RESTRICTEDWORLD TRADE
ORGANIZATIONG/AG/9
9 July 2001
(01-3387)
Committee on Agriculture
IMPLEMENTATION OF ARTICLE 10.2 OF  THE AGREEMENT ON AGRICULTURE
Progress Report by the Vice-Chairman, Minister Yoichi Suzuki, to the General Council
1. At its meeting on 18 October 2000, the Special Session of the General Council referred to the
relevant subsidiary bodies, including the Committee on Agriculture, a number of implementation
related issues which had been identified in the report presented by the Director-General and the
Chairman of the General Council on their consultations on implementation issues and concerns as
being appropriate for such action.
2. In the case of the Committee on Agriculture the relevant part of this report, which constitutes
the Committee's mandate in this matter, is as follows:
"On tiret 6, regarding the development of intern ationally agreed disciplines to govern the
provision of export credits, export credit guarantees or insurance programmes pursuant to
Article 10.2 of the Agreement, I propose, on the basis of our discussions, that the General
Council instruct the Committee on Agriculture to include in the agenda of its regular meetings
an item on the implementation of Article 10.2 and to report back on the Committee's progress
on this issue to the General Council at its last regular meeting of this year.
It is my understanding that in pursuing their work on export credits in accordance with
Article 10.2, Members will of course take into account the provisions of paragraph 4 of theMarrakesh Decision on net food-importing countries, in which Ministers agreed that any
agreement on export credits should ensure appropriate provision for differential treatment in
favour of least-developed and net food-importing developing countries."
3. In accordance with the foregoing mandate, the question of the implementation of Article 10.2
of the Agreement on Agriculture, including with respect to the provisions of paragraph 4 of the
Marrakesh Ministerial NFIDC Decision, was the subject of a third round of discussions at the regular
meeting of the Committee held on 28-29 June 2001.  (Progress reports to the General Council on theCommittee's discussions on this implementation matter at its regular November 2000 and March 2001
meetings are contained in documents   G/AG/6 and G/AG/8 respectively.)
4. A detailed summary of this third round of discussions in the Committee on the
implementation of Article 10.2 of the Agreement and on the provisions of paragraph 4 of the
Marrakesh Ministerial NFIDC Decision, is attached he reto as Annex I.  The text of the negotiating
proposal, "Export Credits For Agricultural Products", which was submitted to the March meeting of
the Committee by MERCOSUR (Argentina, Brazil, Paraguay and Uruguay), Bolivia, Chile, Costa
Rica, Guatemala, India and Malaysia (G/AG/W/50), is  attached as Annex II.  (This proposal was also
submitted to the Special Session negotiations:  G/AG/NG/W/139 refers.)
5. Overall, it was considered that the Committee's further round of discussions on this subject at
the 28-29 June meeting of the Committee had been useful, including with regard to the
implementation and negotiation aspects of a number of the issues involved.  As noted in the  summaryG/AG/9
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of my remarks at  the conclusion of the discussion (paragraph 11 of Annex I hereto), there is an
evident willingness on the part of Members to progress the development of the disciplines provided
for in Article 10.2 of the Agreement in an appropriate way and it is to be hoped that  a more specific
debate in this connection will ensue.
6. The question of the implementation of Article 10.2 and of the related provisions of the
Marrakesh Ministerial Decision will be on the agenda of the next regular meetings of the Committee,
which is to be held on 27 September 2001.
7. As agreed by the Committee on Agriculture this report is submitted to the General Council on
my responsibility as Vice-Chairman of the Committee.G/AG/9
Page 3
Annex I
Implementation of Article 10.2 of the Agreement on Agriculture and the related provisions of
the Marrakesh Ministerial NFIDC Decision:  Summa ry of the discussion at the meeting of the
Committee on Agriculture on 29 June 2001
1. Brazil stated that it was pleased with the discussions which  had taken place during the last
meeting of the Committee in March on implementation of Article 10.2.  A first exchange of views had
been undertaken during that meeting as well as in the November meeting.  In this regard it was noted
that a number of Members had expressed their support for the proposal by MERCOSUR and others
on the negotiation of disciplines on export credits for agricultural products in the WTO.  In the view
of these Members the WTO was the legitimate forum to work towards the development of disciplines
on agricultural export credits, credit guarantees and insurance programmes.
2. In view of the fact that the Cairns Group was likely to table a proposal during the next Special
Session on Agriculture in July, Brazil did not consider it appropriate to duplicate the discussions that
would take place at this Special Session meeting in just a few weeks time.  For that reason, Brazil did
not intend to engage in an in-depth discussion of the matter at the present meeting nor to present a
more detailed version of the MERCOSUR proposal.  The Special Session in July would certainly
offer the opportunity to do so.  However, it was stressed that, independently of what happened in the
on-going negotiations, all Members had undertaken the commitment within the Uruguay Round to
develop disciplines governing the provisions of export credits, credit guarantees and insurance
programmes.  Therefore, it was important not to lose sight of that commitment since it pertains to the
overall balance of rights and obligations agreed  upon at the end of the Uruguay Round.  Article 10.2
was unfinished business of the Uruguay Round and was a matter to be dealt with in the context of
implementation as directed by the General Council, to whom it would be necessary to report at the
end of our deliberations.  Brazil also considered that the Committee's deliberations on this topic were
complementary to the discussions that would be taking place during the Special Session under
Article 20.  In this Committee members were bound by the commitment to develop disciplines on
agricultural export credits and related facilities.  In the Article 20 negotiations the aim was the
elimination of the subsidy component in export cr edits.  These two objectives were complementary
and nothing should stop the Committee from focusing on the issue of developing disciplines in a more
substantive way during its next regular meeting.  The important goal, from Brazil's point of view was
to complete the process of elaborating disciplines, as called for in Article 10.2, within the WTO.
