WORLD TRADE
ORGANIZATIONG/AG/NG/W/48
5 October 2000
(00-4073)
Committee on Agriculture
Special SessionOriginal:  English
THIRD SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
28-29 SEPTEMBER 2000
Statement by the Philippines
US Proposal for Comprehensive Long-Term Agricultural Trade Reform
(G/AG/NG/W/15), 23 June 2000
The Philippines welcomes the US proposal as a major input to the on-going discussions in the
Committee.  We marks its declared objective of "correcting and preventing restrictions and distortionsin world agricultural markets", as indeed, mountin g evidence show that despite the ground-breaking
disciplines under the Agreement, such distortions have even worsened in the developed countries
during this implementation period.  We are concerned that support and protection for farmers in the
few developed country members had reached a combined level of more than US$360 billion, a
complete reversion to the damaging mid-1980 levels which the Agreement intended to address.  Thus,we append to this objective, "…at the shortest feasible time."
We further note that such restrictions and distortions prejudiced most not only the current
interests of developing countries – supposedly the subject of Special and Differential Treatment and
constitute the bulk of the Organization's membership, but more dangerously, the individual and
collective development potentials and aspirations of these countries – upon whose effective
participation in responsibilities and benefits the future of the Organization and its goals mainly rest.That trade distortions arising from developed country policies have cost developing countries an
estimated US$20 billion annually in welfare losses is sufficient enough reason to undertake more
meaningful, effective, and necessarily radical, reform.
It is in this slight that we would like to address the US proposal.
Market Access
On tariffs, we concur with the proposal to substantially reduce or altogether eliminate tariff
escalation and ensure effective market access opportunities for all products in all markets.  However,we note that neither this section nor that on Special and Differential Treatment fail to adequately
address the situation of developing countries.  We also do not find adequate logic or justice in the call
for tariff reductions from applied rates while at the same time proposing reductions in domestic
support based on bound levels.
Most developing country agricultural industries and sectors have yet to fully adjust to the
Agreement's reform programme.  The call for the elimination of special safeguard measures, so
central to further reform in the developed countries, will be disastrous and counter-productive in the
case of developing countries.  With minimal domestic support and significantly reduced tariff walls,
the removal of this immediate trade remedy measure means further and undue exposure to heavily
supported imports, threatening their very survival and the purchasing power that reforms are supposed
to enhance.G/AG/NG/W/48
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With regard to the proposal on 'products of new technologies', we reserve any comment at this
point as we exhort the US to further clarify this part of the proposal.
Export Competition
The Philippines shares the general objective of the US with regard to agricultural export
competition – that of the complete elimination of export subsidies.  The proposal, however, is
ambiguous in terms of the necessary level of ambition to fully address distortionary effects of such
subsidies on trade.
We, therefore, exhort the US to consider the elements of the Cairns Group proposal on export
competition, which we submit sufficiently addresses the issue of export subsidies.  First, thatelimination be achieved through a substantial downpayment in terms of reduction, say not less than
50 per cent, of outlays and volumes during the first year of implementation.  Such initial
downpayment shall be followed by no less than an  accelerated process of reduction of residuals
leading to zero.  Second, the start for the do wnpayment and reduction process shall be the bound
subsidy ceilings at the end of 2000 for developed countries and 2004 for developing countries.  Third,the development of additional and/or strengthened  rules and disciplines to prevent circumvention.
Further, this would include eliminating any subsidy elements of other forms of unfair export
competition measures.
Domestic Support
On the matter of domestic support, the Philippines defers to the statement of ASEAN which
shall shortly be presented.  Suffice it to say that we appreciate the proposal to simplify domestic
support disciplines into exempt and non-exempt categories, and exhort the US to consider much more
ambitious commitments that would, at the shortest feasible time, eliminate trade distorting domesticsupport.
Special and Differential Treatment
The Philippines likewise welcomes the US proposal to enhance developing country access to
technical assistance and capacity building as a vehicle for integration and attainment of development
objectives.  It is important to bear in mind, however, that technical and capacity building assistance,together with other well-meaning development assistance programmes from developed countries,
while essential to the realization of developing countries' potentials, can not and will never substitute
for the necessary condition of agricultural reform by developed countries.  Further, we submit that it
is only through true and meaningful special and differential treatment, not dependence on the altruism
and largesse of the few developed countries, that the potentials and aspirations of developingcountries for sustainable economic and social development are attained.
