RESTRICTEDWORLD TRADE
ORGANIZATIONG/AG/R/32
6 November 2002
(02-6118)
Committee on Agriculture
SUMMARY REPORT OF THE MEETING HELD ON 26 SEPTEMBER 2002
Note by the Secretariat1
1. The Committee on Agriculture held its thirty-second regular meeting on 26 September 2002
under the chairmanship of Dr. Magdi Farahat of Egypt.  The agenda of the meeting as contained in
WTO/AIR/1896 was adopted.
PART I:  T HE REVIEW PROCESS
A. M ATTERS RELEVANT TO THE IMPLEMENTATION OF COMMITMENTS UNDER THE REFORM
PROGRAMME :  ARTICLE 18.6
(a) Argentina:  European Communities – Reform of the Common Agricultural Policy (CAP) –
Mid-Term Review
2. Argentina sought clarification from the EC with respect to any additional measures which the
EC might be taking in the context of the Mid-Term Review process to reduce trade-distorting
domestic support, taking into account that the proposed measures would result in a reduction of only
0.4 per cent of CAP expenditure.  Given that the reforms may result in lower domestic production,
Argentina enquired whether any recommendations were under consideration to improve market
access to satisfy internal demand.
3. The EC responded that it did not wish to enter into a debate concerning policy initiatives that
were not yet reflected in legislation.  With regard to Argentina's second question, the EC stated thatsince the depicted situation was hypothetical, the EC did not wish to speculate.
4. Canada noted that it was closely following th e Mid-Term Review by the EC.  Argentina
requested that, due to the far-reaching implications of changes of the CAP, this matter be kept on the
agenda of the Committee and that Members be informed by the EC.  The EC took note of Members'
interest concerning its Mid-Term Review of the CAP and undertook to inform the Committee at theappropriate stage.
(b) Canada:  United States – Farm Security and Rural Investment (FSRI) Act of 2002
5. Canada sought further clarification regarding the status of implementation of a number of
provisions of the FSRI Act 2002 in relation to the US domestic support commitments.  In this regardCanada noted that, since the June meeting of the Committee, the United States had taken a number of
steps to implement direct and counter-cyclical payments.  In particular, producers had been requested
to sign up from 1 October 2002, with "payments to farmers soon thereafter" (USDA press release,
12 August 2002).
                                                     
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice
to the positions of Members or to their rights or obligations under the WTO.G/AG/R/32
Page 2
6. In response to the Canadian question regarding the implementation of the circuit breaker
provision in Section 1601(e) of the FSRI Act, which provided for "adjustment authority related to the
Uruguay Round compliance", the United States stated that the proposed measures to implement this
statutory authority were under consideration within the executive branch of the US Government.  No
decision had been made as to whether regulations were needed to implement this provision.  With
respect to the meaning of "to the maximum extent practicable" in making adjustments in the amount
of expenditures provided for in Section 1601(e), the United States explained that the level of support
provided under some US domestic support programmes was dependent on market conditions and
producer decisions that the US Department of Agriculture (USDA) did not know in advance.
7. With respect to the question as to how the Congress would be consulted prior to making any
adjustment and how this would ensure that the adjustment would be taken in time to ensure that the
annual Total AMS commitment was not exceeded, the United States responded the USDA consultedregularly with the Congress, including on WTO issues such as levels of support and the AMS.  The
USDA would continue to consult to ensure that the Congress was fully informed, consistent with
Section 1601(e).  USDA would have ample m echanisms available to make adjustments.
8. With regard to the question as to how the United States intended to monitor expenditures
during each reporting period so that action, if necessary, could be taken within the reporting period toensure the United States complied with its annual commitment level, the United States reiterated that
the USDA expected to put in place a process to permit on-going monitoring of domestic support
spending that would allow the Secretary of Agriculture sufficient time to take appropriate action.  In
response to Canada's questions as to how direct payments, including counter-cyclical payments,
would be classified, the United States stated that no decisions had been made on the futureclassification of these programmes for notification purposes.
9. In view of the fact that some of the FSRI Act provisions had taken effect immediately when
the President of the United States had signed the Act into law on 13 May 2002 and sign ups for direct
payments and counter-cyclical payments had begun, Canada sought clarification as to when and for
what programmes the United States would submit Table DS:2 notifications on any new or modifieddomestic support measures exempt from reduction.  The United States responded that a USDA task
force was reviewing the entire Farm Bill and identifying where implementing regulations were
needed.  New Farm Bill provisions required implementation through a rule-making process.  The
United States would submit appropriate Table DS:2 notifications in a timely manner.
10. Canada expressed disappointment about the response by the United States.  In its view, it was
unacceptable that Members had to wait for a US notification on domestic support in order to find out
how support would be classified.  It was important that the right mechanism for monitoringexpenditures be put in place from the beginning.  Australia urged the United States to inform the
Committee as to how its domestic support programmes would be classified.  Argentina and the EC
supported the statements by Canada and Australia.  In Argentina's view, international commitments
should take precedence over domestic issues of the practicability of expenditure control.  Japan
registered its concerns regarding some of the new US domestic support measures, including counter-cyclical payments, and their outstanding notification to the Committee.
11. The United States recalled that its Farm Bill reflected current legislation;  it had made a
proposal for future agricultural policy in the context of the negotiations.  The United States
recognized the importance of prompt notification a nd undertook to convey Members' concerns in this
regard to its capital.  Some of the new policies might qualify as Amber but a decision had not beenmade.  The United States underlined that the fact that a circuit breaker provision had been established,
implied that the United States was committed to meeting its WTO obligations.G/AG/R/32
Page 3
(c) Canada:  United States – Proposed drought aid of US$6 billion
12. Canada stated that under the FSRI Act of May 2002, the United States had authorized
expanded and enriched levels of trade-distorting support to agriculture. Four months later, the US
Senate had approved an additional US$6 billion for drought relief to farmers and ranchers.  Canadasought clarification as to how the United States intended to meet its Total AMS commitment of
US$19.1 billion, if this spending were to proceed.
13. The United States responded that the US Administration did not wish to speculate in the
WTO on the outcome of legislation pending in the US Congress.
(d) New Zealand:  Venezuela – Dairy import licensing – Tariff quota administration
14. In relation to the tariff quota administration regime for dairy products notified in
G/AG/N/VEN/22, Ne w Zealand stated it had received reports that licences were not currently being
issued for dairy products until the end of the year.  New Zealand was concerned that this step could
significantly disrupt the market by raising costs to processors and consumers in Venezuela, and curtail
legitimate trade.  New Zealand sought clarification as to whether the licensing system was still in
effect;  as to the last date on which import licences for dairy products were issued, and as to the dateson which requests for import licences would be sought in the remainder of 2002.  To the extent that
there had been changes, New Zealand enquired about the reasons for these changes and when these
changes would be notified.  New Zealand also soug ht an indication from Venezuela as to what steps
the government was taking to resume the issuing of import licences for dairy products.
15. Venezuela responded that the system notified in G/AG/N/VEN/22 was still in effect. It
provided the following information based on the records of the Directorate-General of Agricultural
Marketing:
• Import licences for milk powder (26 per cent) were last issued on 29 August 2002.
Approximately 55 per cent of the total quota, or over 40,000 tonnes, had now beenfilled. Complete records for the second half of the current year were not yet available.
• Import licences for cheese were last issued on 12 August 2002.  Allocation now
totalled 2,894.46 tonnes, equivalent to 130.85 per cent of the total quota.
• Import licences for skimmed milk powder were last issued on 6 September 2002.
Allocations now totalled 4,524.40 tonnes, eq uivalent to 5,200 per cent of the total
quota.
Venezuela considered that this information demonstrated that licences were indeed currently being
issued.  Licences for the above products corresponding to the last quarter of the current year were
currently being allocated, which indicated that the respective import licences would be issued shortly.
16. The United States and Uruguay expressed their concerns in this matter.  The United States
stated that the US Government and exporters continued to face frustrations with Venezuela's
administration of its import permits for a number of products and were considering their options foraddressing this issue.  Uruguay stated it had concerns with respect to import quotas and import
licences for dairy products, in particular cheese.  It considered that the procedures applied by
Venezuela lacked transparency since the conditions for quota access were set annually and, according
to Venezuela, depended on market needs.  Uruguay's exports were seriously affected by these
restrictions.  According to data for January-June 2002, most of the Uruguay exporters of cheese hadbeen unable to export to that market.  Furthermore, Uruguay's enterprises were adversely affected byG/AG/R/32
Page 4
the procedures of allocating 90 per cent of quotas to traditional importers and only 10 per cent to
newcomers.
17. In response, Venezuela reminded the United States that oral responses to its questions on
import licensing administration had been provided at the recent meeting of the Committee on Import
Licensing Procedures which would be circulated in  writing within the next few days.  Venezuela
added that the Minister of Agriculture and Lands of Venezuela was scheduled to make an official visit
to Uruguay during which he intended to raise the issue of cheese imports from Uruguay.
(e) United States:  Turkey – Import permits for rice
18. United States raised its concerns about the fact that Turkey, for the third consecutive year,
appeared to be slowing or preventing rice imports through the denial of import licences.  The
United States had been informed bilaterally that Turkey did not have sufficient laboratory capacity tomeet all pending import licence requests, hence the delays.  However, consistent with previous years,
the United States was receiving reports that Turkey may be using import licences to impede imports,
just as Turkish farmers began their rice harvest.  The United States requested Turkey to immediately
resume issuing rice import licences, noting that inappropriate use of import permits could be a
violation of the Agreement on Import Licensing Procedures, the TBT Agreement, and the Agreementon Agriculture.
19. Turkey noted that domestic production of rice covered less than 50 per cent of Turkey's needs
and the rest was imported.  As a matter of fact, Turkey did not issue import licences for rice from the
United States;  import licences were related to preferential trade arrangements.  For rice, as well as a
range of other agricultural products, control certificates were issued for the purpose of customsprocedures and food security analysis.  Such control certificates were intended to ensure food safety,
protect consumers, protect producers from "unfair competition" and to provide statistical data.
20. The United States sought further clarification as to how control certificates were issued to
control, among other things, unfair competition.  Turkey responded that the notion of "unfair
competition" was only concerned with aspects of food safety and food quality.  The United Statessuggested to pursue this issue bilaterally.  The EC  indicated an interest in  being informed about the
results of any such bilateral discussions between Turkey and the United States.
(f) Thailand:  Chinese Taipei – Tariff quota administration for rice
21. Thailand raised its concerns regarding the sub-quota for state trading under the minimum
access quota for rice by Chinese Taipei.  Under the government rice procurement, Chinese Taipei
administered an auction regime for imports of short and medium grain rice which accounted for more
than 92,000 tonnes or 98 per cent of total rice importe d by the government.  Since most Thai rice was
long grain, the new specification would eliminate any opportunity for Thailand of participating in the
auctions.  Thailand considered that such requirement concerning the specific length of rice under the
bidding system was in conflict with accession commitments of Chinese Taipei and its recent
announcement to open up the milled and brown rice markets.  Accordingly, Thailand requested
clarification from Chinese Taipei as to whether this new specification had been notified to the WTO,whether it constituted a permanent measure and whether other forms of tariff quota allocation without
specifications of the type of rice were considered.
