RESTRICTED  WORLD TRADE  
ORGANIZATION  G/AG/R/40 
26 October 2004 
 (04-4550) 
Committee on Agriculture  
   
SUMMARY REPORT OF THE MEET ING HELD ON 23 SEPTEMBER 2004  
 
Note by the Secretariat
1 
  
1. The Committee on Agriculture held its fortie th regular meeting on 23 September 2004 under 
the chairmanship of Mr. Roald Lapperre of the Neth erlands.  The agenda of the meeting as contained 
in WTO/AIR/2380 was adopted with the following modi fications:  a matter raised by Chinese Taipei 
concerning China's tariff quota administration fo r rice was taken up under the agenda item  
concerning the Transitional Review under Paragra ph 18 of China's Protocol of Accession; and a 
matter to be raised by the European Commun ities concerning Venezuela's foreign exchange 
restrictions was added to the agenda under Ar t. 18.6 of the Agreement of Agriculture.   
P
ART I:  THE REVIEW PROCESS  
A. M ATTERS RELEVANT TO THE IMPLEMENTATION OF CO MMITMENTS UNDER THE REFORM 
PROGRAMME :  ARTICLE 18.6 
(a) Mexico:  Panama – Applied tariff levied on a dairy product  
2. Mexico stated that Panama's applied tariff of 65 per cent on a dairy product under subheading 
1901.10.19 appeared to be higher than the relevant binding.  Mexico sought clarification from Panama 
as to the steps under consideration to bring this me asure into conformity with its WTO obligations.  
3. Panama responded that it had addressed the matte r using the procedures for the rectification 
of Schedules pursuant to the Decision of 26 March 1980.2  The tariff subheading concerned, 
1901.10.19, was the result of a rectification whic h Panama was compelled to make owing to a 
misunderstanding in relation to tariff subheadi ng 1901.10.10.  This latter tariff subheading was 
subject to a rectification and the applied tariff was reduced from 5 per cent to zero.  As far as tariff 
subheading 1901.10.19 is concerned,  Panama was in the process of notifying a rectification to the 
tariff heading which gave rise to this new subhe ading, and will be holding consultations with 
interested Members.  
4. For its part, Mexico considered that the pro cedure envisaged by Panama  was inappropriate.  
Mexico stated its interest in pursuing this matter bilaterally with Panama.   
5. Colombia and the EC raised their concerns in this matter.  The EC considered that Panama 
had established new import barriers and noted its interest in being informed about further 
developments in this matter. 
 
 
                                                      
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. 
2 Document L/4962 entitled "Procedures for Modifi cation and Rectification of Schedules of Tariff 
Concessions", BISD 27th Supplement, March 1981. G/AG/R/40 
Page 2  
(b) New Zealand:  Colombia – Administration of the tariff quota for skim milk powder
 
6. New Zealand sought clarification from Colombia regarding the administration of the tariff 
quota for skim milk powder (SMP).  According to it s Table MA:2 notifications, the 4,529 tonne tariff 
quota was subject to significant overfill of up to 30 0 per cent in 1999 and 2000.  In November 2002, 
however, Colombia had implemented Decree 1310 requiring import licences for the tariff quota, 
initially for six months and in response to an excep tional situation, i.e., an increase in milk supply 
resulting from the closure of the Venezuelan market  to Colombian dairy exports.  The decree had 
been extended twice, the latest extension being in June 2004, although it appeared that Colombian 
dairy exports to Venezuela had returned to earlier le vels.  New Zealand understood that Colombia had 
not issued import licences during the implementation of the decree and that no imports of SMP had entered the country.  New Zealand inquired about the reasons for the extension of the decree and 
requested information concerning the number of im port licences issued in 2003 and in the first six 
months of 2004, as well as SMP imports into Colombia in the same period. 
7. Colombia responded that in the case of milk and cream (concentrated or containing added 
sugar or other sweetening matter) under tariff headin g 0402, the Customs, Tariffs and Foreign Trade 
Committee, which applies the import policy and crite ria established by the Trade Superior Council, 
had approved the establishment of non-automatic  licensing.  The purpose of the non-automatic 
licensing procedure was to implement Colombia's trade policy according to clearly established criteria and to facilitate foreign trade and the necessary formalities with the different government entities 
involved in foreign trade, but not to limit the quantity or value of imports. 
8. Colombia explained that the domestic milk market was faced with excess supplies in 2002 
due to an unexpected four per cent increase in produc tion compared to 2001, which was attributable to 
favourable climatic conditions and increased imports, coupled with a significant decline in domestic 
consumption.  Milk stocks increased, exerting downward pressure on the domestic prices, with 
obvious social consequences, given that the prim ary dairy industry accounts for more than 500,000 
jobs in Colombia.  In September 2002, the situati on worsened due to the closure of the Venezuelan 
market, which traditionally accounted for more th an 90 per cent of Colombia's milk exports. 
9. As the domestic market for milk continued to be over-supplied, in May 2003, the Government 
issued Decree 1310, as amended by Decree 3672 of 19 December 2003.   The administrative restrictions of Venezuela aggravated the situation.  In the first six months of 2004, the milk exports 
decreased by 63 per cent compared  to the same period of 2003.    Responding to the structural surplus 
and with the aim of maintaining stability on the dom estic dairy market, the Government of Colombia 
extended application of import licensing for milk under heading 0402 in 2004, as provided for in 
Decree 1963 of June 2004, effective until December 2004.  According to preliminary information, no 
import licences were issued for tariff quota products during the first half of 2004.  
10. New Zealand reminded Colombia that it had yet to submit a Table MA:1 notification 
reflecting the changes in tariff quota administration.    
(c) New Zealand:  United States – Food aid activities (skim milk powder)
 
11. New Zealand recalled that it had previously rai sed concerns over the damage caused to certain 
markets by the monetisation of non-fat dry milk (skim milk powder) donations by the United States 
from its non-commercial stockpile.  Commercial trade in both Guatemal a and El Salvador was subject 
to ongoing disruption as a result of monetisation of SMP food aid.  New Zealand  was aware of a commercial contract for sweet whey powder that had recently been cancelled in Nicaragua following 
the monetisation of a non-fat dry milk donation at less th an one-quarter of the prevailing market price.  
Further planned donations by the United States to  Yemen (10,000  tonnes) and Pakistan (2,650 
tonnes) would involve monetisation of at least some of the non-fat dry milk concerned.  New Zealand 
sought clarification as to how the United States inte nded to ensure that the monetisation of these non-
fat dry milk donations would not displace commercial transactions.  G/AG/R/40 
 Page 3 
 
12. The United States responded that the issue of a US non-fat dry milk donation referred to by 
New Zealand was under investigation and subject to  discussions with the local Private Voluntary 
Organization (PVO) in Nicaragua.  The United States  had calculated the usual marketing requirement 
(UMR) prior to making this donation.  The calculation of the UMR included a market analysis of intended recipient countries that took into account factors such as expected consumption, local production, and commercial imports.  Countries that received aid had gaps between these factors and 
actual need. 
13. New Zealand requested information concerning the current stock level of non-fat dry milk 
held by the Commodity Credit Corporation (CCC).  New Zealand also sought clarification concerning the quantity of non-fat dry milk that was availa ble for donation in fiscal year 2004, noting that 
according to USDA website information no non-fat dr y milk would be available from CCC stocks for 
food aid under the "Section 416(b)" programme for the 2005 year.  The United States responded that 
the current CCC stock level of non-fat dry milk, as of 3 September 2004, was approximately 257,500 
tonnes which was considerably less than the 455,000 tonnes at the end of December 2003.  Regarding 
the quantity of non-fat dry milk that was available for donation in fiscal  year 2004, the United States 
noted that the amount allowed for shipment was 81, 000 tonnes, while USDA had not finalized fiscal 
year 2005 programming. 
14. Australia, Canada, the EC and New Zealand reitera ted their concerns in this matter.  Japan 
flagged its interest as a major food aid donor.    
15. The EC encouraged the food aid receiving countries to state their position in this matter.  It 
also requested the United States to provide inform ation concerning the break-down of destinations 
accounting for the decrease in CCC non-fat dry milk stocks.  
16. The United States took note of Members' concerns and undertook to provide a response to the 
follow-up question by the EC.  
(d) United States:  European Communities – Admi nistration of the tariff quota for pig meat
 
