RESTRICTEDWORLD TRADE
ORGANIZATIONTN/AG/R/9
25 August 2003
(03-4428)
Committee on Agriculture
Special Session
SUMMARY REPORT ON THE NINETEENTH MEETING
OF THE COMMITTEE ON AGRICULTURE SPECIAL SESSION
HELD ON 1 JULY 2003
Note by the Secretariat1
1. As agreed by the Trade Negotiations Committee (TN/C/M/1) the Special Session of the
Committee on Agriculture, which was established by the General Council (WT/GC/M/53), is
pursuing negotiations under paragraphs 13, 14 and other relevant provisions of the Doha Ministerial
Declaration.  It held its nineteenth meeting on 1 July 2003.  Mr. Stuart Harbinson chaired the meeting.
2. The agenda as contained in WTO/AIR/2121 was adopted.
ITEM A(i):  R EPORT BY THE CHAIRMAN
3. The Chairman presented his summary report of the main features of the discussions at the
informal Special Session held on 26 June and of the informal consultations held since 31 March 2003
which took place on the basis of a revision of the First Draft of Modalities for the Further
Commitments issued on 18 March 2003 (TN/AG/W/1/Rev.1, thereafter the Revised First Draft).  Acopy of the report is attached (Annex 1).
I
TEM A(ii):  S TATEMENTS BY MEMBERS
4. The representative of Indonesia noted its support and encouragement for the Chairman to
continue on the path he had taken in the agriculture negotiations.  At the current stage of the
negotiations, Indonesia, supported by Kenya, Peru and Venezuela, was particularly concerned at the
continuing inconsistency in the positions of so me net agricultural exporters compared to the
negotiating mandate given by Ministers in Doha.  These exporting countries emphasized the need tokeep to the mandate on market access, export subsidies, and domestic support, but ignored the part of
the mandate calling for special and differential treatm ent to be an integral part of the modalities to
address the issues of food security and rural development.  Indonesia viewed the mandate as a
package and, in that connection, the concept of SP products was an integral part of the draft
modalities.  Rejection of the SP products concept by some members would in effect fail to fulfill theDoha mandate in agriculture and make it difficult for Indonesia to agree on any modalities.
Furthermore, to be consistent with the so-called Doha Development Agenda, future special and
differential treatment for developing countries had to be more than that given during the Uruguay
Round.  Indonesia also stated that it did not share the position of those Members who had called for
strict criteria in determining products eligible for the Special Safeguard Mechanism (SSM).  The
purpose of the SSM was to provide an immediate lifeline against import surges and hence, it had to be
available to all developing countries for any agricultural product under threat from cheap and
subsidized imports.  Indonesia did not see the need for strict criteria for a defensive mechanism like
                                                     
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice
to the positions of Members or to their rights or obligations under the WTO.TN/AG/R/9
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the SSM, whilst there were no strict criteria for distorting subsidies given under the Amber, Blue or
Green Box.
5. Indonesia, supported by Honduras, referred to an analysis of SP products made at the
informal meeting.  That analysis had shown that  for some developing countries a small number of
products made up a significant share of their imports.  In some cases, these few products had highbound tariff rates.  Therefore, the concept of SP products could mean a large portion of trade would
be subject to small tariff reductions.  Indonesia and Honduras stated that this analysis was not
representative of the situation in all developing countries, and hence it was misleading.  The same
analysis conducted for Indonesia gave a completely different picture as it found that the average
bound tariff for Indonesia's top 20 agriculture imports was 48.1 per cent.  If these 20 products where
to be listed as SP products, the average bound tariff after reduction would be about 43.29 per cent
which, for a developing country, which provided no subsidies, did not constitute a high tariff barrier.With regard to the conclusion that SP products would have a devastating impact on the reform
process, Indonesia noted that if the reference was about reform in agriculture trade, it wished to ask
where were the reforms in subsidies.  If the reference was to reform to gain greater access to
developing countries market, it then wished to ask how many more resource poor farmers would lose
their livelihoods.
6. Switzerland, supported by Mauritius and Chinese Taipei, noted a difference in interpretation
with regard to the term "substanti al" in the Doha Ministerial Declaration.  For Switzerland, a repeat of
the Uruguay Round Formula would mean cutting by half border protection in a 15 year period which
would be a very substantial cut.  Switzerland also noted that the Chair's report to the TNC on the
negotiations on agriculture (TN/AG/10, refers) lacked reference to the Overview Paper circulated inDecember 2002 which was, in Switzerland's view, the only document truly reflecting Members'
positions.  The draft Chair's report was also missing a reference to the fact that the Revised First Draft
did not represent a negotiating basis for many Members.  Also, Switzerland did not believe that the
Chair's mention of "considerable progress being made" reflected the true outcome of the work carried
out so far.  In concluding, Switzerland stated that it could not accept the claim that the Revised FirstDraft was the only paper on the table or the only path to be followed.  Modalities had to be found to
finally open up the negotiations rather than simply repeating national positions.
7. Argentina noted that the reform of the CAP by the European Communities had to quickly
result in increased substantive exchanges and consultations so as to effectively contribute to the
establishment of modalities on agriculture.  Argentina, supported by Chile, noted with concern that
while Commissioner Fischler recognized that subsidies caused a great deal of damage to developing
countries, the European Communities demanded trade concessions from other Members for theirremoval, including from countries which did not use export nor domestic subsidies.  Argentina was
also concerned that if the so-called "negotiating capital" available by the EC was not used, this would
increase the risks of Cancun failing to deliver the minimum results necessary to maintain a negotiating
momentum.  Argentina noted its long stated positi on that a timely examination of the issue of the
interlinkages between the three pillars would be key to move negotiations forward.  As manydeveloping countries, Argentina was of the view that only drastic cuts in developed countries support
could lead to ambitious modalities in market access.  With regards to the Chair's report to the TNC on
the negotiations on agriculture (TN/AG/10, refers), to be submitted under his own responsibility,
Argentina stated that the report should not include  issues which were not mentioned in the Revised
First Draft or in the discussions or which did not fall under the competence of the Committee onAgriculture.
8. Thailand stated that the level of ambition in agriculture negotiations would set the benchmark
for the level of ambition in other areas of the Doha Development Agenda negotiations.  Thailand, like
many developing countries, had set priority in the elimination of export subsidies as well as
substantial reduction of domestic support.  However, there were many loopholes in the market accesspillar which could exclude sensitive agricultural products from trade liberalization and provideTN/AG/R/9
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obstacles to south-south trade.  In addition, Thailand was concerned that the Revised First Draft
introduced flexibilities for certain groups of Members aside from traditional classification, in
contradiction with the core WTO principle of non-discrimination.  In that respect, Thailand believed
that an increased level of ambition in the pillar of domestic support could close some of the loopholes
present in the Revised First Draft and would make it possible for many developing countries to bemore flexible in the market access area.
9. The representative of the Philippines noted that further access to developing countries
markets would not be feasible without symmetric reform commitments in trade distorting export
competition and domestic support measures.  The Philippines, supported by Kenya, further noted that
the so-called domestic reform programmes recently undertaken by two major players to the
negotiations showed gross inadequacies of ambition in trade distorting support.  In that context,
developing countries had no choice but to insist on the availability of adequate flexibilities throughappropriate provisions on SP products and the SSM.  Concerning the questions raised by some
Members on the proper economic justification for SP products, the representative of the Philippines
noted that if the negotiations were about proper economics, the elimination of the persisting trade-
distorting support and non-tariff barriers had to be equally important targets of the reform program.
The Philippines was of the position that SP products, along the lines defined in the Revised FirstDraft, be self-declared.  On the other hand, the issue that needed to be negotiated was that of a
"limited number of tariff lines at the 4-digit level".  Due to the very nature of SP products, the
Philippines further proposed it should have automatic access to the SSM.
10. With regard to special safeguards, the Philippines stated that the provisions of Article 5 of the
Agreement on Agriculture had to cease to apply for developed countries.  As for the SSM, the issuewhich needed to be negotiated was the threshold level of tariffs below which there should be universal
access to special safeguard measures.  Finally, the Philippines could accept the multi-band formulae
proposed in the Revised First Draft with an upward revision in the upper bands to address tariff peaks.
11. As regarded the Chair's report to the TNC on the negotiations on agriculture (TN/AG/10,
refers), the representative of Paraguay stated that the Chair's proposed modalities for tariff reductionscould be used as a valid basis for the negotiations.  Paraguay, supported by Sri Lanka, noted that the
negotiations had to address market access provisions which would benefit all Members since, the
experience of many developing countries had shown that the Uruguay Round formula had not
achieved real market access improvements.  In particular, the fact that tariff peaks and tariff escalation
still affected developing countries was contrary to the Doha mandate.  Members needed to be more
realistic so that negotiations would open markets and create opportunities for developing countries to
develop trade.  Hence, Paraguay supported the "Swiss" formula.  With regards to paragraph 7 of theChair's report to the TNC, Paraguay agreed that, as per the Doha Ministerial Declaration, there was a
link between the three pillars, that special and differen tial treatment should be an integral part of the
negotiations and that non-trade concerns should be taken into account.  Regarding paragraph 15 on
non-trade concerns, the Doha mandate was clear about which non-trade concerns had to be addressed,
e.g. food security and environmental issues, those were the "traditional" non-trade concerns.Paraguay believed that the negotiations at hand were about liberalisation of agriculture trade and that
geographical indications, food safety, animal welfare and labelling were TRIPS, SPS or TBT issues.
Regarding paragraph 26 of the Chair's report to the TNC, Paraguay believed that it should be deleted
since the Peace Clause was not under negotiations and would expire on 1 January 2004.  Finally,
Paraguay noted that the reform of the CAP represented a positive step forward which could help theEuropean Communities comply with the Doha mandate.
12. Bolivia noted that on the issue of market access Members were yet to find an appropriate
formula which would reflect the interests of all Members and particularly those of developing
countries.  As regarded domestic support and export competition, Bolivia also felt that there was no
real progress yet in living up to the objectives of the Doha Ministerial mandate.  Bolivia did not usesubsidies and it wished for its exporting sector to find a place in world markets on the basis of fair andTN/AG/R/9
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healthy competition.  The representative of Bolivia urged Members to get rid of trade-distorting
measures and include greater flexibility for developing countries in order to live up to the mandate set
by Ministers in Doha.
13. The representative of Djibouti  thanked the Chair for his introductory report and for the
impartiality of his approach in conducting the Committee's discussions.  Djibouti noted that the Chairwould be submitting his report to the TNC under his own responsibility and expressed the hope that
the Chair would take into account the concerns and interests of the more fragile Members.
14. India, supported by Kenya, noted its agreement with Indonesia and Philippines that special
and differential treatment for developing countries was integral to all aspects of the negotiations.
Whilst large agricultural exporters were trying to move towards a purely mercantilist approach, India
did not have the resources to use subsidies nor did it have income generation opportunities outside
agriculture for its 650 million poor farmers.  The sensitivities across agricultural products in respect ofmarket access were clear.  India stated that its primary objective was to protect the livelihoods of its
vast rural poor.  In India's view, reform through these negotiations meant ending the distortions
caused by subsidies in developed countries. In moving towards that reform, the concept of SP
products and the new special safeguard mechanism were central in addressing legitimate food security
and rural development and/or livelihood security concerns of developing countries.  Indeed, specialand differential treatment had to be effective and meaningful.  India reiterated its call for the Uruguay
Round approach to the further tariff reduction commitments as well as for due flexibility in the
determination of SP products and SSM products on the basis of self-declaration.  The representative
of India stressed the need to address non-tariff measures and the extent of subsidy and protection
given to agricultural products in developed countries at the same time as tariffs, especially onproducts of export interest to developing countries.  Trade distorting subsidies and export credits had
to be addressed including the need to effectively reduce product-specific support and to ensure Green
Box subsidies did not distort trade.
15. The representative of Norway, supported by Chinese Taipei, stated that tariffs were
indispensable to secure a certain degree of domestic production and non-trade concerns.  A tariffharmonisation formula was not acceptable as it did not take into account the differences in production
conditions in different Members.  An unmodified Uruguay Round formula was therefore the way
forward.  Regarding the Chair's report to the TNC on the negotiations on agriculture (TN/AG/10,
refers), Norway took note of the reference, in paragraph 8, to the Revised First Draft contained in
Annex 1 of the report.  In that connection, Norway  merely wished to stress that a fundamentally
different version of the modality proposal was needed as a useful basis for further negotiations.
Finally, Norway pointed out that the role of info rmal consultations should not be given too great a
role as the final outcome of the negotiations would have to be acceptable to all, and urged the Chair to
ensure that the process was being carried out in an open-ended manner with the highest possible
degree of transparency.
16. Mauritius stated its appreciation for the transparent and participative manner in which debates
had been held in the Special Sessions.  Mauritius, following the Chair's advice, had met some of the
countries with differing views and this had indeed improved understanding of the respective concerns.
However, as had been eloquently expressed by countries such as Trinidad and Tobago, Barbados and
Jamaica, Mauritius had little to offer and its re quirements were minimal when compared to world
trade and had not been and would never be trade distorting.  Mauritius pleaded that the process be
transparent and participative so as to give Members ample opportunity to safeguard their interests.
17. Uruguay stressed that agriculture was a key element of the negotiations and progress had to
be made in agriculture to go hand-in-hand with progress in other areas of the negotiations.  Bearing
that in mind, Members had to increase negotiations amongst themselves and not wait for the next
Special Session of the Committee on Agriculture.  In that context, Uruguay considered the role of theTN/AG/R/9
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Chairman essential in facilitating and enhancing the consultation process in the format he deemed
most appropriate.
18. The representative of Iceland noted, in relation to the  Chair's report to the TNC on the
negotiations on agriculture (TN/AG/10, refers), that with only a few weeks until the Ministerial in
Cancun, any reports to the WTO governing bodies had to contain the appropriate level of precisionand balance.  In Iceland's opinion, the Revised First Draft simply represented an input to the
Committee's work, not an agreed basis for negotiation.  Iceland, supported by Chinese Taipei,
advocated a Uruguay Round approach to the negotiations as the only realistic avenue to achieve
substantial reform, in accordance with the Agreement on Agriculture and the Doha mandate, while
retaining the flexibility Iceland required to safeguard the viability of its vulnerable agricultural sector.
