State policy and regulatory framework
The following laws are primary legislative documents regulating domestic support to agriculture:
- Tax Code
- Decree of the President of the Republic of Azerbaijan No 1314 “On stimulating sugar beet production in the Republic of Azerbaijan”, adopted on 04.04.2017
- Resolution of the President of the Republic of Azerbaijan No 2337 "On State support for the development of sericulture in the Republic of Azerbaijan”, adopted on 15.09.2016
- Resolution of the President of the Republic of Azerbaijan No 2336 on “State support for the development of tobacco production in the Republic of Azerbaijan”, adopted on 05.10.2016
- Resolution of the President of the Republic of Azerbaijan No 2350 "On State support for the development of cotton growing in the Republic of Azerbaijan”, adopted on 22.10.2016
- Resolution of the President of the Republic of Azerbaijan No 1907 "On State support to producers of agriculture products”, adopted on 23.01.2007
- Decision of the Cabinet of Ministers of the Republic of Azerbaijan No 91 on “Rates of customs duties for export-import operations”, adopted on 22.04.1998
- Decision of the Cabinet of Ministers of the Republic of Azerbaijan No 273 on adoption of “Rules of granting privileges to the machinery and irrigation systems and equipments newly purchased, leased or sold through leasing by “Aqrolizinq” OJSC”, of 13.08.2014
Scope - 3 Pillars of the WTO Agreement on Agriculture
1. Market Access
Market access refers to the reduction of tariff (or non-tariff) barriers to trade by WTO members. The WTO Agreement on Agriculture requires tariff reductions in the following manner:
- 36% average reduction by developed countries, with minimum per-tariff line reduction of 15% over six years
- 24% average reduction by developing countries, with minimum per-tariff line reduction of 10% over ten years
Least developed countries were exempt from tariff reductions, but they either had to convert non-tariff barriers to tariffs - a process called “tariffication” or "bind" their tariffs, creating a ceiling that could not be increased in future.
2. Domestic Support
Domestic support falls under one of the following four boxes. The content of each box and the classification of a measure under any of the boxes is explained below (source: WTO page "Domestic support in agriculture: The boxes").
Amber Box: Nearly 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 Agreement on Agriculture 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 (generally 5% of agricultural production for developed countries, 10% for developing countries). 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. For example, the EU's purchase of cereals and dairy products at guaranteed prices from its producers is an amber box support measure.
Blue Box: 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 Agreement on Agriculture ). At present, there are no limits on spending on blue box subsidies.
Green Box: Such type of support is defined in Annex 2 of the Agreement on Agriculture. 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 programmes 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 programmes. “Green box” subsidies are therefore allowed without limits, provided they comply with the policy-specific criteria set out in Annex 2. For example, green box support includes certain direct income supports for farmers that are not related to current production levels or prices, the support to farmers to restructure the agriculture, as well as direct payments to farmers under environmental and regional assistance programmes.
Development box: Article 6.2 of the Agreement on Agriculture allows developing countries additional flexibilities in providing domestic support. The type of support that fits into the developmental category are measures of assistance, whether direct or indirect, designed to encourage agricultural and rural development and that are an integral part of the development programmes of developing countries. They include investment subsidies which are generally available to agriculture in developing country members, agricultural input subsidies generally available to low-income or resource-poor producers in developing country members, and domestic support to producers in developing country members to encourage diversification from growing illicit narcotic crops.
3. Export Competition
The Agreement on Agriculture prohibits export subsidies on agricultural products unless the subsidies are specified in a Member’s lists of commitments. Even if they are listed, the Agreement requires WTO Members to cut both the amounts spent on export subsidies and the quantities of exports that receive subsidies. According to the Decision adopted at 10th Ministerial Conference in Nairobi, 15-18 December 2015:
- Developed Members shall immediately eliminate their remaining scheduled export subsidy entitlements;
- Developing country Members shall eliminate their export subsidy entitlements by the end of 2018 and shall continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture until the end of 2023;
- Least developed countries and net food-importing developing countries shall continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture until the end of 2030.
Position of Azerbaijan in accession negotiations
The position of the Government of Azerbaijan in the context of the WTO accession negotiations is the following:
- De minimis (minimum permitted amount of domestic support expressed in percentage to the amount of total annual agriculture production) - 10%
- Total Aggregate Measurement of Support (the sum of all domestic support provided in favour of agricultural producers, calculated as the sum of all aggregate measurements of support for basic agricultural products) – USD 1 bln
- The right to use additional amount for regeneration of rural areas after de-occupation of Nagorny Karabakh and surrounding areas
- The right to use provision of Article 6.2 of the Agreement on Agriculture
State authorities and competences
Responsibilities for support to agriculture producers in Azerbaijan are divided among the Ministry of Agriculture, the Ministry of Finance, the Ministry of Taxes and the State Customs Committee of the Republic of Azerbaijan.
Relevant documents, data and resources
- General page on agriculture
- The Boxes
- Domestic support page
- Tariff and tariff quotas page
- Book "WTO Agreements Series - Agriculture"
- Transparency toolkit
- List of disputes regarding the WTO Agreement on Agriculture
- Agriculture Information Management System
- Agricultural Market Information System