Crop Insurance and the WTO

• Agricultural Economics Workshop
• Departmental Seminar

Date and Location

Monday, May 13, 2013, 4:10 PM - 5:30 PM
3001 Plant and Environmental Sciences

Abstract

This paper examines the treatment of crop and revenue insurance under the WTO. Insurance programs have become an increasingly popular means of providing support to agricultural producers. An often cited impetus for the growth in insurance program is the potential treatment of such programs as exempt from WTO reduction commitments. Under Annex 2 of the Uruguay Round Agreement on Agriculture URAA), domestic support measures that have, at most, a minimal impact on trade, so-called green box policies, are excluded from reduction commitments. Paragraph 7 of Annex 2 includes criteria that identify qualifying income insurance and income safety net programs while Paragraph 8 includes criteria that identify qualifying natural disaster assistance programs including crop insurance. Yet while WTO rules shield green box policies from reduction, few developed countries have notified agricultural insurance policies under Annex 2. Moreover, crop insurance programs have been challenged in recent WTO dispute settlement cases and domestic countervailing duty investigations. This paper discusses the prevalence of agricultural insurance programs and how countries have notified insurance programs to the WTO. It discusses the treatment of agricultural insurance in trade disputes, including Brazil's WTO challenge to U.S. support programs for upland cotton. Lastly, the paper examines the impact of alternative notifications of insurance subsidies on overall support levels.