RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/SPEC/807/3/Add.1 
26 February 2002 
 (02-0962) 
Working Party on the Accession of the  
Former Yugoslav Republic of Macedonia Original:   English 
 
 
  
ACCESSION OF THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA  
 
Domestic Support and Export Subsidies in Agriculture
 
 
Addendum  
 
 For the purposes of the accession of the Gove rnment of the Former Yugoslav Republic of 
Macedonia to the WTO, the Government has presente d the following replies to questions raised by 
members of the Working Party with reference to document WT/ACC/SPEC/807/3, with the request 
that they be circulated to members of the Working Party.  
_______________ WT/ACC/SPEC/807/3/Add.1 
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 General
 
Question 1 Macedonia has expressed all values in terms of EURO. Acceding countries normally make these 
calculations based with data expressed in  the local currency unit (LCU). Why was not 
Macedonia's national currency used? 
Answer:
 
All amounts in WT/ACC/SPEC/807/3 are expressed in EU RO because the EURO is a stable currency. 
Macedonia also uses EURO to express the amounts of  specific duties in its Customs Tariff and its 
goods offer. 
Question 2 
Please provide the exchange rates used  to convert these values into EURO. 
For the conversion of Denars into EURO and US$ for the purposes of WT/ACC/SPEC/807/3 
Macedonia applied the annual average exchange rate s provided by the National Bank of the Republic 
of Macedonia. Rates for respective years were as follows:  
Year Annual average exchange rate 
MKD/1 US$ Annual average exchange rate 
MKD/1 EURO 
1994 43. 2351 50. 3930 
1995 38. 0354 49. 1517 
1996 39. 9941 50. 0768 
1997 49. 8299 56. 1979 
1998 54. 4507 61. 0652 
1999 56. 8964 60. 6164 
 
Question 3 
To ensure full transparency, we would request Ma cedonia to document all data sources in those 
supporting tables as precisely as possible (e.g., speci fic document title, table from which the data 
is obtained, page number). 
Answer:  
Data sources are listed in Attachment 1 to document WT/ACC/SPEC/807/3/Rev.1. 
Question 4 
We appreciate that Macedonia has provided us  with data for 1993-99. However, WT/ACC/4 
specifies that applicant countries should use the most recent 3-year period for these calculations. 
As the data for 1999 appears to be final, we req uest that Macedonia's next submission present 
data for 1997-99.  WT/ACC/SPEC/807/3/Add.1 
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 Answer:  
Macedonia submitted data on domestic support and export subsidies for the period 1993-1999 to give 
to the Working Party a clearer picture of the pattern  of agricultural support for a longer period of time. 
The agriculture is one of the most important sect ors of the Macedonian economy and it ensures the 
existence of approximately 41 per cent of the population.  
Unfortunately, in the negotiations with the World Bank about the Structural Adjustment Loan (SAL) 
in 1996, Macedonia was requested to either significan tly reduce or even completely terminate certain 
types of support. As a result,  the production of  certain agricultural products has virtually stopped 
while for others the current support is not ade quate to attain the results projected by the 
macroeconomic policy of the country. 
Macedonia had already made significant reductions in its domestic support in 1996. To consider the 
period of 1997-1999 as a base period for determina tion of reduction commitments pursuant to the 
provisions of the Agreement on Agriculture woul d represent a further reduction in the level of 
Macedonian domestic support and would have a dev astating effect on the economic situation in the 
agriculture.  
Macedonia therefore pursues its request to have th e support provided in 1994-1996 to be a  base level 
to which the reduction commitments will apply. 
Question 5 
Will Macedonia consolidate the 3 years of data in to each table? (So, for example, instead of 
producing 3 separate supporting table DS:1 (DS:4, etc.) Macedonia would prepare one 
supporting table DS:1(DS:4, etc.) that presents data  for each of the three years, plus an average 
of the three years, as appropriate.) 
Answer:  
Consolidated supporting tables for 1994-1996 and 1997-1999 are included in the revised 
WT/ACC/SPEC/807/3 (WT/ACC/SPEC/807/3/Rev.1).  
Supporting Table DS: 1 (Green Box")  
Question 6 
Under the general services category, Macedonia lists infrastructure building for irrigation 
purposes. Can Macedonia confirm that expenditu res exclude the subsidized provision of on-
farm facilities (other than for the reticulation of  generally available public utilities) and does not 
include subsidies to inputs or operating costs, or preferential user charges? 
Answer:  
The program “infrastructure building for irrigation purposes” comprises financial support for water 
resource management agencies to establish and main tain generally available reticulation of water 
supply. Funds are provided through the publicly -funded Program for Agricultural Development 
Incentives (Official Gazette numbers are listed in Attachment 1 to document WT/ACC/SPEC/807/3/Rev.1). Measures do not include any provisions for on-farm facilities, 
subsidies to inputs or operating costs and preferential user charges.  WT/ACC/SPEC/807/3/Add.1 
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 The program meets the criteria set out in paragraph 2(g) of Annex 2 to the Agreement on Agriculture.  
See the revised Table DS:1 in document WT/ACC/SPEC/807/3/Rev.1. 
Question 7 
Does the program "protection against hail dama ges" listed under general services involve any 
direct payments to producers? If so, it is not co nsistent with the criteria contained in paragraph 
2 of Annex 2, which clearly states that measur es under this category must not include direct 
payments to producers or processors. It is possible that this program may meet the criteria of paragraph 8 of Annex 2, which covers payments  for relief from natural disasters. Macedonia 
should provide more information on haw this pr ogram operates, and how it specifically meets 
Annex 2 criteria.  
Answer:
 
