RESTRICTEDWORLD TRADE
ORGANIZATIONG/AG/NG/R/2
15 August 2000
(00-3310)
Committee on Agriculture
Special Session
SUMMARY REPORT ON THE MEETING OF THE SPECIAL SESSION
HELD ON 29–30 JUNE 2000
Note by the Secretariat
1. The Special Session of the Committee on Agriculture, which was established by the General
Council to conduct the negotiations for continuing the reform process under Article 20 of theAgreement on Agriculture (WT/GC/M/53, paragraph 39 refers), held its second meeting on
29-30 June 2000 on the basis of the agenda as set out in the convening airgram WTO/AIR/1331.  The
meeting was chaired by Ambassador Jorge Voto-Bernales of Peru.
2. The present report provides a detailed summary of the Committee's discussions on substantive
matters under the relevant agenda items and should be read in conjunction with the short factual
report to the General Council on the meeting as a whole by the Chairman (G/AG/NG/2, copy
attached).  Unless otherwise stated, all references to documents refer to the G/AG/NG/- series.  Thefollowing Members requested that copies of their statements be circulated:  Argentina (NG/W/20),
Australia (NG/W/21 and NG/W/21/Cor r.1), Brazil (NG/W/22), Cana da (NG/W/23), EC (NG/W/24),
Grenada (NG/W/25), Hungary (NG/W/26), Japan (NG/W/27), Mauritius (NG/W/28 and
NG/W/28/Add.1), New Zealand ( NG/W/29), Norway (NG/W/30), Thailand (NG/W/31), the United
States (NG/W/32) a nd India (NG/W/33).
ITEM A : INTRODUCTORY STATEMENT BY THE CHAIRMAN
3. With regard to the decision that progress in the negotiations be reported directly to the
General Council on a regular basis (WT/GC/M/53, paragraph 3.1, refers), it was recalled that at the
first Special Session it had been agreed for that meeting that a short factual report would be made to
the General Council on the responsibility of the Chairman.  This was on the understanding that thereport, once circulated, could if necessary be amended to correct any errors of a factual nature
(G/AG/NG/1, paragraph 4, refers).  This arrangement was confirmed as a basis for the regular reports
to the General Council, it being noted that the Ch airman would outline the general content of his
report in appropriate detail at the end of each Special Session.
4. As regards the organization of the work of the Special Session, the Chairman noted that the
basic arrangements should be orderly but reasonably pragmatic and flexible in order to facilitate
participation generally, in particular by developing country Members and smaller delegations.  The
various submissions and proposals would be taken up under each agenda item in the order in which
they had been circulated.  Following the presentation of submissions and proposals there would be an
opportunity for comments by other delegations.  Thereafter, there would be an opportunity for otherdelegations to introduce and present additional submissions or proposals.  Having regard to the need
for pragmatism and flexibility, as appropriate, it would not be necessary for a submission or proposal
to have been circulated prior to a Special Session in order for it to be introduced and presented.
Delegations were nevertheless encouraged to circulate their proposals and submissions well in
advance of meetings where this was possible.  The Chairman also indicated that there would be full
opportunity for delegations wishing to make general statements to do so under Agenda Item B, on theG/AG/NG/R/2
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basis that Agenda Item C should be reserved, so far as possible, for the presentation and consideration
of negotiating proposals as such.
5. Finally, the Chairman noted that delegations would be able to have the full text of their
statements circulated, with a minimum of delay, to all participants as working documents of the
Special Sessions.  Delegations who wished to have the full text of their statements circulated in this
way were invited to so inform the Secretariat, if possible before the close of meetings, so that they
could be mentioned in the Chairman's report and other delegations made aware of their availability.
6. Bolivia, supported by Mexico, noted that it would greatly help their preparation for meetings
if documents could be made available in all the working languages of the WTO as time was needed to
examine them and to prepare comments.  South Africa asked that it be given the opportunity to revert
to different proposals and submissions at later meetings.  The Secretariat noted that documents were
translated as quickly as possible but as some proposals had been submitted immediately prior to the
meeting it had not been possible to translate all subm issions.  In response to South Africa's question,
the Chairman confirmed that Members would be given such opportunities at future meetings.
ITEM B:  W ORK WITHIN THE FRAMEWORK OF PARAGRAPHS (A), (B), (C) AND (D) OF ARTICLE 20 OF
THE AGREEMENT ON AGRICULTURE
7. The representative of Brazil referred to background paper NG/S/6 on Agricultural Trade
Performance by Developing Countries 1990-1998.  He felt that the data, though correct, and thestructure of the document gave a distorted picture of the development of trade since the Agreement on
Agriculture came into effect.  For a number of reasons, including the lack of data for 1999 and the
relatively small increase in market share for exports of agricultural products from developing
countries, the paper did not reflect actual developments.  Furthermore, developed countries had
continued to support and protect their agriculture sectors.  Another information that reinforced theBrazilian perception that agricultural reform is necessary and urgent was the fact that developed
countries' imports of agricultural products from de veloping countries grew less in the post-Uruguay
Round period than in the preceding period.  In proposing that the document be revised he suggested a
number of additional elements that should be examined.  (The full text of Brazil's statement is
contained in NG/W/22.)
8. Mexico also commented on document NG/S/6 noting that the definition of products used in
the paper appeared to be different to that set out in Annex 1 of the Agreement on Agriculture.  He
noted that this could mean that different papers were using different definitions making cross-
references difficult.  In particular the paper on the effect of the reduction commitments on world trade
(NG/S/11) gave some information on exports, imports  and market share for different countries.  In
referring to NG/S/11 he suggested that an additiona l table would be useful showing combined trade to
indicate the relative importance of each Member in  total world trade.  In NG/S/1 and NG/S/2 he noted
that some of the descriptions of different measures concerning Mexico may need to be amended.
9. The representative of Japan thanked the Secretariat for the work and asked for two additional
papers.  The first was a revision of a document prepared for the process of Analysis and Information
Exchange "Studies on the Implementation and Impact of the Agreement on Agriculture on
Developing Countries" (AIE/S7) but this time also  taking into account studies on the impact on
developed countries.  The second request concerned Article 20(c) for a paper to show the elements of
non-trade concerns, including those discussed in the AIE process and in the General Council.  He
made a number of comments relating to different Secretariat background papers including NG/S/11
on world trade, NG/S/6 on the trade performance of developing countries, NG/S/2 on Green Box
measures, NG/S/7 and NG/S/8 on tariff quotas, NG/S/5 on export subsidie s and NG/S/3 and NG/S/4
on the implementation of the Marrakesh Decision on least-developed and net food-importing
developing countries.  In his comments he noted that Japan was the world's largest net food-importing
country with a significant proportion coming from developing countries.  The dominance of aG/AG/NG/R/2
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relatively small number of supplying countries and large fluctuations in supply due to policy and
weather related factors meant security of supply was very important for food importing countries.  He
noted that the shift from trade-distorting Amber Box supports to less-distorting Green Box supports
and suggested that this showed that many WTO Members were reforming their agricultural policies in
line with greater liberalization.  He also stressed the importance of the Blue Box as an aid to this
process.  On market access he noted that imports under tariff quotas were affected by a number offactors and further analysis may be needed and pointed out that data for imports under state-trading
enterprises showed that they could be an effec tive way to implement tariff quotas.  On export
subsidies he suggested that not only should export subsidies be examined but also export credits, taxes
and prohibitions /restrictions as all had the ability to distort trade.  The decline in food aid in recent
years was a matter of great concern and he noted that according to the OECD Japan was the largest
aid donor in the field of agriculture contributing 38 per cent of total aid in 1996.  (The full text of
Japan's comments on the Secretariat papers can be found in NG/W/27.)
10. On the development of world trade (NG/S/11) the representative of Turkey noted that the
average rate of growth in total world trade in agricultural products had actually declined in the period
1995-1998 compared to 1992-1994.  Even if the period 1995-1997 was taken, thereby excluding 1998
and the effect of the Asian crises, the rate of growth remained unchanged compared to 1992-1994.  In
addition, since 1995 the average share of fifteen selected countries, including Turkey, the EC, theUnited States and Japan had remained virtually unchanged compared to the early 1990s.  In Turkey's
opinion the Agreement on Agriculture had not brought the expected benefits.  On the impact of the
Agreement on developing countries (NG/S/6) he noted  that the average annual growth rate of exports
of agriculture products from developing countries  had fallen compared to the pre-Uruguay Round
period although if 1998 data were excluded the rate of growth had increased.  However, in Turkey'sopinion the increase in market share of 1 per cent for exports of agricultural products from developing
countries was insignificant and other data gave inconclusive results.  Some concern was expressed
about the data for Europe and Japan which showed a decline in market share for imports with no
change, or only small increases, for other developed countries.  He noted that Turkey's share of total
imports increased after the conclusion of the Uruguay Round while exports had decreased.  The mainreason for the unsatisfactory results included the tariffication process by developed countries that had
resulted in increased protection, the reservation of the right to use the special safeguard and the
misuse of tariff quotas resulting in low levels of imports under market access opportunities.  On
export subsidies, the paper NG/S/5 showed that five developed countries accounted for nearly all
expenditure.  He also stated that the special and differential treatment provisions should be formulatedaccording to the development needs of developing countries.
