CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

A

PAPER

AUGUST 2005

Policies That

Distort World

Agricultural

Trade:

Prevalence and 

Magnitude

CBO

The Congress of the United States O Congressional Budget Office

CBO

Policies That Distort World Agricultural 

Trade: Prevalence and Magnitude

August 2005

A

PAPER
Notes

Numbers in the text and tables of this report may not add up to totals because of rounding.

The European Union, or EU, refers to the 15 member states constituting the EU until 2004, 

when 10 additional countries were admitted. References to the 25-member EU are indicated 

as European Union (25), or EU (25).

The cover photograph of wheat harvesting in El Centro, California, is by Tim McCabe, courtesy of the U.S. Department of Agriculture.
Preface

A major issue on the agenda of the ongoing Doha Round of multilateral trade negotiations by

members of the World Trade Organization concerns how and to what extent policies that

affect agricultural trade should be liberalized. For most of the postwar period, the series of

multilateral negotiating rounds under the auspices of the General Agreement on Tariffs and

Trade allowed policies that distort agricultural trade to continue in large part while tariffs and

other policies distorting trade in other sectors were progressively reduced or eliminated. The 

Uruguay Round, which took place from 1986 through 1994, began the liberalization of agricultural trade; yet tariffs remain much higher, and the use of subsidies much more prevalent,

in agriculture than in other goods-producing industries.

This Congressional Budget Office (CBO) paper, which responds to part of a request by the 

Chairman of the House Ways and Means Committee, presents statistics on policies around

the world that distort agricultural trade. In keeping with CBO’s mandate to provide objective,

nonpartisan analysis, this paper makes no recommendations.

Bruce Arnold of CBO’s Microeconomic Studies Division prepared this paper under the supervision of Roger Hitchner, Joseph Kile, and David Moore. (Roger Hitchner has since left

CBO.) Gregory Hitz of CBO’s Budget Analysis Division wrote the two boxes. Menzie Chinn

served as CBO’s internal reviewer. Ufuk Demiroglu, Gregory Hitz, Arlene Holen, and Elizabeth Robinson provided comments on early drafts of the paper. Cathy Jabara of the U.S.

International Trade Commission staff and John Wainio of the Economic Research Service at

the U.S. Department of Agriculture also provided comments. (The assistance of external

reviewers implies no responsibility for the final product, which rests solely with CBO.)

Janey Cohen edited the paper, and Christine Bogusz proofread it. Maureen Costantino prepared the paper for publication and designed the cover. Lenny Skutnik printed copies of the

paper, and Annette Kalicki and Simone Thomas produced the electronic version for CBO’s

Web site (www.cbo.gov).

Douglas Holtz-Eakin

Director

August 2005

Summary ix

Introduction and Background 1

Market Access 2

Domestic Support 2

Export Subsidies 4

Statistics on Market Access 4

Agriculture Is Substantially More Protected Than Manufacturing 4

Tariff Bindings Are Substantially Higher Than Applied Tariffs 7

Which Countries Have the Highest Tariffs? 8

Extreme Tariffs and Tariff-Rate Quotas 10

Statistics on Domestic Support 13

Which Countries Provide the Most Domestic Subsidies? 16

Which Countries Have the Highest Domestic Subsidy Rates? 18

Breakdown of Subsidies by WTO Category 18

Which Countries Provide the Most Amber-Box Subsidies? 24

Which Countries Have the Highest Amber-Box Subsidy Rates? 25

Amber-Box Bindings Are Substantially Higher Than Actual

Amber-Box Subsidies 32

Which Products Receive the Most Amber-Box Subsidies? 32

Which Products Have the Highest Amber-Box Subsidy Rates? 33

Statistics on Export Subsidies 33

Which Countries Provide the Most Export Subsidies? 33

Which Countries Have the Highest Export Subsidy Rates? 35

Export Subsidy Bindings Are Substantially Higher Than Actual

Export Subsidies 37

Which Products Receive the Most Export Subsidies? 40

A Final Note 40

Appendix A: Caveats on Tariff Comparisons 43

Appendix B: Some Measures of the Combined Effects of Protection,

Domestic Support, and Export Subsidies 45

Appendix C: Detailed Domestic and Export Subsidy-Rate Statistics 49

Glossary 55

CONTENTS
vi POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Tables

1. Simple Average Tariff Rates for Agriculture and Manufacturing 5

2. Trade-Weighted Average Applied Tariff Rates for the Agricultural and Food

Sectors and Total Merchandise Trade in 2001 6

3. Simple Average Bound and Applied Tariffs for Agricultural and Manufactured

Products 8

4. Average and Peak Applied Ad Valorem Agricultural Tariffs 11

5. Mean and Median Bound Tariffs, by Region 12

6. Tariffs of Over 100 Percent Faced by the Top 30 U.S. Agricultural Exports 14

7. Countries Ranked by Percentage of Agricultural Tariff Lines Covered by

Tariff-Rate Quotas 16

8. Agricultural Output Covered by Tariff-Rate Quotas 18

9. Countries Ranked by Average Over-Quota Tariff Rates of Tariff-Rate Quotas 19

10. Countries Ranked by Numbers of Notified and Enforced Tariff-Rate Quotas 20

11. Countries Ranked by Average In-Quota Tariff Rates of Tariff-Rate Quotas 21

12. Total Domestic Support Reported by Countries to the World Trade Organization 22

13. Average Annual Domestic Support Reported by Countries to the World Trade

Organization by Category, 1998 to Present 26

14. Amber-Box Support Reported by Countries to the World Trade Organization 30

15. Amber-Box Support Reported by the European Union, by Product 34

16. Amber-Box Support Reported by the European Union, by Product as a

Percentage of the Value of Production 36

17. Agricultural Export Subsidies by Countries with Subsidy Reduction Commitments 38

18. Agricultural Export Subsidies Reported by the European Union, by Product 41

B-1. Producer Nominal Protection Coefficients for 2004 46

B-2. Producer Support Estimates for 2004 47

B-3. General Services Support Estimates for 2004 48

C-1. Total Domestic Support Reported by Countries to the World Trade Organization

as a Percentage of Agricultural Output Value 50

C-2. Amber-Box Support Reported by Countries to the World Trade Organization as a

Percentage of Agricultural Output Value 52

C-3. Agricultural Export Subsidies by Countries with Subsidy Reduction

Commitments as a Percentage of Agricultural Export Value 53
CONTENTS vii

Figures

S-1. Countries Ranked by Trade-Weighted Average Applied Tariff Rates in the

Agriculture and Food Sector in 2001 x

S-2. Average Annual Rates of Reported Domestic Support, 1998 to Present xii

S-3. Breakdown of Domestic Support by Categories in the Uruguay Round

Agreement on Agriculture: Average Annual Reported Values, 1998 to Present xiii

S-4. Countries with Export Subsidy Reduction Commitments Ranked by Average

Annual Rates of Reported Export Subsidies, 1998 to Present xv

1. Countries Ranked by Trade-Weighted Average Applied Tariff Rates in the

Agriculture and Food Sector in 2001 9

2. Countries Ranked by Average Annual Rate of Total Reported Domestic

Support, 1998 to Present 25

3. Countries Ranked by Average Annual Rate of Reported Amber-Box

Subsidies, 1998 to Present 32

4. Countries with Export Subsidy Reduction Commitments Ranked by Average 

Annual Rate of Reported Export Subsidies, 1998 to Present 40

Boxes

1. Domestic Support Programs in the United States and the European Union 28

2. Agricultural Export Subsidies in the United States and the European Union 39

Summary

A central objective of the World Trade Organization’s (WTO’s) Doha Round of trade negotiations, initiated with the Doha Ministerial Declaration on November 14, 2001, is to liberalize world agricultural markets. 

To illuminate that issue, this paper presents statistics on 

current policies around the world that distort agricultural 

production and trade. In the rubric of WTO negotiations, such policies and the talks to liberalize them fall 

into three major categories: (1) market access, which refers to policies that restrict or regulate imports; 

(2) domestic support, which refers to domestic subsidies 

and other forms of support to domestic producers;

and (3) export subsidies (often referred to as export 

competition).

In broad terms, the statistics indicate that:

B Policies that distort agricultural trade remain much 

more pervasive and substantial around the world than 

policies that distort trade in other goods.

B High agricultural tariffs are most prevalent in East 

Asian countries. The United States has a low average 

agricultural tariff, and the European Union’s (EU’s) 

average is in the middle.

B The European Union provides the largest amount of 

the most trade-distorting category of domestic support (so-called amber-box support) as measured by 

dollar value, with the United States a distant second 

and Japan a distant third. The highest rates of such 

support, measured as a percentage of total agricultural 

output value, are those of the members of the 

European Free Trade Association, or EFTA (Iceland, 

Norway, and Switzerland-Liechtenstein), followed by 

the European Union. The United States is further 

down the list.

B The European Union is by far the dominant provider 

of export subsidies, providing 85 percent to 90 percent of the world’s total.

Market Access

Whereas distortions and barriers to trade in the manufacturing sector have been progressively reduced in a succession of multilateral trade negotiating rounds extending 

over more than half a century, such policies in the agricultural sector were largely unaddressed until the Uruguay 

Round Agreement on Agriculture that went into effect on 

January 1, 1995. That agreement required the conversion 

of all nontariff barriers to imports into tariff-rate quotas 

(TRQs); placed upper limits, or “bindings,” on all agricultural tariffs of all signatories to the agreement; and required reductions in agricultural tariffs (implemented 

through those bindings).1 Notwithstanding those reductions, tariffs on agricultural goods remain substantially 

higher than those on manufactured goods almost everywhere around the world. For the world as a whole, the 

trade-weighted average tariff for agricultural products in 

2001 was more than three times the average for all merchandise trade, with almost all countries having higher 

tariffs for agricultural trade than for all merchandise 

trade. For the United States, the agricultural average was 

1.3 times the all-merchandise average.

Tariffs actually applied to agricultural products are substantially lower for most countries—especially for developing countries—than the tariff bindings agreed to in the 

Uruguay Round. The average applied tariff is 50 percent 

lower than the average bound tariff for developing countries in Asia, 42 percent lower for those in Africa, 65 percent lower for the Middle East, 64 percent lower for Latin 

America, 62 percent lower for the rest of the developing 

world, and 19 percent lower for developed countries (although a majority of individual developed-country tariffs 

1. A TRQ consists of a low tariff on imports up to a given quota level 

and a higher tariff on imports above that level. 
x POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Summary Figure 1.

Countries Ranked by Trade-Weighted Average Applied Tariff Rates in the

Agriculture and Food Sector in 2001

(Percent)

Source: See Figure 1 on page 9.

Notes: See Figure 1 on page 9 for additional notes and Table 2 on page 6 for an ordering of countries that clarifies the meaning of country 

groupings.

a. China joined the World Trade Organization in December 2001, and its accession agreement required significant reductions in tariffs. 

Therefore, if its tariff averages were calculated using more recent data, they would be lower.

b. The European Free Trade Association (EFTA) comprises Iceland, Norway, and Switzerland-Liechtenstein.

c. Botswana, Malawi, Mozambique, Tanzania, Zambia, Zimbabwe, Madagascar, and Uganda.

are equal to their bounds). Hence, the Doha Round 

tariff-reduction negotiations, which are based on bound 

tariffs, will have to achieve substantial reductions to have 

even a small effect on actual applied tariffs.

Extreme tariffs—tariffs of over 100 percent—and tariffrate quotas, which typically have very high over-quota 

tariffs, protect a substantial portion of agricultural production from international competition. Fifty percent of 

Eastern European production is protected by TRQs, as is 

39 percent of European Union production and 26 percent of U.S. production. On average, 28 percent of production in members of the Organization for Economic 

Cooperation and Development (OECD), which consists 

primarily of the major industrialized countries of the 

world, is protected in this way.

On average, U.S. agricultural tariffs—along with those of 

Australia and New Zealand—are low in comparison with 

those of most other countries (see Summary Figure 1). 

The trade-weighted U.S. average in 2001 was 

2.4 percent. By comparison, the EU (25) and the European Free Trade Association together averaged 13.9 percent; and most developing countries had higher averHong Kong and Singapore

United States

Australia and New Zealand

Indonesia

Brazil

Argentina

South Africa

Canada

Rest of Latin America and Caribbean

Mexico

Selected Sub-Saharan African Countries 

Rest of the World

Bangladesh

Russia

Rest of East Asia

European Union 25 plus EFTA 

Middle East and North Africa

Rest of Europe and Central Asia

Turkey

Rest of South Asia

Rest of Sub-Saharan African Countries

Japan

Thailand

Vietnam

China 

India

Korea and Taiwan

0 10 20 30 40 50 60

a

b

c
SUMMARY xi

ages.2 Mexico and Canada averaged 11.6 percent and 9.0 

percent, respectively. 

The tariff structures of many countries are complicated 

and difficult to summarize in a single number, such as an 

average tariff. Although they are useful in documenting 

the protection of agriculture around the world, such averages are only rough indicators of countries’ protective 

policies. For particular countries, products, and policies, 

more-detailed analysis is required.

Domestic Support

Subsidies by different countries can be compared in two 

key ways. One is to compare their absolute value when 

converted to some common currency, such as the dollar. 

That comparison is best for assessing which countries’ 

policies most distort the total world market (although all 

subsidies are not equally distortionary). The other way is 

to calculate the subsidy rate of each country—that is, the 

subsidy as a percentage of the value of agricultural output—and compare such subsidy rates. That approach is 

better for measuring the competitive advantage a country 

attempts to confer on its farmers and exporters through 

subsidies.

The Uruguay Round Agreement on Agriculture focuses 

future subsidy reductions on only the most tradedistorting domestic support. It divides domestic agricultural subsidies into five categories, or “boxes”: the green 

box, the blue box, the special and differential box, de 

minimis support, and the amber box. The green box is for 

measures, defined in some detail in the agreement, that 

were deemed by the negotiators to have little or no distorting effects on trade—that is, to have little, if any, effect on the prices and quantities of goods exported or imported (or produced, since increased production affects 

the prices and quantities of traded goods). The blue box is 

for certain direct payments under production-limiting 

programs. Such payments, while more distorting than 

green-box payments, are not as distorting as others and 

are a means some countries use to reduce the distortionary effect of their income-support programs for farmers. 

The special and differential box is for certain development 

subsidies granted by some developing countries. De minimis support consists of subsidies that are below specified 

percentages of the value of production that the agreement’s negotiators deemed low enough so as not to be a 

cause for concern. The amber box consists of all support 

not falling into the other four categories. Amber-box

support is generally the most distortionary of the five categories, and it is limited and reduced by the agreement. 

The other four categories are exempt from reduction requirements.

The agreement requires countries to report their domestic 

agricultural subsidies to the WTO along with the categories into which they fall. Thus, the accuracy and timeliness of the resulting data depend on the effort, judgment, 

and care taken by the various reporting countries. 

Domestic subsidies for agriculture are substantial. Such 

subsidies of all kinds total more than $200 billion per 

year worldwide. Value added in the agricultural sector 

worldwide is roughly $1.2 trillion, so domestic subsidies 

are equivalent to roughly one-sixth of value added. The 

subsidies also are pervasive around the world: 64 out of 

76 countries have reported to the WTO that they granted 

subsidies of some kind in at least one of the years from 

1998 through 2004. Nevertheless, a few countries dominate the total dollar value of subsidies granted. The EU 

and the United States each grant about one-third of the 

world’s total—the EU a little more than the United States 

because its agricultural sector is a little larger—and Japan 

grants a little less than 15 percent. Hong Kong and Singapore provide no such subsidies, and Australia grants 

less than one-half of 1 percent of the world’s total.

The United States and the EU have such large subsidy totals in part because they and their agricultural sectors are 

so large. Even a small subsidy rate can result in a large total subsidy if applied to a large output. The ranking by 

subsidy rates paints a different picture, although the 

United States still ranks relatively high. Among countries 

for which such rates can be calculated, members of the 

EFTA—Iceland, Norway, and Switzerland-Liechtenstein 

—top the ranking, with average reported subsidies ranging from 140 percent down to 83 percent of the values of 

their respective agricultural outputs since 1998 (see Summary Figure 2). Japan, the United States, and the EU 

each have had subsidies averaging 37 percent of their agricultural outputs over that period. The rates for U.S. 

neighbors Canada and Mexico are 13 percent and 11 percent, respectively (although the most recent numbers for 

those countries are for 1998 and 1999). Australia and

2. Averages of tariff bindings suggest that the members of the EFTA 

(Iceland, Norway, and Switzerland-Liechtenstein) have substantially higher tariffs than does the EU. 
xii POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Summary Figure 2.

Average Annual Rates of Reported Domestic Support, 1998 to Present

(Percentage of agricultural output value, countries ranked by amber-box subsidies)

Note: Numbers are based on subsidy data reported to the World Trade Organization by the countries in question as of June 30, 2005. The 

most recent reports by most countries are for 2002 or earlier. Availability of output data further restricts the years and countries for 

which rates can be calculated. The average for Iceland is based only on rates for 1998 and 1999, and the “average” for SwitzerlandLiechtenstein is based only on the rate for 1998. See Table C-1 on page 50 for sources, additional notes, and more-detailed numbers, including numbers for each year.

New Zealand averaged 5 percent and just under 2 percent, respectively.

About one-half of all domestic subsidies fall into the 

green box; 10 percent fall into the blue box; 5 percent are 

de minimis; and one-half of 1 percent fall into the special 

and differential box (see Summary Figure 3). That leaves 

one-third that are the most distortionary subsidies that 

fall into the amber box and are limited by the Agreement 

on Agriculture.

Although the United States and the EU provide comparable amounts of total subsidy, much more of the U.S. total 

falls into the green box and much less—roughly onethird as much—falls into the amber box. The EU provides over half of the world’s amber-box subsidies, the 

United States about one-fifth, Japan about 8 percent, and 

every other country substantially less.

U.S. amber-box subsidy rates, although high enough to 

distort production and trade, are significantly lower than 

those of a number of other countries, most notably those 

of the EU (see Summary Figure 2). Among countries for 

which such rates could be calculated, the members of the 

EFTA have had the highest rates since 1998, with average 

reported subsidies ranging from 113 percent down to 42 

percent of the values of their respective agricultural outputs.3

 Ranking next is the EU with subsidies averaging 

19 percent of the value of its output over the period (and 

a still-lower rate of 15.9 percent in 2001). The U.S. subsidy rate, at 7.7 percent, was less than half the EU rate. 

Mexico averaged just over 5 percent, Canada just under 3 

percent, and Australia only 0.5 percent.4

Turkey

New Zealand

Uruguay

Romania

Chile

Estonia

Jordan

Bulgaria

Macedonia

Australia

Tunisia

South Africa

Poland

Canada

Czech Republic

Mexico

Korea

United States

Japan

Israel

Hungary

Slovak Republic

European Union

Switzerland-Liechtenstein

Norway

Iceland

0 20 40 60 80 100 120 140 160

Amber Box

Non-Amber Box

3. The only rate that could be calculated for SwitzerlandLiechtenstein was for 1998.

4. The only rate that could be calculated for Mexico was for 1998.
SUMMARY xiii

Summary Figure 3.

Breakdown of Domestic Support by Categories in the Uruguay Round

Agreement on Agriculture: Average Annual Reported Values, 1998 to Present

Note: Numbers are based on subsidy data reported to the World Trade Organization by the countries in question as of June 30, 2005. The 

most recent reports by most countries are for 2002 or earlier. See Table 13 in the main text for source and additional notes.
xiv POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

As was the case with tariffs, actual amber-box subsidies 

are substantially lower than amber-box bounds for most 

countries, so only substantial reductions in those bounds 

negotiated in the Doha Round would have much effect 

on actual subsidies. The EU’s most recent reported

amber-box subsidies totaled less than half their final 

bound value. The most recent U.S. total was almost 25 

percent below its final bound value. Japan’s was 84 percent below its final bound value.

Export Subsidies

Export subsidies are much less widespread than are domestic subsidies. A country may provide such subsidies 

only if it made a commitment to reduce them under the 

Agreement on Agriculture (or as part of its accession 

agreement if it joined the WTO after the Agreement on 

Agriculture went into effect).5 Only 25 countries have 

such subsidy reduction commitments, and two of those 

commitments have a final bound of zero. (In addition, 

China agreed to eliminate all export subsidies immediately upon admission to the WTO.) Since 1998, the EU 

has dominated the use of export subsidies more than it 

has the use of domestic subsidies, providing 85 percent to 

90 percent of all the export subsidies reported to the 

WTO by countries with reduction commitments. Ranking next in order of total value of such subsidies granted 

have been Switzerland-Liechtenstein, with 4.5 percent to 

6.5 percent of the world’s total, and Norway and the 

United States with 1 percent to 2 percent.

By far the highest export subsidy rates are those by 

Switzerland-Liechtenstein, at 9.3 percent, and the EU, at 

6.6 percent (see Summary Figure 4). The Czech Republic 

and Norway are a distant third and fourth place at 1.6 

percent. The United States has a very low subsidy rate 

that places it well down in the rankings. It should be 

noted that most countries subsidize only certain products. The subsidy rates for those products might be significantly higher than the average rate for all agricultural 

exports of the country.

As was the case with tariffs and amber-box subsidies, actual export subsidies are substantially lower than their 

bound values for many countries. However, that fact has 

less significance for the Doha Round than does the corresponding fact for tariffs and amber-box subsidies because 

the framework agreement calls for export subsidies to be 

eliminated.

A Final Note

The statistics analyzed here are as up-to-date as the Congressional Budget Office was able to obtain. Most are for 

2002 or earlier and therefore may not reflect subsequent 

policy changes. However, the Organization for Economic 

Cooperation and Development (OECD) publishes some 

measures of the combined effects of its members’ tariffs 

and subsidies that are available up through 2004. Those 

measures suggest that the conclusions of this paper continue to hold true at least as they relate to the members of 

the OECD.