The program “protection against hail damages” does not  include direct payments to producers. Under 
this program funds are used for the dispersion of clouds containing the threat of producing hail 
storms. Funds are used for the purchase of anti-hail ro ckets, for on-going maintenance of the anti-hail 
stations, the purchase of tools and related inventor y, and the purchase of equipment. The funds are 
used by the Weather Bureau of the Republic of Macedonia. 
The program meets the criteria set out in paragra ph 2(g) of Annex 2 to the Agreement on Agriculture. 
See the revised Table DS:1 in document WT/ACC/SPEC/807/3/Rev.1  
Question 8 
How does the program "Protection against hail to prevent damages in the agricultural 
production" work and how does it meet the specific criteria of Annex 2 of the Agreement on 
Agriculture for "General services"? 
Answer:  
See the answer to Question 7 and the revised Table DS:1. 
Question 9 
Could Macedonia explain how  the program that funds growing artificial meadows for 
protection of esparzeta seed operates, and ho w it meets Annex 2 criteria for exemption? 
Answer:  
The production of seed materials for the forage  cultures is under the control of a Commission 
authorized by the Ministry of Agriculture, Forest ry and Water Economy. The implementation of this 
measure is carried out  through a contract for funding and implementing  the Program for Promotion of the Agricultural Development  concluded by th e Ministry of Agriculture, Forestry and Water 
Economy and the enterprises that produce elite seed  material according to the Law on Seeds and 
Planting Material. The establishment of the producti on and demonstrative experiments is carried out 
by or under the supervision of the Agency for Promotion of the Agricultural Development. It is regulated by an  agreement concluded by the Mini stry of Agriculture, Forestry and Water Economy 
and the Agency, and by a Ministry’s Decision on Funding.   WT/ACC/SPEC/807/3/Add.1 
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 The Ministry of Agriculture, Forestry and Wate r Economy disburses funds for the purchase of seeds 
upon applications by the individual producers involved in the program through the Centers for Promotion of Individual Farming. 
The Centers for Promotion of Individual Farming di stribute the funds to individual farmers through a 
public tender. In cooperation  with the Faculty of Agriculture, the Centers advise on the mixture of  
various types of forage and its packing in units fo r planting 1 dkm, the preparation of the fields and 
the rational use of the land potential.  
Funds are disbursed under the publicly-funded Program  for Agricultural Development Incentives. The 
measure meets the criteria set in paragraph 2(f) of Annex 2 to the Agreement in Agriculture. 
See the revised Table DS:1 in document WT/ACC/SPEC/807/3/Rev.1. Question 10 Beginning in 1998, we note that Macedonia has included a program supporting the introduction 
of modern technology for production of quality tobacco seed material under the general services 
category. Could Macedonia explain how this program operates, and how it meets Annex 2 
criteria? 
Answer:
 
