RESTRICTED
WORLD TRADE G/AG/R/12
31October 1997
ORGANIZATION(97-4791)
Committee onAgriculture
SUMMARY REPORT OFTHE MEETING HELD ON25-26 SEPTEMBER 1997
Note bytheSecretariat
1. TheCommittee onAgriculture helditstwelfth meeting on25-26 September 1997, initially
under theChairmanship ofMr.Jorge Riaboi ofArgentina andthereafter oftheChairman,
Ambassador Nestor Osorio Londoño ofColombia. Theagenda ofthemeeting, contained in
WTO/AIR/670, wasadopted.
PartI:TheReview Process
2. TheCommittee reviewed thefollowing notifications aslisted ontheagenda:
(i) ontheadministration oftariff andother quota commitments (Table MA:1): from
Ecuador (G/AG/N/ECU/1), theEuropean Communities (G/AG/N/EEC/3), Korea
(G/AG/N/KOR/11),Poland(G/AG/N/POL/10),Thailand(G/AG/N/THA/21,22and24)
andVenezuela (G/AG/N/VEN/6);
(ii) relating toimports under tariff andother quota commitments (Table MA:2): from
Australia (G/AG/N/AUS/12), Brazil (G/AG/N/BRA/8), Colombia (G/AG/N/COL/3),
theEuropean Communities (G/AG/N/EEC/4 andEEC/7 andCorr.1), Hungary
(G/AG/N/HUN/9), Iceland (G/AG/N/ISL/8), Korea (G/AG/N/KOR/12), Morocco
(G/AG/N/MAR/8),NewZealand(G/AG/N/NZL/10),thePhilippines(G/AG/N/PHL/8),
Poland(G/AG/N/POL/9),Slovenia(G/AG/N/SVN/6),SouthAfrica(G/AG/N/ZAF/12),
Tunisia (G/AG/N/TUN/9), theUnited States (G/AG/N/USA/9 andAdd.1) and
Venezuela (G/AG/N/VEN/3);
(iii) inthecontext ofthespecial safeguard (Tables MA:3 toMA:5): from Australia
(G/AG/N/AUS/9), Canada (G/AG/N/CAN/15), Colombia (G/AG/N/COL/4 and5),
Ecuador (G/AG/N/ECU/2), Iceland (G/AG/N/ISL/7), Korea (G/AG/N/KOR/13),
NewZealand (G/AG/N/NZL/9), thePhilippines (G/AG/N/PHL/9), Romania
(G/AG/N/ROM/6) andtheSlovak Republic (G/AG/N/SVK/10);
(iv) relating todomestic support commitments (Table DS:1): from Bahrain
(G/AG/N/BHR/2),Chile(G/AG/N/CHL/6/Rev.1),Colombia(G/AG/N/COL/6and7),
Cyprus (G/AG/N/CYP/3), Iceland (G/AG/N/ISL/9), Japan (G/AG/N/JPN/21), Korea
(G/AG/N/KOR/14), Morocco (G/AG/N/MAR/7), thePhilippines (G/AG/N/PHL/10),
Poland (G/AG/N/POL/12 and13),Romania (G/AG/N/ROM/8 and9),Switzerland
(G/AG/N/CHE/11), Thailand (G/AG/N/THA/23), Tunisia (G/AG/N/TUN/7), the
United States (G/AG/N/USA/10) andVenezuela (G/AG/N/VEN/4);G/AG/R/12
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(v) inthecontext ofnew ormodified support measures exempt from reduction
(Table DS:2): fromKorea (G/AG/N/KOR/15) andSouth Africa (G/AG/N/ZAF/10);
and
(vi) relating toexport subsidy commitments (Tables ES:1 toES:3): from Australia
(G/AG/N/AUS/10 and11),Argentina (G/AG/N/ARG/3), Bahrain (G/AG/N/BHR/1),
Brazil (G/AG/N/BRA/9), theCzech Republic (G/AG/N/CZE/13), Ecuador
(G/AG/N/ECU/3), theEuropean Communities (G/AG/N/EEC/5/Rev.1), Korea
(G/AG/N/KOR/16),NewZealand(G/AG/N/NZL/11),Norway
(G/AG/N/NOR/10/Corr.1),thePhilippines(G/AG/N/PHL/11),Poland
(G/AG/N/POL/11),Romania(G/AG/N/ROM/7),Thailand(G/AG/N/THA/20),Tunisia
(G/AG/N/TUN/8),Turkey(G/AG/N/TUR/5),Venezuela(G/AG/N/VEN/5)andZambia
(G/AG/N/ZMB/1).