5. The Agreement on Agriculture made a temporary exception for 

developing countries without reduction commitments to provide 

certain kinds of export subsidies during the initial nine-year 

implementation period of the agreement. That period is now over, 

and the only export subsidies now allowed and subject to negotiation in the Doha Round are those subject to reduction commitments. Therefore, the discussion in this paper is restricted to those 

subsidies, and the temporary subsidies reported under the exception for developing countries are not addressed.
SUMMARY xv

Summary Figure 4.

Countries with Export Subsidy

Reduction Commitments Ranked by 

Average Annual Rates of Reported 

Export Subsidies, 1998 to Present

(Percentage of agricultural export value)

Note: Numbers are based on subsidy data reported to the World 

Trade Organization by the countries in question as of June 

30, 2005. The most recent reports by most countries are 

for 2002 or earlier. Availability of export data further 

restricts the years and countries for which rates can be 

calculated. The averages for Switzerland-Liechtenstein 

and the Czech Republic are each based only on rates for 

1999 and 2000. See Table C-3 on page 53 for sources, 

additional notes, and more- detailed numbers, including 

numbers reported for each year.

Uruguay

Bulgaria

Canada

Iceland

Brazil

New Zealand

Indonesia

Australia

South Africa

United States

Colombia

Israel

Hungary

Romania

Turkey

Poland

Norway

Czech Republic

European Union

Switzerland-Liechtenstein

0 2 4 6 8 10

Policies That Distort World Agricultural Trade: 

Prevalence and Magnitude

Introduction and Background

The Doha Round of trade negotiations by the members 

of the World Trade Organization (WTO) was initiated 

by the Doha Ministerial Declaration on November 14, 

2001, and a framework agreement for the talks was 

reached on July 31, 2004. Although a number of issues 

are under negotiation, the subject of most attention and 

contention is the liberalization of world agricultural 

markets.

To illuminate the issues at hand, this paper examines the 

major features of current policies around the world that 

distort agricultural production and trade. It presents statistics and tables drawn from a survey of the literature, 

along with others produced by the Congressional Budget 

Office (CBO), based on data reported to the WTO, to 

answer such questions as:

B What are some of the major features of agricultural 

tariffs around the world?

B Which countries have the highest tariffs?

B How substantial and how prevalent are subsidies for 

agriculture around the world?

B Which countries provide the most subsidies?

B What fraction of subsidies are relatively benign, such 

as those for agricultural research, and what fraction 

significantly distort production and trade?

B Which countries provide the most of the latter subsidies?

B Which products receive the most subsidies?

Answers to questions such as those are suggestive of the 

potential benefits and the distribution of benefits by 

country that would likely accrue from liberalization—

which countries’ agricultural sectors would gain and 

which would lose, and which countries’ policies are most 

detrimental to economic welfare.

Although tariffs, quotas, subsidies, and other distortions 

of trade in manufactured goods have been progressively 

reduced and, in many instances, eliminated in the series 

of trade negotiating rounds under the General Agreement 

on Tariffs and Trade (GATT) since the end of World 

War II, significant distorting policies in the agricultural 

sector were to a large degree allowed to continue until the 

Uruguay Round, which took place from September 1986 

through April 1994.1 The Uruguay Round began the 

process of agricultural liberalization with the Agreement 

on Agriculture. An examination of the major elements of 

that agreement is useful for three reasons. First, it contributes to an understanding of what has been accomplished so far and what remains to be accomplished in the 

liberalization of agricultural production and trade policy. 

Second, the basic structure of WTO regulation of tradedistorting policies in the agricultural sector that was established under the agreement has carried over into the 

framework agreement for the Doha Round and will 

strongly influence the agreement reached in those negotiations. Third, many of the numbers presented below derive from data contained in reports that the agreement requires member countries to make to the WTO and are 

based on the structure, categories, and definitions contained in the agreement.

The agreement required liberalization in three major areas: market access, domestic support, and export subsidies (often referred to as export competition in multilateral 

1. Trade-distorting policies are those that significantly affect the 

prices and quantities of goods exported or imported (or produced, 

since increased production affects the prices and quantities of 

traded goods). 
2 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

trade negotiations and agreements).2 Market access refers 

to government policies regulating imports, such as tariffs 

and quotas. Domestic support refers to various kinds of 

government programs to support domestic agricultural 

producers, such as production subsidies and price support programs. Export subsidies refers primarily to various 

kinds of subsidies to the export of agricultural products.

Market Access

For the most part, the Agreement on Agriculture prohibited nontariff protective measures. Countries that had 

such measures before the agreement were required to 

convert them to equivalent tariffs—that is, tariffs that 

would increase the domestic prices of the products in 

question by the same amount that the nontariff measures 

did. Countries also were required to allow foreign producers to continue to sell at least as much of those products—often referred to as “tariffied” products—as they 

sold in the base period of 1986-1988. That requirement 

was generally implemented by the use of tariff-rate quotas 

(TRQs), in which tariffs on imports below specified 

quota amounts are kept very low (to allow import levels 

at least equal to what had been allowed before the “tariffication”), and only imports above those quota amounts 

are subject to the higher tariff rates required for equivalency with the previous nontariff measures. If the market 

access before the agreement was less than 5 percent of domestic consumption, it had to be raised to 5 percent by 

2000 in developed countries and by 2004 in developing 

countries. The details of the tariff-rate quotas (the underand over-quota tariff rates and the quota levels) for each 

product were specified in schedules in the agreement for 

each member.

For products that previously were protected only by tariffs, the agreement required the “binding” of those tariffs—that is, the setting of a rate (called a bound rate or 

tariff binding) above which that tariff could not be raised. 

Each country has a schedule that lists the tariff bindings 

for all of its agricultural products (the same schedule as 

the one containing the specifics of the tariff-rate quotas, 

the rates for which are bound and treated equivalently to 

the other tariff bindings for the purpose of the next paragraph). For many developing countries, the bound rates 

were set higher than the rates those countries had applied 

prior to the agreement and are sometimes called ceiling 

rates.

Under the agreement, developed-country members were 

required to reduce their tariffs by 36 percent on average 

over a six-year period beginning in 1995, with a minimum cut of 15 percent for any given product. Developing-country members were required to reduce tariffs by 

24 percent on average over 10 years, with a minimum cut 

of 10 percent. The least-developed countries were not required to undertake reduction commitments.

A country has the right to invoke a special safeguard provision for tariffied products provided that a reservation to 

that effect appears in the country’s schedule next to the 

product in question. The special safeguard provision allows an additional tariff to be imposed when specified 

criteria relating to a bulge in imports or a fall in the import price are met.

Domestic Support

The agreement divides domestic support measures into 

five categories, or boxes: the green box, the blue box, the 

special and differential box, de minimis support, and the 

amber box.

The Green Box. The green box is for measures that were 

deemed to have little or no distorting effects on trade or 

production. A five-page annex to the agreement describes 

in detail the kinds of subsidies and other measures that 

can be included in this box. They include such measures 

as agricultural and environmental research programs, extension and advisory services, infrastructure services (such 

as roads, port facilities, and water supply facilities), marketing and promotion services, public stockholding for 

food security purposes, domestic food aid, income support that is decoupled from production, payments for financial relief from natural disasters, various kinds of 

structural adjustment, payments for environmental and 

conservation programs, and regional assistance programs 

for disadvantaged regions.

The Blue Box. Direct payments under productionlimiting programs fall into the blue box if they are based 

on fixed areas and yields, on a fixed number of livestock, 

or on 85 percent or less of the base level of production. 

Those payments are distinguished from the fully decoupled payments that fall into the green box by the fact that 

they (the blue-box payments) are conditioned on there 

being production (which the green-box decoupled pay2. The discussion here of the Uruguay Round Agreement on Agriculture is based on similar discussions contained on the World 

Trade Organization’s Web site and on the agreement itself.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 3

ments are not) but do not directly relate to the current 

quantity of production.

The Special and Differential Box. The special and differential box is for “measures of assistance, whether direct or 

indirect, to encourage agricultural and rural development 

[that] are an integral part of the development programmes of developing countries, investment subsidies 

which are generally available to agriculture in developing 

country Members, and agricultural input subsidies generally available to low-income or resource-poor producers 

in developing country Members.”3

De Minimis Support. Two related kinds of measures are 

considered de minimis: (1) product-specific support not 

falling into the first three boxes and for which the total 

value of the support does not exceed 5 percent of the total value of production of the product in question for developed countries and 10 percent for developing countries; and (2) non-product-specific support not falling 

into the first three boxes and for which the total value of 

the support does not exceed 5 percent of the value of total 

production of all agricultural products for developed 

countries and 10 percent for developing countries.

The Amber Box. All measures that do not fall into the first 

three boxes and are not de minimis fall into the amber 

box by definition. Unlike green- and blue-box measures, 

amber-box measures more than minimally distort trade. 

Unlike de minimis support, they are considered large 

enough for the distortion to be significant. Unlike measures in the special and differential box, they are not 

linked to Third World development, which the negotiators of the Agreement on Agriculture deemed to be a sufficient justification for subsidies.

The total value of a country’s amber-box measures is 

called its total aggregate measure of support, or total 

AMS. The agreement required each developed country to 

reduce its total AMS by 20 percent over six years from its 

value in the 1986-1988 base period; each developing 

country was required to reduce its total AMS by 13 percent over 10 years. The resulting limits on amber-box 

subsidies are called bound values or bindings, and they are 

listed for each country on its schedule (the same schedule 

that lists the country’s tariff bindings as outlined above).

Support measures in the first four categories are exempt 

from the limitations and reductions mandated for amberbox measures; they can be used without limit (other than 

the defining limit that de minimis support cannot total 

more than 5 percent of the value of production). Hence, 

they are often referred to as exempt measures. Amber-box 

measures are often referred to as nonexempt measures. 

Some countries have sought limits on green-box measures 

in the Doha Round, questioning whether they are as benign as they were originally deemed.

Beyond the Agreement on Agriculture, domestic agricultural subsidies and agricultural export subsidies (like subsidies in other industry sectors) are subject to the Agreement on Subsidies and Countervailing Measures 

(ASCM), which is another component of the overall 

Uruguay Round Agreement. The ASCM has its own set 

of categories for subsidies, with “red-light” subsidies being prohibited in almost all circumstances, “green-light” 

subsidies being allowed in almost all circumstances, and 

“yellow-light” subsidies being allowed or not allowed depending on their effects on trade. Further, in certain circumstances, it allows countries to impose countervailing 

duties on imports that have been subsidized by the country from which they came.

The Agreement on Agriculture contains a “peace” clause 

that for a time (nine years from the date the agreement 

took effect in 1995) made agricultural subsidies conforming to that agreement exempt from certain provisions of 

the ASCM, limited the applicability of other provisions, 

and admonished countries to exercise “due restraint” in 

initiating countervailing-duty investigations. The peace 

clause has expired, however, so agricultural subsidies are 

subject to all provisions of the ASCM. Hence, any agricultural subsidy must be in accordance with both the 

Agreement on Agriculture and the ASCM to avoid other 

countries’ successfully challenging it in the WTO or imposing countervailing duties. 

The ASCM will not be discussed further in this paper, 

but the reader should bear in mind that some of the subsidies discussed, although allowed by the Agreement on 

Agriculture, are prohibited by the ASCM in all circumstances (export subsidies and import-substitution subsidies), and others are prohibited in some circumstances. 

Many are subject to countervailing duties. Further, the 

reader should not confuse the categories of subsidies un3. Article 6, paragraph 2 of der the Agreement on Agriculture, which are used in this the Agreement on Agriculture.
4 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

paper, with the categories under the ASCM, which are 

not.

Export Subsidies

The agreement lists the export subsidies to which it applies. The list includes most of the subsidy practices that 

were prevalent in the agricultural sector at the time the 

agreement was negotiated. Although international food 

aid is not on the list, the agreement contains a separate 

provision designed to ensure that food aid is not used as 

an export subsidy. Countries were required to agree to reduction commitments for their export subsidies on a 

product-specific basis. In particular, developed countries 

were required to commit to reductions of the base-period 

volumes of their subsidized exports by 21 percent and of 

their budgetary outlays for the subsidies by 36 percent in 

equal annual steps over six years. Developing countries 

were required to reduce volumes by 14 percent and budgetary outlays by 24 percent over 10 years.

Each country’s commitments, also called bound values or 

bindings, are listed on its schedule. In general, no export 

subsidies are allowed for which there are no reduction 

commitments. A temporary exception was made for developing countries to grant certain subsidies related to 

marketing costs and internal transport during the implementation period, which was defined as a period extending nine years from the date the agreement took effect in 

1995. The implementation period is now over, so the 

only export subsidies allowed are those for which the 

countries granting them have made reduction commitments.

The agreement also calls for members to work toward the 

development of internationally agreed disciplines on export credits, export credit guarantees, and insurance programs.

Statistics on Market Access

The tariff structures of many countries are complicated, 

and difficulties arise in any attempt to collapse those 

complicated structures into simple statistics for comparison with other countries. Tariff averages are only rough 

indicators of countries’ protective policies, and different 

studies will often calculate slightly different average tariff 

rates for the same country (see Appendix A). Nevertheless, such statistics support a number of significant conclusions about the protection of agriculture around the 

world, including:

B Notwithstanding the reductions mandated by the 

Uruguay Round Agreement on Agriculture, tariffs on 

agricultural goods remain substantially higher than 

those on manufactured goods almost everywhere 

around the world.

B Bound tariffs are substantially higher than actual applied tariffs in most countries—especially in developing countries—so the Doha Round tariff-reduction 

negotiations, which are based on bound tariffs, will 

have to achieve substantial reductions to have even a 

small effect on actual applied tariffs.

B Extreme tariffs—tariffs of over 100 percent—and 

tariff-rate quotas (which generally have very high tariffs on imports above quota) protect a substantial portion of agricultural production from international 

competition.

B U.S. agricultural tariffs are lower than those of almost 

all other countries. The highest tariffs in 2001, measured by the trade-weighted average, were those of a 

number of populous Asian countries—Korea, Taiwan, 

India, China, Vietnam, Thailand, and Japan—each 

with an average of nearly 30 percent or higher. 

(China’s average has probably declined since 2001, 

however, as a result of tariff reductions it was required 

to make in conjunction with joining the World Trade 

Organization in December 2001.) Industrialized Europe (the European Union [25] plus the European 

Free Trade Association, or EFTA) averaged 13.9 percent, with tariff-binding averages suggesting that 

members of the European Free Trade Association had 

much higher tariffs than did the European Union 

(EU).4

 U.S. neighbors Mexico and Canada averaged 

11.6 percent and 9.0 percent, respectively. The U.S. 

average was only 2.4 percent. Most developing countries had higher average rates than did most industrialized countries.

Agriculture Is Substantially More Protected Than 

Manufacturing

Average tariffs on agricultural goods remain higher than 

those on manufactured goods. That is true whether one 

looks at simple averages (see Table 1) or trade-weighted 

averages (see Table 2). It is true for the world as a whole 

4. The European Free Trade Association comprises Iceland, Norway, 

and Switzerland-Liechtenstein.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 5

Table 1.

Simple Average Tariff Rates for Agriculture and Manufacturing

(Percent)

Source: World Bank, Global Economic Prospects: Realizing the Development Promise of the Doha Agenda, 2004 (Washington, D.C.: World 

Bank, 2003), Table 3.8, which used data from the World Trade Organization’s Integrated Database.

Note: Averages are based on most-favored-nation applied ad valorem duties from the World Trade Organization’s Integrated Database. In 

the case of tariff-rate quotas, the out-of-quota duty is used. Specific duties are not fully reflected in the averages. Available ad valorem 

equivalents of specific duties tend to be much higher than ad valorem rates. The right-most column gives a measure of the likely 

downward bias for the agricultural average resulting from tariff omissions for each country or group of countries. The bias is likely to 

be most severe for Canada, Japan, and the European Union.

a. A tariff line is a line in a country’s tariff schedule that assigns a tariff to a particular product or group of products. Averages do not include 

specific tariffs; therefore, not all tariff lines are covered.

b. The name used by the source to describe the four major industrialized-country markets.

c. Brazil (2001), China (2001), India (2000), Korea (2001), Mexico (2001), Russian Federation (2001), South Africa (2001), and Turkey 

(2001). China joined the World Trade Organization in December 2001, and its accession agreement required significant reductions in tariffs. Therefore, if the tariff averages for this group of countries were calculated using more recent data, they would be somewhat lower.

d. Bulgaria (2001), Costa Rica (2001), Hungary (2001), Jordan (2000), Malaysia (2001), Morocco (1997), Philippines (2001), and Romania 

(1999).

e. Bangladesh (1999), Guatemala (1999), Indonesia (1999), Kenya (2001), Malawi (2000), Togo (2001), Uganda (2001), and Zimbabwe 

(2001).

(see Table 2); for low-, middle-, and high-income countries (see Tables 1 and 2); for all major regions of the 

world (see Table 3); and indeed for almost all individual 

and small groups of countries (see Table 2). The main exceptions are Australia and New Zealand (evaluated together as one), Argentina, Brazil, and Bangladesh, of 

which all except Bangladesh are significant agricultural 

exporters.

The differences between tariffs on agricultural goods and 

those on manufactured goods are substantial. For the 

world as a whole, the trade-weighted average agricultural 

tariff in 2001 was over three times the average for all merchandise trade (see Table 2). For high-income countries, 

the ratio was even higher at 5.5. Middle- and low-income 

countries had lower ratios at 1.9 and 1.4, respectively. 

The lower ratios for middle- and low-income countries 

do not stem from lower protection of agriculture, however, but from higher protection of other merchandise 

trade. The high ratio for high-income countries hides 

some diversity among those countries, with Australia and 

New Zealand together having a ratio of 0.5 and Korea 

and Taiwan together having a ratio of 7.2. The U.S. ratio 

was 1.3.

Two features of the methodology behind Table 1 create 

biases in opposite directions that vary in degree from 

country to country. One feature is that specific tariffs, 

which are particularly common in the protection of 

agriculture, are not fully reflected in the averages in the

Agriculture Manufacturing

Percentage of

Agricultural Tariff Linea

Covered by Average

Quad Countriesb 10.7 4.0 86.7

Canada (2001) 3.8 3.6 76.0

 European Union (1999) 19.0 4.2 85.9

Japan (2001) 10.3 3.7 85.5

United States (2001) 9.5 4.6 99.3

Large Middle-Income Countriesc 26.6 13.1 91.3

Other Middle-Income Countriesd 35.4 12.7 97.7

Lower-Income Countriese 16.6 13.2 99.8
6 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 2.

Trade-Weighted Average Applied Tariff Rates for the Agricultural and

Food Sectors and Total Merchandise Trade in 2001

(Percent)

Continued

Agricultural and 

Food Sectors

Total

Merchandise Trade Difference

Ratio of Average Agriculture 

and Food Tariff Rate

to Average Tariff Rate for

All Merchandise Trade

World Total 16.7 5.2 11.5 3.2

High-Income Countries 16.0 2.9 13.1 5.5

Australia and New Zealand 2.6 4.8 -2.2 0.5

European Union (25) and EFTAa 13.9 3.2 10.7 4.3

United States 2.4 1.8 0.6 1.3

Canada 9.0 1.4 7.6 6.4

Japan 29.4 5.2 24.2 5.7

Korea and Taiwan 55.0 7.6 47.4 7.2

Hong Kong and Singapore 0.1 0 0.1 n.a.

Developing Countries 17.7 9.9 7.8 1.8

Middle-Income 16.5 8.9 7.6 1.9

Argentina 7.1 10.0 -2.9 0.7

Brazil 5.0 9.5 -4.5 0.5

Chinab 37.6 13.6 24.0 2.8

Mexico 11.6 5.1 6.5 2.3

Russia 13.5 9.7 3.8 1.4

South Africa 8.8 6.6 2.2 1.3

Thailand 29.7 10.2 19.5 2.9

Turkey 16.7 2.5 14.2 6.7

Rest of East Asia 13.7 4.6 9.1 3.0

Rest of Latin America and Caribbean 11.0 9.1 1.9 1.2

Rest of Europe and Central Asia 16.0 5.0 11.0 3.2

Middle East and North Africa 14.1 9.8 4.3 1.4

Low-Income 22.2 15.9 6.3 1.4

Bangladesh 12.7 18.4 -5.7 0.7

India 50.3 28.1 22.2 1.8

Indonesia 5.0 4.8 0.2 1.0

Vietnam 37.1 16.7 20.4 2.2

Rest of South Asia 21.3 14.6 6.7 1.5

Selected Sub-Saharan African 

Countriesc 11.9 8.7 3.2 1.4

Rest of Sub-Saharan African 

Countries 21.4 16.2 5.2 1.3

Rest of the World 12.1 9.1 3.0 1.3
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 7

Table 2.

Continued

Source: Kym Anderson, Will Martin, and Dominique van der Mensbrugghe, “Market and Welfare Implications of Doha Reform Scenarios,” 

Chapter 12 in Kym Anderson and Will Martin, eds., Agricultural Trade Reform and the Doha Development Agenda (New York:

Palgrave Macmillan and the World Bank, forthcoming); Tables A12.3(a) and A12.3(d), pp. 63 and 66 of chapter draft downloaded 

from the World Bank’s Web site on June 30, 2005.

Note: n.a. = not applicable.

a. The European Free Trade Association (EFTA) comprises Iceland, Norway, and Switzerland-Liechtenstein.

b. China joined the World Trade Organization in December 2001, and its accession agreement required significant reductions in tariffs. 

