WORLD TRADE
ORGANIZATIONG/AG/NG/W/101
16 January 2001
(01-0259)
Committee on Agriculture
Special SessionOriginal:  English
WTO AGRICULTURE NEGOTIATIONS
Proposal by Norway
Table of Contents
PART I:  PROPOSAL 2
1. GENERAL PRINCIPLES 2
2. AREAS FOR NEGOTIATION 3
2.1 Market access 3
2.2 Domestic support 4
2.3 Export competition 4
2.4 Special and differential treatment for developing countries 4
2.5 Other issues 5
PART II:  BACKGROUND ELEMENTS 6
3. EXPERIENCES AND EFFECTS OF THE EXISTING AGREEMENT 6
4. THE ISSUE OF JOINTNESS 7
5. DISPARITIES BETWEEN AND WITHIN COUNTRIES 8
5.1 Demand side variations 8
5.2 Supply side variations 8
6. APPROPRIATE POLICY COMBINATIONS FOR ADDRESSING NTCs 9G/AG/NG/W/101
Page 2
PART I:  PROPOSAL
GENERAL PRINCIPLES
1. Article 20 recognises the "long-term objective of substantial progressive reductions in
support and protection" .  However, while Article 20 represents an obligation to continue  the reform
process, the process should not necessarily be finalised by reaching the long-term objective in the
ongoing negotiations.  Moreover, the size of the reductions in support and protection should be
determined by, among other things the experience gained from implementing the existing Agreement,
the consequences of the Agreement, non-trade concerns (NTCs), special and differential treatment to
developing countries and the objective of establishing a fair and market-oriented agricultural trading
system.
2. In the Preamble to the Marrakesh Agreement Establishing the World Trade Organization , the
Parties recognise that their relations in the field of trade and economic endeavour should allow for
"optimal use of the world's resources in accordan ce with the objective of sustainable development,
seeking both to protect and preserve the enviro nment and to enhance the means for doing so in a
manner consistent with their respective needs and concerns at different levels of economicdevelopment ."  The promotion of sustainable development and environmental concerns should be
taken into account in the negotiations.
3. Other multilateral commitments of relevance to  the reform process must also be taken into
account.  Furthermore, emerging issues relating to broader society concerns need to be adequately
addressed in the reform process.  This may also contribute to increased understanding in civil societyfor the continuation of the reform process.
4. Agricultural products are unique and most essential commodities in every society.  NTCs
include agriculture's multifunctional contributions to the viability of rural areas, food security, the
cultural heritage and environmental benefits such as the agricultural landscape, agro-biological
diversity, land conservation and high standards of  plant, animal and public health.  Furthermore,
negative environmental effects should be minimised.  As spelled out in the background part of this
negotiation proposal, most NTCs are unique to agriculture and have public goods characteristics that
may justify government intervention.  Moreover, most of these public goods cannot be disassociated
from the agricultural production activity itself, as they are provided  jointly  with, and therefore depend
on, ongoing agricultural production.  Further, agricultural production is biological and site-specific.
All these special and multifunctional characteristics of the agricultural sector need to be recognised
and call for continued special treatment of the agri cultural sector within the multilateral trading
system.
5. As continued and sustained safeguarding of NTCs requires on-going agricultural production,
and as policy objectives and agricultural production conditions vary considerably among Members,
the continuation of the reform process cannot be based on a one-size-fits-all approach.  Due
consideration must be given to the different situations in Member countries, including in developingcountries and economies in transition, and the changing needs that characterise agricultural
development.  In particular, proper attention must  be paid to the less favourable production conditions
and narrow product range that certain countries,  for climatic and other reasons, are facing.
6. Special attention should be paid to the interests of developing countries, in particular the least
developed and net food-importing countries.  Norway recognises that improved market access foragricultural products is of vital importance to many developing countries as a vehicle for economic
growth and poverty alleviation.  Furthermore, challenges faced by developing countries in terms ofG/AG/NG/W/101
Page 3
acute food insecurity and in cases where a large share of their population is dependent on agriculture
should be carefully addressed in the negotiations to ensure adequate flexibility in national policy
design to foster domestic agricultural production.