22. In response, Chinese Taipei stated that it had lifted its import ban and allowed rice imports
under the provisions of Annex 5 of the Agreemen t on Agriculture.  The annual minimum access quota
for 2002 was 144,720 metric tonnes on a brown rice basis, with 35 per cent of the quota(50,652 tonnes) allocated to the private sector and 65 per cent of quota (94,068 tonnes) imported by
the government on the condition that it be tendered to meet internationally recognized standards forG/AG/R/32
Page 5
trade in rice and resold to the domestic market for table use.  According to the statistics of Chinese
Taipei, medium- and short-grain rice accounted for more than 92 per cent of the domestic market
share and long-grain rice, which was mainly used for processing, accounted for the remainder.  Since
the rice imported by the public sector was resold on the domestic market, market preferences were an
important factor when deciding the specification of imported rice.  The Council of Agriculture haddecided that the first three instalments of gove rnment-imported rice, which amounted to 68,000 metric
tonnes, would be medium-grain rice.  Any supplier from WTO Members could participate in the
bidding for public rice tenders provided they could meet these specifications.  The specifications of
the publicly imported rice were no stricter than those of other Members, and the implementation of
the quota was in compliance with WTO obligations.  Nonetheless, Chinese Taipei had decided to
purchase 2,000 tonnes of long-grain rice under its public import quota to test the market for long-grain
rice.
23. In response to the claim by Chinese Taipei that there was little  demand for long-grain rice in
the country, Thailand stated that data provided by private sector importers showed otherwise.  In the
first quarter of 2002, long-grain rice imports in Chinese Taipei accounted for 45 per cent
(7,145 tonnes) of the total of 17,167 tonnes, in other words, there was a substantial demand for long-
grain rice.  There was a large population of foreign workers in Chinese Taipei, including more than100,000 people from Thailand, who preferred long-grain rice over other types of rice and consumed
rice three times a day.
24. The United States and Argentina flagged their interest in this matter.  Australia noted that the
issue at hand concerned the systemic question of end-use requirements which may accidentally
restrict market access.
25. In response to the interventions by Thailand, the United States, Argentina and Australia,
Chinese Taipei reiterated that the specification of publicly imported rice was determined on the basis
of market demand and was not discriminatory.  Fu rthermore, the 2,000 tonnes of long-grain rice
which Chinese Taipei had decided to import would meet the needs of foreign workers.
(g) Thailand:  India – Domestic and export subsidies on rice
26. Thailand sought clarification from India concerning export subsidies for rice applied in 2002
to reduce the government's excessive level of stocks.  Thailand stated that the significant increase of
stocks was a result of India's domestic rice subsidies.  In 2001, for example, the Indian Government,
through the Food Corporation, had provided 167,2 40 million Rupees (US$3,800 million) in the form
of domestic subsidies to farmers.  According to data available to Thailand, the Indian Government,
through the Food Corporation, had sold parboiled rice for export only, at a price of 6,000 Rupee/tonne
and 25 per cent rice at a price of 5,650 Rupee/tonne, whereas such types of rice were domesticallysold by the same agency at a price of 8,300 Rupee/tonne.  Both the domestic and the export subsidies
had a significant impact on the international market for rice.  Thailand also enquired as to when the
specific measures at issue would be notified to the WTO.
27. The United States and Canada flagged an interest in this issue.
28. In response, India undertook to convey the concerns expressed to its capital and to provide a
response to Members.  In any case, India would fully abide by its WTO obligations.G/AG/R/32
Page 6
B. REVIEW OF NOTIFICATIONS
29. The Committee reviewed the following notifications as listed in the agenda:
(i) on the administration of tariff and other quota commitments (Table MA:1):  from
Slovenia (SVN/1/Add.1), Un ited States (USA/40);
(ii) relating to imports under tariff and other quota commitments (Table MA:2):  from the
European Communities (EEC/40), Morocco (MAR/22), Philippines (PHL/24),
Poland (POL/51), Switzerland (CHE/28);
(iii) in the context of the special safeguard (Tables MA:3 to MA:5):  from the Czech
Republic (CZE/40), Japan (JPN/76), Pola nd (POL/52 and Corr.1), Poland (POL/53);
(iv) relating to domestic support commitments  (Table DS:1):  from Cuba (CUB/19),
Estonia (EST/6), European Communities (EEC/38), India (IND/2), Israel (ISR/26),
Korea (KOR/31), Morocco (MAR/24), Philippines (PHL/23), Slovenia (SVN/21),Turkey (TUR/14);
(v) relating to new or modified domestic support measures exempt from reduction
(Table DS:2):  from the Czech Republic (CZE/38), European Communities (EEC/39).
30. Specific points raised with respect to the notifications listed above and the responses thereto
are summarized in Part I of the Annex to this report.
C. O
THER NOTIFICATIONS BEFORE THE COMMITTEE
(a) Notifications in respect of which no questions have been raised in advance
31. The Committee took note of the following notifications, which had been circulated in advance
of the date on which the notice convening the present meeting was issued but in respect of which no
questions had been raised by that date under the Committee's Working Procedures:
(i) on the administration of tariff and other quota commitments (Table MA:1):  from
El Salvador (SLV/11) and Switzerland (CHE/13/Add.3);
(ii) relating to imports under tariff and other quota commitments (Table MA:2):  from
El Salvador (SLV/15) and Slovenia (SVN/22);
(iii) in the context of the special safeguard (Tables MA:3 to MA:5):  from the Czech
Republic (CZE/39), El Salvador (SLV/12), Japan (JPN/73/Rev.1), Nicaragua (NIC/8,
NIC/4), Philippines (PHL/25), Switzerla nd (CHE/27/Rev.1, CHE/29) and the United
States (USA/41);
(iv) in the context of domestic support commitments (Table DS:1):  from Australia
(AUS/41/Rev.1), Czech Republic (CZE/34/Co rr.1), El Salvador (SLV/13), Georgia
(GEO/2), Jordan (JOR/1), Nicaragua (NIC/7), Paraguay (PRY/10), Singapore
(SGP/8) and Slovenia (SVN/18/Rev.1) ;
(v) relating to new or modified domestic support measures exempt from reduction
(Table DS:2):  from  Australia (AUS/43, 44), Estonia (EST/7) and Slovenia
(SVN/23);G/AG/R/32
Page 7
(vi) on export subsidy commitments (Tables ES:1 to ES:3):  from Bangladesh (BGD/1),
El Salvador (SLV/14), Japan (JPN/77 and Corr.1), Nicaragua (NIC/6), Paraguay
(PRY/9), Philippines (PHL/26), Poland (POL/50), Singapore (SGP/9), Slovenia
(SVN/20) and Zambia (ZMB/4).
(b) Notifications circulated or made available after the notice convening the meeting was issued
(G/AG/1, paragraph 9 refers)
32. The following notifications were subject to prelim inary review and are to be reverted to at the
next meeting for substantive review in accordance with paragraph 9 of the Committee's Working
Procedures:
(i) on the administration of tariff and other quota commitments (Table MA:1):  from
China (CHN/1);
(ii) on special safeguard (Tables MA:3 to MA:5):  from the Czech Republic (CZE/41),
Japan (JPN/79), Philippines (PHL/27, PHL/28) and South Africa (ZAF/41);
(iii) on domestic support commitments (Tables DS:1 and DS:2):  from Honduras
(HND/10/Rev.1 and HND/13) and the Slovak Republic (SVK/35).
D. P OINTS CONCERNING NOTIFICATIONS RAISED AT PREVIOUS MEETINGS (G/AG/R/2,
PARAGRAPH 14 REFERS )
33. There was no discussion under this agenda item.
E. C OUNTER NOTIFICATIONS UNDER ARTICLE 18.7
34. The Committee took note that no counter-notifications had been received under Article 18.7
of the Agreement.
F. O THER MATTERS RELATING TO THE REVIEW PROCESS
(a) Deferred replies to questions raised under the Review Process
35. The deferred replies received from the Eu ropean Communities regarding its Table DS:2
notification (EEC/39) and from Morocco regarding its Table MA:2 fill notification (MAR/22) and
Table DS:1 notification (MAR/22), which were subject to review at this meeting, are summarized in
Part II of the Annex to this report.
(b) Overdue notifications
36. As had been agreed at the March 1997 meeting of the Committee (G/AG/R/10, paragraph 10
refers) the Secretariat made available a room document, dated 25 September 2002, showing the
current status of compliance with the notification obligations.
(c) Addenda to Table MA:1 notifications
37. The Chairman recalled that the Doha Ministerial Conference had endorsed the
recommendation that the Committee keep under review the implementation of the December 2000
decision of the General Council on the administration of tariff quotas (WT/L/384, paragraph 1.1,
refers).  The understanding was that this decision should not place undue new burdens on developing
countries (WT/GC/M/62, paragraph 14, refers).G/AG/R/32
Page 8
38. The Committee took note that the following Members administering tariff quotas had
submitted the requisite Table MA:1 Addenda:  Australia (G/AG/N/AUS/1/Add.1);  Canada
(G/AG/N/CAN/ 2/Add.2, 6/Add.1, 10/Add.1, 19/Add.1 and 45);  Czech Republic
(G/AG/N/CZE/1/Rev.1/Add.1);  European Communities (G/AG/N/EEC/1/Add.2, 3/Add.1, 14/Add.1
and 15/Add.1);  Hungary (G/AG/N/HUN/1/Add.1, 5/ Add.1, 8/Add.1, 13/Add.1 and 18/Add.1);  Japan
(G/AG/N/JPN/1/Add.1, 8/Add.1, 23/ Add.2 and 57/Add.1);  Latv ia (G/AG/N/LVA/1/Add.1);
New Zealand (G/AG/N/ NZL/1/Add.1);  Norway (G/ AG/N/NOR/1/Add.1);  Slovenia
(G/AG/N/SVN/1/Add.1);   Thailand (G/AG/N/THA/38/Add.1);  and the United States
(G/AG/N/USA/ 2/Add.3 and 34/Add.1).
39. The Chairman urged those Members administering tariff quotas which had not yet done so to
provide Addenda to their MA:1 notifications in  accordance with the General Council Decision in
WT/L/384.
G. F OLLOW -UP TO THE COMMITTEE 'S RECOMMENDATIONS CONCERNING IMPLEMENTATION -
RELATED ISSUES
40. The Chairman recalled the Committee's recommendations regarding implementation-related
issues that were approved by the Doha Ministerial Conference (G/AG/11 refers).  With respect to theissue of the implementation of Article 10.2 of the Agreement on Agriculture, the Chairman noted that
at the June meeting, a questionnaire on export credits and related facilities had been distributed on the
basis that those Members which were in a position to do so were encouraged to complete and return
the questionnaire to the Secretariat.  The Secretariat had prepared a Room Document dated
23 September containing the completed questionnaires that had been returned by Members(Madagascar, New Zealand, Oman and the United States).  It was agreed that a compilation of these
completed questionnaires would be issued as a Committee on Agriculture document in the three
official languages, on the basis that any additional questionnaires that would be submitted by
Members would be circulated as addenda to that document (G/AG/W/56 refers).
