INF/TE/SSD/W/29/Rev.1  
 
15 November 2023 
(23-7713) Page: 1/13 
  Original: English  
 
  
TRADE AND ENVIRONMENTAL SUSTAINABILITY STRUCTURED DISCUSSIONS  
INFORMAL WORKING GROUP ON SUBSIDIES  
Compilation of experiences and considerations regarding subsidy design  
Revision  
_______________  
 
Contents  
1   INTRODUCTION  ................................ ................................ ................................ ..........  1 
2   AGRICULTURAL SUBSID IES ................................ ................................ .........................  1 
3   SUBSIDIES RELATED TO THE TRANSITION TO A LOW -CARBON ECONOMY  ..................  5 
4   TRANSPARENCY  ................................ ................................ ................................ ..........  7 
ANNEX: SUBSIDY DESIGN CONSIDERATIONS RAISED IN DISCUSSIONS  .......................  10 
 
 
1  INTRODUCTION  
1.1.  In line with the 2021 TESSD Ministerial Statement (WT/MIN(21)/6/Rev.2) and the 2022 TESSD 
Work Plan (INF/TE/SSD/W/17), Members have carried out discussions on the environmental effects 
and trade impacts of relevant subsidies, related transparency issues and the role of  the WTO in the 
Informal Working Group on Subsidies.  
1.2.  Following the TESSD High -level Stocktaking event in December 2022 and the related 
Statement by the TESSD Co -Convenors (INF/TE/SSD/W/21), Mem bers have also shared experiences 
in subsidy design and considered how to enhance transparency and data availability . Members 
started these discussions focusing on agricultural subsidies and subsidies related to the transition to 
a low -carbon economy.  
1.3.  This document provides a compilation of Member experiences and considerations with subsidy 
design based on discussions in the meetings of the Informal TESSD Working Group on Subsidies on 
16 March , 10 May and 19 September  2023. The compilation 's objective is t o take stock of past 
discussions without being exhaustive of all types of subsidies that might be discussed in future 
meetings of this Working Group . 
1.4.  This document remains a 'living document ' and will continue to be updated based on  further  
discussions and  input from Members.  
2  AGRICULTURAL SUBSIDIES  
2.1.  Agricultural subsidies were discussed in the meeting s on 16 March  and 19 September  2023. As 
part of presentations contributing to the discussion on environmental effects  of agricultural subsides , 
the Food and Agriculture Organization (FAO)  pointed to the importance of taking into account INF/TE/SSD/W/29/Rev.1  
 
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  different dimensions  such as country conditions, support instruments and agricultural products  in 
the analysis of environmental effects and possible trade -offs between different policy objectives . The 
Organization for Economic Cooperation and Development ( OECD ) highlighted that analytical work 
found that the most market -distortive producer support (market price support, output subsidies, 
and variable input subsidies  without constraints ) was also potentially most harmful to the 
environment, while agri-environmental payments could have positive environmental impacts , 
especially  if spatially targeted and based on environmental performance. The Secretariat of the 
Convention on Biological Diversity (CBD)  elaborated on Target 18 of the Kunming -Montreal Global 
Biodiversity Framework (GBF), which aimed to identify, eliminate, phase ou t, or reform incentives 
(including subsidies) harmful for biodiversity  and scale up positive incentives for the conservation 
and sustainable use of biodiversity .  
2.2.  In discussing environmental effects, Members acknowledged the complexities of agricultural 
subsidies and their effects on the environment  and encourag ed a holistic approach taking into 
account environmental, social (such as food security) and economic indicators . The relevance of 
moving to less distorting and environmentally harmful forms of subsi dies, and  using subsidies to 
improve the environmental performance of the agricultural sector  was also highlighted . 
2.3.  Members also shared their experiences on subsidy design and discussed the following 
questions:  
• How do you consider possible environmental ef fects and trade impacts in the design of 
agricultural subsidies? How do you balance environmental and trade considerations?  
• What kind of agricultural subsidies can be beneficial to the environment?  
• What criteria do Members consider when establishing subsid ies in order to determine 
whether  or not they are environmentally friendly?  
2.4.  Table 1 provides a compilation of experiences shared by Members in the form of presentations 
or as part of their interventions.  
Table 1. Experiences with the design of agricultural subsidies  
Brazil: Subsidies and Environmental Sustainability of Brazilian Agriculture  
Brazilian Agricultural Policy aims to strengthen sustainability in its three dimensions – economic, 
social and environment, and its goals, inter alia, include increase d productivity; reduction of 
GHG emissions; prevention of losses in agricultural production; rationalization of the use of 
natural resources and inputs; soil recovery and conservation; improving the quality and health 
of agricul tural production; treatment of manure and agricultural residues ; and reforestation. 
Agricultural production has expanded at a rate substantially superior to agricultural land use and 
was mainly driven by gains in productivity, including through the use of double cropping.  
Environmental sustainability has guided agricultural policy for decades, including the Agriculture 
Climate Risk Zoning policy and the Low Carbon Emission Agriculture Plan (ABC). The ABC Plan 
aims to spread environmentally friendly technolo gies, while the ABC program provides access 
for environmentally sustainable financing (among other options). The Brazilian Forest Code 
establishes minimum limits for environmental preservation in rural properties. As of 2021,  areas 
used for farming only co vered around 31% of Brazilian territory, compared to a forest area of 
close to 60%.  
Credit subsidies are the main input subsidy instrument, although they represent less than a third 
of resources raised by farmers and less than 1% of the value of agricultural production. 
Environmental sustainability is an essential requirement for accessing resources. Production has 
grown at an accelerated pace, contrasting with the reduction of subsidies, which demonstrates 
the economic sustainability of Brazilian  agriculture. Instruments such as ecological economic 
zoning and agricultural climate risk zoning are fundamental for increasing environmental 
sustainability. There is a need to associate financing for sustainable production with financing 
for the recovery  of ecosystems, i.e. payment for environmental services.  There is also a need 
for a balanced approach between economic, social and environmental aspects, given that, if it 
is necessary to adopt subsidies to keep the economic aspects artificially viable, th en the activity 
is not sustainable.  INF/TE/SSD/W/29/Rev.1  
 
