. /.WORLD TRADE
ORGANIZATIONG/AG/NG/W/35
22 September 2000
(00-3818)
Committee on Agriculture
Special SessionOriginal:  English
WTO Negotiations on Agriculture
Cairns Group Negotiating Proposal
Domestic Support
Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Fiji, Guatemala,
Indonesia, Malaysia, New Zealand, Paraguay, Phil ippines, South Africa, Thailand and Uruguay
submit the following Cairns Group proposal which deals with domestic support issues in the WTOnegotiations.
INTRODUCTION
The Uruguay Round committed WTO Members to fundamental reform resulting in correcting
and preventing restrictions and distortions in world agricultural markets. Yet today agriculture
remains the most highly subsidised sector in the world economy.  The OECD has confirmed that
support to farmers in industrialised countries, calculated at more than US$360 billion in 1999, has
returned to the high levels existing before the end of the Uruguay Round.
The Uruguay Round disciplines governing domestic support distinguished between trade and
production-distorting forms of support (aggregate measurement of support (AMS) and "blue box")
and those which have no, or at most minimal, trad e and production-distorting effect ("green box").
However, current disciplines and reductions are clearly inadequate and have not resulted in a
fundamental shift away from trade and produ ction-distorting forms of domestic support.
High levels of, and wide disparities in, trade and production-distorting domestic support
continue to corrupt world agricultural markets. Such support, provided mainly by some wealthy
developed countries, encourages inefficient production which competes unfairly with producers in
other WTO Member countries.  Only 30 WTO Memb ers have the right to provide AMS support at
above de minimis levels.  In addition "blue box" support measures which distort trade and production
are exempt from Uruguay Round reduction commitments, while other policies claimed as "green box''
measures are also causing, or have the potential to cause, distortions.
The Cairns Group seeks major reductions in domestic support leading to the elimination of all
forms of trade and production-distorting support.  Only non-distorting forms of support should be
permitted within the context of declining levels of support.  The Cairns Group recognises the need forenhanced special and differential treatment provisions to address the agricultural and rural
development needs of developing and least developed countries, and increase the living standards of
their populations.
PROPOSAL
Consistent with the objective of the reform pr ocess, and taking into account that, from 2004,
WTO Members will not be restricted from taking action against domestic support under the GATTG/AG/NG/W/35
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1994 and the Agreement on Subsidies and Countervailing Measures, the Cairns Group proposes that
WTO Members decide on the following general approach to domestic support:
• A formula approach will be used to deliver major reductions in trade and production distorting
domestic support, including AMS and blue box, leading to the elimination of such support and
thus the removal of disparities in the levels of this support provided by countries;
• The time period, and other parameters, of the reduction formula for trade and production-
distorting domestic support will be agreed in the negotiations;
• The formula will include a substantial downpayment during the first year of the implementation
period (eg. not less than a 50% initial reduction in trade and production-distorting domestic
support);
• The formula will result in commitments on a di saggregated basis to ensure that trade and
production-distorting support will be reduced for all agricultural products;
• The basic and policy-specific criteria for "green box" support not subject to reduction and
elimination (Annex 2 of the Agreement on Agriculture) will be reviewed to ensure that all such
domestic support meets the fundamental requirements of no, or at most minimal, trade-
distorting effects or effects on production.
Continuation of the Reform Process
In order to ensure that the reform process continues during the course of the WTO
negotiations, countries should show maximum restraint and reduce the extent to which trade andproduction-distorting forms of support are provided.
Special and Differential Treatment
The Cairns Group recognises the importance of providing concrete special and differential
treatment (S&D) provisions in the area of domestic support to assist developing countries, including
least-developed and net food-importing developing countries.  Provisions should enable developing
countries to address their legitimate and varied needs, including agricultural and rural development,
food security, and subsistence and small scale farming for the development of domestic food
production.  The final provisions for developing and least-developed countries will need to take intoaccount the outcome of the negotiations, but S&D outcomes must ensure that developing countries
have adequate flexibility to pursue their development needs.  S&D provisions relating to domestic
support should build on the existing WTO provisions and include:
• Enhanced green box provisions for developing countries which would address their specific
concerns regarding food security, rural development and poverty eradication;
• Differentiated AMS formula and commitments for developing countries, including preserving
de minimis provisions and exceptions for investment and input subsidies, and domestic support
to encourage diversification from growing illicit narcotic crops;
• Enhanced technical assistance and the promotion of international cooperation to assist
agricultural and rural development, and food security programs in developing countries.
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