11. The representative of Argentina noted that he was not in a position to comment in detail on
the Secretariat background papers as more time was needed to examine and analyse them.  However,
following a preliminary examination he stated that  Argentina supported the comments made by Brazil
on the paper on the trade performance of developing countries (NG/S/6).  On the papers on export
credits (NG/S/12 and NG/S/12/Add.1) he was disappointed to find that the tables in NG/S/12 did not
provide the same data on export credits as they did on export subsidies.  He hoped that the Secretariatwould be able to expand the papers and to brea k down the tables in NG/S/12/Add.1, that showed the
total value of exports that benefited from export credits, in the same way as the tables presented in
NG/S/12.  Referring to the request from Japan for a background paper on non-trade concerns and
Japan's suggestion that this paper should draw on the data provided in the process of Analysis and
Information Exchange he stated that this was acceptable only if the paper was simply a compilation ofthe issues raised by Members and no more.
12. The representative of Australia stated that the papers provided by the Secretariat showed just
how little had really been done to achieve the objective of fundamental reform of agricultural trade.
On the paper on export subsidies (NG/S/5) he noted that well over 90 per cent of the value of export
subsidies was provided by only a few Members and that the flexibility permitted under Article 9.2 ofthe Agreement on Agriculture meant some Members had increased their use of these supports.  TheG/AG/NG/R/2
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papers on domestic support (NG/ S/1, NG/S/1/Corr.1, NG/ S/2, NG/S/12 and NG/S/12/Add.1) were of
limited use because some Members had not made their notifications but data from other sources
suggested that support levels were now back to where they had been before the conclusion of the
Uruguay Round.  For market access (NG/S/7 and NG/S/8 ) he noted that the opening of market access
opportunities had not been very successful and he was disappointed to see that fill rates had actually
been declining in recent years.  A close examinat ion of the reasons for these low fill rates was
necessary and this examination would have to take into account administration of tariff quotas.  As for
possible future work he suggested that more information on bound versus applied tariffs was needed
as well as market access information with respect to products of interest to developing countries.
13. On behalf of CARICOM the representative of Grenada supported Brazil in its comments on
the paper on the trade performance of developing countries (NG/S/6) and he pointed out that there
was only weak causality between trade liberalization a nd trade.  With regard to future work based on
NG/S/6 he suggested that information on trade unde r preferential agreements would be useful as
would information on the rates of growth in trade for raw and processed products.  A separate study
on bound versus applied tariffs for products of exporting interest to developing countries would also
be useful.  (The full text of Grenada's comments is contained in NG/W/25).
14. Korea noted that in the paper on Green Box meas ures (NG/S/2) the data showing expenditure
in terms of US dollars was useful for comparison purposes.  However, a proper understanding of thedata needed to take account of the effects of changes in exchange rates including the dramatic
fluctuations in some countries in 1997 and 1998.  The paper on the trade performance of developing
countries (NG/S/6) contained some useful inform ation but the concentration on export performance
did not give the full picture.  It was also necessary to examine the agriculture trade balance or the
terms of trade, including data on imports of agriculture commodities.  Korea noted that developingcountries were in reality a series of sub-groups with different characteristics.  For the paper on
domestic support (NG/S/1), the fact that expenditure in most countries was well below commitment
levels was noted, although it was also pointed out that there were wide variations in expenditure
relative to commitment levels as well and Korea stressed that these developments were taking place
against a background of reducing commitment levels.  It was suggested that the Secretariat shouldprepare a paper on non-trade concerns as this was one of the factors listed under Article 20 that had to
be taken into account during the negotiations.  In fact non-trade concerns had already been discussed
in the first Special Session and in the AIE process.  The paper could draw on the submissions made in
the preparatory process for the Seattle Ministerial and the Chairman's reports to the Committee on
Agriculture on the AIE process.
15. The representative of Norway stated that his delegation would consider Article 20, paragraphs
(a) to (d), in light of the background papers prepar ed by the Secretariat and Norway's experience of
implementing the Agreement on Agriculture.  He st ated that the Agreement had contributed towards
improving stability on the world market and suggested that the binding of tariffs, export subsidies and
domestic support arising from the Agreement had increased attention in each country on support
policies and improved transparency through schedules and notifications.  He noted that for Norway
imports had increased by 23 per cent since 1995 and the domestic support and export subsidycommitments were binding constraints.  While welcoming the papers on the Marrakesh Decision on
least-developed and net food-importing developing countries (NG/S/3 and NG/S/4) and noting that
the new Food Aid Convention had come into force, he also noted that this new Convention included
reduced commitments.  However, he stated that aid should be targeted and should not be a
disincentive to domestic production.  He stressed the importance of financial and technical assistanceas a way to assist integration into the international trading system and noted that developed, and some
better off developing countries, could contribute by improving market access.  Although the paper on
the trade performance of developing countries (NG/ S/6) contained some useful data he would like to
see information on specific countries, especially thos e who had gained or lost market share.  (The full
text of Norway's comments is contained in NG/W/30.)G/AG/NG/R/2
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16. The representative of the EC noted that Article 20 required an examination of the impact of
the commitments undertaken in the Uruguay Round and suggested that a comprehensive review of
non-trade concerns was needed as had taken place in the AIE process.  In the paper on Green Box
supports (NG/S/2) he suggested that the increased  use of Green Box subsidies should be a welcome
development as these supports were, at most, minima lly trade distorting.  On the Marrakesh Decision
on least-developed and net food-importing developing countries (NG/S/3 and NG/S/4) he felt that the
fears expressed at the end of the Uruguay Round had been overstated as prices had not risen as
predicted.  He noted that a reliable source of food aid was necessary but that aid should not be used
for disposal of surpluses.  On export subsidies (NG/S/5) he noted that the EC was within its
commitment levels.  Export supports were not lim ited to the measures set out in this document as
export credits (NG/S/12, NG/S/12/A dd.1 and NG/S/13) and some forms of domestic support could
also have the same effects as export subsidies.  He also pointed out that while the EC was the main
user of export subsidies the United States was the main user of export credits and he regretted that thedisciplines on export subsidies were not applicable to export credits.  On the papers on tariff quotas
(NG/S/7 and NG/ S/8) he noted that although the Uruguay Round Agreement on Agriculture had
greatly increased the use of tariff quotas it had not clarified the rules on their administration.
Although the paper on the special safeguard (NG/S/9) showed that it had not been used as widely as
expected this did not mean the special safeguard was unnecessary.  On the contrary it made it easier tomake tariff commitments and it was less trade distorting than other remedies such as general
safeguards.  On the paper on the effect of the reduction commitments on world trade (NG/S/11) he
noted that the EC had been losing market share although this was not surprising given the
Communities' export subsidy commitments.  However, he pointed out that those countries that had
increased market share had been mostly developed countries and suggested that this undermined the
conclusion that export subsidies were damaging developing countries.  He supported the suggestion
by Grenada that some work was needed on trade under preferential arrangements as he felt these had
an important role, especially if an equitable participation in trade was to be achieved between
developed and developing countries.
17. New Zealand noted that although the Uruguay Round Agreement on Agriculture had set up a
framework for the reform of agricultural trade there was still a long way to go.  On market access
(NG/S/7 and NG/S/ 8) he noted that imports under tariff quotas were actually declining as a proportion
of the total tariff quota volume and suggested that this could mean quota administration or high in-
quota tariffs were restricting access.  He noted that the special safeguard (NG/S/9) was relatively little
used and stated that this reinforced the view that this measure was not really needed.  Australia'ssuggestion of work on bound and applied tariffs was supported with the addition of an analysis of
complex tariffs and their effect on trade.  It was disappointing to see that, at the end of the
implementation period for developed countries, export subsidies remained high and that their use was
concentrated in a relatively small number of WTO Members and commodities.  He suggested that a
table could be added to NG/S/5 to show the five main users and the five main commodities affected
along with some information on the effect of the flexibility allowed under Article 9.  Although the
papers on domestic support (NG/ S/1, NG/S/1/Corr.1 and NG/S/2) showed a trend towards using more
Green Box support this raised the concern that the criteria for the Green Box might need to be
examined.  These domestic support papers also showed  that high levels of trade-distorting supports
were still being used although, on the Blue Box, he noted the trend appeared to be towards reducing
the use.  While the information on the Marrakesh Decision (NG/S/3 and NG/S/4) was important the
most important element was food security.  He acknowledged the role of food aid in determining foodsecurity although he observed that food aid levels appeared to fluctuate in ways that were not always
consistent with needs.  While it was good to see that the trade performance of developing countries
(NG/S/6) had improved he noted that it was importa nt to ensure that the reform process allowed the
least-developed and the net food-importing developing countries to benefit from the opportunities that
would arise.  Measures could include increased market access, elimination of export subsidies andconcrete special and differential treatment.G/AG/NG/R/2
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18. The representative of the United States noted that the notifications by Members showed that
most of them were well below their commitment levels which suggested that there was scope for
further reductions in support and protection.  He was encouraged by the increased use of Green Box
measures as these allowed Members to support their agriculture and rural communities without
distorting trade.