3. Specific points raised withrespect tothenotifications listed inparagraph 2above andthe
responses thereto aresummarized inPartIoftheAnnex tothisreport. Deferred replies toquestions
raised onnotifications attheprevious meeting aresummarized inPartIIoftheAnnex.
4. Thefollowing notifications were subject topreliminary review andaretobereverted toat
thenextmeeting inaccordance withparagraph 9oftheCommittee 'sWorking Procedures:
(i) relating toimports under tariff andother quota commitments (Table MA:2): from
Venezuela (G/AG/N/VEN/3/Corr.1 andVEN/10);
(ii) inthecontext ofthespecial safeguard (Tables MA:3 toMA:5): from Venezuela
(G/AG/N/VEN/7);
(iii) relating todomestic support commitments (Table DS:1): fromCuba(G/AG/N/CUB/6),
Japan (G/AG/N/JPN/21/Corr.1), New Zealand (G/AG/N/NZL/12), Norway
(G/AG/N/NOR/11), Switzerland (G/AG/N/CHE/6/Corr.1 andCHE/11/Corr.1) and
Venezuela (G/AG/N/VEN/4/Rev.1 andVEN/8); and
(iv) relating toexport subsidy commitments (Tables ES:1 toES:3): from Burkina Faso
(G/AG/N/BFA/1), Cuba (G/AG/N/CUB/2 and CUB/3) and Venezuela
(G/AG/N/VEN/5/Rev.1 andVEN/9).
5. TheCommittee noted thatnocounter-notifications hadbeenreceived under ItemDofPartI
oftheagenda.
Matters Relevant totheImplementation ofCommitments under theReform Programme: Article 18:6
6. Thefollowing matters relating totheimplementation ofcommitments under thereform
programme wereraised pursuant toArticle 18:6oftheAgreement onAgriculture ("theAgreement"):
(a) Australia, Argentina, Brazil, NewZealand, Paraguay, thePhilippines, Thailand, Uruguay and
theUnited States: UseofArticle 9:2flexibility provisions onexport subsidies
7. Therepresentative ofAustralia stated thatAustralia hadserious concerns about developments
sincetheJunemeetingoftheCommitteeregardingthemannerinwhichsomeMemberswereinterpreting
andapplyingtheprovisionsofArticle9:2(b)oftheAgreementrelatingtocumulationofexportsubsidies.
These developments included thenotification byPoland ofexport subsidy levels significantly inexcess
ofannual ceiling commitments andtheapproval ofexport refund allocations forcertain agriculturalG/AG/R/12
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products inthecurrent yearwhich allowed fortheuseofexport subsidies above theannual ceiling
commitments. Therepresentative ofAustralia pointed outthat, ascertain major players inthe
Uruguay Round werewellaware andassuggested byanexamination ofthevarious draftnegotiating
textsandexplanations oftheBlairHouse accords, itwasneither theintention northenegotiated outcome
onexport subsidy commitments thatMembers should beabletocumulate unutilized export subsidies
foruseinlateryears.
8. Therepresentative ofAustralia further stated that,independently ofthenegotiating history,
thetextoftheAgreement onAgriculture didnotprovide forsuchcumulation andthattointerpret the
Agreement asproviding flexibility tostore uporbackload unutilized subsidies foruseinlateryears
involved taking Article 9:2(b) completely outofcontext. InAustralia 'sviewtheflexibility provided
bytheAgreement allowed aMember toexceed theannual volume andmonetary limits by1.75percent
and3percent,respectively, ofthebaseperiod amounts. Thiswasallowed provided thatthecumulative
amountofexcessduringtheimplementationperioddidnotexceedthepercentagesstipulatedandprovided
thatthesubsidies overthewhole implementation period werenotgreater thanthetotals allowed during
thatperiod. Some Members, however, weretaking theterm"cumulative" asusedinthesub-paragraphs
ofArticle 9:2(b) andtheterm"cumulated" outofcontext. Moreover, asmentioned byAustralia at
theJune meeting, there wasalsoanissue astowhat could becumulated: theactual levels or
1.75percentofthebaseperiod quantities? Australia considered thatwhatwasreferred towasthe
overall reduction commitment reflected insub-paragraph b(iv). ItwasAustralia 'sviewthatthetext
provided asfollows: inanyoneyearwhere aMember hasexport subsidies inexcess ofitscorresponding
annual commitments thelevelabove itsbound commitments wasconstrained bytheoverall reduction
limit, i.e.,nogreater that79percentofthe1986-1990 baseperiod levels. Theexpression "full
compliance", inparagraph 2(b)(ii) wasalsorelevant. AMember would beinfullcompliance even
ifitdidnotutilize fullyitsexport subsidy limitinaparticular year. InAustralia 'sviewthelevelof
actual export subsidies utilized could amount to,orbetaken tomean, fullcompliance aslongasthere
wasnobreach ofthebound levelor1.75percentabove thebaseperiod quantities inyears twothrough
fiveoftheimplementation period. Therepresentative ofAustralia alsonoted thatthe1.75percent
ofthebaseperiod referred tointhetextoftheArticle 9:2(b) represented halftheannual reduction
rate. Byimplication thismeant thatdownstream flexibility wasonlyapplicable insituations where
thehigher 1991-1992 baseperiod hadnotinfactbeenutilized. Thiswasanimportant limitation on
theuseofthedownstream flexibility provisions, inparticular having regard totheproducts onwhich
some Members were currently intending tobackload unutilized export subsidies.