Authorized scientific institutions, such as the Toba cco Institute receive funds for the introduction of 
programs for the following purposes:  
- Observing the reaction of existing acknowledged orie ntal, as well as newly introduced  brands 
of tobacco tested under irrigation and drought conditions in the tobacco producing regions 
and areas in order to achieve a production of quality tobacco seeds; 
- Research for the protection of tobacco  from diseases, pests and weeds;  
- Establishment of a Research Laboratory "In vitr o" and defining the area of its research 
activities.  
Part of the funds is paid at the beginning  of the Proj ect and the rest is paid after completing   the final 
annual report. 
The measures listed under 1, 2 and 3 meet the criteria of paragraphs 2(d), 2(b) and 2(a) of Annex 2 to 
the Agreement in Agriculture, respectively. 
Question 11 
Under the category "public stockholding fo r food security purposes", Macedonia lists a 
program that purchases goods for the Stock Rese rves. Can Macedonia confirm that purchases 
and disposal of these goods are made at market prices, as required in paragraph 3 of Annex 2? 
Answer:  
Yes, goods for the stock reserves are purchased and sold at market prices. WT/ACC/SPEC/807/3/Add.1 
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 Question 12 
How does the program "Supply of goods for the St ock reserves" work and how does it meet the 
specific criteria of Annex 2 of the Agreement on  Agriculture for "Public stockholding for food 
security purposes? 
Answer:
 
Maintenance of stock reserves for food security purpo ses (establishment, renewal, use and territorial 
arrangements, as well as construction and maintenance of  warehouses)  is carried out pursuant to the 
Program on the Stock Reserves prepared under Article 8 of the Law on Stock Reserves (Official Gazette 47/87, 13/93). 
Under Article 7 of the law, government agency res ponsible to manage and use the stock reserves is 
the Bureau for Stock Reserves. 
The accumulation and the disposal of goods for the reser ves are carried out at market prices and in a 
transparent manner in accordance with the bi dding procedures provided in the Law on Public 
Procurement. Offers describing the goods, the qu antity and the terms of sale are published in the 
public media.  
Question 13 Macedonia lists several programs under the cate gory of regional assistance for farmers in 
officially classified disadvantaged areas: 1) funds for infrastructure projects for livestock 
breeding farms; 2) support to the cost of social payments (pension and health) for farmers; 3) support to the interest rates for credits gran ted to farmers. Could Macedonia provide more 
information on how these programs operate, and ho w they meet the criteria of paragraph 13 of 
Annex 2, in particular, the requirement (paragr aph 13 (b)) that payments in any given year 
shall not be related to, or based on, the type or volume of production undertaken by the producer in any year after the base period other than to reduce that production. 
Answer:
 