17. The United States raised its concerns in rela tion to Regulation 1458/2003 of the European 
Communities concerning the administration of the tariff quota system in the pig meat sector.  
Specifically, the United States considered that the establishment of a 10 per cent limit for each 
importer imposed additional trade distorting e ffects on imports.  The United States sought 
clarification as to:  (i) how the 10 per cent limit was calculated and why it was used as a ceiling for 
categories placed in group 2, even when that categor y was not fully utilized;  (ii)  how parties seeking 
to export more than 10 per cent of the quota volume would be afforded the opportunity to do so,     (iii) how this system was consistent with the procedures notified in G/LIC/N/3/EEC/6/Add.1, which 
did not refer to Regulation 1458/2003, nor indicate any fixed limit for import allocations within the 
tariff quota.  
18. The EC responded that the 10 per cent limit perm itted a larger participation of small and 
medium enterprises in this tariff quota, which consti tuted the large majority of importers in the pig 
meat sector.  This allocation system was not ne w and had been applied since 1995 under Regulation 
1486/95 (art 4 (b)).
3  
                                                      
3 The EC noted that the date of its last notificati on on licensing procedures is 1 July 2003, whereas 
Regulation 1458/2003 was published in August 2003.  The integral text of its pred ecessor Regulation 1486/95 is 
included on pages 86 to 90 of notification G/AG/N/EEC/1/Add.2, G/AG/N/EEC/3/Add.1, 
G/AG/N/EEC/14/Add.1 and G/AG/N/EEC/15/Add.1 of 14 June 2001. 
 G/AG/R/40 
Page 4  
19. The United States noted that the tariff quota concerned was significantly under-subscribed 
and that there were a number of medium-sized enterpri ses that had an interest to ensure that the tariff 
quota was administered on the basis of more viable allocations.  
(e) United States:  Moldova – Applied tariff levels and licences for poultry
 
20. The United States raised its concerns with resp ect to the tariffs applied by Moldova on poultry 
meat (HS 0207).  The tariff of 30 per cent exc eeded Moldova's tariff bindings for a number of 
products at the 6-digit level.  The United States sought clarification from Moldova as to when it  
would amend the ordinance so as to bring its tariffs on poultry meat into conformity with WTO commitments.      
21. The United States also understood that Moldova was limiting imports to specific importers 
through a non-automatic licensing procedure.  This  procedure limited import licenses to 40 tonnes per 
importer per month, which acted as a quantitative rest riction.  The United States sought clarification 
as to conformity of the new non-automatic licen sing regime with Moldova's WTO obligations. 
22. Moldova took note of the questions and undertook to provide a response as soon as possible. 
(f) EC:  Venezuela  – Foreign exchange restrictions  
   
23. The EC voiced its concerns regarding the fo reign exchange restrictions introduced by 
Venezuela in February 2003, which provided that only imports of items listed as "priority goods" 
could be authorized with US dollars delivered at the official exchange rate.  The EC understood that 
the remaining goods should make use of parallel ma rkets in order to access foreign currency.  The 
foreign exchange restrictions, and the resulting discr imination of EC agricultural products, had led to 
significant price differences between certain agricu ltural products supplied by the EC and other third 
countries.   The EC considered that the system a pplied by Venezuela was a serious and discriminatory 
trade barrier for exports of a number of EC  products, such as spirit drinks and wines. 
24. Venezuela responded that a new exchange rate policy had been introduced in response to the 
devastating economic effects of a general strike, affe cting in particular the country's leading industry, 
the petroleum industry.  The immediate impact was the loss of almost US$13 billion and a foreign 
exchange outflow amounting to US $150 million per day – a situati on which very few Members would 
be able to sustain.  
25. Venezuela stated that there wa s only one foreign exchange market in Venezuela and that the 
rate was fixed.  It should also be noted that ther e was a natural difference between the prices of wines 
from Latin America and those from the European Uni on origins since the former were not dependent 
on foreign currency at the official rate of exchange .  Venezuela, as a member of the Latin American 
Integration Association (LAIA), paid for its im ports from countries of that region by means of 
clearing between the central banks in their national currencies. 
B. REVIEW  OF NOTIFICATIONS  
(a) Notifications in respect of which questions have  been raised in advan ce of the issuance of the 
convening airgram  
 
26. The Committee reviewed the following no tifications as listed in the agenda: 
 (i) relating to imports under tariff and ot her quota commitments (Table MA:2):  from 
Bulgaria (BGR/11), China (CHN/3), Iceland (ISL/24 & Corr.1), Israel (ISR/34), Poland (POL/63) and Tunisia (TUN/29);  G/AG/R/40 
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 (ii) in the context of the sp ecial safeguard (Tables MA:3 to  MA:5):  from Chinese Taipei 
(TPKM/16 & TPKM/17); 
 (iii) in the context of domestic support commi tments (Table DS:1):  from the European 
Communities (EEC/49), Hungary (HUN/37) and Japan (JPN/98); 
 (iv) in the context of new or modified domestic support measures exempt from reduction 
(Table DS:2):  from Honduras (HND/17);  and 
 (v) on export subsidy commitments (Tables ES: 1 to ES:3):  Israel (ISR/32), the Slovak 
Republic (SVK/44) and the United States (USA/53). 
27. Specific points raised with respect to the notif ications listed above and the responses thereto 
are summarized in the Annex – Part I to this report. 
(b) Notifications subject to review in respect of which no questions have been raised in advance  
of the issuance of the convening airgram  
 28. The Committee took note of the following notificatio ns, 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 the 
Former Yugoslav Republic of Mace donia (MKD/3) and Japan (JPN/100); 
(ii) relating to imports under tariff and other quota commitments (Table MA:2):  from 
Israel (ISR/34/Corr.1) and Japan (JPN/99); 
(iii) in the context of the special safeguard (Tables MA:3 to MA:5):  from Bulgaria 
(BGR/12), Israel (ISR/35) and Uruguay (URY/28); 
(iv) in the context of domestic support commitm ents (Table DS:1):  from Barbados 
(BRB/16), Cuba (CUB/26), Georgia (GEO/5), Honduras (HND/16), Israel (ISR/33), Jordan (JOR/5) and Uruguay (URY/27); 
(v) in the context of new or modified domes tic support measures exempt from reduction 
(Table DS:2):  from Barbados (BRB/17);  and 
(vi) on export subsidy commitments (Tables ES: 1 to ES:3):  from China (CHN/4), the 
Former Yugoslav Republic of Macedoni a (MKD/2), Honduras (HND/18), Paraguay 
(PRY/11), Chinese Taipei (TPKM/18) and Uruguay (URY/29). 
(c) Notifications circulated or made available after the notice convening the meeting was issued
 
29. The following notifications were subject to prelimin ary review and are to be reverted to at the 
next meeting for substantive review in accordan ce with paragraph 9 of the Committee's Working 
Procedures (G/AG/1): 
(i) relating to imports under tariff and othe r quota commitments (Table MA:2):  from 
China (CHN/5) 
(ii) in the context of the special safegua rd (Tables MA:3 to MA:5):  from Poland 
(POL/64); 
(iii) on domestic support commitments (Tab le DS:1):  from Tunisia (TUN/30);  and G/AG/R/40 
Page 6  
(iv) on export subsidy commitments (Tables ES:1 to ES:3):  from Trinidad and Tobago 
(TTO/5). 
(d) Points concerning notifications raised at previous meetings
 