19. Mauritius stated that the negotiating process should complete its assessment of Article 20,
paragraphs (a) to (c), before considering paragraph (d).  In commenting on the paper on the trade
performance of developing countries he supported the statement made by Brazil and stated that the
main beneficiaries had been some developed or developing countries that exported a wide variety of
commodities.  He felt that preferential trade agreements were necessary to ensure participation by
many developing countries in world trade.  On the papers on the implementation of the Marrakesh
Decision he noted the statements made by the FAO showed that declining levels of food aid and
export subsidies meant that an increasing proportion of food aid was being traded on commercialterms and that the capacity to import food in least-developed and net food-importing developing
countries remained precarious.  He felt that any examination of export subsidies should be pragmatic
and should take account of their role for net food-importing countries.  Finally, he supported Japan's
suggestion that a background paper by the Secretariat on non-trade concerns would be useful.  (The
full text of Mauritius' statement is contained in NG/W/28 and Add.1.)
20. The representative of the Czech Republic stated that a clear analysis of the experience of
implementation of commitments was necessary.  On  the papers on tariff quotas (NG/S/7 and NG/S/8)
he agreed with the EC that the Agreement on Agriculture had created over 1,300 tariff quotas but
there were still no clear rules on their administration and it was often more important to know how a
quota was administered than its nominal level of commitment.  He asked if the Secretariat couldelaborate on the papers by seeing if there was any relationship between a change in administration and
the level of imports.  Secondly, on domestic supports he asked for an analysis of the impact of rates of
inflation on the real level of domestic support commitments.
21. The representative of Switzerland noted that the discussion so far had shown that Members
were still far from having a collective appreciation of the review required under Article 20 (a) and (b).The general trend in world trade (NG/S/11) showed very different situations between countries and he
noted in particular the developments in market share that had occurred over the past few years
especially for some of the countries in the Cairns Group.  From the papers on domestic support it was
clear that many countries were shifting towards support systems that were increasingly decoupled
from production.  He also noted that under the Green Box a large portion of spending was directedtowards domestic food aid.  Overall the results of the Uruguay Round had triggered a reform process
in Members' agricultural policies that was continuing.  The challenge now was to find a way to
stimulate this process as required by Article 20.  For developing countries (NG/S/6) he noted their
diversity and the relatively good trade performance of some of those that were able to offer a wide
range of products.  On the special safeguard he supported the EC and stated that the low number of
users and rate of application did not mean it could be removed.  In fact it showed that the special
safeguard was working well and was not being abused.  Removing it could mean some Memberswould use alternative trade remedies that were more trade disrupting.  On imports under tariff quotas
he noted that Switzerland, together with Australia, had the highest rates of quota fill.  He also noted
that Switzerland had one of the highest per capita levels of food aid, none of which was tied, and that
only Switzerland had increased its commitments under the new Food Aid Convention.  In conclusion
he supported the request by Japan for a Secretariat background document on non-trade concerns.
22. The representative of India stated that information provided in these documents confirmed his
conclusion from the process of Analysis and Information Exchange that the greatest distortions in
agricultural trade arose from the policies of some developed country Members.  The Agreement on
Agriculture had been expected to lead to a shift in cereal production from high to low subsidy areas
but this had not happened.  High domestic support was still causing over-production and exportG/AG/NG/R/2
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subsidies were still needed to dispose of the surplus, depressing prices further at the expense of
developing countries.  Overall, domestic supports remained at nearly the same level as in the base
years as they had been shifted from one box to another.  The opening of markets under the Agreement
on Agriculture had occurred mostly in developing countries with insignificant increases in developed
countries as shown by the discouraging rate of growth in imports from developing to developed
countries, with western Europe and Japan's share of imports actually declining.  Although theAgreement on Agriculture had been a success in defining rules for trade it had little to show in terms
of effective market opening.  Market access continued to be hampered by high tariffs, tariff peaks and
tariff escalation and, in some cases, non-tariff measures.  He felt improvements would only occur with
the complete elimination of export subsidies and domestic supports along with significant tariff
reductions.  In addition the particular needs of developing countries had to be taken into account in
creating market access opportunities for the products of interest to developing countries.  The
commitments had to be made in an equitable way taking into account non-trade concerns, includingfood security, and special and differential treatment for developing countries.  In fact the current
provisions for special and differential treatment had yet to be effectively operationalized.  Agriculture
was at the centre of India's economy.  The sector employed a large number of people and contributed
a large share of GDP which meant an approach was needed in which non-trade concerns, such as rural
livelihoods and local production to meet local needs, were taken into account.  State support to lowincome and resource poor farmers was an integral part of poverty alleviation programmes in countries
like India, with a large number of subsistence farmers producing only enough for their own
consumption needs or crops to exchange for food at local markets.  Such farmers' ability to trade was
limited with little likelihood of improvement in the medium term.  The aim was to increase local
production which meant protection from unfair competition with moderate tariffs and access to thespecial safeguard.  In conclusion he stated that India was preparing its initial proposal on food
security.  (The full text of India's statement is contained in NG/W/33.)
23. The representative of Kenya noted that other WTO agreements had an impact on trade in
agricultural products, in particular the SPS Agreement.  While some countries had concentrated on the
effect of export subsidies he felt that other factors also had a considerable impact on exports fromdeveloping countries such as technical barriers to trade.  He supported the proposal from the Czech
Republic for an analysis on the effects of exchange rate fluctuations on commitments.
24. The representative of Pakistan outlined his country's experience with the implementation of
the Agreement on Agriculture.  He stated that in the mid-eighties Pakistan had undertaken substantial
policy reforms in the agriculture sector.  As a result of these reforms, quantitative export restrictionshad been removed and subsidies eliminated.  Pakistan had fully complied with its Uruguay Round
commitments;  it had not provided export subsidies;  had no tariff rate quotas;  had a negative AMS;
and had no access to the special safeguard under Article 5.  When the Uruguay Round had been
concluded a number of studies had projected significant benefits, including in agriculture.  However,
the outcome for Pakistan had been very negative in terms of net trade.  Imports had increased but
market access for products from Pakistan had changed very little while many developed countries had
increased their SPS standards. The benefits of the Uruguay Round depended on the extent to whichPakistan's trading partners implemented their commitments.  High levels of support and protection in
OECD countries showed little change compared to before the Uruguay Round and trade-distorting
policies continued to impede access.  In conclusion, he hoped that the mandated negotiations would
lead to policy reforms and better market access of products from Pakistan.
I
TEM C :  P RESENTATION AND CONSIDERATION OF THE NEGOTIATING PROPOSALS FOR CONTINUING
THE REFORM PROCESS
25. The Chairman outlined the procedure for discussing the proposals.  Presentations would first
be made by the Member(s) making the proposals.  When all presentations were completed the floor
would be opened for comments.G/AG/NG/R/2
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26. Before the presentations began the representative of Bulgaria raised a preliminary
methodological point.  He pointed out that in other negotiating bodies in the WTO it had been
suggested by some Members that before a proposal could be considered it was first necessary to
determine if it came under the mandate of the respective body.  Specifically, in the Council for Trade
Related Aspects of Intellectual Property Rights (TRIPs) the question had been raised whether the
extension of additional protection to agricultural products other than wines and spirits came under thescope of the TRIPs Council.  Bulgaria would have preferred a pragmatic and practical approach by
leaving it to Members making proposals to decide what should or should not be the subject of their
proposal.  However, if other bodies were going to adopt a rigid legalistic approach then Bulgaria
believed all negotiating bodies would have to do the same.  The Special Sessions of the Committee on
Agriculture would then have to consider each proposal to see if it came under the negotiating mandate
before it could be considered.  He stated that, at this meeting, Bulgaria would refrain from insisting
that this legalistic approach be adopted but would reserve its rights with respect to future meetings
depending on the developments in other bodies.