7. In order to achieve the objective to establish a fair and market-oriented agricultural trading
system as referred to in Article 20, there is a need to acknowledge, inter alia,  the right of every
country, according to mutually agreed rules, to secure the coexistence of various types of agriculture.
2. AREAS FOR NEGOTIATION
8. In the continuation of the reform process, there is a need to proceed progressively and
cautiously through a balanced approach in which commitments are made "in an equitable way among
all Members" , as prescribed in the Preamble to the Agreement, and where all concerns referred to in
Article 20 are taken into account.  The various interests of all WTO Members, in particular the special
needs of developing countries, should be reflected and valid and legitimate NTCs of a multifunctional
agriculture should be fully recognised and adequately addressed while trade distortions are minimised.
9. Every Member should be granted flexibility in national policy design to foster domestic
agricultural production necessary to address domestic NTCs, based on each country's production
conditions and potentials, policy objectives and historical and cultural background.  Domestic
production of key agricultural products is of vital importance to Norway as a means of safeguarding
domestic NTCs.  As a result of differences in production conditions between and within countries and
in order to be able to sustain domestic production required to properly address NTCs, countries with acomparative disadvantage need to be allowed to have recourse to a policy measure combination that
includes, to a large extent, the use of production-related policy measures.  On the other hand, export
competition measures should not be deemed part of a long-term strategy to address NTCs. Provided
that NTCs are safeguarded, such measures could be subject to stricter disciplines.
2.1 Market access
10. Improved market access is a key element in the agricultural reform process.  Negotiations on
market access must take into account all legitimate interests, including the special needs of developing
countries.
11. Agricultural imports to Norway are subject to no or very low bound tariffs on a number of
agricultural products, such as sugar, oil-seeds and oil products, fibres, rice, maize, tropical products
and to a large extent fruits and vegetables.  Overall, measured on a calorie basis, around 50 per cent ofNorway's domestic agricultural consumption requirements are met through imports.  Domestic
production is characterised by a relatively narrow product range, as only relatively few products are
produced domestically due to disadvantaged and unfavourable production conditions.  Such products
are generally subject to high tariff levels.
12. On the basis of the above, Norway woul d like to make the following proposals:
• Modalities on further market access commitments must be designed to allow Members to make
only limited MFN tariff reductions on their key agricultural products.
• When considering further MFN tariff reductions, special attention should be paid to products of
particular interest to developing countries (see also Section 2.4).
• For countries with low self-sufficiency and a narrow product range resulting from for example
natural production conditions domestic production of key agricultural products is sensitive toG/AG/NG/W/101
Page 4
further increases in minimum access quotas.  Modalities on minimum access quotas should be
designed accordingly.
• Tariff quotas should be administered in ways that are transparent, equitable and do not place
developing countries at a disadvantage (see also Section 2.4).
• Given the special character of agriculture, the Special Safeguard (SSG) mechanism should be
continued for the purpose of providing sufficient protection against sudden import surges and price
fluctuations (see also Section 2.4).
2.2 Domestic support
13. Norway would like to ma ke the following proposal:
• Based on existing bound commitments, AMS should be divided into two categories. The first
category would consist of domestic support to agricultural production destined for the domestic
market. Such support should be subject to less stringent reduction commitments.  The second
category would consist of AMS support to expo rt-oriented production.  This support should be
subject to further reductions.
• Within each of the two categories suggested above, the non-product specificity of the AMS
support should be maintained in order to allow for flexibility to reallocate support among
productions.
• The Blue Box should be maintained.
• The Green Box should be maintained.
• Monetary domestic support commitments should be subject to annual inflation adjustments.
• Special attention must be paid to the needs of developing countries in the area of domestic support
(see also Section 2.4).
2.3 Export competition
14. As part of a balanced approach through which NTCs of a multifunctional agriculture are fully
addressed (see above), Norway acknowledges the need for stricter disciplines on export competition
measures.1
15. It should be ensured that the subsidy element of all forms of export competition measures,
such as direct export subsidies, export credits, state trading export enterprises and food aid, are treated
equally in the continuation of the reform process, without restricting the availability of genuine food
aid in fully grant form and while taking fully into account possible negative effects of the reform
process on net-food importing developing countries.