3. Argentina  indicated that there was not a great deal that needed to be added to what had been
said by Brazil. Independently of how negotiations go in the Special Session, this was a topic which
was subject to the Agreement on Agriculture and was therefore an important element of the current
Agreement.  Quite aside from whether or not this topic was discussed in the mandated negotiations,
there is also an obligation to examine this topic in this Committee.  That being so, Argentina shared
the view of Brazil that in the next Special Session or in the next regular meeting of the Committee we
should review developments.
4. Australia expressed its agreement  with what had been said by Argentina and Brazil and
indicated that it was Australia's view that the WTO disciplines on the provision of agricultural export
credits needed to be strengthened.  Australia's position on this issue was reflected in the Cairns Group
proposal on Export Competition, which called for the elimination of the subsidy elements of export
credits, export credit guarantees or insurance programmes and non-commercial transactions.Australia accordingly looked forward to the July Special Session to make further progress on this
issue.G/AG/9
Page 4
5. The EC stated that it could subscribe to most of what had just been said, in particular by
Brazil, and underlined the fact that  this was a long overdue implementation issue.  As was clear from
the text of Article 10.2 itself, disciplines should by now have already been in place.  This, however,
was not the case and very little or nothing was happening in Paris in the OECD.  Like other
delegations, the EC is looking forward to the Special Session in July where this issue will be on theagenda and certainly the EC sees this as the way to move this issue forward.  But, as Brazil had just
said, there is an outstanding unfulfilled commitment from the Uruguay Round.  This had to be borne
in mind in the July Special Session when addressing what the starting-point should be for further
disciplines and where we should go.
6. United States observed that it was not quite ready to take the talks in Paris off of life-support.
In fact, participants in those talks appeared to be within reach of concluding their negotiations and
these negotiations, if eventually concluded, could define disciplines for export credit and creditguarantee programmes in fulfilment of Article 10.2 of the Agreement on Agriculture.  The proposals
submitted last March by MERCOSUR, Bolivia, Chile, Costa Rica, Guatemala, India and Malaysia
reflected many of the issues being addressed in the OECD negotiations.  Efforts should therefore be
focussed on concluding those negotiations immediately.   All but one of the potential signatories to the
agreement on export credits in the OECD had accepted a Chairman's text which would subject exportcredits to strict disciplines.  The United States had signed on to this agreement because it believed that
there was an obligation through the Uruguay Round commitment to work towards the development of
disciplines on export credits.  The United States had supported this proposed agreement despite
opposition from domestic constituencies which objected to the fact that it would cut current United
States programmes in half.  The United States called for the remaining participant to show flexibilityand to sign on to the currently proposed OECD agreement on export credits.
7. New Zealand supported the general thrust of the points made by previous speakers and
associated itself with those delegations which strongly believed that disciplines on export credits
constituted  long overdue unfinished business in the WTO in terms of implementation, New Zealand
would continue to make efforts in all forums, incl uding in the WTO and in the OECD, to progress this
issue to a satisfactory conclusion.
8. Canada stated that it agreed with others that the undertaking to work towards the development
of internationally agreed disciplines to govern the provisions of export credits, credit guarantees or
insurance programmes was as an outstanding commitment from the Uruguay Round of negotiations.
Canada had engaged in negotiations in the OECD  towards an understanding that would contain
disciplines on the practices of participating OECD Members.  Unfortunately, the major user of credit
had not been able to agree in those negotiations on provisions that would really discipline creditpractices.  Canada remained committed to working towards the development of real disciplines on
export credit practices in agriculture and stood ready to engage in negotiations that would achieve this
objective in any appropriate form.
9. Uruguay supported what had been said by Brazil and Argentina and also expressed its support
for the general idea that it was important to achieve an agreement within the OECD context on this
topic.  It was recalled, however, that although the WTO had perhaps tacitly allowed this topic to be
dealt with on a priority basis within the OECD, the fact that an agreement in OECD might be reached
would not of itself meet the requirements of Arti cle 10.2, because the vast majority of WTO Members
would not have participated in those negotiations.  It was considered therefore that it would be a good
idea if the participants concerned could first reach an agreement in the OECD because that wouldmake the job easier in the WTO.  But an agreement in the OECD did not mean that automatically
there would be compliance with the requirements of Article 10.2.  If some result is achieved in
OECD, that would be a major contribution to the work of the WTO.  Any such agreement, however,
would have to be examined in the WTO, following which the WTO membership as a whole could
then take the appropriate decisions.G/AG/9
Page 5
10. Mexico stated that it wanted to have it on record that Mexico was also in support of the
requirements of Article 10.2 of the Agreement on Agriculture being implemented.