Therefore, if its tariff averages were calculated using more recent data, they would be lower.

c. Botswana, Malawi, Mozambique, Tanzania, Zambia, Zimbabwe, Madagascar, and Uganda.

table.5 As noted in Appendix A, specific tariffs tend to 

have ad valorem equivalents that are higher than most ad 

valorem tariff rates. Consequently, omission of some or 

all of them is likely to bias the calculated averages downward, and the bias is likely to be larger for agricultural 

tariffs than for manufacturing tariffs. One would expect 

the bias to be particularly severe for Canada, with 24 percent of its agricultural tariff lines not included in its average, and for Japan and the European Union, with 14 percent of their respective agricultural tariff lines not 

included;6 and indeed, the differences for Canada and Japan in Table 1 are smaller than those in Table 2.7

The other feature is that the out-of-quota duty is used for 

tariff-rate quotas, which are also particularly common in 

the protection of agriculture. Because some imports receive the lower within-quota tariff rate, that procedure 

causes an upward bias in the averages for agriculture.

Tariff Bindings Are Substantially Higher Than 

Applied Tariffs

Tariff bindings from the Uruguay Round Agreement on 

Agriculture tend to be substantially higher than the tariffs 

that many countries currently impose (see Table 3). The 

difference is smallest for developed countries, for which 

the average applied rate is 19 percent (5 percentage 

Agricultural and 

Food Sectors

Total Merchandise 

Trade Difference

Ratio of Average Agriculture 

and Food Tariff Rate

to Average Tariff Rate for

All Merchandise Trade

Memorandum:

East Asia and Pacific 26.3 10.5 15.8 2.5

South Asia 33.9 23.5 10.4 1.4

Europe and Central Asia 14.8 6.0 8.8 2.5

Middle East and North Africa 14.1 9.8 4.3 1.4

Sub-Saharan Africa 18.2 12.6 5.6 1.4

Latin America 10.3 7.7 2.6 1.3

5. Specific means that the tariff is defined in terms of a specific 

amount of money for a given quantity of the import, such as 50 

cents per bushel of wheat. Ad valorem means that the tariff is 

defined in terms of a specified percentage of the value of the 

import.

6. A tariff line is a line in a country’s tariff schedule that assigns a particular tariff to a particular product or group of products.

7. The difference for the European Union is not smaller in Table 1 

than in Table 2. The comparison is not exact because the averages 

in Table 1are for the European Union (15) whereas those in 

Table 2 are for the European Union (25) plus the European Free 

Trade Association taken together. One might expect the inclusion 

of the EFTA in Table 2 to accentuate the difference, since the 

EFTA countries generally provide greater protection to their agriculture than does the European Union. However, unlike Table 1, 

Table 2 includes free-trade areas and tariff preferences to developing countries in its averages on a trade-weighted basis. That inclusion may explain the lower averages and smaller difference for 

Europe in that table.
8 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 3.

Simple Average Bound and Applied Tariffs for Agricultural

and Manufactured Products

(Percent)

Source: Benjamin Buetre and others, Agricultural Trade Liberalization: Effects on Developing Countries’ Output, Incomes, and Trade, ABARE 

Conference Paper 04.6 and paper presented to 7th Annual Conference on Global Economic Analysis, Trade, Poverty, and the Environment (Washington, D.C., June 17-19, 2004), Tables 1-3, available at www.abareconomics.com.

Note: Bound tariff averages are based on final values of the most recent commitments made by each country. Applied tariffs in the database 

at the time of the study were for various years depending on the country, with tariffs for the largest number of countries coming from 

2002, those for the second largest number from 2001, and those for the third largest number from 2000. Ad valorem equivalents of 

specific tariffs are not included in the averages. Numbers are based on data from the World Trade Organization’s Integrated Database.

a. Australian Bureau of Agricultural and Resource Economics’ estimates of average nominal rate of protection for Japan, the 15 countries of 

the European Union, and the United States.

points) lower than the average bound rate for agricultural 

and food products. The corresponding number for developing countries is 50 percent for Asia, 42 percent for Africa, 65 percent for the Middle East, 64 percent for Latin 

America, and 62 percent for the rest of the world. In past 

negotiating rounds, tariff negotiations in the manufacturing sector have typically used then-current tariff bindings 

as their starting point rather than actual applied tariff 

rates. Similarly, the framework agreement for the Doha 

Round calls for negotiations on agricultural tariff reductions to use current tariff bindings rather than current applied rates as their starting point. The substantial difference between tariff bindings and actual applied tariffs 

means that negotiated reductions will have to be fairly 

substantial to have much effect on actual applied tariffs 

and thereby on trade.

A sizable difference between applied and bound tariffs for 

a given country or group of countries does not necessarily 

mean that there is a sizable difference for all products of 

those countries. For some products, the difference is 

greater than the average and for some it is less. For developed countries, more than half of applied tariffs are equal 

to their bound values (excluding free-trade areas and tariff 

preferences for developing countries), and for the United 

States the proportion is substantially higher than half. 

Further, the averages in Table 3 are simple rather than 

trade-weighted averages, so it is unclear whether the particular products that cause the 5 percentage-point difference for developed countries are significant in terms of 

trade.

Which Countries Have the Highest Tariffs?

Measured by the trade-weighted averages, U.S. agricultural tariffs are lower than those of almost all other countries. The ranking of countries by that measure in 2001 

was topped by a number of populous Asian countries— 

Korea, Taiwan, India, China, Vietnam, Thailand, and Japan—each with an average tariff of nearly 30 percent or 

higher (see Figure 1). (China’s average is now probably 

lower than its average in 2001, however, because it was 

required to make tariff reductions as a condition of its

Developed 

Countriesa Asia Africa

Middle

East

Latin

America

Rest of

World

Agriculture and Food

Average Bound Tariffs 27 39 69 59 47 38

Average Applied Tariffs 22 20 40 20 17 14

Difference as a Percentage of Bound 19 50 42 65 64 62

Manufactured Products

Average Bound Tariffs 4 12 37 12 34 16

Average Applied Tariffs 4 8 20 6 13 6

Difference as a Percentage of Bound 10 32 47 54 62 62
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 9

Figure 1.

Countries Ranked by Trade-Weighted Average Applied Tariff Rates in the

Agriculture and Food Sector in 2001

(Percent)

Source: Kym Anderson, Will Martin, and Dominique van der Mensbrugghe, “Market and Welfare Implications of Doha Reform Scenarios,” 

Chapter 12 in Kym Anderson and Will Martin, eds., Agricultural Trade Reform and the Doha Development Agenda (New York: Palgrave Macmillan and the World Bank, forthcoming), Tables A12.3(a) and A12.3(d), pages 63 and 66 of chapter draft downloaded 

from the World Bank Web site on June 30, 2005.

Notes: Numbers are the same as those tabulated in Table 2. Numbers presented are trade-weighted averages based on tariff data from Global 

Trade Analysis Project (GTAP) Release 6.05. They include tariff preferences granted by some industrialized countries to some developing countries. They also include specific tariffs and quantification of some nontariff barriers (such as tariff-rate quotas).

China joined the World Trade Organization in December 2001, and its accession agreement required significant reductions in its agricultural tariffs. Therefore, if this figure was produced using more recent tariff data, it would probably show a lower tariff average for 

China.

a. The European Free Trade Association (EFTA) comprises Iceland, Norway, and Switzerland-Liechtenstein.

b. Botswana, Malawi, Mozambique, Tanzania, Zambia, Zimbabwe, Madagascar, and Uganda.

Hong Kong and Singapore

United States

Australia and New Zealand

Indonesia

Brazil

Argentina

South Africa

Canada

Rest of Latin America and Caribbean

Mexico

Selected Sub-Saharan African Countries 

Rest of the World

Bangladesh

Russia

Rest of East Asia

European Union 25 plus EFTA 

Middle East and North Africa

Rest of Europe and Central Asia

Turkey

Rest of South Asia

Rest of Sub-Saharan African Countries

Japan

Thailand

Vietnam

China

India

Korea and Taiwan

0 10 20 30 40 50 60

a

b
10 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

admission to the WTO in December 2001.)8 The industrialized countries of Europe—the 25 current members of 

the European Union plus the members of the European 

Free Trade Association—averaged 13.9 percent. U.S. 

neighbors Mexico and Canada stood at 11.6 percent and 

9.0 percent, respectively. The United States was near the 

bottom at 2.4 percent. In general, most developing countries had higher average rates than did most industrialized 

countries.

Averages of tariff bindings, which are available from another source for the European Free Trade Association and 

the European Union separately, suggest that the tariffs of 

the former are much more restrictive than those of the 

latter.9

 The simple average tariff bindings for Norway, 

Switzerland-Liechtenstein, and Iceland are in excess of 

100 percent, whereas the average for the European Union 

is 21.1 percent. The average for the United States is 11.9 

percent.

Extreme Tariffs and Tariff-Rate Quotas

Not revealed by the average tariff rates is the fact that 

many countries have extremely high tariffs on a number 

of products (see Table 4). The highest EU tariff is 506.3 

percent—more than 26 times the EU’s average rate of 

19.0 percent. The United States, with an average ad valorem rate of 9.5 percent, has tariffs as high as 350 percent. 

Canada, with an average ad valorem rate of only 3.8 percent, has tariffs up to 238 percent.10

Extreme tariffs are high enough and numerous enough to 

cause the simple average (mean) tariff to be noticeably 

higher than the median tariff in 11 of 13 regions of the 

world and significantly higher in nine of the regions (see 

Table 5). Extreme tariffs tend to shut off trade in the 

products in question, although many of those tariffs are 

the over-quota rates of TRQs so that some trade occurs 

within quota at lower in-quota rates.

A January 2001 survey of agricultural tariff protection 

found that U.S. agricultural exports face an abundance of 

such high tariffs (see Table 6 on page 14).11 Twenty-five 

countries maintain such tariffs on all agricultural commodities. Those 25 countries are mostly small developing 

countries, some of them quite poor. Two of them, however (Bangladesh and Nigeria), have large populations 

(140 million and 117 million, respectively, in 2001) and 

therefore would presumably have agricultural markets of 

considerable size. A number of other countries impose 

tariffs of over 100 percent on one or more of the top 30 

U.S. agricultural export products, including Canada, the 

EU, Switzerland, Iceland, Norway, Korea, Japan, Israel, 

and Romania. Consequently, each of those exports faced 

such tariffs in anywhere from 25 to 37 countries. The top 

three U.S. agricultural exports are corn, soybeans, and 

wheat.12 Corn and soybeans face tariffs above 100 percent from Korea, Romania, and the countries of the 

EFTA; wheat faces them from Japan, Israel, Romania, 

and the countries of the EFTA. The EU imposes such 

tariffs on boneless frozen beef, residual manufactured 

starch, milled rice, and mixed feeds.

8. With regard to the change in the average Chinese agricultural 

tariff, one source states: “Depending on how preaccession 

agricultural-sector tariffs are weighted, the movement is either 

from 21 to 17 percent, or from 17 to 14 percent.” See Dan Rosen, 

Scott Rozelle, and Jikun Huang, “Roots of Competitiveness: 

China’s Evolving Agriculture Interests,” Policy Analyses in International Economics 72 (Washington, D.C.: Institute for International Economics, July 2004), p. 41, footnote 1. All of those 

numbers are lower than that presented in Table 2 and Figure 1. As 

explained in Appendix A, different analysts make different 

assumptions, which can result in the calculation of slightly—and 

occasionally more than slightly—different averages for the same 

country. Without more information on the assumptions used in 

the studies that produced the numbers presented here, it is not 

possible to determine why they differ.

9. Mary E. Burfisher, ed., Agricultural Reform in the WTO—The 

Road Ahead, Market Trade Economics Division, Economic 

Research Service, U.S. Department of Agriculture, Agricultural 

Economic Report No. 802 (May 2001), Appendix table 1-1, p. 

101.

10. The average tariff rate for Canada in Table 4 is smaller than that 

in Table 2 at least in part because the rates in Table 4 do not 

include all specific tariffs and specific components of tariffs. Specific tariffs tend to have ad valorem equivalents that are higher 

than typical ad valorem tariffs.

11. Paul Gibson and others, Profiles of Tariffs in Global Agricultural 

Markets, Market and Trade Economics Division, Economic 

Research Service, U.S. Department of Agriculture, Agricultural 

Economic Report No. 796 (January 2001), p. 33.

12. In 1999—the date of the trade data used by the source of 

Table 6—the three largest exports were corn, soybeans, and wheat, 

in that order. In every year since, the same exports were the three 

largest, but the order was soybeans, corn, and wheat.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 11

Table 4.

Average and Peak Applied Ad Valorem Agricultural Tariffs

Source: World Bank, Global Economic Prospects: Realizing the Development Promise of the Doha Agenda, 2004 (Washington, D.C.: World 

Bank, 2003), Table 3.9, which used data from the World Trade Organization’s Integrated Database. Tariff numbers for most countries are for 2001 or earlier.

Note: Statistics are based on most-favored-nation applied ad valorem duties. In the case of tariff-rate quotas, out-of-quota duty rates are 

used. Specific duties are not fully reflected in the averages. Available ad valorem equivalents of specific duties tend to be much higher 

than the rates of ad valorem tariffs. The resulting downward bias in the average for agricultural duties is particularly severe for Canada 

and Japan, which use non-ad valorem rates for 25 percent and 15 percent of their tariff lines, respectively. The right-most column 

above gives a measure of the likely downward bias for the agricultural average for each country or group of countries.

a. A tariff line is a line in a country’s tariff schedule that assigns a tariff to a particular product or group of products. Lines not covered are 

those for which the duty is specific rather than ad valorem.

The same January 2001 survey found that tariff-rate quotas covered only 6 percent of the agricultural tariff lines 

and were used by only 35 of the 113 countries included 

in the survey.13 Nevertheless, the effect of TRQs is substantial. Among the 35 countries that use TRQs, 23 percent of tariff lines are covered, on average, and those 

countries include the largest agricultural importers in the 

WTO (see Table 7 on page 16). The ranking of countries 

with the highest percentage of lines covered is similar to 

that of the countries with the highest tariffs. Highest is 

Poland (which ranked high by average tariff), with 85 

percent of tariff lines covered. Poland is followed by two 

members of the European Free Trade Association—

Iceland and Norway—with 57 and 55 percent of their 

tariff lines covered, respectively. Another EFTA member, 

Switzerland, also ranks high with 42 percent of lines covered. The European Union ranks 12th, with 28 percent 

of lines covered—slightly higher than the United States, 

which ranks 14th with 24 percent covered. Canada is just 

below the United States at 22 percent. Mexico ranks a 

good bit lower at 13 percent. Australia, Brazil, and New 

Zealand are at or near the bottom.

TRQs also protect a substantial portion of agricultural 

production in a number of countries (see Table 8 on 

page 18). Fifty percent of Eastern European production is 

protected, as is 39 percent of EU production and 26 percent of U.S. production. On average, 28 percent of production in countries of the Organization for Economic 

Cooperation and Development (OECD) is protected.

The over-quota tariff rates of TRQs are substantial (see 

Table 9 on page 19). The average for all 113 countries in 

the January 2001 survey is 128 percent. (The numbers 

presented here are bound rates, based on final implementation of the Uruguay Round Agreement on Agriculture—not actual applied rates.) Japan has the highest average over-quota rate at 422 percent. The countries of the 

Average Tariff (Percent)

Maximum Tariff

(Percent) Percentage of Lines Covereda

Canada 3.8 238.0 76.0

European Union 19.0 506.3 85.9

Japan 10.3 50.0 85.5

United States 9.5 350.0 99.3

Korea 42.2 917.0 98.0

Brazil 12.4 55.0 100.0

Costa Rica 13.2 154.0 100.0

Indonesia 8.5 170.0 100.0

Malawi 15.3 25.0 100.0

Morocco 63.9 376.5 100.0

Togo 14.7 20.0 99.9

Uganda 12.9 15.0 100.0

13. Gibson and others, Profiles of Tariffs in Global Agricultural Markets, p. 16.
12 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 5.

Mean and Median Bound Tariffs, 

by Region

(Percent)

Source: Paul Gibson and others, Profiles of Tariffs in Global Agricultural Markets, Market and Trade Economics Division, 

Economic Research Service, U.S. Department of Agriculture, Agricultural Economic Report No. 796 (January 

2001), Table 2.

Note: Means and medians are for most-favored-nation bound 

tariff rates based on final implementation of the Uruguay 

Round Agreement on Agriculture.

European Free Trade Association—SwitzerlandLiechtenstein, Norway, and Iceland—rank fourth 

through sixth, with rates of 210, 203, and 181, respectively. The European Union is 19th at 78 percent. The 

United States is 27th at 52 percent. Australia and New 

Zealand are 34th and 35th at 25 percent and 7 percent, 

respectively.

The high over-quota rates are not applied in all TRQs for 

two reasons. First, according to a May 2001 study, 47 

percent of TRQs notified to the WTO at the time of the 

study were not enforced. Instead, all imports under them 

were allowed to come in at the lower in-quota rate.14 Second, many of the quotas of TRQs are not completely 

filled, meaning that the point at which the higher overquota rate replaces the lower in-quota rate is not reached. 

The same study said that about 25 percent of TRQs consistently had imports that exceeded quota levels, that imports were at least 80 percent of the quota level for about 

one-half of TRQs, and that imports were less than 20 

percent of the quota level for about one-quarter of 

TRQs.15 Those percentages undoubtedly change over 

time with conditions in the market, but the fact remains 

that in any given year, the over-quota rate is not applied 

for many TRQs.

When TRQs that remain unenforced are subtracted from 

the totals, the picture regarding which countries most severely restrict trade through TRQs changes (see Table 10 

on page 20). Norway and Iceland rank first and third in 

terms of the number of TRQs notified to the WTO, with 

232 and 90, respectively. However, they enforce only 19 

and 12 of those TRQs, respectively, which drops both of 

them below 10th in the ranking by number of TRQs enforced. The European Union and the United States enforce all of their TRQs, however, so their rankings rise—

from fourth and 10th to first and fourth, respectively, 

with 87 and 54 TRQs notified and enforced.

Although those changes in rankings do say something 

about the relative restrictiveness of various countries’ 

trade policies, it must be noted that even a TRQ without 

its over-quota rate applied—because that rate is not enforced or because imports do not exceed the quota—still 

may be quite restrictive. The average in-quota rate is 63 

percent—14 percentage points higher than the 49 percent average tariff rate for all agricultural lines (see Table 

11 on page 21). Members of the European Free Trade Association rank high in terms of average in-quota rates, 

with Norway having the highest rate at 262 percent and 

Switzerland and Iceland ranking seventh and ninth at 75 

percent and 49 percent. Compared with its rankings by 

other measures, Japan ranks a low 24th at 22 percent; 

similarly, the European Union ranks a comparatively low 

29th at 17 percent. The United States and Australia rank 

a still-lower 31st and 32nd at 10 percent each. At the botMean Median

South Asia 113 100

Non-European Union Western Europe 104 45

Caribbean Islands 86 100

Sub-Saharan Africa 75 80

North Africa 71 34

Central America 54 45

Eastern Europe 49 20

Middle East 48 35

Southern Africa 39 37

South America 39 35

Asia-Pacific 34 25

European Union 30 13

North America 25 6

14. Mary E. Burfisher, “Overview,” in Mary E. Burfisher, ed., Agricultural Policy Reform in the WTO—The Road Ahead, Market and 

Trade Economics Division, Economic Research Service, U.S. 

Department of Agriculture, Agricultural Economic Report No. 

802 (May 2001), p. 12. TRQs change over time just as tariffs do. 

This publication of the Economic Research Service lists 37 countries as having notified TRQs to the WTO rather than the 35 in 

the January 2001 publication referenced earlier. However, this 

publication does not have tables analogous to those from the earlier publication that are used above, so the tables from the earlier 

publication were used. The difference of two in the number of 

countries having notified TRQs to the WTO should not affect 

any of the conclusions drawn. 

15. Burfisher, “Overview,” p. 13.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 13

tom are Canada and New Zealand at 3 percent and zero,

respectively.

Statistics on Domestic Support

Subsidies by different countries can be compared in two 

key ways. One is to compare their absolute value when 

converted to some common currency, such as the dollar. 

Another is to compare the subsidy rates of each country—that is, the subsidy as a percentage of the value of 

agricultural output. The absolute, or dollar, value is

better for measuring the total distortion of the market by 

a country’s subsidies (leaving aside the fact that some 

kinds of subsidies are more distorting dollar-for-dollar 

than others). Subsidy rates are better for measuring the 

competitive advantage a country attempts to confer on its 

farmers and exporters through subsidies. Thus, both 

measures are useful, and both are therefore presented in 

the following discussion.

The subsidy numbers analyzed in this section are based 

on reports to the World Trade Organization by the various member countries as required by the Agreement on 

Agriculture. Both the values of the subsidies and their 

placement into the various boxes—green, blue, de minimis, special and differential, or amber—are (aside from 

conversion from foreign currency units to dollars) presented as reported by the countries, and thus their accuracy depends on the effort, judgment, and care taken by 

the countries in making their reports. Moreover, many 

countries are delinquent in their reporting, so the most 

recent numbers for many are several years old. Bearing 

those caveats in mind, one can draw a number of conclusions:

B Domestic subsidies for agriculture are substantial and 

pervasive around the world, with such subsidies of all 

kinds totaling more than $200 billion per year—

roughly one-sixth of the total agricultural value added 

in the world—and 64 out of 76 countries reporting to 

the WTO that they granted subsidies of some kind in 

at least one of the years from 1998 through 2004.

B A few countries dominate the total dollar value of subsidies granted. The European Union and the United 

States each grant about one-third of the world’s total—with the European Union providing a little more 

than the United States—and Japan provides a little 

less than 15 percent. Hong Kong and Singapore provide no such subsidies, and Australia grants less than 

one-half of 1 percent of the world’s total.

B The countries with the highest rates of total subsidy—

that is, total subsidies as a percentage of agricultural 

output—are almost entirely high-income countries. 

Members of the European Free Trade Association (Iceland, Norway, and Switzerland-Liechtenstein) top the 

list, followed by Japan, the United States, and the European Union at substantially lower but still sizable 

rates. Australia and New Zealand have very low rates 

of total subsidy.