41. With respect to the report of the Inter-Agency  Panel on Short-Term Difficulties in Financing
Normal Levels of Commercial Imports Basic Foodstuffs in the context of the Marrakesh NFIDC
Decision, the Chairman recalled that as the result  of the inconclusive consideration of the Panel
recommendation by the General Council at its meetin g in July, the General Council had invited him as
Chairman of the Committee, to hold informal consultations on the ways to proceed with the
recommendations and report back to the General Council at its meeting on 15 October.  Accordingly,
the Chairman had held informal open-ended consultations on 9 September and on 19 September
regarding the issue of the panel recommendations (G/AG/13, paragraph 168 refers).  At the informalmeetings, an opportunity was provided, as agreed at the regular June meeting, for Members to
exchange views regarding the implementation of food aid, and technical and financial assistance in
the context of the Marrakesh NFIDC Decision.
42. The Chairman recalled that the Committee was required, following this meeting, to submit a
report to the General Council concerning its fo llow-up to the recommendations on implementation-
related issues.  As agreed at the June meeting, a draft report by the Chairman dated 20 September had
been circulated to delegations in advance of this meeting in order to facilitate consideration of the
report by the Committee.  The draft report was adopted, as amended, on the understanding that it
would be submitted to the General Council on the responsibility of the Chairman (G/AG/14 refers).G/AG/R/32
Page 9
PART II:  O THER MATTERS WITHIN THE PURVIEW OF THE COMMITTEE
A. T RANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF THE
PEOPLE 'S REPUBLIC OF CHINA
43. The Chairman thanked the delegation of China for its flexibility and cooperation in the
preparation of the Committee's first annual Transiti onal Review under paragraph 18 of the China's
Protocol of Accession.  It  was his intention to begin this review by inviting responses from China to
questions and/or comments submitted by the United States, Canada, the EC, Japan and Thailand in
advance of the review.
(a) United States − Questions and/or comments submitted to China in advance of the review
44. The questions submitted to China by the United States in advance of this review are set out in
document G/AG/W/51, with the additional questions submitted at the meeting being circulated in an
addendum thereto (G/AG/W/51/Add.1 refers).
45. China stated that on 26 September it had received additional comments and questions from
the United States on agricultural tariff quotas.  As there appeared to be substantial overlap between
the two lists of questions submitted on 28 August (G/AG/W/51) and on 26 September
(G/AG/W/51/Add.1), China would proceed by responding to the additional questions by the
United States.  With regard to the US questions contained in G/AG/W/51 and some of the questions
by other Members, China noted that its responses thereto were in part reflected in China's
notifications to this Committee (G/AG/N/CHN/1), as well as the Committees on Market Access and
Import Licensing Procedures  (G/LIC/N/1/CHN/1/Add.1 − G/MA/W/41).
Tariff quota administration −  Sub-quota for processing
46. China noted that the United States had raised a number of concerns regarding the issue of sub-
quotas for processing.  First, the United States had claimed that China appeared to be establishing a
sub-quota which was not based on consumer preferences and end-user demand but on the
government's subjective and non-transparent assessment of demand for processing. China responded
that the processing trade had been in existence for two decades and there were many enterprises in
China, including joint ventures, engaged in this business.  China was of the view that in the
framework of tariff quota administration such differing business interests should be accommodated,that is, enterprises engaged in processing trade and those importing import products for sale in China.
The sub-quotas were thus based on objective demand and consumer preferences, and the applicable
procedures were stipulated in the relevant regulations and decrees to ensure transparency.
47. Second, the United States had raised concerns regarding implementation of China's
commitments which provided that the entire tariff quota should be allocated to end-users on 1 Januaryby a single, central authority administering tariff quotas and making allocation decisions.  In response,
China stated that with respect to the processing tr ade, there were no procedural requirements for quota
allocations.  China reserved a proportion of the tariff quota quantities for the processing trade based
on historical performance, the production plan a nd applications by enterprises engaged in the
processing trade.  Applications for a processing trade certificate and business licence were required tobe submitted to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC).  After quotas
were obtained, enterprises were required to apply to the State Development and Planning Commission
(SDPC) for a tariff quota certificate which was granted automatically.  There was no approval
procedure since the sub-quotas for processing were not allocated.  Accordingly, China considered that
it had complied with the relevant headnote of its tariff quota Schedule.G/AG/R/32
Page 10
48. Third, the United States had raised concerns regarding restrictions on the utilisation of
products imported under the processing trade, contrary to Article 3 of the Agreement on Import
Licensing Procedures.  China referred to its response in this regard in the Committee on Import
Licensing Procedures to the effect that there were no restrictions on the utilisation of tariff quota
products imported.
49. Fourth, the United States had raised concerns regarding out-of-quota tariffs on products for
sale in China which it believed to be inconsistent with tariff bindings.  China responded that
enterprises that wanted to sell on the domestic market had to pay the out-of-quota tariff in line with
China's regulations on tariff quota administration.  By contrast, in the processing trade, enterprises
benefited from tariff exemption but were required to re-export their product.
50. Fifth, the United States had raised a question regarding the "additional licensing requirement".
In response, China stated that the additional licensing requirement referred to the processing tradecertificate, not the tariff quota certificate.  China had made the commitment that it would issue a
single import licence which was the tariff quota certificate issued by SDPC.  The processing trade
certificate was not an import licence but a licence for the export-processing trade to benefit from tariff
exemption.  In other words, for imports of tariff quota products, quota holders were required to
present to customs only the tariff quota certificate issued by SDPC.
51. Based on the above-mentioned clarifications and explanations, China considered its
regulations and practice regarding the sub-quotas for processing to be in conformity with its WTO
obligations and commitments;  it had no plans to change the current system.
Tariff quota administration 
−  Licensing
52. China stated that the United States had raised a number of concerns with respect to licensing.
Its first question related to licences from AQSIQ, the quarantine agency of China.  China responded
that the United States appeared to consider that these additional import licences required from AQSIQ
were not based on legitimate quarantine objectives.  China referred to its response in this regard in the
Committees on Market Access and Import Licensin g Procedures.  The licence required from AQSIQ
for the purposes of quarantine objectives was separate from the administration of tariff quotas and notpart of the procedure for approval and allocation of tariff quotas.  In the view of China, the issue of
quarantine licences should be discussed in the SPS Committee.
53. Another issue raised by the United States concerned the requirement in China's tariff quota
regulations that quota holders provide detailed co mmercial information prior to obtaining an import
licence, something which the United States believed restricted the commercial terms that could bechanged thereafter.  In the view of China, its tariff quota regulations did not contain any restrictions
on the commercial terms.  If a quota holder considered it necessary to change the commercial terms,
he should apply to the SDPC to make that change.  From the perspective of the Government of China,
submission of the relevant information was required  for the purpose of customs statistics and the
supervision of the trade floor.  This was a procedural requirement which was compatible with China'sWTO obligations.
Tariff quota administration 
−  Commercially viable quantities
54. China noted that the United States had raised concerns in bilateral consultations concerning
complaints by some exporters that the allocations for certain tariff quota commodities were not made
in commercially viable quantities.  China was open to considering suggestions and further discussingthis issue with the United States and other interested Members, although it believed that the
allocations were in fact made in commercially viable quantities.G/AG/R/32
Page 11
Tariff quota administration −  Transparency
55. China further noted that the United States had raised a number of questions concerning
transparency.  The first question was with regard to the total volume of tariff quotas made available to
private entities and to STEs.  In response, China referred to the Decree No.1, 2002 by SDPC entitled
"The Quantity, Conditions of Application and Allocation Measures of Import Tariff Quota ofImportant Agricultural Products of the Year 2002" (G/LIC/N/1/CHN/1/A dd.1, pages 32-35 refer).
China noted that the term "private entities" was no t used by China, nor stipulated in its Accession
Protocol, and hence China used the term "state trading".
56. The second question concerned the volume of tariff quotas reserved for importation for
processing and re-export.  The reserved tariff quota quantities for the processing trade were:250,000 tonnes for wheat;  200,000 tonnes for corn;  150,000 tonnes for rice;  200,000 tonnes for soya
bean oil;  100,000 tonnes for rapeseed oil;  100,000 tonnes for palm oil;  160,000 tonnes for sugar,
and 500,000 tonnes for cotton.  Overall, the quantities reserved for the processing trade covered only a
very small proportion of the total tariff quota quantities.
57. The third and fourth questions related to the volume and number of requests received from,
and denied to, private entities, state trading enterprises and the processing trade.  China responded that
it had provided the relevant information in its notifications to the WTO in accordance with
Annex 1(a) of the Protocol of Accession.
58. In response to the fifth question concerning the time taken to grant the tariff quota allocations,
China stated that it took one month.
59. In response to the question concerning restrictions on the amount per tariff quota that a single
entity could apply for and/or receive, China provided the following information:  wheat − 2,000 to
13,000 tonnes;  corn − 3,000 to 50,000 tonnes;  long-grain rice − 1,000 to 65,000 t onnes;  short-grain
rice − 1,000 to 100,000 tonnes;  soya bean oil − 3,000 to 26,000 tonnes;  rapeseed oil − 2,000 to
15,000 tonnes;  palm oil − 300 to 28,000 tonnes;  sugar − 2,000 to 8,700 t onnes;  and cotton − 200 to
2,100 tonnes.
(b) Canada − Questions and/or comments submitted to China in advance of the review
60. The questions submitted to China by Canada in advance of the review are set out in document
G/AG/W/52.
Tariff quota administration
61. China noted that Canada had raised five questions concerning tariff quota administration.  In
response to the first question concerning the role of SDPC in collecting applications, China stated that
the Central Government had authorized SDPC as the sole agency to allocate quotas under WTO
accession commitments.  Although the regional SDPC offices were not authorized to allocate the
quotas to end-users, to facilitate the process for applicants, the regional offices had been requested to
assist the Central Government to collect and verify a pplications so as to ensure that allocations could
be made in a timely manner, a procedure which China considered to be fully in accordance with its
Protocol of Accession.
62. With respect to the second question raised by Canada regarding Article 14 of the SDPC's
tariff quota regulations, China confirmed that Article 14 did not specify the mechanism for weighing
different criteria in awarding tariff quota allocations to applicants.  However, Article 3 of the
implementation rules in SDPC Decree No.1, 2002 ha d specific provisions regarding the criteria.G/AG/R/32
Page 12
63. With respect to the third question concerning the regulations for subdividing the tariff quota
for domestic consumption and processing for re-export, China referred to the response given to the
United States (paragraphs 46 to 51 above refer).
64. In response to the fourth question regarding the release of the names of quota holders, China
considered that the publication of the names of quota holders would violate commercialconfidentiality.  However, Canada had requested China to demonstrate how the commercial interests
of these enterprises would be compromised by the release of this information.  China considered that
according to Article XIII, paragra ph 3(a) of GATT, Members were under no obligation to provide
information regarding the names of the importing or supplying enterprises.  China understood that
such information could have a negative impact on the position of enterprises in contract negotiations.
Nonetheless, China had consulted on this issue with  the enterprises concerned but they had declined
to provide such information.
65. In response to the fifth question by Canada, China confirmed that unused and uncontracted
tariff quotas would be reallocated by 1 October in accordance with China's commitments under its
Protocol of Accession.
