The agreement defines, in Appendix 1, agricultural products by reference to the harmonized product classification system and covers not only agricultural commodities such as wheat, milk and live animals, but also by-products, such as bread, butter and meat, as well as all processed agricultural products such as chocolate and deli meats. The cover also includes wines, spirits and tobacco products, fibres such as cotton, wool and silk, and raw skins for catering. Fish and fish products are not included, nor are forest products. Export subsidies are the third pillar. The 1995 agricultural agreement required industrialized countries to reduce export subsidies by at least 36% (in value terms) or by 21% (by volume) over a six-year value. For developing countries, the agreement called for reductions of 24% (in value) and 14% (in volume) over ten years. These agreements provide some flexibility in implementation by developing countries as well as for WTO members (special and differentiated treatment) and least developed countries (LDCs) and net food-importing developing countries (special provisions). The first pillar of the agricultural agreement is “domestic support.” AoA divides domestic support into two categories: distorting trade and not distorting trade (or having a low level of trade distortion). The WTO agricultural agreement negotiated in the Uruguay Round (1986-1994) provides for the classification of subsidies by “boxes” according to the consequences of production and trade: bernstein (most directly related to the level of production), blue (production limitation programmes that still distort trade) and green (minimum distortion).  While payments in the amber box were to be reduced, those in the green box were released from the discount obligations.
Detailed rules for green box payments are contained in Schedule 2 of the AOA. However, all must meet the basic requirement of paragraph 1 in order not to create more than a minimal distortion of trade or production, and they must be provided by a state-funded programme, which does not involve consumer transfer or price support to producers.  (i) national product-specific support that would otherwise have to be included in a member`s current AMS calculation if this assistance does not exceed 5% of the total value of the production of a basic agricultural product in the year under review; and 39 One case concerned the EU. In October 1997, the United States requested consultations with the EC on export subsidies allegedly granted by the EC to processed cheeses, ignoring the EC`s commitment to reduce export subsidies (WT/DS 104). The United States has alleged violations of several articles (8,9,10 and 11) of the Agriculture Convention and Article 3 of the SCM Convention. But the panel in this case has not been set up. In general, WTO members have avoided litigation over agricultural subsidies. This position reflected the “peace clause” that was adopted between the United States and the European Communities during the final phase of the UR negotiations (the Blair House Agreement) . The peace clause gave immunity from the complaint against the subsidies as part of the reduction.
46 is much weaker. On the other hand, the limitation of the common budget becomes very obvious. Finally, support, although very high, is now closer to that of the United States. The share of TSEs as a percentage of EU GDP is 1.3% and 0.9% in the US. Subsidies per full-time farmer amount to 18,000 euros in the EU and 16,000 euros in the United States. That is why, for the first time in multilateral negotiations, the United States and the European Union have probably drawn up a common proposal on trade liberalization in agriculture. 5 The EC has introduced significant changes to subsidies. The agricultural agreement required WTO members to reduce direct export subsidies.