| Abstract: | One of the questions debated in the ongoing WTO agricultural negotiations is whether 'trade-distorting' subsidies, or subsidies outside the 'green box', are needed in order to pursue non-trade concerns. The term 'multifunctional agriculture' is increasingly applied to describe non-trade concerns. This article focuses on how to achieve the multifunctional goals that nations may have with minimal trade-distortion. In the first part of the article, this is done by a literature review and a theoretical analysis. The findings are then converted into an analysis of possible policy formulations in a Norwegian context using a partial equilibrium model. The article argues that multifunctionality hardly can justify the use of market support, while it may justify production-related budget support if the positive externalities or public goods are produced jointly with or complementary to agricultural production. The article concludes with suggestions for WTO trade rules to prevent such policies from becoming a form of protectionism. |