Tariffs
66. In response to Canada's question as to the reasons for levying specific tariffs on imports of
certain poultry products and beer, China responded that, unlike in the case of newsprint, it had not
made a commitment to replace those specific tariffs with ad valorem  tariffs.  China's commitment was
to ensure that the specific tariff was equivalent to the ad valorem  tariffs specified in its Schedule.
Value-added taxes(VAT)
67. In response to Canada's question whether China afforded more favourable tax treatment to
domestically produced wheat and corn than like imported products, China responded that according to
its VAT law, such taxes were applied on an equal basis to both domestic and imported products.
China assured Members that the tax levied on bulk wheat was no different from the tax levied on
imported wheat and that it would abide by its national treatment obligation in this regard.
(c) European Communities − Questions and/or comments submitted to China in advance of the
review
68. The questions submitted to China by the European Communities in advance of the review are
set out in document G/AG/W/53.
Tariff quota administration −  Transparency
69. China noted that the EC had submitted a number of questions or comments concerning
transparency.  In response to the request for the relevant regulations concerning tariff quota
regulations, China stated that its notifica tion G/LIC/N/1/C HN/1/Add.1 incorporated eighteen
regulations concerning tariff quota administration and import licensing requirements.
70. With respect to the question of whether the general enquiry point established within
MOFTEC was valid for agriculture, China responded in  the affirmative.  China had established a trade
policy enquiry point to respond to questions raised by Members, as well as individuals, Chinese and
foreign.  Since its accession, China had provided more than 1,000 responses.G/AG/R/32
Page 13
Tariff quota administration −  Transposition into domestic legislation
71. With respect to the question concerning China regulations for subdividing the tariff quota for
domestic consumption and processing for re-export, China referred to the response given to the
United States (see paragraphs 46 to 51 above).
72. On the question as to the rationale for including aid and charities in the framework of tariff
quota  administration, China responded that the negotiated tariff quota  commitments were based on
imports in the period 1995 to 1997, including imports for aid and charity.
73. With regard to the concern raised by EC a bout the overall burdensome character of the tariff
quota  regulations, China responded that it considered the process for allocating the quotas to be
minimally burdensome to the trade, while it involved a considerable burden for the Government ofChina.  All requirements stipulated in  the relevant regulations concerning 
tariff quota s were intended to
ensure the full utilisation of quotas.
74. With respect to the question concerning the ti meliness of regulations, China confirmed that in
August the SDPC had published Decree No. 3 concerni ng re-allocations of quotas in accordance with
China's  commitments.
SPS matters
75. With respect to the issue of China's restrictions on EC animal products which the EC
considered to be without scientific justification, China responded that, on the contrary, it was the EC
that had introduced serious restrictions on animal products from China.  China believed that those
measures were not justified and had no scientific basis.  China intended to raise this issue in the TBT
and SPS Committees.
76. Finally, China thanked the EC for its positive assessment that China had implemented its
tariff quotas quantities and tariffs in line with its Schedule.
(d) Japan − Questions and/or comments submitted to China in advance of the review
77. The questions submitted to China by Japan in advance of the review are set out in document
G/AG/W/54.
78. Regarding the first question concerning state trading, China considered that this issue should
be dealt with by the Council for Trade in Goods in November.  China was in the process of preparing
a notification on state trading, and in any case, its regulations and practices regarding state trading
were consistent with Article XVII of the GATT.
79. The second question concerned the headnote of China's Schedule which indicated that if a
quota holder had not contracted for the total quantity by 15 September, it shall return the unused
portion of the tariff quota to the SDPC.  China responded that generally, for tariff quota products
prices on the international market were lower than domestic prices in China.  As a result, there were
significant market access opportunities for products such as, for example, palm oil.  China had not
received any returns for such products.  For other products, such as wheat, it had received many
returns of quotas as the result of natural disasters in major exporting countries and the fact thatinternational prices were much higher than in Chin a.  At this stage, China was not in a position to
provide data on returned tariff quota quantities.G/AG/R/32
Page 14
80. The third question concerned the method of allocation applied to rice, wheat, maize and
soybean oil.  In this regard, China referred to the response given to Canada (paragraph 62 above).
China also referred to the implementation rule , Decree No.1, 2002 of SDPC for further details.
(e) Thailand − Questions and/or comments submitted to China in advance of the review
81. The questions submitted by to China by Thailand in advance of the review are set out in
document G/AG/W/55.
82. With regard to the first question concerning the allocation of sugar, China responded that
according to its regulations concerning tariff quota  administration and related implementation rules,
China had allocated the quota for sugar.  In 2002 the total volume of the sugar tariff quota  was
1.764 million tonnes, with 70 per cent of this quantity being subject to state trading.
83. The second question concerned the issue of wh ether importation of agriculture products by
sub-regional governments had to be approved by the SDPC in terms of tariff quota allocation and SPS
measures.  China clarified that SDPC was the agency in charge of the allocation of the quotas while
AQSIQ, another governmental agency, was responsible for SPS measures.
(f) Follow-up questions and/or comments by Members
84. Following completion of a first round of questions and answers, the Chairman opened the
floor to Members for further questions and/or comments addressed to China.
85. The EC thanked China for its efforts in preparing the responses.  It appeared that most of the
EC's questions had been answered.  However, the EC had requested information on specific issues
that China had not addressed, that is, additional information concerning agriculture as provided for in
Section 12, paragraph 2 and Section IV, paragraph 2 of Annex 1A of the Protocol of Accession.  The
EC would also appreciate receiving the replies in writing, including to the questions raised by otherMembers, since some of EC questions had been an swered indirectly through the replies to other
countries.
86. Japan thanked China for its flexibility and cooperative approach during this review.  Japan
would examine the relevant Decree referred to by China and sought further clarification regarding the
allocations made so far under the ISTE and the non-ISTE systems (question 3 in G/AG/W/54 refers)and the availability of a notification by China in this regard.
87. Canada thanked China for its responses.  Canada requested further clarification regarding the
tariff issue on certain poultry products and beer, given that its calculations seemed to show that the
tariff equivalents of China's specific duties were in fact above the bound level (question 6 in
G/AG/W/52 refers).
88. The United States thanked the delegation of China for having responded to its additional
questions submitted at the day of meeting and the questions by other Members.  The United States
believed that, although China had answered a number of the questions raised by the United States,
there were some that remained outstanding, in particular, the questions regarding export subsidies
(G/AG/W/51, pages 4-5 refer).  In addition, it appeared that China had not yet answered some of thequestions raised in August regarding tariff quota administration and licensing procedures.  The United
States was disappointed not to have received the responses in writing to the questions posed in
August.  In its view, China had an obligation under its Protocol of Accession to provide responses to
the US questions prior to this meeting, which also might have facilitated the review by providing an
opportunity for follow-up questions by Members.  The United States considered that this review wasan essential element of China's accession package and China's agreement to provide informationG/AG/R/32
Page 15
under this review was part of that commitment.  The United States requested China to provide written
responses to the US questions to allow its capital to review the answers and possibly provide some
additional questions to China, so that this review could be completed.
89. Argentina thanked China for its responses to the questions and expressed an interest in
receiving a response to the US questions posed in August.  Argentina also expressed an interest inreceiving China's responses in writing, if possible.
90. New Zealand expressed appreciation for the tremendous efforts by China in preparing the
responses.  However, it might have been helpful for the purposes of this review if China had
submitted written responses in context of the review by the Committees on Import Licensing
Procedures and Market Access to allow Members to study those answers in advance of the review by
this Committee.  It also would have been helpful if the United States had circulated its list of
additional questions in advance of this meeting.
91. In response to the requests for written responses, China recalled that there had been a long and
inconclusive discussion of this issue in the Committees on Import Licensing Procedures and Market
Access.  The delegation of China had no objections to Members raising additional questions but had
no mandate to provide responses in writing.
92. In response to the intervention by the EC, China referred to its notification provided to the
Committees on Import Licensing Procedures and Market Access.  With regard to the issue of fiscal
transfers from the government to the state tradin g companies, China informed that all STEs were
responsible for profits or losses, and there were no physical transfers from the government to STEs.
93. With regard to the follow-up question raised by Japan, China suggested to pursue this issue
bilaterally.
94. In response to the intervention by Canada, China invited Canada to pursue the issue of
specific tariffs and ad valorem  tariffs on certain poultry products and beer on a bilateral basis.
95. With regard to the questions raised by the United States, China reaffirmed its accession
commitment to eliminate and not to reintroduce export subsidies.  With regard to the request by the
United States to provide sales data for cotton, corn and rice, China stated that prices were determinedby supply and demand, not by the government.  Moreover, for the markets of corn and cotton
representative prices were not yet available.  With respect to the concern that China had provided
some support that was linked to exportation, China responded that no such support existed.  The
railway construction fund for several agricultural products had been abolished.
(g) Report to the Council for Trade in Goods
96. Regarding the question of the Committee's report on this review to the Council for Trade in
Goods, the Committee agreed to the proposal that the Chairman would prepare a short factual reportin which reference would be made to the relevant Committee documents containing the questions
and/or comments by Members, as well as the additional questions by the United States, and with
reference being made to the substantive discussion as reflected in the Summary Report of this meeting
by the Secretariat.
B. M
ATTERS RAISED UNDER "OTHER BUSINESS "
97. The Committee took note that, in light of the late hour, consideration under "other business"
of the Annual Report to the Council for Trade in Goods and the provisional schedule of meetings for
2003 would be deferred to the regular meeting in November.G/AG/R/32
Page 16
Date of Next Meeting
98. The next regular meeting of the Committee on Agriculture will be held on
21 November 2002.  The airgram convening the meeting and containing the draft agenda will be
issued on Monday, 11 November 2002.G/AG/R/32
Page 17
ANNEX
Page
Part IReview of notifications by the Comm ittee on Agriculture on 26 September
2002
(i) administration of tariff and other quota commitments (Table MA:1):  Slovenia
(G/AG/N/SVN/1/Add.1), Unite d States (G/ AG/N/USA/40)18
(ii) imports under tariff and other quota commitments (Table MA:2):  European
Communities (G/AG/N/EEC/40), Morocco (G/AG/N/MAR/22), Philippines
(G/AG/N/PHL/24), Poland (G/AG/N/POL/51), Switzerland (G/AG/N/CHE/28)19
(iii) use of the special safeguard (Tables MA:3 to MA:5):  Czech Republic
(G/AG/N/CZE/40), Japan (G/AG/N/JPN/ 76), Poland  (G/AG/N/POL/52 and
Corr.1), Poland (G/AG/N/POL/53)22
(iv) domestic support commitments (Table DS:1):  Cuba (G/AG/N/CUB/19),
Estonia (G/AG/N/EST/6), European Communities (G/AG/N/EEC/38), India
(G/AG/N/IND/2), Israel (G/AG/N/ISR/26), Korea (G/AG/N/KOR/31),
Morocco (G/AG/N/MAR/24), Philippines (G/AG/N/PHL/23), Slovenia
(G/AG/N/SVN/21), Turkey (G/AG/N/TUR/14)24
(v) new or modified domestic support measures exempt from reduction
(Table DS:2):  Czech Republic (G/AG/N/CZE/38), European Communities
(G/AG/N/EEC/39)35
Part II Deferred replies to questions raised at previous meetings
(i) relating to tariff quota fill:  MAR/22 (page 18 refers) 39
(ii) relating to domestic support commitments:  MAR/24 (page 31 refers) 40
(iii) relating to new or modified domestic support:  EEC/39 (page 36 refers) 41G/AG/R/32
Page 18
ANNEX – PART I
Review of notifications by the Co mmittee on Agriculture on 26 September 2002
Summary of specific points raised and responses thereto
Table MA:1 Notifications
Slovenia     G/AG/N/SVN/1/Add.1 Tariff Quota Administration   (Table MA:1)
Points raised by other Member s Response by Notifying Member
New Zealand –  Information requested on progress in
moving away from auctions as a mechanism for
allocating tariff quotas.