27. Switzerland, Turkey, India (see comments in NG/W/33), Sri Lanka, the Czech Republic, and
Mauritius expressed their support for Bulgaria.  Switzerland noted that geographical indications were
an important element of the agriculture negotiations but as they went beyond agricultural products
they should be dealt with first in the TRIPs Counc il.  He suggested that the Special Session should be
regularly updated on the work in the TRIPs Council on this subject and that Members should
acknowledge the link between the Council and the Spec ial Session on this subject.  Mexico noted that
the discussion in the Special Session on a proposal did not automatically mean the subject came under
the scope of the negotiations.  However, the negotiations under Article 20 of the Agreement on
Agriculture were not linked to other negotiations in the WTO.  The Committee took note of thisexchange of views.
1. Presentation of Proposals
(a) Export Competition – Cairns Group (NG/W/11)
28. The representative of Australia presented the Cairns Group proposal on export competition
(NG/W/11).  He stated that this was the first of a series of proposals from the Cairns Group and that
subsequent ones would cover domestic support and market access.  In each area the Group would put
forward ideas on special and differential treatment for developing countries which was an integral of
the reform process.  He noted that the objective of the negotiations was to achieve a fair and market
orientated agriculture trading system.  Export subsidies were the most trade-disruptive form of
subsidy that allowed the excesses of domestic support to be dumped on the world market.  The effectwas to depress prices, reduce incentives for production and to damage agriculture production in other
countries, including net food-importing developing countries.  He noted that only 25 Members had the
right to use export subsidies and support for their elimination came from a wide variety of sources
including trade Ministers of the Asia Pacific Economic Cooperation countries, the Group of 77, the
negotiators for a Free Trade Area of the Americas and the Group of 15.  The process of elimination
had started in the Uruguay Round although on a flawed basis as the reductions had been based on
usage during a base period.  As a result entitlements to use export subsidies remained high while therewere still no disciplines on the use of export credits despite the provisions of Article 10.2 of the
Agreement on Agriculture.  The current negotiations should result in the elimination of all forms of
export subsidization and then their prohibition.  This should start with minimum reductions of 50 per
cent in both budgetary outlays and volume terms.  To prevent circumvention better rules were also
needed including disciplines on export credits, guarantees and insurance programmes and on non-commercial transactions.  The exact form that spec ial and differential treatment should take should
depend on the negotiations but it could take the form of longer elimination periods and the
continuation of the current exemptions for developing countries until the final date for the elimination
of export subsidies.  Finally, he called on Members to show restraint during the negotiations in the useG/AG/NG/R/2
Page 9
of export subsidies.  (The full text of the Australian statement on behalf of the Cairns Group is
contained in NG/W/21 and Corr.1.)
29. A number of other Members of the Cairns Gr oup supported the statement by Australia.
Brazil noted that export subsidies did nothing to help net food-importing countries.  Although prices
may be lower for urban dwellers the lower prices and increased competition reduced the incentives for
production in the same countries.  In fact the Marrakesh Decision on least-developed and net food-importing developing countries could only be really effective when export subsidies were eliminated
and developing countries were able to fully participate in international trade of agricultural products.
Bolivia noted that poorer, more vulnerable countries were hampered in their development, with
special treatment effectively going to some richer c ountries by allowing them to use export subsidies.
South Africa noted that support was growing for th e abolition of export subsidies.  Under the
Agreement on Agriculture only some countries had the right to use them.  Paraguay stated that trade
liberalization should not exclude agriculture and, as for industrial products, export subsidies foragricultural products should be prohibited.  Paraguay was a land-locked country and its exports, most
of which were agricultural products, already faced the disadvantage of high transportation costs.
Increased competition resulting from export subsidie s made this situation worse.  Canada noted that
the elimination of export subsidies was essential.  The question for negotiation was how fast they
should be eliminated.  The Philippines stated, on behalf of ASEAN, that it was unfair that relativelywealthy producers in richer countries should have the benefit of export subsidies.  It was also pointed
out that better rules were needed to prevent circumvention, including the carry-over of unused
entitlements from one year to the next, although some account would have to be taken of the special
needs of developing countries.  Uruguay stated that export subsidies were particularly damaging to
developing countries as they depressed international prices, destabilized world markets, eroded theincomes of efficient farmers and hampered investment and production.  It was felt that while special
and differential treatment provisions for developing countries were necessary they were more relevant
to the areas of market access and domestic support than they were to export subsidies.  The future
proposals from the Cairns Group in these areas would have more proposals for special and differential
treatment that would address the concerns of net food-importing developing countries more directly.Colombia noted that export subsidies used by w ealthier countries added to the many disadvantages
facing developing countries where their agriculture sectors suffered from poor production structures,
low levels of technology, low levels of capitalization and poor access to finance.  Their inefficient and
expensive transport and infrastructure systems made it necessary to continue to give developing
countries access to the exemptions currently available under special and differential treatment.Guatemala stated that the negotiations were an opportunity for Members to improve their economic
performance.  For developing countries to achieve that goal meant that the distortions caused by
export subsidies had to be eliminated.  Chile noted that there was a wide degree of support outside the
Cairns Group for the proposal.  Export subsidies meant less resources for Chile, resources that could
be used for housing, education, health or for envi ronmental protection or improvement.  New Zealand
stated that export subsidy elimination was a key objective.  Export subsidies were used by a small
number of rich countries that used them to export to the rest of the world the problems caused by theirdomestic support policies.  (New Zealand's comm ents are contained in NG/W/29.)  Indonesia added
to the statement on behalf of ASEAN saying that while the distorting subsidies of developed countries
had to be abolished developing countries should continue to benefit from the special and differential
treatment provisions of Article 9.4.  Costa Rica stated that the objective of the negotiations was to
achieve a fair and market oriented agriculture trading system and that the best support that could begiven to developing countries was to allow them to use their natural advantages.  Both these issues
required the elimination of export subsidies.
(b) Market Access – Canada (NG/W/12)
30. The representative of Canada introduced her country's proposal on market access set out in
NG/W/12.  She stated that it was essential to continue the reform process in agricultural trade that hadstarted in the Uruguay Round with the aim of improving market access for all agricultural  products.G/AG/NG/R/2
Page 10
In the Uruguay Round most quantitative import restrictions had been removed, tariffs had been bound
and the concept of minimum access opportunities had been introduced.  However, the effect of these
reforms had been modest and problems remained.  For single stage tariffs, that is a single tariff for all
imports of a particular product, the principal problems were high tariffs, tariff escalation and large
differences in tariffs between competing products.  To reduce the distortions caused by these
problems Canada was proposing a formula approach to tariff reductions.  In cases where the level ofthe final bound tariff would not provide real market access opportunities, a duty free import quota
should be established.  For two-stage tariffs, that is in cases where market access obligations required
a lower tariff rate for a certain volume of imports and a higher bound tariff on out-of-quota imports,
the problems were principally the disparities in tariff quota volumes between Members and across
products, high in-quota tariff rates and administration methods that had the effect of restricting access.
Canada proposed expanding all such tariff quotas to a minimum common level expressed as
percentage of current consumption of commonly defined agriculture products and eliminating the in-quota tariff.  Tariff quotas should be set out on a product basis and not subdivided into smaller
categories leaving it to the market to decide precisely what would be imported.  Furthermore, to
ensure that administration of tariff quotas did not impede access, better rules were needed on
administration.  In order to make such a proposal workable and to put quotas on the common basis
information was needed from Members on their consumption of basic agricultural products in a recentperiod.  Canada recommended that the Secretariat be asked to begin compiling such information
based on information to be submitted by Members.  Canada also noted that some agriculture sectors in
many countries wanted liberalization for their sectors.  For example oil-seeds and vegetable oil
industries were pursuing the objective of zero-for-zero in these negotiations.  Canada supported this
initiative and suggested that other sectoral initiatives should be pursued.  Canada acknowledged thatfor food-importing countries increased market access meant increasing reliance on imports for food
needs.  An open and well-functioning market could make a considerable contribution to food security
but importers also needed reliable suppliers.  For this reason Canada believed better disciplines were
needed on export restrictions and export taxes.  Finally, while some developing countries had noted
that there was no section on special and differential treatment Canada believed that their proposaldirectly addressed many issues of concern to developing countries such as tariff escalation and real
market access opportunities.  However, she underlined that Canada was open to special and
differential treatment and acknowledged that developing countries have special requirements and
hoped to hear specific ideas from them on what was needed to smooth their integration into the
trading system.  (The full text of Cana da's comments is contained in NG/W/23.)
(c) Cuba, Dominican Republic, Honduras, Pakist an, Haiti, Nicaragua, Kenya, Uganda,
Zimbabwe, Sri Lanka and El Salvador – Special and Differential Treatment and a
Development Box (NG/W/13)
31. The paper on special and differential treatment and the need for a development box by Cuba,
the Dominican Republic, El Salvador, Haiti, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka and
Zimbabwe (NG/W/13) was presented by the representative of Pakistan.  He stated that special and
differential treatment would be a central part of the negotiations based on the special needs ofdeveloping countries.  The current special and differential treatment provisions in the Agreement on
Agriculture were only best endeavour type prov isions.  New binding provisions were needed.