Iceland felt that the Chair's report to the TNC, placed too much emphasis on the modalities draft at the
expense of the different positions expressed by Members.  Iceland also remained concerned with theapparent unwillingness of some Members to address non-trade concerns in any meaningful and
effective way.
19. Peru remained concerned that the links and balance which had to exist between the three
pillars be dully taken into account.  Peru also noted that the concept of strategic products should
remain in the Chair's draft on modalities.
20. Cuba considered that the concept of the SP products constituted a legitimate tool in order to
take into account special and differential treatment for developing countries in accordance with the
Doha Mandate.  Furthermore, the concept of SP products had to be distinct from any reduction
commitment to be agreed upon and should not be restrictive.  Cuba also stated that the SSM was to be
a temporary tool to deal with the instability of agricultural markets and its criteria had to be less
"stringent" than those of the current Article 5 of the Agreement on Agriculture.  Finally, Cuba
stressed that unilateral trade-distorting measures had to be eliminated as a result of the negotiations
and reaffirmed the need for NFIDCs' concerns to be addressed by the negotiations.
21. El Salvador and Venezuela made a particular reference to paragraph 7 of the Chair's report to
the TNC and noted the importance of finding a balanced solution in each of the three pillars of theAgreement on Agriculture. Such balanced solution should be based on special and differential
treatment.  In that context, El Salvador mentione d that reductions on market access would be subject
to the reduction and elimination of export subsidies and domestic support, as well as to the inclusion
of a special safeguard mechanism and strategic products for developing countries.  Venezuela stated
that the Revised First Draft represented a good effort in trying to cover the concerns of Members,
while abiding by the Doha mandate.
22. The representative of the European Communities referred to the recent decision taken by the
European Communities on CAP reform and stated that it shared the hopes expressed by many that the
decision would give new impetus to the negotiations.  The European Communities was ready to
continue contributing to a successful outcome at Cancun but on the basis of reciprocal movement on
all sides.  The representative of the European Communities stated that the question of special and
differential treatment was a crucial issue in the negotiations and one which the EuropeanCommunities would continue to address with an open mind.  As regarded the Chair's report to the
TNC, while it was being made on his own responsibility, it had to continue reflecting the key issues to
be addressed in the negotiations, as it currently did.
23. Japan reiterated it's views that the Revised First Draft was not a basis for the negotiations.
Japan wished to strongly request that the Chair's report to the TNC be drafted in a more neutralmanner duly reflecting the different concerns of Members.  Japan believed that the goal of the
negotiations had to be the coexistence of various types of agriculture.  Hence, the rules and disciplines
that Members were currently negotiating had to promote and facilitate reform efforts undertaken by
Japan and other Members.  Japan was convinced that flexibility among commodities, continuity ofTN/AG/R/9
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reform and balance between importing and exporting countries had to embodied in the modalities to
be established and in that context, the Uruguay Round formula was the only possible solution.
24. Australia pointed out the long-term objective of establishing a fair and market-oriented
agricultural trading system.  Many Members had stressed that the biggest problem faced in moving
the negotiations forward was the discrepancy in subsidy levels between developed and developingcountries.  In Australia's view, there was a clear need for reform commitments on domestic support
and export subsidies before legitimate sensitivities over market access could be taken into account.
Australia welcomed the European Communities reform package although it noted that this reform had
not been done for the WTO Membership or for the purposes of unblocking the negotiations in the
WTO.  The package had not addressed export subsidies nor market access issues and it had not gone
far enough in cutting support.  Rather, Australia noted that there was a general concern among
developing countries about the ability of certain developed countries to move subsidies from one Boxto another.  Australia was disappointed by the European Communities' call for reciprocity as most
other Members did not have the levels of subsidies still applied in the EU and there was no potential
for reciprocity.  On market access, Australia noted that many reform proposals on the table stated that
tariff escalation and tariff peaks were important and that the Uruguay Round formula would not
address these problems.  If a majority view was to be taken, a first step would be for developedcountries to get rid of all their trade-distorting support and to open up their markets and also the
elimination of export subsidies.
25. Brazil welcomed the European Communities reform decision which it assumed would have
an impact on the agricultural negotiations.  Concerning the Chair's report to the TNC, Brazil was
concerned about the highlighting of two issues which did not have an impact on the establishment ofmodalities, namely geographical indications, and precaution and labelling which did not qualify as
non-trade concerns. Brazil also failed to see any li nkage between the expiry of the Peace Clause and
the establishment of modalities.  Brazil was of the view that issues related to the expansion of TQs
and to the Green Box lay at the center of the debates on market access and domestic support,
respectively.  On market access Brazil believed that the only one way forward was to take up all theissues surrounding the question, decide on the reduction formula, and then address the expansion of
TQs.  Members could then consider the question of special and differential treatment.  There was an
undeniable linkage between market access in developed and developing countries as lesser market
access in developed countries would offer less room for concessions by developing countries.  Brazil
noted that, as a rule, derogations from the general disciplines in market access, such as the special
safeguard mechanism for developing countries had to act as incentives for Members which had
decided to undertake additional steps to liberalize.  In any event, additional duties should not behigher than current bound rates.
26. Uganda stated its support for the views expressed by India, Indonesia and the Philippines on
special and differential treatment and the importance of agriculture to developing countries'
economies.  Uganda was concerned that a few delegations' statement that the Revised First Draft  did
not constitute a basis for the negotiations.  Did those delegations have alternative modalities, and if sowhen would the rest of the Membership get to  see them?  This was a "Development Round" and
Uganda wished to reiterate that any modalities to be considered had to include special and differential
treatment.  Paragraph 54 of the Revised First Draft  was very important as those modalities had to
provide an unconditional exemption of LDCs from reduction commitments.  Paragraph 16 on
preferences needed more work. and Uganda sensed a lack of appreciation of the problem fromcountries which had geographical proximity to the United States or which were already competitive
on the European Communities market.  Finally, the representative of Uganda expressed the hope that
modalities would take into account the concept of SP products and that of the SSM.
27. The representative of Chile stated that Chile had taken note of the CAP reform in the
European Communities and that now the Membership had to consider what had to be done up to andin Cancun to make progress towards establishing modalities.  Chile was concerned by the insistenceTN/AG/R/9
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of some Members on defending the Uruguay Round formula for tariffs which would not allow
substantial reductions in border protection and which would not yield many benefits for developing
countries.  To move forward in the agricultural negotiations and in the rest of the Doha Agenda a
more ambitious formula was required.  Chile was fl exible with regard to the time needed for
adjustment so as to be able to open markets in an orderly fashion and to avoid the proliferation ofregional trade agreements with winners and losers.  Chile noted that in addition to doing away with
trade distortions linked to export subsidies and domestic support, special tools would also be required
such as Special Products (not Strategic) and the SSM as tool for the liberalisation of developing
countries markets.  In Chile's view, the SSM mechan ism had to be used on the basis of relatively low
tariff bindings and, both concepts of SP products and the SSM had to be used as transitional tools with
disciplines.  Chile agreed that LDCs also needed special treatment.
28. Croatia, as other recently acceded countries, re iterated the need for flexibility in any future
modalities.  On tariffs, low tariffs had to be exempted from reductions, lower reductions than those of
developed countries had to be allowed for recently acceded Members, and a longer implementation
period and a pause in implementation of new commitments after the implementation period of
accession commitments should be provided.  On the issue of the SSM/SSG current proposals would
end up with most Members having the right to use them while only 7 or 8, mostly recently accededMembers,  would not be able to use them.  Hence, Croatia believed that a special safeguard
instrument had to be made available to all Members.  As regarded the Chair's report to the TNC,
Croatia reiterated that the response to the Chair's question on flexibilities for recently acceded
Members could only be affirmative.
29. The representative of the United States stated that time was running out and progress along
with political will were needed soon in order to mu ltilaterally reform agricultural trade in all three
pillars.  The United States had made a proposal for meaningful reform and looked forward to hearing
from other Members as to how they could contribute to the reform process.  Like other Members the
United States was encouraged by CAP reform in the European Communities which it hoped would be
translated into meaningful commitments in the WTO in all three pillars.
30. Canada stated that real progress in domestic support was needed as many countries seemed
reluctant to improve market access unless they could compete on a fair and equitable basis.  The
representative of Canada stressed the need to go further in reforming domestic support than proposed
in the Revised First Draft and in the proposals submitted by major subsidisers as those proposals
would still leave significant levels of domestic support in the United States and the European
Communities. Further reductions were needed in the Amber and Blue boxes as well as further
constraints on the Green Box.
31. Hungary commented on the reference, in the Chair's report to the TNC, to an eventual
expansion of tariff rate quotas by noting that a large part of the membership strongly opposed it and
that in the current situation of significant quota underfill, an increase in quota quantities could not lead
to improved market access.  In reaction to a comment by Australia, Hungary stated that reciprocity
meant matching levels of market access without using unjustified and prohibitive SPS barriers.Hungary believed that those barriers were a de facto  abuse of the precautionary principle and that was
the reason why it wanted the precautionary principle to be on the agenda of the agricultural
negotiations.
32. On the Chair's report to the TNC, Zimbabwe stated that it was not clear how special and
differential treatment, as well as the linkages with the three pillars, would be treated.  Zimbabwewished that paragraph 22 be revised to include the Green Box and that SP products be incorporated in
the modalities.  Finally, Zimbabwe enquired about the status of the Revised First Draft as some
Members had not accepted it as a basis for the negotiations.TN/AG/R/9
Page 8
33. The representative of Turkey noted that while special and differential treatment was to be an
integral part of the negotiations in accordance wi th the Doha mandate, the issue of the interlinkages
between the three pillars and developed countries' promises on special and differential treatment had
not yet materialized.  Hence, the concepts of SP products and the SSM had to be taken into account as
they represented tools for addressing the   concerns of developing countries.
34. The representative of New Zealand welcomed the European Communities' decision on CAP
reform although it was still unclear what it meant in practice.  New Zealand hoped that this meant that
real negotiations could begin.  There were still some unanswered questions about the ability of
developing countries to engage in making real improvements in market access, as the European
Communities' domestic reform package did not deliver all that was needed to clinch the multilateral
deal envisaged in the Doha mandate.  It seemed to New Zealand that to make progress on core issues
political input was needed.  Indeed, for New Zealand, there seemed to be a contradiction between theclear liberalization mandate of the Doha agenda and the proposals from some Members.  On the
question of what outcome was expected from Cancun, the focus had to be more on what sort of
understandings could be reached and what sort of further guidance had to be developed to help
negotiators.  New Zealand noted that full participation was needed in the negotiations process with
particular emphasis on the interests of developing countries as special and differential treatment wascentral to the mandate and had to be operationalized in the modalities.
35. Malaysia reiterated that reform in market access was closely linked to reform in the other two
pillars.  Regarding the concepts of SSM and SP products concepts, Malaysia noted that some criteria
were needed in the selection of products and agreed that some of the ideas put forth by Sri Lanka and
Chile in that regard should be pursued further.
36. Some Members requested that their statements made at the formal Special Session form an
integral part of the record of the formal Special Session (Annex 3, refers).  Other similar requests
regarding statements made at the informal meetings of 26 and 27 June have also been accommodated
in Annex 2 of this report.
37. The Chairman, in concluding the agenda item, noted that there were many different point of
views. He had sensed few signs that Members were aware that the Ministerial Conference was close
and that it was now necessary to engage in negoti ations between Members and not with the Chairman.
Solutions were needed and while the Chair would do whatever possible, it would be difficult to
produce something acceptable unless delegations had considered the issues and were ready to make
the necessary moves in the negotiations to bring about a successful result.
I
TEM A(iii):  P OVERTY REDUCTION - SECTORAL INITIATIVE IN FAVOUR OF COTTON ; JOINT PROPOSAL
BY BENIN , BURKINA FASO, CHAD AND MALI
38. The Chairman noted that the proposal set out in document TN/AG/GEN/4 had been presented
to the Trade Negotiations Committee by President Blaise Campaore of Burkina Faso on 10 June.  At
the request of the countries sponsoring it, it had been included on the agenda for the Special Session.
39. The representative of Benin stated that the issue at hand was one of crucial importance, a
question of survival for cotton producers of Africa, especially the least developed among them and agood comprehensive outcome was needed.  Those countries had hoped that the decisions taken at the
Ministerial Conference in Doha would have fostered negotiations among Members to address
obstacles to trade.  The agricultural sector in developing countries was very important in terms of
employment, export earnings, and budgetary resources and constituted the backbone of the economy.
For African countries, cotton was more than 50 per cent of export earnings and 10 per cent of GDP,hence occupying a strategic position in development and in poverty reduction programmes.  Those
countries faced a difficult situation caused by high supports in other countries which distorted trade.
In 2001 nearly six times more subsidies were provided to farmers than for development aid andTN/AG/R/9
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represented very high assistance as a proportion of prices.  Recent evaluations had estimated at
250 million US dollars the export earning losses for African cotton producers because of higher
competition and lower prices.
40. The Doha mandate set the objective of establishing a fair and market-oriented agriculture
trading system, hence the co-sponsors had submitted the sectoral initiative paper to get a fair solutionto their problem.  The aim of this initiative was to obtain substantive reductions in domestic support
and other forms of subsidies and to improve market access for exports of cotton from LDCs.  The
co-sponsors wanted, at the latest by Cancun, immediate reductions in domestic support and border
measures and financial compensation for the damage caused over the transitional period for the
elimination of subsidies.  The co-sponsors of the sectoral initiative for cotton would submit shortly
proposals for modalities concerning reference criteria and estimates of levels of compensation.  The
representative of Benin recalled that the sectoral initiative for cotton had already received the supportof the ACP group of countries, LDCs and African tr ade ministers.  Other Members of the WTO which
were not members of the groups cited above had also understood the importance of the issue for the
countries concerned and supported the initiative.