9. Overall itwasAustralia 'sview thatthere were lawyers allaround theworld looking foror
inventing loopholes inthetext,andthattheattempts tocumulate unutilized export subsidies wereno
morethananexercise inclever accounting. Australia 'sview, based onanexamination ofthenegotiating
history andtexts, wasthatsuchcumulation wasnotenvisaged orintended, andthatthisnegotiating
history hadtobeborne inmindinorder toclarify anddetermine themeaning ofthecomplex provisions
ofArticle 9:2(b). Actions which sought tointerpret theAgreement asallowing cumulation ofexport
subsidies would undermine theeffectiveness oftheexport subsidy disciplines oftheAgreement on
Agriculture. Australia didnotbelieve thattheUruguay Round export subsidy commitments, themost
crucialareaoftheagriculturalreformprogramme,shouldbewhittledawaybycircumventionorbreaches
ofcommitments, orbyquestionable unilateral interpretations.
10. Therepresentative ofNewZealand endorsed theanalysis andviews ofAustralia. NewZealand
wasdisturbedbytheEuropeanCommunities',Poland'sandNorway'sinterpretationoftheexportsubsidy
disciplines asoutlined inthediscussion onPoland 'sexport subsidy notification (G/AG/N/POL/11)
sincetheirinterpretation wasentirely outofcontext inrelation tothenegotiating history andtheoverall
intention oftheAgreement, namely toprovide substantial progressive reductions inagricultural support
andprotection. NewZealand admitted thatthedrafting oftheprovisions wasambiguous inplaces
butanycareful legal analysis hadtoconclude thattheflexibility limits forexport subsidies wereG/AG/R/12
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determined bythefigures of1.75percentforquantities and3percentforbudgetary outlays. The
interpretation given bytheEuropean Communities, Poland andNorway implied thattheAgreement
envisaged thepossibility ofannual reduction commitments being exceeded bymassive amounts ifmarket
conditions hadbeenfavourable tosubsidizing countries inprevious years. NewZealand could not
agree withthisinterpretation andconsidered thatnoWTO panel could either. NewZealand therefore
appealed totheMembers concerned toreconsider theirposition inlightofthedrastic implications that
thisinterpretation would havefortheimplementation oftheAgreement onAgriculture.
11. Therepresentative ofthePhilippines, speaking alsoonbehalf ofMalaysia andThailand, noted
thattheoriginal purpose oftheflexibility provision inArticle 9:2wastoallow some limited scope
forexceeding theexport subsidy commitments inindividual years ifMembers concerned haddifficulties
inmeeting theircommitments exactly. Itwasnotintended toallow countries toaccumulate "credit"
thatwould beusedtosubsidize exports beyond commitment levels insubsequent years. Such an
interpretation wentbeyond theoriginal intent oftheprovision anddefeated theobjective ofbringing
more discipline andpredictability totrade inagricultural products.
12. Therepresentative oftheEuropean Communities stated thatshehadtaken careful noteofthe
interventions bydelegations. However, thespirit oftheAgreement notwithstanding, the
European Communities hadultimately agreed toArticle 9:2asitstood, thetextofwhich intheview
oftheEuropean Communities wasnotambiguous. Therepresentative noted thatother Members often
referred tothelegaltextwhen itseemed tosuittheirparticular interests. Thetextasitwasfinally
agreed byMembers permitted cumulation andthecarry-over ofunused quantities: inother words,
itallowed opportunities thatwere notexhausted inoneyeartobecumulated andcarried forward.
Itwasalsoclearthat,bytheendoftheimplementation period, Members hadtobebackatthelevel
oftheircommitments.