Follow-up comment by Argentina – Associated itself
with New Zealand's concerns concerning the auctionmechanism.Slovenia referred to its response regarding this issues
at the June meeting in 1999 (G/AG/R/19 refers).
Auctions were introduced in 2002 alongside the first-
come-first-served method which have been in place
for the third year.  No other methods are used.
Slovenia is satisfied with the results of the auctioningsystem, as it is the most efficient, transparent and
equitable of the systems implemented by Slovenia.
United States    G/AG/N/USA/40       Tariff Quota Administration   (Table MA:1)
Points raised by other Member s Response by Notifying Member
Japan – Reasons for maintaining the country
allocations for raw cane sugar, other cane or beetsugars or syrups, as well as sugar containing
products.The United States chose to allocate the sugar tariff
quotas in question on a country-by-country basisconsistent with GATT Article XIII, paragraph 2(d).
GATT Article XIII requires that the importing
country choosing to use country-by-countryallocations, establish the base period for theallocations using the most recent period of relativelyunfettered access to the importing country's market.
In the case of the raw cane sugar tariff quota, that
period was 1976-1981 for which the United Statesused an Olympic average to determine the importshares for the purpose of allocations.G/AG/R/32
Page 19
Table MA:2 Notifications
European Communities   G/AG/N/EEC/40     Tariff Quota Fill (Table MA:2)
Points raised by other Member s Response by Notifying Member
Argentina – Reasons for quota underfill for certain
products.The supply situation on the internal market is an
important factor explaining low fill rates. However,
the EC has previously provided other reasons for lowquota fill rates such as a lack of the required qualityof the product in supplying countries and low or zero
out-of-quota tariff rates, for example, for wheat.
Australia –  In light of the zero or low fill rates (less
than 10 per cent) for a range of commodities
including frozen orange juice, pork meat, wheat,
broken rice, fresh apricots and animal feed,questioned the necessity of tariff quotas for theseproducts.
Follow-up comment by Australia – Would appreciate
more information concerning the internal market ofthe products in question to ensure transparency.The tariff quotas concerned are an integral part of the
EC's commitments under the Agreement. The low fill
rates are a consequence of market forces which in
some cases led to low or zero out-of-quota duties.The EC respects its commitments and sees no reasonto reconsider the current arrangements of tariff quotas
for the products mentioned by Australia.
Morocco   G/AG/N/MAR/22     Tariff Quota Fill (Table MA:2)
Points raised by other Member s Response by Notifying Member
United States – Clarification sought as to whether
there were imports under agricultural tariff quotas
that were agreed to under  the EU-Morocco free trade
agreement.  If so, information requested regardingtariff lines and quantities.Undertook to provide a response.  See Annex – Part II.G/AG/R/32
Page 20
Philippines   G/AG/N/PHL/24     Tariff Quota Fill (Table MA:2)
Points raised by other Member s Response by Notifying Member
Australia – In light of the zero or very low fill rates
for 2000 and 2001 for beef, pork and goat meat,queried whether the transition to a tariff only regimewould be useful. Explanation sought for thesignificant decline in the fill rate for beef from 100
per cent in 1999 to 0.04 per cent in 2000 and 2001.
Follow-up comment by Canada – Canada's pork
exporters have faced problems in the past.
Clarification sought whether such problems could be
related in part to the Administrative Order which ismodified every 6 months.
Follow-up comment by the United States –
Clarification sought whether unused licences were
reallocated during the period in question.The in-quota and out-quota tariffs on meat of bovine
animals were unified in 1998 at the in-quota level,and reduced to 10% which is below the in-quotacommitment.  Thus, all imports of meat of bovineanimals are within the in-quota commitment and
enter the Philippines under a tariff-only regime.  The
minimal imports of bovine animals, fresh/chilled (HS0201) in 2000 and 2001 are therefore only due to theinterplay of supply and demand on this product.
Pork and goat meat are under the Minimum Access
Volume (MAV) mechanism.  Licences were issued
for in-quota imports of pork but use of these licences,
which is a business decision of licence holders, wasbelow 50 per cent.  In addition, the pork sectorcontinues to be one of the growth engines in the locallivestock industry, significantly contributing to meetlocal pork demand.  For goat meat, there is no
demand for in-quota licences and there has been no
recorded importation of the product for CY 1999 to2001.
Undertook to provide response to Canada.
Undertook to provide response to the United States.
Poland   G/AG/N/POL/51     Tariff Quota Fill (Table MA:2)
Points raised by other Member s Response by Notifying Member
Australia – In light of the zero or very low fill rates
(less than 10 per cent) for a range of products
including wheat, beef, milk and cream concentrate,
butter,  some fruit and vegetables and potato flour,questioned the necessity of tariff quotas on theseproducts.Tariff quotas are an important part of the reform
process which facilitate and improve the ability of the
Polish agricultural sector to adopt to the necessary
changes.  The tariff quota system is under constantreview, in relation to coverage and administrationmethods.  Several factors are taken into account,including the market situation of the respectiveproducts and requests from importers.  During the
implementation period Poland has experienced a
certain degree of fluctuation in quota fill rates,depending on market conditions, domestic andforeign prices relationships and consumer
preferences.G/AG/R/32
Page 21
Poland   G/AG/N/POL/51     Tariff Quota Fill (Table MA:2)
Points raised by other Member s Response by Notifying Member
New Zealand – Notes that price-based safeguards
(POL/52 and POL/53) were notified for a variety ofproducts and tariff quotas apply for these sameproducts.  Clarification sought regarding thecalculation of the price-based SSG when in-quota
imports are very low for some tariff lines, such as
meat of swine, cut flowers and wheat and meslin.Confirmation sought that additional SSG duties areapplied only after the relevant tariff quotas have been
filled.Confirms that imports under tariff quota are exempt
from SSG duties.  According to the provisions ofArticle 5 of the Agreement, the SSG duty is appliedonly to products imported out-of-quota if the import
price is 10% lower than the relevant trigger price.
Switzerland   G/AG/N/CHE/28     Tariff Quota Fill (Table MA:2)
Points raised by other Member s Response by Notifying Member
Argentina –  In light of the fact that in-quota imports
of live bovine animals, live sheep and goats, animalsfor slaughter, dairy products, eggs, bovine semen, cutflowers, potatoes and fresh vegetables havesignificantly  exceeded established quotas,
clarification sought regarding the reasons for the
extension of the tariff quotas, the conditions for suchextension, the reasons why such extension has notbeen notified and the beneficiary countries of such
extension.
Follow-up question by Argentina – In the case of
such autonomous quota extensions, how can advancenotice be obtained.
Follow-up question by Canada – Whether the terms
and condition for the extended quotas differ from thescheduled tariff quotas.
Follow-up comment by New Zealand – Whether
Switzerland has any intention of making the
extensions permanent.In 2000 and 2001, the tariff quotas for the products
referred to by Argentina were increased on anautonomous basis. Theses increases wereimplemented in response to demand developmentswhich temporarily exceeded the basic tariff quotas
and domestic production of these products.
Quotas can be extended by the Government
according to Art. 21 of the Federal Law onAgriculture of 29 April 1998 and the GeneralOrdinance on imports of agriculture products (Art.10). All imports under the additional tariff quotas
were subject to the same in-quota-tariff rates as the
basic tariff quota quantities. Under present WTOrules there is no obligation to notify tariff quotaextensions.  For more information regarding theSwiss tariff quota administration, see the MA:1notification G/AG/N/CHE/13/Add.2 dated 22 March
2002 and Part 1 of notification G/LIC/N/1-3/CHE/2-
3 dated 26 September 2000.
There are no country-specific allocations of
additional tariff quota quantities and equal
opportunities apply to all countries.
Information is available on a daily basis at the web
site of the Swiss Customs Office.
The tariff quota extensions are implemented on the
same terms and conditions as the scheduled tariffquota quantities.
There are currently no plans to grant permanent
extension of these tariff quotas.G/AG/R/32
Page 22
Tables MA:3 to MA:5 Notifications
Czech Republic    G/AG/N/CZE/40     Vo lume-Based Special Safeguard (Table MA: 3)
Points raised by other Member s Response by Notifying Member
New Zealand – Clarification sought regarding the
scheduled tariff items which correspond to the
notified volume-based special safeguards for dairyfats and spreads, and the level of the additional levelapplied.The scheduled tariff items were affected by HS 1996
changes.  These changes have been incorporated into
the Czech Republic Schedule through the Procedureof Certification of Modifications and Rectificationscontained in WLI/100 (page 10).  The additional dutyis 22.6% for all tariff items covered by notification
CZE/40.
Japan     G/AG/N/JPN/76     Price-Based Special Safeguard (Table MA:4)
Points raised by other Member s Response by Notifying Member
Australia – Information requested on the application
of the special safeguard, including when the triggerprice was reached, how much lower prices fell, and
what rates of additional duty were levied.The three notifications concern the price-based SSG
which was invoked on individual cargoes when theprice was lower than the trigger price.  The dateswhen the trigger price was reached were therefore the
same as the dates when the SSG was applied.  Japan
has not published the amount of extra duty imposedas a result of the SSG or the price of the importedproducts since they are related to traders' commercialbenefits. For the three products concerned, thedifference between the import price and the trigger
price was greater than 10% but less than 40% of the
trigger price, with the additional duty being equal to30% of the amount by which the difference exceeded
10%.
Poland     G/AG/N/POL/52 and Corr.1    Price-Based Special Safeguard (Table MA: 4)
Points raised by other Member s Response by Notifying Member
New Zealand – With respect to the price-based
special safeguards applied to swine meat, flowers,and wheat, confirmation sought that volumes ofimports of these products are not declining(Article 5.7 of the Agreement).  Confirmation sought
that the safeguards will be applied on a shipment-by-
shipment basis depending on whether the triggerprice is reached, and only during the notified period.The SSG is applied on a shipment-by-shipment basis
depending on whether the trigger price is reached.Regarding swine meat, imports in the first half of2002 reached 20,000 tonnes; in same period of 2001,imports were 7,000 tonnes.  Regarding wheat,
imports in the first half of 2001 were 182,000 tonnes
and in the same period of 2002 licences were issuedfor 299,000 tonnes (imports until 15 April 2002reached 54 per cent of total imports in 2001).Regarding flowers, until 20 June 2002, importlicences issued for roses totalled 100 million pieces,
which exceeds total imports in 2001; for
chrysanthemums import licences were issued for 139million pieces, which exceeds total imports in 2001.Poland considers its SSG system to be in full
compliance with Art. 5.7 of the Agreement.G/AG/R/32
Page 23
Poland     G/AG/N/POL/53    Price-Based Special Safeguard (Table MA: 4)
Points raised by other Member s Response by Notifying Member
New Zealand – With respect to the price-based
special safeguards applied to fowls, confirmationsought that volumes of imports of these products arenot declining (Article 5.7 of the Agreement).Confirmation sought that the safeguards will be
applied on a shipment-by-shipment basis depending
on whether the trigger price is reached, and onlyduring the notified period.The SSG will be applied on a shipment-by-shipment
basis depending on whether the trigger price isreached.  For imports of fowls, in the first half of2002 licences were issued for over 18 million piecesand imports in that period reached 15.8 million
pieces. Poland considers its SSG system to be in full
compliance with Article 5.7 of the Agreement.G/AG/R/32
Page 24
Table DS:1 Notifications
Cuba   G/AG/N/CUB/19      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Australia – With reference to Cuba's revised
notification G/AG/N/CUB/11/Rev.1, clarification
sought whether "compensation of agriculturalproducers" was provided in conjunction with, orseparately from, the Retail Price Subsidy Programme.Compensation to agricultural producers is not part of
the domestic food aid programme notified in
ST/DS:1 of CUB/19.  Compensation for agriculturalproducers was notified in ST/DS:2.  This wascorrectly notified in the Spanish original but not in
the English version.