Agriculture was important for most developing countries as it represented a large part of their
economies and their work forces.  It contributed significantly towards economic growth, poverty
reduction and enhanced food security.  The current Agreement, in many ways, distorted production infavour of richer countries.  The experience of developing countries with the implementation of the
Agreement had been difficult as exports had not increased but cheap imports had destabilized the
sector.  The balance-of-payments situation continued to deteriorate as did food security, agricultural
employment and poverty.  All this warranted a Development Box for the agriculture sector in
developing countries to cover measures needed to achieve their developmental objectives.G/AG/NG/R/2
Page 11
32. Zimbabwe noted that this was an initial proposal that could be developed in the negotiations.
The proposal was really an attempt to redirect  the special treatment given in the Agreement on
Agriculture away from richer countries to those that most needed it.  The exemptions given for certain
types of export subsidies for developing countries should be expanded to cover all those listed in
Article 9.1 of the Agreement on Agriculture.  This was not in order to compete, because the financial
situation of developing countries meant that they w ould not be able to do so, but to enable developing
countries to give a modest stimulation to their export sectors.  Sri Lanka stated that the agriculture
sector was very important in terms of food security and social stability.  The current Green Box was
designed to meet the needs of developed countries and was open to abuse while the experience of
developing countries in implementing the Agreement on Agriculture had been difficult.  The proposed
Development Box would allow them to take measur es according to their development needs.  The
proposal to increase the de minimis  to 20 per cent would give them the flexibility to meet these
objectives.  In addition, developing countries should be able to raise their tariff bindings on keyproducts when cheap imports threatened domestic production and to maintain tariff barriers until they
became export competitive.  It was noted that there did not seem to be any political will to activate the
Marrakesh Decision on least-developed and net food-importing developing countries. The
representative of Cuba suggested that structural  changes to the current Agreement on Agriculture
were needed so that less advantaged countries could increase their production and their food security.So far special and differential treatment had only worked in favour of developed countries.  This had
to be changed to assist developing countries.  Kenya stated that this proposal was a food security
issue.  Agriculture was vitally important to Kenya's economy as well as for government revenues and
employment.  The special and differential treatment provisions that currently existed did not work in
their favour.  It was noted that the final shape of such provisions would depend on progress in otherareas of the negotiations.
(d) Cuba, Dominican Republic, Honduras, Pakist an, Haiti, Nicaragua, Kenya, Uganda,
Zimbabwe, Sri Lanka and El Salvador – Green Box/Annex 2 Subsidies (NG/W/14)
33. The paper on the Green Box by Cuba, the Dominican Republic, El Salvador, Haiti, Honduras,
Kenya, Nicaragua, Pakistan, Sri Lanka and Zimbabwe (NG/W/13) was presented by therepresentative of El Salvador.  The existing Green Box was associated with a number of problems
such as lack of transparency and abuse by some Members.  The Agreement on Agriculture was
supposed to have resulted in reduced levels of support for agriculture.  Instead support had increased
as countries increased the use of Green Box measures.  This was reflected in the data from the OECD.
Although the Green Box criteria required such subsidies to be at most minimally trade distorting these
criteria were not clear enough as it was up to each government to decide what was minimally trade
distorting.  The proposal recommended that all domestic supports should be classified into one group
and criteria developed on what programmes were allowed.  Flexibility for developing countries would
be given through a Development Box.  The Peace Clause of the Agreement should be phased out as
soon as possible and allowed only for developing countries.
(e) United States - Proposal for Comprehensive Long-Term Agricultural Trade Reform
(NG/W/15) and Note on Domest ic Support Reform (NG/W/16)
34. The representatives of the United States presented their two papers on a comprehensive
proposal for agricultural trade re form (NG/W/15) and on domestic support (NG/W/16).  The United
States proposal was based on the high priority it attached to the negotiations making progress towards
reforming agricultural trade.  The proposal had received wide bipartisan support in the United States
from senior politicians as well as wide support from leaders of the farming community.  The UnitedStates aimed at reducing the high levels of pr otection and trade-distorting support common in many
countries even after the progress made in the Uruguay Round.  Freeing trade flows would enhance
food security.  The negotiations would also have to take account of the circumstances of the least-
developed and other developing countries.  The United States was seeking to achieve the aim of
greater liberalization of agricultural trade by substantial reductions in tariffs, increasing tariff quotas,G/AG/NG/R/2
Page 12
the elimination of export subsidies, disciplines on the use of export restraints, disciplines on single
desk state-trading importers and exporters, a ceiling on trade-distorting support based on a proportion
of agricultural output and disciplines on trade barriers to products produced using new technologies.
Three points in particular were highlighted;  first that there were no product exemptions, second that
the negotiations should eliminate disparities between  different countries' levels of commitments and
third that meaningful progress could be made by focusing on the most trade-distorting types ofpolicies.  The United States recognized the right of countries to support their farming and rural
communities but it was also necessary for each country to bear the full cost of such support and not to
impose it on others, especially not on developing countries.  Supports should be provided in the least
trade-distorting manner possible although the negotiations would have to take account of programmes
in developing countries aimed at more efficient or market-orientated production.  (The full text of
statements made by the representatives of the United States is contained in NG/W/32.)
(f) European Communities – The Blue Box and Other Support Measures (NG/W/17);  Food
Quality - Improvement of Market Access Oppor tunities (NG/W/18);  and, Animal Welfare
and Trade in Agriculture (NG/W/19)
35. In presenting the European Communities' three proposals, on the Blue Box (NG/W/17), food
quality (NG/W/18) and animal welfare (NG/W/19), th eir representative stated that the three proposals
were an attempt to clarify the EC position on these areas and that the Communities were preparing acomprehensive proposal to be submitted later in the year.  On the Blue Box paper he stated that at the
conclusion of the Uruguay Round it had been believed, and subsequent work in the OECD had
shown, that non-variable area based payments in production restricting programmes contributed to
reform by reducing distortions and improving the market situation.  It was therefore misguided to
suggest that they should be included in the Amber Box.  On the paper on food quality he stated thatthe EC was not trying to justify higher tariffs but rather to protect consumers and producers from
misleading labelling.  On animal welfare he felt that the EC position had been misunderstood.  The
EC was not trying to benefit animals over humans or to increase trade barriers.  They were trying to
ensure that trade liberalization could go ahead while guarding the progress that had been made in
some countries in the area of animal welfare.  (The full text of the EC statement is contained inNG/W/24.)
2. Discussion of Proposals
(a) Cairns Group - Export Competition (NG/W/11)
36. In the discussion of the proposal by the Cairns Group on export competition a number of
countries, including the United States, Kenya, Pakistan, Ecuador, the Dominican Republic, Egypt andHonduras, expressed their support.  Pakistan noted that many of the products that receive export
subsidies competed with its own exports while the United States noted that it was looking for reform
not just in direct export taxes but also in exporting state-trading enterprises and in export restrictions.
Egypt stated that it was in favour of a higher level of liberalization for trade in agricultural products
but real and effective special and differential treatment was needed, including implementation of the
Marrakesh Decision on least-developed and net food-importing developing countries.
37. The European Communities (see comments in NG/ W/24) stated that it was prepared to
negotiate reductions in export subsidies provided all forms of export subsidies were treated in the
same way.  The representative of Switzerland stated that he was in favour of further reductions while
Mauritius (see comments in NG/W/28) was disappointed to see that there was no reference to the
Marrakesh Decision on least-developed and net food-importing developing countries.  The reference
to special and differential treatment failed to recogn ize that more than simple modalities were needed.
Sri Lanka noted that all proposals should be considered carefully including their implications on other
Agreements.  Special and differential treatment would also remain necessary for developing countries.
The Czech Republic felt that it was difficult to comment on a proposal that concentrated on only oneG/AG/NG/R/2
Page 13
aspect of Article 20.  The Czech Republic needed to have the full set available in order to assess them
properly.
38. The representative of Argentina (full comments in NG/W/20) stated that the Cairns Group
proposal referred to all forms of export subsidies.  He noted that during the Asian financial crises
some countries had increased their usage of export subsidies which had had the effect of depressing
prices even further.  In addition OECD data showed  that the overall use of domestic support had been
increasing in recent years while a study by the Institute for Economic Affairs had shown that high
levels of support in some countries were very expensive partly due to the higher costs and taxes in
these countries but also due to lost production in other countries that had to compete with the
subsidized production.  In addition such policies affected production and income in other countries
and he noted that a recent World Bank study showed the impact on African countries of such policies.