13. Therepresentative oftheUnited States considered thatthecarry-over ofunused quantities for
useinfuture years wasnotinthespirit oftheAgreement, andnoted thatthisviewwasalsoshared
bythemajority ofMembers. Carry-over ofunused quantities wasnottheintended outcome ofthe
Agreement andtheUnited States fullyendorsed Australia 'sanalysis ofthetext'snegotiating history.
Cumulated quantities could besubstantial forsome Members andlarge scale carry-over could add
distortions anduncertainty totheworld grainmarket, thereby seriously jeopardizing progress onfurther
export subsidy reductions. Moreover, thiscould generate substantial domestic political pressures in
theUnited States toimplement itsown"roll-over progamme", which intheviewoftheUnited States
would beahighly regrettable outcome. TheUnited States urged Members, eventhose which may
nothave export subsidy programmes, toconsider thisissue seriously andtakeaposition. The
United States alsourged great caution withregard totheinterpretation given bysome Members to
Article 9:2(b) which wasclearly notinaccordance withthenegotiating history oftheAgreement.
14. Therepresentative ofPoland expressed theviewthatultimately thetextual sideprevailed over
thespiritoftheAgreement.TherepresentativeofNorwaystatedthatNorwaysharedtheviewsexpressed
bytheEuropean Communities andPoland.
15. Therepresentative ofArgentina tookissuewiththeEuropean Communities 'interpretation of
exportsubsidiesbeingopportunitiesratherthanreductioncommitments.ArgentinaappealedtoMembers
toactinamature manner andcurethrough appropriate actions anyambiguity thatmight existinthe
textofArticle 9:2.Therepresentative ofArgentina recalled thattheexport subsidy disciplines reflected
thecontractual interest ofMembers. Allowing useofcumulated export subsidies, atthisstage, was
apolitical matter rather thanamatter concerning theexercise ofcontractual rights. Argentina, supportedG/AG/R/12
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bytheUnited States, called ontheEuropean Communities todemonstrate political leadership inthis
matter. Therepresentative oftheEuropean Communities responded thatadistinction should be
maintained between legalpossibilities, onwhich theEuropean Communities hadstated itsviews, and
actual policies. TheEuropean Communities would continue tobehave inaresponsible manner asa
major trading partner ontheworld markets.
16. Therepresentatives ofBrazil, Canada, Chile, Colombia, Mexico, South Africa, Thailand and
Uruguay expressed theirgovernments 'serious concerns overtheactual orpotential useofcumulated
unused export subsidies andregistered, together withJapan andSwitzerland, theirinterest inpursuing
thismatter. Itwassuggested thatthismatter besubject toinformal consultations asappropriate.
(b) United States: Pricing policy forpoultry exports from Canada
17. TheUnited States sought clarification fromCanada concerning arecently implemented pricing
system forexports ofpoultry products, inparticular astohowtheexport pricing system differed or
complemented thesystem fordomestic pricing.
18. Therepresentative ofCanada responded thatitwould appear thatthenewsystem referred to
bytheUnited States wasinfactanexport initiative developed byChicken Farmers ofCanada in
cooperationwithprovincialproducerboards.Theexportinitiativepermittedthegrantingofaproduction
quota tomeetnewexport market demands butnopricing provisions wereinvolved. Prices forlive
poultry werenegotiated between provincial poultry producer boards andprimary poultry processors
based onmarket conditions. TheCanadian Government andthenational supply management agencies
hadnoroleinpoultry pricing.
19. Therepresentative ofArgentina noted thata"joint venture" between private producers and
stateproducers might haveaninfluence onprices, ifstateproducer companies controlled alargeshare
ofdomestic supplies. Therepresentative ofCanada responded that,asapractical matter, thisassertion
hadnorelationship totheCanadian chicken market. Theproducers andtheprocessors were inthe
private sector andexports wereundertaken byprivate companies withnogovernmental involvement,
except inthesense ofmaking available production quotas. Therepresentative oftheEuropean
Communities sought clarification astowhether Canada maintained anational quota ontheproduction
ofpoultry. Therepresentative ofCanada confirmed thatCanada maintained supply management for
chicken withnational andprovincial production quotas fordomestic purposes. Therepresentative of
NewZealandinquiredwhetherthequotasysteminvolvedseparatequotasforexportedproductasopposed
todomestically consumed product. Therepresentative ofCanada responded thatCanada would provide
written responses tothevarious questions posed bydelegations.
(c) United States: Canada 'sspecial milkclasses scheme
20. With regard toCanada 'sspecial milkclasses scheme, theUnited States sought clarification:
(i)astohowcurrent dairy exports werefinanced inlightofinternal prices being atlevels significantly
higher thaninternational prices; and(ii)astohowthespecial milkclass(P9)wasrelated totheP6
andP4agreements. TheUnited States alsosought clarification, inthecontext oftheimpact ofthe
newpooling system onCanada 'sdairy exports andproducers 'income, withregard tothevariables
which determined dairy exports andproducers 'income.