11. The Vice-Chairman, in summing up the discussion, indicated that there was an evident
willingness on the part of Members to negotiate on this subject in the appropriate way.  Suggestions
had been made that  the development of disciplines as called for in Article 10.2 of the Agreement wasan implementation matter to be pursued in the re gular Committee, with the agricultural negotiations
being targeted at eliminating the subsidy component.  It was to be hoped that the general debate thus
far undertaken, as well as the further discussions to be undertaken in the July Special Session, would
facilitate a more specific discussion at the September meeting of the Committee, and for this purpose
the proposal by MERCOSUR and others could serve as a useful checklist.  In this connection it was
also noted that any input from the OECD would be  useful but that, as had been underlined in the
course of the Committee's discussions at this meeting, the development of disciplines as foreseen inArticle 10.2 was a matter for Members of the WTO as a whole.G/AG/9
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Annex II
EXPORT CREDITS FOR AGRICULTURAL PRODUCTS
Proposal by MERCOSUR (Argentina, Brazil, Paraguay and Uruguay),
Bolivia, Chile, Costa Rica, Guatemala, India and Malaysia1
(G/AG/NG/W/139* – G/AG/W/50, dated
21 March 2001, refers)
Background:
During the Uruguay Round, Members undertook, under the Agreement on Agriculture, to
"work toward the development of internationally agr eed disciplines to govern the provision of export
credits, export credit guarantees or insurance programmes and, after agreement on such disciplines, to
provide export credits, export credit guarantees or insurance programmes only in conformitytherewith" .
This set of disciplines has not yet been developed in the WTO, which is the appropriate forum
for the negotiation of the "internationally agreed disciplines" on export credits.  Thus, Article 10.2 of
the Agreement on Agriculture remains unimplemented.
The lack of disciplines to govern the granting of export credits to agricultural products is,
therefore, an outstanding issue, which requires pr iority in the WTO in order to prevent its use to
circumvent export subsidy commitments.
According to Article 10.1 of the Agreement on Agriculture, export subsidies other than those
listed in paragraph 1 of Article 9 (e.g. export credits, export credit guarantees or insurance
programmes) "shall not be applied in a manner which results in, or which threatens to lead to,
circumvention of export subsidy commitments".
Consequently, whilst export credits, export credit guarantees or insurance programmes are
covered by the general rules and disciplines (i.e. Articles 3.3, 8, 9 and 10.1) applicable to exportsubsidies, we need to develop the specific disciplines called for in Article 10.2.
Accordingly it is proposed that a set of discipline s to govern these practices be negotiated and
agreed in the WTO, so that all interested parties to this negotiation (users, recipients and potentially
affected countries) have the opportunity to make their views known and taken into consideration in
this exercise.
Objective:
Agricultural export credits, export credit guarantees and export insurance programmes must
be brought under specific multilateral discipline under the WTO with a view to ending government
subsidization of such credits, taking into account the needs of developing countries.  In addition, a
clear approach is required to prevent circumvention of export subsidy commitments.
Proposal:
Consistent with the objective of the reform process concerning reductions in support and
protection, it is proposed that WTO members negotiate and agree on a specific set of disciplines to
govern the provision of export credits, export credit guarantees and export insurance programmes.G/AG/9
Page 7
As we negotiate and agree on these disciplines in the WTO, the following issues, inter alia ,
should be addressed:
(a) a definition of "officially supported export credit";
(b) identification and listing of the variety of forms of officially supported export credit
operations;
(c) identification and listing of types of institutions and programmes to be covered by
such disciplines;
(d) terms and conditions for use of such credits which include, but are not limited to:
• source of the funds employed in the operation;
• maximum repayment term;
• starting point of the credit;
• repayment of principal;
• payment of interest;
• cash payments;
• sharing of risk;
• minimum interest rates;
• validity period for export credits;
• minimum premium.
(e) notification requirements of all officially supported export credit transactions that exceed 180
days.  The notifications shall provide the following information on an aggregated basis by programme
or institution:
• products concerned (volume and amount of credit);
• countries of destination;
• terms and conditions of the transaction as specified in letter (d).
Export credits, export credit guarantees and export insurance programmes given by private financial
institutions are not required to be notified on a regular basis, provided that, upon request, the relevant
information mentioned in letters (d) and (e) be granted.
Special and Differential Treatment
(a) Appropriate minimum interest rates, inter alia , shall be established  to address the interests of
exporting developing countries;
(b) In recognition of the "Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Fo od-Importing Developing Countries", adopted in
Marrakech, the disciplines to be adopted must include appropriate provisions for differential treatmentin favour of least-developed and net food-importing developing countries.  These provisions should
include longer repayment periods and should be consistent with the exemptions already provided in
the Agreement on Agriculture for developing countries and with the modifications resulting from the
negotiations to the general rules and disciplines applicable to export subsidies.
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