WORLD TRADE
ORGANIZATIONTN/AG/10
7 July 2003
(03-3669)
Committee on Agriculture
Special Session
NEGOTIATIONS ON AGRICULTURE
Report by the Chairman, Mr. Stuart Harbinson, to the TNC
1. This report is intended to assist participants in their deliberations on agriculture in the
preparatory process for the Fifth Meeting of the Ministerial Conference.  The report is divided into
two parts:  (i) a brief factual account of the work carried out by the Committee on Agriculture, Special
Session since Doha, including references to the releva nt documents, and (ii) a section highlighting in a
non-exhaustive manner key issues and questions which, in view of the Chairman of the Committee on
Agriculture, Special Session, participants need urgently to address.  The report is submitted by theChairman on his own responsibility and is without prejudice to the positions of participants.
Status of Work
2. The negotiations on agriculture are conducted under paragraphs 13 and 14 of the Ministerial
Declaration (WT/MIN(01)/DEC/1 refe rs). These paragraphs provide:
"13. We recognize the work already undertaken in the negotiations
initiated in early 2000 under Article 20 of the Agreement on Agriculture,
including the large number of negotiating proposals submitted on behalf of a
total of 121 Members.  We recall the long-term objective referred to in the
Agreement to establish a fair and market-oriented trading system through a
programme of fundamental reform encompassing strengthened rules and specific
commitments on support and protection in order to correct and preventrestrictions and distortions in world agricultural markets.  We reconfirm our
commitment to this programme.  Building on the work carried out to date and
without prejudging the outcome of the negotiations we commit ourselves to
comprehensive negotiations aimed at:  substantial improvements in market
access;  reductions of, with a view to phasing out, all forms of export subsidies;and substantial reductions in trade-distorting domestic support.  We agree that
special and differential treatment for developing countries shall be an integral
part of all elements of the negotiations and shall be embodied in the Schedules of
concessions and commitments and as appropriate in the rules and disciplines to
be negotiated, so as to be operationally effective and to enable developingcountries to effectively take account of their development needs, including food
security and rural development.  We take note of the non-trade concerns
reflected in the negotiating proposals submitted by Members and confirm that
non-trade concerns will be taken into acco unt in the negotiations as provided for
in the Agreement on Agriculture.
"14. Modalities for the further commitments, including provisions for
special and differential treatment, shall be established no later than 31 March
2003.  Participants shall submit their comprehensive draft Schedules based on
these modalities no later than the date of the Fifth Session of the Ministerial
Conference.  The negotiations, including with respect to rules and disciplines andTN/AG/10
Page 2
related legal texts, shall be concluded as part and at the date of conclusion of the
negotiating agenda as a whole."
3. On 26 March 2002, the Committee on Agriculture adopted a programme under paragraph 13
and 14 of the Doha Development Agenda covering the period March 2002 to March 2003 with a view
to establishing modalities for the further commitmen ts, including special and differential treatment, by
the date mandated by Ministers (TN/AG/1 refers).  In accordance with this programme, between June
2002 and March 2003 seven meetings of the Special Session of the Committee on Agriculture were
held, complemented by a series of inter-sessional and other informal consultations.  In the course of
the work, many negotiating proposals and informal papers as well as other specific inputs for the
negotiations were submitted by a wide range of participants.  As required by the agreed programme,
the Chairman submitted on his own responsibility on 18 December 2002 an Overview Paper
(TN/AG/6 refers), on 17 February 2003 the First Draft of Modalities for the Further Commitments(TN/AG/W/1 refers), and on 18 March 2003 a revision of the First Draft of Modalities for the Further
Commitments (TN/AG/W/1/Rev.1 refers).  Participants' comments concerning these three papers are
reflected in the Secretariat summary reports of the relevant meetings of the Special Session
(TN/AG/R/6, 7 and 8 refer).  The Chairman reported  regularly to the Trade Negotiations Committee
(TNC) on the work carried out and the progress made (TN/AG/2 to 5 and 7 to 9 refer).
4. Throughout the period covered by the programme adopted on 26 March 2002, participants
engaged in detailed and focused debate.  Considerable progress was made in some areas.  However, at
the formal meeting of the Special Session on 31 March 2003, the Chairman had to conclude that,
overall, participants remained far apart on key issues and, in the absence of collective guidance from
participants on possible bases for compromise, there had been no scope for producing a second draftof modalities at that juncture.  In these circumstances, it was not possible to establish modalities
within the time-limit foreseen by Ministers.
5. While many participants were concerned by the seriousness of the situation resulting from the
failure to meet the established deadline, the Special Session of the Committee agreed at this meeting
on the need to continue and intensify its work in order to establish modalities for the further reform assoon as possible.  To this end it was agreed that the Chairman should continue to organize technical
and other consultations in order to facilitate progress on all fronts, taking into account also the need
for a balanced work programme.  He noted that in carrying out this work participants should bear in
mind that consultations on specific issues have to be seen as part of the package as a whole.
6. From April to mid-June 2003, the Chairman organized 11 informal technical and other
consultations on a wide range of issues. A further meeting of the Special Session was held at the end
of June  In the course of these meetings, it became evident that the failure to establish modalities forthe further commitments had given an added edge to making progress in  essential technical work,
with worthwhile further progress being achieved in a number of the rule-related areas.  However, the
same could not be said with respect to core issues regarding the modalities for the further
commitments, notwithstanding repeated appeals by the Chairman for all delegations to work on and
come forward with solutions that might contribute to the development of a basis for compromise.  Inthese circumstances, achieving the objective of establishing modalities as soon as possible has
continued to remain elusive.  The Chairman has co ntinued to keep the TNC regularly abreast of the
state of play.
The Way Forward – Key Issues and Questions7. Clearly, any modalities established must faithfully reflect the Doha mandate. As matters
stand, collective guidance and decisions are required on a number of key issues in order to clear the
way for reaching this goal.  In the following paragra phs, an attempt is made to highlight the issues and
questions which, in the Chairman's view, are the most urgent.  For this purpose, this section is
organized according to the so-called three pillars of the Agreement on Agriculture, i.e. market access,TN/AG/10
Page 3
export competition and domestic support, it being understood that, in line with the Doha mandate,
special and differential treatment has to be an integral part of all elements of the negotiations and that
non-trade concerns are to be taken into account in the negotiations as provided for in the Agreement
on Agriculture.  Participants will, no doubt, also bear in mind the linkages that exist between all areas
under negotiation, both within agriculture and across the negotiations under the Doha DevelopmentAgenda as a whole.
8. For reference, a copy of the revised First Draft of Modalities for the Further Commitments
("revised First Draft") is attached (Annex 1).  It should be noted that some participants do not accept
the revised First Draft as a basis for the negotiations. These as well as a number of other participants
have noted that their negotiating proposals remain on the table (for a survey of proposals see
TN/AG/6 and subsequent specific inputs by participants).  Further, it is important to underline that the
issues and questions for urgent attention raised in the following paragraphs do not necessarilyconstitute an exhaustive list of the matters that participants may wish to address in connection with
the revised First Draft, nor are they intended to prejudge the results of the negotiations.  Finally, the
issues and questions raised in the present paper are specified on the understanding that, on matters not
explicitly highlighted in this paper, an eventual outcome on modalities would reflect the progress
made in the technical and other consultations since 31 March 2003.
Market Access
9. The negotiations on agricultural market access are confronted with having to reach
compromises on a wide range of issues.  The principal areas involved are:  the modalities to be
employed for reducing tariffs and other means to improve market access such as expanding marketaccess opportunities through tariff quota access commitments;  rule-related issues, such as tariff quota
administration and special safeguards; other market access issues related to certain non-trade
concerns;  and special and differential treatment in relation to both the negotiation of further access
commitments and rules.
Tariff Reduction Formulas:  Main Options
10. A formula reduction in tariffs will play a key role in achieving the objective of "substantial
improvements in market access" as agreed by Ministers at Doha.  In this context, many participants
have also raised the need to tackle tariff peaks and tariff escalation.  As matters currently stand there
is, on the one hand, strong and widespread support for a flexible, simple average reduction formula
along the lines of the formula used in the Urugua y Round (36 per cent average reduction target with a
minimum cut of 15 per cent for developed participants) and, on the other hand, strong supportamongst a range of other participants for a Swiss-type formula that would result in the harmonisation
of developed participants' tariffs, with the maximum tariff at the end of the implementation period
being 25 per cent ad valorem  for any tariff item.  Given the unwillingness of the proponents of these
two approaches to compromise, the Chairman put forward the graduated simple average reduction
formula outlined in paragraphs 8 to 15 of the revised First Draft in an attempt to bridge the wide gap.The principle underlying this approach is "the higher the tariff the greater the required average
reduction rate" (rising in bands from [40] to [60] per cent, subject respectively to a minimum cut per
tariff line).  Under each of these options special and differential treatment would generally apply in
the form of lower tariff reduction targets and a longer implementation period.
11. Key issues to be resolved are which of the above formulae should be retained or whether any
of them can be modified in such a way as to make it broadly acceptable.  In the latter case, the details
would have to be specified.
12. Many developing country participants accept that a tariff reduction formula should also be
applicable, with appropriate adaptations in terms of reduction target rates and implementation periods,
to their tariffs. However, a number of these countries have made the point that tariffs are their onlyTN/AG/10
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instrument of defence and that their ability to improve market access critically depends on developed
countries' commitments in the areas of domestic support and export competition. They are seeking
maximum flexibility in some areas in order to address their food security, rural development and/or
livelihood security concerns.  In this regard, a significant number of developing countries has
welcomed the inclusion in the revised First Draft of the concept of special products ("SP products")which would be eligible for significantly lower reduction rates, although a number of them would like
these products to be fully exempted from reduction commitments. On the other hand, some other
developing countries have raised concerns regardin g the implications of this concept for South-South
trade (this point was also made in the discussions on a possible special safeguard mechanism for
developing countries mentioned in paragraph 14(c) below).  Some developed and developing
countries have also flagged concerns regarding the possible creation of a large loophole and
underlined the need for real improvements in market access.
13. In tandem with the tariff reduction formula to be established, participants should decide
whether the concept of SP products should be retained and, if so, what approach would be appropriate
in determining how developing country products should be classified as "SP". In the latter case, a
critical question is whether this should be done by wa y of self-declaration or of objective criteria to be
specified.
Related Issues
14. In the light of the tariff reduction formula agreed, there are a number of other major issues on
which decisions are required in tandem.  They include:
(a) Whether existing tariff quotas should be expanded and, if so, in the way
proposed in paragraphs 17 to 23 of the revised First Draft or by some other modality.
Furthermore, should there be trade-off possibilities between the depth of tariff cuts
for individual products and the degree of tariff quota expansion? Some participants
have also called for the reservation of a certain share of tariff quotas or their
expansion for small (commodity) suppliers.
