Canada has $7 billion dollars in agricultural exports ($314 million of dairy products) while Canadian farms sell over $18 billion dollars in agricultural products. Export of agricultural products has increased in the past years but general farm returns have continued to fall. Supply management is a tool that allows dairy, egg and poultry producers to obtain a fairer share of consumer spending on food. It does not prevent others from exporting.

Canada currently imports about 4% of the market for dairy products consumed in Canada ($547.9 million). In comparison, the United States gives only 2.75% access for dairy products and Europe offers a mere 0.5% for poultry. Canada?s agricultural trade position seeks that all countries provide clean market access. If all countries provided 5% access to their markets, overall trade could increase, for example, by 77.5% for cheese, 114% for pork, 152% for poultry, 50% for wheat and 92% for beef.

All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box, which is defined in Article 6 of the Agriculture Agreement as all domestic supports except those in the blue and green boxes. These include measures to support prices, or subsidies directly related to production quantities. These supports are subject to limits: ?de minimis? minimal supports are allowed (5% of agricultural production for developed countries, 10% for developing countries); the 30 WTO members that had larger subsidies than the de minimis levels at the beginning of the post-Uruguay Round reform period are committed to reduce these subsidies. The reduction commitments are expressed in terms of a ?Total Aggregate Measurement of Support? (Total AMS) which includes all supports for specified products together with supports that are not for specific products, in one single figure. In the current negotiations, various proposals deal with how much further these subsidies should be reduced, and whether limits should be set for specific products rather than continuing with the single overall ?aggregate? limits. In the Agriculture Agreement, AMS is defined in Article 1 and Annexes 3 and 4.

This is the amber box with conditions conditions designed to reduce distortion. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production (details set out in Paragraph 5 of Article 6 of the Agriculture Agreement). At present there are no limits on spending on blue box subsidies. In the current negotiations, some countries want to keep the blue box as it is because they see it as a crucial means of moving away from distorting amber box subsidies without causing too much hardship. Others wanted to set limits or reduction commitments, some advocating moving these supports into the amber box.

The green box is defined in Annex 2 of the Agriculture Agreement. In order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion (paragraph 1). They have to be government-funded (not by charging consumers higher prices) and must not involve price support. They tend to be programs that are not targeted at particular products, and include direct income supports for farmers that are not related to (are ?decoupled? from) current production levels or prices. They also include environmental protection and regional development programs. ?Green box? subsidies are therefore allowed without limits, provided they comply with the policy-specific criteria set out in Annex 2. In the current negotiations, some countries argue that some of the subsidies listed in Annex 2 might not meet the criteria of the annex?s first paragraph ? because of the large amounts paid, or because of the nature of these subsidies, the trade distortion they cause might be more than minimal. Among the subsidies under discussion here are: direct payments to producers (paragraph 5), including decoupled income support (paragraph 6), and government financial support for income insurance and income safety-net programs (paragraph 7), and other paragraphs. Some other countries take the opposite view ? that the current criteria are adequate, and might even need to be made more flexible to take better account of non-trade concerns such as environmental protection and animal welfare.