We, therefore, invite the US to consider, in any further elaboration of its proposal, that the
sheer underdevelopment of agriculture in developing countries, coupled with poorer budgetary
resource endowments, severely constrains their ability to undertake reforms at the same level and paceas those with developed countries.  Therefore, conventional flexibilities in terms of longer and gradual
implementation time frames, which must continue for developing countries, will not be sufficient.
The nature, depth and substance of developing country commitments must also sufficiently and
adequately be different.
Conclusion
The Philippines thanks the United States for a proposal which broadly outlines some of the
more positive steps upon which the next reform programme can proceed.  We note the significance of
its specific proposals on the core elements of further reform.  The US is hereby enjoined to considerG/AG/NG/W/48
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the essential elements of meaningful special and differential treatment for developing countries, so
unambiguously stated in Paragraph 5 of the 'Enabling Clause', and as outlined in this note.  The next
reform process, to qualify as real and meaningful, must be able to promote fairness and be facilitative
rather than constraining of developing countries' development potentials and aspirations.  Special and
differential treatment for developing countries must be the additional pillar of fairness that is essentialin addressing the latter's legitimate concerns if th ey are to meaningfully participate, contribute and
benefit from further in the reform process.
As the current reform process brought most of the developing countries' agriculture sectors
within the rules and disciplines of the multilateral trading system, so must the next reform programme
bring developed countries' agriculture trade policies u nder fairer disciplines that completely eliminate
distortions in agricultural production and trade that severely compromise the welfare and interests notonly of developing countries but all the peoples of the world.
EC's proposal on Export Competition
The Philippines thanks the EC for bringing fo rward the important issues related to export
competition, which have not been tackled comp rehensively and immediately during the Uruguay
Round.  It is essential that these issues be covered if the negotiations are to result to truly effective
disciplines on export competition.  The Philippines wishes to offer the following views on the
aforementioned EC paper:
Export credits
Let us note at the outset that the issue of disciplines on export credits is not an issue for
negotiations.  Rather, this is an implementation issue.  Article 10.2 of the present Agreement alreadycommits Members to work towards the development of internationally agreed disciplines to govern
the provisions of export credits, export credit guarantees or insurance programmes.  It is regrettable,
however, that to-date, Members have not yet complied with this obligation.
As the negotiations seek to eliminate the use of export subsidies, the need to instill effective
disciplines on export credits would be all the more important, in order to avoid the possibility for
circumvention.  It is alarming to note that the use of export credits has been increasing in recent years.
The gains in rules and disciplines on export subsidies could be nullified by the indiscriminate use of
export credits.  Failure to agree to a set of disciplines on export credits could bring us back to the pre-
Uruguay Round situation where countries try to match each other and compete in the use of, this time,
export credits.  This situation would only be most disadvantageous for developing countries.
We appreciate the serious efforts by some Members to negotiate towards a protocol on export
credits under the auspices of the OECD.  But whil e the OECD may be a good forum for starting the
discussions on this subject, we would, however, remind Members that the commitment to work
towards a set of disciplines was taken in the multilateral context.  Although OECD countries are the
chief providers of officially supported export credits, the application of this instrument would affectnot only the OECD exporters, but also all export ing countries.  Thus we urge those involved to
exercise greater transparency in the treatment of this issue.
Food Aid
The Philippines recognizes the positive role which food aid could play in the objective of
achieving food security.  Very often, however, food aid increases dependency.  Unless carefully
administered by donors and recipients to increase longer-term food security, the influx of food aid
could depress prices in receiving country and diminish incentives for domestic producers.  MoreG/AG/NG/W/48
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importantly, it can dampen political pressures from recipient countries to adopt the reforms and
policies to strengthen the domestic food system.
Many food imports, particularly of cereals, come in the form of food aid, comprising of loans
and grants.  To qualify as food aid, the grant component must be equal to 25 per cent of the total.This component may, however, be greatly over-estimated as the food given is valued at world market
prices, which would decline if the surpluses disposed through food aid were in fact to be placed in the
world market.  Indeed, the recent trend in food aid disposal as described in the EC's paper is a cause
for concern to developing countries.  The tendency of donors to resort to food aid as a "price reducing
surplus stock" runs counter to the goal of improving the food security situation of developing
countries, as such policy in fact deprives developing countries of access to cheaper food supplies.