41. Mauritius stated that it understood the concerns of the co-sponsors of the sectoral initiative for
cotton, particularly since agriculture played a key role in Mauritius, concerning poverty alleviation,food security and harmonious rural development.  Furthermore, with respect to paragraph 37 of the
paper, Mauritius noted that it too had great difficulties with diversification in agriculture as only one
crop had proved suitable for large-scale commercial cultivation.  However, Mauritius went on to note
that sectoral initiatives would go against its interest and pointed out that 40 Ministers of Trade of the
African Union had come out strongly on the is sue of preferences and the African Union had
welcomed the proposal on preferences at paragraph 16 of the Revised First Draft.  Mauritius had a
much broader view of preferences than that stated by Ecuador, but was ready to discuss the issue with
Ecuador and explain why Mauritius would never agree to the deletion of paragraph 16 of the Revised
First Draft or a modification thereof unless it meant its improvement.
42. Morocco, on behalf of the African Group, stated that Structural Adjustment Programs had
caused the replacement of state monopolies by private enterprises unable to face up to international
competition and that situation had in turn led to a drop in production.  Morocco, supported by
Djibouti, further noted that cotton was vital to many countries' economies but despite numerous
efforts made to support domestic cotton producers, distortions from subsidies had prevented benefits
from flowing.  While paragraph 13 of the Doha Ministerial Declaration clearly spelt out the measures
to be taken to achieve a fair and market-oriented agriculture trading system, the critical and urgent
situation in West and Central African countries required that the measures spelled out in the jointinitiative be adopted at the Ministerial Conference in Cancun.
43. Paraguay, supported by Cuba, welcomed the joint initiative on cotton and noted that the Doha
Development Agenda called for a fair and market-oriented agriculture trading system with particular
attention to the needs of developing countries, especially the poorest among them.  This initiative had
to be seen in broader context, especially as most of the sponsors were landlocked countries likeParaguay.  The drop in cotton prices had also had affected Paraguay's economy as over the past ten
years export earnings and the number of farms growing cotton had fallen respectively by 72 and
52 per cent.  Those drops were very severe as cotton was mostly produced on small holdings, and as a
whole, about 30 per cent of Paraguay's population was involved in cotton production, processing and
other related activities.
44. Senegal associated itself with the joint initiative on cotton and stressed the necessity for WTO
Members to address the issue since the co-sponsors of the initiative were simply demanding the
application of a fundamental WTO principle, that of fair trade.  The representative of Senegal noted
that this was an example of a rare case where LDCs had managed to be competitive through
adjustment efforts and it was essential to encourage those countries to continue on that path byTN/AG/R/9
Page 10
allowing them to reap the benefits of such reform s.  Senegal further noted that there was a need for
consistency between WTO rules and those of the multilateral financial institutions.  In the cotton case,
the WTO had to adjust by making the interna tional trading environment compatible with the
adjustment efforts made by LDCs who were cotton producers.
45. The representative of the Philippines, also speaking on behalf of Indonesia, stated that the
issue of cotton was a perfect example of the unfairness which still existed in the Agreement on
Agriculture.  The figures mentioned in the paper on cotton were also those of many Developing
Country Members of the WTO and represented a good example of the effects of trade distortions on
resource poor farmers and of the necessity of accompanying tariff reductions with substantial
reductions in trade distorting supports.  The Philippines believed that a successful elaboration of the
concept of SP products by Members, on the way to Cancun, could perhaps allow the co-sponsors of
the sectoral initiative to self declare cotton.
46. The representative of India stated that India could fully empathise with the proposal to
eliminate export subsidies and domestic support on cotton as it had itself around nine million hectares
of land under cotton cultivation with a total an nual production ranging between 10 to 14 million
tonnes.  India shared the concern of the co-spons ors of the cotton paper that certain WTO Members
continued to apply support measures on agricultural products which distorted prices in theinternational market.  As a result much lower returns accrued to producers in developing countries,
not only for cotton but also sugar, dairy products, cereals and oil seeds.  The approach suggested by
the co-sponsors was consistent with India's suggestion to reduce Amber Box support on a product-
specific basis.
47. South Africa, supported by Canada, believed the cotton paper was a valuable contribution
towards the Doha Development Agenda and its own position in favor of the substantial reduction of
trade and production distorting subsidies of all kinds.  While the proposal focused on the particular
concerns of LDCs, the issue also had wider systemic implications. Following its deregulation, South
African's cotton production had dramatically decrease d mainly due to low international prices and
subsidies.  South Africa's strategy for the cotton sector included broadened participation, globalcompetitiveness and sustainability in the sector. South Africa welcomed the initiative and supported
the earliest phasing down and elimination of production and trade distorting subsidies on cotton.
48. Argentina supported Paraguay's presentation of the dramatic situation in some of its cotton
producing provinces (such as Chaco, Formosa and Santiago del Estero) as Argentina experienced
similar situations.  The joint initiative on cotton was an example of why distortions had to be
eliminated as called for by the Cairns Group. Compensation had to be provided by the Members
which subsidised cotton.  Noting the importance of exports for developing countries, Argentina askedthat account also be taken of the elimination of distortions in market access.
49. The representative of New Zealand stated that  New Zealand could support the main thrust of
the joint paper on cotton and encouraged countries currently subsidizing cotton to consider carefully
the sobering facts set out in the paper.  The best move to assist the poorest countries in the global
trading system was to remove the distortions caused by subsidies.  According to New Zealand, thepaper was a worthy cause for sectoral initiatives which could complement or enhance the formula to
be agreed overall to eliminate or substantially reduce all trade-distorting subsidies and market access
barriers.  As a Cairns Group Member, New Zeal and was pleased that the co-sponsors saw clear
economic rational for domestic reform in cotton.  They were obviously not afraid of competing in a
market driven environment and New Zealand would work to turn the joint initiative into a workableoutcome in the context of the negotiations.
50. The representative of China noted that although the joint paper on cotton had put China
among the largest cotton producers, China played a different role from that of other producers as it
was a net importer and was becoming a bigger importer from some of the sponsors of the paper.TN/AG/R/9
Page 11
Furthermore, cotton grown in China did not receive a lot of support and this was mostly for some of
the poorest provinces.  Hence, in its own proposal, China also supported the substantial reduction of
domestic support and the phasing out of export subsidies as soon as possible.  China fully supported
the call for a systematic solution to the cotton problem within the framework of the Doha
Development Agenda.
51. The European Communities shared the concerns of the co-sponsors of the paper about low
world market prices for cotton and the role played therein by subsidies to cotton production and
exports.  The European Communities was the second largest importer of cotton in the world and most
imports came in at zero tariffs from ACP and West and Central African countries.  Exports of cotton
from the European Communities were minimal and free of subsidies.  The European Communities
cotton production was only 2 per cent of world production and therefore the European Communities
aid scheme to domestic cotton production did not have any significant impact on world prices.  Therepresentative of the European Communities noted that the Commission had undertaken to put
forward proposals for reform to the cotton support sy stem within the next few months.  The European
Communities was fully committed to substantially reduce trade distorting domestic support for
agricultural products, including deficiency payments-type subsidies, within the context of the Doha
negotiations as well as to obtain a series of market access measures in favour of developing countriesincluding a provision that no less than 50 per cent of developed countries imports should come from
developing countries at zero duty.  Finally the European Communities representative stated that the
European Communities did not generally favour sectoral approaches but noted that the mention of
appropriate measures in the context of the Doha Development Agenda.
52. According to Brazil, the case of cotton illust rated the consequences of the failure to give
effect to the agricultural negotiating mandate.  The proposal by West and Central African cotton
producers was in line with the Cairns Group views and proposals.  Brazilian cotton producers also
suffered from a similar situation and Brazil had opted to follow the path of dispute settlement.  As a
number of agricultural commodities found themselves in the same situation, Brazil suggested that
Members seek a comprehensive solution to the question of export subsidies and trade distortingdomestic support.
53. Kenya, supported by Egypt, Zimbabwe and Uganda, fully shared the concerns highlighted in
the joint initiative, particularly the emphasis on the objectives of the Doha Development Agenda.
Kenya hoped that Members would give due consideration to the proposals and find a long-term
solution not only to cotton but also to other commodities exported by LDCs and developing countries,
especially from Africa.
54. Australia welcomed the proposals from the co-sponsors and in particular the high level of
ambition across all three pillars of reform.  Australia had of course proposed a reduction of all
protection and the elimination of trade distorting domestic support for all agricultural goods.
However, the joint proposal was in accordance with  the spirit of the Agreement on Agriculture and
the Doha Development Agenda and Australia therefore could support the complete elimination of
support and protection for cotton.  Australia also agreed with India that consideration could be givento extend the proposal to include all tropical products and processed products that were derived from
tea, coffee, cocoa and sugar, provided that such consideration of an extension would not reduce the
chances of the joint initiative for success.
55. Switzerland recognized the difficulties described, particularly in the light of the development
objective of the Doha agenda.  Switzerland was prep ared to discuss a solution in the context of the
negotiations while aware of the implications and difficulties connected with the proposals put
forward.
56. The representative of Burkina Faso thanked all those who spoke in favour our the proposal it
had co-sponsored.  Burkina Faso recalled that the Doha Development Agenda had two objectives, oneTN/AG/R/9
Page 12
was for the inclusion of all Members in the multilateral trading system and the second was that of
development.  Burkina Faso stated that this was a case of very poor agricultural countries which relied
on a number of agricultural products to be able to take part in international trade but were excluded
from it because other Members were not following the rules of transparency, competition and
fairness.  Results were needed urgently as this was an issue of survival as, if nothing was done, in 2 or3 years the cotton sector would decline in West and Central Africa  and that would be dramatic for
millions of people who relied on the production of cotton.  Burkina Faso wished to appeal to all
Members which supported the initiative so that a solution be found in Cancun.  The co-sponsors of the
sectoral initiative for cotton wanted subsidies to be totally dismantled so that they could remain on the
market and in the meantime, a financial compensation mechanism represented a reasonable solution
to temporarily deal with the problem.
57. The representative of the United States stated that the United States had very ambitious
proposals on agriculture which would address all the issues raised in the joint proposal on cotton.  The
United States called on all Members which supported the cotton proposal to support the United States
call for the elimination of all domestic support and export subsidies and the substantial reduction of
market access barriers.
58. The Chairman thanked the four sponsors and noted that there certainly appeared to be
significant sympathy and concern for the situation and all Members were now aware of the difficulties
faced by those four countries.  The Chairman suggested the Members now reflected more specifically
on the issue and that it be addressed again at the next Special Session with the aim of having a more
concrete discussion on  how to react to the proposal.
I
TEM B:  S PECIAL AND DIFFERENTIAL TREATMENT PROVISIONS UNDER CONSIDERATION BY THE
GENERAL COUNCIL
59. The Chairman recalled that on 28 May he had circulated to participants a copy of a letter sent
to him, as Chairman of the Special Session of the Committee on Agriculture, from the Chairman of
the General Council concerning a number of special and differential treatment issues.  Those issues
related to a proposal from the African Group and were contained in document TN/CTD/W/3/Rev.2.The relevant sections of the proposal were attached to the letter from the Chairman of the General
Council.  Those proposals had been referred to the Special Session for consideration and, in
accordance with the directions from the Chairman of the General Council, he would be reporting back
to the General Council on the results of the Committee's discussion today.
60. The Chairman noted that he had hoped to hold preliminary informal consultations on those
issues sometime during the previous two weeks.  Unfortunately, the schedule of other meetings and
activities meant it had not been possible to find a room and the necessary back-up of interpretationand other logistics.  Therefore, this was the first opportunity for the Committee to discuss those
important issues.
61. The Committee undertook to discuss Article 6.2, Article 14, Article 15.1, and Article 15.2 of
the Agreement on Agriculture on the basis of the proposal from the African Group contained in
document TN/CTD/W/3/Rev.2.  A summary of the discussions on the above issues can be found indocument TN/AG/11.  In concluding the discussions, the Chairman stated that the Committee would
revert to all four matters, at or in the margins of, the next Special Session.
I
TEM C:  O THER BUSINESS
Date of the next Special Session
62. The Chairman informed the Committee that the next Special session would be held on 16 to
18 July 2003.TN/AG/R/9
Page 13
Annex 1
Chairman's Report of the Special Session of the Committee on Agriculture
1 July 2003
In my concluding remarks to the Special Session of the Committee on Agriculture held on
31 March I undertook to report to the following Special Sessions on progress made in consultations
I would be holding on technical and other matters (TN/AG/9 refers).  In addition to these
consultations, this report also covers the discussions at the informal Special Session held on 26 June.
Please note that this report is made on my own responsibility and does not attempt to summarise theviews expressed at these meetings but rather to indicate the issues discussed and to give a short
general overview of how the negotiations are going.
Since the end of March eleven consultations have been held with interested participants on a
wide range of technical and other matters relating to possible modalities for agriculture.  In addition to
these consultations, on Thursday, 26 June at the informal Special Session we discussed tariffreduction formulae, tariff quota commitments and complementary approaches to improving market
access, the special safeguard mechanism for developing countries and the concept of Special
Products.  Although on the agenda, there was not enough time to consider the "other" market access
issues referred to in paragraph 28 of the revised First Draft of Modalities and this matter will be
revisited in my further informal consultations.  Export credits and food aid were on the agenda of aninformal consultation held on Saturday, 28 June.  Finally, on Friday, 27 June, participants had an
opportunity to comment on the draft report to be submitted to the TNC by the Chairman on his own
responsibility in the context of the preparations for the Fifth Meeting of the Ministerial Conference.
As for the process prior to the meeting of the Special Session, consultations were held on
23 April 2003 on special and differential treatment for developing countries under Article 6.2 andAnnex 2 of the Agreement on Agriculture.  A number of delegations stated that, while flexibility for
developing countries was needed, the exemptions should be made more effective and targeted at
groups in need of assistance.  There were also concerns relating to possible overlaps between
Article 6.2 and Annex 2 and it was suggested that  the fundamental requirement of Annex 2, that
measures in this category should not have more than a minimal effect on trade or production, should
be respected.
On 24 April the consultations addressed the calculation of domestic consumption in the
context of tariff quotas.  Some participants reiterated their view that an approach based on tariff quota
expansion would not be equitable.  Nevertheless, there was an interesting exchange on a number of
technical points.  While most participants that took the floor agreed that any calculation of domestic
consumption should be done in an open, transparent manner there were different views concerning the
methodology.  Another point made was that pro rata  increases in tariff quotas would avoid having to
recalculate domestic consumption.
