RESTRICTEDWORLD TRADE
ORGANIZATIONG/AG/8
27 April 2001
(01-2129)
Committee on Agriculture
IMPLEMENTATION OF ARTICLE 10.2 OF  THE AGREEMENT ON AGRICULTURE
Progress Report by the Vice-Chairman, Minister Yoichi Suzuki, to the General Council
1. At its meeting on 18 October 2000, the Special Session of the General Council referred to the
relevant subsidiary bodies, including the Committee on Agriculture, a number of implementation
related issues which had been identified in the report presented by the Director-General and theChairman of the General Council on their consultations on implementation issues and concerns as
being appropriate for such action.
2. In the case of the Committee on Agriculture the relevant part of this report, which constitutes
the Committee's mandate in this matter, is as follows:
"On tiret 6, regarding the development of intern ationally agreed disciplines to govern the
provision of export credits, export credit guarantees or insurance programmes pursuant to
Article 10.2 of the Agreement, I propose, on the basis of our discussions, that the General
Council instruct the Committee on Agriculture to include in the agenda of its regular meetings
an item on the implementation of Article 10.2 and to report back on the Committee's progress
on this issue to the General Council at its last regular meeting of this year.
It is my understanding that in pursuing their work on export credits in accordance with
Article 10.2, Members will of course take into account the provisions of paragraph 4 of the
Marrakesh Decision on net food-importing countries, in which Ministers agreed that any
agreement on export credits should ensure appropriate provision for differential treatment in
favour of least-developed and net food-importing developing countries."
3. In accordance with the foregoing mandate, the question of the implementation of Article 10.2
of the Agreement on Agriculture, including with respect to the provisions of paragraph 4 of theMarrakesh Ministerial NFIDC Decision, was the subject of a second round of discussions at the
regular meeting of the Committee held on 29-30 March 2001.  (The Committee's first round of
discussions on this implementation matter was the subject of a report to the General Council and its
last regular meeting in 2000: G/AG/6 refers.)
4. A detailed summary of this second round of discussions in the Committee on the
implementation of Article 10.2 of the Agreement and on the provisions of paragraph 4 of the
Marrakesh Ministerial NFIDC Decision, is attached he reto as Annex I.  The text of the negotiating
proposal, "Export Credits For Agricultural Products", which was submitted to the Committee by
MERCOSUR (Argentina, Brazil, Paraguay and Uruguay), Bolivia, Chile, Costa Rica, Guatemala,
India and Malaysia (G/AG/W/50), is attached as Annex II.  (This proposal was also submitted to theSpecial Session negotiations:  G/AG/NG/W/139 refers.)
5. Overall, it was considered that the Committee's further round of discussions on this subject at
the 29-30 March meeting of the Committee had been useful, including with regard to theG/AG/8
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implementation and negotiation aspects of a number of the issues involved.  In this general context it
may be noted that, on 11 April 2001, a further meeting was held in the negotiations within the OECD
on a sector understanding on agricultural export credits and that further efforts are expected to be
made amongst the participants concerned to conclude these negotiations by the OECD Ministerial
meeting in mid-May.
6. The question of the implementation of Article 10.2 and of the related provisions of the
Marrakesh Ministerial Decision will be on the agenda of the next regular meetings of the Committee,
which is to be held on 28-29 June 2001.
