In this paper, the consistency of UK agri-environmental policy in relation to the requirements of the GATT Agreement on Agriculture is examined with particular reference to the general and specific criteria within the Annex 2. Jointness in the production of agricultural and environmental output is used to explain the form of agri-environmental policy. UK Environmentally Sensitive Areas are examined and the trade distorting effects of agri-environmental policy considered. It is argued that the appropriate test of trade consistency of agri-environmental policy is social cost-benefit analysis and not changes in the composition of agricultural production.