World Trade Organization

In article it is reported about the main spheres of the Agreement on agricultural industry: access on the market of agricultural production, protective measures; export subsidies; internal programs of support and action of the state support which are spread conditionally out on three multi-colored baskets: "green", "yellow" and "blue". Expenses of the government budget of Ukraine of 2005 on actions of a "yellow" basket are given.

The country prepares for accession to WTO

AGREEMENT ON AGRICULTURAL INDUSTRY

As it was reported in the previous issue of the newspaper, the sphere of regulation of the Agreement on agricultural industry is trade in agricultural production and products of its processing. The agreement defines the main spheres on which member countries of the WTO assume obligations: access on domestic market of agricultural production; internal support of agricultural industry – protective measures; export subsidies.

How access on the agricultural products market is regulated?

Before the country for the purpose of protection of own producers limited agricultural import by active application of quantitative restrictions (quotas, selective licenses for import etc.). According to the Agreement these means of protection should be counted in tariff equivalents on the basis of enough difficult calculations. Further these rates of import duty should decrease gradually (for 6 years for developed countries and for 9 years – for developing states).

What is the protective measures?

The member country of the WTO can use special protective measures, i.e. enter additional protective duty for agricultural products import if volumes of an import or the price of imported production threaten domestic market. The critical volume of an import pays off not any way, and according to the Agreement, and the additional duty entered thus, can be raised in the size which is not exceeding a third of usual duty.

How export subsidies are regulated?

Export subsidies became object of rigid regulation from the WTO. Member countries of the WTO assumed obligations to freeze their operating level, and then to reduce throughout a certain period of time. In Ukraine this method of advance of domestic agricultural products on foreign markets wasn’t used, and at accession to WTO Ukraine and will refuse further subsidizing of the export.

How internal programs of support of agricultural industry will change?

All measures of internal state support of agricultural industry are classified by the WTO according to the main criterion – whether they influence volume of production and the price in such a manner that it leads to inefficient use of resources.

All measures of the state support are spread conditionally out on three multi-colored baskets: "green", "yellow" and "blue".

Actions of a "green" basket of the WTO – it actions of the state support of agricultural industry which don’t serve as the reason of inefficient distribution of resources in the agrarian sphere. These actions aren’t directed on support of the prices of producers.

The state expenses within a "green" basket can be carried out in the following directions:

• scientific researches, preparation and professional development of shots, information and consulting service;

• veterinary and fytosanitory actions, control of safety of food;

• assistance to agricultural products sale, including collecting, processing and distribution of market information;

• infrastructure improvement (construction of ways, power supply networks, meliorative constructions), except for operational costs of its contents;

• maintenance of strategic food stocks, internal food aid;

• providing the guaranteed income to agricultural producers, land use improvement;

• support of the income of the producers, not connected with a look and volume of production (for example, payments on the basis of the status of the land owner or the producer);

• assistance    to restructuring  of agricultural production (for example, payments  on production translation programs from agarny sector in not agrarian);

• environmental protection;

• programs of regional growth (for example, payments according to programs of a regional aid in depressive regions).

Whether limits the WTO financing of actions of a "green" basket?

The state has the right to finance actions of a "green" basket in any necessary volume depending on possibilities of the budget.

Share of actions of a "green" basket of the WTO in structure of the state support of agricultural industry of Ukraine in 2003-2005g.g.:

2003 – 19 %;     2004g – 25 %;  2005g. – 34 %.

Actions of a "blue" basket are directed on overproduction restriction (that is actual for developed countries), and concerning them also there are no financing restrictions from the budget.

Actions of a "yellow" basket of the WTO:

• grants for animal husbandry and plant growing production;

• grants for breeding animal husbandry;

• grants for elite seed farming;

• grants for compound feeds;

• compensation of a part of expenses for mineral fertilizers and means of protection of plants;

• compensations of a part of expenses for energy resources;

• price support: difference compensation between purchase and market price of agricultural products;

• granting to the producer of the goods and services in the prices, below the market;

• purchase at the producer of the goods and services in the prices exceeding the market;

• preferential crediting of agricultural producers at the expense of the budget, write-off of debts;

• privileges for agricultural products transportation;

• expenses of leasing fund, etc.

Whether limits the WTO financing of actions of a "yellow" basket?

Concerning actions of a "yellow" basket the state should assume the obligation on reduction of budget financing.

Cumulative measurement of support (HOARSED) – the annual sum of all types of the state support on which obligations on reduction extend. Throughout a 6-year transition period HOARSED it is necessary to reduce by 20 % (for developed countries). The participating country of the WTO has the right not to reduce an expense of a "yellow" basket if undertakes to provide support in the size no more than 5 % from cost of gross output of agricultural industry (for developed countries) and 10 %-for the developing.

Such rigid requirements of the WTO are directed, first of all, against the countries with the developed market economy which possibilities on support of own producers are more considerable. Ukraine (for political reasons) at accession to WTO aspires to receive the country status with the developed market economy.

How actions of a "yellow" basket in Ukraine are financed?

Most resolved amount of the state support of agricultural industry actions of a "yellow" basket is one of the most debatable questions at the introduction Ukr ajny in the WTO. Almost all actions of the state support of the Ukrainian agricultural industry thanks to which the branch developed for the last years (in particular, introduction since 2000 of partial compensation to agricultural producers from means of the state budget of discount rate for using the credits; surcharges from the state budget for delivery of production of the corresponding quality; write-off to farms of central government debts) treat "a yellow basket", i.e. most likely, will be subject to a certain reduction.

Expenses of the government budget of Ukraine of 2005 on actions of a "yellow" basket:

On materialam:T. Ostashko Agricultural industry in the conditions of the WTO, Institute of Rural Development