(b) Whether the special safeguard provisions of Article 5 of the Agreement on
Agriculture ("SSG") should cease to apply for developed countries and, if so, (i) at
the end of the implementation period, or (ii) two years thereafter (paragraph 25 of the
revised First Draft refers).
(c) Can it be agreed that a new special safeguard mechanism for developing
countries should be established along the lines indicated in paragraph 26 of the
revised First Draft and as further developed in the course of technical consultations(Annex 2 refers)?  In the affirmative, participants will have to decide the criteria to
determine the products to be eligible for measures under such a safeguard
mechanism.
(d) Whether the provisions regarding preferential schemes which are  contained
in paragraph 16 of the revised First Draft are acceptable or should be further refinedand, if so, in what way.
(e) Whether the market access package should also include complementary
approaches, such as sectoral initiatives or any other means to further improve market
access. In this regard, are the recent proposals on cotton (which go beyond market
access) submitted by four African countries acceptable (TN/AG/GEN/4 refers)?TN/AG/10
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Other market access issues
15. There are various areas of the modalities set out in the revised First Draft, and under the
Agreement on Agriculture as it stands, where, explicitly or de facto, non-trade concerns such as food
security or the need to protect the environment ar e taken into account.  However, some participants
feel that insufficient attention has been accorded to  these concerns, particularly in regard to the need
to secure the viability of rural areas in all countries, including in areas with disadvantaged or high-cost
agricultural production conditions. Other participants hold the opposite view.
16. Specifically in the context of market access a number of other non-trade concerns or other
issues have been raised by some participants in the negotiations. In these regards:
(a) Are participants prepared to agree that the agriculture modalities should
contain provisions for additional protection for a limited list of GIs?
(b) Should the agriculture modalities include an authoritative interpretation of the
conditions under which Article 5.7 of the Agreement on the Application of Sanitary
and Phytosanitary Measures can be invoked?
(c) Should the agriculture modalities include an authoritative interpretation of
Article 2 of the TBT Agreement with respect to agricultural products?
It should be noted that a number of participants hold that these issues are not covered by the Doha
mandate. In their view, these matters can only be addressed in the appropriate fora, i.e. the TRIPs
Council, the  SPS Committee and  the TBT Committee, respectively.
Export Competition
17. At Doha, Ministers agreed to aim at "reduction s of, with a view to phasing out, all forms of
export subsidies".  In the area of export competition, the negotiations have covered export subsidies,
export credits, food aid and state trading export enterprises. While in the course of the work since
March 2002 progress has been made in some of these areas, decisions are still required on a numberof key points.
Export Subsidies
18. The key question is whether the formula for the phasing out of export subsidies contained in
paragraphs 29 to 35 of the revised First Draft can be agreed.  In the alternative, participants would
have to decide on the specifics of other modalities, including the target expressed in quantitative
terms, the  implementation period and path, as well as the modalities under special and differentialtreatment.
Export credits
19. Progress has been made on developing strengthened disciplines concerning officially
supported export credits, export credit guarantees and insurance programmes ("export financingsupport").  The draft of a possible new Article 9 bis or 10 bis of the Agreement on Agriculture is
contained in Attachment 5 of the revised First Draft and, in an updated version, attached as Annex 3
to this report (a further revision reflecting the results of recent consultations is in preparation). While a
number of other details still have to be negotiated, key decisions to be taken include:TN/AG/10
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(a) the question of the length of the maximum repayments terms in excess of 180
days to be accorded under the provisions of special and differential treatment
(paragraphs 8 and 9 of Annex 3 refer);
(b) the details of possible more favourable terms of export financing support in
respect of exports to developing country Members experiencing emergency situations(paragraph 10 of Annex 3 refers).
Food Aid
20. Progress has also been made regarding the development of strengthened disciplines on food
aid.  A draft of the envisaged new rules in this area is contained in Attachment 6 of the revised First
Draft.  A major point of controversy among participants is, however, whether the provisions of
paragraph 4(b)(i) of Attachment 6 referring to emergency or critical food need situations areappropriate.  In particular, there remain differences in views whether food aid should be triggered on
the basis of appeals by specialized United Nations agencies only or whether the broader concept
contained in paragraph 4(b)(i) is preferable.  Similar differences in views prevail with regard to the
provision of food aid for other purposes (paragraph 4(b)(ii) refers).  There is also not full consensus to
the effect that food aid shall be exclusively provided in fully grant form (paragraph 4(b)(iii) ofAttachment 6 refers).  Decisions on these three points are needed.
State Trading Export Enterprises
21. There continues to be some debate whether Article XVII of GATT 1994 provides for
sufficient disciplines or whether, as part of strengthened disciplines in the area of export competitionand of the agriculture package as a whole, the modalities should cover state trading export enterprises.
In this regard, a key question for decision is whether the modalities should incorporate an undertaking
not to restrict the right of any interested entity to export, or to purchase for export, agricultural
products, subject to a phasing-in period to be negotiated as set out in paragraphs 5(b)(ii), 5(c) and 5(d)
of Attachment 7 of the revised First Draft.
Export restrictions and taxes
22. In the context of the debate on food-security, a number of participants have called for the
prohibition or progressive reduction/elimination of export restrictions and export taxes while other
participants have not been in favour of such a strengthening of the provisions of Article 12 of the
Agreement on Agriculture.  The key issue to be decided is whether the new rules contained in
paragraphs 39 and 40 of the revised First Draft should become part of the overall package onagriculture.
Domestic Support
23. In the area of domestic support, the main issues to be decided include:
(a) Whether the modalities contained in paragraphs 44 and 45 of the revised First
Draft concerning the Blue Box can be agreed upon and, in the affirmative, which of
the two options proposed in these paragraphs should be retained (i.e. a cut by [50] per
cent of Blue Box payments or the inclusion of Blue Box payments in the AMS and
the respective S&D modalities).  In the altern ative, participants would have to decide
on the specific modalities of an alternative approach in terms of the depth of reformexpressed in quantitative terms, the implementation period and the corresponding
modalities under special and differential treatment.TN/AG/10
Page 7
(b) Whether the modalities to reduce Amber Box support by [60] per cent (for
developing countries: [40] per cent) and to cap product-specific Amber Box support
as contained in paragraphs 46 to 48 of the revised First Draft can be agreed upon.  In
the alternative, participants would have to decide on the specific modalities of an
alternative approach in terms of the depth of reform expressed in quantitative terms,the implementation period and the corresponding modalities under special and
differential treatment.
(c) In tandem, can it be agreed that the de minimis  level  under Article 6.4 of the
Agreement on Agriculture should be reduced by [0.5] per cent per annum over a
period of five years for developed countries, and that the level for developing
countries should be maintained ( paragraphs 51 to 53 of the revised First Draft refer).
24. As for the Green Box, a number of participants have proposed strict new disciplines,
including provisions such as a cap on Green Box payments or the elimination of certain forms of
direct payments to producers. Other participants have pointed out that the Doha mandate calls for
substantial reductions for trade-distorting domestic support which, by definition, would exclude the
Green Box. Attachments 8 and 10 of the revised First Draft include a number of adjustments,
particularly in the context of S&D. Can these be agreed?
Other Matters
Least-developed countries
25. Can participants agree:
(a) that least-developed countries shall not be required to undertake reduction
commitments (paragraph 54 of the revised First Draft refers)?
(b) that developed countries shall provide duty- and quota-free access  to their
markets for all imports from least-developed countries (paragraph 55 of the revised
First Draft refers)?
Recently  acceded Members
26. The key issues for decision are whether recently acceded Members should have special
flexibility and, if so, whether that flexibility should be in the form of more time to implement the
reduction commitments (paragraph 56 of the revised First Draft refers) or whether, as proposed by a
number of Members concerned, recently acceded Members should have more wide-ranging flexibility
in the areas of market access and domestic support and, if so, what would be the specific modalities?
Additional flexibility for certain other groupings
27. A further question is whether other groupings such as small island developing States, other
vulnerable developing country groupings or transition economies should have special flexibility.
Views among participants differ. In the affirmative case, the modalities would need to be specified.TN/AG/10
Page 8
Final Points
New date for submitting draft schedules
28. With respect to paragraph 14 of the Doha Ministerial Declaration, a new date for the
submission of comprehensive draft Schedules based on the modalities to be established will need tobe set.
Peace clause
29. Participants will be aware that the provisions of Article 13 of the Agreement on Agriculture
will expire at the end of 2003.  This point is not covered in the revised First Draft.
Updating
30. This report may have to be updated in the light of the results of further work prior to the Fifth
Meeting of the Ministerial Conference.  In this rega rd, it should be noted that a further meeting of the
Special Session is to be held on 16 to 18 July 2003 and there may also be further developments
subsequent to this meeting.TN/AG/10
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Annex 1
WORLD TRADE
ORGANIZATIONTN/AG/W/1/Rev.1
18 March 2003
(03-1585)
Committee on Agriculture
Special Session
NEGOTIATIONS ON AGRICULTURE
FIRST DRAFT OF MODALITIES FOR THE FURTHER COMMITMENTS
Revision
Preface1. Under the programme adopted by the Special Session of the Committee on Agriculture on
26 March 2002, a revision of the first draft of modalities for further commitments is to be prepared
and circulated in advance of the Special Session to be held on 25-31 March 2003 (TN/AG/1 refers).
In accordance with this requirement, the Chairman submits herewith the present draft on his own
responsibility.
2. The present draft is an evolution of the first draft of modalities based on the discussions at the
Special Session held on 24-28 February (TN/AG/W/1 refe rs).  On that occasion, participants engaged
in intense and focused debate.  A number of participants indicated that the draft did not correspond in
various ways with their vision of the modalities to be established. Others found the paper useful or
expressed interest in various ideas presented.  Overall, while a number of useful suggestions emerged,
positions in key areas remained far apart.  In the circumstances, there was insufficient collective
guidance to enable the Chairman, at this juncture an d in those areas, significantly to modify the first
draft as submitted on 17 February 2003.  The present paper must therefore be considered as an initial,
limited revision of certain elements of the first draft of modalities.
3. The discussions at the Special Session in February made it clear that a major negotiating
effort, focusing particularly on the key divergences referred to above, is still required in order toestablish modalities for further commitments by 31 March.  Readiness on all sides to engage in
serious negotiations aimed at finding solutions that can attract broad-based support will be of the
essence.  In parallel, as indicated by the Chairman in his report to the formal Special Session on
28 February 2003, further technical work, some of which has already been initiated, will need to be
pursued in a number of areas.