21. TherepresentativeofCanadastatedthatCanadahadprovideddetailedanswerstoalargenumber
ofquestions fromother Members concerning theoperation ofitsdairy pricing system. Ithadbecome
apparent thatthere wasadifference inviewbetween Canada andsome other Members astowhether
thissystem wasconsistent withCanada 'sWTO obligations. TheUnited States hadrecently received
arequest fromrepresentatives ofitsdomestic industry topursue thisissue through theWTO disputeG/AG/R/12
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settlement process. Canada understood thattheUnited States administration wasactively considering
thisrequest buthadyettomake adetermination onwhether thisrequest would beaccepted. Canada
therefore considered ittobeinappropriate atthisstage forthisCommittee todiscuss these questions.
22. Therepresentative oftheUnited States confirmed thatapetition onthismatter hadbeenfiled
andthatadetermination onappropriate action wasunder consideration. Therepresentative of
NewZealand stated thatNewZealand continued tobeconcerned about Canada 'sscheme andthat
consideration wasbeing given tothevarious options forpursuing thismatter.
(d) United States: Canada 'stariff quota forfluidmilk
23. Withregard toCanada 'sadministration ofitstariffquota forfluidmilk, theUnited States sought
clarification from Canada: (i)onthesurveys conducted since 1995 regarding imports offluidmilk;
(ii)astowhether Canada considered thetextunder "other terms andconditions" inPartI,Section I-B
ofCanada 'sSchedule tobemore thananexplanatory note; (iii)astohowCanada justified denying
access tocommercial shipments under thetariff quota; (iv)astotheopening andclosing dates for
thefluidmilktariff quota; (v)astowhether thefluidmilktariff quota hadbeenfilled in1996 and
astowhich specific product category hadthelargest imports under thetariff quota; and(vi)asto
whether fluidmilkbrought intoCanada byCanadian citizens wasallowed entry regardless ofsanitary
requirements orequivalent barriers.
24. TherepresentativeofCanadastatedthathisresponseregardingspecialmilkclasses(paragraph22
above) alsoapplied tothese questions.
(e) United States: Information concerning import policies intheDominican Republic
25. TheUnited States reverted toamatter ithadpreviously raised (G/AG/R/11, paragraph 26)
andsought clarification fromtheDominican Republic withregard totherequirement fornon-sanitary
orphytosanitary import permits formostagricultural products andthestatus oftheproposed technical
rectification ofitsSchedule.
26. TherepresentativeoftheDominicanRepublicstatedthattheDominicanRepublichadundertaken
tocomplete therectification process byJuly1997 butforreasons beyond itscontrol hadbeenunable
todoso.Negotiations onrectifications would hopefully beconcluded inthecoming weeks. The
Dominican Republic remained determined toconclude thismatter andtoeliminate non-sanitary or
phytosanitaryimportpermitsassoonaspossible.Moreover,theGovernmentoftheDominicanRepublic
wasfirmly committed tofulfil allcommitments ithadundertaken intheWTO. Therepresentative
oftheUnited States stated thathewasencouraged bythisreplyandlooked forward tothefinalresolution
ofthismatter.
(f) United States: Duty ratesandtariff quota implementation byEgypt
27. TheUnited States sought clarification fromEgypt concerning reported changes intheimport
regime forpoultry products, inparticular: (i)astohowtheproposed 80percenttariffandtheproposed
3percentsurcharge werejustifiable under Articles II(b)andVIIIoftheGATT; (ii)astothebasis
forincreasing thetariffonimported poultry parts, given indications thatEgypt intended tobaseimport
duties onanarbitrary import value ofUS$1,500 pertonne; and(iii)astohowEgypt justified
maintaining animport banonpoultry parts.G/AG/R/12
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28. Therepresentative ofEgypt responded that:
(i) the80percenttariff, rather thanbeing aproposed dutyrate,wasthebaseratefor
poultry imports asagreed inmarket access negotiations withinterested Members under
tariffication procedures forreplacing import restrictions byordinary customs duties. Egypt
wascommitted towhatwasspecified initsSchedule, namely tobindthecustom dutyonpoultry
at60percentattheendofthetenyearimplementation period. The3percentsurcharge
represented thecostofservices rendered bythecustoms authorities atthetimeofimportation;
(ii) indetermining theimport value itwasnotEgypt 'sintention toincrease thetariff on
imported poultry. Thisvalue wasdetermined inaccordance withEgypt 'scustoms lawswhich
provided thatthevalue should becommensurate withthepriceofgoods soldinacompetitive
market. Inpractical terms, thevalue ofimported poultry wasdetermined inaccordance with
theprices stated ininvoices forproducts ofEuropean andAmerican origin, taking into
consideration Egypt 'srights andobligations under theAgreement ontheImplementation of
Article VIIoftheGATT; and
(iii) Egypt 'srulesandprinciples ontheimportation ofpoultry andother meatrequired that
imported meatofanykindshould beslaughtered according toIslamic rules. Since there was
uncertainty about theapplication ofthatrulewithregard toimported poultry parts, thedecision
toimport poultry parts hadbeenpostponed untilastudy onthismatter wasfinalized.