 30. There was no discussion under this agenda item. 
(e) Counter-notifications under Article 18.7 of the Agreement
 
31. The Committee took note that no counter-notifi cations had been received under Article 18.7 
of the Agreement. 
(f) Deferred replies to questions raised under the Review Process  
 32. The EC provided deferred responses to questions th at were raised at the June 2004 meeting in 
the context of the review of notification G/AG/N/EEC/49.  A summary of the responses is contained 
in the Annex – Part II.  
(g) Overdue notifications
 
 33. The Committee took note that the Secretariat ha d made available a revised and updated room 
document, dated 22 September 2004, showing the cu rrent status of compli ance with notification 
obligations. 
34. Australia stressed the importance of ensuring that domestic support notifications are up to 
date and provided in a timely manner to assist the ongoing agriculture negotiations.  It suggested that 
Members include information on the gross value of production which so far had only been needed for 
purposes of the de minimis  exemption but in future would be needed to calculate the Blue Box cap for 
a historical period to be determined. 
(h) Addenda to Table MA:1 notifications
 
 35. The Committee took note that the following Members administering tariff quotas had 
submitted the requisite Table MA :1 Addenda in accordance with the General Council Decision of 
December 2000 (paragraph 1.1 of WT/L/384 refers):  Australia, Canada, the Czech Republic, the   
EC-15, Hungary, Japan, Latvia, New Zealand, No rway, Slovenia, Switzerla nd, Thailand, and the 
United States.  The Chairman urged those Members administering tariff quotas which had not yet done so to provide Addenda to their Table MA:1 no tifications in accordance with the General Council 
Decision in WT/L/384. 
P
ART II:  OTHER MATTERS WITHIN THE PURVIEW OF THE COMMITTEE  
 
A. I MPLEMENTATION -RELATED ISSUES  
 36. The Committee took note that this agenda item concerned the implementation of Article 10.2 
of the Agreement, as well as an examination of possible means of improving the effectiveness of the 
implementation of the NFIDC Decision (G/AG/16, Sections A and B).   
37. Argentina recalled the statement it had made at previous meetings and at the September 2003 
meeting of the Committee concerning the matter of implementation of Article 10.2 of the Agreement 
(see G/AG/R/36, paragraph 35). 
38. Egypt, speaking also on behalf of the Africa Group, stressed the importance of the NFIDC 
Decision to African NFIDCs and LDCs.   Progress made in the agriculture negotiations should be  G/AG/R/40 
 Page 7 
 
complemented by taking up the elements of the NF IDC Decision as a permanent agenda item.   Egypt 
encouraged potential beneficiaries and the donors to address this matter in a constructive manner. 
B. T RANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF THE 
PEOPLE 'S REPUBLIC OF CHINA (WT/L/432)  
 39. The Committee held its third annual review under paragraph 18 of the Protocol of Accession 
of the People's Republic of China.  The questions by the United States and Chinese Taipei are set out 
in documents G/AG/W/64 and Add.1 and G/AG/W/65, respectively.  
(i) Statement by China
 
40. China stated that continued efforts had been  made in 2004 to implement the agricultural 
commitments resulting from its acce ssion to the WTO.  The average tariff on agricultural products  
had been further reduced from 16.8 per cent in 2003 to 15.6 per cent in 2004.  The current average 
tariff level for agricultural products represen ted one of the lowest among WTO Members. 
41. Regarding the matter of tariff quotas, the Mini stry of Commerce and the State Development 
and Reform Commission of China had issued Decree No. 4 of 27 September 2003, entitled "Interim Measures on the Administration of Tariff Rate Quota fo r Importation of Agricultural Products".  This 
new regulation was the result of the democratic legislative process under which views from various 
stakeholders were solicited and taken into account.  On 15 October 2003, the Ministry of Commerce 
and the State Development and Reform Commissi on issued Announcement No. 54 of 2003, which 
contained a list of agencies authorized to administ er import tariff quotas for agricultural products.  As 
a result of the restructuring of government agenci es and re-adjustment of their functions in 2003, 
since 2004 the State Development and Reform Commission was responsible for tariff quota 
administration for grains and cotton, while the Mi nistry of Commerce was responsible for all other 
agricultural tariff quotas.  On 30 September 2003, the State Development and Reform Commission issued the Announcement No. 25 of 2003, coveri ng the quantities, application procedures and 
allocation methods for importation of agricultural products.  On 28 September 2003, the Ministry of 
Commerce issued Announcements No. 51 and 52 of  2003, which established the 2004 implementing 
rules for allocation of the tariff quotas for palm oil, soybean oil, rape seed oil, sugar, and wool and 
wool tops. 
42. China drew attention to the Table MA:2 notif ication concerning imports under tariff quotas in 
2003 (G/AG/N/CHN/5 dated 21 September 2004), and the written document containing detailed 
information regarding tariff quota administration that China had submitted to the Committee on 
Market Access in 2004 in accordance with the requi rement of Annex 1A of  China's Protocol of 
Accession.  
43. China considered that the new tariff quota regi me had functioned well so far.  Along with the 
gradual increase of tariff quotas for farm imports under commitments, the market access opportunities had expanded further, and the Chinese market for agricultural goods had been further opened.  
44. China also noted that it had notified the Comm ittee that no export subsidy of any kind had 
been  provided in 2002-2003. 
45. In response to the questions on tariff quota ad ministration by the United States in document 
G/AG/W/64 (i.e.,  the request for information regardi ng the volume requested and denied; fill rates to 
date; the quantities imported at the out-of-quota ra te;  and time taken to grant allocations and 
reallocations), China noted that the relevant in formation was contained in document G/MA/W/64 
dated 21 September 2004 submitted to the Committee on Market Access.  
46. In response to the United States, Ch ina stated that it was not yet in a position to provide a list 
of enterprises because this information was consider ed to be confidential business information. The G/AG/R/40 
Page 8  
enterprises concerned had expressed the view that re lease of this information would affect their 
competitiveness in the market.  Chin a considered these concerns to be legitimate and noted that under 
Article XIII:3(a) of the GATT 1994 "... there shall be no obligation to supply information as to the 
names of importing or supplying enterprises".  Ch ina provided the following information concerning 
the number of the enterprises that had applied for, and had been granted, tariff quota allocations in 
2004. 
Product Number of enterprises having applied for 
tariff quota allocations in 2004 Number of enterprises having been 
granted tariff quota allocations in 2004 
Wheat 340 299 
Corn 290 271 
Rice 218 190 
Rape seed oil 355 238 
Palm oil 1764 1262 
 
 
47. With respect to the allocation of agricultural  tariff quotas for 2005, China confirmed that the 
relevant domestic procedures were underway and that quantities, application procedures and other 
details would be published in the near future. 
48. With respect to cotton, Chin a stated that cotton imported into bonded warehouses and bonded 
areas did not count towards its global cotton tari ff quota allocation, as provided for in the annual 
Announcement for Allocation of TRQs for agricultural products. 
49. Regarding the matter of "processing trade", Ch ina stated that imports under processing trade 
were bonded.  Bonded materials and components and products thereof were not permitted for 
domestic sale and had to be re-e xported.  Enterprises that intended to sell imported materials and 
components or products thereof in the domestic ma rket should conduct the importation under "general 
trade" rather than processing trade.  Under gene ral trade, there was no preferential treatment of 
bonded imports, although imports within  quota could be sold in the domestic market at the in-quota 
tariff rate. Processing trade was subject to prefer ential treatment of bonded imports with the 
prohibition of sale in the domestic market, in whic h case they were subject to out-of-quota tariffs and 
other penalties.  To do otherwise would be unfai r for the imports conducted under general trade. 
50. Concerning the questions on SPS-related matter s, China considered that the SPS or TBT 
Committees were the appropriate WTO bodies to a ddress issues such as quarantine matters, disease 
control, risk assessment, inspection and certificat ion procedures. China preferred to respond to 
questions in this regard at the meetings of those bodies.   
(ii) Follow-up questions and/or comments by Members and China's responses thereto  
 