4. As with the first draft submitted on 17 February 2003, the present revision is based on the
work carried out during the series of formal and informal Special Sessions of the Committee on
Agriculture and related intersessional and technical consultations conducted in accordance with the
mandate provided by Ministers at Doha and the programme thereunder as adopted by the Special
Session on Agriculture on 26 March 2002.  Paragraphs 13 and 14 of the Doha Ministerial Declaration
provide (WT/MIN(01)/DEC/1 refers):TN/AG/10
Page 10
"13. We recognize the work already undertaken in the negotiations initiated in
early 2000 under Article 20 of the Agreement on Agriculture, including the large
number of negotiating proposals submitted on behalf of a total of 121 Members.  We
recall the long-term objective referred to in the Agreement to establish a fair and
market-oriented trading system through a programme of fundamental reformencompassing strengthened rules and specific commitments on support and protection
in order to correct and prevent restrictions and distortions in world agricultural
markets.  We reconfirm our commitment to this programme.  Building on the work
carried out to date and without prejudging the outcome of the negotiations we commit
ourselves to comprehensive negotiations aimed at:  substantial improvements in
market access;  reductions of, with a view to phasing out, all forms of export
subsidies;  and substantial reductions in trade-distorting domestic support.  We agreethat special and differential treatment for developing countries shall be an integral
part of all elements of the negotiations and shall be embodied in the Schedules of
concessions and commitments and as appropriate in the rules and disciplines to be
negotiated, so as to be operationally effective and to enable developing countries to
effectively take account of their development needs, including food security and ruraldevelopment.  We take note of the non-trade concerns reflected in the negotiating
proposals submitted by Members and confirm that non-trade concerns will be taken
into account in the negotiations as provided for in the Agreement on Agriculture.
"14. Modalities for the further commitments, including provisions for special and
differential treatment, shall be established no later than 31 March 2003.  Participantsshall submit their comprehensive draft Schedules based on these modalities no later
than the date of the Fifth Session of the Ministerial Conference.  The negotiations,
including with respect to rules and disciplines and related legal texts, shall be
concluded as part and at the date of conclusion of the negotiating agenda as a whole."
5. The present paper does not claim to be agreed in whole or in any part and is without prejudice
to the positions of participants.  Square brackets are used in a number of places for a variety of
purposes, such as to put forward figures for indicative purposes, to suggest alternatives, or possible
formulations.  Where text is not in square brackets, this does not convey any degree of acceptance.  In
a few areas, the text has not been fully elaborated and any resulting unevenness may need to be ironed
out.
6. It is the Chairman's earnest hope that the Special Session to be held on 25-31 March will be
used by participants for meaningful and serious negotiations.  Only constructive engagement byparticipants will create the space for establishing modalities in line with the Doha mandate.TN/AG/10
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General Provisions and Terms
7. Unless otherwise specified below, the following general provisions and terms shall apply:
(a) Product coverage
The product coverage as specified in Annex 1 of the Agreement on Agriculture shall apply (hereafter
referred to as "agricultural products").
(b) "Year""Year" in the context of these modalities refers to the annual basis (calendar year, financial or
marketing year) to be specified in Members' draft Schedules.
(c) "Commitment"
The term "commitment" includes concessions.(d) Starting-point of reduction commitmentsThe starting-point for the first instalment of the reduction commitments in all areas shall be the
beginning of year 1 of the respective implementation periods.  Subsequent reductions shall be made at
the beginning of each of the successive implementation years.
Market Access
Tariffs
8. Tariffs, except in-quota tariffs, shall be reduced by a simple average for all agricultural
products subject to a minimum reduction per tariff line.  The base for the reductions shall be the final
bound tariffs as specified in the Schedules of Members.  Except as provided in paragraph 16 below,
the tariff reductions shall be implemented in equal annual instalments over a period of [five] years,
applying the following formula:
(i) For all agricultural tariffs greater than [90 per cent ad valorem ] the simple average
reduction rate shall be [60] per cent subject to a minimum cut of [45] per cent per
tariff line.
(ii) For all agricultural tariffs lower than or equal to [90 per cent ad valorem ] and greater
than [15 per cent ad valorem ] the simple average reduction rate shall be [50] per cent
subject to a minimum cut of [35] per cent per tariff line.
(iii) For all agricultural tariffs lower than or equal to [15 per cent ad valorem ] the simple
average reduction rate shall be [40] per cent subject to a minimum cut of [25] per cent
per tariff line.
In applying this formula, where the tariff on a processed product is higher than the tariff for the
product in its primary form, the rate of tariff reduction for the processed product shall be equivalent to
that for the product in its primary form multiplied, at a minimum, by a factor of [1.3].
9. Where participants apply non- ad valorem  tariffs, the allocation of any tariff item in categories
(ii) and (iii) above shall be based on tariff equivalents to be calculated by the participant concerned ina transparent manner, using three-year average external reference prices or data, based on a recent
representative five-year period, excluding the highest and the lowest entry. Full details of the methodTN/AG/10
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and data used for these calculations shall be included in the tables of supporting material for the draft
Schedules and shall be subject to multilateral review.
Special and Differential Treatment
10. In implementing their market access commitments, developed country Members shall take
fully into account the particular needs and conditions of developing country Members by providingfor greater improvement of opportunities and terms of access for agricultural products of particular
interest to these Members, including the fullest libe ralization of trade in tropical products, whether in
primary or in processed form, and for products of particular importance to the diversification of
production from the growing of illicit narcotic crops, or crops whose non-edible or non-drinkable
products, while being lawful, are recognized as being harmful for human health.
11. Developing countries shall have the flexibility to declare up to [  ] agricultural products at the
[6-digit] [4-digit] HS level as being special produc ts with respect to food security, rural development
and/or livelihood security concerns and designate these products with the symbol "SP" in Section I-A
of Part I of their Schedules (hereafter referred to as "SP products").  This concept will be evolved in
further technical consultations.
12. For all agricultural products other than SP products, the reduction commitments of developing
countries shall be implemented applying the following formula:
(i) For all agricultural tariffs greater than [120 per cent ad valorem ] the simple average
reduction rate shall be [40] per cent subject to a minimum cut of [30] per cent per
tariff line.
(ii) For all agricultural tariffs lower than or equal to [120 per cent ad valorem ] and
greater than [60 per cent ad valorem ] the simple average reduction rate shall be
[35] per cent subject to a minimum cut of [25] per cent per tariff line.
(iii) For all agricultural tariffs lower than or equal to [60 per cent ad valorem ] and greater
than [20 per cent ad valorem ] the simple average reduction rate shall be [30] per cent
subject to a minimum cut of [20] per cent per tariff line.
(iv) For all agricultural tariffs lower than or equal to [20 per cent ad valorem ] the simple
average reduction rate shall be [25] per cent subject to a minimum cut of [15] per cent
per tariff line.
13. Where participants apply non- ad valorem  tariffs, the provisions of paragraph 9 above apply.
14. The simple average reduction rate for all SP products shall be [10] per cent subject to a
minimum cut of [5] per cent per tariff line.
15. In all cases, the base for the reductions shall be the final bound tariffs as specified in the
Schedules of Members.  The reduction commitments shall be implemented in equal annual
instalments over a period of [ten] years.
Preferential Schemes
16. In implementing their tariff reduction commitments, participants undertake to maintain, to the
maximum extent technically feasible, the nominal margins of tariff preferences and other terms and
conditions of preferential arrangements they accord to their developing trading partners.  As an
exception to the modality under paragraph 8 above, tariff reductions affecting long-standingpreferences in respect of products which are of vital export importance for developing countryTN/AG/10
Page 13
beneficiaries of such schemes may be implemented in equal annual instalments over a period of
[eight] instead of [five] years by the preference-granting participants concerned, with the first
instalment being deferred to the beginning of the [third] year of the implementation period that would
otherwise be applicable.  The products concerned shall account for at least [20] per cent of the total
merchandise exports of any beneficiary concerned on a three-year average out of the most recent five-year period for which data are available.  Interested beneficiaries shall notify the Committee on
Agriculture, Special Session accordingly and submit the relevant statistics.  In addition, any in-quota
duties for these products shall be eliminated.  The preference-providing Members shall undertake
targeted technical assistance programmes and other measures, as appropriate, to support preference-
receiving countries in efforts to diversify their economies and exports.
Tariff Quotas
Tariff Quota Volume
17. Final bound tariff quota quantities or values as specified in Members' Schedules (hereafter
referred to as "tariff quota volume") which are equivalent to less than [10] per cent of "current"
domestic consumption of the product concerned shall be expanded to that level.  However, for up to
one-quarter of the total number of tariff quotas concerned, a Member may opt for binding the tariffquota volume at a level equivalent to [8] per cent of  that consumption, provided that the volumes for a
corresponding number of tariff quotas concerned are expanded to [12] per cent.
18. "Current" domestic consumption means the average consumption of the period 1999-2001 or
of the most recent three-year period for which data are available.  Full details of the method and data
used for the calculations of domestic consumption for the products concerned shall be included in thetables of supporting material for the draft Schedules and shall be subject to multilateral review.
19. The expansion of tariff quota volumes shall be implemented in equal instalments over a
period of [five] years.  The starting-point for implementing the expansion of tariff quotas shall be the
beginning of year 1 of the implementation period.  Additional market access opportunities provided
by the expansion of tariff quotas shall be on an MFN basis.
Special and Differential Treatment
20. Developing countries shall not be required to expand tariff quota volumes for SP products.
For other agricultural products, final bound tariff quota volumes as specified in Members' Schedules
which are equivalent to less than [6.6] per cent of "current" domestic consumption of the product
concerned shall be expanded to that level.  However, for up to one-quarter of the total number of tariff
quotas concerned a Member may opt for binding the tariff quota volume at a level equivalent to[5] per cent of that consumption, provided that the volumes for a corresponding number of tariff
quotas concerned are expanded to [8] per cent.
21. The modalities in paragraphs 18 and 19 above apply, except that the commitments by
developing countries shall be implemented over a period of [ten] years.
In-quota Tariffs22. There shall be no requirement to reduce in-quota tariffs, except that (i) in-quota duty free
access shall be provided for tropical products, whether in primary or in processed form, and for
products of particular importance to the diversification of production from the growing of illicit
narcotic crops, or crops whose non-edible or n on-drinkable products, while being lawful, are
recognized as being harmful for human health, and (ii) in respect of tariff quotas where fill rates onaverage of the most recent [three] years for which data are available have been less than [65] per cent.TN/AG/10
Page 14
Special and Differential Treatment
23. Developing countries shall not be required to reduce in-quota tariffs, except as provided for
under the provisions of (ii) in paragraph 22 above.
Tariff Quota Administration24. The administration of tariff quotas shall be subject to disciplines as outlined for further
consideration in Attachment 1 to this document.  It is noted that this outline is the subject of ongoing
technical consultations.
Special Safeguard Provisions
Article 5 of the Agreement on Agriculture
25. The provisions of Article 5 of the Agreement on Agriculture shall cease to apply for
developed countries [at the end of the implementation period for the further tariff reductions] [[two]
years after the end of the implementation period for the further tariff reductions].
