Constraining U.S. and EU Domestic Support in Agriculture: The October 2005 WTO Proposals

In October 2005 the USA, EU, and G-20 submitted proposals on domestic support in the WTO agriculture negotiations. We consider the de minimis rules and allowances, project future (2014) distorting support for the USA and the EU-15, calculate the constraints resulting from projected values of production combined with the U.S., EU and G-20 proposals, and compare their effectiveness in constraining components of distorting support and future applied support. The de minimis rules make a significant difference for future allowed support. Under the U.S. proposal the Overall commitment constrains neither the USA nor the EU. Under the EU and especially the G-20 proposals the Overall commitment constrains distorting support to be less than the sum of the cap on blue and the Maximum Usable Components (MUC). The MUC is smaller than the sum of the commitment on Total Aggregate Measurement of Support (TAMS) and all de minimis allowances. Despite seemingly large percentage reductions, the three proposals would impose only very modest, if any, constraints on projected 2014 applied domestic support.