51. The United States expressed the view that the Transitional Review had proceeded relatively 
smoothly last year and was a constructive and positiv e exercise.  The United States looked forward to 
continuing in a cooperative and pragmatic spirit during this year’s exercise.   
52. The United States noted that the first set of qu estions addressed to China concerned the issue 
of tariff rate quotas.  The United States welcom ed China's Table MA:2 notification dated 21 
September 2004, as well as China's commitment at the November 2003 Committee meeting, and in 
the April 2004 bilateral discussions, to provide bu siness information regarding tariff rate quota 
holders, as envisaged in the Headnot es to China's Schedule (Part I, Section I-B of Schedule CLII).  
Subsequent to those meetings, the United States ha d submitted a written request to China regarding all 
tariff rate quota commodities.  In response, the United States had received an initial list of quota  G/AG/R/40 
 Page 9 
 
holders for wheat and cotton, but no information on the amounts allocated or reallocated.  The United 
States was disappointed that it had not received any in formation with regard to the other tariff rate 
quota commodities and invited China to provide the full information.   
53.  The United States appreciated that China had re vised its tariff rate quota regulations in 2003 
to eliminate the sub-quota for processing trade (i.e. imports that must be processed and re-exported).  However, the United States remained concerned that  the regulations provided for the application of 
out-of-quota tariff rates if a tariff rate quota pro duct imported under a processing trade channel was 
sold in China rather than processed and re-exporte d.  Given that imported products that entered 
bonded areas or export processing zones were exempt from obtaining a tariff rate quota certificate,  the United States sought clarification from China as to why the TRQ Certificate had a section 
detailing "trade pattern" where quota holders had th e option of choosing the processing trade channel 
as opposed to the general trade channel.  
54. The United States took note of China's request to deal with certain issues in the SPS 
Committee.  Without prejudice to the US position that  the overall quarantine import/inspection permit  
was not an SPS measure, the United States looked forward to further discussing these issues at the 
meetings of the SPS or TBT Committees with experts from China's capital.  
55. Chinese Taipei considered that China had provided non-specific answers to its specific 
questions.  Chinese Taipei expressed its interest in  receiving more detailed information since Chinese 
Taipei had a commercial interest in the rice market of China.  
56. Australia noted its interests in relation to some  of the issues raised, particularly concerning 
tariff quota administration, where it had both commerc ial and systemic interests.  Australia had a 
follow-up question concerning tariff quota volumes fo r products that had reached their final quota 
levels in 2004, including wool, cotton, wheat and s ugar.  During the bilateral negotiations on China's 
WTO accession, China and Australia had agreed to consult prior to the end of the implementation 
period on each product subject to a tariff quota.  Australia would welcome information about China's 
plans with respect to those particular products wh ere the tariff quota volumes had reached their final 
quota levels in 2004, i.e., whether the volumes woul d be maintained, expanded or abolished in 2005.  
New Zealand supported Australia request for clarification in this regard. 
57. Canada noted its systemic interest in relati on to a number of questions.  Thailand noted its 
interest concerning the administration of the tariff quota for rice.    
58. The EC supported the concerns raised by  Members concerning China's tariff quota 
management.  The EC requested that China provid e a list of quota holders to all Members, in 
particular for the wheat tariff quota, which was of particular interest to the EC. 
59. China thanked delegations for their interest in this exercise and expressed appreciation for  the 
understanding of those delegations that had not ta ken the floor under this agenda item.  China 
considered that trade with these Members was also very important.  For its part, China was prepared 
to work with all Members to fac ilitate the growth of trade.  China also took note of the follow-up 
question by Australia which would require further st udy at the capital.  With respect to the requests 
for information by various delegations, China refe rred to the information provided in its opening 
statement, including the documents, submissions  and notifications that it had mentioned.  
(iii) Report to the Council for Trade in Goods
 
 60. With respect to the Committee's report on the Tran sitional Review to the Council for Trade in 
Goods, the Committee took note that the Chairman  would submit a factual report on his own 
responsibility.  The Committee's discussions as reflect ed in the Secretariat summary report of the 
September meeting, as well as the advance questions posed to China, would be included in the report 
as an attachment. G/AG/R/40 
Page 10  
C. M
ATTERS RAISED UNDER "OTHER BUSINESS " 
 (i) Announcement by the Chair on further work  concerning the Marrakesh NFIDC Decision -
 
Proposal by the African Group in the context of  the review of all Special and Differential 
treatment provisions by the Committee on Trade and Development in Special Session   
 
61. The Chairman noted that his announcement concerned a proposal by the WTO Africa Group 
from July 2002 regarding the Marrakesh NFIDC D ecision.  The proposal, which was originally 
referred to the Committee for consideration by the Ch airman of the General Council in the context of 
the review of all Special and Differential tr eatment provisions by the Committee on Trade and 
Development in Special Session, provided as follows:  
"It is understood, in the context of the NFID C Decision, that deve loped country Members 
shall embody in their schedules of commitments unde rtakings on, contributions to a revolving 
fund for normal levels of food imports, providing food aid in fully grant form, and maintaining food aid levels c onsistently with recommendations and rules under the Food Aid 
Convention." (paragraph 52 of TN/CTD/W/3/Rev.2 refers)   
62. The Chairman recalled that the proposal was fi rst discussed at the June 2003 meeting at the 
request of the Chairman of the General Counc il, and that a report summarizing the Committee's 
exchange of views had been submitted to the General Council (G/AG/17 and Corr.1 refer).   
63. The Chairman recalled further that under th e Decision adopted by the General Council on 
1 August 2004 concerning the Doha Work Progra mme, this Committee, as well as other Committees 
to which specific proposals had been referred to, ha d been instructed "to expeditiously complete the 
consideration of these proposals and report to the General Council, with clear recommendations for a 
decision, as soon as possible and no later than July 2005" (page 2 of WT/L/579 refers).    
64. The Chairman proposed that the Committee revert  to this matter on the basis of the specific 
recommendation contained in the Committee's repo rt to the General Council on Implementation-
related Issues (G/AG/16): 
"... that, building on the work already undertaken, including the WTO roundtable of 19 May 
2003, the Committee will continue to explore, as a matter of priority and on the basis of 
proposals submitted by Members, options and solutions within the framework of the 
Marrakesh NFIDC Decision to address short-term difficulties of LDCs and WTO NFIDCs in financing commercial imports of basic foods tuffs." (paragraph 19(c) of G/AG/16 refers) 
65. The Chairman noted that, in his view, this recommendation should offer an opening for 
making progress on the issue of short-term financ ing difficulties by the LDCs and NFIDCs, while 
recognizing that the proposal of the Africa Group contai ned other elements that were related to food 
aid.  These latter elements could be taken up in due  course as well.  The Chairman announced that he 
would consult informally on this matter prior to the forthcoming November meeting.  There would 
also be an opportunity to discuss this issue at the 18 November meeting.   
(ii) Date of next meeting
 
 
66. The next regular meeting of the Committee on Agriculture will be held on Thursday, 
18 November 2004.  The airgram convening the mee ting and containing the draft agenda will be 
issued on Monday, 8 November 2004. 
(iii) Provisional schedule of meetings for 2005  
 