Special and Differential Treatment
26. An outline of a possible new special safeguard mechanism to enable developing countries to
effectively take account of their development needs, including food security, rural development and
livelihood security concerns, is currently subject to technical work and will be included at the
appropriate stage in Attachment 2.  The right to invoke this mechanism shall be reserved by
designating in Schedules with the symbol "SSM" the products concerned.  In addition, items alreadycurrently covered and designated with the symbol "SSG" shall be eligible for measures under
Article 5 of the Agreement on Agriculture, provided , however, that measures under a new safeguard
mechanism shall not be taken concurrently with measures under Article 5.
State Trading Import Enterprises27. State trading import enterprises shall be subject to disciplines as outlined for further
consideration in Attachment 3 to this document. This outline is to be the subject of further technical
consultations.
Other Market Access Issues
28. It is recalled that under paragraph 13 of the Doha Ministerial Declaration non-trade concerns
will be taken into account in the negotiations as provided for in the Agreement on Agriculture. Such
concerns have been taken into account in various parts of the present text (and not only in marketaccess). Nevertheless, further consideration needs to be given to non-trade concerns and other market
access issues identified in paragraph 28 of document TN/AG/6 dated 18 December 2002 and the
extent to which these issues should be taken into account in the modalities to be established and/or
subsequent work.TN/AG/10
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Export Competition
Export Subsidies
29. The basis for the further commitments on export subsidies shall be the final bound budgetary
outlay and quantity commitment levels as specified in Members' Schedules.
30. For a set of agricultural products representing at least [50] per cent of the aggregate final
bound level of budgetary outlays for all products subject to export subsidy commitments, final bound
levels of budgetary outlays and quantities as specified in Members' Schedules shall be reduced over
[five years (n = 5)] using the following formulae with the constant factor c equal to [0.3]
(Attachment 4 to this document provides an illustration of the operation of these formulae):
(1)   B j = B j-1  -  c · B j-1   with j = 1, ….. , n
(2)   Q j = Q j-1  -  c · Q j-1  with j = 1, ….. , n   
with
B = budgetary outlays    Q = quantities    c = constant factor     j = implementation yearand B
0  and Q 0  being the base levels, respectively .
31. At the beginning of [year 6], budgetary outlays and quantities shall be reduced to zero.
32. For the remaining products, final bound levels of budgetary outlays and quantities as
specified in Members' Schedules should be reduced over [nine years (n = 9)] instead of [five] yearsusing the formulae (1) and (2) above.  However, for these products the constant factor c shall equal
[0.25].  At the beginning of [year 10], budgetary outlays and quantities for these products shall be
reduced to zero.
Special and Differential Treatment
33. For a set of agricultural products representing at least [50] per cent of the aggregate final
bound level of budgetary outlays for all products subject to export subsidy commitments, final bound
levels of budgetary outlays and quantities as specified in developing country Members' Schedules
shall be reduced over [ten years (n = 10)] using the formulae (1) and (2) above, with the constant
factor c equal to [0.25].  At the beginning of [year 11], budgetary outlays and quantities shall be
reduced to zero.
34. For the remaining products, final bound levels of budgetary outlays and quantities as
specified in developing country Members' Schedules should be reduced over [twelve years (n = 12)]instead of [ten] years using the formulae (1) and (2 ) above.  However, for these products the constant
factor c shall equal [0.2].  At the beginning of [year 13], budgetary outlays and quantities for these
products shall be reduced to zero.
35. The exemptions for developing countries under Article 9.4 for certain transport and
marketing-cost subsidies set out in Article 9.1(d) and (e) of the Agreement on Agriculture shall becontinued for the time of the implementation period of the further export subsidy commitments to be
undertaken by developing countries.
Export Credits
36. Export credits and export credit guarantees and insurance programmes shall be subject to
disciplines as outlined for further consideration in Attachment 5 to this document. It is noted that thisoutline is the subject of ongoing technical consultations.TN/AG/10
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Food Aid
37. International food aid shall be subject to disciplines as outlined in a revised draft for
consideration in Attachment 6 to this document. This revised draft will itself be the subject of further
technical  consultations.
State Trading Export  Enterprises
38. State trading export enterprises shall be subject to disciplines as outlined for further
consideration in Attachment 7 to this document. This outline is to be the subject of further technical
consultations.
Export Restrictions and Taxes
39. Except as provided for in paragraph 2(b) of Article XI and Articles XX and XXI of GATT
1994, the institution of new export prohibitions, restrictions or taxes on foodstuffs shall be prohibited.
Special and Differential Treatment
40. The new disciplines under paragraph 39 above are not applicable to developing countries.
For these Members, the provisions of Article 12 of the Agreement on Agriculture shall continue to
apply.
Domestic Support
Annex 2 of the Agreement on Agriculture (Green Box)
41. The provisions of Annex 2 of the Agreement on Agriculture shall be maintained, subject to
possible amendments as outlined in a revised draft for consideration in Attachment 8 to this
document. This revised draft will itself be the subject of further technical consultations.
Special and Differential Treatment
42. Possible amendments to Annex 2 of the Agreement on Agriculture are outlined for further
consideration in Attachment 9 to this document. This outline, which is to be the subject of further
technical consultations, includes several essentiall y editorial changes as compared to the previous
version.
Article 6.2 of the Agreement on Agriculture
43. The provisions of Article 6.2 of the Agreement on Agriculture shall be maintained and
enhanced as outlined for further consideration in Attachment 10 to this document. This outline, which
is to be the subject of further technical consultations, includes an essentially editorial change as
compared to the previous version.TN/AG/10
Page 17
Article 6.5 of the Agreement on Agriculture (Blue Box)
44. Direct payments under production-limiting programmes provided in accordance with the
provisions of Article 6.5 of the Agreement on Agriculture (Blue Box payments) [shall be capped at
the most recent notified level and bound at that level in Members' Schedules.  These payments shallbe reduced by [50] per cent.  The reductions shall be implemented in equal annual instalments over a
period of [five] years.] [shall be included in a Member's calculation of the Current Total Aggregate
Measurement of Support (AMS)].
Special and Differential Treatment
45. For developing countries, [the commitment shall be implemented in equal annual instalments
over a period of [ten] years, with the rate of re duction being [33] per cent.] [Blue Box payments shall
be included in a Member's calculation of the Current Total AMS as of the [fifth] year of theimplementation period.]
Amber Box
46. The final bound Total AMS as set out in Members' Schedules shall be reduced by [60] per
cent in equal annual instalments over a period of [five] years.
47. Article 6.3 of the Agreement on Agriculture shall be amended so as to ensure that the Current
AMS for individual products shall not exceed the respective average levels of such support provided
over the period 1999-2001.
Special and Differential  Treatment
48. For developing countries, the final bound Total AMS shall be reduced by [40] per cent in
equal annual instalments over a period of [ten] years.
Other matters
Inflation
49. Scheduled Total AMS commitments may be expressed in national currency, a foreign
currency or a basket of currencies.  In case a foreign currency or a basket of currencies is used and thefinal bound Total AMS in a Member's Schedule is expressed in national currency (or another foreign
currency) and a participant wants to avail itself of this option, the final bound Total AMS shall be
converted using the average exchange rate(s) as reported by the IMF for the year at issue.
50. The provisions of Article 18.4 shall be maintained.
Article 6.4 of the Agreement on Agriculture (de minimis)
51. The de minimis level of 5 per cent under subparagraph (a) of Article 6.4 of the Agreement on
Agriculture shall be reduced annually by [0.5] pe rcentage point over a period of [five] years.
Special and Differential Treatment
52. The de minimis level of 10 per cent under subparagraph (b) of Article 6.4 of the Agreement
on Agriculture shall be maintained.
53. Developing countries shall have the flexibility to credit to the non-product-specific de
minimis support an amount of any negative product-specific support up to the equivalent of 10 perTN/AG/10
Page 18
cent of the respective Member's total value of production of the basic agricultural product concerned
during the relevant year.
Least-developed Countries
54. In addition to the special and differential treatment provisions above, least-developed
countries shall not be required to undertake re duction commitments.  [However, they are encouraged
to consider making commitments commensurate wi th their development needs on a voluntary basis,
including in response to requests from their trading partners.]
55. Developed countries [should] [shall] provide duty- and quota-free access to their markets for
all imports from least-developed countries.
Others
Recently Acceded Members
56. Members that have recently acceded to the WT O shall have the flexibility to defer the
respective implementation periods by [2] years.
Others
57. Participants will further consider the possible introduction of additional forms of flexibility
for certain groupings (e.g. SIDS, vulnerable developing countries, transition economies) which have
made specific proposals to this effect (TN/AG/6 refers).TN/AG/10
Page 19
Attachment 1
Tariff Quota Administration
Draft for further consideration of possible disciplines regarding tariff quota administration
1. Tariff concessions in Part I of a Member's Schedule which are limited to specified quantities
or values of a product or products ("tariff quota commitments") shall be administered in conformity
with the provisions of this Article and, subject to these provisions, in accordance with other relevant
WTO provisions, including those of the Agreement on Import Licensing Procedures.
2. Tariff quota commitments shall be administered in a manner which ensures that the market
access opportunities represented by such commitments are made fully and effectively available.  To
this end the following general requirements shall be complied with:
(a) Tariff quota commitments shall be administered in a transparent and predictable
manner and, to maximum practicable extent, in the same way as other tariff
concessions.
(b) Domestic purchasing requirements or other measures having the same effect shall not
be imposed, directly or indirectly, on or in connection with importation of tariff quotaproducts.
(c) Except as specifically described in Schedules, no seasonal restrictions shall be
imposed on imports under tariff quotas.
(d) A tariff quota commitment shall not be administered in a manner which precludes the
importation of any product within the tariff description of the commitment, or which
restricts importation of such products in processed form or for sale to final
consumers.
(e) Methods of tariff quota administration shall not be employed which result in the
attribution to importers of commercially non-viable allotments.
(f) Only imports of tariff quota products from MFN suppliers shall be credited as imports
against tariff quota commitments.
(g) Export or re-export requirements shall not be imposed in connection with the
importation of tariff quota products.
(h) An importer shall be treated no less favourably than another on the basis of degree of
foreign affiliation or ownership.
(i) No charges, deposits or other financial requirements shall be imposed, directly or
indirectly, on or in connection with the administration of tariff quota commitments or
with importation of tariff quota products other than as permitted under the GATT
1994.
3. The following specific requirements shall apply to the methods of tariff quota administration
referred to hereunder ("year" in this context refers  to the calendar, marketing or other annual basis to
which the commitment relates as specified in a Member's Schedule):TN/AG/10
Page 20
(a) In the case of tariff-only methods of administration and methods not requiring import
licences as a condition of importation:  access opportunities shall be made available
from the beginning of the year concerned and timely advance public notice shall be
given of any suspension of the opportunity to import at the in-quota rate of tariff.
