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.
These supports are subject to limits: “de minimis” minimal supports are allowed (5% of agricultural production for developed countries, 10% for developing countries); the 30 WTO members that had larger subsidies than the de minimis levels at the beginning of the post-Uruguay Round reform period are committed to reduce these subsidies.
The reduction commitments are expressed in terms of a “Total Aggregate Measurement of Support” (Total AMS) which includes all supports for specified products together with supports that are not for specific products, in one single figure.
In the current negotiations, various proposals deal with how much further these subsidies should be reduced, and whether limits should be set for specific products rather than continuing with the single overall “aggregate” limits.
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.
These subsidies are nothing but certain direct 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 blue box subsidies.
In the current negotiations, some countries want to keep the blue box as it is because they see it as a crucial means of moving away from distorting amber box subsidies without causing too much hardship.
Others wanted to set limits or reduction commitments, some advocating moving these supports into the amber box.
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.
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.
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.