67. According to the Committee's rules of procedures,  regular meetings of the Committee shall be 
held in March, September and November.  The Committee took note that the question of whether  G/AG/R/40 
 Page 11 
 
there is a need for an additional regular meeting in  June 2005 would be determined by the Chairman 
following the March 2005 meeting in consultation with Members.  The Co mmittee took note of the 
provisional schedule of meetings for 2005, on the ba sis that the dates for each regular meeting would 
continue to be confirmed at the preceding me eting of the Committee.  Moreover, the following 
schedule may need to be re-visited in light of  developments in the agriculture negotiations: 
 16 March (Wednesday) 
 
 [2 June (Thursday)]   22 September (Thursday)  
 10 November (Thursday) 
 G/AG/R/40 
Page 12  
 
 ANNEX
 
 
   Page  
Part I  Review of notifications by the Committe e on Agriculture at the meeting on  
23 September 2004   
 
 (i) imports under tariff and othe r quota commitments (Table MA:2 ):  Bulgaria 
(BGR/11), China (CHN/3), Iceland (ISL/24 & Corr.1), Israel (ISR/34), Poland 
(POL/63) and Tunisia (TUN/29); 13 
    
 (ii) use of the special safeguard (Tables MA:3-MA:5 ):  Chinese Taipei (TPKM/16 & 
TPKM/17); 16 
    
 (iii) domestic support commitments (Table DS:1 ):  the European Communities 
(EEC/49), Hungary (HUN/37) and Japan (JPN/98); 17 
    
 (iv) new or modified domestic s upport measures exempt from reduction 
(Table DS:2) :  Honduras (HND/17); and 21 
    
 (v) on export subsidy commitments (Tables ES:1 to ES:3) :  Israel (ISR/32), the 
Slovak Republic (SVK/44) and the United States (USA/53). 22 
 
Part II    
Deferred replies to questions raised under the Review Process of previous 
meetings  
  
  Reply provided by the EC in the c ontext of the review  of notification 
G/AG/N/EEC/49 concerning domestic  support commitments (page 15 of 
G/AG/R/39 refers)  23 
  G/AG/R/40 
 Page 13 
 
 ANNEX – PART I  
 
Review of notifications by the Committee on Ag riculture at the meeting on 23 September 2004 
 
Summary of specific points raised and responses thereto  
Table MA:2 Notifications 
 
Bulgaria    G/AG/N/BGR/11     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Australia – Bulgaria has again recorded either no in-
quota imports, or very low fill rates, for a large range 
of its TQs.  Fill rates for 22 TQ items were either 
zero, or lower in 2003 than in 2002.  Whether Bulgaria intends to modify its tariff quota regime, or 
move to a tariff-only regime, for those products 
during the Doha round?  
New Zealand – Notes the zero fill rates for a variety 
of products including a number of bovine meat tariff 
lines (various lines under 0201, 0202).  There is also 
significant underfill of tariff quotas for frozen sheep 
meat (under 0204), as well as for fresh cheese and cheese and curd other than fresh (various lines under 
0406).  Clarification sought regarding the consistent 
underfill for these tariff quotas and whether moving to a tariff-only regime is under consideration. 
 TQ commitments were undert aken by Bulgaria upon 
its accession to the WTO at the request of countries, 
such as Australia and New Zealand.  No  
administrative or other measures applied which might constitute obstacles for in-quota imports.  The import 
regime is fully transparent and based on the principle 
of first-come, first-served.  TQ fill rates depend on demand and supply.  For example, the in-quota tariff 
rate for frozen sheep meat was equal to the MFN rate 
in 2003.  Thus the in-quota import figure in column 4 of G/AG/N/BGR/11 represents total imports under 
subheadings 0204.41, 0204.42 and 0204.43 in 2003. 
In addition, there has been no change in the method of administration of TQs, which might have 
negatively affected imports of these products.  It 
could be asked why Australia and New Zealand have not been able to supply products of interest to them to 
the Bulgarian market.  As to the eventual 
modification of the current import regime, Bulgaria 
does not consider this to be an exercise to be 
conducted in the regula r Committee on Agriculture. 
 
 
China     G/AG/N/CHN/3     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Japan –  Explanation sought for low TQ fill rates in 
light of FAOSTAT data showing 2002 total import 
volumes of wheat, maize and cotton far above the in-
quota import volumes notified by China. For 
example, the import volume for maize indicated in 
FAOSTAT is 5 million tonnes while the notified in-quota import volume is 10,000 tonnes.   
Information sought for all TQ products concerning:  
(i) quantity applied for TQ allocation;  (ii) quantity of 
in-quota imports licensed;  (iii) quantity of out-of-
quota imports, and (iv) the total volumes imported by state trading enterprises, including the volumes which 
state trading enterprises imported as agents for other 
non-state trading quota-holders. 
Follow-up comment by Japan  –   Noted that it would 
provide a clarification wi th respect to FAOSTAT. Clarification sought from Japan regarding the data 
and methodology employed for comparison using 
FAOSTAT data, and the legal status of FAOSTAT in 
the review of notifications.  
 
 
China's statistics are collect ed and submitted to meet 
its accession commitments.  Ch ina does not consider 
that the information sought by Japan is explicitly 
covered by China's Schedule of commitments in 
relation to Table MA:2.  
 
 
 G/AG/R/40 
Page 14  
 Iceland     G/AG/N/ISL/24 and Corr.1     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Australia – Reasons why, with the exception of one 
product (meat and edible offal of poultry), fill rates 
have fallen in 2003, or remained at zero.  
New Zealand – Reasons for the continuing underfill 
of the butter TQ.  Given that some imports of bovine 
meat and offal are occurring, confirmation sought 
that a sanitary-based import ban on fresh and frozen meat is no longer maintained.  Explanation sought 
why no imports of sheep or swine offal are occurring, 
and why imports of bovine offal are so low.  
New Zealand commends Iceland's implementation of 
a tariff-only regime to many products for which tariff 
quotas are allowed in its Schedule.  Given the 
extremely low fill rates for the meat and offal (0201-
0210) and butter (0405) tariff lines, whether Iceland will implement a tariff-only regime for these products 
as well.  
United States –  Notes the low quota fill rates for 
imports of cereals, animal fats and oils, and prepared 
vegetables.  Interested in specific market elements or 
possible TQ administration changes, which could 
offer the TQs more responsive. The statement contained in Australia's question is 
incorrect.  The notification is covering two reporting 
periods and where imports are occurring the numbers 
all increased between 2002 and 2003, i.e. imports of 
meat and offal of bovine animals, swine and poultry, processed meat and edible offal, and eggs and cheese 
increased in 2003. 
There has been no commercial  interest in imports of 
sheep meat, horsemeat or butter and this accounts for 
continued underfill of those quotas.  All import quotas are duly advertised and subsequent imports 
reflect commercial interest in exploiting the market 
access opportunities concerned.   With respect to the 
butter quota, no interest has been expressed towards 
its exploitation.  This is partly due to favourable 
prices of domestic products, partly to consumer 
preferences.  Experience since the beginning of the 
implementation period has shown that there is no demand for imported butter. 
Iceland operates a stringent sanitary regime in 
protection of the very favourable health situation 
enjoyed in Icelandic agriculture.  Imports of fresh and 
frozen meat can occur and have consistently been occurring in recent years in spite of this stringent 
regime if recommended for approval by Iceland's 
Chief Veterinary Officer.  Such a recommendation is 
given if the CVO is convinced that the imports in 
question do not pose a risk to the prevailing sanitary 
situation.  There has been no commercial interest expressed in exploitation of the sheep meat quota 
from the very beginning of the implementation 
period.  Regarding meat and offal of swine, prices of these products on the domestic market over the past 
couple of years have been  at a historical low, inter 
alia, owing to considerable overproduction in the 
sector.  Imports have as a result not been 
commercially attractive.  Interest in imports of 
bovine meat decreased dramatically a few years ago 
on account of the BSE crisis, but import levels are 
now rising again as reflected in the notification.   
There are at present no plans to extend tariff-only 
treatment beyond the produ cts receiving it today. 
Regarding the US question, the products covered by 
the question are not subjec t to any form of TQ 
administration or other form  of market interference, 
only applied rates of duty that are equal to or lower 
than the corresponding in-quota rates.  Market demand is thus the sole determinant of the level of 
imports.   
 