(b) In the case of methods of administration under which import licences are a
requirement:
(i) The total quantity or value of a tariff quota shall be allocated to importers
sufficiently in advance of the year to  which they relate so as to enable
imports to be effected from the beginning of that year and to facilitate
imports from developing countries and distant suppliers.
(ii) No restrictions shall be applied with respect to retail distributors and other
end-users applying for and being allotted shares of tariff quotas. Nor shall
conditions or formalities be imposed which would prevent any importer from
utilizing fully the share which has been  allocated to it within the period of
validity of the corresponding import licence.
(iii) Tariff quota licences shall be valid for a period of [eight] months and shall
not be transferable without the concurrence of the administering authority.
(iv) The quantity or value of any tariff quota commitment which remains unused
following the expiry of the period of validity of the licences initially issued in
connection with that tariff quota shall be reallocated in time to enable
importation before the end of the year concerned.
(c) In the case of allocation of tariff quota shares to supplying countries:  where an
allocated country-specific share remains unused or is consistently under-utilized, such
unused or under-utilized share shall be re-allocated to non-traditional suppliers.
4. The provisions of this Article shall apply to tariff quota commitments that are administered by
or through state trading enterprises.
5. In addition to the requirements of Article X:1 of GATT 1994 relating to publication,
Members administering tariff quota commitments shall establish Internet Websites on which all
relevant information relating to their administration of tariff quota commitments can be accessed,
including information regarding administrative requirements and procedures, the business and e-mail
addresses of importers to whom tariff quota shares have been attributed, and current tariff quota fillrates.  Developing country Members shall have the option of establishing centralized enquiry points
instead of Websites.
6. Special and differential treatment:  developed country Members shall accord special and
differential treatment to products from developing country Members in connection with the allocationof expanded access under existing or new tariff quotas resulting from the negotiations under the Doha
Development Agenda.  For the purposes of Article XIII of GATT 1994, where a tariff quota has been
allocated in full or in part among developing country suppliers the individual country allocations shall
be as specified in the Schedule of the Member concerned; and any re-allocation of shortfalls shall be
made among the developing country suppliers concerned.  Developed country Members shall, onrequest, provide to the maximum extent possible advisory and marketing assistance in order to
facilitate imports from developing countries under tariff quotas.TN/AG/10
Page 21
Attachment 2
Draft for further consideration of a possible new safeguard mechanism for developing countries
(Text to be included following further technical work)TN/AG/10
Page 22
Attachment 3
State Trading Import Enterprises
Draft for further consideration of  possible provisions for a new Article 4.3 of the
Agreement on Agriculture
3. (a) Members shall ensure that state trading import enterprises are operated in conformity
with the provisions of this Article and, subject to these provisions, in accordance with
Article XVII and other relevant provisions  of GATT 1994, this Agreement and other
WTO agreements.  For the purposes of this Article, state trading import enterprisesshall include any governmental or non-governmental enterprise, including a
marketing board, which has been granted or which enjoys de facto as a result of its
governmental or quasi governmental status, exclusive or special rights, privileges or
advantages, including any statutory or constitutional powers, in the exercise of which
or by virtue of which such state trading import enterprises (hereinafter referred to as"governmental import enterprises") influence through their purchases and sales the
level, direction or prices of imports.
(b) Members shall ensure that governmental import enterprises are not operated in such a
way as to nullify or impair the benefits of market access concessions and of thecommitments relating to non-tariff measures under Article 4.2 of this Agreement.
(c) Any Member which establishes or maintains a governmental import enterprise shall
notify relevant information on the operations of that enterprise in accordance with a
format and at intervals to be established by the Committee on Agriculture.
(d) The disciplines regarding governmental import enterprises shall not unduly impede
developing countries in the pursuit of their legitimate food and livelihood security
and rural development objectives.  The notification requirements to be established
under subparagraph (c) above shall provide for appropriate special and differential
treatment for developing countries.TN/AG/10
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Attachment 4
Illustration of the Operation of the Export Subsidy Reduction Formula
1. In accordance with paragraph 29, the following formulae are to be applied for the reduction of
export subsidies:
(1)   B j = B j-1  -  c · Bj-1   with j = 1, ….. , n
(2)   Q j = Q j-1  -  c · Qj-1  with j = 1, ….. , n   
with
B = budgetary outlays    Q = quantities    c = constant factor     j = implementation year
and B 0  and Q 0  being the base levels, respectively.
2. The following table illustrates the operation of these formulae.  Column 1 refers to the base
level and the implementation years.  Column 2 provides the path of reductions expressed, for each
implementation year, as a percentage of the base level of budgetary outlays (formula (1)) or quantities
(formula (2)) for the product concerned if the constant factor c equals 0.15.  Columns 3 to 6 providethe corresponding paths for alternative values of the constant factor c.
Export subsidy reduction formula
(Base level = 100 per cent of final bound level of budgetary outlays/quantities)
Constant  Factor c
0.15 0.2 0.25 0.3 0.35
Per cent Base
level 100 100 100 100 100
Year "Current" bound level in per cent of base level
1 85.0 80.0 75.0 70.0 65.0
2 72.3 64.0 56.3 49.0 42.3
3 61.5 51.2 42.2 34.3 27.5
4 52.3 41.0 31.6 24.0 17.9
5 44.5 32.8 23.7 16.8 11.6
6 37.8 26.2 17.8 11.8 7.6
7 32.1 21.0 13.4 8.3 4.9
8 27.3 16.8 10.1 5.8 3.2
9 23.2 13.4 7.6 4.1 2.1
10 19.7 10.7 5.7 2.9 1.4
11 16.7 8.6 4.3 2.0 0.9
12 14.2 6.9 3.2 1.4 0.6TN/AG/10
Page 24
3. For example, if the constant factor c eq uals 0.3 (Column 5), then at the beginning of
implementation year 1, the bound level of budgetary outlays will have to be reduced to 70 per cent of
the final bound level of budgetary outlays (formula (1 )).  At the beginning of implementation year 2,
the bound level of budgetary outlays will have to be reduced to 49 per cent of the final bound level of
budgetary outlays, at the beginning of implementation year 3 to 34.3 per cent and so forth.  If theconstant factor c equals 0.2, the corresponding percentages are 80 per cent, 64 per cent, 51.2 per cent
and so forth.
4. The application of formula (2) in a practical case could look as follows:  If the final bound
quantity for product x equals 500 tonnes (base level Q
0) and a constant factor of 0.3 is chosen, the
calculation using formula (2) above yields the follow ing results for the bound levels for the first three
years of implementation ("current" bound levels Q 1, Q 2 and Q 3):
Base level Q 0 = 500 tonnes            "current" bound level in year 1, …, 3
Year          in tonnesin per cent of
base level
(Column 5 of
table above)
1 Q1 = Q 0 - c · Q0  =  500  -  0.3 · 500  =    350 70.0
2 Q2 = Q 1 - c · Q1  =  350  -  0.3 · 350  =    245 49.0
3 Q3 = Q 2 - c · Q2  =  245  -  0.3 · 245  =    171.5 34.3
and so forth.TN/AG/10
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Attachment 5
Export Credits
Draft for further consideration of a possible new Article 9 bis or 10 bis of the Agreement of
Agriculture on Governmental Support for Export Financing
General
1. Subject to the provisions of this Article, Members shall not, directly or indirectly, provide
support or enable support to be provided for or in connection with the financing of exports ofagricultural products or the credit and other risks associated therewith otherwise than on market-
related terms and conditions.  [Each Member accordingly undertakes not to provide export financing
support otherwise than in conformity with this Ar ticle.]  [Each Member accordingly undertakes not to
provide export financing support otherwise than in  conformity with this Article and with the
commitments as specified in that Member's Schedule.]
Forms and providers of export financing support subject to discipline
2. Export financing support that is subject to the provisions of this Article includes:
(a) direct financing support, comprising direct credits/financing, refinancing, and interest
rate support;
(b) risk cover, comprising export credit insurance or reinsurance and export credit
guarantees;
(c) government-to-government credit agreements covering the imports of agricultural
products exclusively from the creditor country under which some or all of the risk is
undertaken by the government of the exporting country;
(d) any other form of governmental support, direct or indirect, including deferred
invoicing and foreign exchange risk hedging.
3. The provisions of this Article shall be applicable to export financing support provided by or
on behalf of:  government departments, agencies, or statutory bodies, at both the national and sub-
national levels;  any financial institution or entity engaged in export financing in which there is
governmental participation by way of equity, provision of loans or underwriting of losses;  anygovernmental or non-governmental enterprise, including a marketing board, which has been granted
or enjoys de facto exclusive or special rights, privileges or financing advantages, including statutory
or constitutional powers, in the exercise of which or  by virtue of which support for or in connection
with the financing of exports is provided;  and any bank or other private financial, credit insurance or
guarantee institution which acts on behalf of or at  the direction of governments or their agencies.
Terms and conditions
4. Export financing support which is provided in conformity with th e following terms and
conditions shall be deemed to comply with paragraph 1 above:
(a) Maximum repayment term:  the maximum repayment term of a supported export
credit shall not exceed the period beginning at the starting point of credit and ending
on the contractual date of the final payment.  The "starting point of a credit" shall be
no later than the weighted mean date or actual date of the arrival of the goods in theTN/AG/10
Page 26
recipient country for a contract under which shipments are made in any consecutive
six-month period.  The following maximum repayment terms shall be respected:
(i) for breeding cattle:  [   ] months for contracts up to and including [   ];  and
[   ] months for contracts exceeding [   ];
(ii) for agricultural vegetable reproduction material:  [   ] months;(iii) for exports of agricultural products to developing countries, as specified in
paragraph 9(a) below:  [.. months];
(iv) for exports of basic foodstuffs to least-developed and for net food-importing
developing countries as listed in document G/AG/5/Rev.5, as specified in
paragraph 10(a) below;
(v) for all other products and destinations:  [six months/180 days].
(b) Cash payments:  a minimum cash payment shall be required to be paid, by or on
behalf of the importer, at or before the starting point of the supported credit,
representing not less than [15] per cent of the total amount of the contract/shipment
value but excluding interest as defined in subparagraph (c) below.  Cash payments
shall not be financed.
(c) Payment of interest:  in the case of direct financing support, "interest" excludes
premiums and other charges for insuring or guaranteeing supplier or financial credits,
banking fees or commissions relating to the export credit, and withholding taxes
imposed by the importing country.  Interest shall be payable.  Where the repaymentterm exceeds 180 days, interest shall be payable not less frequently than every six
months, with the first payment to be made no later than six months after the starting
point of export financing.
