Question:Consider the following.
1. Direct cash transfers
Which of the above is/are Green Box Subsidies as per WTO ?.
a) Only 1 and 3
b) Only 2
c) 1, 2 and 3
d) None of these
The WTO divides subsidies into amber, blue and green box subsidies. Amber box are trade-distorting subsidies, blue box are subsidies with restrictions designed to reduce distortion and green box subsidies are non-trade distorting subsidies. Direct cash transfers, coupons and subsidies that do not impact production are not considered trade-distorting subsidies and categorized as green box.
Member countries can challenge such subsidies imposed by trading countries in the WTO dispute settlement procedure. If the WTO feels the subsidy is harming international trade, it can ask the country to withdraw the subsidy. Countries with per capita gross national product of less than $1,000 are exempt from these conditions, while developing countries are given time to phase out these subsidies, called the “peace clause”. The current peace clause expires on December 31, 2015.