    G/AG/R/40 
 Page 15 
 
 Israel    G/AG/N/ISR/34    Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Australia –  Israel recorded above-quota imports for 
all products on which it imposes a tariff quota.  
whether these above-quota im ports entered at the in-
quota tariff rate or the out-of-quota rate? For many products, the in-quota tariffs are much 
lower than the commitments levels.  For some 
products, the above-quota tariffs are similar to the in-
quota rates which allows above-quota imports to 
occur.  
 
 
Poland    G/AG/N/POL/63     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
United States – Poland's TQs are no longer applied as 
of 1 May 2004.  When will the Unites States enjoy 
again the access to which Po land committ ed in the 
Uruguay Round? Response by the EC: 
Future access to the EC-25 market will depend on the 
outcome of the pending GATT Art. XXIV:6 
negotiations.  
 
 
Tunisia    G/AG/N/TUN/29     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
New Zealand – Reasons for the zero fill of the tariff 
quotas for sheep meat, and calves and bullocks.  
Reasons for the consistent significant underfill of the 
tariff quotas for bovine meat (0.26 per cent), milk 
powder (10 per cent) as well as butter (60 per cent).   
 
How many "Special Tariff Quota Authorisations" 
were issued by the Ministry of Trade for the above 
products during the reporting period and what was the validity period for these authorisations? Deferred reply: 
In 2001, the tariff quotas concerned were opened in 
conformity with the administration details that were 
published and notified to this Committee.  The tariff 
quota fill rates reflect import demand, which was weak or nil, depending on the products, during the 
period in question. 
The Special Tariff Quota Au thorizations are issued 
by the Ministry of Commerce on the basis of 
proposals by the management committee, in 
accordance with Art. 5 of decree no. 96-1119 of  10 June 1996 establishing the modalities for tariff 
quota administration.  In 2001, the number of 
authorizations were as follows:  
sheep meat and bovine meat – 3 milk powder – 52 
butter – 11. 
The validity of the authorizations is two months and 
they are renewable. 
 
   
 
 G/AG/R/40 
Page 16  
 Tables MA:3 to MA:5 Notifications 
 
Chinese Taipei     G/AG/N/TPKM/16     Volume-Based Special Safeguard (Table MA:3) 
Points raised by other Members  Response by Notifying Member 
New Zealand – Given that the objective of Article 5 
is to protect domestic producers from sudden rises in 
import volumes, clarification sought as to the reasons 
for activating the SSG on imports of fresh and other 
liquid milk at levels one third of those of the previous year.  Assurances sought that safeguard duties will 
not be applied to in-quota volumes for liquid milk.  The calculation of the trigger volume for the SSG 
action on imports of fresh and other liquid milk is 
fully in accordance with Article 5 of the Agreement.  
The TQ systems are administ ered in such a way that 
even if SSG action has been triggered, only in-quota duties will be applied to those imports which hold a 
valid quota certificate.  No SSG duties will be 
applied to the in-quota volumes. 
 
 
Chinese Taipei     G/AG/N/TPKM/17     Volume-Based Special Safeguard (Table MA:3) 
Points raised by other Members  Response by Notifying Member 
Australia –  Clarification sought as to why data on in-
quota imports of 162 tonnes of dried shiitake in 2003 
and 3,877 tonnes of peanuts in 2003 (G/AG/N/TPKM/14 refers) were not used in the 2004 
trigger level calculation.  Does Chinese Taipei agree 
that if the 2003 figures were used, the trigger level for 2004 would be at least 128 tonnes for dried 
shiitake and 3,212 tonnes of peanuts (if domestic 
consumption is not taken into account)?   
The calculated 2004 trigger levels for the safeguards 
are less than the 2004 volumes of the TQs on shiitake 
mushrooms (288 tonnes) and peanuts (5,235 tonnes).  
Can Chinese Taipei confirm that no additional duties will be applied to these products in 2004 until the TQ 
volumes are filled? 
 
 
 
 
Follow-up question by Australia –   Confirmation 
sought that data for the early months of 2004 were 
available to determine that 2004 imports had exceeded the trigger level.   Encourages Chinese 
Taipei to use the most recent data available.  According to Article 5.4 of the Agreement, the SSG 
trigger level should be calculated using the "average 
quantity of imports during  the three preceding years 
for which data are available".  Because the 2004 
trigger level for dried shiitake mushrooms was 
calculated and published at the end of November 2003 when the actual import data for 2003 was not 
yet available, the trigger level for dried shiitake 
mushrooms in 2004 was calculated using data of the 
average quantity of imports during the three years of 
2000 to 2002.  
For the same reasons given in response to the 
questions concerning notification TPKM/16, Chinese 
Taipei confirms that no SSG duties will be applied to 
the in-quota volumes. 
The replies to questions regarding peanuts are the 
same as those provided above for shiitake 
mushrooms. 
 
To ensure a predictable administration of TQs for the 
year following the curr ent implementation year, 
Chinese Taipei gives advance notice of trigger volumes and trigger prices.  In this case, at the time 
of publishing this information, import data for 2003 
were not complete, hence the use of import data of the previous year for purp oses of the volume-based 
safeguard (i.e. 2002 data).  When imports reach 90 
per cent of the trigger volume, Chinese Taipei posts a 
warning on the Internet and makes an announcement 
to importers that the safeguard is close to being triggered. 
 
  G/AG/R/40 
 Page 17 
 
 Table DS:1 Notifications 
 
European Communities   G/AG/N/EEC/49      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
United States – Clarification sought concerning the 
negative price support for potatoes for processing to 
starch, including the calculation details for the 
equivalent measurement of support and details on 
how this programme operates. 
The United States does not  agree with the EC's 
decision to subtract negative price support from other 
non-exempt direct payments  to calculate the total 
AMS for potatoes for processing to starch.  The 
negative price support should be set to zero before calculating the total product-specific AMS in 
Supporting Table DS:4.  The United States 
recognizes that Members may have different views on this methodological issue, and it may warrant 
further discussion and review in the WTO agriculture 
negotiations.  All support, including negative support, allocated for 
a specific product needs to be added before indicating 
the resulting support in column "Current Total AMS" 
in ST DS:4. Only there can the resulting negative 
support be shown as nil support. The support should not be set to zero upon entry in other columns of ST 
DS:4.    
In the view of the EC, th ere is an economic link 
between negative support and positive support 
provided it is given for the same commodity.  This link does not exist between different commodities.  If 
for a specific commodity, the support price is lower 
than the external reference price, producers will have to be compensated.  This is the case for potatoes for 
processing to starch.  The price gap is calculated 
using an administrative price of 209.8 €/t and an external reference price of 311 €/t and the applicable 
production is 1,814,200 tonnes.  The direct payments 
are a compensatory payment for the reduced internal 
administrative price. 
 
Hungary     G/AG/N/HUN/37      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
New Zealand – Clarificatio n sought on how each of 
the programmes listed below meet the relevant 
criteria of Annex 2 of the Agreement through a Table 
DS:2 notification. 
New in 2001:  "Assistance to the restructuring of the 
agricultural sector", "Loan programmes authorised with government guarantee in 2001 and assistance to 
investment in agricultural logistics in 2001-2002", "Loan programme for agricultural development".  
New in 2002:  "Assistance to the implementation of 
the National Agricultural Environment Protection 
Programme". Response by the EC: 
Since 1 May 2004, the CAP applies in Hungary, and 
national Hungarian agricultural support will be vetted 
by the EC.  The DS notifications requested by New 
Zealand would cover a different set of support 
measures than are currently  applicable.  As Hungary 
indicated at the June meeting, it would notify if 
appropriate.  The EC has doubts as to whether the 
Committee should not concentrate on the current 
support situation.  
 