Estonia   G/AG/N/EST/6      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Australia – Data requested of the Gross Value of
Production for beef in 2001 for ST/DS:7.  Suggestionto present the Total AMS Commitment level for the
period in question as well as the Current Total AMS,
at the beginning of Table DS:1.The Gross Value of Production of beef is estimated at
371.4 million EEK in 2001 and accordingly theapplicable de minimis  level for beef cattle support is
18.6 million EEK (5 per cent).  The actual beef
production support paid was 0.8 million EEK aspresented in ST/DS:7.
The Gross Value of Production of total agricultural
production is estimated at 6,896.4 million EEK in2001.  The Current Total AMS in 2001 was
18.2 million EEK, of which 17.4 million EEK was
for non-product specific support (ST/DS:9) and0.8 million EEK for pr oduct-specific support
(ST/DS:7).
European Communities     G/AG/N/EEC/38       Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Green Box
New Zealand – Clarification sought as to whether
Council Regulations 1260/99 and 719/96 referred to
under "Research" and "Pest and disease control" arenew and would be notified under Table DS:2.Regulation 1260/99 derived from the Agenda 2000
reforms.  The regulation covers the general
provisions of EU structural funds.  The Agenda 2000reforms concerning agriculture were notified inTable DS:2 notification G/AG/N/EEC/17.  Since thecontent of the programmes did not change, they
needed no mention in G/AG/N/EEC/17.  Regulation
719/96 concerns veterinary measures.G/AG/R/32
Page 25
European Communities     G/AG/N/EEC/38       Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
United States – With respect to "Marketing and
promotion services", clarification sought as to howthe measure "protection of geographical indications"operates, how it meets the criteria of Annex 2, and asto whether it is a new programme for which a Table
DS:2 notification will be provided. Clarification
sought on the protection of third-country geographicindications within the EC.
Follow-up questions by the United States –  Reasons
as to why a programme called "protection ofgeographical indications" is notified if in fact such
programme is not implemented.The amount notified does not contain expenditure for
protection of geographical indications. In thereporting year there were no programmes running
under this heading.
The EC it unable at this stage to provide any further
information on the "protection of geographicalindications", other than to reiterate that there is noexpenditure on this particular item.
Australia / Canada / New Zealand / United States –
Clarification sought regarding the large increase in
"Infrastructural services" from 1998/99 to 1999/00,i.e. in shifting from Regulation 950/97 to Regulation1257/99.  Which of the six measures named incolumn 2 have increased the most and the nature oftheir increase?  Relation of these measures to the
major changes in Regulation
 1257/99 referred to in
Table DS:2 notification G/AG/N/EEC/17.
Australia –   Information sought on the details of this
expenditure to reassure Members that the paymentsare made directly to farmers and exclude the
subsidised provision of on-farm facilities.The increase is not due to any particular shift towards
a specific measure. The reason for the increase is the
accumulation of payments for the expiringprogramming period 1994-1999 with advancepayments made for the new programming period2000-2006.  The approach of the new ruraldevelopment regulation is to shift the focus from an
orientation on specific measures to an integrated rural
development strategy at the appropriate regional levelcomprising several instruments in a co-ordinatedway.
On-farm facilities are subsidised and the EC intends
to correct the notification on this specific issue.
Canada –  Clarification sought regarding "Public
stockholding for food security purposes", which  wasnotified for the first time in 1998/99 and 1999/00,  toverify that the programme meets the criteria ofparagraph 3 of Annex 2 regarding predeterminedtargets related solely to food security, and the process
of stock accumulation and disposal.  Whether
government aid to private storage is part of thisprogramme.The purpose of the stocks is to provide food supplies
if needed in the framework of a North-Atlanticsecurity alliance.  The supplies are bought and sold atcurrent market prices.
Australia/New Zealand/United States – With respectto "Decoupled income support", clarification soughtfor the increase of agri-monetary aid payments from129 million to 958 million Euro in 1999-2000, i.e. a
87% increase of in one year, and as to how they meet
the criteria of  Annex 2, paragraph 6 (a) to (e).With the introduction of the Euro the agricultural
conversion rates disappeared on 1 January 1999.  Inspecific cases this resulted in a reduction inagricultural income.  Council Regulations R. 2799/98
and 2800/1998 provided for a temporary digressive
aid to offset the effect of the disappearance of theagricultural conversion rates on the level of direct aidin terms of national currency.  The aid was up forpayment in the reporting period and caused theincrease.  The aid meets the criteria of Annex 2,
paragraph 6 because the payments are triggered by
well defined monetary circumstances concerningconversion of the Euro into national currency on1 January 1999.G/AG/R/32
Page 26
European Communities     G/AG/N/EEC/38       Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Australia – Clarification sought as to why payments
under "Structural adjustments assistance providedthrough resource retirement programmes" in1999-2000 were much lower than in previousnotifications and if this means that land has moved
out of permanent set-aside.The payment is significantly lower because under the
heading concerned, set-aside programmes areexpiring.  The environmental set-aside is increasinglyincluded in the agri-environmental programmesbased on Council Regulation R.2078/92 and notified
under Annex 2, paragraph 12.  This notification
classification will be maintained under Agenda 2000where the environmental set-aside is included in theagri-environment chapter of the integrated ruraldevelopment regulation R.1257/99.  The land has not
moved out of permanent set-aside.
Argentina – Clarification sought regarding the
objectively demonstrated structural disadvantages
which gave rise to the measures taken pursuant to
paragraph 11 of Annex 2 of the Agreement.Regulation 1260/99 lays down general provisions for
structural funds. Structural disadvantage, defined as a
per capita GDP less than 75% of the Community
average, qualifies Regions for Objective 1 measures,from the Guidance Section of EAGGF.  Theoutermost regions and arctic regions are also coveredby this objective. Regions covered by Objective 2
include amongst others declining rural areas. The
EAGGF Guarantee Section contributes to theattainment of Objective 2.
United States –  With respect to "Structuraladjustment assistance through investment aid" datarequested regarding the total expenditures used foreach of the following: construction of processing;
construction of packaging, and construction of
storage centers and purchase equipment.  Provisionof the top 10 products (at the 6-digit level) benefitingfrom each of these activities and how much for each
product.The EC does not have this information available.
United States – With respect to "Environmental
programmes" descriptions requested and a breakout
of expenditures by programme.
Follow-up comment by the United States –
Questioned how the EC could notify theseprogrammes if the relevant information is not
available.The EC does not have this information available.
The EC does have aggregate information which
allows it to make a notification, but the detailedinformation is not presently available.  If it becomes
available, the EC will provide it to the United States.G/AG/R/32
Page 27
European Communities     G/AG/N/EEC/38       Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Blue Box
Argentina – Confirmation sought that the per-hectare
compensatory payments based on regional base areasto producers of cereals, soya beans, sunflower seed,non-textile flax seed, peas and beans are governed byCouncil Regulation (EEC) No. 1765/92.  (Thereference given in the domestic support notification
for 1998-1999 (G/AG/N/EEC/30) is to Council
Regulation (EC) No. 3072/95 on rice.)
Explanation sought how compensatory payments to
producers with an area not exceeding that needed toproduce 92 tonnes of cereals and who are not subjectto the obligation to set aside land could be
incorporated into a production-limiting programme in
compliance with Article 6.5 of the Agreement.The EC can confirm that the references to regulation
1765/92 for the products listed are correct.Regulation 3072/95 covers only the Common MarketOrganisation for rice.
The production limitation is effective because there is
a cap on the payments based on a fixed area.Payments are calculated on the regional basis, and
this allows the respect of such cap on the payments.
Canada – With reference to the EC's previous
statement to questions raised on payments made torice producers in EEC/26 (G/AG/R/24, 31 October2000), that this was the first time that this hectare-based scheme for rice producers appears in the
domestic support notification" and a related DS:2
notification would be promptly submitted(G/AG/R/27, 14 September 2001), clarificationsought as to when that notification would be
submitted.The EC intends to provide the notification soon.
Amber Box
Australia - The heading in Table DS:1 indicates that
the notification provides the Total AMS commitment
level for '1998'. This appears to be an error and
should read '1999'.Error confirmed.
Canada – With reference to "The Agricultural
Situation in the European Union - 1999 Report"(paragraph 417) that subsidies for private storage ofpigmeat were provided in parts of 1998/99 and1999/00, clarification sought as to how this measure
is notified.
With reference to Council Regulation (EC)
No.1493/99 of the common organization on themarket in wine, which provides several supportmeasures such as private storage aid, distillation, andaids for specific use, clarification sought as to how
this measure is notified.The information is not contained in the notification.
The EC  is considering providing the data in acorrigendum.
These support measures are accounted for in the
Current Total AMS by the price gap calculation forwine.G/AG/R/32
Page 28
India   G/AG/N/IND/2      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Canada – Regarding "Buffer stock operations" and
the information provided in G/AG/R/16, informationsought with respect to the predetermined targets forvolume and accumulation of each product for
1995/96, 1996/97, and 1997/ 98;  the quantities of
each product purchased by the FCI, and quantitiesdisposed of in each of those years by the PDS and atwhat prices.
Clarification sought regarding the "Crop insurance
scheme" in G/AG/R/16 which did not meet the
criteria of paragraph 8(a) of Annex 2 (the 30%
production loss and the three-year averaging ofproduction) and as to why India notified AMS-typesupport under the Green Box.
Information requested regarding the names and
associated amounts for the programmes totalling
US$3.7 billion, under "Other input subsidies" in
ST/DS:2.  Explanation sought as to how each of themmeets the criteria of Article 6.2 of the Agreement.  Inview of the fact these programmes are reported inST/DS:2 for the first time, clarification sought as towhen the necessary ad hoc  notifications of "new and
modified" support would be submitted.
Clarification sought regarding the fixed external
reference price established for the product group"coarse cereals", given that AGST/IND shows aspecific reference price for each of the crops of this
group (bajra, jowar, maize, barley).
