Reforming Indonesia’s agricultural subsidies through the WTO Green Box: Legal pathways for trade, environment, and climate smart agricultural

Universitas Indonesia, Faculty of Law, Depok, Indonesia

^* Corresponding author: Alfiyahinayah13@gmail.org

Abstract

Indonesia continues to rely on input-based agricultural subsidies, particularly for chemical fertilizers, to maintain food production. However, this approach poses several challenges, including potential environmental impacts from excessive chemical use, trade distortions, and the slow adoption of more sustainable agricultural practices that support Indonesia's climate change adaptation and mitigation goals. Under the WTO Agreement on Agriculture (AoA), subsidies are classified based on their trade-distorting effects, with Green Box subsidies recognized as having minimal impact on trade. This research reveals significant regulatory and implementation gaps between current input subsidy policies, as stipulated in Presidential Regulation No. 6/2025, and the WTO Green Box standards, as well as the Climate Smart Agriculture (CSA) targets mandated by Indonesia's National Determined Contribution (NDC). Therefore, this paper argues that reforming subsidies toward Green Box-compatible instruments by supporting public services, environmental program payments for low-carbon agriculture, and structural adjustment assistance for smart agriculture investments is an important legal reform pathway.