2.4 Special and differential treatment for developing countries
16. Special and differential treatment (S&D) for developing countries is an integral part of the
Agreement and is particularly important for least developed countries. S&D should be further
developed in the areas of market access, domestic support and export competition. Moreover, trade-related technical assistance to developing countries should be increased considerably.
                                                     
1 It should be noted, however, that in Norway such stricter disciplines may have a substantial negative
impact domestically. At present, around 10 per cent of  Norwegian milk production is processed to cheese for
subsidised exports.  Many dairy farms are located in re mote rural areas where few or no alternative employment
opportunities exist.G/AG/NG/W/101
Page 5
17. S&D is a complement to, not a substitute for, the more general rules of the multilateral
trading system. However, undesirable and unnece ssary fragmentation of the system should be
avoided. Given that the development situation and the agricultural policy environment are
continuously changing, S&D measures may not be sufficient to meet the future needs of countries,
which are developing countries today.  Therefore, in the continuation of the reform process it shouldbe ensured that the general rules of the agricultural trading system are refined in ways that meet the
long-term needs of all countries.
18. In order to enable developing countries, in particular the least-developed, to take full
advantage of the multilateral trading system, Norway would like to submit the following concrete
proposals for consideration with respect to S&D:
• When considering further MFN tariff reductions, special attention should be paid to products of
particular interest to developing countries.
• Market access for products originating in LDCs shou ld be improved in terms of predictability and
product coverage. Both developed countries and the more developed of the developing countries
should as a first step grant duty-free and quota-free market access on a preferential basis for
essentially all products from LDCs.
• Tariff quotas should be administered in ways that are transparent, equitable and do not place
developing countries at a disadvantage.
• Developing countries, in particular the least developed, should be given the opportunity to benefit
from a preferential allocation of existing tariff quotas, for instance through preferential in-quota
tariff rates.
• The right to have recourse to the SSG provisions  should be extended to all developing countries
that do not have this right today.
• De minimis  levels should be increased for developing countries.
• S&D domestic support provisions adapted to the specific situation of developing countries should
be expanded as a supplement to the existing Green Box measures.
• The Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform
Programme on Least-Developed and Net Food-Importing Developing Countries  should be
reviewed in order to ensure its effective implementation.
19. Norway will carefully evaluate the various proposals on S&D submitted by developing
countries in the context of the negotiations.
2.5 Other issues
20. The Peace Clause should be maintained as an integral part of the Agreement on Agriculture in
order to preserve the role of this specific agreement vis-à-vis  the Agreement on Subsidies and
Countervailing Measures and the relevant GATT 1994 provisions.G/AG/NG/W/101
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PART II:  BACKGROUND ELEMENTS
3. EXPERIENCES AND EFFECTS OF THE EXISTING AGREEMENT
21. Since the implementation of the AoA began in 1995, significant progress has been made in
reforming agricultural policy and making the agricultural sector more market-oriented.  Through the
AoA, increased attention is now being paid to the level of support and protection and to  different
types of policy measures, both internationally and domestically.
22. The AoA has brought enhanced predictability and stability  to the sector.  The transformation
of non-tariff import  measures into bound customs duties and binding commitments on domestic
support and export subsidies represented a major shift in and streamlining of market access and
support regimes.
23. Reviews of Members' support and protection schemes and the establishment of binding
schedules and the procedure of annual notifications, publicly available through the Internet, represent
an important step towards increased transparency, both among Members and vis-à-vis  other
stakeholders.
24. The AoA has also had a disciplinary effect  on agricultural policy design, compared with the
pre-UR situation, also in cases in which countries have not reached their bindings.  For instance, many
countries undertook reforms during the UR negotiations in anticipation of the final outcome.
25. In Norway's case, domestic support commitments have been a binding constraint in the
determination of target prices and/or base deficiency payments.  Our export subsidy commitments
have been a major force in changing the Norwegian dairy and milk marketing regime, and have for
example led to substantial reductions in milk quotas.
26. According to background information provided by the Secretariat, developing countries'
agricultural trade performance has improved  during the period 1990-98, with significant and
important increases in the value of exports from developing countries and their share of world
agricultural exports.