New Zealand – Disappointed that Hungary has 
continued to adjust its AMS commitments (and 
expenditure) for excessive inflation.  New Zealand 
considers that scheduled commitment levels cannot 
be altered – the adjustment for the influence on 
excessive rates of inflation should only be on the 
level of domestic support provided.  
Follow-up comment by New Zealand:   Considers 
that the Current Total AMS may be adjusted for 
inflation, as appropriate.   The commitment level as 
such cannot be adjusted fo r effects of inflation.   Response by the EC: 
The EC invites New Zealand to elaborate on how it 
considers the adjustments should be made on the 
level of support provided.  Moreover, all questions 
related to AMS commitments of the EC-25 will be 
addressed in the wider context of GATT Art. XXIV negotiations. 
 G/AG/R/40 
Page 18  
 Japan     G/AG/N/JPN/98      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Green Box 
Payments for conversion from rice production   
United States –  What are the environmental benefits 
of keeping land under agricultural production?  Is a 
certain type of production required, or can the land 
stand idle? In Japan, which is under the climate of the "Asian 
monsoon", paddy fields have several environmental 
benefits, such as land conservation through prevention of floods and soil erosion, cultivation of water 
resources, preservation of natural environment and 
creation of beautiful landscapes.  If farmers were to 
stop producing rice on their paddy fields, those paddy 
fields would be ruined, and the environmental benefits would be lost.  The programme gives farmers an 
incentive to grow other plants on their paddy fields or 
to manage them appropriately, in order to keep above-mentioned functions of the paddy fields. 
The main requirement of this programme is to grow 
any plants other than rice on the paddy fields or to 
manage the paddy fields appropriately without growing 
any plants.  Production is not necessarily required but it 
is not permitted to leave the paddy fields idle. 
Direct Payments to Farmers in Hilly and 
Mountainous Areas  
United States –  Has the acreage base for this 
programme changed over the years?  Do the regions 
fit within the Annex 2, paragraph 13(a) definition?  
If a farmer must continue production for 5 years after the payment is made, how does this programme fit 
the criteria of Annex 2, paragraph 13(b)?  By limiting 
payment to farmers that are at least 1 hectare in size, 
is this consistent with Annex 2, paragraph 13(d)?   
 
The acreage base for this programme is fixed through 
the implementation period of this programme.  The 
eligible areas for this programme are consistent with 
the para. 13(a) of Annex 2,  because the eligibility for 
the payments is given only to the farmers in designated 
areas specified by various laws concerning 
disadvantaged areas, such as the Law on Special Measures for Depopulated Areas and the Mountainous 
Village Development Law.  Within the areas, only 
farmland which is disadvantaged for agricultural production, e.g. farmlands with steep slopes and which 
have at least 1 hectare in size, are eligible for the 
payments.  
The eligible areas for this  programme are consistent 
with the para. 13(b) of Annex 2, because the payments 
are limited to 80% of the ex tra costs for undertaking 
agricultural production on eligible farmland, namely, 
the gap of production costs between the farmland on level ground and eligible farmland, and the eligibility 
of this programme is not related to the type or the 
volume of production. 
The eligible areas for this programme is limited to 
farmland which is disadvantaged for agricultural 
production. There is no limitation for producers in such areas to receive the payments.  The farmland of the 
producers within such areas can be less than 1 hectare.  
Therefore, this programme is consistent with para. 13(d) of Annex 2.  G/AG/R/40 
 Page 19 
 
 Japan     G/AG/N/JPN/98      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Blue Box 
United States –  It app ears that the Rice Farming 
Income Stabilization Progra m (JRIS) payments are 
based on the price gap between the compensation standard price (the three- year average price of the 
voluntarily-marketed rice) and the price of the 
voluntarily-marketed rice in the year reported.  
Information sought on:  the trend in this price gap 
over the history of the JRIS program;  the price gap in each of the years reported, and the compensation 
standard price and the voluntarily-marketed price in 
each of the years reported. 
  The following data were calculated using the average 
prices of all the brands of rice listed in the bidding. 
 
Crop 
year Compensation 
price 
(Yen/60kg) 
(A) Price of 
voluntarily- 
marketed rice 
(Yen/60kg) 
(B) Price Gap 
(Yen/60kg)
(A)-(B) 
1998 19,148 18,508  640 
1999 18,720 16,904 1,816 
2000 18,166 16,084 2,082 
2001 18,166 16,274 1,892 
2002 17,828 16,157 1,671 
2003 17,079 21,078  -3,999 
 
The compensation standard price has been falling 
gradually, responding to the declining tendency of the price of voluntarily-markete d rice.  The gap between 
the compensation standard price and the price of 
voluntarily-marketed rice also shows a declining tendency, while the price of voluntarily-marketed rice 
has roughly stayed the same.  In 2003 crop year, the 
price of voluntarily-marketed rice exceeded the compensation standard price for most brands of rice. 
Amber Box 
United States – Why has the product-specific AMS 
for soybeans shown a dramatic increase since 1999? In the former direct payment scheme for soybean 
producers, the government compensated the price gap 
between the sales price and the standard price set by the government (deficiency payment scheme).  It was 
considered that this scheme had not given farmers an 
incentive to produce value-added and high-quality 
soybeans as all producers had been able to achieve the 
same income per unit regardless of their sales price.  In order to realize higher incomes of producers that 
produce high-quality soybeans and sell them at a 
higher price, and to enco urage producers' efforts to 
produce and sell soybeans, the direct payment scheme, 
applied since the 2000 crop, was changed from a 
deficiency payment to a fi xed payment.  Due to the 
promotion of soybean production incentives and the 
stabilization of producers' income under this new 
scheme, the soybean cropping area expanded.  In addition, due to good weather, the yield in 2000 was 
the highest in history.  Hence, soybean production and 
the AMS increased. G/AG/R/40 
Page 20  
 Japan     G/AG/N/JPN/98      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
United States - Why is eligible production for wheat 
and barley price support so much lower than was 
notified in 1999?   
 
 
Follow-up comment by Australia  –  Government 
intervention effectively provides price support for all 
production, not only for the quantity purchased by government for intervention. The distribution of domes tically produced wheat and 
barley, most of which had been distributed through the 
government until 1999, was moved to the private 
sector.  As a result, the amount of government 
purchases of domestically produced wheat and barley decreased substantially. 
United States –  Wheat and sugar were added as 
commodities eligible  to receive price-related direct 
payments.  Has there been a change to the 
programme to include these commodities? As regards wheat, in response to a newly introduced 
system which distributes domestically produced wheat 
through the private sector, a price-related direct 
payment programme for wheat was introduced in 2000 
for the purpose of stabilizing wheat farming income. 
Sugar, sugar beets and sugar cane are essential crops in 
certain areas of Japan.  In order to promote the 
production of sugar beet and sugar cane, the scheme to provide direct payments to the producers of those crops 
based on their production was newly introduced in 
2000. 
  G/AG/R/40 
 Page 21 
 
 Table DS:2 Notifications 
 
Honduras     G/AG/N/HND/17    New or  Modified Domestic Support (Table DS:2)  
Points raised by other Members  Response by Notifying Member 
Australia – Table DS:1 (G/AG/N/HND/16) and Table 
DS:2 (G/AG/N/HND/17) include a number of 
measures that may not need to be notified under the Agriculture Agreement.  It is not clear how the 
Regional Forest Health and Management Strategy for 
Latin America and the Forest Policy Support Project meet the obligations of the Agriculture Agreement as 
forestry is not covered under Annex 1 of the 
Agreement.  Requests an amendment of the notification. 
In relation to the Mangrove Management and 
Conservation Project it is not clear whether the 
expenditure provides services or benefits to 
agriculture or the rural community as set out in 
Annex 2 of the Agreement and therefore whether it is 
covered under the Agriculture Agreement.  If this is 
not the case, it is suggested that the notification be amended accordingly. Honduras is considering these comments and if it 
comes to the conclusion th at the programmes are not 
directly related to agricultural products or sectors, a revision of the notifications will be submitted. 
 G/AG/R/40 
Page 22  
 Tables ES:1 to ES:3 Notifications 
 
 
Israel     G/AG/N/ISR/32    Export Subsidy Commitments (Tables ES:1 & ES:2)  
Points raised by other Members  Response by Notifying Member 
Canada – Clarification sought concerning the 
increase of export subsidization of vegetables in 
2002/2003? 
 Total export subsidies that were provided to 
vegetable products and all other products during the 
last three export seasons were much lower than the 
outlay and quantity commitments.  The increase in 
the case of vegetables, which were exported in very limited quantities, was due to fluctuations in 
production costs.  
 
