Deploying climate-smart agriculture (CSA) policies globally will provide benefits from reducing greenhouse gas (GHG) emissions and providing carbon capture. But a report from the American Enterprise Institute (AEI) cautions putting those policies in place with incentives also risk running such efforts afoul of world trade rules. “While government implementation of mitigation and adaptation policies may help address climate change, concerns arise if CSA policies run counter to international trade disciplines,” the report prepared by former USDA Chief Economist Joe Glauber said.
“In particular, CSA policies could directly conflict with World Trade Organization (WTO) trade rules if those policies distort production and trade.” Efforts tied incentivize new technologies and practices relative to input use could also be ones that would be considered “Amber Box” subsidies under the WTO — ones that potentially can be trade distorting — as opposed to be considered “Green Box” payments — ones that provide minimally trade distorting impacts.
“Input subsidies to encourage adoption of new GHG technologies would generally be considered amber box programs since they are tied to production or the input itself,” the paper said, as “paying farmers to adopt no-tillage practices would presumably be based on planted area.”
However, cost-share payments could well be considered Green Box under WTO rules if they are limited to “extra costs or loss of income involved with complying with the government program.”