Reductions in Blue and Amber Box support were discussed at consultations held on 25 April.
No real progress was made on either subject.  Some participants again pointed out that, compared to
some other forms of support, Blue Box payments had relatively little effect on trade or production.
Others stressed the need to maintain some level of trade-distorting subsidies in order to enable them tomaintain some level of production and to address various non-trade concerns.  On the other hand,
other participants stated that all subsidies linked to production had a significant effect on trade.
Therefore, both Blue and Amber Box support should be reduced or eliminated as quickly as possible,
particularly in developed countries.TN/AG/R/9
Page 14
The consultations on tariff quota administration on 19 May focussed on the questions of
imports from MFN suppliers counting towards quota fill, the specific requirements where import
licenses are required and special and differential treatment.  Some progress was made, but more work
still needs to be done on these, and other, outstanding issues under tariff quota administration.  On the
same occasion, there was also a brief discussi on concerning the methodology for calculating ad
valorem  equivalents of non- ad valorem  tariffs.
The possible special safeguard mechanism for developing countries and the concept of
Special Products were discussed at consultations on 27 May and 4 June and, as already noted, at the
informal meeting of the Special Session on 26 June.  On the first item, a number of comments
regarding the pros and cons of establishing such a mechanism resulted in little movement in known
positions. Furthermore, the discussions focused on the details of the criteria for, and operation of, a
possible new special safeguard mechanism. Some clarifications were achieved but a number ofcritical issues remain unresolved, including the question of self-selection of products eligible for the
SSM versus selection according to objective criteria.  On Special Products, considerable differences
remain as well although there have been some indications that acceptability of this concept may also
depend on the shape and content of the modalities package on market access as a whole.  A number of
developing countries reiterated their view that SP products should not be subject to any tariffreduction.
In the consultations on export credits and food aid held on 28 May and 28 June, further useful
work was accomplished on such matters as minimum interest rate benchmarks, risk sharing and on
special and differential treatment provisions.  Further informal technical work on these and other
elements of possible export credit disciplines will need to be pursued.  On food aid it appears that
most participants accept that the role of possible disciplines  in relation to food aid is to prevent
circumvention of export subsidy commitments.  However, at the same time we need to ensure that the
rules do not hinder or obstruct genuine food aid.  Developing rules on this issue in these negotiations
is, therefore, both delicate and complicated but progress is being made.
The question of modalities relating to recently acceded countries was discussed in the
consultations held on 4 June.  A number of recently acceded countries stated that a longer time-period
for implementation was not sufficient and that they needed more flexibility in a number of areas in
line with their specific negotiating proposals.  Some other delegations raised a number of questions
including what countries would be able to avail of specific modalities and the need for, and scope of,
such flexibility.
There was an interesting exchange of views at the consultations held on 5 June on tariff
reduction formulae, tariff quota commitments and possible complementary approaches to achievingsubstantial improvements in market access.  As for tariff cuts, most delegations remain fixed on either
a harmonising formula or a simple average cut.  In this regard, the possibility was raised of
undertaking tariff quota commitments in lieu of significant tariff reductions on particularly sensitive
products.  Some useful suggestions were also ma de concerning possible complementary approaches,
including zero-for-zero initiatives and tariff and quota free access for imports from least-developedcountries.  Some developing countries indicated that, subject to the outcome of the negotiations on
special products and a special safeguard mechanism for developing countries, they considered the
tariff package put forward in the revised first draft of modalities to be a reasonable basis for
negotiations.
In the consultations on preferences on 5 June there was an interesting, although quite
repetitive, exchange of views.  Some developing countries are concerned that tariff reductions will
erode the preference margins they currently benefit from and they suggested that longer
implementation periods as suggested in the revised first draft of modalities were insufficient.  Other
delegations, however, were concerned by preferences that discriminate against other, sometimes
poorer, developing countries.TN/AG/R/9
Page 15
Consultations were also held on 5 June on possible additional forms of flexibility for certain
groupings of countries.  A number of small island developing states, land-locked countries and
countries with economies in transition emphasised once again the need for flexibility to address their
specific concerns.  Other delegations stated that further flexibility for certain groups in addition to
what had already been put forward in the revised first draft of modalities would mean that manycountries would not meet the objectives of the Doha Ministerial Declaration.
The "other" market access issues referred to in paragraph 28 of the revised first draft of
modalities were discussed at consultations held on 6 June. Time constraints did only permit an
exchange of views on geographical indications, food safety and labelling.  On these matters, there is
little to report as some delegations continued to insi st that these issues had to be dealt with in the
agriculture negotiations while others pointed out that they were not part of the mandate for the
negotiations.
Time constraints, including difficulties to find  meeting rooms, did not allow to include other
issues of interest to participants in the consultations held over the past three months.
As is clear from this brief survey of our activities since the end of March 2003, we have
managed to cover a lot of ground, including many of the most difficult and complex subjects.
Throughout this period, participants remained actively engaged.  The  discussions were useful in thatthey led to further clarification of a number of technical points and of positions of participants.  By
focusing the consultations on the more difficult or controversial issues within the various subject
matters, it was possible to make some progress in a number of areas such as export credits and food
aid.  Even on the most contentious issues such as the modalities to achieve substantial improvements
in market access, where hitherto there has been some disinclination to get into detail, some usefulcomments were made that are worthwhile further consideration.
Having said this, the consultations on market access and domestic support have not yet
resulted in any progress in narrowing down the wi de gap in positions among participants regarding
the key issues in these areas.
Overall, it is therefore obvious that it is now more urgent than ever to advance our work and
find solutions, particularly with regard to the key i ssues.  In this context, I would note that the recent
reforms agreed among European Communities member States are a timely and welcome
development.  While essentially taken in response to internal requirements, they should also give
some impetus to our negotiations.  However, there is a hard road ahead of us and time is of the
essence.  I would urge you therefore, to re-double your efforts at the bilateral and plurilateral levels
over the coming weeks to broaden the scope for eventual consensus on the key modalities for further
commitments and to focus on developing compromise  solutions that are capable of delivering on the
further reform objectives enunciated by Ministers at Doha.
I will do my very best to facilitate such progress.  In this regard I hope that the report I will be
making on my own responsibility to the TNC on 14 July, a draft of which you commented on at the
informal meeting last Friday, will be of some help to start with.  Difficult as many of the key issues
we face are, we must now be prepared to face up to them and begin to make the hard choices.  Wehave only a few weeks before Cancún and we simply cannot afford to present Ministers with too
many complex issues to solve in too short a time.TN/AG/R/9
Page 16
Annex 2
Statements by Members at the Informal Special Session of the Committee on Agriculture
held on 26-27 June 2003
Statement by Australia – Comments on Chair Report to TNC
(TN/AG/10)
Recognise that this meeting is not over, we still have another meeting and this is a report
which you will submit on your own responsibility.
Welcome the opportunity to comment.  It is important that in the lead up to Cancun any
papers from Chairs reflect accurately the position of delegations.
Comments directed to 4 paragraphs in the report.
Paragraph 14
Paragraph 14(a) relates to TQ.
How TQs are addressed will depend on the tariff formula.
Clearly the protective effect of a TQ will depend critically on the level of the base rate and the
depth of tariff cut resulting from the formula.
The proposal you have made on TQs and the tariff formula in your draft modalities text will
not automatically result in any increased access, let alone the substantial improvements in market
access agreed by Ministers in Doha.
So the question you have posed in 14(a) as to whether existing TQ should be expanded is not
the question at issue. At issue is to what extent should TQs be expanded and the way this is to be
achieved.
Paragraph 15
In paragraph 15, the draft report states that a number of new or additional non-trade concerns
have been introduced in the negotiations and that participants need to decide on how they should be
handled.
Specific reference is made to GIs, the SPS Agreement and the TBT Agreement.  here is a
fourth issue, the implications of which are not clear to this delegation.
The draft report states that these issues have been "introduced" in the negotiation, which
carries a possible misleading connotation that there is some element of agreement that they have been
raised.
In fact, the first three propositions refer to proposals which have been made by a group of
delegations and over which there is considerable disagreement as to whether they fall within the
mandate of the negotiations.TN/AG/R/9
Page 17
Let me deal firstly with propositions (b) and (c) which appear to relate to the question of the
precautionary approach and mandatory labelling.
We all recall that these two proposals were made prior to Doha, and, despite negotiations in
Doha, there was no agreement reached on whether they should be included in the Doha Development
Agenda.
I can still vividly recall the discussion during the last evening at Doha during which one
delegation sought to have the issue of precaution and mandatory labelling included in the
negotiations.  The two propositions were rejected but a compromise was found in which we agreed to
negotiations on the relationship between the WTO an d MEA's (what now appear s in 31(i) of the Doha
Declaration).
Thus we believe that these two propositions not only fall outside the mandate of this Group
but also fall outside the DDA. The idea that the issue was specifically rejected in Doha but can nowbe introduced through the back door under the guise of NTC's is unacceptable to this delegation.
Moreover, to suggest that the issue is a NTC is a misnomer.  The SPS and TBT agreements
deal directly with trade in goods.  They are not part of the Agriculture Agreement which is the subject
of negotiations under paragraph 13 of the Doha Declaration.
If the delegations who have made these proposals wish to pursue them, they will be obliged
through the appropriate procedures of the General Council to ask Ministers to re-open the Doha
mandate to include them.  The idea of opening up the DDA is not a particularly propitious one.
The DDA, as we all know, was a delicate ba lance struck between delegations.  Yes, we
indulged in some cute wordsmithing which papered over a number of areas which have since
prompted calls for clarification.
But on those two proposals it was not a matter of fudging the differences - the fact is that they
were proposed, they were considered but there was no consensus.
Turning to the first proposal, on GIs, the history is a little different.
The DDA contains two specific references to GIs - in paragraphs 12(b) and 18.  There are two
issues, the establishment of a multilateral system of notification and registration of GIs for wines andspirits, where negotiations are under way, and the so-called "implementation" proposal on extension,
on which the Director-General is now holding consultations.
What is being suggested in paragraph 15(a) is that we open up yet another avenue for
considering the calls of demandeurs.
While in contrast to the issue of the register and extension which were explicitly discussed in
the lead up to, and at, Doha, the issue which we now find in paragraph 15(a) was never discussed.
The issue in (a) is phrased in terms of extending protection.Encapsulated in the two short sentences is an ag enda to fundamentally re-write section three
of the TRIPS Agreement on Geographical Indications.
There is no mandate to even contemplate a revision of this nature.
− Currently the TRIPS Agreement contains an obligation to protect GIs and a right to exempt
certain GIs from that protection.
− The European Communities wants to strengthen the obligation to protect GIs.TN/AG/R/9
Page 18
− At the same time it want to extinguish others' rights to exempt certain GIs from such
protection.
I should also observe that every other discus sion we are having on the TRIPS Agreement (on
Public Health and on Genetic Resources) is aimed at increasing Members' flexibilities under that
agreement.
Rewriting the TRIPS Agreement is not somethin g that should even be considered in the
Agriculture Negotiations.  This is a matter for the TRIPS Council and the General Council.
Once again, if Members want to pursue this proposal they will have to do it through the
appropriate channels, not through the backdoor of this Group.
Paragraph 20 - State Trading Enterprises
Here the report singles out one of the issues in the draft modalities text.  It leaves an
impression that on all but the issue identified in paragraph 20 there is a large measure of convergence.
The fact is that there is a fundamental difference of view about whether there should be any
reference whatsoever to STE's in the draft modalities plan.
Those who have proposed new disciplines have failed to produce any evidence that STE's
constitute a form of export subsidies.  Their arguments that STE's are distorting trade or engaging in
unfair practices has been unpersuasive.  The best they  can come up with is to suggest that there are
some competition angles, which we are happy to consider in the Working Group on CompetitionPolicy.
Article XVII of the GATT applies to all products, not just agricultural products and, unless
there are special reasons for doing so, we see no need for differentiating rules according to product
sector.
The implication in paragraph 20 that there is any consensus on Attachment 7 of the draft
modalities text is completely misleading.  We, and I believe other delegations, have strong counter
views on a number of aspects of the Attachment.  At best we would suggest that all you could
realistically report is that there remains a difference of views among Members as to whether the
agricultural modalities should contain any new disciples on STE's (both import and export) and if so
what they should be.
Paragraph 26 - Peace Clause
Most delegations who have an interest in agricultural trade are well aware that the provision
of Article 13 of the Agreement on Agriculture expire at the end of 2003.  The question is why such an
obvious statement has to be made in a document reporting on the negotiations on agriculture.
I think you have made the point on several occasions that the modalities text on which we are
engaged is not the be-all-and-end-all of the agricultural negotiations and that they are intended to
provide a basis on which to table draft schedules of concessions.
The Peace Clause was a quid pro quo agreed at the end of the Uruguay Round once
modalities were agreed and offers made.
The implication that those who agreed to wa ive their rights under the SCM Agreement would
continue to do so in the absence of any idea of what is going to happen in these negotiations is a bit
rich.TN/AG/R/9
Page 19
We all will need to decide at the end of the day whether there is a sufficient balance across the
whole spectrum of the negotiations to sign up to the single undertaking.  But this is for the end of the
day.
We see no reason for including in your report any reference to issues which are not related to
the immediate task before us, i.e. reaching agreement on modalities.TN/AG/R/9
Page 20
Statement by Bangladesh
We thank you for your report. Our remarks on your report are as follows:
With regard to the treatment of LDCs, we ha ve seen that you posed two questions to the
membership on para 25 (a) and 25 (b).  As regards paragraph 25 (a), we would like to reiterate that
LDCs shall be exempted from any reduction commi tments.  The LDCs shall also not be asked to
make any voluntary reduction commitments.  With regard to the question posed at paragraph 25 (b)
we urge to drop the bracketed "should" in paragraph 55 of TN/AG/10.  The modalities shall ensure
that developed countries provide duty-free and quota-free access to their markets for all imports from
Least-developed countries.
On paragraph 17 of your report regarding phasing out of export subsidies, we would like to
reiterate our position that subsidies that are provided by developed countries to products of export
interests to LDCs be phased out on a first track basis.