He suggested that, with the expiry of the peace clause of the Agreement on Agriculture at the end of
2003, all forms of agriculture subsidies would be open to challenge under Articles 3, 5 and 6 of theAgreement on Subsidies and Countervailing Measures.  He also noted that the obligation in
Article 10.2 of the Agreement on Agriculture to nego tiate disciplines on the use of export credits
should be concluded by the end of the Agreement's implementation period.  If there were no agreed
disciplines by that date then such subsidies woul d come under the other provisions of Articles 9 and
10 of the Agreement on Agriculture.  He noted th at the OECD Ministerial Council had called for
these negotiations to be concluded by the end of year 2000 at the very latest.  Finally, he suggested
that the process of reform should not be interrupted and that during the negotiations countries with the
right to use export subsidies should agree to limit and reduce them.
39. In response to the Argentinean statement, Switzerland noted that Article 20 had to be
considered in its entirety and that it called for a continuation of the reform process and not to anyspecific conclusion.  The EC noted that the carry forward provision facilitated prudence in the use of
export subsidies while rigid annual commitments could encourage full use in all years.  Removal of
the EC's export subsidies could lead to increase in prices and this was one of the concerns that had
resulted in the Marrakesh Decision.  However, the reductions in subsidies that had occurred since the
Agreement on Agriculture had come into effect had led to other countries increasing their exports andprices had not increased as predicted.
40. India commented on NG/W/11 to NG/W/16 taken together, in order to take account of some
horizontal issues.  (The full text of India's comments  is contained in NG/W/33.)  India reiterated that
the biggest distortions to trade arose from policies in some developed countries.  This had been clearly
brought out in the Secretariat background documents that showed that despite the reductioncommitments of the Uruguay Round, support had increased rather than decreased.  On the other hand,
for many developing countries agriculture was th e most important form of occupation and had to
remain a viable sector for the majority of the population.  Agriculture could not be treated in the same
way as other sectors.  The share of agriculture in terms of GDP, employment, per capita income, size
of farm holdings and so on could be used to classify Members.  For India, food security meant having
the flexibility to support production, to have self-sufficiency in food grains and to ensure that
agriculture remained viable for its many farmers.  India shared the views set out in the proposals putforward by the group of eleven developing countries  and with the view expressed in the proposals put
forward by the United States and the Cairns Group that supports in developed countries were harming
developing countries.  India also noted the proposal  put forward by the United States on the provision
of criteria based support for individual developmen t programmes in developing countries.  India was
concerned however, that the United States' proposal on market access seemed to disregard special anddifferential treatment for developing countries especially in light of the heavy support given in
developed countries.  India could not accept any suggestion that the basis for reducing market access
barriers should be applied tariff rates, nor could India support any zero-for-zero initiative.  Finally,
India was concerned about the negotiations on export credits which were being undertaken in
the OECD.G/AG/NG/R/2
Page 14
41. Australia responded to the comments noting th at it did not share Switzerland's view on the
continuation of reform nor did Australia share the EC's view about the benefits of the accumulation of
rights to use export subsidies.  Uruguay also responded to the comments noting that it was the Cairns
Group view that agriculture should be subject to the same rules and disciplines as trade in industrial
products.  While Uruguay could accept that domestic support and tariffs would not be eliminated in
the negotiations the objective on export subsidies was abolition.
(b) Canada - Market Access (NG/W/12)
42. In the discussion of Canada's proposal on market access a number of countries stated their
general support although some countries had reservations on specific suggestions in the proposal.
Kenya stressed its interest and support for the suggestions on tariff escalation and tariff quotas.
However, the paper appeared somewhat short-sighted as Kenya would have preferred to see general
tariffs reduced to the extent that tariff quotas were abolished.  Kenya was also concerned that there
did not seem to be any suggestions for special and differential treatment.  In this regard, Kenya,supported by Ecuador, suggested that during the negotiations Members could consider exempting
tropical products from tariff quotas.  Hungary (see comments in NG/W/26) recalled that in the
preparatory process for the Seattle Ministerial Conference it, along with the Czech Republic and the
Slovak Republic, had submitted a paper calling for the establishment of modalities for tariff reduction
and other related commitments necessary to reduce the difference between Members in the effectivelevels of market access. Colombia noted that market access opportunities were not being filled and
suggested that the tariff quota allocation systems used did not always take account of market realities.
Tariff quotas should be extended until they could be abolished.  In some sectors, such as tropical
fruits, tariffs should be reduced to zero and, in general, developed countries should improve access to
their markets for products from developing countries, especially least-developed countries.  NewZealand (see comments in NG/W/29) and Urugua y also supported the proposal noting that many
problems remained that continued to impede market access including tariff peaks, tariff escalation, the
special safeguard and administration of tariff quotas.  The United States noted the proposal on sectoral
liberalization and the suggestion of applying this to the oil-seeds sector.  Other delegations, however,
were concerned about this suggestion including Thailand and Mauritius (see comments in NG/W/28)that stated that this could effectively mean a plurilateral approach in the multilateral negotiations.
Pakistan noted their support for some elements of the proposal but stated that in other areas it had
reservations.  While any move to address the difficulties associated with tariff quotas was welcome
Pakistan was disappointed by the apparently low priority given to tariff peaks which also needed to be
addressed.
43. Poland noted India's statement in relation to market access and stated that all aspects of
Article 20 needed to be considered.  The European Communities (see comments in NG/W/24) stated
that while the proposal needed to be carefully considered it did appear to be missing suggestions on
how tariff quotas should be administered and, instead, concentrated on how they should not be
administered.  It was also pointed out that some of the difficulties in administration arose from the
high quota rents available and reducing in-quota ta riffs could make administration more difficult.
Switzerland noted that the high tariffs referred to in the proposal were the result of tarifficationundertaken in the Uruguay Round and therefore reflected market protection at that time.  A simple cut
to a standard level was too simplistic and modalities should be discussed that responded to the
different needs of different countries.  Korea stated that the current market access commitments
reflected the balance between Members achieved in the Uruguay Round negotiations.  The current
negotiations should maintain this balance.  In Kore a's view the proposal reflected an exporter's view.
Any rules on tariff quota administration would have to be developed in a realistic way taking into
account factors in the importing market.  In addition, Korea noted that disparities also existed between
importers and exporters.  Market access negotiations should consider the issue of security of food
supply.  Finally, Korea noted that the sectoral appr oach suggested could conflict with the objective set
out in the paper of eliminating the disparity in tariffs between different products.G/AG/NG/R/2
Page 15
(c) Cuba, Dominican Republic, Honduras, Pakistan, Haiti, Nicaragua, Kenya, Uganda,
Zimbabwe, Sri Lanka and El Salvador - Special and Differential Treatment (NG/W/13) and
Green Box/Annex 2 Subsidies (NG/W/14)
44. A number of Members expressed support for the general thrust of the proposals including
Nigeria, the Philippines, Norway, Barbados (o n behalf of CARICOM), Mauritius, Guinea and
Indonesia.  The Philippines noted that in the preparatory process for Seattle, the Philippines, alongwith Indonesia, Malaysia and Thailand, had presented a paper on special and differential treatment
that included some suggestions on modifications.  For such provisions to have effect the Philippines
noted that it was first necessary to eliminate all forms of trade-distorting support.  Even if that was
achieved developing countries were still at a disadvantage given that some developed countries had
been using such supports for some time.  For developing countries the reforms had to be gradual.  The
concept of a food security and a development box should be explored.  It was necessary to
differentiate between measures necessary to boost production and to acquire export markets and thoseaimed at food security and supporting farmers' incomes.  The Philippines supported the proposal that
production of certain staple foods should not be impeded by concerns over market access or by
restrictions on government support as well as the suggestion that Green Box criteria should be
redesigned to meet the needs of developing countries.  Norway (see comments in NG/W/30) noted
that developing countries faced very different needs to developed countries and that special anddifferential treatment was needed to help them address these needs.  It was also noted that both
developed and developing countries needed flexibility to address certain issues such as ensuring a
viable agricultural sector and to address their non-trade concerns.  Mauritius (see comments in
NG/W/28) supported the sugge stion that some products should be exempt from trade liberalization
and that domestic production should be protected from competition.  The FAO World Food Summithad recognized the need to develop agriculture production in both high and low potential areas and
had stressed the multifunctional nature of agriculture.  Regarding export subsidies, Mauritius pointed
out that these, together with export credits do facilitate economic access to food in net food-importing
developing countries.  Mauritius did not support the end of the due restraint clause or the special
safeguard clause, instead it supported the expansion of the scope of these two clauses to cater for theneeds of developing countries.  Korea, too, suppo rted the suggestion that some products should be
exempted from trade liberalization and were pleased to note that the paper concentrated on the
experience of importers since much of the focus so far had been on exporters.