7. As agreed by the Committee on Agriculture at its meeting on 29-30 March 2001, this report is
submitted to the General Council on my responsibility as Vice-Chairman of the Committee.G/AG/8
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Annex I
Implementation of Article 10.2 of the Agreement on Agriculture and the related provisions of
the Marrakesh Ministerial NFIDC Decision:  Summa ry of the discussion at the meeting of the
Committee on Agriculture on 29 March 2001
1. Brazil, in introducing the negotiating proposal on export credits for agricultural products
presented by MERCOSUR (Argentina, Brazil, Paraguay and Uruguay), Bolivia, Chile, Costa Rica,
Guatemala, India and Malaysia (G/AG/NG/W/139 - G/ AG/W/50 re fers), recalled that in October last
year the General Council had, in the context of its implementation exercise, mandated the Committee
on Agriculture to implement Article 10.2 of the Agreement on Agriculture.  A first exchange of viewson this issue was undertaken at the November 2000 meeting of the Committee on Agriculture.  On
this occasion, Brazil presented a paper which set out, for the information of Members of the
Committee and as a contribution to transparency in this area, a MERCOSUR proposal which had been
circulated in the FTAA negotiations (G/AG/W/47 refers).  The Committee was also provided with
some information by the OECD observer representative at the November meeting.  At the Novembermeeting of the Committee Brazil had invited the WTO Members participating in the OECD
agricultural export credit negotiations to come forward and provide other WTO Members with more
information, more substantive information, but none had been forthcoming.  Brazil considered that
this was all the more legitimate because developments in the OECD were independent from the WTO
and agreements and the arrangements being concluded in OECD had no bearing in this Organization.WTO Members should therefore move forward and mind their own business here in the WTO.
2. Against this background it was decided by Brazil and the other Members sponsoring this
proposal to present it at this regular meeting of the Committee, as well as in the Special Session in the
mandated negotiations.  The objective of tabling this proposal here was to start the negotiations in the
Committee on Agriculture, which is the legitimate forum to implement Article 10.2. Brazil explainedthat the proposal had a very pragmatic dimension and tried to go straight to the heart of the matter.
The proposal outlined a list of elements, a check-list of elements that should be contemplated in an
agreement on a set of disciplines on export credits, including provisions for transparency
requirements.  A chapter is contemplated on special and differential treatment and it was also
proposed to have provisions in line with the decision on Marrakesh Ministerial NFIDC Decision.
Accordingly, the idea behind the proposal was to contribute to the negotiations in the Committee on
Agriculture and other Members were, on this basis, invited to comment and contribute in order tomove this process forward.
3. Chile highlighted two points:  firstly, that the implementation of Article 10.2 was an issue
which should be handled within WTO and that the Committee on Agriculture was an appropriate
platform for discussion of this type of issue;  and secondly, that the proposal was a proposal made by
developing countries which Chile considered provided a clear indication to this Organization asregards the views of the sponsoring countries on the issue of implementation of Article 10.2.
4. Costa Rica stated that it would like to underscore the importance which it attached to the
discussion of this issue within the framework of WTO in relation to the work of the Committee on
Agriculture.  Costa Rica had always drawn attention to the need to deal with all issues which relate to
export subsidies in the Committee.  The question of export credits was an issue which has beenpending since the Uruguay Round.  There was a clear mandate for Members to take action in
Article 10.2 and this had been further confirmed by the decision taken by the General Council.
Costa Rica very much hoped that there will be very rapid initiation of discussion of this proposal
within the context of the Committee on Agriculture.G/AG/8
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5. Paraguay, associating itself with the preceding speakers, considered that the WTO was the
most appropriate organization for dealing in detail with this subject, as well as with the interests
involved.  It was for this reason that the decision was taken by the General Council that this matter
should be analysed within the Committee on Agriculture.
6. Malaysia, speaking as well on behalf of the Philippines on this matter, flagged the point that
the issue was one of importance which both Malaysia and the Philippines would like to have
discussed as an implementation issue in the Committee on Agriculture, as mandated by the recent
General Council decision.  Other WTO colleagues were accordingly urged to join Malaysia and the
other co-sponsors in submitting proposals based on the elements which were outlined in the detailed
proposal now before the Committee.
7. The EC observed that this issue was an issue on implementation and noted that Article 10.2
had not been implemented.  This was all the more regrettable because the six-year implementation
period had expired.  Now, there was another question, which was the ongoing Article 20 Negotiations
on Agriculture.  While it was recognized that the paper presented by Brazil and supported and
presented by other countries was a very good paper, it was the view of the EC that there should be a
distinction between an implementation discussion and a negotiating discussion.  Implementation
should be the first step in the direction of moving export credits towards commercial practice.  But thesituation that we have today, and this has to be recognised, is that the issue of subsidized export
credits is on the table of the Article 20 negotiations.  The EC have presented ideas in that respect.