27. Since 1995, Norwegian total imports of agricultural products have increased by 23 per cent in
nominal value terms. In 1999 the unweighted average MFN tariff on agricultural products was
39.7 per cent.2  The value of total imports of agricultural products in 1999 amounted to USD 2 billion
with an average applied tariff of 6.5 per cent.
28. It is acknowledged that the existing commitments have contributed significantly to the long-
term objective of fundamental reform.  There is, however, an increasing awareness that in
negotiations on further reductions in support and protection, society objectives related to NTCs should
be taken into account.  This may restrict the size, speed and distribution of future reductions.  In the
continuation of the reform process, there is therefore a need to proceed cautiously and to take the
specific situation of each country fully into account.
29. The WTO policy reform must be undertaken in ways consistent with other relevant
multilateral commitments, such as the Convention on Biological Diversity and commitments relating
                                                     
2 Including ad valorem equivalents of specific dutie s. Agricultural products defined according to the
Agreement on Agriculture. See WT/TPR/S/70.G/AG/NG/W/101
Page 7
to the right to food. Since the Universal Declaration of Human Rights was adopted by the United
Nations in 1948, a number of international legal instruments and recommendations relating to
nutritional concerns and the right to food have been developed, recognising the fundamental right of
everyone to be free from hunger and emphasising the responsibility of the state in this respect3.
4. THE ISSUE OF JOINTNESS
30. Taking account of NTCs, including food security and the need to protect the environment, is
an integral part of the UR outcome and the mandate for continuing the reform process. During the
Uruguay Round Norway stressed the importance of NT Cs as vital elements of the overall reform
process. While different countries are giving different weights and priorities to individual NTCs in a
multifunctional agriculture, their safeguarding is a legitimate key priority in both developing and
developed countries.
31. On the basis of the comprehensive examination of NTCs during the Analysis and Information
Exchange Process of the WTO Committee on Agriculture, three conclusions can be drawn with regard
to NTCs, conclusions that have important implications for the continuation of the reform process.
32. First, NTCs are often unique or specific to agriculture.  Most of the actual NTCs
safeguarded by agriculture cannot be provided by other sectors. Of the various NTCs listed so far byWTO Members, the viability of rural areas is probably among the few in which sectors other than
agriculture can play, and are playing, an important role. However, in remote regions of many
developed countries or in the case of developing countries with predominantly agrarian economies,
agriculture's contribution to rural employment and economic and social viability is fundamental.
33. Second, NTCs often have public goods characteristics. While private goods can be
exchanged in a market, NTCs often have public goods characteristics for which, by definition,
functioning markets are lacking. Furthermore, the scope for market creation seems to be limited.
While market creation is possible in certain cases, government intervention may be justified in order
to correct the underprovisioning of NTCs with public good characteristics and to internalise
externalities.
34. Third, most NTCs can only be safeguarded jointly with agricultural production.  Most
NTCs cannot be disassociated from agricultural  production. This joint production relationship is
complex and may relate to certain types of input use, farming practices or technologies, to agricultural
output, or to a combination of all these elements.
4  For instance, as part of a country's policy to ensure
long-term food security, a certain degree of domestic food production may, in addition to other factors
such as stable access to world markets and stockholding, be judged as essential. Therefore, continued
and sustained safeguarding of NTCs requires a viable domestic agricultural sector with agriculturalproduction.
35. Furthermore, since agricultural production is bi ological and site-specific, it has many special
features. All the special and multifunctional characteristics of the agricultural sector need to be
recognised and call for special treatment within the multilateral trading system.  This will benefit both
developing and developed countries.
                                                     
3 See also G/AG/NG/W/36.Rev.1, Note on Non-trade Concerns, Attachment 6.
4 The issue of jointness is further substantiated in the AIE papers AIE/22, AIE/48, AIE/57 and AIE/68.G/AG/NG/W/101
Page 8
5. DISPARITIES  BETWEEN AND WITHIN COUNTRIES
36. As discussed in Section 4, contrary to most private goods for which international markets
exist, NTCs, in general, cannot be ensured through trade, but need to be provided by domestic
agricultural production. To some extent food security represents an exception, as both domesticproduction and a predictable and stable trading system contribute to increased food security. The
domestic safeguarding of NTCs varies substantially from country to country, as well as within
countries, depending on national priorities (i.e. demand side variations) and the cost levels that each
country's agricultural sector is facing (i.e. supply side variations).