45. Bolivia expressed sympathy for the objective of the proposals which was to seek a remedy for
the damage caused by support measures in some developed countries.  Argentina shared the concernsof other developing countries and noted that, like the Cairns Group, the proposals included the
abolition of export subsidies.  However, Argentina was sceptical about the benefits of trade
preferences noting that the trade with ACP countries had declined after twenty years of preferential
agreements.  Argentina suggested that the situation might have been very different if the ACP
countries had been left to develop according to market requirements and the transfer of resources had
been directed at poverty alleviation and infrastructure improvements.  Argentina, Uruguay, Brazil and
Ecuador suggested that the best form of special and differential treatment would be the removal ofexport subsidies and other production related supports.  Ecuador remained open to suggestions about
special and differential treatment for developing countries aimed at establishing a fair and market
oriented agricultural trading system and agreed that the provisions of the Green Box should be
reformed and geared towards policies that had no influence on production.  New Zealand (see
comments in NG/W/29) noted that the proposal highlighted the difficulties facing some developingcountries caused by the policies of wealthier countries and supported some of the suggestions such as
the removal of the special safeguard, tackling tariff peaks and the elimination of export subsidies.  In
particular, it was noted that at this, the first Special Session to consider proposals, thirty WTO
Members had called for the elimination of export s ubsidies.  Brazil shared the view that fundamental
reform was necessary, particularly improved market access for all agricultural products but it felt thatdeveloping countries needed trade liberalization in order to develop.  Although special and differential
treatment could accelerate this process care was needed that suggestions for such treatment did notG/AG/NG/R/2
Page 16
legitimize the exemptions already in place for developed countries or that such a proposal did not
freeze existing distortions.  Thailand (see comments in NG/W/31) noted that the Cairns Group paper
had also addressed special and differential treatment and that this concept was an integral part of the
negotiations.  Although it was not a panacea for all problems facing developing countries it could be
part of the answer to many of them.  Removing trade distortions would benefit both developed and
developing countries.  The current system of rules was unequal and unfair.  Thailand supported thesuggestion to remove export subsidies and shared the view that production capacity should be
enhanced and not destroyed.
46. The United States stated that the negotiations had to take account of the needs of developing
countries and the United States was aiming at a leve l playing field.  It was noted that some developing
countries might need capacity building and technical assistance and the United States was prepared to
work on this in the negotiations and bilaterally in cases where there was a real comparative advantage
or where there were subsistence producers.  Domestic policy reforms and removing distortions werecrucial elements for increasing competitiveness.  It was also noted that developing countries often
need better market access but they could often benefit from providing better market access
themselves.  The EC (see comments in NG/W/24) and Australia supported the principle of special and
differential treatment but, while having some sympathy for some suggestions in the proposals, they
stated that it could not be in the interest of developing countries to reverse the process of tradeliberalization.  They noted that trade created wealth for both the importer and the exporter.  The EC
noted that the Communities were the biggest importer of agricultural products in the world and
suggested that its trade preferences had helped many developing countries.  Australia noted the
importance of supply side policies and the role of development and technical assistance and, with
Canada, stated that while the negotiations should result in meaningful special and differentialtreatment provisions developing countries would also benefit from the end of production-distorting
supports and export subsidies.
47. Kenya thanked the Members for their comments and especially noted the importance attached
to moving forward on trade liberalization and avoiding protectionism through special and differential
treatment.  It reiterated that the paper may not have addressed the imports of agricultural productscompared to exports.
48. On the proposal on the Green Box (NG/W/14) Colombia noted that the current system of
commitments on domestic support had led to higher levels of support overall some of which were
trade-distorting.  It was suggested that better disciplines were needed along with reduced levels of
trade-distorting supports in developed countries.  Colombia did not accept that a common  de minimis
level should be allowed as this would permit the continued use of distorting supports and prevent the
Agreement on Subsidies and Countervailing Measures from being used.  It was also noted that giving
protection from action through a due restraint clause for developing countries might not be advisable
as some developing countries with sufficient resources would be protected from action from other
developing countries with fewer resources.  The United States stated that the proposal contained a
number of ideas consistent with its own approach.  The United States wanted to end the use of trade-
distorting supports in favour of non-distorting supports.  While the non-distorting or minimally-
distorting criteria in paragraph 1 of Annex 2 should remain, the United States was prepared to
examine the specific criteria in the Green Box.
(d) United States - Proposal for Comprehensive Long-Term Agricultural Trade Reform
(NG/W/15) and Note on Domest ic Support Reform (NG/W/16)
49. The representative of Japan (see comments in NG/W/27) stated that he would make a
collective comment not only on the US's proposal, but on all the proposals presented to the current
session.  He stated that on domestic support the current three-box system had been developed in
negotiations and should be maintained.  The Blue Box facilitated countries moving from trade and
production distorting supports while the Green Box criteria were not only about supporting producersG/AG/NG/R/2
Page 17
in non trade-distorting ways but also to assist in addressing non-trade concerns, including
multifunctionality.  The requirements and scope for the Green Box should be received based on the
experiences gained from implementing the Uruguay Round Agreement on Agriculture, with a view to
responding to the various concerns of each Member in a flexible manner.  On market access, current
tariff levels were based on domestic and geographic factors and the different levels were the result of
negotiations.  The negotiations had to proceed by considering each product in each Member takingaccount of the special characteristics of each product,  the need to ensure a certain level of domestic
production, and the experience from the implementation of the Uruguay Round.  It was not possible to
consider sectoral liberalization as proposed.  On tariff quota administration methods it was not
appropriate to treat different products under a single rule without taking account of each country's
situation and the characteristics of each producer.  Japan also noted that there was notable disparity in
the current rules on the rights and obligations of importers versus those of exporters and taking into
account this imbalance and the food security needs of importing countries it would be necessary toconsider strengthening disciplines on export restrictions and taxes as well as export subsidies.  For
developing countries suffering from poor nutrition as well as for least-developed and net food-
importing developing countries the aim of the negotiations should be to improve their production
capacity and rural employment, by taking account of their experience in implementation.  Finally on
the time-frame for the negotiations, Japan was of the view that the agriculture negotiations should bepart of a broader round of trade talks and a time-frame could not be decided outside that context.
50. Mauritius (see comments in NG/W/28) noted that the United States' proposal recognized that
trade liberalization alone would not help the food security needs of least-developed and net food-
importing developing countries and it referred again to the role of export credit programmes in
delivering food.  Mauritius asked for clarification on a number of issues including whether the UnitedStates wanted the negotiations to cover state-trading enterprises or if this should be left to the WTO
Committee on State Trading Enterprises and if the negotiations in the OECD on export credit
disciplines should be carried out in the WTO.  On food security Mauritius noted that the United States
proposed to renew the commitments made under the Marrakesh Decision on measures concerning the
possible negative effects of the reform programme.  Mauritius, as a net food-importing developingcountry, suggested that concrete measures be first taken in the context of the existing Decision.  The
current negotiations should reach binding commitments in favour of least-developed and net food-
importing developing countries.  On the United States' note on domestic support (NG/W/16)
Mauritius noted the positive attitude towards developing countries which acknowledged the unique
challenges facing them.  On farm income safety nets, risk management and bio-mass programmesmentioned, Mauritius noted that these were just as vital for developing countries, especially for those
that depended on few commodities and had no fossil fuels, such as the small island developing states,
and that their special needs had to be addressed.  In this context, Mauritius welcomed the support
given by the US in respect of "the exemption of additional criteria-based support measures deemed
essential to development objectives".
51. Hungary (see comments in NG/W/26) was please d to note that the United States' proposal
accepted the need to review the criteria for exempt support measures on the basis of the experiencegained in implementation and to establish additional criteria-based categories to be exempt from
reduction.  Hungary also noted that the United States' proposal had recognized the problems facing
countries in transition and suggested that, given th e growing number of Members in this category, it
should be given higher prominence in the negotiations.