The Law on Encouraging the Development of U nderdeveloped Regions (Official Gazette 2/94) 
recognizes three types of disadvantaged regions: 
- Economically underdeveloped regions - regions wh ere the rate of employment and the  per 
capita income is less than 75 per cent of the country’s average; 
- Mountainous regions; and 
- Border regions. 
Disadvantaged regions for 1994-1998 and 1999-2003 ar e designated in the Government Decisions on 
Determining the Economically Underdeveloped Re gions for 1994-1998 and 1999-2003 published in 
Official Gazette 16/94 and 47/99, respectively. 
Macedonia applies the following support measures in the disadvantaged regions: 
- Support for the cost of social security payments (pension and health) for farmers; 
- Funds for infrastructure projects for livestock farms; 
- Support to the interest rates for credits granted to the farmers.  WT/ACC/SPEC/807/3/Add.1 
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 The measures are implemented through the Agency   for Development of Underdeveloped Regions 
(currently Bureau for Economically Underdevel oped Regions). The support granted is generally 
available to all producers within a respective region a nd it is not related to, or based on, the type or 
volume of production. 
Operation of the programs  
(1)  Support for the cost of social security paym ents (pension and health) is granted to farmers  
who have  continuously lived and worked at l east five years  in  mountainous or border or  
economically underdeveloped regions that are subj ect to above  average migration rate, or 
have a  status of returnees  who are over 50 years of age if men and over 48 years of age if women, except for  persons  with the status of returnees who can use this right regardless of 
their age for the period in which they  remain to  live in the respective areas  or if they are 
farmers  and farming is their sole profession.   
A status of a returnee is given to a person who decides to live in a mountainous or border 
settlement after living for at  least ten years in a city. 
The Bureau for Economically Underdeveloped Regi ons also covers the h ealth insurance costs 
for the unemployed members of the main beneficiary’s family.  
(2) Funds for infrastructure projects  for liv estock farms are granted for construction and 
improvement of  roads, electricity supply, as well as water supply and water holes for sheep, 
goat and cow farms. The financia l participation provided by the Bureau equals to maximum 
80 per cent of the investment value of proj ects in mountainous and border regions or 
maximum 60 per cent  of the investment valu e for projects in economically underdeveloped 
regions. 
Procedure
.  Interested natural persons and legal en tities submit applications (on a prescribed 
form) to the Bureau. An application must be  accompanied by other required documents   
(investment project, financial proposal, evidence for provision of the remainder of finance, 
licenses and approvals from different authorized  agencies, etc.). The Bureau reviews the 
application and issues an appropriate Decision on the basis of which funds are  transferred to 
the account of  the investor or, upon its con sent  to the accounts of contractors, equipment 
suppliers, etc. 
(3) Support relating to the interest rates for cred its granted to farmers is made for the following 
purposes: 
- construction of new capacities; 
- reconstruction of existing production capacities;  
- conversion of large capacities into small or  medium-sized manufacture, agriculture 
and crafting facilities and equipment services.  
Additional criteria to be observed for this measure  are that the project: 
- contributes to increased exports and improves country’s balance-of-payments; 
- increases employment rate in propulsive sectors of the economy;  
- contributes to the better use, as well as to the higher level of processing of domestic 
raw materials and natural resources;  
- improves the ecological balance. WT/ACC/SPEC/807/3/Add.1 
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 The share  of participation of the  Bureau is set  according to  the status of the area  where the 
project operates at the following rates: 
- 80 per cent of the interest rate  for investments made in mountainous and border 
regions; 
- 50 per cent of the interest rate for inv estments made in economically underdeveloped 
regions. 
The support is limited to loans that amount to maximum 80 per cent of the total value of the 
project,  but not more than loan value of 300,000 DM (approx. 150,000 EURO). Refund may 
also be approved for loans with values higher than the above but only subject to a positive 
assessment of the Bureau and the creditor bank.  Funds are transferred to the bank on the day 
the obligation becomes due. The refund of interest  on foreign loans that  are not serviced by a 
domestic bank  is transferred directly to the  loan beneficiary in a Denar equivalent according 
to the exchange rate of the National Bank of Macedonia on the day the debt becomes due. 
The Bureau does not approve refunds of default interest. 
Procedure.
 The application for refund is submitte d to the Bureau on a prescribed form 
together with an investment program and an or iginal copy of the lo an contract enclosed. 
Subject to the documentation being complete and the requirements being met, the Bureau 
issues a Decision for approval of funds. Funds are transferred to the bank upon submission of 
evidence on the interest amount and its maturity.  
Question 14 
We would note that support for the social secu rity payments may not belong in Macedonia's 
domestic support tables, and recommend that this  be discussed in the plurilateral meeting. 
Answer:  
Macedonia agrees to discuss the above issue on the next plurilateral meeting. 
Question 15 
Does Macedonia include any tax exemptions und er the regional assistance category? We note 
from Working Party documents that Macedonia  explained that farmers in underdeveloped 
regions, determined by the Government, were gr anted tax exemptions. If so, they should be 
removed from the table as tax exemptions are not included in the domestic support tables. 
No,  tax exemptions are not included under regional assistance programs. 
Supporting table DS: 4 (Calculation of the AMS)  
Question 16 
Please provide the total value of production fo r each commodity listed supporting table DS: 4, 
including those (breeding veal, lambs and milk) for which de minimis  is being claimed.  
Answer:  
A table containing values of production for all products included in the supporting tables, as well as 
values of total agricultural production for all resp ective years are submitted in Attachment 2 of 
document WT/ACC/SPEC/807/3/Rev.1.   WT/ACC/SPEC/807/3/Add.1 
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 Question 17 
All support from supporting tables DS:5-DS:9 should be listed in supporting table DS: 4 
including de minimis  support (which will be entered as a zero in the last column). 
Answer:  
The above advice is included in the revision of WT/ACC/SPEC/807/3 (WT/ACC/SPEC/807/3/Rev.1). 
Question 18 Could Macedonia please indicate the relevant values of production when de minimis  exemptions 
are claimed? What percentage (5% or 10%) does Macedonia apply? 
Answer:
 