Other countries have put the matter forward as well.  In addition to that, export credits is an issue
which we all agreed to discuss during the first 2 or 3 meetings of the Special Session.  So, as a matter
of fact, the EC believe that to a very large extent, the centre of gravity of discussion has moved nowto the negotiation and to the Special Session.
8. Hungary stated that it had been concerned for several years about the lack of implementation
of Article 10.2 of the Agreement on Agriculture.  This had resulted in unequal treatment of various
but equally or similarly distorting forms of export assistance.  Hungary considered that the proposal
submitted jointly by a number of countries led by MERCOSUR was a constructive attempt to addressthe immediate unfinished business.  Hungary welcomed the proposal and looked forward to
discussing this issue in the Special Sessions of the Agriculture Committee.
9. India stated that, while it fully associated itself with the presentation made by Brazil, it wished
to reiterate that the matter was an implementation issue which India would like to see addressed as a
part of the special process set up by the General Council to address the implementation issues.  This
subject was also on the table under Article 20 negotiations but this did not preclude this Committee
from discussing this issue.
10. Guatemala highlighted the importance which Guatemala attaches to this issue, which it
considered should be dealt with within the purview of the WTO and within the Committee on
Agriculture.
11. Canada thanked the proponents for putting forward this proposal. Canada had also called for
disciplines on export credit programmes and it shared the objective that agricultural export credits,
credit guarantee and insurance programmes should be brought under effective international disciplines
and that any export subsidies provided through export credit programmes should be eliminated.  The
undertaking to work towards the development of internationally-agreed disciplines to govern these
programmes was an outstanding commitment from the Uruguay Round of negotiations.  As a first
step to meeting this commitment Canada had en gaged in negotiations in the OECD towards an
understanding that would contain disciplines on practices of the participating OECD members.
Regrettably the negotiations at the OECD were not yet concluded, although the number of outstanding
issues left to resolve was small.  While Canada re mained ready to participate in negotiations in theG/AG/8
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interest of resolving these issues it had not been possible to bring them to conclusion.  Canada remain
hopeful that OECD participants would be in a positi on to resume their negotiations in the near future
and that these negotiations will result in a consensus on an understanding.  If the negotiations are
successful, this would be an important first step  towards meeting the commitment in Article 10.2 of
the Uruguay Round Agreement on Agriculture.  Nonetheless, Canada fully recognized that it will befor all Members to decide on internationally-agr eed disciplines for the purposes of the commitment in
Article 10.2.  The proposal submitted today identified a number of elements to be considered in the
development of disciplines on export credit programmes.  This list was a good starting-point as a
checklist of the elements that will need to be considered.
12. Mexico thanked the sponsoring Members for having put forward the proposal and pointed out
that Mexico's proposal in the Special Session negotiations also addressed this issue.  Mexico's interest
was in seeking immediate compliance with the provisions of Article 10.2 in the context of these WTOnegotiations.  This issue could be looked at in the context of implementation at the regular meeting of
the Committee, and the Mercosur proposal would be welcome, particularly if this helped to find a
solution to the problem.  However, Mexico would need more time before it was in a position to
comment on the substance of the proposal.
13. Argentina stated that it considered the Committee on Agriculture to be the appropriate forum
to discuss implementation-related matters, including those under Article 10.2.  Argentina believed that
there was a distinction to be made between the discussions held at the regular meeting of the
Committee on a pending implementation-related matter such as Article 10.2, on the one hand, and on
the other, the issue of dealing with issues in the Special Session negotiations under Article 20.