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  Costa Rica: NAMA Café and Payment for Environmental Services  
The NAMA Café initiative seeks to promote low -emission and sustainable coffee production and 
processing in Costa Rica, through the adoption of low -emission te chnologies and the efficient 
use of water and energy. An incentive mechanism by the Costa Rican Coffee Institute (ICAFE) 
allows NAMA café beneficiaries to receive a monetary contribution for a maximum of three 
investment projects of up to 10% of the invest ment. Incentives might be obtained for 
technologies related to wet and dry milling, by -product treatment system, or use of renewable 
energy, among others.  
The National Fund for Forest Financing finances forest management for the benefit of SMEs. The 
Fund a lso includes a Programme for Payment of Environmental Services (PPSA) drawing its 
funding from a single fuel tax, of which 3.5% is allocated to PPSA which guarantees the 
sustainability of the Progra mme. Other financial contributions can be received from th e 
Government and international development financing. The development of these programs 
entails an exhaustive process of consultation at the domestic level with government sectors and 
entities, including the Ministry of Foreign Trade, which ensures that an y state policy adheres to 
the rules of the multilateral trade system and international law.  
European Union : Environmental dimension of the EU's Common Agricultural Policy (CAP)  
Since 1980, the EU's CAP gradually shifted from price support to coupled produ cer support , and 
then to decoupled support. Around 85% of EU farm support currently falls into the WTO green 
box. EU agriculture has seen decreasing trends in GHG emissions (19% lower in 2017 vs. 1990), 
in antibiotic sales for animal production (40% lower in 2020 vs. 2011), and in chemical 
pesticides. Organic farming is increasing , accounting for 9% of utilised agricultural land in 2020. 
Challenges remain, in particular regarding biodiversity, water quality, soil erosion, and ammonia 
emissions.  
By placing requirements on farmers, the CAP provides a baseline protection for the environment 
on more than 8 9% of EU's agricultural land, while for example targeted voluntary commitments 
related to soil and going beyond this baseline protection cover 45% of European  farmland. In 
addition to statutory management requirements, all farmers receiving CAP support have to 
adhere to EU standards on good agricultural and environmental condition of lands  such as crop 
rotation, allocation of at least 4% of land to non -producti ve areas of ecological importance, 
maintenance of permanent grassland, and water management and protection from pollution.  
The CAP aims to achieve the right balance between economic, social and environmental 
objectives. The new CAP (2023 -2027) includes enh anced conditionality regarding climate and 
environmental requirements which are mandatory for farmers. Eco -schemes and 
environmentally friendly rural development interventions provide additional incentives for 
voluntary practices beyond conditionality. The  new CAP includes a needs -based, targeted 
approach to addressing environmental and climate objectives, includes a no backsliding clause 
in terms of environmental ambitions, and provides for different mechanisms to ensure alignment 
with the EU Green Deal.  
Israel : Supporting agricultural practices for positive environmental outcomes  
Israel's experience shows that subsidising agricultural practices like service crops has a positive 
effect on the environment, where it is accompanied by research and extension, and parallel 
commitments from farmers. For instance, provision of partial subsidies that require matching by 
farmers. Similarly, subsidies for integrated pest management drastically reduce chemical 
pesticide use while maintaining the same level of production; and subsidies for soil conservation 
lower nitrous oxide emissions, reduce water evaporation and decrease soil erosion, while 
increasing organic matter, biota, and wildlife presence, when used under the same 
comprehensive approach.  
Japan: Ap proach to incentivize sustainable agriculture  
Japan has continually reformed its agricultural support policy, with government spending on 
agriculture being on a downward trend since 2000. Japan pursues a two -dimensional approach 
to incentivize sustainable agriculture by (i) using environmental conditionality to 
constrain/mitigate the negative environmental effects of subsidies; and (ii) repurposing 
subsidies for green innovation to enhance positive environmental effects. In terms of 
environmental conditiona lity, Japan's agri -environmental policy establishes periodically reviewed 
reference levels, including in the form of standards, for almost all agricultural support taking INF/TE/SSD/W/29/Rev.1  
 