(d) Minimum interest rates:  interest rates in respect of direct financing support shall not
be below the actual cost of borrowing for the funds so employed (including the cost
of funds if capital was borrowed on international capital markets in order to obtainfunds of the same maturity), plus an appropriate risk-based spread reflective of
prevailing market conditions:  provided how ever that, for repayment terms of twenty-
four months or longer, Members shall us e Commercial Interest Reference Rates
(CIRRs) as published by the OECD, plus an appropriate risk-based spread reflective
of prevailing market conditions.
(e) Repayment of principal:  the principal sum (transaction value minus cash payment) of
an export credit shall be repayable in equal, regular six-monthly instalments starting
not later than six months after the starting point of the credit.
(f) Premiums in respect of coverage of risks under export credit insurance, reinsurance
and export credit guarantees:  premiums shall be charged, shall be risk-based and
shall be adequate to cover long-term operating costs and losses.  Premium shall be
expressed in percentages of the outstanding principal value of the credit, shall be
payable in full at the date of issuance of cover and shall not be financed.  Premiumrebates shall not be accorded.  Furthermore, support in the form of export credit
insurance, reinsurance or guarantees shall not be provided in respect of export
financing contracts whose terms and conditions are not otherwise in conformity with
the provisions of this paragraph.TN/AG/10
Page 27
(g) Foreign exchange risk:  Export credits, export credit insurance, export credit
guarantees, and related financial support shall be provided in freely traded currencies.
Foreign exchange exposure deriving from credit that is repayable in the currency of
the importer shall be fully hedged, such that the market risk and credit risk of the
transaction to the supplier/lender/guarantor is not increased.  The cost of the hedgeshall be incorporated into and be in ad dition to the premium rate determined in
accordance with this Article.
(h) Period of validity of export financing offers:  credit terms and conditions (e.g.,
interest rates for direct financing support and all risk-based terms and conditions)
offered for an individual export credit or line of credit shall not be fixed for a period
exceeding six months without payment of premium.
Non-conforming financing support
5. Export financing supports which do not conform with all the relevant provisions of
paragraph 4 of this Article, hereinafter referred to as "non-conforming export financing", constituteexport subsidies for the purposes of this Agreement and are subject to specific export financing
reduction commitments under this Article.
6. The commitments for each year of the implementation period, as specified in Part IV,
Section IV, of a Member's Schedule, represent with respect to non-conforming financing support:
(a) in the case of scheduled reduction commitments relating to the value of non-
conforming export financing support, the maximum level of such financing support in
value terms, that may be provided in that year in respect of the agricultural product,
or group of products concerned;
(b) in the case of scheduled quantity reduction commitments, the maximum quantity of
an agricultural product, or group of pr oducts, in respect of which non-conforming
export financing may be provided in that year;  and
(c) in the case of commitments relating to repayment terms, the maximum and degressive
non-conforming repayment terms that may be supported in each successive year ofthe specified implementation period.
Emergency exception
7. An emergency situation is defined as a sudden, significant and unusual deterioration in a
Member country's economy and its ability to finance current imports of basic foodstuffs, and which
may have far-reaching consequences such as social deprivation or unrest.  In the event of such an
emergency the importing Member country concerned may request an exporting Member to provide
more generous export financing terms than are permissible under this Article.  A Member making
such a request shall concurrently notify the Committee on Agriculture in writing accordingly.  TheMember to whom such a request is addressed shall consider the request for more generous terms in
accordance with the need to sustain the viability of its export credits, export credit guarantees, or
export credit insurance programmes.
Transparency and notification
8. No later than three months after the entry into force of this Article each Member shall submit
a notification concerning that Member's export financing programmes, export financing bodies and
other related matters in accordance with the format specified in Annex [  ] hereto.  This notification
shall be updated at the beginning of each subsequent year.  At not less than [  ] monthly intervalsTN/AG/10
Page 28
Members shall submit a notification to the Committee on Agriculture in which details are provided of
export financing commitments entered into in acco rdance with the format specified in Annex [..]
hereto.  Least-developed country Members shall not be required to submit such notifications.  [Note:
the Annexes referred to in this paragraph to be developed at the appropriate stage.]
Special and differential treatment
9. In respect of imports of agricultural products, special and differential treatment in favour of
developing country Members shall comprise:
(a) longer maximum repayments terms of up to [   ] months;
(b) repayment of the principal sum in equal and regular instalments not less frequently
than annually, with the first payment due no later than twelve months after the
starting point of credit;
(c) payment of interest not less frequently th an annually, with the first interest payment
to be made no later than twelve months after the starting point of credit.
10. In respect of imports of basic foodstuffs least-developed countries and net food-importing
developing countries as listed in G/AG/5/Rev.5 shall be accorded:
(a) additional longer maximum repayment terms of up to [   ] months;
(b) differential and more favourable interest rates and/or premiums.
11. Developing country Members providing di rect export financing support may use London
Interbank Offered Rates (Libor rates) and CIRRs, plus an appropriate risk-based spread, as minimum
interest rate benchmarks.
12. For developing country Members the provisions of this Article, other than those relating to
notification and transparency, shall enter into force at the beginning of the year following the end of
the developing country implementation period for export subsidy commitments:  provided that, with
respect to any product or group of products for which a developing country Member is listed as asignificant exporter in document G/AG/2/Add.1, these provisions shall become applicable with effect
from the entry into force of this Article;  and provided further that the provisions of  Article 9.4 of this
Agreement shall also apply to export financing.
Other matters
13. The provisions of Articles 3.1, 3.3, 8, 10.1 and 10.3 of this Agreement shall apply mutatis
mutandis to the commitments with respect to export financing under this Article.
14. [Annexes hereto comprise….]TN/AG/10
Page 29
Attachment 6
Article 10.4 of the Agreement on Agriculture
Draft for further consideration of a  possible replacement of paragraph 4 of Article 10 of the
Agreement on Agriculture
4. (a) Members recognize that international food aid and the commitments undertaken in
this regard under the Food Aid Convention play a critically important role in
alleviating hunger and in contributing to world food security, particularly in
responding to emergency food situations and to other food and nutrition needs ofdeveloping countries.  The following provisions are accordingly intended not to limit
the role of bona fide international food aid, but to ensure that such aid is not used as a
method of surplus disposal, nor as a means of achieving commercial advantages in
world export markets.
(b) Members donors of international food aid, whether provided in-kind or in the form of
financial grants to be used to purchase food for or by the recipient country, shall
ensure:
(i) that, in the case of food aid to meet or relieve emergency or critical food
needs arising from natural disasters, crop failures or humanitarian crises and
post-crisis situations, such aid is provided on the basis of pledges and
commitments to, or in response to appeals from, specialized United Nations
food aid agencies, other relevant regional or international intergovernmental
agencies, non-governmental humanitarian organizations and privatecharitable bodies, or in response to an urgent government-to-government
ministerial request for assistance in meeting  food needs in the immediate
aftermath of a natural disaster;
(ii) that food aid for other purposes, including under programmes and projects to
enhance nutritional standards amongst vulnerable groups in least-developed
and net food-importing developing countries, is provided exclusively in theform of untied financial grants to be used to purchase food for or by the
recipient country:  except that such food aid may be provided in-kind within
the framework of programmes and projects operated by specialized United
Nations food aid agencies, or through non-governmental humanitarian
organizations or private charitable bodies under agreements concluded with adonor Member; provided full details of the food aid to be provided under
such agreements are notified to the Committee on Agriculture by the Member
concerned.
(iii) that food aid is provided exclusively in fully grant form;(iv) that the provision of food aid is not tied directly or indirectly, formally or
informally, explicitly or implicitly, to commercial exports of agricultural
products or of other goods and services to recipient countries.
(c) Members shall ensure that their food aid transactions are carried out in accordance
with the procedures under the FAO "Principles of Surplus Disposal and Consultative
Obligations", including, where appropriate, the system of "Usual Marketing
Requirements".  Any Member may raise any matter relating to a donor Member'sTN/AG/10
Page 30
compliance with these principles and requirements under Article 18.6 of this
Agreement.
(d) Members which are recipients of food aid undertake not to re-export such food aid
otherwise than as may become appropriate as part of a food aid transaction initiatedby a specialized United Nations food aid agency.
(e) Members shall report on the form in which food aid is provided, as well as on the
products, amounts, destinations, channelling and other relevant terms and conditions
of their food aid operations, on the basis of a format and at intervals to be established
by the Committee on Agriculture.
(f) Food aid transactions which are not in  conformity with the provisions of
subparagraphs (b) and (c)  above and which cannot be accommodated within limits of
a Member's export subsidy reduction commitments shall be deemed for the purposes
of Article 10.1 of this Agreement to constitute non-commercial transactions which
circumvent that Member's export subsidy commitments.TN/AG/10
Page 31
Attachment 7
State Trading Export Enterprises
Draft for further consideration of possible additional provisions for inclusion
as a new Article 10.5 of the Agreement on Agriculture
5. (a) Members shall ensure that state trading export enterprises are operated in conformity
with the provisions of this Article and, subject to these provisions, in accordance with
Article XVII and other relevant provisions  of GATT 1994, this Agreement and other
WTO agreements.  For the purposes of this Article, state trading export enterprisesinclude any governmental or non-governmental enterprise, including a marketing
board, which has been granted or which enjoys de facto as a result of its
governmental or quasi-governmental status, exclusive or special rights, privileges or
advantages, including any statutory or constitutional powers, in the exercise of which
or by virtue of which such state trading export enterprises (hereinafter referred to as"governmental export enterprises") influence through their purchases and sales the
level, direction or prices of exports.
(b) Members shall ensure that governmental export enterprises are not operated in such a
way as to circumvent export subsidy commitments under this Agreement nor in sucha manner that would nullify or impair the conditions of competition in world export
markets that would prevail in the absence of such special rights, privileges or
advantages.  To this end Members undertake:
(i) to ensure that exports of a product by  a governmental export enterprise do not
take place at a price less than the price paid by such an enterprise to the
domestic producers of the product concerned;
(ii) not to restrict the right of any intere sted entity to export, or to purchase for
export, agricultural products;
(iii) not to grant special financing privileges, including government grants, loans,
loan guarantees, or underwriting of operational costs, to governmental export
enterprises that export for sale, directly or indirectly, a significant share of the
respective Member's total exports of an agricultural product.
(c) The provisions of subparagraph (b) above, other than (b)(i), shall not apply to
developing country Members.
(d) The provisions of subparagraph (b)(ii) above shall enter into force progressively on
the basis of a plan to be negotiated and specified in Part IV, Section V of the
Schedule of the Member concerned.
(e) Any Member which establishes or maintains a governmental export enterprise shall
notify relevant information on the operations of that enterprise in accordance with a
format and at intervals to be established by the Committee on Agriculture.TN/AG/10
Page 32
Attachment 8
Annex 2 of the Agreement on Agriculture
Possible amendments for further consideration (changes in italics)
1. Addition to paragraphs 5, 6, 11 and 13:
Reference to base periodsPayments shall be based on activities in a fixed and unchanging historical base period.  All
base periods shall be notified.