On paragraph 19 of your report regarding the disciplines on food aid, we request that the need
for food aid to address chronic food deficit situation in LDCs and to achieve development objectives
be taken into account.
With regard to paragraph 8-12 of Annex 3 (T N/AG/10), LDCs are examining the implications
of the provisions both for its imports of foodstuffs as well as the export of goods of interest to LDCs.
At this stage we would like to mention that LDCs would require policy space at both ends to pursue
its development objectives.  For instance, the LDCs may require longer periods under 9(a) or in
regard to the rise of interest rate.  Although most of the LDCs are unable to provide export credits due
to financial limitations, but the option must be available to LDCs.
The LDCs may need to revisit the S&D provisions later.TN/AG/R/9
Page 21
Statement by El Salvador
I would like to begin by thanking you on behalf of my delegation for having convened this
meeting and for your efforts to give impetus to the work of this Committee.
With regard to tariffs, one of the three pillars of the matter under consideration, my country
has, on other occasions, shown its support for the Swiss formula, as this reflects, in our view, the level
of ambition that we have set for ourselves in this round of negotiations.  Obviously, for developing
countries such as my own, support for this formula is subject to three conditions:
(1) That the treatment agreed upon in Doha with regard to domestic support and
subsidies be accorded;
(2) that agreement be reached on the special safeguard mechanism; and(3) that developing countries, inter alia  for the reasons set out in the paper you have put
before us, are able to rely on a list of strategic products that are not subject to the
same concessionary treatment as the other products.
I can only support what was said by our distinguished colleague from India, to the effect that
this is only one of the three pillars.  Progress in this pillar will depend on the progress made in theother two pillars.TN/AG/R/9
Page 22
Statement by Honduras and the Dominican Republic
Paragraph 1:  General approach
With regard to this section, we view positively retention of the possibility of triggering the
special safeguard by volume and by price.  This is consistent with the way in which the current special
safeguard is triggered and we believe that the new mechanism should not be more restrictive than the
present one.  Nevertheless, we do not agree that specific conditions or criteria should be established
for products having access to this mechanism because the situation and the needs of developing
countries are very different and there are no criteria that could meet them all simultaneously.  In
addition, we consider that all products subject to low bound tariffs should have access to the newmechanism, and some products with high bound ta riffs may need to apply the mechanism because
they are vulnerable and important for rural development and food security.  Moreover, in recent years
international prices have fallen significantly and the protection afforded by such high tariffs has not
been sufficient.  We also consider that many developing countries are unable to raise their tariffs
applied at the bound level owing to their commitments under regional agreements so in this respectrecourse to the mechanism could give them temporary relief and allow them to avoid the marked
impact of instability on import prices and volumes.
Paragraphs 2 and 3:  Scope of product coverage of SSM
Regarding this section, we consider that there should be broad coverage of products, as is the
case with the current special safeguard.  Accord ing to Secretariat document G/AG/NG/S/9/Rev.1, the
EU reserved 539 tariff lines for price-based and volume-based safeguard action, the United States of
America reserved 189 tariff lines for both, Costa Rica reserved 87 tariff lines for price-based
safeguard action, Switzerland reserved 961 tariff lines for price-based safeguard action, theRepublic of Korea reserved 111 tariff lines for both, Canada reserved 150, and Malaysia 72. In
mentioning these cases it is not our intention to question these countries' right to have recourse to
Article 5 of the Agreement;  what we wish to highlight is that it is unreasonable to seek to restrict the
new mechanism, which is to be used by developing countries that do not at the moment have any right
to invoke this Article for any product.
In addition, we propose that the reference to products in their primary or semi-processed form
be deleted so that all agricultural products, including processed products, have access to the new
mechanism as processed products play an important role in rural development and job creation etc.
Moreover, some of these products are subject to high subsidies or domestic support programmes that
affect our domestic production.
Paragraphs 4, 5 and 6.  General conditions relating to the application of SSMs
We consider that paragraph 4 should be deleted because the objective of the new mechanism
is not to stop imports but in fact to ensure a normal level of trade, which will be guaranteed through a
trigger mechanism that identifies a situation in wh ich there is a drastic increase in imports or a
significant fall in prices.  Furthermore, the period proposed is not representative because there were
sharp reductions in international agricultural market prices during this period as a result of large
increases in domestic support and export subsidies, leading to an increase in imports, so we cannot
say that it represents normal levels of trade.
Concerning paragraph 5, we also propose that it be deleted because we have always
maintained that this mechanism is an emergency and time-bound measure whose objective is to
respond to external shocks, either increases in imports or a fall in prices, and the harmful effects of
these situations should be corrected by applying the special safeguard measure to the product
irrespective of its country of origin.TN/AG/R/9
Page 23
Paragraph 6(a) and 6(b).  Form of special import measures
With regard to paragraph 6(a) (price-triggered measures), we consider that the obligation to
express prices in terms of the domestic currency should be eliminated because several developingcountries are facing situations of inflation and devaluation of our domestic currency which would
make it impossible to trigger this measure.  In this  respect, we believe that the most appropriate way
would be for the price to be expressed on the basis of the currency used in the reference market.
As to paragraph 6(b) (volume-triggered measures), we consider that the amount of 30 per cent
is fairly limited, particularly for those countries where the tariffs applied are already low and no type
of support or subsidy is given to their producers.  Furthermore, the second part of this paragraph,which refers to triggering the measure when there is an increase of 25 per cent in the average volume
of imports over the preceding three-year period, is insufficient because it is to be hoped that imports
grow by more than 25 per cent over a short period of  time and, in view of the vulnerability of the
agricultural sector in developing countries, this could cause the ruin of many farmers.  We propose
that this figure be lowered from 25 per cent to 5 per cent because we consider that a governmentshould be able to act before injury to production actually occurs.
Furthermore, we consider that the last sentence of paragraph 6(b) should be deleted because if
the measure is applied in the month of November of the current year, for example, it would have to be
withdrawn the following month, i.e. December, so it would not have accomplished its purpose.  Themeasure should therefore have a term of 12 months with the possibility of extension.
In addition, there is no mention of the possibility of applying quantitative restrictions.  This
possibility should be added because such measures give the importing country greater security as
regards the level of imports into its market.  So as not to interrupt the normal flow of imports, it couldbe agreed that the measure must be imposed in such a way as to allow a minimum level of imports
based on past imports during a recent period, which might be the past three years.
Paragraph 7.  Transparency and notification requirements
The transparency provisions and notification requirements for this mechanism should be
simple and should not become an additional administrative burden, neither should they discourageapplication of the mechanism.  In any event, they should not be more onerous than the current
provisions on the application of Article 5 of the Agreement.
Paragraph 8.  Duration and review
Regarding duration, we consider that the possibility of triggering the mechanism once again
should be allowed when the situation that gave rise to the imposition of the special safeguard measure
persists.
STATEMENTS ON THE REDUCTION FORMULA
HONDURAS.   My country could consider a tariff reduction as and when the modalities
include an effective special safeguard mechanism and a significant number of strategic products that
will not be subject to any tariff reduction  are agreed.  This is because Honduras' current bindings
are very low and our agricultural sector is totally unprotected because we have no instrument thatprevents the harmful effects of subsidies and domestic support.
In general, Mr Chairman, in a scenario in which an appropriate margin of flexibility is in fact
agreed for strategic products, the levels of tariff reduction for the remaining agricultural productsTN/AG/R/9
Page 24
which are not strategic should be substantially less than those sought by developed countries, as long
as export subsidies and domestic support that distort international trade continue to exist.
DOMINICAN REPUBLIC.  My delegation could accept the proposal you have put forward
provided that there is effective special and differential treatment, which should consist of approving alarge number of strategic products, selected by each country in accordance with its food security and
rural development needs.  In addition, as we have already stated, it is of vital importance to have a
special safeguard mechanism for developing countries.  If no satisfactory agreement is reached on
these two instruments, our delegation reserves its position on the tariff reduction formula.
STATEMENTS ON TARIFF QUOTAS
DOMINICAN REPUBLIC.   First of all, we consider it extremely positive that in
paragraph 20 of your document it is stated that tariff quota volumes for strategic products should not
be expanded.  This is an essential point for the ef fective granting of special and differential treatment
for our countries.  Nevertheless, regarding tariffs within the quota, we should like to see the proposal
in the first draft retained, in other words, tariffs within developing countries' tariff quotas should notbe subject to reduction.  In any event, we can agree that only tariffs within tariff quotas for strategic
products should be exempt from reduction.
It is important to bear in mind that tariffs within a quota are the result of delicate negotiations
between importing and exporting countries and they were not established on the basis of multilateralmodalities.  Consequently, amending them would affect the balance achieved during the
aforementioned negotiations.  In addition, these tariffs have already been bound at fairly low levels.
Furthermore, the provisions in your revised document establish a direct link between tariffs
within quotas and the fact that the quota has not been filled.  Nevertheless, experience tells us thatthere are other factors that explain why a quota is not filled, for example, the procedures for
administering the quota or the fact that  domestic production is sufficient.  It is also important to bear
in mind that tariff quotas do not imply a commitment to import but a commitment to access so those
members that have not covered a certain percentage of their quotas should not be penalized inasmuch
as they have not violated any commitment.
STATEMENTS ON CRITERIA FOR STRATEGIC PRODUCTS (PARAGRAPH 11)
DOMINICAN REPUBLIC AND HONDURAS.   As you will remember, a group of
developing countries put forward document job ( 03)/59 dated 20 March 2003, which indicated that it
is not possible to establish criteria to cover the different situations in each developing country.  We
therefore considered that each of our countries shou ld have the right to determine itself which are its
strategic products on the basis of a percentage of tariff lines produced at the domestic level.  In this
respect, we consider that this is the only way of meeting the special needs of food security, rural
development and poverty reduction in our countries.TN/AG/R/9
Page 25
Statement by Honduras
Although you have clearly stated that the report in document 4806 is under your
responsibility, I must emphasize that your text gives us much cause for concern.
As a general comment, I should like to indicate that your report does not mention the link
made by almost all developing countries among the three pillars of the negotiations and we cannot
grant concessions on market access unless there is far-reaching reform on export subsidies and
international-trade-distorting domestic support.
Regarding paragraph 12, you appear to imply that Member countries which have supported
the concept of strategic products agree to approve extremely low reductions in the sense that
developing countries, and my delegation in particular, have emphasized that strategic products must
not be subject to tariff reductions, and our position has not changed.  In this respect we suggest that
the following words in paragraph 12 be deleted "which would be eligible for significantly lower
reduction rates" and replaced by "which would not be eligible for reductions".
In paragraph 13, you suggest that retention of the concept of strategic products in the
modalities depends on the tariff reduction formula.  Mr Chairman, my delegation has stated on several
occasions that, irrespective of the formula applied, Honduras cannot lower tariffs on strategic products
because our current bindings are already very low.
Concerning paragraph 14, you establish a link between the special safeguard and the tariff
reduction formula.  This is not acceptable to us and, as we have already stated, the special safeguard
mechanism is needed to remedy situations where there is price instability and significant increases in
highly-subsidized volumes of imports and it is not related to the reduction formula to be adopted.TN/AG/R/9
Page 26
Statement by Hungary – Comments on Chair Report to TNC
(TN/AG/10)
Let me say that we consider that you made a wise choice in your draft text to avoid
prejudging the mandate of our negotiations and the choice was also wise to include all the major
issues which were brought up in proposals and the di scussions during the negotiations.  We share your
view that this issue of interpreting the mandate  or prejudging it is not the task for this report.
We hope that in finalising the report you woul d stick to this approach and not follow the
advice of those Members which think to have the privilege of deciding on the content of the
negotiating agenda by themselves and who consider that the only constructive possibility ofaddressing significant non-trade concerns of a large part of the Membership is simply by ignoring
them.   We are not sure that this is the approach which will lead us to progress in the negotiations at
this stage which we all are looking for.
With regard to specific issues I would like to li mit myself to just one at this late hour and just
to say that we have considerable difficulty in understanding the suggestions to change the draft text in
the area of tariff quota expansion.  I would just me ntion two issues.  First from a large part of the
Membership there is a clear objection to the expansion of tariff quotas and the second that in a world
of significant under-utilization of tariff quotas, there is hardly any improvement that one could get by
simply increasing tariff quota quantities.TN/AG/R/9
Page 27
Statement by Iceland
Iceland belongs to those Delegations who are advocating the Uruguay Round ("UR")
approach to these negotiations.  We have continually emphasized that the principles of continuity andadaptation are crucial concerns of ours in this process.  Our vulnerable agricultural sector must be
afforded a realistic opportunity to adapt to the realities imposed by substantial reform and
advancement of the long-term goals of the Agreement on Agriculture.  That is the process we
embarked on and the one we should remain faithful to.  We have also repeatedly stressed the
importance of NTCs and drawn attention to the different needs of individual members in this respect.
The UR approach, which is by definition a compromise  formula, provides the necessary flexibility for
us to meet our diverse policy objectives within a framework of substantial reform.
Iceland cannot accept the application of a tariff harmonization formula for the simple reason
that it fails to take into consideration the challenges we face in maintaining a vibrant agricultural
sector on the edge of the Arctic Circle.  I should also stress in light of the positions that have been
outlined by a few delegations earlier, that tariff harmonization is neither an obligation nor an objectiveof the Agreement on Agriculture or the Doha Declaration.  A one-size-fits-all approach will get us
nowhere.
Erosion of the flexibility we require to afford the necessary degree of tariff protection for the
relatively few products which represent the mainstay of Icelandic agriculture could only have seriousconsequences.  Iceland already imports more than half of its domestic food consumption in calorific
terms and most agricultural imports from developing countries enter the market without duty or
quantitative restriction.
Contrary to what some have said, we suggest that there is nothing to prevent tariff peaks and
tariff escalation from being addressed within th e framework of a general UR approach to market
access.  We are certainly prepared to explore ways and means in that respect, with particular attention
to products of interest to developing countries.