Article 10.2 calls on Members to develop disciplines to govern the provision of export credits, exportcredit guarantees or insurance programmes.  The whole purpose of Article 10.2 was not to aim at the
elimination of the subsidy element in credits, but ra ther to ensure the drawing up of disciplines which
would ensure that the countries which use export credits do not use them in such a way as they can
circumvent the commitments that they entered into at the end of the Uruguay Round in relation to
export subsidies as a whole.  As the jointly sponsored proposal says export credits fall under the rulesof Article 10.1.  The problem is, therefore, to draw up disciplines which avoid the use of export
credits to circumvent the substantive commitments on export subsidisation under the Agreement on
Agriculture.  In the Special Session negotiations what is being sought is not the drawing up of
disciplines but rather the elimination of all forms of  export subsidy, be they subsidies which relate to
prices or which relate to the forms or the terms of payments.  So these are two very distinct matters,
but totally complementary.  Article 10.2 should have been the first step, which unfortunately was
never taken.  This is why the matter is still a pe nding implementation issue.  The negotiations under
Article 20 have their own merits and what we are looking for is something more ambitious than mere
disciplines.
14. Australia agreed that WTO disciplines on the provision of agricultural export credits needed
to be strengthened.  Australia's position on this issue was reflected in the Cairns Group's proposal on
export competition.  Australia also welcomed the proposal by Mercosur and other countries on exportcredits and was looking forward to studying this closely in Phase Two of the Special Session
negotiations.  However, like Canada, Australia would like to note that time had not run out for
concluding an understanding on agricultural export credits in the OECD.  If this were successful,
Australia would hope that the outcome would be accepted as a basis for developing disciplines in the
WTO in order to give effect to Article 10.2.  In this context it was encouraging that the proposal madeby Mercosur and others included the elements identified in the OECD work on this issue.
15. New Zealand considered that all forms of export subsidies for all agricultural products should
be eliminated and prohibited.  The current lack of implementation of Article 10.2 of the Agreement of
Agriculture was a matter for concern.  As part of the elimination of export subsidies, additional and
strengthened rules and disciplines will be vital in preventing countries circumventing what isG/AG/8
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eventually agreed.  Thus, New Zealand welcomed and fully supported the proposal submitted jointly
by Mercosur and others.  New Zealand stood ready to work constructively towards addressing this
issue of unfinished business in an implementation context as directed by the General Council.  At the
same time New Zealand stood ready to work and engage constructively in:  (i) pursuing this issue in
the parallel track of the mandated negotiations on agriculture, in the first two to three meetings inPhase Two;  and (ii) attempting to bring to a successful conclusion the separate discussions on
disciplines in the OECD context.
16. Uruguay endorsed the relevance of the qualitative distinction which had been flagged by
Argentina between the process under Article 10.2 and the exercise carried out under Article 20.  The
first referred to disciplines, the second to the elimination of all forms of export subsidies.  The
Committee had been given a mandate by the General Council to carry out a given task.  It was
therefore incumbent on the Committee to look at this issue in substance, in detail, and on the basis ofthe proposals put forward.  It was true that the mandated negotiations were also considering this
matter, but given the burden of work involved in the negotiating process as a whole and other
constraints, discussion on a preliminary basis in the Committee on Agriculture would in fact
constitute a contribution to the mandated negotiations.  The possible success of the negotiations in this
area in the OECD did not automatically mean that the issue would thereby have been solved here.
Nevertheless, if the OECD negotiations were to succeed that would no doubt serve as a good
contribution to the whole exercise in the multilateral process of the WTO.
17. The United States expressed its appreciation for the export credit proposal by Mercosur,
Bolivia, Chile, Costa Rica, Guatemala, India, Malaysia, and the Philippines.  As others had pointed
out the proposal noted that despite the commitment of WTO Members through Article 10.2,disciplines on the use of agricultural export credits, export credit guarantees and export insurance
programmes, had not yet been implemented.  There had been an intensive effort underway at the
OECD to develop these disciplines.  The United States remained hopeful that this effort would be
successful and that the appropriate disciplines on export credit practices will result.  A successful
outcome of these negotiations was in the best interests of all WTO Members. Regarding the Specialand Differential Treatment noted in the proposal, the United States has also in the OECD negotiations
made a concerted effort to ensure that the export credit agreement reflect the relevant provisions of
the Marrakesh Decisions on LDCs and NFIDCs.  Th e United States looked forward to further
discussions on this important issue at the next scheduled meeting at the OECD in April.  Regarding
the fact that much had been said about negotiating th is subject in this and other fora, the United States
noted that the progress that has been made in the current negotiations had taken six years and
suggested that maximum effort be made to capture that progress and to successfully conclude thesetalks at the OECD.