2. Modification of subparagraphs 7(a), (b) and (c):
Compensation criteria with respect to government  financial participation in income insurance
and income safety-net programmes.
(a) Eligibility for such payments shall be de termined by an income loss, taking into
account only income derived from agriculture, which exceeds 30 per cent of average
gross income or the equivalent in net income terms (excluding any payments from the
same or similar schemes) in the preceding five-year period or a three-year average
based on the preceding five-year period, excluding the highest and the lowest entry.
Any producer meeting this condition shall be eligible to receive the payments from
the government.
(b) The amount of such  payments by governments shall restore a producer’s income to
no more than 70 per cent of income derived by that producer from agriculture in the
averaging period used to trigger eligibility for payment.
(c) The amount of any such payments shall relate solely to income derived from
agriculture of the farm enterprise as a whole ;  it shall not relate to the type or volume
of production (including livestock units) undertaken by the producer;  or to the prices,
domestic or international, applying to such production;  or to the factors of productionemployed.
3. Modification of subparagraphs 8(a), (b) and (d):
Compensation criteria with respect to payments (made either directly or by way of
government financial participation in crop insurance schemes) for relief from natural
disasters.
(a) Eligibility for such payments shall arise:
- in the case of direct payments related to disasters:   only following a formal
recognition … excluding the highest and lowest entry.
- in the case of government financial participation in crop insurance schemes:
eligibility for such payments shall be determined by a production loss whichexceeds 30 per cent of the average of production in an actuarially
appropriate period.TN/AG/10
Page 33
- in the case of the destruction of animals or crops to control or prevent
diseases named in national legislation or international standards: the
production loss may be less than the 30 per cent of the average of production
referred to above.
(b) Payments made under paragraph 8  shall be applied only in respect of losses of
income, livestock (including payments in connection with the veterinary treatment of
animals), land or other production factors due to the natural disaster or destruction of
animals or crops  in question.
(d) Payments made under paragraph 8  shall not exceed the level required to prevent or
alleviate further loss as defined in criterion (b) above.
4. Addition at the end of subparagraph 10(d):
Structural adjustment assistance provided through resource retirement programmes
(d) Payments shall not … remaining in production.  Payments shall be time limited.
5. Addition at the end of subparagraph 11(a), modification of subparagraph 11(b), and inclusion
of new subparagraph 11(b) bis:
Structural adjustment assistance provided through investment aids
(a) Such structural disadvantages must be clearly defined.
(b) The amount of such payments in any given year shall not be related to, or based on,
the type or volume of production or inputs into the production (including livestock
units) …
(b bis) The amount of such payments in any given year shall not be related to, or based on,
the use of factors of production in any given year after the base period.
6. Modification of scope of paragraph 12:
Payments under environmental programmes /animal welfare payments
(a) Eligibility for such payments shall be determined as part of a clearly-defined
government environmental, conservation or animal welfare  programme and be
dependent on the fulfilment of specific conditions under the government programme,
including conditions related to production methods or inputs .
(b) The amount of payment shall be limited to the extra costs or loss of income involved
in complying with the government programme.TN/AG/10
Page 34
Attachment 9
Annex 2 of the Agreement on Agriculture
Possible new elements of special and differential treatment for further consideration
(changes in italics)
1. Inclusion of a new sentence at the end of paragraph 3:
Public stockholding for food security purposes
The volume and accumulation … product and quality in question.  Developing country
Members shall be exempted from the condition in paragraph 3 that the volume and
accumulation of food security stocks shall correspond to predetermined targets.
2. Inclusion of new paragraph 6 bis:
Payments to maintain domestic production capacity of staple crops for food security purposes
in developing countries
(a) Eligibility for such payments shall be determined by reference to clearly-defined
criteria in government programmes designed to provide support for the producers of
staple crops.
(b) Total production of the crop shall account for no less than [X] per cent of the total
value of agricultural production and:
- total consumption of such crop shall account for no less than [Y] per cent of
the total domestic consumption of agricu ltural products in terms of calorie
intake;  or
- total export of such crop shall account for no less than [Z] per cent of the
total export of a particular country.
(c) The amount of payment shall be limited to the minimum to maintain domestic
production capacity of such crop of the Member concerned.
3. Inclusion of new paragraph 6 ter:
Payments to small-scale producers/family farms for the purpose of maintaining rural viability
and cultural heritage in developing countries
(a) Eligibility for such payments shall be determined by reference to clearly defined
criteria in government programmes design ed to provide support for small-scale
producers/family farms.
(b) Small-scale producers/family farms shall be defined in national legislation, taking
into account such factors as total annual sa les, share of hired farm labour, off-farm
income, etc.
(c) The amount of such payment shall be limited to the minimum level for continued
existence of such farms based on the purpose of maintaining rural viability and
cultural heritage.
(d) The payment shall not mandate or in any way designate the agricultural products to
be produced by the recipients.TN/AG/10
Page 35
4. Modification of subparagraphs 7(a), (b) and (c):
Compensation criteria with respect to government financial participation in income insurance
and income safety-net programmes.
(a) Eligibility for such payments shall be de termined by an income loss, taking into
account only income derived from agriculture, which exceeds 30 per cent of averagegross income or the equivalent in net income terms (excluding any payments from the
same or similar schemes) in the preceding three-year period or a three-year average
based on the preceding five-year period, excluding the highest and the lowest entry,
or, in the case of developing country Members, a certain proportion of average gross
income or the equivalent in net income terms (excluding any payments from the same
or similar schemes) which shall be clearly defined in national legislation .  Any
producer meeting this condition shall be eligible to receive the payments.
(b) The amount of such payments shall compensate for less than 70 per cent of the
producer's income loss in the year the producer becomes eligible to receive this
assistance , or, in the case of developing country Members, shall compensate for less
than a certain proportion of the producer's income loss, which shall be clearly
defined in national legislation.
(c) The amount of any such payments shall relate solely to income derived from
agriculture of the farm enterprise as a whole ;  it shall not relate to the type or volume
of production … production employed.
5. Modification of subparagraph 8(a):
Payments (made either directly or by way of government financial participation in crop
insurance schemes) for relief from natural disasters
(a) Eligibility for such payments shall aris e only following formal … excluding the
highest and the lowest entry , or, in the case of developing country Members, [exceeds
10 per cent of the average of production in the preceding year ] [exceeds a proportion
to be determined in national legislation of the average of production in the precedingthree-year period ].
6. Modification of subparagraph 10(b):
Structural adjustment assistance provided through resource retirement programmes
(b) Payments shall be conditional upon the retirement of land from marketable
agricultural production for a minimum of three years, or, in the case of developing
country Members,  one year , and in the case of livestock … disposal.
7. Inclusion of new sentence at the end of subparagraph 13(a):
Payments under regional assistance programmes
(a) Eligibility for such payments …… temporary circumstances.  Developing country
Members shall be exempted from the condition that disadvantaged regions must
constitute a clearly designated contiguous geographical area with a definable
economic and administrative identity.TN/AG/10
Page 36
Attachment 10
Article 6.2 of the Agreement on Agriculture
Possible amendments for further consideration (changes in italics)
In accordance with the Mid-Term Review Agreement that government measures of assistance,
whether direct or indirect, to encourage agricultural and rural development are an integral part of the
development programmes of developing countries, and in accordance with paragraph 13 of the Doha
Ministerial Declaration the following measures  in developing country Members shall be exempt from
domestic support reduction commitments:
(i) investment subsidies which are generally available to agriculture
(ii) agricultural input subsidies generally available to low-income or resource-poor producers
(iii) domestic support to producers to encourage di versification from growing illicit narcotic crops
or those whose non-edible or non-drinkable products, being lawful, are recognized [by
WHO] as harmful for human health
(iv) subsidies for concessional loans through established credit institutions or for the
establishment of regional and community credit cooperatives
(v) transportation subsidies for agricultural products and farm inputs to remote areas(vi) on-farm employment subsidies for families of low-income and resource-poor producers(vii) government assistance for conservation measures
(viii) marketing support programmes and programmes aimed at compliance with quality and
sanitary and phytosanitary regulations
(ix) capacity building measures with the objective of enhancing the competitiveness and
marketing of low-income and resource-poor producers
(x) government assistance for the establishment and operation of agricultural cooperatives(xi) government assistance for risk management of agricultural producers and savings
instruments to reduce year-to-year variations in farm incomes
Domestic support meeting the criteria of this paragraph shall not be required to be included in a
Member's calculation of its Current Total AMS.TN/AG/10
Page 37
Annex 2
Possible Architecture of Developing Country Special Safeguard Mechanism (SSM):  Non-
Exhaustive Outline by Chairman of Matters for Further Technical Work
(version of 7 March 2003)
Agreement on Agriculture - Draft Article 5bis
General approach
1. Reservation in Schedules of the right to have recourse to price-triggered or quantity-triggered
Special Safeguard Measures in respect of certain products which meet certain conditions.  Such
products to be designated in the Schedule of the developing country concerned with the symbol
"SSM".
Scope of product coverage of SSM
2. Least-developed and net food-importing deve loping countries may designate up to [N]
products, in their primary or semi-processed form at the HS eight digit level (e.g., HS 1006 30 00,
"Semi-milled or wholly milled rice" ), provided that the following conditions are complied with ….
(to be developed).
3. Other developing countries may designate [N-n] products, in their primary or semi-processed
form at the HS eight digit level, provided that the following conditions are complied with …. (to be
developed).
General conditions relating to the application of SSMs
4. Special safeguard measures, whether price or quantity triggered, may not be applied in a
manner which results in import access opportunities being reduced below a level corresponding to
average annual imports in the period 1999 – 2001.
5. No special safeguard measures shall be applied to imports of designated products originating
in other developing countries.
6. SSMs may be applied concurrently with any countervailing or anti-dumping duties imposed
in accordance with the relevant WTO Agreements.  Such measures may not be applied in conjunction
with measures under the Agreement on Safeguar ds, nor with measures under Article 5 of the
Agreement on Agriculture.
Form of Special Import Measures
(a)  Price-triggered :  An additional duty not exceeding any positive difference between the
c.i.f. import price of a shipment expressed in terms of the domestic currency of the importing
developing country concerned, on the one hand, and, on the other hand, a corresponding
import reference price representing the monthly average import price of the product
concerned over a recent three year period excluding the three highest and three lowest
monthly averages. In the absence of relevant average import price data for a particularproduct, the import reference price may be constructed on the basis of published
representative export price quotations, provided that details of the prices and methodology
employed are notified in advance to the Committee on Agriculture.TN/AG/10
Page 38
(b)  Volume-triggered : An additional duty of not more than 30 per cent ad valorem  to be
imposable in any year on any quantity of imports in excess of 125 per cent of the average
volume of imports in the immediately preceding three year period. This additional duty shall
not be applied beyond the end of the year in which it has been imposed.