B About one-half of all domestic subsidies fall into the 

green box, 10 percent fall into the blue box, 5 percent 

are de minimis, and one-half of 1 percent fall into the 

special and differential box. That leaves one-third that 

are the distorting subsidies that fall into the amber box 

and are limited by the Agreement on Agriculture.

B Although the United States and the European Union 

provide comparable amounts of total subsidy, much 

more of the U.S. total falls into the green box and 

much less—roughly one-third as much—falls into the 

amber box.

B The European Union provides more than half of the 

world’s amber-box subsidies, the United States about 

one-fifth, Japan about 8 percent, and all other countries substantially less.

B The countries with the highest amber-box subsidy 

rates are the members of the European Free Trade Association. Next is the European Union, with a substantially lower but still high rate. The United States is 

much farther down the list with a rate that is substantially lower than that of the European Union. Mexico 

and Canada have still-lower rates, and Australia’s rate 

is very low.

B As was the case with tariffs, amber-box bounds are 

substantially higher than actual amber-box subsidies 

for most countries, so substantial reductions in those 

bounds will have to be negotiated in the Doha Round 

to have much effect on actual subsidies.

B Half of all EU amber-box subsidies in 2001 went to 

beef, white sugar, and butter. No product or small 

group of products dominated in terms of amber-box 

subsidy rates. Ten products had rates higher than 50 

percent, and 10 additional products had rates higher 

than 30 percent. Among the products with such high 

rates were tobacco, various fruits, beef, cotton, and 

rice.
14 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 6.

Tariffs of Over 100 Percent Faced by the Top 30 U.S. Agricultural Exports

Continued

U.S. Export 

(Ranked by Value)

Countries Imposing Tariffs of 

Over 100 Percent Specifically 

on the Product in Question

Number of

Countries

Imposing Such

Tariffs on All

Agricultural

Productsa

Total Number

of Countries

Imposing Such

Tariffs

Number of 

Such Tariffs 

Imposed

Corn Korea, Iceland, Romania, Norway, Switzerland 25 30 34

Soybeans Korea, Switzerland, Iceland, Norway 25 29 30

Wheat Japan, Israel, Switzerland, Norway, Iceland, 

Romania 25 31 35

Cigarettes Israel, Poland, Romania 25 28 28

Food Preparation, NESb Canada, Japan, Korea, Israel, Norway, Iceland 25 31 38

Beef, Boned, Fresh and 

Chilled

Switzerland, Poland, Israel, South Africa, 

Botswana, Iceland, Morocco, Namibia, Norway, 

Romania, Swaziland 25 36 38

Poultry Cuts, Frozen Barbados, Pakistan 25 26 26

Tobacco, Unprocessed Malaysia, Israel, Poland 25 28 29

Soymeal Iceland, Norway 25 27 27

Beef, Boneless, Frozen EU, Norway, Switzerland, Poland, Israel, Botswana, 

Iceland, Namibia, Romania, South Africa, 

Swaziland, Tunisia 25 37 54

Cotton None 25 25 25

Cattle Hides and Skins Romania 25 26 26

Dog and Cat Food Iceland 25 26 26

Residual Starch, 

Manufactured EU, Norway, Iceland 25 28 28

Sorghum Korea, Switzerland, Iceland 25 29 31

Rice, Milled EU, Norway, Iceland, Poland, Romania, Japan 25 31 47

Almonds, Fresh and Dry, 

Shelled Israel 25 26 26

Mixed Feeds, Etc. Canada, EU, Norway, Iceland 25 29 42

Peptones and Derivatives None 25 25 25
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 15

Table 6.

Continued

Source Paul Gibson and others, Profiles of Tariffs in Global Agricultural Markets, Market and Trade Economics Division, Economic Research 

Service, U.S. Department of Agriculture, Agricultural Economic Report No. 796 (January 2001), Table 9 and Appendix Table 3.

Notes: Tariffs counted are all tariffs—including over-quota tariffs of tariff-rate quotas—of over 100 percent based on bound most-favorednation tariffs as of final implementation of the Uruguay Round Agreement on Agriculture.

Products are categorized according to six-digit Harmonized System (HS) codes.

EU = European Union.

a. The following 25 countries impose tariffs over 100 percent on all agricultural commodities, not just the ones specifically listed: Barbados, 

Bangladesh, Lesotho, Nigeria, Zimbabwe, St. Vincent and Grenadines, Malawi, Zambia, Mauritius, Tanzania, Gambia, Antigua and Barbuda, Belize, Burkina Faso, Burundi, Dominica, Grenada, Guyana, Jamaica, Kenya, Kuwait, Mozambique, St. Kitts and Nevis, St. Lucia, and 

Trinidad and Tobago.

b. NES = not elsewhere specified.

U.S. Export

(Ranked by Value)

Countries Imposing Tariffs of

Over 100 Percent Specifically 

on the Product in Question

Number of

Countries

Imposing Such

Tariffs on All

Agricultural

Productsa

Total Number

of Countries

Imposing Such

Tariffs

Number of 

Such Tariffs 

Imposed

Wine Israel, Egypt, Romania 25 28 41

Beef, Sheep, Goat Fat Iceland, Norway, Romania, Switzerland 25 29 33

Bread, Pastry, Etc. Israel, Norway, Romania 25 28 37

Pork, Fresh and Chilled Japan, Barbados, Iceland, Norway, Romania, 

Tunisia 25 30 35

Potatoes, Frozen Israel, Norway, Romania 25 28 34

Apples, Fresh Israel, Norway, Romania, Switzerland 25 29 41

Manufactured Tobacco Turkey, Poland, Israel, Romania 25 29 32

Whiskies South Africa, Israel, Poland, Egypt, Romania, India, 

Botswana, Namibia, Swaziland 25 34 41

Soyoil Iceland, Norway, Pakistan, Romania, Switzerland, 

Thailand 25 31 33

Grapes, Fresh Israel, Romania, Switzerland 25 28 32

Forage Korea, Iceland, Norway 25 29 31
16 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 7.

Countries Ranked by Percentage of Agricultural Tariff Lines Covered by

Tariff-Rate Quotas

Continued

Which Countries Provide the Most Domestic

Subsidies?

Domestic subsidies for agriculture are substantial and 

pervasive around the world. WTO members report subsidies totaling more than $200 billion per year (see Table 

12 on page 22).16 Value added in the agricultural sector 

worldwide from 1999 through 2001 was roughly $1.2 

trillion per year, so the reported subsidies were a little 

more than one-sixth of agricultural value added.17 Out of 

76 countries that reported to the WTO on their domestic 

subsidy practices for at least one of the years from 1998 

through 2004, 64 reported providing subsidies of some 

kind—green box, blue box, special and differential box, 

de minimis, or amber box.

Tariff Lines

Without TRQs

(Number)

Tariff Lines with

In-Quota Tariffs

(Number)

Tariff Lines with

Over-Quota Tariffs

(Number)

TRQ Lines

as a Percentage

of Total

Poland 73 169 258 85

Iceland 717 524 417 57

Norway 722 368 502 55

Hungary 495 86 416 50

Botswana 296 72 178 46

South Africa 296 72 178 46

Switzerland 854 236 395 42

Colombia 234 75 67 38

Panama 181 57 56 38

Venezuela 216 62 63 37

Slovenia 160 33 33 29

European Union 1,593 333 284 28

Korea 1,134 195 173 25

United States 1,198 190 182 24

Canada 1,020 141 151 22

Japan 1,181 188 122 21

Slovak Republic 798 40 177 21

Morocco 1,205 30 279 20

Barbados 607 37 109 19

Costa Rica 669 73 86 19

Tunisia 286 14 43 17

16. Most countries report their subsidies in foreign-currency units. 

CBO converted the numbers to dollar values using the average 

exchange rates for the calendar years in question. The numbers 

reported by some countries are for year-long periods (such as fiscal 

years) that overlap with but are not identical to the calendar year. 

Furthermore, even for those countries that report for the calendar 

year, the subsidies might occur predominantly at a time of year (or 

the sale of the crop might occur at a time of year) when the 

exchange rate was slightly different from the average for the calendar year. Therefore, the dollar values should be viewed as approximate.

17. The agricultural-value-added number is based on selected indicators from the World Bank’s World Development Indicators database 

that were accessed from the World Bank’s Web site at http://

devdata.worldbank.org/data-query/. According to those indicators, such value added was 4.089 percent, 3.893 percent, and 

3.807 percent, respectively, of world GDP in 1999, 2000, and 

2001, and world GDP in those years was $30.7 trillion, $31.6 trillion, and $31.3 trillion.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 17

Table 7.

Continued

Source: Paul Gibson and others, Profiles of Tariffs in Global Agricultural Markets, Market and Trade Economics Division, Economic Research 

Service, U.S. Department of Agriculture, Agricultural Economic Report No. 796 (January 2001), Table 3.

Notes: A tariff line is a line in a country’s tariff schedule that assigns a tariff to a particular product or group of products.

Tariffs are bound most-favored-nation rates based on final implementation of the Uruguay Round Agreement on Agriculture.

TRQ = tariff-rate quota; n.a. = not applicable.

Although the practice of providing domestic subsidies is 

widespread, a few countries dominate in value terms. Because so many countries have not reported for a number 

of years, precise percentages on a current basis cannot be 

determined. However, the European Union and the 

United States each provide a little over one-third of the 

total provided by all countries—the EU slightly more 

than the United States—and Japan a little less than 15 

percent. Fourth-place Korea provides only about onequarter the amount provided by Japan—roughly 3 percent of the world’s total. Hong Kong and Singapore provide no subsidies at all, and Australia provides less than 

half of 1 percent. Although China joined the WTO in 

December 2001, it has not yet reported on its domestic 

subsidies for any year and therefore does not appear in 

Table 12.

Table 12 presents subsidy numbers over a range of 

years—in part to allow averaging of subsidies that fluctuate over time with economic conditions in the agricultural sector and in part to allow presentation of the most 

recent numbers available while at the same time allowing 

comparison of countries reporting recent numbers with 

countries whose reporting is more dated. However, the 

reader is warned against drawing conclusions from trends 

in the numbers for individual countries in this table or 

any of the succeeding tables in this paper that present 

dollar values of subsidies. Most countries provide and report their subsidies in currencies other than dollars, and 

the numbers are converted to dollars using exchange rates 

to provide the numbers in the tables so that the subsidies 

from different countries can be compared in a common 

unit of measure. Over time, exchange rates can fluctuate, 

creating spurious trends in the dollar values. FurtherTariff Lines

Without TRQs

(Number)

Tariff Lines with

In-Quota Tariffs

(Number)

Tariff Lines with

Over-Quota Tariffs

(Number)

TRQ Lines

as a Percentage

of Total

El Salvador 670 37 89 16

Guatemala 699 31 106 16

Czech Republic 1,728 46 246 14

Mexico 882 69 68 13

Thailand 683 35 54 12

Philippines 680 15 67 11

Malaysia 1,238 73 71 10

Israel 877 23 37 6

Nicaragua 671 17 29 6

Ecuador 887 18 22 4

Australia 785 11 9 2

Brazil 1,415 4 4 1

Indonesia 1,318 2 13 1

New Zealand 979 4 4 1

Average n.a. n.a. n.a. 23

Total 27,447 4,993 4,972 n.a.
18 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 8.

Agricultural Output Covered by

Tariff-Rate Quotas

Source: World Bank, Global Economic Prospects: Realizing the 

Development Promise of the Doha Agenda, 2004 (Washington, D.C.: World Bank, 2003), Figure 3.8, which is 

based on data from the Organization for Economic Cooperation and Development’s (OECD’s) Agriculture Market 

Access Database.

more, some subsidies may be provided as a set percentage 

of the output of a given product. If there is a good harvest, the output will be large and so will the value of that 

subsidy even if there is no change in the subsidy policy.

The subsidies of the European Union illustrate that caveat. According to Table 12, the dollar value of total EU 

domestic subsidies declined from $97.1 billion in 1998 

to $75.7 billion in 2001—a decline of 22.1 percent. 

However, the value of the euro declined against the dollar 

by 20.0 percent over the same period.18 Denominated in 

euros, EU total subsidies declined by only 2.5 percent, 

suggesting little change in EU policy. The value of EU 

production went up over that time, however, so total subsidies as a percentage of the value of output declined from 

40.6 percent in 1998 to 34.3 percent in 2001, perhaps in 

part because of reforms in subsidy policy that the EU enacted in 2000.

Which Countries Have the Highest Domestic

Subsidy Rates?

Part of the reason that the European Union and the 

United States dominate the subsidy totals is that their 

economies, and in particular their agricultural sectors, are 

very large. When one looks at subsidy rates—that is, total 

subsidies as a percentage of the value of agricultural output—the picture changes (see Figure 2). Topping the list 

of countries for which such rates could be calculated are 

the members of the European Free Trade Association—

Iceland, Norway, and Switzerland-Liechtenstein—with 

average reported rates since 1998 ranging from 140 percent down to 83 percent of their respective agricultural 

outputs.19,20 Japan, the United States, and the European 

Union each averaged 37 percent of agricultural output. 

U.S. neighbors Canada and Mexico were significantly 

lower, with averages of 12 percent and 11 percent, respectively.21 Australia and New Zealand averaged only 5 percent and just under 2 percent.

Breakdown of Subsidies by WTO Category

As noted above in the discussion of the Uruguay Round 

Agreement on Agriculture, not all subsidies are created 

equal when it comes to their distortion of output and 

trade, and the agreement makes allowance for that with 

its green box, blue box, amber box, and other support 

measures. Roughly half of all reported domestic subsidies 

around the world fall into the green box, which is reserved for subsidies deemed to have little, if any, distortionary effect on output or trade (see Table 13 on 

page 26). Another 10 percent fall into the blue-box category, which is reserved for certain support payments 

linked to production-limiting programs. Only the European Union, Japan, Norway, the Czech Republic, the Slovak Republic, Slovenia, and Estonia have made use of the 

blue box.

About 5 percent of all subsidies fall into the de minimis 

category. Those subsidies can, in principle, be distortionary, but their distortionary effect is limited by the fact 

that they are less than 5 percent of the value of the product being subsidized. Subsidies in the special and differential box also can be distortionary, but they constitute 

Percentage

OECD Average 28

European Union 39

United States 26

Japan 13

Eastern Europe 50

Australia and New Zealand 0

Other Industrialized Countries 49

Other Developing Countries 14

18. The euro declined in value from an average of $1.12002 in 1998 

to an average of $0.89562 in 2001.

19. Unfortunately, lack of data on agricultural output prevents the 

calculation of that percentage for many countries, but it can be 

calculated for enough countries—those representing roughly 95 

percent of the subsidies granted by all WTO members—to be reasonably informative. The most significant missing countries in 

terms of dollar value of their total subsidies are Brazil (7th largest), 

Cuba (10th), Thailand (11th), Venezuela (14th), Morocco 

(18th), the Philippines (19th), and Argentina (20th).

20. The average for Iceland must be qualified by the fact that rates are 

available only for 1998 and 1999. The only subsidy report for 

Switzerland-Liechtenstein is for 1998.

21. However, the only numbers for Canada are for 1998 and 1999, 

and the only number for Mexico is for 1998.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 19

Table 9.

Countries Ranked by Average Over-Quota Tariff Rates of Tariff-Rate Quotas

(Percent)

Source: Paul Gibson and others, Profiles of Tariffs in Global Agricultural Markets, Market and Trade Economics Division, Economic Research 

Service, U.S. Department of Agriculture, Agricultural Economic Report No. 796 (January 2001), Table 3.

Notes: Tariffs are bound most-favored-nation rates based on final implementation of the Uruguay Round Agreement on Agriculture.

TRQ = tariff-rate quota.

a. A tariff line is a line in a country’s tariff schedule that assigns a tariff to a particular product or group of products.

Average Tariff Over

All Linesa

Average In-Quota Tariff

for TRQ Lines

Average Over-Quota Tariff

for TRQ Lines

Japan 58 22 422

Korea 66 19 314

Malaysia 25 106 248

Switzerland 120 75 210

Norway 142 262 203

Iceland 113 49 181

Indonesia 48 65 179

Israel 75 79 151

Mexico 43 48 148

Canada 23 3 139

Colombia 87 132 137

Guatemala 49 32 118

Morocco 65 148 115

Barbados 102 141 114

Tunisia 110 26 109

Venezuela 52 37 101

Thailand 35 27 91

Panama 43 15 83

European Union 30 17 78

El Salvador 41 25 75

Nicaragua 61 44 71

Slovenia 51 17 71

Botswana 39 20 69

South Africa 39 20 69

Costa Rica 42 44 68

Poland 48 31 59

United States 12 10 52

Czech Republic 12 28 48

Ecuador 26 30 43

Brazil 37 7 42

Slovak Republic 13 30 42

Hungary 29 26 40

Philippines 34 40 36

Australia 4 10 25

New Zealand 7 0 7

Overall Average 49 63 128
20 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 10.

Countries Ranked by Numbers of Notified and Enforced Tariff-Rate Quotas

Source: David Skully, “Liberalizing Tariff-Rate Quotas,” Chapter 3 in Mary E. Burfisher, ed., Agricultural Reform in the WTO—The Road 

Ahead, Market Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, Agricultural Economic 

Report No. 802 (May 2001), Table 3-4.

Note: TRQ = tariff-rate quota.

only about one-half of 1 percent of all subsidies. Hence, 

for the world market as a whole, they are not very significant in comparison with the other categories (although 

they may indeed be significant to some of the countries 

that make use of them). Excluding all of the preceding 

categories leaves roughly one-third of all subsidies worldwide falling into the amber box, ranging from $78 billion 

to $80 billion in 1998 and 1999 down to a little less than 

$65 billion in 2001 when rough corrections are made for 

significant nonreporting countries. Those are the subsidies that most distort trade and that therefore were limited and reduced by the Agreement on Agriculture.

Individual countries vary substantially from the proportions for the world as a whole, with significant implications for the relative distortion caused by the countries’ 

policies and for the treatment of their policies by the 

Agreement on Agriculture. Of particular note are the different proportions of the European Union and the 

United States. As noted above, the European Union and 

TRQs

Notified

TRQs

Enforced

TRQs Applied

as Tariff

Countries Ranked by Number of Notified TRQs

Norway 232 19 213

Poland 109 35 74

Iceland 90 12 78

European Union 87 87 0

Bulgaria 73 45 28

Hungary 70 68 2

Colombia 67 34 33

South Korea 64 63 1

Venezuela 61 2 59

United States 54 54 0

All Others 461 307 154

Total 1,368 726 642

Countries Ranked by Number of Enforced TRQs

European Union 87 87 0

Hungary 70 68 2

South Korea 64 63 1

United States 54 54 0

Bulgaria 73 45 28

Poland 109 35 74

Colombia 67 34 33

South Africa 53 25 28

Czech Republic 24 24 0

Slovakia 24 24 0

All Others 743 267 476

Total 1,368 726 642
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 21

Table 11.

Countries Ranked by Average In-Quota Tariff Rates of Tariff-Rate Quotas

(Percent)

Source: Paul Gibson and others, Profiles of Tariffs in Global Agricultural Markets, Market and Trade Economics Division, Economic Research 

Service, U.S. Department of Agriculture, Agricultural Economic Report No. 796 (January 2001), Table 3.

Notes: Tariffs are bound most-favored-nation rates based on final implementation of the Uruguay Round Agreement on Agriculture.

TRQ = tariff-rate quota.

Average Tariff

Over All Lines

Average In-Quota Tariff

for TRQ Lines

Average Over-Quota Tariff 

for TRQ lines

Norway 142 262 203

Morocco 65 148 115

Barbados 102 141 114

Colombia 87 132 137

Malaysia 25 106 248

Israel 75 79 151

Switzerland 120 75 210

Indonesia 48 65 179

Iceland 113 49 181

Mexico 43 48 148

Costa Rica 42 44 68

Nicaragua 61 44 71

Philippines 34 40 36

Venezuela 52 37 101

Guatemala 49 32 118

Poland 48 31 59

Slovak Republic 13 30 42

Ecuador 26 30 43

Czech Republic 12 28 48

Thailand 35 27 91

Hungary 29 26 40

Tunisia 110 26 109

El Salvador 41 25 75

Japan 58 22 422

Botswana 39 20 69

South Africa 39 20 69

Korea 66 19 314

Slovenia 51 17 71

European Union 30 17 78

Panama 43 15 83

United States 12 10 52

Australia 4 10 25

Brazil 37 7 42

Canada 23 3 139

New Zealand 7 0 7

Overall Average 49 63 128
22 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 12.

Total Domestic Support Reported by Countries to the World Trade Organization

(Millions of current U.S. dollars)

Continued

1998 1999 2000 2001 2002 2003 2004

Average Reported 

Value, 

1998–Present

European Union 97,143 93,791 81,574 75,708 87,054

United States 64,973 74,046 74,200 72,130 71,337

Japan 29,745 31,245 31,812 27,457 25,005 29,053

Korea 5,532 6,357 6,473 6,120

Switzerland-Liechtenstein 4,448 4,448

Mexico 3,221 3,221

Brazil 3,285 2,971 2,850 2,769 2,301 2,633 2,801

Norway 3,003 2,915 2,612 2,485 2,754

Canada 2,142 2,551 3,106 2,600

Cuba 1,621 1,225 1,454 1,514 1,873 2,344 1,672

Thailand 1,556 1,524 1,640 1,673 1,598

Australia 901 899 909 897 1,184 1,435 1,038

Poland 1,152 836 894 482 1,047 882

Venezuela 845 845

Hungary 686 595 467 753 907 682

Israel 792 637 712 693 538 674

South Africa 607 554 457 351 375 469

Morocco 446 430 418 427 391 423

Philippines 261 372 466 392 373

Argentina 370 378 348 366

Turkey 594 401 207 60 316

Romania 458 255 341 312 208 315

Czech Republic 228 283 303 375 329 303

Pakistan 291 251 271

Cyprus 195 234 191 223 240 306 231

Iceland 224 233 221 226

Slovak Republic 230 187 247 185 167 221 206

Slovenia 187 181 158 196 223 262 201

Malaysia 161 161

Colombia 206 126 104 236 192 81 158

Indonesia 131 205 105 147

Tunisia 161 161 121 115 139

Chile 115 131 163 147 138 139

New Zealand 118 133 108 88 112 144 117

Latvia 66 68 78 71

Bulgaria 62 85 65 56 67

Zambia 61 61
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 23

Table 12.