52. A number of countries, including Malaysia, Colombia, Argentina, Canada, New Zealand (see
comments in NG/W/29), Uruguay and Brazil, supported the general thrust of the proposal from the
United States.  Malaysia suggested that, although the United States was also recommending the
abolition of export subsidies, the proposal by the Cairns Group on how to achieve this aim might be
more practical.  Malaysia also stated that negotiations on disciplines on export credits should be
undertaken in the WTO and better disciplines be negotiated on food aid to prevent it being used tocircumvent export subsidy commitments.  On export taxes Malaysia noted that any proposal in thisG/AG/NG/R/2
Page 18
area should give due recognition to the fact that some developing countries used export taxes either
for revenue or as part of their efforts to improve their food processing industries. Tariff negotiations
should start with the bound rates rather than the applied rates.  However, if it was agreed to start with
applied tariff rates then the same principle should hold for negotiations on export subsidies and
domestic supports as both the United States and the EC had stated that they, and other countries, were
well within their commitments in these areas.  Colombia supported the proposal to simplify tariff ratesand suggested that simple ad valorem  tariffs only should be allowed while tariff quotas should be
abolished by progressively increasing their size.  However, it was felt that tariff reductions had to take
account of the different situations in different countries and flexibility for developing countries was
needed in the negotiations.  Colombia also suggested  that the Secretariat should carry out an analysis
of the United States' domestic support proposal to see how much support was given, as a percentage
of the value of production, under each category for different products.  Argentina noted the broad
based support in the United States for the proposal and agreed with many of the specific points in theproposal, however, the negotiations on agriculture may not be the most appropriate place for
addressing the proposal on products produced using new technologies.  On domestic support the
proposal should not stop continuing progressive reductions and that the proposed two box system
should not result in weaker rules by permitting trade-distorting supports in the Green Box.  In
addition, the suggestion to allow supports as a proportion of the value of production could beconsidered but such support for specific products should be proportional to its impact on the total
value of production in each country.  Finally the sectoral liberalization suggestions were supported as
these served to complement a broader agreement.  Canada noted the similarity with their own
proposal on market access and, along with Australia and Uruguay, with the Cairns Group proposal on
export subsidies.  New Zealand stated that this comprehensive proposal added to the momentum ofthe negotiations.
53. Chile, Brazil and Thailand (see comments in NG/W/31) had some problems with specific
aspects of the proposals.  Brazil and Chile, like Malaysia, felt that the negotiations should not start
with applied tariff rates and it was felt that sectoral negotiations could concentrate liberalization
efforts in areas that might least need it.  However, Brazil noted that such an approach could be used tocomplement a horizontal formula method of tariff reduction.  Thailand considered that the proposal on
domestic support was too weak in comparison with that for export subsidies and suggested that all
three pillars of the Agreement on Agriculture should be treated in a similar fashion.  On special and
differential treatment, Thailand stated that this w ould remain necessary at least until export subsidies
had been abolished.  However, Thailand did support the time-frame suggested by the United States.
54. Norway (see comments in NG/W/30) suggested that in some areas the proposal went beyond
Article 20 and that it failed to take account of the differences between countries, especially the
situation in those countries facing high costs and with low production potential.  The EC noted (see
comments in NG/W/24) that, in its opinion, the suggestions in the proposal concerning domestic
support could cover the multifunctional nature of agriculture and that this should allow some progress
to be made.  However, the proposal seemed to suggest stricter disciplines on the types of programmes
that were little used in the United States and weaker on those types of programmes on which theUnited States relied more heavily.  On the special safeguard it was again stated that this helped
tariffication and avoided other remedies, such as the general safeguard.  The Blue Box could not be
equated with the Amber Box and, in fact, the Blue Box had contributed to reform and was less trade
distorting than many instruments such as deficiency payments.  The EC also noted that linking the
value of permitted domestic support to the value of  production would favour those countries that had
a relatively small number of efficient farmers.  It would be better to take the current position and
apply the same percentage reduction.
55. The discussion of the United States' proposal was adjourned until the next meeting of the
Special Session when the three proposals from the European Communities would also be considered.G/AG/NG/R/2
Page 19
56. The Secretariat commented on the work that had been requested in the course of the Special
Session and responded to the comments made by Members.  On the paper on the trade performance of
developing countries (NG/S/6) it was noted that the facts had been reported but that just because
developing countries had increased market share did not mean reform should stop, in fact the purpose
of the negotiations as set out in Article 20 was to continue the reform process.  The suggestions for
improving the paper would be examined.  On product definition it was noted that, as in earlierversions, the paper used the SITC definition of agricultural products used in the Comtrade database of
the United Nations and this did differ from the definition of Annex 1 of the Agreement on Agriculture
that was based on the Harmonized System.  The other suggestions would also be considered although
the increased information requested on export credits would have to be provided by Members.
57. While noting that progress on the work requested from the Secretariat would depend on
resources and the demands placed on those resources, such as requests for technical cooperation, the
Committee agreed that the Secretariat should prepare additional or revised background papers, or tofollow-up as appropriate, on the following subjects:
(a) a compilation of issues relating to non-trade concerns based on relevant AIE papers
and pre-Seattle submissions;
(b) an update and extension of the information contained in AIE/S7;
(c) a revision of G/AG/NG/S/6 to broaden its scope;(d) tariff information on products and markets of interest to developing country
Members;
(e) inflation and exchange rate movements in the context of domestic support
commitments;
(f) changes in tariff quota administration methods and fill rates;(g) notification of information on domestic consumption of agricultural products;
(h) an addendum to G/AG/NG/S/11 ("combined trade");
(i) value of total agricultural production by Member;  and
(j) data on agricultural export credits.
I
TEM D:  O THER BUSINESS
58. Under "Other Business" the Chairman outlined the general content of his report to the General
Council.  The next Special Session will take place on 28-29 September following the twenty-fourth
regular meeting of the Committee on Agriculture on 27 September.G/AG/NG/R/2
Page 20
ANNEX
SECOND SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
(G/AG/NG/2)
Report by the Chairman, Ambassador Jorge Voto-Bernales, to the General Council
1. The Special Session of the Committee on Agriculture, which was established by the General
Council to conduct the negotiations for continuing the reform process under Article 20 of the
Agreement on Agriculture (WT/GC/M/53, paragraph 39 refers), held its second meeting on
29-30 June 2000.
2. The Committee adopted the agenda as set out in WTO/AIR/1331.
3. With respect to the requirement that progress in  the negotiations be reported directly to the
General Council on a regular basis, it was confirmed that, following each meeting, a short factual
report would be made to the General Council on the responsibility of the Chairman.  This was on the
understanding that the report, once circulated, could if necessary be amended to correct any errors of a
factual nature.
4. Under Item (a) of the programme for the first phase of the negotiations (paragraph 6 of
G/AG/NG/1 refers), work was commenced within the fra mework of paragraphs (a), (b), (c) and (d) of
Article 20 on the basis of statements by participants, taking into account information and data
prepared by the Secretariat in documents G/AG/NG/S/1 to 13.
5. Under Item (b) of the programme for the first phase of the negotiations (paragraph 6 of
G/AG/NG/1 refers), the following negotiating proposals for continuing the reform process were
presented by:  the Cairns Group on "Export Compet ition" (NG/W/11);  Canada on "Market Access"
(NG/W/12);  Cuba, the Dominican Republic, Honduras,  Pakistan, Haiti, Nicaragua, Kenya, Uganda,
Zimbabwe, Sri Lanka and El Salvador on "Special  and Differential Treatment and a Development
Box" (NG/W/13) and on "Green Box/Annex 2 S ubsidies" (NG/W/14);  the United States on
"Comprehensive Long-Term Agricultural Trade Re form" and the related note on "Domestic Support
Reform"  (NG/W/15 and 16);  and by the Eur opean Communities on "The Blue Box and Other
Support Measures to Agriculture", on "Food Quality – Improvement of Market Access Opportunities"
and on "Animal Welfare and Trade in Agriculture" (NG/W/17 to 19).  The initial consideration of
these proposals is to be completed at the September Special Session.  It was noted that there would beopportunities to revert to these negotiating proposals and that an appropriate item for this purpose is to
be included in the agendas for forthcoming Special Sessions.
6. As requested by the participants concerned, the following statements made at the meeting are
being circulated:  Argentina (NG/W/20), Au stralia (NG/W/21), Brazil (NG/W/22), Canada
(NG/W/23), EC (NG/W/24), Grenada (NG/W/25), H ungary (NG/W/26), Japan (NG/W/27), Mauritius
(NG/W/28), New Zealand (NG/W/29), Norway ( NG/W/30), Thailand (NG/W/31), and the United
States (NG/W/32).  (Statements made at the first Special Session but circulated after the appearanceof the Chairperson's report on that meeting are:  Fiji (NG/W/8);  Colombia (NG/W/9);  and Canada
(NG/W/10).)
7. The Secretariat was requested to prepare additional or revised background papers, or to
follow-up as appropriate, on the following subjects:
(a) a compilation of issues relating to non-trade concerns based on relevant AIE papers
and pre-Seattle submissions;G/AG/NG/R/2
Page 21
(b) an update and extension of the information contained in AIE/S7;
(c) a revision of G/AG/NG/S/6 to broaden its scope;(d) tariff information on products and markets of interest to developing country
Members;
(e) inflation and exchange rate movements in the context of domestic support
commitments;
(f) changes in tariff quota administration methods and fill rates;(g) notification of information on domestic consumption of agricultural products;(h) an addendum to G/AG/NG/S/11 ("combined trade");(i) value of total agricultural production by Member;  and
(j) data on agricultural export credits.
8. The next Special Session is to be held on 28-29 September 2000, following on from the
twenty-fourth regular meeting of the Committee on Agriculture on 27 September.
__________