We have not envisaged or proposed the expansion of TQs and fail to see the rationale for its
inclusion in our modalities for reasons that have already been expanded upon.  We similarly fail to see
why the special safeguard should be eliminated for developed countries.  Our position is that thisshould remain in place for the duration of the reform process, as stipulated by the Agreement on
Agriculture.TN/AG/R/9
Page 28
Statement by India
The fundamentals underlying India's position on the proposed modalities on market access
remain as enunciated during the previous meetings, especially those held in February andMarch 2003.  You would recall that we have very cl early stated that the level of ambition in the
market access pillar is disproportionately higher than the level of ambition proposed in the pillars of
domestic support and export competition.  Since there is an explicit linkage between the three pillars,
it is rather difficult for us to comment on the pillar of Market Access, as it is still not clear what will
be achievable under the two other pillars.
We have had occasion to analyse the domestic support given in major developed countries on
a number of products of export interest to them.  We have found that in one country, the product-
specific support as a proportion of the value of production is as high as 56.3 per cent for sugar,
53.9 per cent for cotton, 48.7 per cent for wool, 42.1 per cent for sunflower oil, 36 per cent for
peanuts, 35 per cent for rice and 23 per cent for soyabeans.  Support on dairy products is as high as
40 per cent in certain other countries.  This is only part of the story.
We are wondering why only an average reduction in the Amber Box has been proposed,
whereas a band approach with graduated reduction commitments has been proposed in the Market
Access pillar.  Logically, there should be parity in the approaches adopted between these pillars.  In
other words, if there is no band approach to reduction in domestic support, one would also expect asimilar approach to reduction in tariffs, which is  the already existing UR approach.  We remain firmly
committed to the UR approach in reduction of tariffs.
Tariff quota access commitments have been listed by you as one of the areas for specific
consideration during this informal session.  India would like to state that it attaches importance to theproposal in paragraph 20 of the revised first draft of modalities that developing countries shall not be
required to expand tariff quota volumes for SP products.  India would also like to state that the
expansion of tariff quota volumes or reduction in in-quota rates is in any event relevant for TQs
established as a part of the tariffication of quotas under the UR commitments of Members.  We are
not convinced that Members like India that did not tariffy their balance of payments related
quantitative restrictions, should somehow be asked to expand TQ volumes in respect of products
where the volume was established as a part of an exchange of concessions under Article XXVIIInegotiations.
In paragraph 22, an exemption has been propos ed from in quota duty free access in respect of
"products of particular importance to the diversification of production from" certain categories of
products.  We would like to understand at a practic al level how this particular proposal would
translate to commitments in a Member's Schedule.
The relevance of complementary approaches such as request and offer and sectoral initiatives
would stem from the nature of the established formula for reduction of tariffs.  By their very nature,
these approaches can only be placed for voluntary participation by Members, and with no implicationsfor the acceptance by all Members of the draft Schedules circulated by a Members on the basis of the
agreed formula for tariff reductions.  I wonder whether this approach will be available in the domestic
support pillar.  We note that a few countries like Benin, Burkina Faso, Mali and Chad have proposed
zero-for-zero approach on domestic support on cotton.
Finally, we would reiterate the paramount importa nce of the need to protect livelihood of a
vast majority of our resource poor farmers.TN/AG/R/9
Page 29
Statement by India
Our views on Special Products have been consistent.  We strongly believe that for us this is
the fourth pillar of negotiations in Agriculture.  It has a significant relationship with our approach totariff reduction.  The justification for SP is to maintain food security, livelihood security and promote
rural development.  Since agriculture in India is a traditional occupation across over 20 varied
agro-climatic zones, maintenance of agricultural production becomes essential to maintain incomes.
Alternative social or income security based systems for over 650 million people are not a feasible
proposition.  In the case where Australia's analysis  shows otherwise, we would like to hear about it.
Compounded with this practical situation in agricult ure is also the fact that almost all crops are
rainfall dependent and, hence, flexibility to farmers to grow different crops in their level is limited.For the same reasons, it is difficult to arrive at a criteria based selection for SP.  Again, for the same
reasons, it would not be possible to have criteria multilaterally determined.  All these factors
combined together, leave little areas, space in the wake of changes in the external market conditions.
Therefore, there is a need to designate a certain number of products as SP.
For translating the objective of the SP concept into practical use, SP products should be
identified on a self declaration basis, and their number pegged as a percentage of the total agricultural
tariff lines.  Any attempt at overlooking these factors and pushing for criteria would result in defeating
the very purpose for which the pillar of SP products is to be created.
Promoters of free but not necessarily fair trade focus solely on trade while diminishing the
importance of protecting livelihoods of those engaged in agriculture in markets of interest to them.
We would have reason to agree with their approach if they could provide assurance of alternative
employment or incomes to all the farmers in those countries placed at high risk of loss of livelihood as
a result of such an approach.
In all fairness to delegations who worry that by placing just ten products of five developing
countries under SP, the loss of opportunities for agricultural trade would cover 75 per cent of the
imports by these five developing countries.
We note that at current tariff levels, substantial trade is still taking place in those products
among developing countries.  With any further reductions in tariffs resulting from these negotiationstrade between them can only improve.
The argument by some that trade addresses issues of competitiveness cannot hold its own
when survival is at stake.  Besides, factors that determine competitiveness vary across countries.  This
is even more relevant in a situation where world markets remain highly distorted and when anyreduction in the Amber Box only translates to a  tr ansfer of subsidies away from the Amber Box and
into others.
The suggestions given by Canada and a few others today regarding establishing new tariff
quotas will be antithetical to the objectives sought to be achieved through SP.
Turning to the proposal for the new Special Safeguard Mechanism for developing countries, it
cannot be denied that in the wake of further  cuts in tariffs and given the price volatility observed in
respect of a wide range of agricultural commodities over the last decade in particular, the SSM
becomes an indispensable facility for developing countries to safeguard vulnerable farmers.
Our assessment of the application of the Article 5 SSG by eligible countries shows that liberal
use was, in fact, made of both the volume base d SSG and the price based SSG in the post UR phase.
Volume based SSGs by OECD countries numbered 210, and Price based SSGs numbered 438 duringTN/AG/R/9
Page 30
1995-99.  Moreover , these safeguards were not applied only in respect of products that attracted
lower tariffs in these Members' Schedules.
Any extension of Article 5 type SSG to developi ng countries should, therefore, recognize that
adequate flexibility is necessary to deal with emerging situations, by using both price and volumetriggers, and across  products irrespective of the current level of tariff bindings.  I am sure Chile will
agree that risks are high when products support is high irrespective of tariff binding.
As regards the base period for the new mechanism, it may be appropriate to agree to the
period 1996-98 for the price and volume triggers,  a period which falls exactly a decade after the
Uruguay Round base period.
In order not to reduce the effectiveness of SSM in serving legitimate objectives, it is
important that the external reference price and the c.i.f import price of the shipment concerned should
be denominated in a stable currency.
The triggers under price and volume triggered safeguards should be ten per cent.  The
additional duty levels should not be limited to levels which do not permit the developing countries to
effectively address the price volatility and import surge.  Equally, there is no justification for limiting
the application of additional duty to the single year in which it has been imposed, if the conditions that
necessitated the safeguard in the first instance continue to prevail.
We note that developed and developing countries, who have the right to use Article 5 SSG,
would continue to retain their right.  The number of products on which the SSM is extended to
developing countries should therefore be at least comparable to the product coverage of Article 5
SSG.
Finally, we believe that there may be no justification in differentiating between LDCs and
NFIDCs and other developing countries in the pr oduct coverage of the new SSM.  There can be no
tenable basis for restricting the recourse to a safeguard designed for vulnerable producers of other
developing countries to fewer products.
We will elaborate our position on the SP products whenever you permit.TN/AG/R/9
Page 31
Statement by Jamaica
Jamaica supports the Uruguay Round formula.  Your own proposals on market access both
for tariffs and tariff quota expansion on an MFN basis would have serious adverse implications forkey products of great importance to us.
We therefore believe that the matter of preferences would have to be addressed satisfactorily
for us to be able to begin to consider the level of ambition which your proposal entails.  That is on the
export side.
On the import side, we believe that any possibility of receptivity to your proposals is linked to
the outcome of discussions on the Special Safeguard Mechanism and Special Products.TN/AG/R/9
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Statement by Kenya
Thank you for giving us the opportunity to give our preliminary comments on your report.
We do note that the report is being submitted on your own responsibility.  We also take note of thelanguage used in the text which in our view seems to imply that members have agreed on certain
issues.  As far as we are concerned all issues are subject to negotiations and nothing is agreed until
everything is agreed.  We concur with your assessment on the way forward and in particular the
urgent need for collective guidance and decisions on a number of key issues in order to pave the way
for the establishment of modalities.
Paragraph 8
This paragraph indicates that on issues not explicitly highlighted in the report an outcome on
modalities would reflect the progress made in the technical and other consultations since 31 March.
In our view, this paragraph seems to suggest that there is consensus in certain issues which is not the
case.  We would therefore appreciate getting a clarification on this paragraph.
Paragraph 12
On SP products we agree that a significant number of developing countries have welcomed
the SP concept.  However, a number of developing countries particularly those from Africa haveargued that the SP products should be exempted from tariff reduction a point that you probably need
to reflect in your report.  Your paragraph 12 seems to suggest that those countries that have supported
the concept of SP products have also agreed to the idea of "significantly lower reduction rates".
Paragraph 13
Paragraph 13 of your report does not reflect a balanced assessment of the discussions that
have been going on regarding the SP concept.  In our view, a significant number of developing
countries including Kenya have explicitly expressed the importance that they attach to the SP concept.
We therefore propose that paragraph 13 should be redrafted to reflect a more positive and balanced
assessment of the discussions that have taken place on the SP concept including the need to replace
this term with the Strategic Products concept.  We also wish to point out that the SP concept isindependent of the tariff reduction formula to be agreed.
Paragraph 14
On paragraph 14(a) Kenya and a number of other developing countries have pointed out the
need to consider preferential access for small suppliers as an S&D in any TQ expansion.  This
however is not reflected in the report.
On SSM we wish to point out that the SSM for developing countries will address itself to
import surges and steep drop in prices and therefore we do not visualize any link between the SSMand the tariff reduction formula.  Further, we have time and again pointed out that this SSM should
not be based on the current SSG since the latter should cease to apply at the beginning of the
implementation period.
Export Subsidies (Paragraph 17)
In Kenya's view paragraph 17 does not adequately reflect the discussions that have been
going on export subsidies.  Although discussions have been based on paragraphs 29 to 35 of the
revised First Draft there are certainly other views that have been expressed by Members that do not
necessarily go along the line of the formula proposed in this paragraph.TN/AG/R/9
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Domestic Support
We note that discussions on the Green Box so far are not reflected in your report and
therefore it would be appropriate if you could clarify this omission.  A number of developing
countries including Kenya have pointed out the need for a cap on trade distorting elements of the
Green Box and the tightening of the policy-speci fic criteria for the Green Box.  We have also
indicated our reservations on the expansion of the Green Box.
On de minimis  we have time and again expressed the view that the de minimis  provisions
should be eliminated for developed countries and developing country members shall be allowed to
aggregate support within the de minimis  levels.
On the Peace Clause we are of the view that Article 13 of the Agreement on Agriculture very
clearly states that the Peace Clause will expire on 31 December 2003.  We do not think that this is
subject to discussions.
Finally we agree that there is need to set a new date for the submission of comprehensive
draft schedules based on the modalities to be established.  However, the new date in our view should
only be indicative in order to provide enough time to developing countries to prepare after modalities
have been fully agreed including modalities on special and differential treatment.TN/AG/R/9
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Statements by Sri Lanka
Introductory comments
On tariff reduction formula, we have made our position clear in earlier meetings and also at
the technical level consultations which you have held.  We continue to hold the view that your
proposed three-band approach for developed and four-band approach for developing countries would
provide a good basis to approach a tariff reduction.  However, we share the view that tariffs over 100
per cent should be treated differently and should be harmonized by a formula approach.  Therefore we
believe also that the Uruguay Round formula would not address tariff peaks and tariff escalation.
On SP products, we support the view that a mi nimum tariff reduction of 5 per cent perhaps
would be the way to treat them and on that basis we would support the SP reduction.
What is important is that a country like Sri Lanka which has lower bound tariffs - and there
are many countries who have lower bound tariffs - is expecting that their concerns on sensitiveproducts and some of the products which have very low tariff bindings, will be addressed through the
concept of SP and SSM. Therefore, our position is that the tariff reduction formula we would support
would depend clearly on how SP and SSM concepts would be treated and eventually how the
instruments will be developed in those two areas.  We will make our comments when we discuss
these issues subsequently, but for the time being, I would state as we have stated our position, wereserve our right to change our position depending on what will be the outcome on the instruments
that will be eventually developed on SP and SSM.
SSM
On SP concept and Special Safeguard Mechanism, my delegation has made detailed
comments at the previous meeting as well as at technical level consultations you held since our
previous meeting.  As we have stated, the approach to these two concepts and instruments that we
develop will very much decide our approach to tariff reduction formula.  We support three-band to
developed and four-band approach to developing on tariff reduction, and for harmonization of tariffs
over 100 per cent.  We believe concerns of developing countries who have low bound tariffs will beaddressed through these two instruments under SP and SSM.
We would wish to emphasize that SP and SSM are aimed to address different objectives.  SP
is to address food security and livelihood security of small-scale farmers and to undertake only
minimum tariff reductions of not more than 5 per cent on sensitive commodities or products on whichwe have limited flexibility to reduce tariffs further.
The SSM mechanism on the other hand is to address volatility of international markets and to
protect domestic producers from import surges.  While SP is a permanent measure in terms of tariff
reduction, SSM will be a temporary measure to address import surges.
The group of countries who submitted a proposal on SSM, argued that the countries with low
bound tariff levels on agricultural produce who do not have access to SSG mechanism or any other
instrument for broader protection.  If Sri Lanka's bound tariff is 150 or 100 per cent then we would
not need a special safeguard mechanism.  Therefore deciding criteria for eligible countries for SSMthe fundamental criteria should be whether they have lower bound tariff levels.  These countries also
do not distort markets as they do not have domestic s upport measures or export subsidies.  Therefore
the second criteria should be, those countries who do not have domestic support reduction
commitments or export subsidies should be entitled for SSM.  We have argued that it should be a
simple, flexible and operational instrument.  It should be based on both volume and price trigger asTN/AG/R/9
Page 35
you have proposed in the non-exhaustive outline dated 7 March which was circulated for technical
discussions.