Continued

Continued

1998 1999 2000 2001 2002 2003 2004

Average Reported 

Value,

1998–Present

Jordan 64 54 33 50

Dominican Republic 15 23 40 130 44 35 48

Uruguay 53 43 51 58 32 29 44

Estonia 30 27 44 34

Barbados 32 31 33 31 32

Costa Rica 29 20 24

Paraguay 19 28 26 17 17 11 20

Malawi 27 8 17

Namibia 17 17 17

Trinidad and Tobago 11 16 14 17 18 17 15

Armenia 14 14

Guyana 16 12 14 12 11 11 13 13

Macedonia 13 13

Zimbabwe 13 11 12

Guatemala 8 13 13 12 11

Nicaragua 2 13 12 9 9 9

Jamaica 8 8 8

Honduras 0.4 1.9 0.6 3.3 4.2 13.8 4

Georgia 4 6 2 4 4

Egypt 4 4

Malta 4 4 3 4

Mongolia 4 3 3

Oman 1 3 4 3

Kyrgyz Republic 3 3

United Arab Emirates 0 0 3.0 3.4 1.6

Maldives 0.002 0.002

Burundi 0 >0 >0 >0 >0a

Bolivia 0 0 0 0

Ecuador 0 0 0 0

El Salvador 0 0 0 0 0 0

Gabon 0 0 0 0

Haiti 0 0

Hong Kong 0 0 0 0 0 0 0

Macau 0 0 0 0 0 0 0 0

Madagascar 0 0 0

Myanmar 0 0 0 0

Qatar 0 0

Singapore 0 0 0 0 0 0 0

Uganda 0 0
24 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 12.

Continued

Source: Congressional Budget Office based on foreign-currency-denominated subsidy data from “Table 2—Use of Bound Total AMS Commitments by Member, 1995-2004,” in World Trade Organization, Total Aggregate Measurement of Support: Note by the Secretariat,

TN/AG/S/13 (January 27, 2005); “Direct Payments under Production-limiting Programmes (Article 6.5 of the Agreement on Agriculture—“Blue Box”) by Member, 1995-2003,” in World Trade Organization, Blue Box Support: Note by the Secretariat, TN/AG/S/

14 (January 28, 2005); “Table 1—Value of Product-specific and Non-product-specific De Minimis Support by Member, 1995-2003,” 

in World Trade Organization, De Minimis Support: Note by the Secretariat, TN/AG/S/16 (February 1, 2005); and member-country 

reports to the World Trade Organization; and on exchange-rate data from International Monetary Fund, International Financial Statistics.

Notes: Numbers are based ultimately on subsidy data reported to the World Trade Organization (WTO) by the countries in question as of June 

30, 2005. A blank space indicates that the country has not reported its subsidies for the year in question.

The following countries have agreed to WTO domestic subsidy commitments but have never reported their subsidies or lack thereof to 

the WTO and therefore are not included in this table: China, Croatia, Lithuania, Moldova, Papua New Guinea, and Taiwan. The following 

countries reported their subsidies or lack thereof to the WTO for at least one of the years from 1995 through 1997 but not for any year 

since and therefore are not included in this table: Bahrain, Benin, Botswana, Fiji, Gambia, India, Kenya, Nigeria, Peru, and Sri Lanka.

Most countries report their subsidies in foreign currency units. CBO converted the numbers to dollar values using the average 

exchange rates for the calendar years in question. The numbers reported by some countries are for year-long periods (such as fiscal 

years) that overlap with but are not identical to the calendar year. Furthermore, even for those countries that report for the calendar 

year, the subsidies might occur predominantly at a time of year (or the sale of the crop might occur at a time of year) when the 

exchange rate was slightly different from the average for the calendar year. Therefore, the dollar values should be viewed as approximate.

a. Burundi reported that its only subsidies in 2000, 2002, and 2004 were those in the special and differential box and did not report their 

magnitude.

the United States provide comparable amounts of domestic subsidies (summing over all categories) in dollar-value 

terms—the European Union granting a slightly larger 

amount of subsidies but also having a slightly larger agricultural output, with the result that the EU subsidy rate is 

very close to that of the United States. However, roughly 

70 percent of U.S. subsidies fall into the green box and a 

little under 10 percent fall into the de minimis category, 

leaving only slightly more than 20 percent that are the 

amber-box subsidies that distort trade and are limited by 

the Agreement on Agriculture. At the same time, only 

about one-quarter of EU subsidies fall into the green box, 

and only a little more than one-half of 1 percent fall into 

the de minimis category. Consequently, even with 

roughly one-quarter of its subsidies falling into the blue 

box, one-half of EU subsidies still fall into the amber box. 

As a result, the European Union has three times the dollar 

value of amber-box subsidies that the United States has. 

(The numbers presented here are average reported values 

from 1998 through 2001—the last years for which either 

the European Union or the United States has reported its 

subsidies. The EU’s amber-box subsidies were a little less 

than three times those of the United States in 2000 and 

2001 and a little more in 1998 and 1999.)

The various U.S. and EU domestic support programs and 

the boxes they fall into are discussed in Box 1 on page 28.

Which Countries Provide the Most Amber-Box

Subsidies?

How, then, do countries rank in terms of the dollar value 

of their amber-box subsidies? The distribution of such 

subsidies is more highly skewed than is that for total subsidies, with each of the most highly subsidizing countries 

providing roughly three times the subsidies of the nexthighest-ranking country (see Table 14 on page 30). The 

European Union dominates with average annual reported 

subsidies since 1998 of $44.7 billion—almost 60 percent 

1998 1999 2000 2001 2002 2003 2004

Average Reported

Value, 

1998–2004

Total, All Reporting 

Countries 226,413 224,500 213,107 190,187 35,447 7,574 13 221,945
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 25

Figure 2.

Countries Ranked by Average Annual 

Rate of Total Reported Domestic

Support, 1998 to Present

(Percentage of agricultural output value)

Note: Numbers are based on subsidy data reported to the World 

Trade Organization by the countries in question as of June 

30, 2005. The most recent reports by most countries are 

for 2002 or earlier. Availability of output data further 

restricts the years and countries for which rates can be 

calculated. The average for Iceland is based only on rates 

for 1998 and 1999, and the “average” for SwitzerlandLiechtenstein is based only on the rate for 1998. See Table 

C-1 on page 50 for sources, additional notes, and moredetailed numbers, including subsidy rates for each year.

of the sum total of the averages for all reporting countries.22 The United States is a distant second with an average of $14.6 billion, or roughly 20 percent of the reported world total.23 Japan is a distant third at $6.1 

billion, or 8 percent. Fourth-place SwitzerlandLiechtenstein provided 3 percent of the reported world 

total, and Mexico, Korea, and Norway each provided 2 

percent. Every other country provided less than 1 percent.24

The dollar value of the EU’s amber-box subsidies declined more dramatically than was the case for its total 

domestic subsidies—from $52.3 billion in 1998 to $35.2 

billion in 2001, or by 32.7 percent. More than half of 

that decline was a figment of the decline of the euro relative to the dollar. The euro value of EU amber-box subsidies declined by 15.9 percent, probably as a result of the 

reforms that the EU enacted in 2000. As a share of the 

value of agricultural output, the subsidies fell from 21.9 

percent to 15.9 percent.

Which Countries Have the Highest Amber-Box

Subsidy Rates?

The ranking of the United States drops significantly 

when one looks at amber-box subsidy rates (see Figure 3 

on page 32). The members of the European Free Trade 

Association—Iceland, Norway, and SwitzerlandLiechtenstein—have the highest rates among the countries for which rates could be calculated, with average reported subsidies equal to 113 percent, 60 percent, and 42 

percent of the values of their respective agricultural outputs.25,26 By comparison, the fourth-place European 

22. When rough corrections are made for significant nonreporting 

countries in the later years, the percentage is higher in 1998 and 

1999 (67 percent and 61 percent, respectively) and lower in 2000 

and 2001 (roughly 55 percent in both years).

Turkey

Macedonia

New Zealand

Bulgaria

Uruguay

Romania

Chile

Tunisia

Australia

Poland

Jordan

South Africa

Estonia

Czech Republic

Mexico

Canada

Hungary

Slovak Republic

Israel

Korea

European Union

United States

Japan

Switzerland-Liechtenstein

Norway

Iceland

0 40 80 120 160

23. When rough corrections are made for significant nonreporting 

countries in the later years, the U.S. percentage is lower in 1998 

(13.3 percent) and higher in 2000 and 2001 (roughly 23 percent 

and 22 percent, respectively).

24. The numbers for Switzerland-Liechtenstein and Mexico must be 

qualified by the fact that the only year for which they have 

reported to date is 1998.

25. As was the case with total domestic subsidies, lack of agricultural 

output data prevents calculation of amber-box subsidies as a percentage of output for most countries. However, the percentages 

can be calculated for almost all of the most significant countries. 

Output numbers are available for 20 of the 29 countries reporting 

non-zero amber-box subsidies in at least one of the years from 

1998 through 2004, and output numbers are not necessary to 

deduce that the percentages are zero for the 47 countries that 

reported no amber-box subsidies. The nine missing countries 

are Thailand (10th-largest amber-box subsidies by dollar value), 

Venezuela (13th largest), Argentina (18th), Cyprus (20th), Slovenia (21st), Colombia (22nd), Morocco (24th), Brazil (26th), and 

Costa Rica (28th). 

26. Once again, the number for Switzerland-Liechtenstein must be 

qualified by the fact that the only subsidy report for the period is 

for 1998.
26 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 13.

Average Annual Domestic Support Reported by Countries to the World Trade 

Organization by Category, 1998 to Present

(Millions of current U.S. dollars)

Continued

Total

Domestic

Support Green Box Blue Box

Special and

Differential Box

De Minimis

Support Amber Box

European Union 87,054 20,355 21,466 0 511 44,722

United States 71,337 50,076 0 0 6,644 14,617

Japan 29,053 21,939 699 0 354 6,061

Korea 6,120 4,295 0 42 478 1,305

Switzerland-Liechtenstein 4,448 2,191 0 0 0 2,258

Mexico 3,221 1,645 0 145 0 1,430

Brazil 2,801 1,442 0 343 1,003 14

Norway 2,754 529 929 0 0 1,296

Canada 2,600 1,204 0 0 817 578

Cuba 1,672 1,653 0 18 0 0

Thailand 1,598 1,019 0 90 51 439

Australia 1,038 920 0 0 9 108

Poland 882 539 0 0 0 344

Venezuela 845 588 0 47 0 211

Hungary 682 152 0 0 70 460

Israel 674 303 0 0 71 300

South Africa 469 399 0 0 2 68

Morocco 423 260 0 143 0 19

Philippines 373 242 0 60 71 0

Argentina 366 285 0 0 0 81

Turkey 316 0 0 0 316 0

Romania 315 109 0 0 206 0

Czech Republic 303 179 8 0 0 116

Pakistan 271 251 0 0 20 0

Cyprus 231 163 0 10 7 52

Iceland 226 44 0 0 0 182

Slovak Republic 206 62 8 0 0 137

Slovenia 201 145 26 0 0 31

Colombia 158 85 0 45 0 27

Malaysia 161 126 0 35 0 0

Indonesia 147 147 0 0 0 0

Tunisia 139 57 0 51 11 20

Chile 139 101 0 4 34 0

New Zealand 117 117 0 0 0 0

Latvia 70.6 54.6 0 0 16.0 0

Bulgaria 66.9 36.6 0 0 14.9 15.4
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 27

Table 13.

Continued

Source: Congressional Budget Office based on sources listed in Table 12.

Notes: Numbers are based on subsidy data reported to the World Trade Organization by the countries in question as of June 30, 2005. The 

most recent reports by most countries are for 2002 or earlier. See Table 12 for additional notes.

Total

Domestic

Support Green Box Blue Box

Special and

Differential Box

De Minimis

Support Amber Box

Zambia 60.5 60.5 0 0 0 0

Jordan 50.4 22.7 0 3.4 24.0 0.4

Dominican Republic 47.7 47.7 0 0 0 0

Uruguay 44.2 32.6 0 4.1 7.6 0

Estonia 33.7 20.5 11.8 0 1.4 0

Barbados 31.7 28.2 0 3.5 0 0

Costa Rica 24.4 19.7 0 3.9 0 0.8

Paraguay 19.6 19.3 0 0.3 0 0

Malawi 17.5 0 0 17.5 0 0

Namibia 17.1 13.8 0 3.3 0 0

Trinidad and Tobago 15.5 15.5 0 0 0 0

Armenia 13.9 13.9 0 0 0 0

Guyana 12.7 12.7 0 0 0 0

Macedonia 12.6 5.4 0 0 1.9 5.3

Zimbabwe 11.6 11.6 0 0 0 0

Guatemala 11.3 11.3 0 0 0 0

Nicaragua 9.0 9.0 0 0 0 0

Jamaica 8.1 8.1 0 0 0 0

Honduras 4.0 3.0 0 1.0 0 0

Georgia 3.9 3.9 0 0 0 0

Egypt 3.7 1.3 0 2.4 0 0

Malta 3.6 3.6 0 0 0 0

Mongolia 3.4 3.4 0 0 0 0

Oman 2.7 2.7 0 0 0 0

Kyrgyz Republic 2.7 2.7 0 0 0 0

United Arab Emirates 1.6 0.4 0 1.2 0 0

Sum of Annual 

Averages for All 

Countries 221,945 112,087 23,147 1,074 10,739 74,898
28 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Box 1.

Domestic Support Programs in the United States and the

European Union

In the United States, producers of grains, cotton, 

oilseeds, peanuts, and several other, minor crops are 

eligible for support in the forms of fixed direct payments, countercyclical payments, and marketingloan-program benefits. Dairy, sugar, and tobacco 

prices also have been supported through production 

and import control programs. Legislation enacted in 

2004 terminated federal price-support and supplycontrol programs for tobacco.

In the European Union (EU), the Common Agricultural Policy (CAP) has traditionally supported “intervention” prices for agricultural commodities 

through purchase and storage programs, production 

controls, export subsidies, and high tariffs. More recently, direct payments tied to historical production 

have, to some extent, replaced intervention pricing 

and production controls.

U.S. Support Programs

The major U.S. domestic support programs for field 

crops (grains, oilseeds, cotton, and rice) are direct 

payments, countercyclical payments, and marketingloan benefits.

Direct Payments. Producers with a history of land 

planted with the major field crops and certain other 

crops are eligible for fixed direct payments, which do 

not vary with current production or prices. The payments are calculated by multiplying 85 percent of 

historical acreage planted with the crop on the farm 

times the historical yield on the farm times a fixed 

payment rate. Direct payments, because they are decoupled from current production and prices, have 

generally been considered green-box support—

a category of domestic support for agriculture that is 

exempt from reduction commitments under the 

Uruguay Round Agreement on Agriculture because 

negotiators deemed it to have little or no distorting 

effects on trade or production. (Direct payments are 

similar to production flexibility contract payments, 

which were classified as green-box support in 2001. 

However, a recent World Trade Organization ruling 

in a case brought by Brazil against U.S. cotton subsidies suggests that direct payments may not be fully 

compliant with green-box requirements because production of fruits and vegetables is not permitted on 

payment acres.)

Countercyclical Payments. Producers eligible for direct payments also may be eligible for countercyclical 

payments, which vary with current market prices but 

not with current production. Payments are calculated by multiplying historical production on the 

farm as calculated for fixed payments (although 

farmers were given the opportunity to update historical yields when they signed up for countercyclical 

payments) times the difference between the price 

guarantee for the crop set in statute and the market 

price (or the loan rate if the loan rate is higher than 

the market price). Although not yet officially classified, countercyclical payments will probably be classified as amber-box support—the category of domestic support that has the most distorting effects on 

trade and therefore is subject to reduction commitments under the Agreement on Agriculture—because they are not decoupled from current market 

prices. They replaced market-loss payments, which 

were classified as amber-box support in 2001.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 29

Box 1.

Continued

Marketing-Loan Benefits. Producers of the major 

field crops and certain other crops are eligible for 

marketing-loan benefits on harvested production 

when the market price is less than the statutory loan 

rate for the crop. Under the loan program, producers 

use their crops as collateral for the loan (the amount 

of the loan is calculated as the loan rate times the 

amount of crop placed under loan). The producer 

can forfeit the crop to the federal government if the 

market price is less than the loan rate at the end of 

the nine-month loan term. Alternatively, to limit forfeitures, the producer is allowed to repay the loan at 

the market price if the market price is less than the 

loan rate. The difference between the original loan 

rate and the lower repayment rate is the amount of 

the marketing-loan benefit. Producers who decide 

not to participate in the loan program are eligible for 

loan deficiency payments equal to the marketingloan gain. Because marketing-loan benefits are tied 

to current production and prices, they are classified 

as amber-box support.

EU Support Programs

The EU offers support to its agricultural sector 

through a domestic price-support program and several direct-payment programs.

Domestic Price Support. Under the CAP, the EU has 

supported agricultural prices by setting high tariffs 

on imports from outside the region and agreeing to 

purchase unlimited quantities of domestic production whenever the market price falls below the statutory intervention price (support price). The government subsidizes the cost of storing or exporting the 

surplus commodities. Spending for commodity purchases and storage associated with the intervention 

pricing programs has been classified as amber-box 

support. Reforms since 1992 have lowered intervention prices and to some extent have substituted direct payments for the benefits producers derived 

from price-support programs. 

Direct Payments. Direct payments to compensate 

producers for reductions in intervention prices began 

in 1994 and were increased in 2000 with further reductions in price supports. Compensatory payments 

are based on historical yields, although crop production is required for payment eligibility. A paid land 

set-aside program, under which producers were required to take some of their land out of production, 

was implemented in 1992 as a condition of eligibility for direct payments. The set-aside for grain producers has ranged from 5 percent to 10 percent in recent years. Most compensatory payments were 

replaced by Single Farm Payments when the CAP 

was reformed in 2003. Compensatory payments 

have been classified as blue-box support—payments 

based on fixed areas and yield, on a fixed number of 

livestock, or on 85 percent or less of the base level of 

production and which are exempt from reduction 

commitments under the Agreement on Agriculture. 

In contrast, the Single Farm Payments have generally 

been considered as green-box support (although the 

exclusion of certain crops from payment acreage suggests that those payments, like the direct payments 

in the United States, may not be fully compliant 

with green-box requirements).
30 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 14.

Amber-Box Support Reported by Countries to the World Trade Organization

(Millions of current U.S. dollars)

Continued

1998 1999 2000 2001 2002 2003 2004

Average

Reported

Value,

1998–Present

Final

Bound

Value

European Union 52,286 51,085 40,337 35,181 44,722 82,904

United States 10,392 16,862 16,803 14,413 14,617 19,103

Japan 5,855 6,565 6,574 5,486 5,822 6,061 36,587

Switzerland-Liechtenstein 2,258 2,258 3,399

Mexico 1,430 1,430 11,935

Korea 1,115 1,305 1,495 1,305 1,291

Norway 1,443 1,383 1,169 1,190 1,296 1,685

Canada 532 632 571 578 3,287

Hungary 456 271 362 554 656 460 165

Thailand 397 457 493 411 439 472

Poland 301 237 336 482 363 344 3,329

Israel 412 257 325 259 248 300 569

Venezuela 211 211 1,131

Iceland 184 185 177 182 192

Slovak Republic 219 170 171 156 45 59 137 312

Czech Republic 31 126 131 144 147 116 524

Australia 75 40 124 160 116 135 108 346

Argentina 81 80 80 81 26

South Africa 148 129 63 0 0 68 309

Cyprus 42 53 38 44 54 79 52 107

Slovenia 73 58 14 13 13 15 31 76

Colombia 10 7 5 37 80 26 27 345

Tunisia 54 25 0 0 20 49

Morocco 13 18 15 27 25 19 77

Bulgaria 15 10 13 23 15 642

Brazil 83 0 0 0 0 0 14 912

Macedonia 5 5 20

Costa Rica 0.1 1.6 0.8 15.9

Jordan 0.04 0 1.0 0.4 1.9

Armenia 0 0

Barbados 0 0 0 0 0

Bolivia 0 0 0 0

Burundi 0 0 0 0 0

Chile 0 0 0 0 0 0

Cuba 0 0 0 0 0 0 0

Dominican Republic 0 0 0 0 0 0 0

Ecuador 0 0 0 0

Egypt 0 0

El Salvador 0 0 0 0 0 0
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 31

Table 14.

Continued

Source: Congressional Budget Office based on sources listed in Table 12.

Notes: Numbers are based on subsidy data reported to the World Trade Organization by the countries in question as of June 30, 2005. See 

Table 12 for other notes.