29. Therepresentative oftheUnited States noted thatsince the80percenttariff constituted the
baserateofdutytheUnited States hadtheexpectation thatthisratewould havebeenreduced over
thelastthree years andtherefore wished toknow when these reductions hadtaken place. The
representative ofEgypt responded that,according toparagraph 2oftheMarrakesh Protocol, tariff
reductions were tobeimplemented annually, except asmight beotherwise specified inMembers '
Schedules. Egypt considered thatsince theStaging Notes under General Remarks initsSchedule
specifically provided fortheimplementation ofannual tariffreductions over5and10years, respectively,
forindustrial items andtextiles butnotforagricultural tariff items, thetariffreduction onagricultural
products wastotakeplace attheendoftheimplementation period. Inanyevent, Egypt would pursue
thismatter withinterested delegations.
(g) Australia, Argentina, Brazil, NewZealand, Paraguay, thePhilippines, Thailand, Uruguay and
theUnited States: TheEuropean Communities 'inward processing arrangements forcheese
-component export subsidies onprocessed cheese
30. TheCommittee tooknotethat,onthebasisofarequest byanumber ofMembers, theChairman
hadheldinformal consultations onthisissuebefore thismeeting which hadprovided theopportunity
foranextensive exchange ofviews. Thediscussions hadfocused ondetailed aspects ofthearrangements
inquestion andanumber ofissues hadbeenusefully analysed orclarified. Inresponse tosuggestions
made byMembers during these informal consultations, theChairman hadindicated hiswillingness
tocontinue theinformal consultations should thisreflect thewishes ofMembers.
31. NewZealand noted thatithadsought further clarification from theEuropean Communities
onitsresponse toearlier questions posed byNewZealand (Annex -PartIII).Some clarification had
beenreceived during therecent informal consultations, although onother issues theinformals had
contributed toNewZealand 'sdoubts. Insummary, therepresentative ofNewZealand stated thatat
issue wasascheme where subsidies wereprovided totheconstituent components -SMP andbutter
-oftheproduct thateventually lefttheEC'scustoms territory, i.e.theprocessed cheese. While the
European Communities argued thatthesubsidies were provided tothese basic inputs thatwentinto
theinward processing factories, theexport refunds wereinfactnotmade untilthefinal(compensating)G/AG/R/12
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product, theprocessed cheese, lefttheEC'scustoms territory. TheEuropean Communities 'position
wasthattheprocessedcheeseundertheinwardprocessingarrangementhadnotreceivedexportsubsidies.
Asaresult, thisallegedly unsubsidized product could enterworld markets atinternational prices while
thedomestic price forthesame product remained significantly higher. IntheviewofNewZealand,
thisscheme appeared tobereminiscent oftheproposals forA/Bmilkquotas (two-tier pricing scheme).
NewZealand understood thatthisscheme hadbeenrejected bytheEuropean Communities, including
because ofconcerns about itsWTO compatibility, butitappeared tohaveemerged inanother guise.
NewZealand considered thatthemodified inward processing scheme wasanunjustified waytorelieve
thepressure oncheese export subsidies where theEuropean Communities hadrunupagainst itssubsidy
limits andremained unconvinced bytheEC'sarguments thattheprocessed cheese thatleftitscustoms
territory should notbecounted against itsexport subsidy commitments oncheese.
32. TheUnited States remained seriously concerned about thecomponent subsidies onprocessed
cheese under theEuropean Communities ’inward processing arrangement. TheEuropean Communities
hadacommitment onexport subsidies forcheese thatspecifically included processed cheese. This
commitment wascircumvented bytheuseofcomponent subsidies. Themotivation forthisprogramme
wasthattheEuropean Communities wasseverely constrained byitsexport subsidy commitment on
cheese butwasnotunder pressure from limits onbutterfat andmilkpowder. Byusing component
subsidies, theEuropean Communities wasabletogreatly expand subsidized exports ofcheese. The
United States wasconcerned thatthispractice, ifcontinued, hadimplications forother commodities
andother Members andtherefore inquired whether theEuropean Communities intended toterminate
itscomponent subsidies programme forcheese andaccurately account forexports made todateand
inthefuture.
