Question

40. Consider the following statement about Aggregate Measurement of Support’ (AMS) under WTO
1. Product-specific subsidy provided to each individual agricultural commodity is part of AMS.
2. AMS represents trade distorting domestic support.
3. Subsidies on inputs for agriculture are not part of AMS.
Select the correct answer using the code given below.

• A. Only 1 and 2
• B. Only 2 and 3
• C. Only 1 and 3
• D. All of the above

Answer 1

The correct option is A Only 1 and 2

WTO’s Agreement on Agriculture (AoA) classifies domestic support or subsidies given by the government to farmers into different categories. An important type of subsidies or supports is Aggregate Measurement of Support (AMS). The AMS represents trade distorting domestic support and is referred as the “amber box”. The Aggregate Measurement of Support consists of two parts—product-specific subsidies and non-product specific subsidies. Product-specific subsidy refers to the total level of support provided for each individual agricultural commodity. For example wheat AMS is the subsidy given specifically to wheat. Non-product specific subsidy, on the other hand, refers to the total level of support given to the agricultural sector as a whole, i.e., subsidies on inputs such as fertilizers, electricity, irrigation, seeds, credit etc. Usually, these non-product subsidies are given to all crops. Developed countries, including the US, the EU and Canada, have been consistently providing trade-distorting subsidies to their farmers at levels much higher than the ceiling applicable to developing countries. Developed countries have more than 90% of global AMS entitlements amounting to nearly US$ 160 bn. Most of the developing countries, including India and China, do not have AMS entitlements.