37. One particular aspect that needs to be duly taken into account in the negotiations is the narrow
product range that many countries rely on when addressing NTCs. The dependence on a relatively
limited number of commodities could be related to specific supply side constraints, for instanceclimatic conditions.
5  Dependence on specific commodities may also be related to the specific public
goods that these commodities provide, for instance the contribution made by production of a specific
commodity to land conservation (e.g. the importance of paddy fields in flood control and prevention
of land slides and soil erosion).
5.1 Demand side variations
38. On the demand side, for a number of reasons related to for instance their cultural, economic,
or historical backgrounds, countries are demanding different goods and services from their
agriculture, thus giving different weights and priorities to different NTCs in a multifunctional
agriculture.
39. For instance, predominantly agrarian countries or countries with few alternative employment
opportunities for their rural populations, tend to put more emphasis on agriculture as a rural
employment generator than countries whose rural population can relatively easily find jobs in other
sectors.  Moreover, countries with low population densities tend to put more emphasis on
decentralised settlement policies.  Furthermore, in countries in which farming has been an economicactivity since ancient times, agriculture makes important contributions to biodiversity and the cultural
heritage.  A third example is the issue of food security, which is approached differently in net food-
importing versus net food-exporting countries.  A fourth example is environmental and food safety
issues, for which consumer sensitivity varies between countries.
5.2 Supply side variations
40. On the supply side, world agriculture is faci ng a considerable diversity of production
conditions, between and within countries and regions, due to natural conditions (e.g. climate, soils and
topography), social and cultural conditions (e.g. agrarian structure) and institutional and economic
conditions (e.g. infrastructure and labour costs).
41. Many developing countries, due to for instance poor soils, difficult climatic conditions (e.g.
low and erratic rainfall), small farms, poor infrastructure and limited access to new technologies arefacing production costs above world average. These differences in production conditions help to
determine the extent to which the various WTO Members are able to compete in world agricultural
markets.
42. As a result of this considerable diversity of production conditions, agricultural production
costs vary substantially within and between countries. In case of dairy production,  current production
                                                     
5 In Norway, for instance, ¾ of the arable land is only suitable for fodder production (basically grass
production) for the purpose of dairy and meat production.G/AG/NG/W/101
Page 9
costs are as much as six to seven times higher in Norway, compared with the most cost-efficient
producers.  The corresponding figure for wheat/barley is four to five times the most efficient
producing country and indicates the same disparity between countries6.
43. In agriculture, Norway faces unusually high production costs for a number of reasons.7  All
the disadvantages stemming from a harsh climate, long distances, a difficult topography, a lowpopulation density and a small-scale structure, combined with a general high cost level, result in high
costs and a very low degree of competitiveness at world market prices.
44. Structural adjustment of the agricultural sector has contributed and will continue to contribute
to reductions in overall cost levels.  However, in many countries like Norway the scope for such
reductions is relatively limited.  Firstly, in many countries the potential for structural adjustment in
terms of large-scale production is restricted by natural conditions, partly because fields and farms are
relatively scattered.  Secondly, the data presented in Table 1 indicate that even with a shift to largerproduction units, overall costs would still be very high, suggesting that costs relating to labour and
natural conditions are very important.  In addition, extensive structural adjustment would have a
considerable negative impact on important NTCs such as rural employment, agricultural landscapes
and bio-diversity
6. APPROPRIATE POLICY COMBINATIONS FOR ADDRESSING NTCs
45. As pointed out in Section 4, most NTCs depend  on a viable agricultural production.  Based on
the discussion in Section 5, it seems clear that because of the wide variations in costs, the NTCs of
countries with disadvantaged and unfavourable production conditions cannot be safeguarded without
considerable levels of transfers to the agricultural sector.
46. In the long run, production will only take place if it is profitable at the farm level, i.e. if farm
production revenues cover production costs. Figure 1 shows production costs and revenues of a dairy
reference farm  in Norway, comparing the present situation with a "world-market-only" scenario in
which all Blue and Amber box support, including tariff protection, has been replaced by Green Box
support.