Macedonia applies the rate of 5 per cent for de minimis  exemptions (Article 6 paragraph 4(a) of the 
Agreement on Agriculture). 
Values of production appear in Attachment 2 to document WT/ACC/SPEC/807/3/Rev.1.  
Question 19 
Alfalfa was not reported in STDS:4 for 1996. Macedonia would likely claim it as de minimis  but 
we should still request to have it noted.  
Answer:  
Correct, alfalfa was not included in the supporting table DS:4 because its support conformed with the 
de minimis criterion. However, Macedonia included it in the revised STDS:4.   
Supporting table DS: 5 (Market Price Support)  
Question 20 Could Macedonia provide more information on the measure type (and legislative basis) 
reported in this table?  
Answer:
 
The legal basis for the application of protective prices is Article 24 of the Law on Trade (Official 
Gazette 23/95, 30/95, 43/95, 23/99, 43/99).   
Question 21 
How does this measure operate? Answer:
 
Protective prices apply to primary agricultural products. By prescribing protective prices, the 
Government guarantees to the farmers that, if the pro duced  quantities are not so ld at a market price, 
they will be purchased at a protective price. Prot ective prices are administered to achieve the 
following purposes: to motivate the producers, to increase the quantity of production, and therefore to 
diminish the dependence of Macedonia on imports of the respective products.  WT/ACC/SPEC/807/3/Add.1 
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 Question 22 
How were the data used in these calculations d erived? We assume that Macedonia has used 
average FOB export prices for those commodities for which it is a net exporter, and average 
CIF import prices for products for which it is ne t importer – is that correct? What is the source 
for this data? 
Answer:
 
Yes, FOB export prices were used for goods for wh ich Macedonia is a net exporter, and CIF prices 
were used for goods for which Macedonia is a net importer. 
External reference prices were calculated on the basis of the quantities and values of imports of 
certain products provided by the State Statistical Bureau.  
Question 23 Please confirm that the volume used for "eligible production" represents all production eligible 
to receive the applied administered price. For example, if Macedonia's market price support 
program applies to all production (i.e. all pr oduction is eligible to receive the applied 
administered price) than Macedonia should u se total production for eligible production. 
Answer:
 
Macedonia confirms that the volume used for “eligib le production” represents all production eligible 
to receive the applied administered price. We u sed the total production as “eligible production” for all 
goods subject to protective prices. Exemption is the raw tobacco with 90% of the total production 
where the administered price refers only to the smal l-leaf oriental varieties of tobacco: Prilep, Jaka 
and Dzebel, which account for 90 per cent of the total production of tobacco in Macedonia.  
Question 24 What policy changes explain the absence and presence of market price support (MPS) 
calculations for individual products in various years? 
Answer:
 
Absence and presence of market price support calculations  in various years are a result of the fact that 
Macedonia follows market principles. This, in fact , means that the agricultural policy is aimed to 
allow individual producers to participate under mark et conditions in domestic and foreign markets.  
Supporting Table DS: 6  
Question 25 What does "Premium for the Quantity Sold in Further Processing " mean?  
Answer:
 
Premium for the quantity sold for further processing is a measure on the basis of which producers of 
certain products who have sold their produce to  processing companies are paid certain amounts. 
Payment of premiums is done pursuant to the Decision for Payment of Premiums for Certain Agricultural Products adopted by the Govern ment of Macedonia for the respective year.  WT/ACC/SPEC/807/3/Add.1 
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 The purpose of this measure is to stimulate incr ease in the production and achieve better quality of 
certain agricultural products with insufficient produc tion in Macedonia and thus provide raw materials 
for the processing facilities in the country. 
Question 26 
In 1996, the total direct payments for sugar beet  and maize are exactly the same (479,261.94 
EURO).  Is this a reporting mistake? 
Answer:  
No, it is not a reporting mistake. The amounts paid fo r premiums for maize and sugar beet in 1996 are 
identical. 
Supporting Table ES: 1  
Question 27 
We note that since 1999 Macedonia has not provided any export subsidies.  We seek 
confirmation that Macedonia will bind export subsidies at zero upon accession. 
Answer:  
Macedonia provided export subsidies for lamb meat in 2001. 
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