SSM will be used, and should be, while ensuring minimum market access taking at least
average imports of the previous three-year period.
Volume triggers should be 105 per cent, not 125 per cent as suggested in the outline, and
additional duty that is proposed in your outline of 30 per cent is totally inadequate for countries who
have bound their tariffs at lower levels.
Products eligible for SSM to be determined should be at 6-digit level.  It should also be not
less favorable than what is currently available to developing countries who have the right to use SSG.
Countries entitled to this mechanism should be able to apply this instrument irrespective of
the origin of product, whether they are from developed or developing countries, as the effect of the
damage to domestic producers are the same irrespective of the origin of the product.
We also need to address the issue of whether current SSG which is available to certain
developing countries could co-exist with the new SSM or whether the current SSG will be replaced by
the new SSM over a period of time.
As proposed in your outline at the technical level discussion in your paper, that NFIDCs
should be eligible for additional products for SSM.  We are repeating what we have been saying
earlier but the SSM is of significant importance to us therefore we believe that although you produced
Attachment 2 with only the title on SSM in 18 March Rev.1 document, our expectation is that
following the technical level consultation that you have had and following this meeting that you will
be able to produce an attachment on SSM with substance including criteria for eligible countries andoperational aspects so that it would form an integral part of the modalities on which decisions could
be made at Cancún.
SP products
On SP products my delegation believes that this has been accepted as a concept in the
negotiations and that we are confident this concept will not disappear from the draft as feared bydeveloping countries in their statements this morning.
As proposed by your draft, SP products should be subject to a minimum tariff reduction; that
is our expectation.  We recognize that in order to address concerns of possible abuse of this concept
by putting an extensive list of products to be covered under SP products and for it to be meaningful asan instrument of special and differential treatm ent to address food security, rural development,
livelihood security of sub-system farmers, a general criteria may have to be developed.  It may be
difficult to have a specific multilateral criteria to be applied to all countries because of different
agricultural structures in different countries and different circumstances due to countries falling under
different climatic zones and geographical sizes.  However, we believe that as a general criteria toqualify for specific products, that products should not enter international markets on commercial
scales.  Secondly there could be agricultural products produced by low-income, resource-poor
farmers, for example, could be linked to the size of the land-holdings and products on which tariff
levels are low bound could be a further criteria.
In the intervention by the Colombian Ambassador, he mentioned the high-bound tariff could
have a lower number of products and lower bound tariffs and this could have a larger number of
products on SSM.  Similarly, I think there is merit looking at this as well in addressing our SP
concept.TN/AG/R/9
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Fundamentally, for us it boils down to one funda mental issue, that is as we said in the
morning, there is a link to the tariff-cutting fo rmula and to the SP and SSM mechanisms and if the
ambition is for an ambitious tariff-cutting formula th en obviously we need to look at what instruments
will be made available to the countries which have lower bound tariffs.  Are you giving these
countries a SSM mechanism which is meaningful, one, or special products at least to address someconcerns, limited number of products?
I also have a concern, the fundamental objective of these agriculture negotiations should be
for a balanced outcome and everyone must benefit.  We have stated this in your informal
consultations that there are concerns that are going to be losers in these negotiations, particularly the
Net Food-Importing Developing Countries, and for such  countries, what instruments will be available
at the end of the negotiations?  So one is SSM we are asking for and also flexibility to the SPproducts; these are issues we need to reflect on, everybody to be benefited from the negotiations at the
end of the Round.TN/AG/R/9
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Statement by Chinese Taipei
My delegation would like to reiterate that agricultural trade liberalization should be a gradual
and on-going process.  Members need adequate instruments and flexibility to implement tariffreductions in order to respect the specific needs of their society and farmers.  In the process of
progressive liberalization, non-trade concerns can only be properly addressed with sufficient
flexibility.  In this respect, any modalities beyond the Uruguay Round approach will cause serious
negative impacts on the implementation of long-term agricultural policies and programmes.  Any
modalities with huge ambition, which were not mandated at the Doha Ministerial, will result in the
disappearance of many agricultural products for small-scale farming Members.  Therefore, for the
sake of non-trade concerns and the survival of vulnerable family farms in both developing anddeveloped countries, my delegation supports the view that the Uruguay Round formula should be the
fundamental basis for tariff reduction.
Regarding TQ expansion, my delegation considers that, for the sake of gradual trade
liberalization and stabilized agricultural development, the tariff quota volume should be maintained atfive per cent of domestic consumption based on the updated period.
With respect to the main reason of the low fill rate for most TQ products, my delegation is of
the view that it is the reflection of the domestic ma rket situation rather than the high in-quota tariff
rate.  When the in-quota tariff is reduced and the imports increase dramatically, there will be a seriousimpact on the development of agricultural industry, especially when domestic production is
decreasing due to bad weather or other conditions.  With this in mind, my delegation considers that
the second point of paragraph 22 in your draft should be deleted.TN/AG/R/9
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Statement by Venezuela
First of all, I wish to refer to the consultation meetings which have been held in recent months
and which, generally speaking, have proved most productive, although headway has yet to be madeon some issues.
We are concerned that obstacles still stand in our way and that substantive progress remains
to be seen.  Of particular concern to my delegation, and undoubtedly to many developing countries, is
that matters are in abeyance pending the agreement of a handful of Members.  Our greatest fear is
that, when they finally do indicate their agreement, these Members will disregard the interests,
concerns and requests that we have been putting forward throughout the negotiations.  The credibility
which the process deserves will thereby be lost and we run the risk both of the outcome not being areflection of a participatory and transparent exercise and of the development objectives which we are
seeking to meet in this Round on Agriculture not being effectively covered.
Secondly, I welcome your interest in ensuring that this session is a fresh opportunity to
address issues which, on the one hand, are particularly sensitive and therefore of great significance to
a number of Members (such as special products, SPs, and the special safeguard mechanism, SSM) andwhich, on the other, require more in-depth discussion.  However, without a constructive outlook and
sufficient determination on the part of some Members, this opportunity could, once again, be lost.
It should be noted that, whilst we agree on the need to concentrate our best efforts on those
areas where they truly are crucial, given that these areas are exactly the same ones as those holding up
progress in the negotiations, we cannot lose sight of the fact that the three pillars of the Agreementmust be satisfactorily interlinked in order to take advantage of this opportunity to reach a new and
well-balanced Agreement.  Substantial improvements in market access will be to no avail if we fail to
simultaneously tackle other problems which not only constitute obstacles to the liberalization of
agricultural trade, but also greatly distort such tr ade, to the detriment of least-developed countries.
With regard to the tariff-reduction formula, we continue to support your proposed price-band
mechanism, although we have pointed out that the level of ambition required of developing countries
is very similar to that required of more developed trading partners and will therefore have to be
reconsidered.  We are, however, open to studying another tariff-reduction mechanism which ensures
the necessary flexibility to address our development needs.  Consideration should also be taken of the
fact that the substantial improvements required by the Doha Mandate with regard to market access
will not be achieved by the tariff-reduction formula alone, but in conjunction with other tools afforded
by this pillar.
The category of special products  and the special safeguard mechanism  are two crucial
instruments for addressing real non-trade concerns which are closely related to development, and they
deal with different problems in different circumstances.  Special products address needs associated
with longer-term objectives and are closely tied to our agricultural development by way of an
appropriate tariff - one of the few effective tools at our disposal.  The special safeguard enables us tocontend with very specific situations in a manner which imposes less of a burden and which takes our
shortcomings into account.  Other trading partners  enjoy the financial capacity to deal with such
economic conditions using other instruments, provid ed in the current Agreement, which are to the
advantage of more developed countries.  We are of the opinion that special products should have
greater flexibility, extending beyond mere tariff reductions, and that they should be exempted fromnew tariff-rate quota disciplines.
Although the goal of the negotiations is the progressive liberalization of agriculture, the not
particularly heartening situation which has become apparent at this meeting constrains us to call forTN/AG/R/9
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instruments which allow us to cope with such lib eralization, whilst also affording us leeway to
implement active productive development policies consistent with both our national and multilateral
commitments.  The aim is not to swim against the tide of liberalization by requesting the development
of instruments which could check the pace of the process itself, but rather to create a fairer playing
field with greater opportunities, taking into account the fact that the Members which should make thegreatest sacrifices are reluctant to renounce their own freedom of action and benefits.TN/AG/R/9
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Annex 3
Statements by Members at the Formal Special Session of the Committee on Agriculture
held on 1 July 2003
Statement by China
My delegation highly appreciates the continued efforts made by you and the Secretariat to
facilitate the negotiation process and to bridge the widely divergent positions of Members since the
last Special Session.  We note with concern that the huge divergence on key issues among Membersstill exists in the discussions at the informal meetings of this Special Session despite progress made in
certain areas.
The long-term objective of establishing a market-oriented and fair trading system for
agriculture requires the removal of the existing trade distorting measures and the elimination ofserious imbalance inequity and huge disparities among Members in the three pillars.  On the basis of
this understanding, my delegation would like to highlight the following points:
The huge gap between the developed and the developing Members in domestic support and
export subsidy is one of the most important issues to handle in the current agriculture negotiations.The modalities for further commitments should be effective enough to eliminate all forms of export
subsidies as soon as possible and substantially reduce all trade-distorting domestic support and lower
the de minimis  level of the developed Members.
The formula for tariff reduction to be established should not only adequately address the
outstanding market access issues such as tariff peaks and tariff escalations but also address the huge
disparity and inequity among Members in tariff levels and complicated tariff structures.
The special and differential treatment enjoyed by the developing Members in market access
should be sufficient to offset the imbalance they suffered in the areas of domestic support and export
competition and to enable them to meet their needs of development.  We, therefore, appreciate the
introduction in the Chairman's draft modalities of the notion of SP products, which could furnish thedeveloping Members with possibilities of identifying certain number of products of particular
importance to them for enjoying special and differential treatment.
Bearing in mind the significant importance of agriculture and the limited macro
administrative capacities in the developing Members, a new effective SSM should be established onlyfor the developing Members to properly tackle import surges.  The new mechanism should be applied
to all products with tariff rate below a certain level.  The existing SSG under Article 5 of the
Agreement on Agriculture should cease.  We also support the proposal to establish a special
countervailing mechanism for developing Members to address the distortion incurred by importation
of highly subsidized products from the developed Members.
The specific realty of the newly acceded Members should be taken into full account and
substantive and proper flexible arrangement should be granted to those Members.  A longer
transitional period only is not sufficient.
A fair and market-oriented system for global agriculture trade will benefit all Members.
China is willing and fully prepared to join effo rts with other Members to promote the successful
conclusion of the agriculture negotiations and achieve our shared objectives.  My delegation would
like to extend congratulations on EUs decision on Agricultural reform.  But how the reform willTN/AG/R/9
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translate into EU proposals for the negotiation will  remain to be seen.  We look forward to their
proposals and will make detailed studies on them.  We are not able to make any comments at this
stage.  We do hope that, with our intensified collective efforts, the current difficulties could be
overcome soon and progress could be made so as to make due contributions to the success of the
forthcoming Cancún Ministerial Meeting.TN/AG/R/9
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Statement by Croatia
Like previous speakers, I would also like to  thank you for your report from the informal
session held last week.
As we did not speak during the informal session, let me make few remarks as we would like
to avoid that our silence be interpreted as a sudden lost of interest in the agriculture negotiations. On a
more serious note, we hope that our views, main concerns and readiness to continue being
constructively engaged in the negotiations are by now well known to our partners. We have expressed
them on many occasions alone or together with other Members that share same or similar views. For
that matter, I would like to recall the joint statements made in the previous special sessions and in theinformal technical consultations by Albania, Croatia, Georgia, Jordan, Moldova and Oman on the
issue of recently acceded countries. Our countries still maintain their positions and views expressed
jointly in these formal and informal meetings in  respect of the necessity to include meaningful
flexibility provisions for recently acceded members in any future modalities.
Turning back now to the statement of my delega tion and in respect of the issues discussed last
week, let me restate that market access together with domestic support are also for Croatia the areas of
utmost importance in these negotiations. Like othe r issues under those two pillars, we approach the
issue of tariff reductions, tariff access commitments and special safeguard from a position of a
country that recently acceded to the WTO.
In this respect we have made a strong case and presented several proposals on the necessity to
include meaningful specific flexibility provisions for recently acceded Members in the modalities for
future commitments in the agricultural area. On ta riffs, we have expressed our view that such a
flexibility provision should: exempt low tariffs from further reduction commitments of recentlyacceded Members; provide for lower tariff reductions for recently acceded Members than those
applicable to developed members, provide a long er period for implementation of new commitments
and provide for a pause for implementation of new commitments after the entry into force of DDA
agriculture results
On the special safeguard, what has been proposed in the texts put forward by the chair and
what we can generally sense from the room has a tendency to create a situation where the vastmajority of WTO Members would have the right to use an SSG in one form or the other i.e. either the
current SSG or the new proposed SSG mechanism. Only a small number of WTO Members, in fact
maximum up to 7-8 mostly RAM's would be prevented to use any SSG, as they currently have not the
right to use such a mechanism. We are asked to make new MA liberalization commitments on the top
of the extensive ones made upon accession, but at the same time contrary to other Members, wewould be prevented to use any temporary or permanent safeguard instrument or mechanism.  Croatia
would not like to believe that such a discriminatory approach could be acceptable to fair minded
Members. Therefore, we firmly believe that a special safeguard instrument should be made available
to all WTO Members.
 With regard to the chair's draft report to th e TNC, we did not use the opportunity to comment
it last Friday; we will do so on 14 July. We have taken note that it has been prepared under Chair's
own responsibility and without prejudice to the positions of participants. However, although we
appreciate all the efforts made by you in trying to facilitate progress, we continue to have major
reservations and disagree with some key concepts, approaches, numbers and parameters in the Chair'stext. Without going into details at this juncture on such key elements like for instance domestic
support (I already partially expressed myself on MA), let me only restate, that in our view, a response
to Chair's question about the flexibilities for RAM' s can only be affirmative. As to the SSG, again, we
do not share the view that the options in Para 14 b and c of the draft report are the only issues of theTN/AG/R/9
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debate. Instead, we believe that the real and key issue here is how to ensure that no member is
excluded from a special safeguard solution.
