criteria, as defined by the Agreement on Agriculture (AoA) of the WTO, focus on the nature of the support provided rather than the amount. The subsidies must meet certain criteria such as being decoupled from production, not requiring specific production levels, and not being linked to prices. However, there are no specific provisions in the WTO agreements that allow for the unlimited increase of Green Box subsidies.
Statement 2: Subsidies provided under India's Public Distribution System (PDS) come under Green Box Subsidies.
This statement is incorrect. The Public Distribution System (PDS) in India provides subsidized food grains to the poor and vulnerable population. However, these subsidies do not fall under the Green Box category. Instead, they fall under the Amber Box category, which includes domestic support measures that are considered to have trade-distorting effects. The Amber Box subsidies are subject to reduction commitments and certain limitations under the WTO agreements.
In conclusion, neither of the statements given in the question is correct. Green Box subsidies cannot be increased without any financial limitation, and subsidies provided under India's Public Distribution System (PDS) do not come under Green Box subsidies.
Statement 1: Under WTO, Green Box subsidies can be increased without any financial limitation.
Statement 2: Subsidies provided under India's Public Distribution System (PDS) come under Green Box Subsidies.
Let's analyze each statement individually:
Statement 1: Under WTO, Green Box subsidies can be increased without any financial limitation.
This statement is incorrect. While it is true that Green Box subsidies are allowed without limitations, it does not mean that they can be increased without any financial limitation. The Green Box criteria, as defined by the Agreement on Agriculture (AoA) of the WTO, focus on the nature of the support provided rather than the amount. The subsidies must meet certain criteria such as being decoupled from production, not requiring specific production levels, and not being linked to prices. However, there are no specific provisions in the WTO agreements that allow for the unlimited increase of Green Box subsidies.
Statement 2: Subsidies provided under India's Public Distribution System (PDS) come under Green Box Subsidies.
This statement is incorrect. The Public Distribution System (PDS) in India provides subsidized food grains to the poor and vulnerable population. However, these subsidies do not fall under the Green Box category. Instead, they fall under the Amber Box category, which includes domestic support measures that are considered to have trade-distorting effects. The Amber Box subsidies are subject to reduction commitments and certain limitations under the WTO agreements.
In conclusion, neither of the statements given in the question is correct. Green Box subsidies cannot be increased without any financial limitation, and subsidies provided under India's Public Distribution System (PDS) do not come under Green Box subsidies.
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Community Answer
Consider the following statements regardingGreen Box Subsidies under t...
- In WTO terminology, subsidies in general are identified by “boxes” which are given the colours of traffic lights: green (permitted), amber (slow down — i.e. need to be reduced), red (forbidden). In agriculture, things are, as usual, more complicated. The Agriculture Agreement has no red box, although domestic support exceeding the reduction commitment levels in the amber box is prohibited; and there is a blue box for subsidies that are tied to programmes that limit production.
- Amber Box: Nearly all domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box. These include measures to support prices, or subsidies directly related to production quantities.
- Green Box: The green box is defined in Annex 2 of the Agriculture Agreement. 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.
- They tend to be programmes that are not targeted at particular products, and include direct income supports for farmers that are not related to (are “decoupled” from) current production levels or prices. They also include environmental protection and regional development programmes.
- Green box” subsidies are therefore allowed without limits, provided they comply with the policy- specific criteria. Hence, statement 1 is correct.
- India's Public distribution system does not come under the Green Box. Hence, statement 2 is not correct.
- Blue Box: This 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. At present there are no limits on spending on blue box subsidies.
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