8  There are two  major reasons why such a "world-market-only" scenario does not seem to be
possible in Norway, if NTCs are to be safeguarded.
47. First, Figure 1 clearly indicates that, in the long run, the "world-market-only" scenario is not
likely to provide sufficient financial incentives to farmers to continue the production that is required
to safeguard NTCs.  At present, production-related policy measures9 amount to 61per cent of total
revenues.  While total production costs would decrease slightly under a "world-market-only" scenario,
                                                     
6 Source: International Farm Comparison Network and Norwegian Agricultural Economics Research
Institute.
7 Average farm and field size of around 14ha and 1.5ha arable land, respectively, average cow herd of
13 cows and steep gradients (nearly 20 per cent of arable  land have a gradient exceeding 1:5) are typical for
Norwegian agriculture. The arctic and subartic conditions  in Norway are characterised by harsh climate, low
temperatures and a short growing season, which varies between 100 and 190 days, depending to a large extenton latitude. The indoor period for livestock varies from around 230 to 290 days a year.
8 Note that the type farm presented in Figure 1 is far above the national average farm size and
productivity. The conclusions drawn in this Section are based on the analysis in AIE/68.
9 In Norway, production-related measures consist of Blue Box measures and AMS, including market
price support.  At present, market price support provided thro ugh tariff protection amounts to 41 per cent of the
total Producer Support Estimate (among the lowest in the OECD), according to OECD figures for 1997-99. Inmany countries, a shift from tariff protection to budgetary support would be subject to budgetary constraints.Moreover, none of these different productionrelated polic y measures have similar effects on production.  Blue
Box measures, for instance, such as livestock and acreage support, do not have any impact on production
beyond the quantitative production ceilings that the production-limiting programme establishes.G/AG/NG/W/101
Page 10
mainly due to reduced fodder prices, this reduction is far from sufficient to offset the elimination of
production-related policy measures that would occur under this scenario.  If the farmer is profit-
maximizing and if Green Box measures are fully  decoupled from production, such support would not
be taken into account when the farmer is making his/her production decisions.  With world market
prices only, production revenues would only cover 38 per cent of total production costs, which isclearly not sufficient to ensure a profitable farm production in the long run.
10
Figure 1: Revenues and costs (1998) on a dairy farm with 23 cows in Eastern Norway (2.5 man
years)
0200400600800100012001400
Total revenues Production costs Total revenues Production costsNOK (1000)Present situation
Green box
Blue box
Budgetary 
price 
support
Border 
protection
Revenues
 at world 
market 
pricesRevenues
 at world 
market 
pricesGreen boxReturn 
to labourReturn 
to labour
Interests 
and 
depreciationInterests 
and 
depreciation
Fixed 
costsFixed 
costs
Variable 
costsVariable 
costsProduction-
related
revenuesProduction-
related
revenues"World-market-only" scenario
(World market production revenues only)
Source : Reference farm number 15, Norwegian Budget Committee for Agriculture (world prices from
the OECD).  Data compiled by the Norwegian Agricultural Economics Research Institute and the
Ministry of Agriculture, Norway.
48. Secondly, whereas, as an alternative to production-related support, it has been suggested that
Green Box measures be targeted directly towards a number of NTC-related criteria in order to
safeguard NTCs such as bio-diversity, the cultural heritage or agricultural landscape, extensive
detailed targeting is probably not feasible in practi ce.  Such targeting will most likely involve very
high administration and control costs, especially in areas where the agricultural sector consists of alarge number of small-sized farmers.  Maximum targeting of policies is of course desirable.
However, there is certainly a trade-off between precision on the one hand, and administration and
control costs on the other hand.  Therefore, while targeting should be pursued in national policy
design, too extensive and detailed targeting does not seem to be feasible.
__________
                                                     
10 Remuneration of equity capital has not been included in the production costs shown in Figure 1.
Moreover, remuneration of labour (per man-year) refers to actual observed remuneration and is very low
compared with other sectors (only around 53 per cent of the average wage of a qualified worker in the industrial
sector in Norway).