 Croatia has, alone or together with other RAM's stated in these negotiations, be it in special
sessions, informal technical consultation or any other setting that any future consensual modalitiesshould contain a text which will have real and meaningful specific flexibility provisions for recently
acceded members with respect to market access and domestic support. This is not an issue that would
just go away. At this stage of negotiations, we have to conclude that despite tiny positive signs here
and there, the overall picture is still unsatisfactory.
 We have been fully and seriously engaged in the agriculture negotiations. We will continue
participating actively and constructively in further negotiating process with the expectation of such anoutcome future modalities text which will fully reflect the legitimate concerns and proposals of WTO
membership by large including the recently acceded Members.TN/AG/R/9
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Statement by Ecuador
MARKET ACCESS
Ecuador attaches particular importance to the elimination of tariff escalation and tariff peaks,
remnants of the commitments made during the Uruguay Round.  It therefore supports the "Swiss
Formula" inasmuch as it allows more uniform bound ceilings, consistent with fullest liberalization of
markets, and at the same time permits a significant lowering of the high levels of protection current in
developed countries.
The Uruguay Round formula in no way ensures the elimination of tariff peaks or escalation as
these are precisely the result of a simple linear reduction and the only thing that could be done is to
maintain these differences over a longer time-period.
The Chairman's idea of dealing with escalation through greater reduction of bound tariffs on
processed products is positive because it gives more access opportunities for value-added products ofinterest to developing countries.  Nevertheless, as it is proposed as a corrective formula, application of
an adjustment factor that increases the reduction for processed products according to the bound level
for the primary product raises problems of application, for example, where the bound level for the
primary product is zero so there is no reduction for the processed product.
Special and Differential Treatment
We support the Chairman's proposal on the fullest liberalization of trade in tropical products
whether in primary or processed form, and for products of particular importance for the diversification
of production from the growing of illicit narcotic cr ops.  This commitment is to be found in the fifth
paragraph of the preamble to the Agreement on Agriculture.
Ecuador considers that the time has come for an objective definition of the list of such
tropical products so as to avoid the situation that occurred during the Uruguay Round when some
developed countries unilaterally drew up a very limited list of tropical products that did not include
those of the greatest interest to developing countries.
It is unacceptable to Ecuador that a tropical fruit such as bananas was excluded from the
category of "tropical fruit".
STRATEGIC PRODUCTS
Ecuador welcomes the Chairman's policy to establish a category of products of strategic
importance for economy and trade, rural development, culture, the environment and rural society in
developing countries, in accordance with the provisions on special and differential treatment.
In this respect, we consider that countries should be free to define a specific number of
"strategic products" but that these must be based on objective and harmonized criteria such as their
contribution to the Gross Domestic Product (GDP),  job creation, the product concerned must not be
exported, the amount of subsidies applicable to them at the global level, low bound tariffs, whether or
not they form part of the basic basket, their environmental importance, their importance for income
generation in rural areas, inter alia .
Such products form part of the staple food chain and reductions of bound tariffs should be on
a voluntary basis.TN/AG/R/9
Page 45
TARIFF QUOTAS
Ecuador proposes that tariff quotas of developed countries that have the highest tariff peaks
should be significantly expanded and subject to the fullest tariff liberalization, priority being given to
access for developing Members.
Special and Differential Treatment
In addition, developing countries should not be required to expand their quotas and, as part of
special and differential treatment, priority for access to developing countries' quotas should be given
to those Members that have declared levels of support lower or equal to the de minimis  levels and
those that do not have any export subsidies, so as to ensure that these additional market accessopportunities are not used as mechanisms for disposing of production surpluses by countries that have
direct domestic support and export subsidies.
Regarding the administration of tariff quotas, developing Members should be allowed to fix a
"contingency period" within which tariff quotas would become applicable and this should not
coincide with periods when domestic production is being exported because our countries lack storage
and marketing infrastructure and import subsidized products that have a negative impact on domestic
production during those periods.
Developing countries should also be allowed to apply import licences for tariff quotas over a
maximum period of three months because the trade control systems in our countries are vulnerable.
In addition, import licences under tariff quotas should not be transferable in order to prevent
speculation and trafficking in these additional market access opportunities.
SPECIAL SAFEGUARD
Ecuador supports the new special safeguard mechanism if the only beneficiaries are
developing countries that are facing sudden and disproportionate increases in their most recent
average figures for imports (ranging from 105 per cent to some 110 per cent) or which record imports
at prices below the average for at least the past five years, corresponding to a representative market.
The amount of the additional duty imposed under the new special safeguard mechanism
should be proportionate to the difference between the price-triggered or volume-triggered level and
the imports recorded or their value at the time of import.
In order to guarantee fair access to the markets of countries applying the new mechanism,
special safeguards should not be imposed within tariff quotas.
Furthermore, we support the mechanism if it also includes processed products and provided
that all developing countries are given the same treatment, with the exception of least-developed
countries.  We also think that this new mechanism should apply to developed countries and, on an
exceptional basis, to developing countries whose exports are subsidized or receive distorting domesticsupport above the de minimis  levels.
The provisions of a new safeguard mechanism should be applied in addition to the special
safeguard in Article 5 of the Agreement on Agriculture, but should not in any way be conditional
upon this contingency measure.
PREFERENTIAL SCHEMES
Paragraph 16 of the Chairman's document entitled "Preferential Schemes", which mentions
deferral of the application of general tariff reductions by developed countries for up to 11 years inTN/AG/R/9
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order not to erode the preferences granted to developing countries, contains some inconsistencies in
comparison with paragraphs 10 and 22 of the same doc ument, which refer to the fullest liberalization
of tropical products and products intended to replace illicit crops, and how duty-free access will be
given within the quotas for these products.
In addition, for Ecuador the inclusion of the words "preferential arrangements" in the third
line of the Spanish text of the Chairman's proposal is totally unacceptable because these words could
cover free trade agreements as well as the exemptio ns approved in Doha, which are specific rules that
govern trade in products of particular interest to some developing countries.  This is the case for the
waivers on bananas, which brought to an end a lo ng-running dispute, and under no circumstances can
the terms and conditions laid down therein be modified by such a general provision.
For the foregoing reasons, Ecuador has proposed that this paragraph be deleted or, at the least,
the words "preferential arrangements" should be deleted, and the title of the paragraph "preferential
schemes" should be replaced by "tariff preferences".  At the same time, Ecuador considers that the
retention of preferential systems should not serve as a pretext to put off even longer the opening of
markets in developed countries.
EXPORT COMPETITION
The deadline for the reduction of all types of export subsidy with a view to their gradual
elimination and for substantial reductions in domestic  support should in essence be shorter than the
period for the proposed tariff reductions.
At the same time, the substantial reduction in subsidies and support within the shortest
possible time-frame should apply both to developed and developing countries because fair and
equitable terms of competition should be guaranteed in all markets so as to avoid further systemicdisparities and trade distortion for which developing countries that do not or cannot finance export
subsidies pay the price.
PEACE CLAUSE
Ecuador notes the statement by the Chairman in his report of 25 June 2003 that the provisions
of Article 13 of the Agreement on Agriculture will expire at the end of 2003.  The legal implicationsof this will therefore come fully into effect as of 1 January 2004.
RECENTLY-ACCEDED MEMBERS
Ecuador considers it important to examine th e nature and the extent of the commitments
made, as well as the status of compliance by countries that have acceded to the WTO since the entry
into force of its constitutive agreements, before fixing a period that would be wholly arbitrary giving
countries that are in this situation additional flexibility as regards reductions in market access, export
subsidies and domestic support.
Countries that acceded immediately after the entr y into force of the WTO have been subject
to the same commitments and disciplines in relation to tariff reductions, quotas, subsidies, domestic
support and all the commitments arising out of the Agreement on Agriculture.  Consequently,
flexibility regarding the time-limits for complian ce should be granted to all countries in the same
situation or to none.TN/AG/R/9
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Statement by Korea
I wish to thank you for your report on the details of the informal sessions.  Unfortunately, it
was confirmed that there are still wide gaps among our views and positions.
There is no doubt that progress should be made in agriculture for successful conclusion of the
DDA.  However, with Cancún less than three months away, I think it is time that a high level of
ambition should be balanced with realism.  Our view is that providing appropriate flexibility and
setting realistic targets for reform are essential for the success of the Cancún Ministerial.
I would like to take this opportunity to make  some very short comments on a few key issues.
First, on issue of tariff reduction, I wish to remind you again of the fact that more than half of
Members are supporting the UR formula, which clearly suggests the direction that we should follow.
Second, while some Members are reluctant to accep t the concept of SP, I think it is indeed an
effective balancing mechanism and also a reflection of flexibility for food security, rural development,
and livelihood security in developing countries.  In this regard, we share the views expressed by
Indonesia, Philippines, India, China, and many others.
My final comment is related to the issue of tariff quota commitment.  In cases where tariff
quota is expanded, I believe the target level should be established in the form of a certain percentage
of the current bound level in order to avoid complicated recalculations.TN/AG/R/9
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Statement by the Philippines
It is with much interest and concern that we followed the debates last week and today.  While
our interest was surely not flagged, our concern has grown as many of the developed countryMembers continue to maintain their respective stands on their own versions of further trade
liberalization without due regard and, more importantly, linkage, to the other pillars mandated for
equally quantum reforms in the so-called Doha Development Agenda.
Given that the prime target of what appears to be obsessive market insecurity of these
countries are our developing country markets, this delegation cannot be a party to the fulfillment of
such an obsession without symmetric reform commit ments in trade distorting export competition and
domestic support measures.  Or as your draft’s architecture suggests and implies, without the two
windows of flexibility in SPs and SSM for condoning the persistence of trade distorting support in
these other two pillars.
We have waited for crucial domestic policy decisions to be made by two major players to
these negotiations with the hope of breaking the inertia.  To the credit of one, such domestic policy
decision, upon resolution, has been translated into a comprehensive proposal, though singular on
market access, de facto  measuring trade liberalization with further tariff reductions, while suffering
from anemia in the other two pillars and S&D.  Nevertheless, we welcomed this development as
another important step forward.
The others recently resolved, per the press releases, their common policy on agriculture.  As
in the case of the first, we welcome this development as a necessary but not sufficient  condition to
move these currently inert negotiations forward.  We have to see, very soon, what these decisions
mean in terms of positively moving forward these negotiations.
As these parties appear to insist that their own so-called domestic ‘reform’ programs be the de
facto  parameters of our global reform commitments in contravention of the Doha Mandate owing to
their gross inadequacy of ambition in trade distorting support, developing countries like the
Philippines have no choice but to insist on the availability of adequate flexibilities afforded by
appropriate provisions on SPs and SSM.
These cannot provide the balance and equity that has so preoccupied developing country
proposals since the mandated Art. 20 phase but without them in the current architecture you propose
and in which we have positively and constructively engaged, the whole exercise will just be further
exposure of our markets to heavily supported competition to the prejudice of our agricultural
economies’ development goals.
We have been asked about the proper economic justification for SPs.  Let me tell colleagues
that if these negotiations is all robustly hinged on and are about proper economics, the elimination of
those persisting trade distorting support and non-tariff barriers should be equally important targets of
the reform program.  Our agricultural sectors that are strategic to food and livelihood security andrural employment have already been destabilized as our development program initiatives are
frustrated by the gross unfairness of the international trading environment.  Even as I speak, our small
producers are being slaughtered in our own markets, even the more resilient and efficient are in
distress.
At the end of the current implementation period, the Philippines will have no tariffs higher
than 50% (with the possible exception of one), with most in the 7 – 15% range.  We have paid our
dues well in advance to move this so-called reform program and we cannot afford the political, social
and economic consequences of the implosion that would result from an unfair share of the adjustment
burden while some continue to wallow in their prof ligate policies that drown us with trade distortions.TN/AG/R/9
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I cannot find a more appropriate economic justification than the survival and the preservation
of whatever opportunities exist for our sectors that determine food security, livelihood and
employment.  Furthermore, our producers also have the right to diversify and fully express their
competitiveness beyond our markets.  I dare add that these are far more robust justifications thanthose that have been advanced in allowing the pe rsistence of trade distorting support, now under the
skirt of the political policy parameters of the developed.
In view of the foregoing, the Philippines is of the position that SPs, along the lines you
defined be self-declared , as one country’s policy measures to attain sustained food and livelihood
security and rural development cannot be competently dictated nor prescribed by any multilateral
negotiation.  On the other hand, the issue that needs to be negotiated should be that limited number of
tariff lines at the 4-digit level .  Further, due to the very nature of SPs, we further propose their
automatic recourse to the SSM.
With regard to special safeguards, we agree that the provisions of Art. 5 of the subsisting
Agreement should cease to apply for developed countries, period .  Since special safeguard measures
are intended to counter the surge in imports which may result from further market opening, access to
the application of measures, either volume or price triggered, must be linked to the degree of market
access.  The proper issue that needs to be negotiated  is therefore the threshold level of tariffs below
which there should be universal access to special safeguard measures.
We have been told that the only flexibility deve loping countries need is the SSM that must be
targeted to the tariff lines we propose to be covered by SPs.  This, at the very least, represents a poor
understanding of developing country agriculture and political economy, and, at its worst, the ultimate
in insensitivity.  SSM addresses the susceptibility of developing country markets to the peculiar
perturbation of import surges, while SPs enable us to ensure the survival and nurture our strategicagricultural sectors in an international trad ing environment jaundiced by trade distortions.
Some parties to these negotiations pull developing countries in opposite directions on the
issue of further tariff reductions: one would have us cut so mechanically that it is SND-blind; and the
other would freeze us in the present medieval world of tariff peaks and tariff escalation.  We can live
with your proposed multi-band formulae.  You can at  least address tariff peaks by an upward revision
in the upper bands.
We exhort you and colleagues to engage more intensively and aim for a mature set of
modalities in these two crucial areas in the next few weeks, that what we bring to Cancún may be
incomplete but already properly developmental in character as Ministers mandated.  Rather than
outright dismissal, we exhort colleagues, particularly the developed countries, to positively andconstructively engage.  You have arrived at your policy parameters as we already have ours, it is time
we commence in earnest our travel to the East.
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