1998 1999 2000 2001 2002 2003 2004

Average

Reported

Value,

1998–Present

Final

Bound

Value

Estonia 0 0 0 0

Gabon 0 0 0 0

Georgia 0 0 0 0 0

Guatemala 0 0 0 0 0

Guyana 0 0 0 0 0 0 0 0

Haiti 0 0

Honduras 0 0 0 0 0 0 0

Hong Kong 0 0 0 0 0 0 0

Indonesia 0 0 0 0

Jamaica 0 0 0

Kyrgyz Republic 0 0

Latvia 0 0 0 0

Macau 0 0 0 0 0 0 0 0

Madagascar 0 0 0

Malawi 0 0 0

Malaysia 0 0

Maldives 0 0

Malta 0 0 0 0

Mongolia 0 0 0

Myanmar 0 0 0 0

Namibia 0 0 0

New Zealand 0 0 0 0 0 0 0 190

Nicaragua 0 0 0 0 0 0

Oman 0 0 0 0

Pakistan 0 0 0

Paraguay 0 0 0 0 0 0 0

Philippines 0 0 0 0 0

Qatar 0 0

Romania 0 0 0 0 0 0

Singapore 0 0 0 0 0 0 0

Trinidad and Tobago 0 0 0 0 0 0 0

Turkey 0 0 0 0 0

Uganda 0 0

United Arab Emirates 0 0 0 0 0

Uruguay 0 0 0 0 0 0 0

Zambia 0 0

Zimbabwe 0 0 0

World Total 78,115 79,960 69,297 58,578 7,569 320 0 74,898
32 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Figure 3.

Countries Ranked by Average Annual 

Rate of Reported Amber-Box

Subsidies, 1998 to Present

(Percentage of agricultural output value)

Note: Numbers are based on subsidy data reported to the World 

Trade Organization by the countries in question as of June 

30, 2005. The most recent reports by most countries are 

for 2002 or earlier. Availability of output data further 

restricts the years and countries for which rates can be 

calculated. The average for Iceland is based only on rates 

for 1998 and 1999, and the “average” for SwitzerlandLiechtenstein is based only on the rate for 1998. See Table 

C-2 on page 52 for sources, additional notes, and moredetailed numbers, including subsidy rates for each year.

Union was low at an average rate of 19 percent and a stilllower rate of 15.9 percent in 2001, although those rates 

are sufficient to give a considerable competitive advantage 

over imports (or to offset a considerable competitive disadvantage). The United States was much lower still at 

7.7 percent. Mexico and Canada averaged 5.1 percent 

and 3.0 percent, respectively.27 Australia averaged only 

0.5 percent.

Amber-Box Bindings Are Substantially Higher Than 

Actual Amber-Box Subsidies

As was the case with tariffs, bound values for amber-box 

subsidies for most countries are substantially higher than 

the actual values that have been granted each year from 

1998 through the present (see Table 14). The European 

Union’s most recent reported amber-box-subsidy total 

was less than half its final bound value. The most recent 

U.S. total was almost 25 percent below the final U.S. 

bound value. Japan’s was 84 percent below.28

The framework agreement for the Doha Round says: 

“Each such Member will make a substantial reduction in 

the overall level of its trade-distorting support from 

bound levels.” Given how much lower most countries’ 

support levels are than their bound levels, the reductions 

will indeed have to be substantial if they are to have much 

effect on actual subsidies.

Which Products Receive the Most Amber-Box

Subsidies?

Because of the dominance of the European Union in the 

use of amber-box subsidies around the world, the breakdown of EU amber-box subsidies by product is of interest 

as an indicator of the distortion of world agricultural output and trade by product. Half of all EU amber-box subsidies in 2001 (the most recent year for which the European Union has reported) went to three products: beef, 

white sugar, and butter (see Table 15). Beef received the 

most subsidies at $8.7 billion, or roughly one-quarter of 

the total for all agricultural products. In second place was 

white sugar, which received $5.1 billion in subsidies, or 

roughly one-seventh of all EU amber-box subsidies. Butter ranked third, with $4.0 billion in subsidies, or 11 percent of the total for all products. After those three products came olive oil, apples, tomatoes, barley, skimmed 

milk powder, and wheat, in that order. Further down

the list are tobacco, wine, and a number of fruits and

vegetables.

Uruguay

Turkey

Romania

New Zealand

Estonia

Chile

Jordan

Bulgaria

Macedonia

Australia

Tunisia

South Africa

Poland

Canada

Czech Republic

Mexico

Korea

United States

Japan

Israel

Hungary

Slovak Republic

European Union

Switzerland-Liechtenstein

Norway

Iceland

0 40 80 120 160

27. The number for Mexico must be qualified by the fact that the 

only report by the country is for 1998.

28. Hungary is substantially above its bound level, but that is the 

result of substantial inflation in Hungary since the bound level 

was set. Hungary’s amber-box usage in 2002 was lower than its 

bound value adjusted for inflation, although not by a large 

amount.
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 33

Which Products Have the Highest Amber-Box

Subsidy Rates?

Expressing the amber-box subsidies as a percentage of the 

value of production reveals that a large number of EU 

products receive very high rates of subsidy; and no one, 

two, or even three or four products stand out as receiving 

dramatically higher rates than everything else (see 

Table 16). Tinned pineapple had the highest rate in 2001 

at 108 percent. Nine other products had subsidy rates 

higher than 50 percent in 2001: tobacco, pears for processing, butter, white sugar, tomatoes for processing, 

skimmed milk powder, cotton, rice, and plums for processing. Four additional products—apples, beef, figs for 

processing, and lemons—had subsidy rates above 40 percent; and six others had rates above 30 percent. Those 

rates of subsidy are sufficient to give EU farmers a sizable 

competitive advantage over their counterparts in countries that export to the EU, or alternatively, sufficient to 

offset a sizable competitive advantage that imports would 

otherwise have over EU agricultural products.

Statistics on Export Subsidies

Export subsidies are more distorting to international 

trade than any other kind of subsidy, a fact that is reflected in the way they are treated by the Agreement on 

Agriculture. The agreement placed little or no restriction 

on several categories of domestic subsidies—the green 

box, the blue box, and the other support measures. However, it required reduction commitments for all export 

subsidies covered by the agreement.

Although the agreement made a temporary exception for 

developing countries without export-subsidy-reduction 

commitments to provide certain kinds of export subsidies 

during the agreement’s initial nine-year implementation 

period, that period is now over. The only export subsidies 

now allowed and subject to negotiation in the Doha 

Round are those subject to reduction commitments made 

under the Uruguay Round Agreement on Agriculture.29

Therefore, the discussion in this section is restricted to 

those subsidies, and the temporary subsidies reported under the exception for developing countries are ignored. 

The major conclusions are:

B Export subsidies are much less widespread than are 

domestic subsidies, with only 25 countries having 

subsidy-reduction commitments and two of those 

commitments having a final bound value of zero.

B The European Union dominates the use of export 

subsidies even more than it does the use of domestic 

subsidies, providing 85 percent to 90 percent of all the 

export subsidies reported to the World Trade Organization by countries with reduction commitments. 

Ranking next is Switzerland-Liechtenstein, with 4.5 

percent to 6.5 percent of the world’s total, followed by 

Norway and the United States with 1 percent to 2 percent.

B The highest export subsidy rates are those by 

Switzerland-Liechtenstein and the European Union—

no other country even comes close. The United States 

has a very low subsidy rate that places it well down in 

the rankings.

B As was the case with tariffs and amber-box subsidies, 

export subsidy bindings are substantially higher than 

actual export subsidies for many countries. However, 

that fact has less significance for the Doha Round than 

does the corresponding fact for tariffs and amber-box 

subsidies because the framework agreement calls for 

export subsidies to be eliminated.

B The EU products receiving the greatest dollar value of 

export subsidies are dairy products, sugar, and beef.

Which Countries Provide the Most Export

Subsidies?

Export subsidies are used disproportionately by European 

countries, especially the high-income European countries 

(see Table 17 on page 38). The top three users of such 

subsidies since 1998 measured by dollar value have been 

the European Union, Switzerland-Liechtenstein, and 

Norway. The United States took fourth place.

The European Union granted between 85 percent and 90 

percent of the total export subsidies reported to the 

WTO in each of the years from 1998 through 2002 (the 

most recent year for which it has reported).30 Adding in 

the rest of Europe brings the total up to well over 95 percent, even with Turkey, Cyprus, and Iceland excluded. 29. An exception is Panama, which joined the World Trade Organization after the Agreement on Agriculture went into effect and 

whose reduction commitment is contained in its accession agreement.

30. Those numbers make rough allowance for significant nonreporting countries in 2001 and 2002.
34 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 15.

Amber-Box Support Reported by the European Union, by Product

(Millions of current U.S. dollars)

Continued

Product 1998 1999 2000 2001

Average,

1998–2001

Beef 14,980 13,964 10,340 8,695 11,995

White Sugar 6,509 6,143 5,367 5,134 5,788

Butter 4,715 4,740 4,106 3,980 4,385

Common Wheat 3,462 3,119 2,098 1,108 2,447

Tomatoes 2,357 2,686 2,453 1,741 2,309

Barley 3,008 2,710 2,028 1,469 2,304

Olive Oil 2,014 2,209 1,913 2,396 2,133

Apples 2,148 2,339 2,078 1,845 2,102

Wine 2,048 2,189 745 799 1,445

Skimmed Milk Powder 1,689 1,463 1,393 1,227 1,443

Tobacco 1,019 1,051 891 852 953

Maize 1,066 1,070 653 340 782

Cotton 801 665 735 515 679

Pears 617 644 581 487 582

Cucumbers 659 614 498 479 563

Peaches and Nectarines 448 626 465 423 491

Rice 490 419 363 355 407

Oranges 311 459 392 287 362

Tomatoes for Processing 450 368 275 329 355

Lemons 326 449 393 251 355

Dried Fodder 344 334 283 284 311

Rye 370 310 220 191 273

Bananas 199 250 302 190 235

Triticale 284 241 194 161 220

Table Grapes 250 234 197 194 218

Clementines 205 248 190 150 198

Courgettes 195 178 148 153 168

Artichokes 251 116 100 175 160

Citrus Fruit for Processing 121 189 119 191 155

Apricots 114 165 119 108 126

Cherries 107 149 134 106 124

Seed for Sowing 121 117 95 89 105

Flax Fiber 110 128 76 5 80

Peaches for Processing 74 84 72 56 72

Chickpeas, Lentils, and Vetches 79 73 64 65 70

Plums 66 76 62 62 66

Lemons for Processing 40 41 29 47 39

Mandarins 37 43 36 28 36
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 35

Table 15.

Continued

Source: Congressional Budget Office based on foreign-currency-denominated subsidy data from reports to the World Trade Organization by 

the European Union and exchange-rate data from International Monetary Fund, International Financial Statistics.

a. Indicates that the value was actually positive but was de minimis (less than 5 percent of the value of production) and therefore set equal 

to zero in the amber-box subsidy calculation.

b. R.2200/96 refers to the European Union’s Council Regulation No. 2200/96 on the common organization of the market in fruits and vegetables.

The United States ranged between 0.5 percent and 2.25 

percent.

Although the total value of U.S. export subsidies is much 

smaller than that of the European Union, they nevertheless cause distortions in certain product markets. Those 

distortions have raised concerns among foreign competitors and have led to challenges to some U.S. export subsidies in the WTO. (See Box 2 on page 39 for a discussion 

of U.S. and EU export subsidy programs.)

Which Countries Have the Highest Export Subsidy 

Rates?

When export subsidies are expressed as a percentage of 

the value of exports, Switzerland-Liechtenstein jumps 

above the European Union, with subsidies equal to 9.3 

percent of total export value compared with the EU’s 6.6 

percent (see Figure 4 on page 40). The latter takes a 

strong second place, however. The Czech Republic and 

Norway are a distant third and fourth place at 1.6 percent. U.S. subsidies are only 0.1 percent of total export 

value, and Australia’s are only 0.004 percent. (A lack of 

data on the value of exports prevented the computation

Product 1998 1999 2000 2001

Average,

1998–2001

Plums for Processing 37 24 27 37 31

Pears for Processing 47 26 23 27 31

Satsumas 25 39 29 15 27

Grapes for Processing 0 0 0 101 25

Sorghum 23 21 15 9 17

Hemp 29 17 10 2 15

Hops 14 13 12 11 13

Tinned Pineapple 7 7 6 6 6

Figs for Processing 7 7 6 5 6

Oats 13 12 0 0 6

Cauliflower and Aubergines 0a 18 0a 0a 5

Fruit and Vegetables Not Mentioned in 

R.2200/96b 0 0a 1 1 1

Silkworms 0 1 0 1 0

Common Wheat, Maize, Barley, Rye, 

Triticale, and Grain Sorghum 0a 0a 0a 0a 0

Milk 0 0 0 0a 0

Pigmeat 0 0 0a 0a 0

Potatoes for Processing to Starch 0a 0 0a 0a 0

Durum Wheat 0 0 0 0 0

Total 52,286 51,085 40,337 35,181 44,722
36 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 16.

Amber-Box Support Reported by the European Union, by Product as a

Percentage of the Value of Production

Continued

Product 2000 2001

Average,

2000–2001

Tinned Pineapple 108.3 108.3 108.3

Tobacco 96.1 94.9 95.5

Pears for Processing 68.2 82.4 75.3

Butter 71.3 71.3 71.3

White Sugar 66.1 64.1 65.1

Skimmed Milk Powder 66.7 60.6 63.7

Rice 66.2 52.0 59.1

Cotton 63.7 52.2 58.0

Apples 67.7 47.5 57.6

Tomatoes for Processing 49.5 60.9 55.2

Lemons 59.9 40.9 50.4

Figs for Processing 53.4 46.2 49.8

Beef 52.4 47.0 49.7

Plums for Processing 36.9 50.9 43.9

Peaches for Processing 47.5 38.1 42.8

Pears 47.7 33.3 40.5

Rye 42.7 33.6 38.2

Barley 41.0 33.1 37.0

Triticale 39.0 33.6 36.3

Cucumbers 34.2 34.0 34.1

Apricots 32.2 19.6 25.9

Olive Oil 25.7 25.6 25.6

Tomatoes 28.9 22.2 25.6

Courgettes 22.0 23.3 22.7

Peaches and Nectarines 22.1 19.6 20.8

Artichokes 14.6 26.2 20.4

Mandarins 18.1 22.6 20.3

Sorghum 22.3 15.5 18.9

Satsumas 23.8 12.5 18.2

Common Wheat 21.5 13.8 17.7

Oranges 17.4 17.7 17.5

Cherries 18.3 14.9 16.6

Clementines 17.7 14.4 16.0

Plums 14.7 15.3 15.0

Table Grapes 15.9 13.1 14.5

Maize 15.6 9.3 12.4

Wine 5.4 6.4 5.9

Aubergines 0a 0 0
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 37

Table 16.

Continued

Source: Congressional Budget Office based on subsidy and value-of-output data from reports to the World Trade Organization by the

European Union.

a. Indicates that the value was actually positive but was de minimis (less than 5 percent of the value of production) and therefore set equal 

to zero in the amber-box-subsidy calculation.

b. Indicates that the percentage could not be calculated because the value of production was not available.

c. R.2200/96 refers to the European Union’s Council Regulation No. 2200/96 on the common organization of the market in fruits and vegetables.

of subsidy rates for Cyprus, Mexico, the Slovak Republic, 

Panama, and Venezuela, so it is unclear where they would 

fall in the ranking.)

It should be noted that most countries do not subsidize 

all exports—only certain products. The subsidy rates for 

those products might be significantly higher than the average rate for all agricultural exports of the country.

Export Subsidy Bindings Are Substantially Higher 

Than Actual Export Subsidies

As was the case with tariffs and amber-box domestic subsidies, bound values for export subsidies for most countries are substantially higher than the actual values that 

have been granted each year from 1998 through the 

present (see Table 17). The European Union’s most recent reported export subsidy total was less than one-third 

the EU’s final bound value. The most recent total for 

Switzerland-Liechtenstein’s export subsidies was 46 percent below their total bound value. The U.S. and Czech

Product 2000 2001

Average,

2000–2001

Cauliflower 0a 0 0

Pigmeat 0a 0 0

Common Wheat, Maize, Barley, Rye, 

Triticale, and Grain Sorghum 0a 0 0

Potatoes for Processing to Starch 0a 0 0

Milk 0 0 0

Durum Wheat 0 0 0

Oats 0 0 0

Chickpeas, Lentils, and Vetches 14.4 b

Grapes for Processing 0 b

Bananas b b

Citrus Fruit for Processing b b

Silkworms b b

Lemons for Processing b b

Hops b b

Fruit and Vegetables Not Mentioned in 

R.2200/96c b b

Dried Fodder b b

Seed for Sowing b b

Hemp b b

Flax Fiber b b
38 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table 17.

Agricultural Export Subsidies by Countries with Subsidy Reduction Commitments

(Millions of current U.S. dollars)

Source: Congressional Budget Office based on foreign-currency-denominated subsidy data from World Trade Organization, Export Subsidy 

Commitments: Note by the Secretariat, Addendum, TN/AG/S/8/Rev.1/Add.1 (January 31, 2005) and member-country reports to 

the World Trade Organization made after that date; and exchange-rate data from International Monetary Fund, International Financial Statistics.

Notes: Numbers are based on the reports that the countries in question had made to the World Trade Organization (WTO) as of June 30, 

2005. A blank space in a given year means that the country in question has not reported its subsidies for that year.

Most countries’ commitment levels are denominated in foreign-currency units, as are those countries’ reported subsidies. CBO converted the numbers to dollar values using the average exchange rates for the calendar years in question. The numbers reported by 

some countries are for year-long periods (such as fiscal years) that overlap with but are not identical to the calendar year. Furthermore, even for those countries that report for the calendar year, most of the exports—and therefore most of the export subsidies—

may have occurred at a particular time of year when the exchange rate was slightly different from the average for the calendar year. 

Therefore, the numbers should be viewed as approximate values.

China committed to eliminating all export subsidies immediately upon admission to the WTO in December 2001.

a. The number given for the final bound value for Romania is for the bound value in 2000 rather than the final bound value that occurs in 

2004, and the total for all countries assumes the 2000 value for Romania. Neither the Romanian reports to the WTO nor the WTO documents that summarize countries’ export subsidy reports give sufficient information to determine how to convert the bound value into dollars for any other year.

1998 1999 2000 2001 2002 2003 2004

Average

Reported Value, 

1998–Present

Final

Bound

Value

European Union 5,977 5,989 2,553 2,305 2,958 3,956 9,195

Switzerland-Liechtenstein 292 290 188 257 352

Norway 77 128 45 32 71 73

United States 147 80 15 55 32 66 594

Czech Republic 42 35 24 34 167

Poland 14 55 37 22 32 500

Turkey 29 28 27 28 105

Panama 11 13 16 14 10 10 12 0

Slovak Republic 12 12 12 7 12 16 12 51

Hungary 12 13 8 4 5 12 4 8 70

Colombia 20 0 0 7 287

Venezuela 6 6 27

Cyprus 3 3 14

Israel 1 1 0 5 6 4 3 43

Romania 3 7 5 0 0 3 115a

South Africa 3 5 3 0 0 2 88

Mexico 2 2 553

Australia 1 2 0 0 0 0 1 65

Indonesia 0 0 0 0 22

Brazil 0 0 0 0 0 75

Iceland 0 0 0 0 0 0 18

Canada 0 0 0 322

Bulgaria 0 0 0 0 0 127

Uruguay 0 0 0 0 0 0 0 1

New Zealand 0 0 0 0 0 0 0 0

Total, All Countries 6,651 6,659 2,933 2,442 3,023 41 4 4,501 12,860a
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 39

totals were substantially less than half of their respective 

bound values.

Unlike tariffs and amber-box domestic subsidies, which 

are subject only to negotiated reductions from bound levels under the Doha Round framework agreement, the 

Doha Ministerial Declaration calls for “reduction of, with 

a view to phasing out, all forms of export subsidies,” and 

the framework agreement says, “The following will be 

eliminated by the end date to be agreed: Export subsidies 

as scheduled ....” If the final Doha Round Agreement 

does indeed include such language, then export subsidies 

will be eliminated regardless of whether the phaseout 

schedule is framed in terms of actual subsidies or bound 

values—unlike the case of tariffs and amber-box subsidies, for which reductions of bound values could occur 

with little, if any, effect on actual tariffs and subsidies. 

Nevertheless, if the substantial difference between actual 

and bound values is not taken into consideration in the 

phaseout schedule, the result could be a schedule having 

little or no effect on actual subsidies until the very end, at 

which time actual subsidy reductions will be sudden and 

substantial.

A qualification to that conclusion is that, in contrast to 

amber-box subsidy bounds, export subsidy bounds are on 

a product-by-product basis. The numbers in Table 17 are 

the sums of all of the product-specific bounds for each 

country. If countries typically have subsidies very close to 

the bound for a number of products and equal to or 

nearly equal to zero for the others, then a 15 percent reduction in all export subsidy bounds will cause roughly a 

15 percent reduction in actual subsidies. However, that is

Box 2.

Agricultural Export Subsidies in the United States and the

European Union

In the United States, direct payments to exporters are 

authorized under the Export Enhancement Program 

(EEP) and the Dairy Export Incentive Program, although no payments have been made under EEP in 

recent years. Payments to exporters are based on 

competitive bidding through which exporters receive 

subsidies on the basis of their ability to provide products for export with the lowest subsidy cost. Before 

EEP payments dropped off in the mid-1990s, most 

of them subsidized exports of wheat, although some 

of them also subsidized exports of flour, poultry, 

eggs, feed grains, pork, barley malt, and rice.

The U.S. government also makes so-called Step 2 

payments to exporters and domestic mills whenever 

the price of U.S. upland cotton exceeds the world 

price. Because the program pays U.S. cotton users at 

the expense of users of foreign cotton, a World Trade 

Organization dispute panel has ruled that payments 

under the program constitute prohibited export- and 

import-substitution subsidies. The same panel also 

ruled that the U.S. Export Credit Guarantee program effectively functions as an export subsidy for all 

of the commodities it benefits because it does not 

charge premiums sufficient to cover its cost. As a result, the Administration has proposed legislation to 

terminate the Step 2 program and has taken administrative actions to reduce subsidy rates under export 

credit guarantee programs.

Finally, the United States has two marketdevelopment programs—the Market Access 

Program and the Foreign Market Development Program—under which projects for developing overseas 

markets for U.S. products are jointly funded by the 

federal government and industry groups. Those two 

programs are exempt from reduction commitments 

under the Uruguay Round Agreement on Agriculture.