Notes that credit subsidies continue to be provided
(http://agricoop.nic.in). Explanation sought at to whysuch subsidies are no longer reported in ST/DS:9 andas to what extent the change in reporting of certainsupport from ST/DS:9 in 1995-96 to ST/DS:2 in
1996-97 and 1997-98 reflects a change in the policies
reported, as opposed to a change in reporting practice(fertilizer subsidy, subsidy on electricity, irrigationsubsidy, and subsidy on average supply of seeds).Undertook to provide a response.G/AG/R/32
Page 29
India   G/AG/N/IND/2      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
United States – Notes that India notifies its domestic
support in US dollars, even though its domesticsupport commitments and most of its supportingtables are in Rupees.  Where India notifies in US
dollars requests a corresponding notification in
Rupees.
Regarding ST/DS:2, clarification sought as to the
criteria used to define low income or resource poorproducers.  Explanation sought as to how theprogramme funds are distributed and as to whether
the payments are made in cash, credit, physical
equipment, or some combination thereof.  Withrespect to "input subsidies to low income or resourcepoor producers", clarification sought as to howfertilizer subsidies given to the fertilizer industry are
notified.
Regarding ST/DS:5, clarification sought as to why
coarse cereals are notified in one category eventhough the supporting table calculations were madefor bajra, jowar, maize, and barley.  Explanationsought regarding the methodology for converting theapplied administered price for paddy rice to the
equivalent price for "rice" and the meaning of the
coefficient of 1.5 for the conversion.Undertook to provide a response.G/AG/R/32
Page 30
Israel   G/AG/N/ISR/26      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Australia – Clarification sought with regard to
"payments from natural disasters:  compensation forcut in water supply to farmers". Measures undertakento alleviate the problem and the expected operation
time of the current programme.
Follow-up question by Australia – The response
points to structural problems rather than naturaldisaster.  Due to the ongoing nature of the payment,Australia considers this payment to be an inputsubsidy generally available to agriculture that shouldbe notified under the non-product specific AMS.Israel has submitted a notification concerning the
compensation given to farmers due to cuts in watersupply in notification ISR/17.
Water scarcity in Israel and in the region is not a new
phenomenon. The region is suffering from a lack of
water resources and for decades Israel has beentrying to ease the pressure on this valuable and scarcenatural resource.  For years the agriculture sector inIsrael has been and still is novice in the field ofreducing water consumption.  Irrigation systems,
recycling water, using salted water and other
measures have been used and are still used in thissector and Israel's farmers are one of the mostefficient in water consumption.  All of these systems
are costly and the farmers have to bear the costs.
In recent years the problem has aggravated, the wave
of new immigrants (20% of the total population in the
beginning of the 1990's) and several bad wintersincluding three consecutive drought years had asevere effect on the water levels.  The farmers inIsrael use a quota for water.  This quota is not the realconsumption of water but an historical quota used for
years.  The quota is not effective but any cut in this
quota has some effect on the production levels of thefarmers. For this reason the Government introduced
this Green Box measure.
Israel is investing in desalination plants, recycling
plants and other measures including import of water.
All programmes have a very high price which theusers will have to pay.  With respect to the questionon how long the current programme is expected to bein operation, as long as we shall have this problem,farmers should be compensate for loosing production
as a result of cuts in water supply.
Israel regards part of the support for water to farmers
as input support and consequently such support isreported a non-specific support to water suppliersunder ST/DS:9.  The support in the Green Box is
additional support that corresponds to the severe
drought for the last three years.  Arguably, thissupport could be notified under natural disaster reliefor decoupled income support.  Israel decided toassign the support to the natural disaster reliefcategory since this is temporary support until water
supplies have increased and are no longer 
restrictive
for farmers.G/AG/R/32
Page 31
Israel   G/AG/N/ISR/26      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
New Zealand – Notes that the product-specific AMS
for milk rose almost 30% from 1999, which is due inpart to an 11.9% rise in the applied administeredprice. Explanation sought as to why the administered
price was raised by this amount between 1999 and
2000.Even with these increases in the AMS, Israel is within
its commitments.  The administrative price of milk rosein real terms, however this is a result of an accumulated
external effect.  The following factors contributed to the
increase in the administrative price for milk for 2000:
• The dollar exchange rate is responsible for a 2%
increase;  the administrative price is in new Israelishekels and has been converted to US dollars forthe notification.
• The agricultural Production Index rose almost 5%
between 1999 to 2000, and as the administrativecost is closely related to this index theadministrative price rose accordingly.
• The standard norms for milk production changed
and hence the cost of production rose by almost 5%as a result.  Israel did not change the reference pricesince this price should be fixed for theimplementation period.
New Zealand - Notes that the amount spent on the
non-citrus fruit re-plantation programme was47 times that in 1999.  Explanation sought for thissignificant increase and the fruits covered by this
programme.The amount spent on non-citrus fruits refers to the
total investment in 2000.  This includes notably re-plantation of several stone fruits such as plums,nectarines, peaches, and other non-citrus fruits, but
also investments on cultivation improvement,
packaging and storage techniques.
Korea G/AG/N/KOR/31      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
United States – Clarification sought regarding the
Green Box measure "Other:  Support for improving
farmers' living condition and operation of a bufferstock management fund" and as to how thisprogramme operates and meets the specific Annex 2
criteria.The objective of the buffer stock management fund is
to stabilise the agricultural markets by narrowing the
range of price fluctuations.  This programme isdesigned mainly for fruits and vegetables, the pricesof which are unpredictable and sometimes showsignificant fluctuations, increasing the risk for
producers.  The programme is implemented by
purchasing during the harvest seasons and selling inoff crop seasons.
Purchased quantities under this programme are small,
normally less than 1% of the total production; theyare purchased at market prices, not at predetermined
administered prices, and sold through wholesale
markets when their prices have recovered.Considering this mechanism, it can be inferred that itneither has an effect on production nor supportsprices for those products and meets the requirements
stipulated in paragraph 1 of Annex 2.G/AG/R/32
Page 32
Morocco G/AG/N/MAR/24 Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
United States – Clarification sought regarding the
definition of low income or resource poor producersand what percentage of producers qualify (ST/DS:2).Undertook to provide a response.  See Annex – Part II.
Philippines   G/AG/N/PHL/23      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
Australia – Information requested regarding the
Gross Values of Production for rice and corn for the
purposes of the de minimis  calculation.The data requested are provided in ST/DS:5 for the
calendar years 1999, 2000 and 2001, respectively
(see footnotes 2 and 4 thereto).
Canada – Clarification sought regarding the new
multi-sectoral dairy development strategies, alsoreferred as "dairy-white revolution" that was
launched by the National Dairy Authority of the
Philippines.  How each of these support measures isaccounted for in the notifications.The Dairy White Revolution is a multi-sectoral
undertaking led by the National Dairy Authority(NDA) and the Philippine Carabao Center (PCC).
Launched in 1998, the programme hinges on
strategies such as herd build-up, post-productionsupport, human resource development, and researchand development.  The support measures providedunder this programme are incorporated in the
notifications for Green Box measures and Special
and Differential Treatment.  Budgetary support forthis programme drawn from the PCC, StateUniversities and Colleges (SUCs) and theDepartment of Agriculture's MAKAMASALivestock programme are spread out among the
appropriate type of support measure/s in the
notifications.  Such support measures includeresearch under General Services, and marketing andpromotion services in ST/DS:1, and investmentsubsidies generally available to the agriculture sectorand input subsidies generally available to
low-income resource-poor producers under ST/DS:2.
Canada –  Clarification sought as to the accuracy of
identical expenditures in ST/DS:1 for both 2000 and2001.The expenditure figures are indeed identical for 2000
and 2001 since the same source of data was used, i.e.the Philippine General Appropriations Act (GAA) ofcalendar year 2000, which was re-enacted for
calendar year 2001.G/AG/R/32
Page 33
Slovenia    G/AG/N/SVN/21      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
New Zealand – Clarification sought regarding the
"retirement programme" and "public works" notifiedunder the Green Box and which appear to be newprogrammes. Confirmation sought that a Table DS:2
notification will be provided for each.In 2001 only 10 out of 192 local communities in
Slovenia implemented structural adjustmentassistance provided through resource retirementprogrammes (line (h) of ST/DS:1).  The amount of
56,260 Euro was used for that purpose.  Public works
in agriculture amounted to 66,060 Euro and werecarried out in order to prevent overgrowing ofagriculture land by forest (line (l) of ST/DS:1).  ATable DS:2 notification in respect of both measures
will be provided.
Australia – Clarification sought regarding the applied
administered price for wheat which is  around nine
times larger than the external reference price, yet no
market price support is reported. Provision of thecorrect applied administered price for 2001.
Clarification sought regarding a zero eligible
production value for wheat for both 2001 and 2000notifications, whereas in earlier years eligibleproduction was notified at around 170,000 tonnes.Information requested concerning the levels of wheat
production in 2000 and 2001.  Explanation sought as
to how "eligible production" has been determined andwhy a level of zero eligible production has beenrecorded.
Follow-up comment by Australia – Considers that the
level of the wheat production should be listed as"eligible production" in the notification, even if theadministrative prices is below the external reference
prices.  Since the AMS cannot be negative, the level
of support remains zero.  This approach is moretransparent and overcomes potential circumventionproblems.The correct applied administrative price for 2001 is
0.09940 '000 EUR/t and not 0.9940 '000 EUR/unit as
stated in Supporting Table DS:5.  The mistake will be
duly corrected.
The wheat production in Slovenia amounted to
162,559 tonnes in 2000 and 180,397 tonnes in 2001.In Slovenia's understanding there is no "eligibleproduction" for this measure of market price supportas the applied administered price was set below the
level of the external reference price and Slovenia has
not implemented this measure for the last three years.
Turkey    G/AG/N/TUR/14      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
United States – Confirmation sought  that Turkey did
not provide any support measures other than thoselisted in ST/DS:4 and ST/DS:5.Supports other than the domestic support listed in the
2001 notification comply with the criteria for GreenBox measures.  These supports are in the form ofdirect income supports under the Agricultural Reformand Investment Project. Direct income support
payments have started towards the end of 2001.  No
notification has been made due to the fact that lessthan 10% of the projected amount of payments hasbeen paid out in 2001. In 2002, a full notification will
be made.G/AG/R/32
Page 34
Turkey    G/AG/N/TUR/14      Domestic Support (Table DS:1)
Points raised by other Member s Response by Notifying Member
United States –  Clarification sought regarding the
calculation of the amount of production eligible toreceive the applied administered price and if thislevel was established at the same time as the
administered applied price was announced
(ST/DS:5).
Clarification sought regarding the calculation of the
applied administered price. Notes that the TurkishGrain Board sets different prices for each grain,depending on the quality/characteristic (for example,
there are prices set for durum wheat, hard wheat,
semi-hard wheat, other wheat, etc.) and asks howthese differences have been taken into account whencalculating the applied administered prices.
Follow-up comment by the United States –
Complimented Turkey its decision to move from
Amber Box policies to Green Box policies to support
their farmers.Turkey has phased out the price-based and input-
based support systems within the framework of awide ranging reform programme started in 2000. Inthis context, as from the end of 2001, no intervention
buying-in has been made.