In this regard, Mr. Chairman, the Philippines welcome the EC's proposal that the negotiations
should treat the issue of export competition in a comprehensive manner.  This should include direct
export subsidies, export credits, food aid, and other measures that may act as implicit export subsidies,
with the end in view of elimin ating all forms of export subsidies at the earliest possible time.
Statement by the Philippines on behalf of ASEAN on the
Cairns Group Proposal on Domestic Support
ASEAN supports the submission by Australia, on behalf of the Cairns Group, of the specific
negotiating proposal on domestic support.
While it is generally considered that a major breakthrough in the Uruguay Round is the
inclusion of domestic support within the ambit of multilateral trade disciplines, there is also a generalrecognition that the rules and disciplines established for this pillar are the least effective of the UR
bindings.  The influence of the Agreement to precipitate the desired policy reforms on domestic
support has been weakened by several corrosiv e compromises reached during the Uruguay Round.
Moreover, the rules and disciplines on domestic support were formulated more in
consideration of the policies of developed countries, and resulted in major imbalances in obligations
and commitments between developed and developing countries.  The present agreement allowsdeveloping countries, which had applied little or had no trade distorting subsidies a 10 per cent ceiling
on the level of this type of support that can be provided.  The developed countries, on the other hand,
were not subject to an upper limit, but were expected to bring down trade distorting subsidies by
24 per cent over six years.  Thus, the obvious advantage that the heavily subsidizing developed
countries have is evident and gross.  Developed countries can retain 76 per cent of their massivelevels of trade-distorting domestic support, while developing countries are allowed to provide the
same subsidies at no more than 10 per cent of the value of production.
Thus, ASEAN deems it imperative that the next reform programme remedy this state of
imbalance, by taking on board the following core elements:
(i) Developed countries must commit to a minimum substantial down-payment in the
reduction of aggregate and specific support from a determined base period, in
absolute terms.  The depth of commitment must render any tendency to apply export
subsidies as well as related export competition measures to resolve the perennialproblem of over production to unbridled subsidization, academic.  The rest of the
trade distorting support must be subject to reduction commitments leading to
elimination at the soonest reasonable time;G/AG/NG/W/48
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(ii) The Blue Box category of support measures or domestic support under production
limiting programmes must be subjected to similarly substantial reduction
commitments leading to elimination;
(iii) Even in the event that agreement is reac hed to eliminate export subsidies or trade-
distorting support measures, the fact remains that any residual domestic supportapplied to exported products is no different from domestic support.  In addition, even
seemingly harmless domestic support measures will have distortive effects on
agricultural trade.  Thus, developed countries should no longer be allowed to have the
additional flexibility to apply de minimis  support.
(iv) If future cuts on trade distorting support are to be effective, it is important to ensure
that these types of policies cannot simply be shifted to categories of support that are
exempt from reduction commitments.  Therefore, the criteria for Green Box measuresor Annex 2 of the Agreement must be re-examined to ensure that they have at least
minimal or more preferably, no trade distorting effects.  This re-examination of the
Green Box is necessary given the fact that no objective analyses was made on what is
"minimally trade distorting" and that the Green Box measures were only based on
what negotiators deemed to be less trade-distorting than those in the Blue Box.
(v) Theoretically, and upon deeper reflection, no specific agriculture policy is fully
decoupled from production and therefore wi thout consequences to trade.  Decoupled
support affect production through effects on factors, such as income, expectations and
risk.  Thus, while there may be no incentive to increase production at the margin,
there still exists production effects in so far as more resources are retained in the
farming sector than would otherwise be the case.  At much higher support levels, the
production and trade effects of even decoupled measures could become significant.
In this light, the negotiations should set a cap on the overall levels of support by
developed countries.
Finally, ASEAN is of the position that separate consideration must be accorded to developing
countries, to which domestic support measures remain a fundamental and indispensable tool in
pursuing their developmental and food security obj ectives.  ASEAN reserves the right to submit its
views on the issue of special and differential treatment.
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