 
Slovak Republic     G/AG/N/SVK/44    Export  Subsidy Commitments (Tables ES:1, ES:2 & ES:3)  
Points raised by other Members  Response by Notifying Member 
United States - The notification includes export 
subsidies for 64,000 tonnes of malt. Given that the 
Slovak Republic joined the EU on 1 May 2004, and 
the fact that the EC does no t have an export subsidy 
commitment for malt in its Schedule, clarification sought that export subsidies for malt will no longer 
be utilized? Response by the EC: 
The EC-15 Schedule applies until the GATT Art. 
XXIV:6 negotiations have led to a revised EC-25 
Schedule. 
 
 
United States     G/AG/N/USA/53    Export Subsidy Commitments (Tables ES:1 & ES:2)  
Points raised by other Members  Response by Notifying Member 
New Zealand - Clarification sought as to the reason 
behind the sharp increase in SMP provided as food 
aid, which has more than doubled since the previous 
notification, and as to how much of this food aid was 
provided in fully grant form.  The United States Government made available 
50,000 tonnes of non-fat dry milk in 2002 and 70,000 
tonnes in 2003, but significantly more was actually 
requested by recipient gov ernments, PVOs, and the 
World Food Programme.  All of the non-fat dry milk 
is being provided in fully grant form. 
  G/AG/R/40 
 Page 23 
 
 ANNEX – PART II  
 
Deferred replies to questions raised under the Review Process at previous meetings  
 
 Reply provided by the EC in the context of the review of notification G/AG/N/EEC/49 
 The EC owes the Committee replies to a set of questions on Green Box issues at the Committee 
meeting in June 2004, no tably on Infrastructural services, St ructural adjustment assistance provided 
through resource retirement programmes and Struct ural adjustment assistance provided through 
investment aids.  Unfortunately the EC has not been  able to complete the work.  The answers include 
some revised data which are still to be consider ed provisional, although they are unlikely to be 
substantially different after finalisation of a co rrigendum.  Corrigenda to the notifications will be 
submitted at a later stage.   
European Communities     G/AG/N/EEC/ 49      Domestic Support (Table DS:1) 
Points raised by other Members  Response by Notifying Member 
Green Box 
Infrastructural services (Annex 2, para. 2 (g))  
Argentina – It would appear from the present 
notification that the EC supplies water and electricity 
directly to its producers.  How are such measures 
consistent with para. 2(g) of Annex 2? 
 Australia – We note expenditure of €949.1 million in 
2000/01, down from €2,352.8 million.  Could the EC 
provide an explanation for the sharp decrease in expenditure?  Whether the notification reflects the 
necessary correction as indicated by the EC in 
G/AG/R/32, page 25?  
 
The measure does not cover the supply of water and 
electricity to producers.  The description will be 
changed to make clear that it concerns "works for the 
supply of" and not "supply". 
 
Australia's observation that the €949.1 million for 
2000/2001 includes the correction is correct.  The EC 
now estimates an amount of €997.1 million for 
Annex 2, para. 2(g) spending in 1999/2000. 
Structural adjustment a ssistance provided through 
resource retirement programmes (Annex 2, para. 10)  
Australia – In the context of the review of 
notification EEC/38, the EC indicated that 
expenditure was significantly lower in 1999/00 due to 
the expiry of set-asid e programmes and the 
increasing take-up of environmental set-asides in 
agri-environmental programmes (G/AG/R/32, page 
26).  Why has expenditure increased to €448.8 million, up from €122 million in the previous year?  
 
The current figure for 2000 /2001 is estimated at   
€88.4 million instead of €448.8 million. This is a 
reduction compared to the €122 million of 1999/2000 
and continues the evolution of the previous year.
 
 G/AG/R/40 
Page 24  
 European Communities     G/AG/N/EEC/ 49      Domestic Support (Table DS:1) 
Points raised by other Members  Response by Notifying Member 
Structural adjustment a ssistance provided through 
investment aids (Annex 2, para. 11)  
Argentina – What objectivel y demonstrated structural 
disadvantages prompted the payments in the 2000/01 
marketing year? 
 Australia – Why have payments increased more than 
2.5 times over the previous year to €5,859.7 million?  
How does the "aid for young farmers scheme" meet 
the Annex 2, para. 11 criteria? 
Canada – Reasons for increase in payments?  What is 
the presumably constant "amount required to 
compensate for the structur al disadvantage", i.e. the 
ceiling amount against which the EC compared both the €2,308.7 in 1999/00 and the 5,859.7 million in 
2000/01 in order to ensure compliance with para. 
11(f)? 
New Zealand – Reasons for increase in outlays and 
measures under the programme particularly affected 
by the increase in funding?  Compliance with Annex 
2 criteria?  
 
The objectively demonstrated structural 
disadvantages leading to payments in 2000/2001 are 
defined in Regulation 1257/99, notably in chapter V, 
art. 18 to 20.  
 
The increase in expenditure is caused by the inconsistency observed by Australia at the review of 
notification G/AG/N/EEC/38 for Annex 2, para. 2(g) expenditure.  For 1999/2000, support in compliance 
with para. 11 was erroneously notified under para. 
2(g).  In addition, current data show that 2000/2001 also needs to be revised to some extent.  Revised 
figures will be included in the corrigenda to 
notifications EEC/38 and EEC/49.  The figures are currently estimated at €5.5 billion for 1999/2000 and 
€6.2 billion for 2000/2001.  Regulation 1257/99 sets 
the criteria for eligibility for aid in the young farmers scheme in its chapter II.  This aid is a single payment 
up to a defined maximum or a subsidy on loans for 
setting up a farm and meets the para. 11(f) criterion.  Payment ceilings are included in the annex (table of 
amounts) to Regulation 1257/99.  
Amber Box 
United States – Clarification sought for support for the processing of citrus fruit, lemons, peaches, plums, pears, figs, tomatoes, and potatoes (ST/DS:4).  
Whether these are paym ents to producers or 
processors, and are made under EU regulations or 
member State regulations?  For each of the listed 
products, how are the processing subsidies calculated? 
 
 
 
Follow-up question by the United States  – Requested 
information as to what third country markets and 
prices as well as what methodology are used for the 
calculations. The support notified for citrus fruits and lemons 
concerns payments to producer organisations that deliver raw material to processors.  For the other 
products an EMS was notified based on a support price for producers.  The s upport is guaranteed to the 
producers of the raw mate rial.  The payments are 
made under EU regulations.  The support is calculated on the basis of the difference between the 
Community minimum price to producers and the 
average price of raw materials in the main competing third countries. 
 
Before 2001, the calculations were based on price 
reporting - per product - by the authorities in 3 or 4 
important producing and exporting third countries.  For peaches and pears the calculation was entirely 
based on data provided by the US Government. 
 
 
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