The Turkish Grain Board has bought limited
quantities of cereals at a price determined totallyunder free market conditions to provide the countrywith security stocks and public stockholdings for
security reasons.  The Turkish Grain Board no longer
make intervention purchase for cereals. Marketing ofsugar beets and tobacco will be determined byproducers and the processing and marketing industry.G/AG/R/32
Page 35
Table DS:2 Notifications
Czech Republic G/AG/N/CZE/38    New or Modified Domestic Support (Table DS:2)
Points raised by other Member s Response by Notifying Member
Australia – Clarification sought as to how the
programme "landscape maintenance" and "supporting
less favoured areas" relate to the goals of
environmental or conservation programmes.
Follow-up questions by Australia – Requested further
clarification regarding this measure.  Since thepayment is to take into account lower profitability inless favoured areas, it is difficult to understand why
the measures should be in the environmental
category.  This would seem to be an input subsidy.This programme which  is part of the sectoral policy
of the Ministry of Agriculture as approved by the
Government.  It provides for partial compensation of
extra costs or loss of income caused by therequirements related to the protection of sources,nature preservation, waste management andprecautionary measures against weeds, pests anddiseases. This programme supports
environment-friendly production methods in
agriculture and takes into account lower profitabilityin less favoured areas.  Eligibility for the payment issubject to the condition that the entire agriculturalland is in good condition in terms of countrysidemaintenance and  protection of the environment.  The
objective of this programme is protection of the
environment and it meets all the policy-specificcriteria of paragraph 12 of Annex 2 of theAgreement.
The Czech Republic took note of the question and
undertook to provide a response.
Canada – Clarification sought concerning"maintenance of agricultural land" as to thedifference between this programme, which partiallysubsidises the extra cost of keeping agricultural landfrom weeds, and any input subsidy to partially offset
a farmer's cost of weed control.This programme does not include input subsidies, but
relates to the protection of agricultural land againstthe spreading of weeds from uncultivated areas,which is not the same as weed control on cultivated
agricultural land.G/AG/R/32
Page 36
European Communities G/AG/N/EEC/39    New or Modified Domestic Support (Table DS:2)
Points raised by other Member s Response by Notifying Member
Canada – Notes that the notification does not contain
details as required under Article 18.3 of theAgreement to verify that the measures meet theapplicable criteria.  Requests a more substantial
description of the programmes, including the
objective(s), how the programmes operate and howthe amount of payments will be calculated.There are wine-growing areas for which production is
not aligned on demand; to encourage a betteralignment of the sector as a whole, the permanentabandonment of wine growing in such areas is
encouraged.  This is clearly a resource retirement
programme.  The other programme is a structuraladjustment programme.  There are also wine-growingareas where production is not aligned on demand, butwhere production could be better aligned throughrestructuring of vineyards by varietal conversion,
relocation of vineyards or improvement of vineyard
management techniques.  To ensure that suchrestructuring and conversion is carried out in acontrolled fashion, they are the subject of plans.Plans are drawn up at a level as close as possible tothe producer to ensure that regional diversity is taken
into account; nevertheless, in order to ensure that the
plans are in conformity with Community law,Member States remain responsible in the last resortfor those plans.  Restructuring and conversion havetwo main financial impacts on the producer, namelyloss of earnings during the period of conversion and
the costs of implementing those measures.  The
support covers both of these impacts.
Korea – Clarification sought regarding thebackground and nature of the reform of the commonorganization of the market in wine.The reform of the common organisation of the
market in wine aims to guarantee the necessaryflexibility to adapt smoothly to new developmentswith the following broad aims:  (a) maintainingimproved balance between supply and demand on the
Community market;  (b) enabling the sector to
become more competitive in the longer term;(c) eliminating the availability of intervention as anartificial outlet for surplus production;  (d) supportingthe wine market and hence facilitating thecontinuation of supplies of wine distillates to those
parts of the potable alcohol sector which traditionally
use that alcohol;  (e) accommodating regionaldiversity;  and (f) formalising the potential role of
producer organisations and sectoral organisations.G/AG/R/32
Page 37
European Communities G/AG/N/EEC/39    New or Modified Domestic Support (Table DS:2)
Points raised by other Member s Response by Notifying Member
Canada/Korea/New Zealand/United States –
Description sought as to how "Resource retirementprogrammes-abandonment premiums" meet allcriteria of paragraph 10(a)-10(d) of Annex 2; how
"Investment aids-restructuring and conversion" meets
all criteria of paragraph 11(a) to (f) of Annex 2; andhow "General services-information and generalprovisions" meets the criteria of paragraph 2 of
Annex 2.
United States – Notes that the abandonment fund
recipients (current wine grape growers) are requiredto continue growing wine  grapes to receive the
Abandonment payment.  Clarification sought ifgrowing a different variety of wine grape constitutes
a different "product" within the meaning of Annex 2.
Follow-up question by the United States – It seems
that for producers to receive the restructuringpayments, they must produce vine-grapes, i.e. theymust stay in wine production. Clarification sought
regarding Green Box compatibility in this regard.The abandonment programme meets the criteria of
Annex 2 paragraph 10 because it removes vineyardsfrom production on a permanent basis.  Therestructuring and conversion programme is in
conformity with paragraph 11 because it helps
producers to restructure their production where theyno longer can respond to market demand.  Theinformation provisions comply with paragraph 2,because they stipulate market research and market
information flows.
The statement regarding abandonment that fund
recipients are required to  continue growing wine is
not correct. They are required to abandon production
permanently.
The EC undertook to provide a response.  See
Annex – Part II.
Canada/Korea/United States – Explanation soughtregarding the structural disadvantage and how it isbeing addressed by the restructuring and conversionof production potential; the types of restructuring andconversion measures that will be provided bymember states; how the amount of the payments will
be calculated and how it will be limited to the amount
required to compensate for the structuraldisadvantage; specific guidelines imposed todetermine the regions, types of production eligible,
and the amount of these aids.Restructuring is intended for wine growing areas
where wine production is not aligned on demand.The alignment is done through restructuring ofvineyards, by varietal conversion, relocation ofvineyards or improvement of vineyard managementtechniques.  The amount of the payments is based on
the total area per member State object of
restructuring and the estimated cost for restructuringper hectare.  This leads to an envelope per memberState, which may vary per region.  In no case shallthe contribution exceed 50% or 75 %.  (Objective 1areas) of the real costs of restructuring and
conversion.  The subsidiarity principle applies,
therefore member States determine the regions thatmay be restructured.
Canada – Assurance sought that the implementationof the programmes by the EC member states meets
the criteria in Annex 2.Programmes have to respect the Community
framework and are assessed by the Commission.G/AG/R/32
Page 38
European Communities G/AG/N/EEC/39    New or Modified Domestic Support (Table DS:2)
Points raised by other Member s Response by Notifying Member
Canada/United States – Notes that the Official
Journal of the European Communities (L29, Volume45, 31 January 2002) indicates that the appropriationsfor the abandonment premiums in respect of areas
under vines are 14 million and 16 million Euro for
2001 and 2002, respectively, and for the restructuringand conversion of vine yards 380 m illion and 422
million Euro, respectively.  Explanation sought forthe discrepancy between these amounts and that
indicated in the notification.
Follow-up question from the United States –
Clarification sought regarding the notifiedexpenditure of 9.5 million Euro for 2000.
Follow-up comment from Argentina – Expressed its
interest in the questions raised by other Members.The figure notified concerns only the expenditure for
the budget year 2000. Confirms the data cited forlater years.
Permanent abandonment (Budget appropriations in
million Euro)
2001: 142002: 16Restructuring and conversion (Budget appropriations
in million Euro)
2001: 3802002: 422
Confirms that this is the actual expenditure in the
year 2000.G/AG/R/32
Page 39
ANNEX – Part II
Deferred Replies to Questions Raised at this Meeting
Table MA:2 Notifications
Morocco   G/AG/N/MAR/22     Tariff Quota Fill (Table MA:2)
(page 18 refers)
Points raised by other Member s Response by Notifying Member
United States – Clarification sought as to whether
there were imports under agricultural tariff quotasthat were agreed to under  the EU-Morocco free trade
agreement.  If so, information requested regarding
tariff lines and quantities.The EU-Morocco free trade agreement came into
effect on 1 March 2000.  The first allocation ofquotas at reduced rates under the agreement took
place during financial year 2000-2001.
The products concerned are pure-bred bovine
breeding animals, frozen bovine meat whether or not
boneless, powdered milk, butter, cheese, cereals,mixed vegetables, seed potatoes, unroasted malt andcattle feed.
A committee of representatives of the Department of
Agriculture and the Department of Industry and
Trade has been set up to determine the distributioncriteria among operators for each product byconsensus.G/AG/R/32
Page 40
Table DS:1 Notifications
Morocco G/AG/N/MAR/24 Domestic Support (Table DS:1)
(page 31 refers)
Points raised by other Member s Response by Notifying Member
United States – Clarification sought regarding the
definition of low-income or resource-poor producers
and what percentage of producers qualify (ST/DS:2).The majority of farms are small with limited
resources.  Almost 70 per cent of farmers have lessthan 5 hectares of agricultural area in use (AAU) and
close on 25 per cent have an AAU ranging from 5 to
20 hectares.
Input subsidies generally available to low-income or
resource-poor producers concern aid for theproduction of selected seeds and for fruit-farming,granted by the State under the Agricultural
Development Fund (FDA).
Subsidies for the production of certified cereal seeds
(wheat, durum wheat and barley) are paid directly tothe authorized seed companies by the FDA.  TheState assumes transport costs and seed storage to
ensure regular supply to farmers.
The percentage of farmers benefiting from this
subsidy is unknown due to lack of data.  The level of
use of certified seeds did not exceed 11 per cent ofthe total requirement for cereal seeds due todeterioration in farmers' income resulting from the
recent recurring droughts.
Aid for fruit farming consists of a subsidy for
purchasing plants and is only granted in zones
recognized as fruit growing areas and only for thespecies which the Department of Agriculture deemsuseful to introduce into Morocco or to develop in theinterests of the domestic economy.  In 2000, thesubsidy went to 29,233 farmers, representing 2 per
cent of the total number of Moroccan farmers.G/AG/R/32
Page 41
Table DS:2 Notifications
European Communities G/AG/N/EEC/39    New or Modified Domestic Support (Table DS:2)
(page 36 refers)
Points raised by other Member s Response by Notifying Member
United States – Clarification sought as to how the
restructuring and conversion of vineyards conforms
to the criteria of paragraph 11 of Annex 2.The system of restructuring and conversion of
vineyards conforms to paragraph 11 of Annex 2 in
the following way:
Paragraph 11(a) of Annex 2:  Support for
restructuring and conversion is only granted inrelation to plans which have been drawn up and,
where necessary, approved by member States.
Paragraph 11(b-c) of Annex 2: Support is paid only
as compensation for producers for the loss of revenuedue to implementation of the plan, and ascontribution to the costs of restructuring and
conversion.
Paragraph 11(d) of Annex 2:  The compensation to
producers for the loss of revenue is paid for the
coexistence of both old and new vines for fixedperiod which shall not exceed three years.
Paragraph 11(e) of Annex 2: The objective is the
adaptation of production to market demand.
Paragraph 11(f) of Annex 2:  The system for the
restructuring and conversion of vineyards covers
varietal conversion, relocation of vineyards andimprovements of vineyard management techniques.It does not cover the normal renewal of vineyards,
which have come to the end of their natural life.
__________