The European Union’s (EU’s) Common Agricultural 

Policy has generally maintained internal EU commodity prices at levels higher than prices in the 

world market. Consequently, the EU has had to provide substantial export subsidies (in terms of total 

dollar value) for agricultural products from the EU 

to be competitive in the world market. As in the 

United States, payments to exporters in the EU are 

based on competitive bids.
40 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Figure 4.

Countries with Export Subsidy

Reduction Commitments Ranked by 

Average Annual Rate of Reported 

Export Subsidies, 1998 to Present

(Percentage of agricultural export value)

Note: Numbers are based on subsidy data reported to the World 

Trade Organization by the countries in question as of June 

30, 2005. The most recent reports by most countries are 

for 2002 or earlier. Availability of export data further 

restricts the years and countries for which rates can be 

calculated. The averages for Switzerland-Liechtenstein 

and the Czech Republic are each based only on rates for 

1999 and 2000. See Table C-3 on page 53 for sources, 

additional notes, and more-detailed numbers, including 

subsidy rates for each year.

not the case for the European Union, by far the largest 

user of export subsidies, as will be shown below.

Which Products Receive the Most Export Subsidies?

Because of the dominance of the European Union in the 

use of export subsidies around the world, the breakdown 

of EU export subsidies by product is a fairly good measure of the export subsidies against which U.S. farmers 

and exporters of various agricultural products must

contend.

The EU products receiving the greatest dollar value of export subsidies in 2002 (the most recent year for which the 

EU has reported) were dairy products, beef, and sugar 

(see Table 18). More precisely, the category receiving the 

largest dollar value of such subsidies was other milk products (that is, milk products other than butter, butter oil, 

cheese, and skimmed milk powder) at $563 million, followed by butter and butteroil at $515 million, incorporated products at $391 million, sugar at $276 million, 

beef at $269 million, and cheese at $253 million. (The 

category of “incorporated products” refers to subsidies of 

agricultural products that are contingent on their incorporation in exported products. It refers to subsidies not of 

particular products but of particular uses of products and 

therefore is not particularly helpful in determining which 

products receive the most export subsidies.) The subsidy 

total for sugar was down considerably from earlier years. 

It received $890 million in export subsidies in 1998, 

making it the EU’s most heavily subsidized product in 

terms of dollar value in that year.

Unfortunately, countries are not required to report the 

value of their exports by product category—only the 

quantity. Therefore, it is not possible to calculate the subsidy rates by product category.

Recalling the discussion from the previous section, it is of 

interest to note that the subsidies in 2002 for all of the 

product categories were significantly lower than their final bound values. Hence, the conclusion stands that if the 

phaseout of export subsidies is structured in terms of 

bound values and those values are not reduced substantially early on, there will be little effect on actual subsidies 

for some time.

A Final Note

Countries’ agricultural policies are not static. As noted 

earlier, China entered the WTO in December 2001, and 

its accession agreement required significant reductions in 

its agricultural tariffs. The agreement also placed constraints on China’s domestic and export subsidies. In addition, in recent years, the United States, the European 

Union, and various other countries have negotiated a 

number of free-trade agreements, which might affect 

some of the countries’ tariff averages (depending on 

Uruguay

Bulgaria

Canada

Iceland

Brazil

New Zealand

Indonesia

Australia

South Africa

United States

Colombia

Israel

Hungary

Romania

Turkey

Poland

Norway

Czech Republic

European Union

Switzerland-Liechtenstein

0 2 4 6 8 10
POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE 41

Table 18.

Agricultural Export Subsidies Reported by the European Union, by Product

(Millions of current U.S. dollars)

Source: Congressional Budget Office based on foreign-currency-denominated subsidy data from World Trade Organization, Export Subsidy 

Commitments: Note by the Secretariat, Addendum, TN/AG/S/8/Rev.1/Add.1 (January 31, 2005), and World Trade Organization, 

Notification, G/AG/N/EEC/52 (February 16, 2005), which is the European Union’s report to the WTO of its export subsidies for 

2002; and on exchange-rate data from International Monetary Fund, International Financial Statistics.

a. Products other than skimmed milk powder, butter and butteroil, and cheese.

b. Refers to subsidies for agricultural products that are contingent on their incorporation in exported products.

whether the averages include preferential tariffs or are

restricted to most-favored-nation rates). Further, the 

2002 U.S. farm bill could have increased U.S. domestic 

support totals and rates. In the opposite direction, the 

European Union has in recent years enacted reforms of its 

Common Agricultural Policy as a result of that policy’s 

substantial cost as more countries are admitted as members. Finally, amounts of subsidies granted by many 

countries vary with conditions in the market that fluctuate from year to year.

Seen in that light, the numbers presented in this paper, 

although as up-to-date as CBO was able to obtain, are 

nevertheless more dated than one would like. The tariff 

averages, depending on the table, are based on tariffs in 

2002, 2001, or even earlier. The domestic and export 

subsidy numbers are taken from members’ reports to the 

WTO up through June 30, 2005, but many of those 

members are slow to make their reports. The most recent 

reports of the European Union and the United States are 

for 2001. Consequently, it would be useful if some sort of 

Product 1998 1999 2000 2001 2002

Average

Reported Value, 

1998–2002

Final

Bound

Value

Other Milk Productsa 850 966 379 360 563 624 861

Incorporated Productsb 642 768 383 369 391 510 512

Beef Meat 720 775 354 348 269 493 1,547

Sugar 890 502 344 432 276 489 616

Coarse Grains 856 779 177 101 158 414 1,292

Butter and Butteroil 320 356 312 291 515 359 1,170

Wheat and Wheat Flour 560 543 100 8 133 269 1,592

Cheese 167 252 220 169 253 212 422

Skimmed Milk Powder 215 360 24 33 154 157 340

Pigmeat 399 259 31 18 14 144 236

Alcohol 136 233 88 47 85 118 119

Poultry Meat 100 80 52 54 85 74 112

Rice 29 28 30 27 24 27 45

Fruit and Vegetables, Fresh 35 40 25 19 14 27 65

Wine 33 28 22 21 16 24 48

Eggs 19 15 7 5 5 10 54

Fruit and Vegetables, Processed 5 6 4 3 3 4 10

Rapeseed 0 0 0 0 0 0 34

Olive Oil 0 0 0 0 0 0 67

Raw Tobacco 0 0 0 0 0 0 50

Total 5,977 5,989 2,553 2,305 2,958 3,956 9,195
42 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

check was available to indicate whether the conclusions 

drawn in this paper are still valid.

Such a check is indeed available. The Organization for 

Economic Cooperation and Development publishes a 

number of measures of the magnitudes and combined effects of its members’ agricultural tariffs and other barriers, 

domestic subsidies, export subsidies, and any other policies with significant effects relating to agriculture. The 

measures cover only OECD members, which are a small 

and select group of countries compared with those covered by the tables above; further, the measures do not follow the nomenclature of the various WTO subsidy boxes. 

However, the countries covered include many of the 

countries that dominate agricultural trade and subsidies, 

and preliminary estimates of the OECD’s measures are 

available for as recent as 2004. Hence, they provide a useful update to the numbers given above.

The measures are discussed in Appendix B. Here it is sufficient to note that they support the proposition that the 

conclusions drawn above from the tariff- and subsidy-rate 

data remained true at least as recently as 2004. The countries that most severely distort their agricultural markets 

in favor of their own farmers are the members of the 

European Free Trade Association—Iceland, Norway, and 

Switzerland-Liechtenstein—and Japan and Korea. They 

in turn are followed by the European Union. Canada, 

Mexico, and the United States are significantly less distorting than the European Union, and Australia and New 

Zealand are the least distorting of the group. The product 

markets most distorted by OECD members as a whole 

are those for rice and sugar.
A

Caveats on Tariff Comparisons Appendix A: Caveats on Tariff Comparisons

Several caveats must be kept in mind when comparing tariff statistics. First, there is no ideal average statistic to use. One commonly used statistic is the simple 

unweighted average of the tariff rates imposed by the 

countries—which is calculated by adding up all of the 

tariff rates and then dividing by the number of tariffs. 

However, that calculation treats tariffs applied to goods 

that the country imports very little of the same as it treats 

tariffs applied to goods that it imports substantial quantities of. Further, one country might have numerous lines 

in its tariff schedule for a given product, assigning many 

different tariffs based on slight variations in characteristics of the product, whereas another country might have 

only one line assigning the same tariff to all variations of 

the product. Everything else being equal, if the product is 

one for which the tariffs are high, the resulting simple average for the first country would be higher than that for 

the second.

Another commonly used statistic is the trade-weighted 

average, in which each tariff is weighted by the value of 

imports coming into the country under that tariff. The 

weighting procedure solves the two problems just cited 

for the simple average, but it introduces another. A very 

large tariff will substantially reduce the value of imports 

coming into a country, resulting in a small weight on that 

tariff in the average. Consequently, a trade-weighted average tends to be biased downward and therefore to understate the significance of the tariffs imposed by a country. 

That is especially true if the country has a number of extremely high tariffs that almost or completely shut off 

trade in the products in question—which is in fact the 

case for many countries with regard to agriculture.

Still another statistic one can use is the median, which is 

the middle tariff when one arrays all of the tariffs imposed by the country from highest to lowest. (If there are 

two middle tariffs, which occurs when the total number 

of tariffs is even, the median is the average of the two 

middle tariffs.) A median lower than the corresponding 

simple average indicates the presence of a number of extremely high tariffs. A few medians are presented in this 

paper.

A second caveat concerns the fact that a large number of 

tariffs in the agricultural sector in many countries are specific, or have components that are specific, rather than ad 

valorem. Specific means that the tariff or tariff component 

is defined in terms of a specific amount of money for a 

given quantity of the import, such as 50 cents per bushel 

of wheat. Ad valorem means that the tariff is defined in 

terms of a specified percentage of the value of the import. 

A January 2001 survey of agricultural tariffs around the 

world found that 44 percent of tariff lines in the United 

States and the European Union were specified in nonad valorem terms.1

 Another more recent study excluded 

24 percent of Canada’s agricultural tariff lines and 14 percent of Japan’s and the European Union’s agricultural tariff lines from its tariff averages because of problems relating to non-ad valorem tariffs.2

Specific tariffs raise two significant issues. First, to average 

them in with ad valorem tariffs, it is necessary to calculate 

ad valorem equivalents of the specific tariffs. To do that 

requires the use of price data for the products in question. 

Information on the relevant prices is difficult or even impossible to find for many products, and analysts often are 

forced to use prices for related but not identical products 

APPENDIX

1. Paul Gibson and others, Profiles of Tariffs in Global Agricultural 

Markets, Market and Trade Economics Division, Economic 

Research Service, U.S. Department of Agriculture, Agricultural 

Economic Report No. 796 (January 2001), p. 5.

2. World Bank, Global Economic Prospects and the Developing Countries 2004 (Washington, D.C.: World Bank, 2003), Chapter 3,

p. 118.
44 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

or some other approximation. Some analysts simply leave 

specific tariffs out of the calculation of average tariffs, averaging only ad valorem tariffs. Leaving specific tariffs out 

of the calculation might not be a problem if there were 

reason to believe that the average ad valorem equivalent 

of specific tariffs was approximately the same as the average ad valorem tariff. Unfortunately, there is reason to believe otherwise. The January 2001 survey found that for 

the 129 countries it examined, the average ad valorem 

tariff binding in agriculture was 58 percent, whereas the 

average ad valorem equivalent of non-ad valorem tariffs 

was 123 percent.3

 Consequently, whether one chooses to 

include specific tariffs in the calculation can have a substantial effect on the resulting average tariff.

A second issue regarding specific tariffs is that their ad valorem equivalents change when the price of the product 

in question changes. In particular, whenever prices are 

low and domestic farmers feel the need for increased protection, the ad valorem equivalent of a specific tariff increases to provide that increased protection. That fact is 

particularly relevant in agriculture, which experiences low 

prices whenever good weather and other circumstances 

combine to produce a large harvest around the world and 

high prices whenever the harvest is small. The net result is 

that a specific tariff might be either more or less protective, on average, over time than the ad valorem equivalent 

that an analyst calculates using price data for a given 

point in time.

A third caveat regarding tariff averages concerns the treatment of tariff-rate quotas (TRQs). The 2001 survey uses 

the over-quota tariffs from TRQs in the calculation of its 

averages because they represent “the marginal binding 

constraint on additional trade” (assuming the quotas in 

question are filled and over-quota quantities of the goods 

are being imported). Some analysts may instead use the 

average of the in-quota and over-quota tariffs in the calculation of the overall average tariff. Over-quota tariffs 

are substantially higher than in-quota tariffs, so the way 

one treats them in the calculation can substantially affect 

the resulting average. 

A final caveat is that the tariffs countries impose change 

over time, and even relatively recent studies published in 

the past year or two calculate their averages for some 

countries on the basis of the tariffs imposed in 2001, 

2000, or even 1999. Some of the studies cited in this paper are several years old. One study might calculate a different average for a country than another does simply because it used more- or less-recent data. For the most part, 

that problem is relevant only to applied tariffs, not bound 

tariffs, because most of the studies calculating averages of 

bound tariffs used the final bound tariffs after full implementation of the Uruguay Round Agreement on Agriculture with all of the reductions it required over time. A related problem, however—the aforementioned fact that 

the ad valorem equivalents of specific tariffs change over 

time—is more serious.

The caveats presented here have two important implications. One is that different studies often will have slightly 

different average tariff rates for the same country—and 

sometimes the differences will be more than slight. The 

other is that the tariff averages presented in this paper 

should not be viewed as precise measures of protection 

but instead as rough indicators.

3. Gibson and others, Profiles of Tariffs in Global Agricultural Markets, p. 5.
B

Some Measures of the Combined Effects of 

Protection, Domestic Support, and Export Subsidies

Appendix B: Some Measures of the Combined Effects of Protection, Domestic Support, and Export Subsidies

The Organization for Economic Cooperation and 

Development (OECD), which consists primarily of the 

major industrialized countries of the world, publishes a 

number of measures of the combined effects of agricultural tariffs and other barriers, domestic support, export 

subsidies, and any other policies with significant effects 

relating to agriculture. The measures cover only OECD 

members but are available up through 2004 for all members—considerably more recent than the numbers presented in the main body of this paper. The values for 

2004 indicate that the major conclusions of the paper 

continue to hold true at least insofar as they relate to 

OECD members. 

The members that most severely distort their agricultural 

markets in favor of their own farmers are European Free 

Trade Association members Iceland, Switzerland, and 

Norway followed by other high-income, food-importing 

countries such as Japan and Korea. They, in turn, are followed by the European Union (25). Canada, Mexico, and 

the United States are significantly less distorting than the 

European Union, and Australia and New Zealand are the 

least distorting of the group. The product markets most 

distorted by OECD members as a whole are those for 

rice, sugar, milk, and beef and veal, in that order.

Protection from Competition

One of the measures the OECD publishes is the producer 

nominal protection coefficient (pNPC), which measures 

the competitive advantage of a country’s agricultural sector in its home market resulting from the combined effects of domestic output subsidies and trade protection 

such as tariffs. Formally, it is the ratio of the average price 

received by a country’s farmers at the farm gate, including 

subsidy payments based on output, to the world price. 

Thus, a pNPC of 2 would mean that farmers’ selling 

price plus output-based subsidy payments are equal to 

twice the world price. A pNPC of 1 would indicate that 

the policies of the country in question provide no net 

protection to its agricultural sector.

By that measure, OECD countries provide substantial 

protection to their agricultural sectors (see Table B-1). 

The average pNPC for OECD countries is 1.28, meaning that, on average, OECD countries’ domestic agricultural sectors receive a 28 percent higher price (including 

output subsidies) than do competing imports because of 

trade protection and output subsidies. The five most protective countries—each with a coefficient higher than 

2.2—are Iceland, Korea, Norway, Switzerland, and Japan. 

The European Union (25) is seventh at 1.29—just barely 

higher than the OECD average of 1.28. The United 

States is ninth at 1.11. New Zealand and Australia are last 

at 1.02 and 1.00, respectively.

By far the most protected products, on average, by 

OECD countries are rice and sugar, with pNPCs of 3.76 

and 2.36, respectively. Least protected are wheat, eggs, 

oilseeds, and wool, each with a pNPC of 1.08 or less.

Support for Producers from Taxpayers 

and Consumers

A second measure the OECD publishes is the producer 

support estimate (PSE). The producer support estimate is 

the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured 

at the farm-gate level, arising from policy measures that 

support agriculture, regardless of their nature, objectives, 

or impacts on farm production or income. In addition to 

government budgetary payments for subsidies, the PSE 

APPENDIX
46 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table B-1.

Producer Nominal Protection

Coefficients for 2004

Source: Organization for Economic Cooperation and Development,

Agricultural Policies in OECD Countries: Monitoring and 

Evaluation 2005, Highlights (Paris: OECD, 2005), Tables 

1.3 and 1.6.

Notes: The producer nominal protection coefficient is the ratio of 

the average price received by producers at the farm gate 

(including output-based subsidy payments) to the border (or 

world) price.

Values given are preliminary estimates as of the date of publication of the source.

includes the higher prices consumers pay as a result of 

trade protection and market price support policies.

As measured by the PSE, the support OECD member 

countries provide to their agricultural sectors is substantial—equal to 30 percent of gross farm receipts, on average (see Table B-2). The ranking of countries by that 

measure is almost identical to the ranking by the producer nominal protection coefficient. The same five 

countries top the ranking by PSE that top the ranking by 

pNPC, although in a somewhat different order. All five 

have PSEs in excess of 50 percent of gross farm receipts. 

The PSE of the European Union (25) is 33 percent—

slightly higher than the OECD’s 30 percent and almost 

twice the United States’18 percent. Australia and New 

Zealand provide the least support, with respective PSEs 

of 4 percent and 3 percent of gross farm receipts.

The product receiving the most support, on average, by 

OECD countries is rice, with support equal to threequarters of gross farm receipts. Sugar is in second place, 

with support at almost three-fifths of gross farm receipts. 

Eggs and wool get the least support, on average—less 

than 10 percent of gross farm receipts each.

Broader Measures of Support

In addition to the direct support to agricultural producers 

that is measured by the producer support estimate, governments also have other policies that redound to the 

benefit of agriculture and agricultural producers. One 

group of policies consists of general support for the agricultural sector as a whole, such as research and development, agricultural training and education, infrastructure, 

and marketing and promotion. The OECD provides estimates of such support by its member countries, which it 

calls its general services support estimate (GSSE). A second group of policies consists of transfers from taxpayers 

to consumers (such as the portion of food stamps and 

food aid spent on domestic agricultural products). Such 

transfers are included in the broadest OECD measure of 

support for agriculture—the total support estimate 

(TSE)—which is equal to the PSE plus the GSSE plus 

transfers from taxpayers to consumers.

For each member country, the OECD publishes the total 

monetary amount of the TSE as well as its percentage of 

gross domestic product (GDP). By the latter measure, 

several less-well-off OECD members rank higher than 

they do when ranked by the PSE (see Table B-3). Turkey 

Coefficient

All Products, by Country

Iceland 3.03

Korea 2.55

Norway 2.41

Switzerland 2.36

Japan 2.20

Turkey 1.30

European Union (25) 1.29

Entire OECD 1.28

Canada 1.13

United States 1.11

Mexico 1.09

New Zealand 1.02

Australia 1.00

Entire OECD, by Product

Rice 3.76

Sugar 2.36

Milk 1.50

Beef and Veal 1.26

Other Commodities 1.24

Poultry 1.23

Pigmeat 1.22

Maize 1.20

Sheepmeat 1.19

Other Grains 1.15

Wheat 1.08

Eggs 1.07

Oilseeds 1.06

Wool 1.02
APPENDIX B SOME MEASURES OF THE COMBINED EFFECTS OF PROTECTION, DOMESTIC SUPPORT, AND EXPORT SUBSIDIES 47

Table B-2.

Producer Support Estimates for 2004

(Percentage of value of gross farm receipts)

Source: Organization for Economic Cooperation and Development, 

Agricultural Policies in OECD Countries: Monitoring and 

Evaluation 2005, Highlights (Paris: OECD, 2005), Tables 

1.3 and 1.6.

Notes: The producer support estimate is the annual monetary value 

of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm-gate level, arising 

from policy measures that support agriculture, regardless of 

their nature, objectives, or impacts on farm production or 

income. It includes higher prices paid by consumers as a 

result of trade-protection and market-price-support policies, 

as well as gross transfers from taxpayers to agricultural producers arising from policy measures based on current output, area planted/animal numbers, historical entitlements, 

input use, input constraints, and overall farming income.

Values given are preliminary estimates as of the date of publication of the source.

ranks highest by that measure with a TSE of 4.12 percent 

of GDP. Its high ranking may reflect that agriculture remains a larger segment of its economy than is the case in 

more-industrialized countries because its industrial sectors have not grown to the extent that those sectors in the 

wealthier countries have. Turkey is followed by the same 

five countries that top the ranking by the two other 

OECD measures previously discussed. The European 

Union (25) ranks seventh at 1.16 percent—equal to the 

average for all OECD countries. The United States is 

ninth at 0.93 percent. New Zealand and Australia are last 

at 0.42 percent and 0.26 percent, respectively.

The policies measured by the general services support estimate have at most a minor distorting effect on trade, 

and they are the kinds of policies that have generally been 

allowed in nonagricultural sectors with little if any restriction by the succession of postwar multilateral trade agreements up through the Uruguay Round Agreement. On 

the other hand, the European Union has argued that food 

aid to foreign countries effectively acts as an export subsidy, and it has resisted negotiating reductions in export 

subsidies unless food aid is also discussed at the same 

time. Hence, it is of interest to examine how countries 

rank when GSSE is removed from the TSE, resulting in a 

measure equal to the PSE plus transfers from taxpayers to 

consumers—all expressed as a percentage of GDP.