33. Therepresentative ofAustralia stated thatAustralia 'sconcerns didnotrelate towhether the
European Communities oranycountry hadtheright tooperate inward processing arrangements.
Australia sought toclarify whether these processed cheese exports werecaptured byitsexport subsidy
commitment forcheese. TheAnnex totheEuropean Communities 'Schedule wasexplicit instating
thatthequantity ofproducts encompassed bythedescription ofproducts wasindependent ofthestate
ofprocessing orpresentation inwhich theproducts were exported. Processed cheese wasincluded
inthecheese category. Thecruxofthematter appeared tobethatthepayment ofexport refunds on
EC-produced component products wascontingent ontheexport ofprocessed cheese since the
European Communities would notbepaying export refunds onthecomponent products iftheywere
notinputs totheprocessed cheese. Australia wondered howtheinclusion ofthesubsidized EC
component products under itscommitment categories forbutter orSMPcould bejustified ifthepayment
ofthesesubsidies wascontingent ontheexport ofthefinished product. Australia hadyettobeconvinced
thattheEuropean Communities 'payment ofexport subsidies onthesecomponent products, which were
subsequently notincluded under itscheese commitment, didnotamount tocircumvention oftheEC's
export subsidy commitments oncheese. Australia therefore requested theEuropean Communities to
consider theoptions available tobring itsactions intoconformity withitsWTO commitments: namely,
either tocease thepayment ofexport subsidies onECcomponent products ofprocessed cheese orto
include thesubsidized exported product under itscheese commitment.
34. TherepresentativeofArgentinaexpressedtheviewthattheEuropeanCommunitiesmustcomply
with itsobligations under Article 10:3 oftheAgreement onAgriculture. Since the
European Communities according toitsnotification hadexhausted theceiling forsubsidized cheese
exports, ithadtodemonstrate thattheexport ofadditional quantities werenotsubsidized. Argentina
consideredthattheEuropeanCommunities'responsetothispropositionmightbeamorefruitfulapproach
totheissue.G/AG/R/12
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35. TherepresentativeofJapanstatedthatsinceexportsofprocessedcheeseaswellasofcomponent
products weresubsidized, therewasapossibility thatexport subsidies forprocessed cheese weregranted
inexcess ofthose specified under theECexport subsidy commitments. Intheview ofJapan, the
European Communities should more carefully consider thismatter inlightoftheWTO Agreement
aswellasitsnegotiating history. Moreover, astheEuropean Communities wasthelargest exporter
ofprocessed cheese toJapan, Japan would wanttoparticipate inanyconsultations onthismatter.
36. Therepresentative ofthePhilippines, speaking alsoonbehalf ofMalaysia andThailand, noted
thattheirGovernments hadconcerns withregard tothesystemic implications which theuseofinward
processing arrangements could haveontheexport subsidy disciplines. Having participated inthe
informal consultations, theyremained convinced thatthefinalproducts derived from theinward
processing scheme using subsidized inputs wereineffect subsidized products andshould becounted
againsttheEC'sexportsubsidyreductioncommitmentsoncheese.Permittingotherwisewouldtransform
thescheme intoaneffective means forMembers tocircumvent theirexport subsidy commitments.
Thispractice constituted aregression inthereform process intrade inagriculture andundermined
thespirit oftheAgreement onAgriculture.
37. Therepresentatives ofBrazil, Canada, Chile, Mexico, Switzerland, theUnited States and
Uruguay noted theirGovernments 'practical andsystemic concerns inthismatter andtheirinterest
inpursuing theissue further.
38. Therepresentative oftheEuropean Communities stated thattheEuropean Communities
considered itsinward processing arrangements forprocessed cheese andthewayinwhich theEuropean
Communities calculated compliance withitsexport subsidy commitments tobeperfectly compatible
with itsWTO obligations. Therepresentative referred totheinformal consultations held on
24September 1997andunderlined thatadetailed description ofthesystem together withanexplanation
ofcompatibility withWTO commitments hadbeengiven. Nonetheless, theEuropean Communities
waswilling toparticipate inaserious manner inanyconsultations tofurther discuss thistechnical and
complex matter.