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  into account environmental cross compliance. Japan also promotes Good Agricultural Pr actices 
(JGAP, ASIAGAP, Global G.A.P.) and has noted an increase in GAP -certified farms by more 
than 1.7 times within 5 years.  
In terms of enhancing positive effects or repurposing of green innovation, support policies 
include direct payments for on -farm e nvironmentally friendly practices (such as soil testing and 
analysis, cover cropping, living mulching), support for community -based activities in rural areas 
(including maintenance of essential agricultural infrastructure and eradication of invasive 
specie s) and support for R&D activities to develop crop varieties that mitigate or adapt to 
environmental impacts.  
Japan assesses the actual impacts of policies by considering its particular natural, social and 
economic conditions and ensures policy coherence b y enacting cross -sectoral standards against 
pollution to achieve national goals.  
Paraguay: Good Agricultural Practices  
In Paraguay, about 65% of farms carry out some soil management and conservation practices, 
of which 64% apply crop rotation and 16% dire ct sowing, which are the most frequent good 
agricultural practices. Organic production is not automatically considered a good agricultural 
practice as it involves trade -offs (e.g. mechanical processes that harm soil) that may not lead 
to a net -positive imp act on the environment. Other good agricultural practices, inter alia , include 
the use of biotechnology which enhances productivity and lowers the use of resources, while 
precision agriculture provides for a more efficient use of equipment and plots, lower ing 
environmental impact. In terms of farming practices, the adjustment of animal load according 
to the intrinsic capacity of available fields will enhance productivity and can bring the greatest 
benefits for climate change mitigation.  
United Kingdom : Reform of agricultural policy  
Estimating the environmental impacts of environmental stewardship schemes to date have 
revealed that between £3.20 and £5.60 of public goods being returned for every £1 put in, with 
benefits to habitats and species, l andscapes and water quality.  
Significant reforms of agricultural policy and spending are being undertaken  in the UK to  help 
align the agricultural sector with national objectives for improving the natural environment and 
meeting the national target of net zero greenhouse gas emissions by 2050.  
Under the 25 Year Environment Plan, new Environmental Land Management Schemes will 
contribute to the delive ry of six environmental public goods : (i) clean and plentiful water: (ii ) 
thriving  plants and wildlife, (iii) protection from and mitigation of hazards; (iv) clean air; (v) 
beauty; heritage and engagement; (vi) mitigation and adaptation to climate change . Some of 
these include, the sustainable farming incentive  (SFI) programme which introduces six new 
sustainable farming standards and provides payments  to farmers to adopt and maintain 
sustainable farming practices that can protect and enhance the natural en vironment alongside 
food production, and support farm productivity ; countryside stewardship (CS)  payments  towards 
more targeted actions relating to specific locations, features and habitats ; as well as  landscape 
recovery payments for  longer -term, larger sc ale projects to enhance the natural environment.  
The UK 's Farming Equipment and Technology Fund provides grants ranging from £2,000 - 
£25,000 based on a prescribed list of items. This too support the purchase of specific equipment, 
technology, and small in frastructure investments aimed at making an immediate difference to 
farm performance, including investments that will help farmers use less inputs, reduce 
emissions, and cut waste.  
Uruguay: Economic Incentives in the Agricultural Sector with environmental objectives  
Uruguay has two support programs that, in principle had beneficial effects on the environment 
namely, Forestry Law 15.938, 1987 and Native Forest Decree 247, 1989. These regulations 
provide for tax exemptions and are still in force  with some modifications.  
The Forest Law of 1987 had two objectives – first, the conservation of forests through sustainable 
management and second, the expansion of forest area to lands of lower productivity. These 
objectives were pursued through a suppor t program providing a tax exemption of up to 75% of 
the cost of planting a new forest, waivers from tariffs on imports of machinery and materials, 
and technical assistance. The enactment of this law resulted in an increase in planted forest 
cover from 15,0 00 hectares in 1985 to over 1 million hectares. The Decree 247 enacted in 1989 INF/TE/SSD/W/29/Rev.1  
 
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  targeted farms with areas occupied by Native forests and established tax reductions for 
increasing the area of Native Forest relative to the National Forest Registry. This measu re led to 
an increase in surface area of Native Forest by 25%. Together, these two support programs have 
resulted in the creation of a carbon sink in Uruguay.  
While the original objectives of both regulations were forest conservation and providing an 
econo mic incentive to a specific sector, the policies also resulted in beneficial effects on the 
environment due to net capture and the consequent creation of a carbon sink. Considering that 
these positive environmental impacts were unintended from a policy des ign perspective indicates 
the complexity of effectively assessing the long -term environmental impacts of subsidies, 
whether positive or negative.  
 
