WORLD TRADE
ORGANIZATIONG/AG/NG/W/58
14 November 2000
(00-4844)
Committee on Agriculture
Special SessionOriginal:  English
PROPOSAL FOR TARIFF RATE QUOTA REFORM
Submission from the United States
The United States believes continued successful agricultural trade reform rests upon the
willingness of members to provide non-discriminatory market access opportunities in conjunction
with the reduction of trade distorting support, as presented in the U.S. proposal for comprehensive
long term agricultural reform, G/AG/NG/W/15 of  23 June 2000.  To achieve that goal, the United
States further believes that in the next round of agricultural trade negotiations members need to reach
an agreement that expands market access opportunities - including through tariff cuts and quotaexpansion - and protects against measures that would circumvent commitments by imposing
unjustifiably burdensome requirements on importers and exporters.
During the Uruguay Round, members agreed to a tariff rate quota (TRQ) system as the most
appropriate method to ensure market access during the transition from an agricultural trading systemof complex tariffs and non-tariff barriers to a tariff-only regime.   As part of attaining the United
States’ objectives to reduce trade distortions a nd limit protection, identified in G/AG/NG/W/15, the
United States proposes further reform of TRQs as integral to further agricultural trade reform.
During implementation of the Uruguay Round Agreement on Agriculture, the majority of
members' TRQs have operated effectively.  The most recent WTO assessment reports that over half of
the TRQ’s have filled to eighty percent of their capacity.  However, the United States believes certainadministrative practices have hampered the performance of some TRQs, accounting for the lower
rates at which they have filled - their fill rate - and likewise diminishing the market access they were
designed to afford.
An effective TRQ system should only restrict trade to the extent it limits the quantity of goods
allowed access to a market at the low in-quota duty rate.  However, poor administration of TRQs and
high in-quota duties have prevented exporters from filling TRQs.  In other instances, exporters have
not been able to meet fully market demands because members have administered their TRQs in a
manner that has restricted products or suppliers, or both, or has raised the price of imports.
Therefore, the United States believes that in the next phase of liberalization, members should
agree to improvements to the TRQ system, based on a four-pronged approach to promote effective
market access for suppliers and to enable them to reflect more accurately market demands.  These
improvements, based on the principles identified in G/AG/NG/W/15, along with reforms in export
competition and trade-distorting domestic support, will  contribute to a more fair and market-oriented
agricultural trading system.
• First, the United States proposes that members agree to develop additional disciplines for
TRQs that ensure that TRQ administration does not become a barrier to trade.
• Second, the United States proposes that members agree to reduce in-quota duties based on the
historical performance of TRQ fill rates - the lower the fill rate, the deeper the cut.G/AG/NG/W/58
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• Third, as stated in the U.S. comprehensive proposal, the United States proposes that members
cut tariffs using an approach that reduces disparities across countries and progressively
increase TRQ quantities.
• Fourth, the United States proposes that members agree to an automatic trigger mechanism to
reduce in-quota duties when TRQ fill is low.
I. Improvement of General Disciplines for TRQ Administration
Several WTO agreements, including the Agreement on Import Licensing Procedures, as well
as Articles X and XIII of the GATT, include disciplines applicable to TRQ administration.  These
disciplines have helped guide members in establishing TRQs, and in some cases helped resolve
disputes over market access restrictions.  The United States believes that if members elaborate uponthese disciplines, they will make agricultural TRQs more effective, thus minimizing the distortions,
reducing trade barriers, and reducing the need for members to resort to the dispute settlement process.
The United States proposes that the improved disciplines be based on the following principles:
- Transparency:  The United States proposes to clarify and expand the Agreement on Import
Licensing Procedures guidance on transparency and GATT’s Article X guidance on timely
and effective communication , to inform members of acceptable methods of disciplining TRQ
administration.  For example, disciplines developed for agricultural TRQs could require
members to publish and otherwise make widely publicly available quota allocation dates,
license validity periods, standard communication mediums, and procedures for changes in thequota system.  Improved transparency will allow potential importers and exporters ready
access to timely and relevant information regarding quotas so they can respond most
effectively to market demand and take advantage of the TRQ in a non-discriminatory manner.
- Non-Restrictiveness:  The Analysis and Information Exchange process and the Committee on
Agriculture have documented administrative practices that restrict the extent to which
exporters fill TRQs or limit access to a narrow portion of the market demand.  To remedy
these restrictions, the United States proposes that members agree to new disciplines based on
the provisions of the WTO Agreement on Import Licensing Procedures and relevant GATT
Articles to ensure that imports are not limited to unprocessed bulk commodities to the
disadvantage of processed products; to prevent end use specifications that limit imports; to
prevent mixing requirements or other domestic purchase criteria; to correct distortionsresulting from the distribution of licenses through domestic producer groups and license
matching schemes; to prevent restrictive re-export requirements; and to assure the allocation
of commercially viable quantities.  The goal of these new disciplines is to ensure that
administration of TRQs does not restrict trade, thus providing to members the opportunity to
fill TRQs with products that best reflect consumer demand.
- Reallocation : Many TRQ administrative practices, particularly the use of import licenses, do
not permit sufficient reallocation to allow exporters to fill TRQs.  The United States proposes
that members develop new disciplines on license reallocation, such as requirements that
licensees surrender  unused licenses if they cannot arrange shipments within specified timeperiods. Members would reallocate, in a timely fashion, unused licenses to provide sufficient
commercially viable opportunities for other importers, including new entrants.
II. Market Access through Reduction of In-Quota Tariffs and Expansion of TRQ Amounts
The United States proposes that members commit themselves to continuing the reform
process initiated in the Uruguay Round by progressively moving members to true tariff-only regimes
by taking the next step towards the eventual phase-out of transitional TRQs.  Consistent with the
objective of reducing and eliminating disparities in tariff levels as identified in the U.S.G/AG/NG/W/58
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comprehensive proposal G/AG/NG/W/ 15, while taking into account the particular interest of
improving access for developing countries that have had little or no access to markets under existing
TRQ arrangements, the United States proposes that members agree:
- to establish in-quota duties based on historical quota fill, so that the lower the historical TRQ
fill, the greater the reduction in the in-quota duty;
- to provide increases in TRQ quantities on a Most Favored Nation basis to ensure broad
availability of market access opportunities to all members;
- to increase substantially TRQ quantities; and
- to reduce substantially out-of-quota duties.
III. Quantitative Trigger Mechanism Based on Quota Fill Rates
The United States believes members should commit themselves to improve the effectiveness
of TRQ market access by reducing in-quota duties when fill rates are low so that if a member's TRQ
does not achieve a fixed percentage fill rate after a specified period of time, that member would lower
the in-quota rate to provide improved access.
IV. Conclusion
The objective of market access reform in the next round of multilateral trade negotiations is to
reduce barriers to trade in agricultural products.  TRQs serve an important interim function as
members increase access to their markets while phasing out tariff barriers.  The United States believesthat these negotiations will succeed to the extent they produce substantial immediate improvement in
market access opportunities and ensure members adhere to commitments made in these and previous
negotiations by disciplining unjustifiably burdensome import requirements.
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