18. Malaysia, in response to the United States co mments, reiterated the point that even if an
agreement were to be negotiated in the OECD, it had to be brought back to the WTO and to be tabled
in the WTO and to be open for negotiations.  It cannot otherwise be said that the mandate of
Article 10.2 has been fulfilled.  For Malaysia, whatever may be discussed in the OECD, and it was tobe hoped that there would be a successful outcome, it had to be brought to the WTO and be open for
discussions and for negotiations by the body politic in the WTO as a whole.  If there is acceptance by
all of us here, then it can be considered as having fulfilled the mandate of Article 10.2.  At the same
time, nothing should prevent the Committee from taking up this issue while discussion is going on in
the OECD. Nor as Argentina had said was there an y disadvantage in having a two-track approach
with complementary/different objectives: one in the Special Session negotiations under Article 20 and
one in the Committee on Agriculture.  Malaysia accordingly urged all Members to join with the
proponents of the proposal and get on with the discussion, rather than talking about whether it should
be in this forum or that forum.G/AG/8
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19. With regard to the observation made by the EC that the centre of gravity of discussions on this
subject had now moved to the Special Session ne gotiations, Brazil concurred in the views on this
matter as expressed by India, by Malaysia, by Ar gentina, and Uruguay and agreed with the Canadian
comments regarding the unfinished business that  was for discussion in the Committee on Agriculture.
From the point of view of Brazil an agreement in OECD should be completed as soon as possible andbrought to the WTO to be discussed and negotiated and to receive the input of all of Members in the
WTO.  Brazil expressed the hope that at the next Committee on Agriculture in June it would be
possible to move ahead and discuss the substance of the proposal in G/AG/W/50, as well as any
proposal of the OECD members.
20. In his concluding remarks the Vice-Chairman noted that the issue of disciplines on export
credit practices was a standing item on the agenda of the Committee as agreed at the Committee's
previous meeting.  The subject would therefore remain on the agenda of the Committee.  Secondly,there was agreement that something needs to be done on the issue of disciplines on export credits
practices but there were differing views about the most appropriate place to take the matter up.  Some
suggested that it could be more effectively dealt wi th within the context of the negotiations.  Others
think that it should be pursued as part of the impl ementation issue in this Committee.  In the view of
the Vice-Chairman and as mentioned by several delegations, there may be implementation aspects tothis issue which are relevant in terms of Article 10.2, as well as negotiating aspects which perhaps go
further and which have a different content.  This distinction and what in concrete terms is meant by
implementation of Article 10.2 may need to be further explored.  In this regard the proposal which is
now on the table and which was put forward by a group of countries, could provide Members with a
useful check-list.  As regards the ongoing work in OECD and the prospects of it coming to successfulconclusion in the near future, the Vice-Chairman noted that, while such an outcome would make a
useful input to work in the Committee, it was for the WTO Members to negotiate the disciplines and
not a question of something having to be accepted which had been discussed outside the WTO.  The
Vice-Chairman invited Members to consider these matters further, taking into account the useful list
of elements that was provided for in G/AG/W/50, and to continue to reflect on these matters inadvance of the further discussion on the implementation of Article 10.2 at the next meeting of the
Committee in June.
21. As regards reporting to the General Council, it was noted that the Vice-Chairman would be
submitting a further progress report on the Committee's discussions on implementation of Article 10.2
in time for the meeting of the General Council to be held in early May.G/AG/8
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Annex II
EXPORT CREDITS FOR AGRICULTURAL PRODUCTS
Proposal by MERCOSUR (Argentina, Brazil, Paraguay and Uruguay),
Bolivia, Chile, Costa Rica, Guatemala, India and Malaysia11
(G/AG/NG/W/139* – G/AG/W/50, dated
21 March 2001, refers)
Background:
During the Uruguay Round, Members undertook, under the Agreement on Agriculture, to
"work toward the development of internationally agr eed disciplines to govern the provision of export
credits, export credit guarantees or insurance programmes and, after agreement on such disciplines, to
provide export credits, export credit guarantees or insurance programmes only in conformitytherewith" .