2.5.  Members also shared their considerations related to the  design  of agricultural subsidies. Table  3 
in the An nex provides a compilation of considerations that were raised as part of Members' 
discussions. Consolidating the elements included in Table 3, Members take into account the following 
considerations when designing agricultural subsidies:  
• Defining a set of goals related to sustainable development such as generating income and 
jobs, raising living standards, improving food security and ensuring environmental 
sustainability;  
• consider in an integrated manner the impact on production, trade and environment and 
steer agricultural production towards high -efficiency and sustainability;  
• subsidies should not  be granted in areas with a greater degree of environmental damage 
such as heavy metal pollution to avoid "environmental depressions" in agricultural 
production;  
• subsidies should be directed towards good agricultural practices as they can limit negative 
effects on the environment while helping developing countries increase productivity;  
• a comprehensive consideration of different environmental effects, including carb on 
emissions, biodiversity, healthy soils and responsible water management;  
• the environmental effects of agricultural subsidies with due consideration to each country's 
specific situation;  
• consider ation of subsidies that can be beneficial to the environment, including support for 
the provision of public goods or compensation of income loss due to the use of 
environmentally friendly  methods of production;  
• evaluate the environmental impacts of agricultural policy using quan titative models;  
• the economic and social externalities on third countries, including the impact on farmers 
in developing countries.  
• the disciplines in the WTO Agreement on Agriculture and its Green Box can serve as  a 
policy tool for the repurposing of agri cultural subsidies towards sustainable agriculture and 
"green green box " measures ; 
• creation of incentives for private sector  investment  towards sustainable activities and 
innovative approaches to meet climate goals ; 
• measures that support access to and the adoption of innovation , knowledge and 
technologies  can support sustainability and food security objectives while also minimizing 
trade and production distortions.  
• avoidance of p rice incentives and subsidies tied to production of a specific commodity or  
input, as evidence indicates that these  are not only trade distortive, but also the most 
potentially damaging to the environment.  
3  SUBSIDIES RELATED TO THE TRANSITION TO A LOW -CARBON ECONOMY  
3.1.  Subsidies related to a low -carbon transition were discussed in th e meeting on 10 May. 
According to the presentation by IISD on the Energy Policy Tracker, at least USD 474.43 billion in 
support  went towards clean energy, compared to USD 512 billion for support towards fossil fuel 
energy  during 2020 -21. IISD underscored t he need to prioritize clean energy investments and 
reforms in recovery plans, and to balance immediate crisis responses with longer term sustainability 
objectives.  INF/TE/SSD/W/29/Rev.1  
 
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  3.2.  In the Working Group, Members shared their experiences on subsidy design and discussed the 
following questions:  
• How do you balance environmental and trade considerations when designing subsidies 
related to the low -carbon transition?  
• How do you consider possible trade impacts in the design of subsidies related to the 
low-carbon transition?  
• How can  the environmental effects and trade impacts of such subsidies be identified?  
• What are information gaps to better understand these impacts, and how could 
transparency and data  availability be enhanced?  
3.3.  Table 2 provides a compilation of experiences shared b y Members in the form of presentations 
or as part of their interventions.  
Table 2. Experiences with the design of subsidies related to the transition to a 
low-carbon economy  
Brazil: Subsidies in support of green transition in agriculture  
Brazil provides no n-distortive agriculture subsidies on a modest level to support the green 
transition in agriculture. Its low -carbon agriculture program (ABC plan) has succeeded in mitigating 
more than 170 million tons of carbon emissions by 2018 and is a core part of the strategy 
encapsulated in Brazil's ambitious Nationally Determined Objective.  
Canada: Federal Budget 2023: Affordable Energy, Good Jobs, and a Growing Clean Economy  
Canada's Plan for Affordable Energy, Good Jobs, and a Growing Clean Economy proposes 
investments in clean growth of almost USD  21 billion over the next five  years and focuses on 
securing global investment in the clean economy, with significant funding allo cated for clean 
electricity, clean economy growth, resilient infrastructure, and technological innovation.  
To accelerate private investment, three tiers of federal financial incentives are employed: targeted 
programming to support clean energy and decarbonization projects; strategic financing to attract 
private capital and accelerate deployment of key technologies; and investment tax credits for 
investments in clean energy, clean hydrogen, clean technology manufacturing and deployment, 
and carbon ca pture use and storage. These financial incentives are underpinned by carbon pollution 
pricing and regulatory frameworks providing a price incentive to reduce emissions and innovate.  
China: Green Subsidy Policy of China – Competitive allocation of fiscal f unds as an example  
China's green subsidy policy aims to contribute to its goals of carbon peaking and carbon neutrality, 
playing an important role for the green transformation of its economy. Examples of policies include 
special funds for the development o f clean energy and air pollution and control, a subsidy fund for 
energy conservation and emission reduction, preferential tax treatments for new energy vehicles 
and enterprises with comprehensive utilization of resources, and conservation and restoration o f 
nature.  
The practice of competitive allocation of fiscal funds reformed the previous model of average 
allocation, providing incentives for participants and improving the effectiveness of the use of fiscal 
funds. Procedures of the competitive allocation include the issuing of funding opportunities by the 
Ministry of Finance, submission of proposals by candidate cities, expert review and competitive 
mechanism, public notification of assessment results, funds allocation and performance evaluation.  
European  Union: EU policy support for the transition to a low -carbon economy  
The EU Green Deal Industrial Plan aims to scale up manufacturing capacity for net -zero 
technologies and  includes the four pillars of: predictable regulations; increased investment for cl ean 
tech production; skills enhancement; and fair and open trade.  
The EU's state aid framework includes a balancing principle, where positive contributions to 
achieving the policy objective are to outweigh any negative effects on trade. The guidelines on 
state aid for climate, environmental protection and energy provide for safeguards (ensure 
effectiveness; do  not unduly distort competition), coherence with environmental legislation and 
WTO compatibility. The WTO has a role in supporting climate neutrality through its disciplines on 
subsidies, promoting green transition i n a manner that minimized trade distortions, and as a forum 
for deliberations on trade aspects of the green transition.  INF/TE/SSD/W/29/Rev.1  
 
