WTO classifies domestic agriculture subsides into three categories: green , blue and amber.
A. GREEN BOX SUBSIDIES
- Subsidies that don’t disrupt trade balance OR only cause minimum damage to trade balance.
- E.g. agriculture research-development, extension services, farmer training programs,domestic food aid , public food security stocks pest-disease control program, flood/drought relief money paid to farmers ,income guarantee and security programmes etc.
- WTO Limit: nothing. Governments can give as much as they want.
B. AMBER BOX SUBSIDIES
- Subsidies that disturb trade balance like, subsidies on fertilizers, seeds, power and irrigation.
- They distort trade balance because they encourage excessive production,therefore given country’s product becomes cheaper than others, in the international market.
C. BLUE BOX SUBSIDIES
- Amber type Subsidies that aim to limit production.
- The Blue box subsidies aim to limit production by imposing production quotas or requiring farmers to set aside part of their land.
- Subsidies that don’t increase with production. For example subsidies linked with acreage or number of animals.
- Very few countries use blue box- Iceland, Norway, Slovenia etc.
- Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit their production.