The ranking by that measure is very similar to the ranking by the TSE. A fairly small percentage of the European 

Union’s TSE consists of its GSSE, so the European Union 

(25) rises from seventh to sixth, with 1.07 percent of its 

GDP devoted to non-GSSE support. By contrast, a fairly 

large percentage of the United States’ TSE consists of its 

GSSE. Its ranking remains at ninth, with 0.64 percent of 

its GDP devoted to non-GSSE support—about threefifths of the EU’s number.

Coefficient

All Products, by Country

Iceland 69

Switzerland 68

Norway 68

Korea 63

Japan 56

European Union (25) 33

Entire OECD 30

Turkey 27

Canada 21

United States 18

Mexico 17

Australia 4

New Zealand 3

Entire OECD, by Product

Rice 75

Sugar 58

Other Grains 43

Sheepmeat 37

Milk 36

Beef and Veal 34

Wheat 33

Maize 31

Oilseeds 27

Other Commodities 24

Pigmeat 21

Poultry 20

Eggs 9

Wool 6
48 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table B-3.

General Services Support Estimates for 2004

Source: Congressional Budget Office based on data from Organization for Economic Cooperation and Development, Agricultural Policies in 

OECD Countries: Monitoring and Evaluation 2005, Highlights (Paris: OECD, 2005), Table 1.1 and Tables 2.1-2.13.

Notes: The general services support estimate is the annual monetary value of gross transfers to general services provided to agriculture collectively, arising from policy measures that support agriculture regardless of their nature, objectives, or effects on farm production, 

income, or consumption. It includes research and development, agricultural training and education, infrastructure, and marketing and 

promotion.

The total support estimate is the annual monetary value of all gross transfers from taxpayers and consumers arising from policy measures that support agriculture, net of the associated budgetary receipts, regardless of their objectives and effects on farm production 

and income or on consumption of farm products. It is equal in value to the producer support estimate plus the general services support estimate plus transfers from taxpayers to consumers (such as the portion of food stamps and food aid spent on domestic agricultural products).

Values given are preliminary estimates as of the date of publication of the source.

Total Support

Estimate

(Percentage of GDP)

General Services Support 

Estimate (Percentage of Total 

Support Estimate)

Total Support 

Excluding General Services

(Percentage of GDP)

Turkey 4.12 3.5 3.97

Korea 3.39 11.4 3.00

Iceland 1.94 7.9 1.79

Switzerland 1.75 6.4 1.64

Japan 1.30 19.8 1.04

Norway 1.28 7.5 1.18

European Union (25) 1.16 8.1 1.07

Entire OECD 1.16 17.4 0.96

Mexico 0.95 12.7 0.83

United States 0.93 31.4 0.64

Canada 0.75 23.7 0.57

New Zealand 0.42 35.4 0.27

Australia 0.26 41.9 0.15
C

Detailed Domestic and Export

Subsidy-Rate Statistics Appendix C: Detailed Domestic and Export Subsidy-Rate Statistics

The following tables contain the detailed subsidy-rate numbers behind Summary Figures 2 and 4 and Figures 2, 

3, and 4.

APPENDIX
50 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table C-1.

Total Domestic Support Reported by Countries to the World Trade Organization

as a Percentage of Agricultural Output Value

Continued

1998 1999 2000 2001 2002 2003 2004

Average

Reported

Value,

1998–Present

Icelanda 137.41 142.08 139.75

Norwaya 122.08 130.22 133.86 126.56 128.18

Switzerland-Liechtensteina 82.86 82.86

Japan 39.16 37.79 37.58 37.57 35.11 37.44

United States 34.04 40.08 39.15 36.34 37.40

European Union 40.62 37.62 36.28 34.30 37.21

Koreaa 26.16 23.72 23.00 24.29

Israel 22.41 20.12 21.10 20.92 16.63 20.23

Slovak Republica 13.98 14.22 21.59 14.88 12.07 13.28 15.00

Hungary 13.73 13.40 11.04 14.59 15.85 13.72

Canada 11.05 13.24 14.53 12.94

Mexicoa 11.49 11.49

Czech Republica 5.70 8.55 9.90 10.98 9.22 8.87

Estonia 8.32 6.48 11.80 8.87

South Africa 7.86 7.63 6.47 7.32

Jordan 10.05 7.01 4.06 7.04

Polanda 7.31 6.54 6.94 3.27 7.76 6.37

Australia 5.02 4.72 4.56 3.89 7.02 6.00 5.20

Tunisia 5.69 5.28 4.28 4.68 4.99

Chile 2.63 3.21 3.93 5.15 4.80 3.94

Romania 4.10 3.04 4.50 3.30 2.20 3.43

Uruguay 2.26 2.53 2.93 3.59 2.83

Bulgaria 1.68 2.28 2.03 1.62 1.90

New Zealanda 2.17 2.32 1.72 1.32 1.68 1.87 1.85

Macedonia 1.14 1.14

Turkeya 1.58 1.27 0.66 0.28 0.95

Burundib 0 >0 >0 >0 >0c

Boliviab 0 0 0 0

Ecuadorb 0 0 0 0

El Salvadorb 0 0 0 0 0 0
APPENDIX C DETAILED DOMESTIC AND EXPORT SUBSIDY-RATE STATISTICS 51

Table C-1.

Continued

Source: Congressional Budget Office based on foreign-currency-denominated subsidy data from “Table 2—Use of Bound Total AMS Commitments by Member, 1995-2004,” in World Trade Organization, Total Aggregate Measurement of Support: Note by the Secretariat, 

TN/AG/S/13 (January 27, 2005); “Direct Payments under Production-limiting Programmes (Article 6.5 of the Agreement on Agriculture—“Blue Box”) by Member, 1995-2003,” in World Trade Organization, Blue Box Support: Note by the Secretariat, TN/AG/S/

14 (January 28, 2005); “Table 1—Value of Product-specific and Non-product-specific De Minimis Support by Member, 1995-2003,” 

in World Trade Organization, De Minimis Support: Note by the Secretariat, TN/AG/S/16 (February 1, 2005); and member-country 

reports to the World Trade Organization; foreign-currency-denominated value-of-production data from “Annex 2—Value of Total 

Agricultural Production as Notified in Members’ Domestic Support Notifications, 1995–2003,” in World Trade Organization, De Minimis Support: Note by the Secretariat, TN/AG/S/16 (February 1, 2005); dollar-denominated value-of-production data from Producer and Consumer Support Estimates, OECD Database 1986-2003, on the Web site of the Organization for Economic Cooperation 

and Development; and exchange-rate data from International Monetary Fund, International Financial Statistics.

Notes: Numbers are based ultimately on subsidy data reported to the World Trade Organization by the countries in question as of June 30, 

2005. A blank space indicates that the country has not reported its subsidies for the year in question.

The following countries have agreed to WTO subsidy commitments but have never reported their subsidies or lack thereof to the WTO 

and therefore are not included in this table: China, Croatia, Lithuania, Moldova, Papua New Guinea, and Taiwan. The following countries reported their subsidies or lack thereof to the WTO for at least one of the years from 1995 through 1997 but not for any year 

since and therefore are not included in this table: Bahrain, Benin, Botswana, Fiji, Gambia, India, Kenya, Nigeria, Peru, and Sri Lanka.

a. Indicates percentages calculated using OECD data instead of WTO data for the value of production. In principle, it is possible that the 

WTO and the OECD do not include exactly the same array of products in their definitions of the agricultural sector, which could cause their 

numbers to differ. For those countries for which both WTO data and OECD data were available, the two sets of numbers were exactly the 

same in some instances and approximately the same in others. Only in one or two years for one or two countries were the numbers significantly different.

b. Indicates no output data available. Percentages assumed to be zero on the basis of the fact that the country reported no subsidies and the 

assumption that the country has at least a small amount of agricultural output.

c. Burundi reported that its only subsidies in 2000, 2002, and 2004 were those in the special and differential box and did not report their 

magnitude.

1998 1999 2000 2001 2002 2003 2004

Average

Reported

Value,

1998–Present

Gabonb 0 0 0 0

Haitib 0 0

Hong Kongb 0 0 0 0 0 0 0

Macaub 0 0 0 0 0 0 0 0

Madagascarb 0 0 0

Myanmarb 0 0 0 0

Qatarb 0 0

Singaporeb 0 0 0 0 0 0 0

Ugandab 0
52 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

Table C-2.

Amber-Box Support Reported by Countries to the World Trade Organization as a 

Percentage of Agricultural Output Value

Source: Congressional Budget Office based on sources listed in Table C-1 on page 50.

Notes: This table lists only countries that have rates of reported total support greater than zero. In addition to those countries, all countries 

listed in Table C-1 as having rates of reported total support equal to zero also have rates of reported amber-box support equal to zero 

for the same years.

See Table C-1 for additional notes.

a. Indicates percentages calculated using OECD data instead of WTO data for the value of production. In principle, it is possible that the 

WTO and the OECD do not include exactly the same array of products in their definitions of the agricultural sector, which could cause their 

numbers to differ. For those countries for which both WTO data and OECD data were available, the two sets of numbers were exactly the 

same in some instances and approximately the same in others. Only in one or two years for one or two countries were the numbers significantly different.

b. Indicates no output data available. Percentages assumed to be zero on the basis of the fact that the country reported no subsidies and the 

assumption that the country has at least a small amount of agricultural output.

1998 1999 2000 2001 2002 2003 2004

Average

Reported Value,

1998–Present

Icelanda 112.7 112.7 114.8 113.4

Norwaya 58.7 61.8 59.9 60.6 60.2

Switzerland-Liechtensteina 42.1 42.1

European Union 21.9 20.5 17.9 15.9 19.1

Slovak Republica 13.3 12.9 15.0 12.5 3.2 3.6 10.1

Hungary 9.1 6.1 8.6 10.7 11.5 9.2

Israel 11.6 8.1 9.6 7.8 7.7 9.0

Japan 7.7 7.9 7.8 7.5 8.2 7.8

United States 5.4 9.1 8.9 7.3 7.7

Koreaa 5.3 4.9 5.3 5.2

Mexicoa 5.1 5.1

Czech Republica 0.8 3.8 4.3 4.2 4.1 3.4

Canada 2.7 3.3 2.7 2.9

Polanda 1.9 1.9 2.6 3.3 2.7 2.5

South Africa 1.9 1.8 0.9 1.5

Tunisia 1.9 0.8 1.4

Australia 0.4 0.2 0.6 0.7 0.7 0.6 0.5

Macedonia 0.5 0.5

Bulgaria 0.4 0.3 0.4 0.7 0.4

Jordan 0.01 0 0.13 0.04

Burundib 0 0 0 00

Chile 0 0 0 0 0 0

Estonia 0 0 0 0

New Zealand 0 0 0 0 0 0 0

Romania 0 0 0 0 0 0

Turkey 0 0 0 0 0

Uruguay 0 0 0000 0
APPENDIX C DETAILED DOMESTIC AND EXPORT SUBSIDY-RATE STATISTICS 53

Table C-3.

Agricultural Export Subsidies by Countries with Subsidy Reduction

Commitments as a Percentage of Agricultural Export Valuea

Source: Congressional Budget Office based on foreign-currency-denominated subsidy data from World Trade Organization, Export Subsidy 

Commitments: Note by the Secretariat, Addendum, TN/AG/S/8/Rev.1/Add.1 (January 31, 2005) and member-country reports to 

the World Trade Organization made after that date; dollar-denominated agricultural export data from World Trade Organization, 

International Trade Statistics (various years), on the WTO’s Web site; and exchange-rate data from International Monetary Fund, 

International Financial Statistics.

Notes: Numbers are based on the reports that the countries in question had made to the World Trade Organization in accordance with the 

Uruguay Round Agreement on Agriculture as of June 30, 2005. A blank space in a given year means that the country in question has 

not reported its subsidies for that year.

No country other than Hungary has reported on its export subsidies for 2004, and Hungary’s subsidy rate cannot be calculated because 

its export value is not available.

Most countries’ commitment levels are denominated in foreign-currency units, as are those countries’ reported subsidies. CBO converted the numbers to dollar values using the average exchange rates for the calendar years in question. The numbers reported by 

some countries are for fiscal years or some other year that overlaps with but is not identical to the calendar year. Furthermore, even 

for those countries that report for the calendar year, most of the exports—and therefore most of the export subsidies—may have 

occurred at a particular time of year when the exchange rate was slightly different from the average for the calendar year. Therefore, 

the numbers should be viewed as approximate values.

a. The following countries have export subsidy reduction commitments but are not included in this table because of a lack of agricultural 

export data: Cyprus, Mexico, Slovak Republic, and Venezuela.

1998 1999 2000 2001 2002 2003

Average

Reported Value, 

1998–Present

Switzerland-Liechtenstein 11.32 7.33 9.33

European Union 9.9 10.15 4.33 3.97 4.65 6.60

Czech Republic 1.95 1.28 1.62

Norway 2.82 1.05 0.79 1.55

Poland 0.38 1.82 1.20 0.65 1.01

Turkey 0.58 0.63 0.71 0.64

Romania 0.34 0.80 0.55 0.00 0.00 0.34

Hungary 0.4 0.53 0.31 0.13 0.18 0.36 0.32

Israel 0.11 0 0.45 0.38 0.21 0.23

Colombia 0.5 0 0 0.17

United States 0.21 0.12 0.02 0.08 0.05 0.10

South Africa 0.09 0.14 0.13 0 0 0.07

Australia 0.01 0.02 0 0 0 0 0.004

Indonesia 0 0 0 0

New Zealand 0 0 0 0 0 0 0

Brazil 0 0 0 0 0

Iceland 0 0 0 0 0 0

Canada 0 0 0

Bulgaria 0 0 0 0

Uruguay 0 0 0 0 0 0 0

Glossary

Agreement on Agriculture. An agreement 

among members of the World Trade Organization that 

regulates policies that distort agricultural trade. The 

agreement is a component of the Uruguay Round 

Agreement.

Amber box. A category of domestic support for agriculture under the Uruguay Round Agreement on Agriculture. All domestic subsidies, price supports, and other domestic support for agriculture that do not fall into one of 

the other four categories (green box, blue box, special and 

differential box, or de minimis support) fall into the amber box by definition. Amber-box support was limited 

and reduced by the Agreement on Agriculture.

Applied tariffs. The tariffs actually applied by a country, 

as opposed to the tariff bindings (or bounds) agreed to by 

the country in the Agreement on Agriculture. Applied 

tariffs may equal or lie below tariff bindings but may not 

exceed them.

Binding/bound/bound rate. A maximum limit 

on a tariff or subsidy agreed to by a country as part of the 

Uruguay Round Agreement. For example, a tariff binding 

is a limit on the tariff rate that the country can impose on 

a specified product.

Blue box. A category of domestic support for agriculture 

under the Agreement on Agriculture. Direct payments 

under production-limiting programs fall into the blue 

box if they are based on fixed areas and yield, on a fixed 

number of livestock, or on 85 percent or less of the base 

level of production. Those payments are distinguished 

from the fully decoupled payments that fall into the green 

box by the fact that they (the blue-box payments) are dependent on the existence of production (which the greenbox decoupled payments are not) but do not directly relate to the current quantity of production. Blue-box support is not limited by the Agreement on Agriculture, and 

there is no requirement to reduce it.

De minimis support. A category of domestic support for agriculture under the Agreement on Agriculture. 

Two related kinds of measures are considered de minimis: 

(1) product-specific support not falling into the green, 

blue, or special and differential boxes and for which the 

total value of the support does not exceed 5 percent of the 

total value of production of the product in question for 

developed countries and 10 percent for developing countries; and (2) non-product-specific support not falling 

into the first three boxes and for which the total value of 

the support does not exceed 5 percent of the value of total 

production of all agricultural products for developed 

countries and 10 percent for developing countries. 

De minimis support is not limited by the Agreement on 

Agriculture other than by the defining percentages, and 

there is no requirement to reduce it.

Doha Round. The current round of multilateral trade 

talks under the auspices of the World Trade Organization. The round was initiated in Doha, Qatar, on November 14, 2001, with the Doha Ministerial Declaration, 

and a framework agreement for the talks was reached on 

July 31, 2004. Although a number of issues are under negotiation, the subject of most attention and contention is 

the liberalization of world agricultural markets.

Domestic support. Domestic policies such as domestic 

subsidies, price supports, and research and development, 

whose purpose is to support domestic agricultural producers. Policies preferentially directed at exports are not 

included in domestic support.
56 POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE

European Free Trade Association (EFTA). A 

free-trade area created in 1960 that encompasses Iceland, 

Liechtenstein, Norway, and Switzerland.

European Union (EU). The European Union is a multinational entity created by the Maastricht Treaty of 1993. 

For many years, the EU and its predecessors (the most 

recent of which was the European Community) have 

worked toward economic and political integration of its 

member countries. The EU has free trade among its 

members, a common trade policy toward the rest of the 

world, and some other aspects of economic policy in 

common. Decisions regarding the common policies are 

made by various governing institutions of the EU, including the European Parliament, the Council of the 

European Union, the European Commission, the Court 

of Justice, and the Court of Auditors. In 2004, the EU 

admitted 10 new members, raising its total membership 

from 15 to 25 countries.

Export subsidies. Direct payments, tax preferences, and 

an array of other beneficial policies for producers and 

economic actors that are contingent on the export of agricultural products.

General Agreement on Tariffs and Trade 

(GATT). Originally signed in 1947, the GATT is an 

agreement among nations establishing rules of international trade that have progressively lowered trade barriers 

and liberalized trade. The last major GATT agreement 

was concluded in 1994, the so-called Uruguay Round, 

and resulted in the creation of the World Trade Organization in 1995. 

Green box. A category of domestic support for agriculture under the Agreement on Agriculture. The green 

box includes measures that the negotiators deemed to 

have little or no distorting effects on trade or production. 

Among the measures deemed as such are agricultural and 

environmental research programs, extension and advisory 

services, infrastructure services (such as roads, port facilities, and water supply facilities), marketing and promotion services, public stockholding for food security purposes, domestic food aid, income support that is 

decoupled from production, payments for financial relief 

from natural disasters, various kinds of structural adjustment, payments for environmental and conservation programs, and regional assistance programs for disadvantaged regions. Because negotiators viewed green-box 

support as benign, it is not limited by the agreement.

Market access. The terms and conditions under 

which imports enter a country. Most discussion of market 

access in agriculture currently focuses on tariffs and tariffrate quotas.

Nontariff barriers. Government policies that restrict trade, including such things as limitations on quantities of imports (quotas), licensing and standards, and 

government procurement policies and practices but excluding taxes on imports.

Organization for Economic Cooperation and 

Development (OECD). An organization of 30 member 

states committed to democratic government and market 

economics, notably in the current context of trade liberalization. Its membership consists primarily of industrialized countries, including (among others) the United 

States, Japan, and many of the industrialized countries of 

Europe.

Q

(Import) Quota. A quantitative limit on the amount of a 

given good that a government allows to be imported into 

the country, such as a restriction limiting imports of sugar 

to a specified number of tons per year.

Special and differential box. A category of domestic support for agriculture under the Agreement on 
GLOSSARY 57

Agriculture. The special and differential box is for “measures of assistance, whether direct or indirect, to encourage agricultural and rural development [that] are an integral part of the development programmes of developing 

countries, investment subsidies which are generally available to agriculture in developing country Members, and 

agricultural input subsidies generally available to lowincome or resource-poor producers in developing country 

Members.”1

Tariff. A tax on imports. Tariffs may be specific or ad 

valorem or some combination of the two. A specific tariff 

is a specific amount of money levied for a specific quantity of the good imported, such as one dollar per bushel 

of wheat. An ad valorem tariff is a tariff equal to a given 

percentage of the value imported.

Tariff equivalent. The tariff rate that would provide 

equivalent protection to a nontariff restriction on trade—

in other words, that would raise the domestic price by the 

same amount as the nontariff measure. For example, a 

quota has the effect of raising the price of the good to 

which it applies. The tariff equivalent of a quota is the 

rate of import tax that would raise the price of the good 

by the same amount as the quota.

Tariff line. A line in the schedule of tariffs levied by a 

country that assigns a given tariff to a given product or 

group of products.

Tariff-rate quota. A form of tariff in which one tariff rate 

applies to imports up to a given quota level and a higher 

tariff rate applies to imports in excess of that quota level. 

Tariff-rate quotas were imposed by many countries in 

response to the twin requirements of the Agreement on 

Agriculture that all nontariff import restrictions be converted to equivalent tariffs and that the conversion not 

reduce the access of foreign exporters to the country making the conversion—in other words, that it not reduce 

the quantities that they are able to export to the country 

in question. 

Total aggregate measure of support (total AMS). The 

total value of a country’s amber-box measures of support.

Trade-weighted average tariff. A tariff average in which 

each tariff is weighted by the value of imports subject to 

that tariff. It is calculated by multiplying each tariff by 

the value of imports subject to that tariff, adding all of 

the resulting products, and dividing the sum by the sum 

total value of imports of all products. The weighting process ensures that tariffs affecting substantial quantities of 

trade count more than tariffs affecting little or no trade. 

However, because high tariffs tend to discourage imports 

and therefore lower the weights of those tariffs in the calculation, trade-weighted averages tend to understate the 

significance of countries’ tariff protection.

Uruguay Round. A round of multilateral trade 

negotiations under the auspices of the GATT that took 

place from September 1986 through April 1994.

Uruguay Round Agreement. The agreement reached in 

the Uruguay Round of multilateral trade negotiations. 

The agreement created the World Trade Organization 

and contained the Agreement on Agriculture as one of its 

components. It took effect on January 1, 1995.

World Trade Organization (WTO). A multilateral institution created by the Uruguay Round Agreement to administer that agreement and adjudicate disputes arising under it. As of October 2004, the WTO 

1. Article 6, paragraph 2 of the Agreement on Agriculture. had 148 member nations.