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  Japan : Green Innovation F und  
As part of its effort to achieve carbon neutrality by 2050, Japan  has been utilizing  the "Green 
Innovati on Fund", which will provide continuous support from R&D through to social 
implementation for up to  ten years. Japan is also preparing a framework to support Green 
Transformation by utilizing financial resources to be generated by growth -oriented carbon pr icing, 
which will be introduced in a step -by-step manner.  
Such support aims to achieve green growth through the creation of  new industries and trade flows, 
rather than closing off domestic markets. For this purpose, Japan will utilize subsidies , such as 
targeted support to high-risk R&D activities that are expected to bring large potential benefits  as 
an incentive, in combination with regulatory measures, to promote bold private investments in 
sectors that contribute to the global green transformation.  
Norway: Incentives provided for purchase and usage of electric vehicles  
Norway has been supporting the introduction of electric vehicles (EV) for some time. Policies do 
not discriminate between countries of origin or producers, but between cars with combusti on 
engines and EVs. Incentives included the exemption of certain taxes at the moment of purchase of 
new EVs, most notably the special 'one-off registration tax ' on vehicles and the 25 per cent value -
added tax (VAT). Support measures for usage have also been granted, like exempted or lower fees 
for road toll and ferries, subsidised public charging facilities, as well as privileged access to road 
lanes generally re served for buses and taxis. These incentives are considered to have contributed 
substantially to the steady increase in the number of EVs sold in the Norwegian market, as a 
proportion of total car sales, over the last decade.  
Over time, the government has modified some of the policies. The strong tax incentives combined 
with increased share of electric vehicles has led to a substantial decline in tax revenues. To slow 
down this revenue decline, Norway has introduced VAT for the more expensive EVs (cars that  cost 
more than NOK 500 000) and a low one -off registration tax for EVs. This also reduces the share of 
subsidies given to customers who buy cars in the premium segment. In addition, the road toll and 
ferry fees are being gradually increased to keep public  transport competitive. These modifications 
illustrate that subsidies should be scaled down when the new technology matures and becomes 
more competitive.  
 
3.4.  Table 4 in the Annex provides a compilation of considerations related to the design of subsidies 
pertaining to the transition to a low -carbon economy that were raised as part of Members' 
discussions.  As part of the experience sharing, Members highlighted a number of common elements, 
including compliance with WTO rules. Consolidating the elements included  in Table 4, Members take 
into account the following considerations when designing subsidies related to a low -carbon 
transition:  
• minimize trade -distorting impacts when designing subsidies;  
• provide subsidies on a non -discriminatory basis;  
• avoid local content requirements;  
• consider the balance between the positive effects for the transition to a low -carbon 
economy and the distorting effects on trade;  
• consideration of nature of linkage with policy objective such as reducing green greenhouse 
gas emissions ; 
• avoid unilateral measures that may disrupt global trade;  
• take into account how market distortions might disproportionately affect developing and 
least developed countries as well as different development levels of countries ; 
• quantify environmental effect s of climate -smart agricultural practices using science -
based, transparent measurement tools to leverage investment.  
4  TRANSPARENCY  
4.1.  Since its first meeting in March 2022, the Working Group has been discussing what information 
exists to better understand envi ronmental and trade impacts of different subsidies,  including 
agricultural, fossil fuel, industrial, and green subsidies . Members pointed to the challenge of 
assessing potential environmental impacts of subsidies due to data shortcomings, and the need for INF/TE/SSD/W/29/Rev.1  
 