Transparency and notification requirements
7. (Appropriate and full notification requirements to be developed at the appropriate stage.)
Duration and review
8. (To be developed at the appropriate stage.)TN/AG/10
Page 39
Annex 3
Export Credits
Revised draft for further consideration of a possible new Article 9 bis or 10 bis of the Agreement of
Agriculture on Governmental Support for Export Financing (version of 21 March 2003)
General
1. Subject to the provisions of this Article, Members shall not, directly or indirectly, provide
support or enable support to be provided for or in connection with the financing of exports of
agricultural products, including the credit and other risks associated therewith, otherwise than on
market related terms and conditions.  [Each Member accordingly undertakes not to provide exportfinancing support otherwise than in conformity w ith this Article.]  [Each Member accordingly
undertakes not to provide export financing support ot herwise than in conformity with this Article and
with the commitments as specified in that Member's Schedule.]
Forms and providers of export financing support subject to discipline
2. Export financing support that is subject to the provisions of this Article includes:
(a) direct financing support, comprising direct credits/financing, refinancing, and interest
rate support;
(b) risk cover, comprising export credit insurance or reinsurance and export credit
guarantees;
(c) government-to-government credit agreements covering the imports of agricultural
products exclusively from the creditor country under which some or all of the risk is
undertaken by the government of the exporting country;
(d) any other form of governmental export credit support, direct or indirect, including
deferred invoicing and foreign exchange risk hedging.
3. The provisions of this Article shall apply to export financing support provided by or on behalf
of the following entities, whether such entities are established at the national or at the sub-national
level:
(a) government departments, agencies, or statutory bodies;
(b) any financial institution or entity engaged in export financing in which there is
governmental participation by way of equity, provision of loans or underwriting of
losses;
(c) any governmental or non-governmental enterprise, including a marketing board,
which has been granted or enjoys, exclusive or special rights, privileges or financing
advantages (such as the ability to borrow at the government cost of funds), or
statutory or constitutional powers, in the exercise of which, or by virtue of which,
support for or in connection with the financing of exports is provided;TN/AG/10
Page 40
(d) any bank or other private financial, credit insurance or guarantee institution which
acts on behalf of or at the direction of governments or their agencies.
Terms and conditions
4. Export financing support which is provided in conformity with th e following terms and
conditions shall be deemed to comply with paragraph 1 above:
(a) Maximum repayment term:  the maximum repayment term of a supported export
credit shall not exceed the period beginning at the starting point of credit and ending
on the contractual date of the final payment.  The "starting point of a credit" shall be
no later than the weighted mean date or actual date of the arrival of the goods in therecipient country for a contract under which shipments are made in any consecutive
six-month period.  The following maximum repayment terms shall be respected:
(i) for breeding livestock: [24] m onths for contracts up to and including
[$150,000];  and [36] months for contracts exceeding [$150,000];
(ii) for agricultural vegetable reproduction material:  [12] months;(iii) for all other products and destinations:  [six months/180 days].
(b) Cash payments:  if the repayment term is 180 days or more, a minimum cash payment
shall be required to be paid, by or on behalf of the importer, at or before the starting
point of the supported credit, representing not less than [ ] per cent of the total amount
of the contract/shipment value but excluding interest as defined in sub-paragraph (c)
below.  Financing support shall not be provided in respect of such cash payments,other than in the form of insurance or guarantees at market rates against pre-credit
risks.
(c) Payment of interest: "interest" excludes premiums and other charges for insuring or
guaranteeing supplier or financial credits, banking fees or commissions relating to the
export credit, and withholding taxes imposed by the importing country.  Interest shall
be payable.  Where the repayment term exceeds 180 days, interest shall be payablenot less frequently than every six months, with the first payment to be made no later
than six months after the starting point of the credit.
(d) Minimum interest rates:  the following mi nimum interest rates, not inclusive of and
separate from risk-premium reflective of, as the case may be, the buyer/commercial,country/political and sovereign credit risks covered shall be applicable in respect of
direct financing support and in respect of invoiced amounts benefitting from deferred
payment under an export contract:
(i) For repayment terms of up to 180 days – the applicable Libor (London
Interbank Offered Rates);
(ii) For repayment terms in excess of 180 days and less than two years – the
applicable Libor for floating rate based transactions  and one year Government
bonds/Treasuries  for fixed interest rate transactions;
(iii) For transactions with repayment terms of two years or more – the applicable
Libor for floating rate based transactions,  and the Commercial Interest Reference
Rates (CIRRS), as published by the OECD, for fixed interest rate transactions.TN/AG/10
Page 41
(e) Repayment of principal: where the repayment term exceeds 180 days, the principal
sum (transaction value minus cash payment) of an export credit shall be repayable not
less frequently than at six-monthly intervals, starting not later than six months after
the starting point of the credit.
(f) Premiums in respect of coverage of risks of non-repayment under direct financing
support, export credit insurance, reinsurance and export credit guarantees:  premiums
shall be charged, shall be risk-based and shall be adequate to cover long term
operating costs and losses.  Premium shall be expressed in percentages of the
outstanding principal value of the credit and shall be payable in full at the date of
issuance of cover.  Premium rebates shall not be accorded.  Furthermore, support in
the form of export credit insurance, reinsurance or guarantees shall not be provided inrespect of export financing contracts whose terms and conditions are not otherwise in
conformity with the provisions of this paragraph.
(g) Risk sharing [to be developed].
(h) Foreign exchange risk:  Export credits, export credit insurance, export credit
guarantees, and related financial support shall be provided in freely traded currencies.
Foreign exchange exposure deriving from credit that is repayable in the currency of
the importer shall be fully hedged, such that the market risk and credit risk of the
transaction to the supplier/lender/guarantor is not increased.  The cost of the hedgeshall be incorporated into and be in ad dition to the premium rate determined in
accordance with this paragraph.
(i) Period of validity of export financing offers:  credit terms and conditions (e.g.,
interest rates for direct financing support and all risk-based terms and conditions)offered for an individual export credit or line of credit shall not be fixed for a period
exceeding six months without payment of premium.
Non-conforming financing support
5. Export financing supports which do not conform with any of the relevant provisions of
paragraph 4 of this Article, hereinafter referred to as "non-conforming export financing", constitutesexport subsidies for the purposes of this Agreement and are subject to specific export financing
reduction commitments under this Article.
6. The commitments for each year of the implementation period, as specified in Part IV,
Section IV, of a Member's Schedule, represent with respect to non-conforming financing support:
(a) in the case of scheduled reduction commitments relating to the value of non-
conforming export financing support, the maximum level of such financing support in
value terms, that may be provided in that year in respect of the agricultural product,
or group of products concerned;
(b) in the case of scheduled quantity reduction commitments, the maximum quantity of
an agricultural product, or group of pr oducts, in respect of which non-conforming
export financing may be provided in that year;  and
(c) in the case of scheduled reduction commitments relating to non-conforming
repayment terms, the maximum non-conforming repayment terms that may be
supported in that year in respect of the agricultural product, or group of products
concerned.TN/AG/10
Page 42
Transparency and notification
7. No later than three months after the entry into force of this Article each Member shall submit
a notification concerning that Member's export financing programmes, export financing bodies and
other related matters in accordance with the format specified in Annex [  ] hereto.  This notificationshall be updated at the beginning of each subsequent year.  At not less than [  ] monthly intervals
Members shall submit a notification to the Committee on Agriculture in which details are provided of
export financing commitments entered into in acco rdance with the format specified in Annex [..]
hereto.  Least-developed country Members shall not be required to submit such notifications.  [Note:
the Annexes referred to in this paragraph to be developed at the appropriate stage.]
Special and differential treatment
8. Special and differential treatment in favour of importing developing country Members shall
comprise longer maximum repayments terms of up to [  ] months.
9. In respect of imports of basic foodstuffs least-developed countries and net food-importing
developing countries as listed in G/AG/5/Rev.5 sh all be accorded differential and more favourable
treatment comprising:
(a) Maximum repayment terms of up to [  ] months;
(b) an exemption from the requirement to make cash payments under paragraph 4(b)
above;
(c) an exemption from the requirement with respect to six-monthly interest payments
under paragraph 4(c) above;
(d) an exemption with regard to the requirement, under paragraph 4(e) above, to make a
principal repayment no later than six months after the starting point of the supported
export financing; and
(e) an exemption of any risk sharing requirement under paragraph 4(g) above.
10. More favourable terms for export financing support in respect of exports to developing
country Members experiencing emergency situations may be provided in accordance with this
paragraph.  An emergency is defined as a sudden, significant and unusual deterioration in a
developing country Member's economy and in its ability to finance current imports of basic
foodstuffs, and which may have far reaching consequences such as social deprivation or unrest.  In theevent of such an emergency the importing developing country Member concerned may request an
exporting Member to provide more favourable export financing terms than are permissible under this
Article.  The importing developing country Member concerned shall concurrently notify the
Committee on Agriculture in writing of the circumstances which are considered to justify more
favourable terms than are permitted under the relevant provisions of this Article, together with details
of the products concerned, so as to provide an opportunity for other interested exporting Members to
consider responding to the request.  The importing Member concerned shall allow a period of not less
than [  ] days following the date of circulation of its notification before accepting any offer with
respect to the provision of more favourable credit terms and conditions. Exporting Members
concerned shall consider the request for more favourable terms in accordance with the need to sustainthe viability of their export credits, export credit guarantees, or export credit insurance programmes.
Where commitments are made  to provide more favourable credit terms and conditions in response to
such a request, details of the committed terms and conditions shall be notified by the exporting
Member or Members concerned to the Committee on Agriculture, in accordance with the format
specified in Annex hereto [to be developed], not late r than [  ] days following the date on which theTN/AG/10
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commitment was entered into by the exporting Memb er concerned.  This treatment shall not extend
beyond the duration of the emergency. The maximum repayment term permitted under this exception
shall not exceed [  ].
11. Developing country Members providing direct  export financing support may use the interest
rates referred to in paragraph 4(d) above, plus appropriate risk-based spreads, as minimum interest
rate benchmarks for direct financing support.
12. For developing country Members the provisions of this Article, other than those relating to
notification and transparency, shall enter into force at the beginning of the year following the end of
the developing country implementation period for export subsidy commitments:  provided that, with
respect to any product or group of products for which a developing country Member is listed as asignificant exporter in document G/AG/2/Add.1, these provisions shall become applicable with effect
from the entry into force of this Article;  and provided further that the provisions of  Article 9.4 of this
Agreement shall also apply to export financing.
Other Matters
13. The provisions of Articles 3.1, 3.3, 8, 10.1 and 10.3 of this Agreement shall apply mutatis
mutandis to the commitments with respect to export financing under this Article.
14. [Annexes hereto – to be developed.]
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