This set of disciplines has not yet been developed in the WTO, which is the appropriate forum
for the negotiation of the "internationally agreed disciplines" on export credits.  Thus, Article 10.2 of
the Agreement on Agriculture remains unimplemented.
The lack of disciplines to govern the granting of export credits to agricultural products is,
therefore, an outstanding issue, which requires pr iority in the WTO in order to prevent its use to
circumvent export subsidy commitments.
According to Article 10.1 of the Agreement on Agriculture, export subsidies other than those
listed in paragraph 1 of Article 9 (e.g. export credits, export credit guarantees or insurance
programmes) "shall not be applied in a manner which results in, or which threatens to lead to,
circumvention of export subsidy commitments".
Consequently, whilst export credits, export credit guarantees or insurance programmes are
covered by the general rules and disciplines (i.e. Articles 3.3, 8, 9 and 10.1) applicable to exportsubsidies, we need to develop the specific disciplines called for in Article 10.2.
Accordingly it is proposed that a set of discipline s to govern these practices be negotiated and
agreed in the WTO, so that all interested parties to this negotiation (users, recipients and potentially
affected countries) have the opportunity to make their views known and taken into consideration in
this exercise.
Objective:
Agricultural export credits, export credit guarantees and export insurance programmes must
be brought under specific multilateral discipline under the WTO with a view to ending government
subsidization of such credits, taking into account the needs of developing countries.  In addition, a
clear approach is required to prevent circumvention of export subsidy commitments.
                                                     
*This document cancels and replaces document G/AG/NG/W/139-G/AG/W/50,  dated 20 March 2001,
in English only.
11 Please note that this proposal will also be tabled in the Committee on Agriculture in the context of
the item regarding the implementation of Article 10.2 of the Agreement on Agriculture.G/AG/8
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Proposal:
Consistent with the objective of the reform process concerning reductions in support and
protection, it is proposed that WTO members negotiate and agree on a specific set of disciplines to
govern the provision of export credits, export credit guarantees and export insurance programmes.
As we negotiate and agree on these disciplines in the WTO, the following issues, inter alia ,
should be addressed:
(a) a definition of "officially supported export credit";(b) identification and listing of the variety of forms of officially supported export credit
operations;
(c) identification and listing of types of institutions and programmes to be covered by such
disciplines;
(d) terms and conditions for use of such credits which include, but are not limited to:
• source of the funds employed in the operation;
• maximum repayment term
• starting point of the credit
• repayment of principal;
• payment of interest;
• cash payments;
• sharing of risk;
• minimum interest rates;
• validity period for export credits
• minimum premium.
(e) notification requirements of all officially supported export credit transactions that exceed 180
days.  The notifications shall provide the following information on an aggregated basis by programme
or institution:
• products concerned (volume and amount of credit);
• countries of destination;
• terms and conditions of the transaction as specified in letter (d).
Export credits, export credit guarantees and export insurance programmes given by private financial
institutions are not required to be notified on a regular basis, provided that, upon request, the relevant
information mentioned in letters (d) and (e) be granted.
Special and Differential Treatment
(a) Appropriate minimum interest rates, inter alia , shall be established  to address the interests of
exporting developing countries;
(b) In recognition of the "Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Fo od-Importing Developing Countries", adopted in
Marrakech, the disciplines to be adopted must include appropriate provisions for differential treatment
in favour of least-developed and net food-importing developing countries.  These provisions shouldG/AG/8
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include longer repayment periods and should be consistent with the exemptions already provided in
the Agreement on Agriculture for developing countries and with the modifications resulting from the
negotiations to the general rules and disciplines applicable to export subsidies.
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