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  collecting quality data and improving transparency on subsidies .1 In 2023, sector -specific discussions 
on agricultural subsidies and subsidies related to the low -carbon transition included a focus on how 
transparency and data availability could be enhanced .  
4.1  Agricultural subsidies  
4.2.  Regarding subsidies on agriculture, Members underlined the importance of transparency and 
monitoring for assessing environmental impacts , both negative and positive . In this rega rd, the 
availability of data on agricultural subsidies, including through domestic support notifications at the 
WTO and support estimates by the OECD, as well as the usefulness of existing analytical work by 
other international organizations and stakeholde rs was acknowledged .  
4.3.  In presentations at the meeting on 19 September, the OECD noted that agricultural support in 
54 countries had been increasing in recent years, and amounted to USD 817 billion per year during 
2019-2021. The WTO Secretariat presented on  improvements in the Agriculture Information 
Management System (AG -IMS) and informed that environmental payments notified under 
paragraph  12 of the Green Box amounted to an annual average of around USD 35 billion over recent 
years, with the top eight Membe rs accounting for 99% of payments provided in 2018.  
4.4.  Members highlighted the need to fulfil existing notification requirements under the WTO 
Agreement on Agriculture as those provid ed the basis for transparency in the area of agricultural 
subsidies. Collaboration with environmental stakeholders for data collection and impact assessments 
using science -based, transparent measurement tools w as considered important for  assessing 
environment al impacts accurately.   
4.5.  Regarding opportunities to enhance transparency and possible  future work  more broadly , 
suggestions included to carry ou t technical exercises that could focus on (i)  identifying the types of 
trade and production distorting agricultur al subsidies that are also particularly harmful to the 
environment, and (ii) good and particularly harmful practices in various sectors, including 
agriculture, such as the use of hazardous chemical s. Further suggestions included to (iii)  share 
experiences and discuss what environmental impact indicators  might  be used  in the monitoring and 
evaluation of agricultural su pport programmes ; (iv)  carry out a questionnaire on the design of 
environmental programmes, including on environmental obje ctives, trade -offs between 
environmental objectives and results  of measures ; (v) share experience s and practices in 
environmental program mes under the Green Box support measures under the Agreement of 
Agriculture  for enhancing mutual understanding and learning ; (vi) consider a reinforced  monitoring 
role of the Committee on Trade and Environment (CTE) in the implementation of commitments 
regarding agricultural subsidies under the Sustainable Development Goals (SGDs) and Global 
Biodivers ity Framework (GBF) .  
4.2  Subsidies related to the low -carbon transition  
4.6.  Regarding subsidies related to the transition to a low -carbon economy , the low level of 
compliance with notification requirements under the WTO SCM Agreement was underlined , as was 
the need to increase efforts to fulfil existing notification obligations.  Proposal s on improving 
transparency in the  WTO SCM Committee were pointed at, as well as the need to support Members 
with genuine capacity concerns to engage in work to  improve the timeliness and quality of 
information provided . Further opportunities to enhance transparency on subsidies in the WTO were 
considered to be found in  Members' Trade Policy Reviews and regular Trade Monitoring Reports , as 
well as though information sharing on domestic initiatives in TESSD.  
4.7.  Members also shared national experiences and measures on transparency on energy subsidies 
and other subsidies related to the low -carbon transition. Transparency on the development and 
implementation of subsidies polices could be ensured through national legislation, opportunities for 
public comments on policies, public offering of specific projec ts, and regular reports on energy 
subsidies, including information on progress towards meeting national objectives on climate and 
energy.  
 
1 TESSD Summary Report 2022 – INF/TE/SSD/R/14 .  INF/TE/SSD/W/29/Rev.1  
 
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  4.3  International cooperation and initiatives  
4.8.  Transparency could also be enhanced through international cooperation. The initiative for a 
joint Subsidy Platform  by the WTO and other international organisations  (IMF, OECD, WB)  was 
welcome d and encouraged to be further developed.2 Other initiatives  to enhance transparency and 
data availability on different types of subsidies  that were presented or referred to in the Working 
Group , inter alia , include:  
i. OECD Agricultural policy monitoring and evaluation : annual report that monitors support 
policies in 54 countries (policy changes and measurement of support – producer and 
consumer support estimates).3 
ii. OECD's Policy Instruments for the Environment " (PINE) database: provides detailed 
information on policy instruments relevant for environmental protection and natural resource 
management, and will be uti lized to measure environmentally positive subsidies under the 
Kunming -Montreal Global Biodiversity Framework.4  
iii. work by the OECD on a Manufacturing Groups and Industrial Corporations (MAGIC) database 
aimed at tracking and monitoring of government support over time and across industrial 
sectors, geographical regions, and policy instruments5;  
iv. Energy Policy Tracker : an initiative of 29 expert organizations which tracks  public financial 
flows from fossil fuels to clean energy, covering pol icies affecting energy production and 
consumption for 38 economies.6 
v. OECD Inventory of Support Measures for Fossil Fuels : documents and estimates government 
measures that encourage fossil -fuel production or consumption relative to renewable 
alternatives.7 
vi. IISD-OECD Fossil Fuel Subsidy Tracker: brings together existing international estimates of 
support for fossil fuels, to help bridge the reporting gap and track progress against 
government commitments to phase out "inefficient fossil -fuel subsidies" in th e context of 
the G20, G7 and APEC forums.8 
  
 
2 Subsidy Platform: https://www.subsidydata.org/   
3 Agricultural policy monitoring and evaluation : http://oe.cd/mon itoring   
4 PINE Database: http://oe.cd/pine .  
5 OECD (2023), "Government support in industrial sectors: A synthesis report", OECD Trade Policy 
Papers, No. 270 : https://doi.org/10.1787/1d28d299 -en. 
6 Energy Policy Tracker: https://www.energypolicytracker.org/ . 
7 Inventory of Support Measures for Fossil Fuels : http://oe.cd/fossil -fuels/ . 
8 Fossil Fuel Subsidy Tracker : https://fossilfuelsubsidytracker.org/ . INF/TE/SSD/W/29/Rev.1  
 
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  ANNEX : SUBSIDY DESIGN  CONSIDERATIONS RAISED IN DISCUSSIONS  
Table 3. Members' considerations in the design of agricultural subsidies  
Sustainable development must be the organizing principle to tackle the multifaceted intersection 
between agricultural subsidies, food security, sustainability and development – when designing 
agricultural policies, countries are faced with the challenge of  defining a set of goals that often 
involve generating income and jobs, raising living standards, improving food and nutrition security 
and ensuring environmental sustainability.  
Agriculture plays a multifunctional role in maintaining biodiversity and protecting the environment, 
while also serving as key contributor to food security and other non -trade aspects. Agricultural 
subsidies can support and enhance agriculture while promot ing environmental sustainability.  
Environmental factors have a big impact on agricultural production, and in the context of tightening 
resources and increasingly fragile ecological environment, agricultural subsidy policies should 
balance the relationshi p between growth promotion and environmental protection so as to improve 
the resilience and sustainability of agricultural production.  
When formulating agricultural subsidy policies, the impact of production, trade and environment 
should be considered in  an integrated manner. Support for governance of agricultural environment, 
water conservation and ecological compensation should be bolstered, the overall protection and 
support for agricultural resources should be strengthened.  
Subsidies should not be g ranted in areas with a greater degree of environmental damage such as 
heavy metal pollution. This can help avoid "environmental depressions" in agricultural production 
and steer the agricultural production towards the direction of high -efficiency and susta inability.  
With good agricultural practices, agricultural producers can be competitive and at the same time 
protect the environment. For example, subsidies directed to the use of fertilizers or plant protection 
products can greatly limit their negative e ffect on the environment if good agricultural practices 
are applied. This is an important point for many developing countries that face increasing 
challenges to control pests and diseases or to increase their productivity in the face of challenges 
such as climate change.  
Members should themselves identify and evaluate environmentally harmful subsidies as well as 
reorient them to environmentally positive ones given that simple elimination or reduction of 
agricultural subsidies can result in decreasing agri cultural production, increasing prices, or reducing 
farmers' income.  
Actual environmental impacts need to be assessed taking into account the natural, social and 
economic conditions of each country. A one -size-fits-all solution is neither desirable nor 
conceivable. Furthermore, environmental impacts need to be assessed from a cross -sectoral point 
of view. In the legislative processes, the Government systematically evaluates the environmental 
impacts of agricultural policy measures including by using quant itative models.  
Agricultural subsidies can be beneficial to the environment. The Government grants subsidies that 
ensure the provision of various public goods, such as the preservation of biodiversity, the protection 
of water and air quality or the reduction of greenhouse gas emissions. Furthermore, subsidies can 
also help in compensating farmers for income loss that is due to the use of environmental -friendly 
methods of production.   
Certain agricultural subsidies or support programs are designed to  achieve multiple objectives, 
some of which may be directly or indirectly related to the protection of the environment.  
Need to look not only look at the trade and environmental factors but also take into account other 
social -related and non -trade factors . 
Agricultural subsidies often have other objectives than environmental sustainability such as 
enhancing food security. While it is important to reduce negative effects, it is also important to 
recognise that different subsidies pursue different policy ob jectives which might be conflicting.  
Environmental effects of agricultural subsidies vary depending on natural conditions or 
environmental requirements of subsidy disbursement. It is therefore indispensable to examine and 
evaluate based on a non -uniform approach with due consideration to each country's specific 
situations. It is also not appropriate to analyse environmental effects based on a single indicator 
or benchmark given their high complexity. The content of data to evaluate environmental effects 
vary depending on the purpose of evaluation and the situation of those countries and regions.  INF/TE/SSD/W/29/Rev.1  
 
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  Comprehensive consideration of all environmental effects is important, including carbon emissions, 
biodiversity, healthy soils and responsible water management.  
Important to consider the potential environmental effects in the long term. Furthermore, the effects 
of agricultural support measures may vary based on the differences in agricultural structures in 
different country contexts. In this regard, the assessme nt of environmental impacts should be 
considered in a holistic way by taking account of relevant factors rather than focusing solely on 
agricultural subsidies themselves . 
High subsidies in rich countries reduce the ability of farmers in developing countries to compete 
and share the benefits of international trade.  
Important to consider the externalities of environmental subsidies in one country on the ability of 
other countries to pursue their environmental goals and SDGs, especially wher e it could lead to 
negative economic and social effects.  
Appropriate regulatory and policy settings to further enable sustainable agricultural financing flow 
on the basis that the investment in this sector sees opportunities for returns on the basis of 
undistorted markets and high sustainability credentials of the sector. Focus is on new models for 
transition finance to support the transition of activities that have the potential to be sustainable in 
addition to those that are already sustainable.  
Multi-dimensional approaches where some support is strategically developed to meet a range of 
objectives, including non -trade distorting, sustainable, resilient, and inclusive agricultural trade 
outcomes. Focus on policy and regulatory settings to catalyse inves tment in agriculture to reduce 
risks faced by the agricultural sector from climate change and the increasing frequency of natural 
disasters.  
The WTO Agreement on Agriculture is important in encouraging Members' policy transition and 
repurposing of subsidi es. 
The Green Box, while not necessarily designed to represent environmentally friendly policies, is an 
immediately available policy tool to implement the "repurposing" of agricultural subsidies towards 
sustainable agriculture and "green green box" measur es. 
Eco-conditionality of aid could be a tool when designing agricultural subsidies. And green box simply 
a better policy option.  
The criteria contained in the Agreement on Agriculture, in the form of its boxes, refer to market 
and production distortion.  So, the legal test, so to say, is whether subsidies are trade distortive, 
not environmentally harmful, and the latter cannot be used to balance the former.  
Sustainability objectives are not necessarily incompatible with food security and agriculture sector 
resilience objectives. All three need to be considered in the design of agriculture subsidies, while 
also minimizing trade and production distortions. Measures that support access to and the adoption 
of innovation, knowledge, tools, tech nologies, and practices that contribute to more productive, 
inclusive, resilient, and sustainable agricultural systems are key to achieving that balance . 
Price incentives, as well as fiscal subsidies which are tied to the production of a specific commodit y 
or input, are not only trade distortive, but also the most potentially damaging to the environment.  
Agricultural negotiations in the WTO on domestic support and international commitments as 
regards the phasing out of trade distorting subsidies (SDG 2) and reduction of subsidies harmful 
to biodiversity (Montreal Convention) seem to be pointing us in the same direction of less trade 
distorting subsidies with the least environmentally harmful impact.  
Members may consider a comprehensive approach to determ ine whether subsidies are balanced 
and environmentally friendly. While some domestic subsidies are often referred to as a cause of 
distortions to trade, environmental subsidies are mainly meant to counter existing distortions 
caused by damaging the environ ment. Examples include service crops, subsidies for integrated 
pest management and subsidies for soil conservation.  
Whether or not any subsidies actually are harmful to the environment depends on a host of factors, 
such as whether the payments incorporat e cross -compliance requirements, or whether farmers are 
constrained by environmental regulations independent of support schemes.  
Policies to create an enabling environment for productive, sustainable, and resilient food systems 
through investment in inno vative systems, infrastructure, climate and environmental measures, 
and risk management. Comprehensive conversation needed to ensure the most effective, efficient, 
and least -distortive policies are encouraged. Importance of new approaches that are voluntar y, INF/TE/SSD/W/29/Rev.1  
 
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  market -and incentive -based, and encourage the private sector to develop innovative approaches 
to meet climate goals.  
 
Table 2. Members' considerations in the design of subsidies related to the transition to a 
low-carbon economy  
Importance of promoting innovation and investment without creating trade distortions or a subsidy 
race. It is essential to adhere to WTO rules while developing support measures to balance climate 
objectives and minimize trade impacts.  
Market -pull incenti ves like carbon pricing, feed -in-tariffs, and investment tax credits are generally 
less distortive than subsidies that directly encourage manufacturing capacity.  
Avoiding local content requirements which can distort trade.  
Balancing test: achieve the po licy objective of a net -zero transition, while minimising trade 
distortions. This balancing is between the positive effects of the subsidy – it must facilitate the 
development of an economic activity with clear link to the green objectives - against the ne gative 
effects – the subsidy cannot unduly affect trading conditions to an extent contrary to the common 
interest.  
WTO compatibility is a built -in feature in subsidy design.  
Essential to ensure WTO -consistency and minimize negative effects on trade espe cially in the phase 
of designing specific subsidies.  
Importance of taking trade effects and WTO conformity into account when designing subsidies.  
Need to align with the rules set by WTO agreements. Importance of avoiding unilateral measures 
that risk a nd disrupt global trade.  
The current balance as set out in the SCM Agreement allows the granting of subsidies, even of 
specific ones, insofar they do not cause adverse effects to the interest of other Members or result 
in particular trade -distortions, due to their design.  
Minimi zing the trade -distorting impact when designing green subsidies is in line with both trade 
and energy policy interests. Trade distortions increase the price of investments necessary for the 
low-carbon transition.  
The current trade rules support taking in to account the possible trade -impacts of subsidies related 
to the low -carbon transition.  
Green subsidies are traditionally provided on a non -discriminatory basis to minimize trade 
distorting effects.   
Important to acknowledge that some green subsidies, even with the best intentions, can negatively 
impact trade.  
In the design of subsidies, it is essential that we not only look towards meeting our shared net zero 
and environmental commitments, but we do so in a way that minimizes potential trade effects and 
complies with existing WTO obligations.  
OECD work on possible elements of subsidy design suggests that "good" government support needs 
to be: (i) proportionate to the scale of the problem it is meant to solve (e.g. market failures); (ii) 
time-limited , e.g. by way of a sunset clause; (iii) targeted toward those that most need it in order 
to minimize windfall effects; (iv) non -discriminatory; and (v) transparent, through the publication 
of relevant information by the government concerned.  
In the conte xt of the green transition, subsidy design may incorporate consideration of whether or 
not the program directly links to the reduction of greenhouse gas emissions.  
Find balanced and meaningful solutions to ensure that our collective approach to subsidies 
promotes environmental objectives at the WTO while, at the same time, upholding and 
safeguarding an open and non -discriminatory international trading system.  
Certa in subsidies might create market distortions disproportionately affecting developing and least 
developed countries, and, in the name of reducing carbon emissions in one jurisdiction, hampering 
the capacity of other countries to pursue similar goals. As fis cal capacity becomes the lever for 
competitiveness, developing countries will struggle to keep pace on this race to the bottom. A 
redistribution of global trade and production that further marginalizes developing countries is bound 
to also constrain their ability for climate action and detract from global efforts for decarbonization.  INF/TE/SSD/W/29/Rev.1  
 
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  Must acknowledge the centrality of development and its different level in all countries, while 
providing all enablers towards sustainably achieving country specific plans and  actions.  
The quantification of environmental effects is crucial for identifying and leveraging investments in 
climate -smart agricultural practices. There is a need for science -based, transparent measurement 
tools to evaluate the environmental benefits o f these practices, including on climate and 
biodiversity.  
 
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