(h) United States: Import regime forbovine semen inHungary
39. TheUnited States raised thismatter withreference toreports thattheGovernment ofHungary
haddelegated tothelocalHolstein association (Hungarian Holstein Amalgamation) powers toapply
aquota orother quantitative restrictions forbovine semen imports. TheUnited States sought
clarification: (i)astothebasisfordelegating powers toaprivate organization which wasalsoaproducer
ofbovine semen; (ii)withregard toinformation thattheHungarian Holstein Amalgamation was
assessing afeeonallimported bovine semen of150forint perdosewhile thecharge fordomestic semen
was30forint perdose, andastohowHungary justified different feesforimported versus domestic
products; (iii)astothebasis forrestricting imports andthesaleoffrozen bovine semen tolicensed
artificial insemination stations; and(iv)astotherequirement thatinorder toqualify asalicensed
station more thanhalfofthesemen marketed byaninsemination station mustbeproduced byanimals
keptatthatstation.
40. TherepresentativeoftheUnitedStatesnotedthattheUnitedStateshadbeenadvisedthatHungary
wastaking steps toaddress these concerns. Thisstatement wasendorsed bytherepresentative of
Hungary.G/AG/R/12
Page10
(i) Canada: Implementation oftheporktariff quota commitments bythePhilippines
41. Canada reiterated itsconcerns regarding theimplementation ofthePhilippines 'access
commitments forpork(G/AG/R/11, paragraphs 9and10). Canada wasseeking afair,transparent
andpredictable import regime thatensured thatimport permits weremade available tothesectors with
aninterest inimporting porkandsought anupdate fromthePhilippines concerning thestatus oftheir
review ofAdministrative Order No.9 of1996.
42. Therepresentative ofthePhilippines stated thatasaresult ofthereview ofAdministrative
Order No.9 of1996, thePhilippines hadissued Administrative Order No.8 of1997 which embodied
therevised rulesandregulations fortheimplementation ofitsminimum access commitments. Subject
tocertain transitional provisions, Administrative Order No.8 superseded Administrative Order No.9
andhadtaken effect on21September 1997. Theadministrative changes involved would shortly be
notified toMembers. Asignificant change wastheestablishment ofabuilt-in quota reallocation system
through abeginning-year poolandamid-year pool. Thecombined provisions forvoluntary surrender
andforfeiture fornon-utilization wereexpected toincrease thevolumes available forthebeginning-year
pooland/or themid-year pool. Administrative Order No.8 wasdrafted taking intoconsideration the
comments made bysome Members inthecourse oftheconsultations onthePhilippine implementation
oftariff quota commitments forporkandpoultry. ThePhilippines considered thatAdministrative
Order No.8 provided adequate andmeaningful access inaccordance with itsminimum access
commitments butwould nonetheless welcome comments byMembers inthecontext oftheon-going
formal dispute settlement consultations.
43. TherepresentativeofCanadarespondedthatCanadawouldconsidersubmittingfurthercomments.
Therepresentatives oftheECandtheUnited States noted theirinterest inthismatter.
(j) United States: Switzerland -export subsidies forbeef
44. TheUnited States sought clarification from Switzerland ontheissue ofsubsidies provided
forbeefexports, inparticular, withregard tohowtheSwiss Meat Board wascurrently subsidizing
exports ofbeef. Therepresentative ofSwitzerland responded thatSwitzerland didnotsubsidize meat
exports andhadsubmitted statistical datatotheUnited States oncommercial exports andfoodaid
donations in1996and1997. Inresponse toaquestion byArgentina, therepresentative ofSwitzerland
confirmed thatSwitzerland hadnointention ofproviding export subsidies formeatinthefuture.
(k) United States: Switzerland -domestic purchase requirements forwheat
45. TheUnited States reiterated itsconcerns regarding plans bytheSwiss Government tosubstitute
domestic wheat forimported wheat through atender forsalesofdomestic stocks. TheUnited States
sought clarification: (i)astowhether thetender ofdomestic wheat hadtaken place andifso,how
much wassold; and(ii)astowhether anytenders were planned forthenearfuture.
46. Therepresentative ofSwitzerland responded thatthetender referred toabove hadbeenheld
and700tonnes ofwheat hadbeensoldforAugust andSeptember delivery. Forthetimebeing, no
tender wasopen. According tothetemporary amendment ofthebread cereals regulation, theSwiss
Grain Producers 'Organization wasauthorized toopenfurther tenders until30June1998. Given the
limited demand, theorganization wascurrently considering whether toopen newtenders. The
representative oftheUnited States noted thattheUnited States would continue tomonitor thesituation.
Therepresentative ofArgentina sought clarification astowhythere wassolittlecommercial interest
inthetender, given theprice gapbetween theinternational anddomestic markets. Therepresentative
ofSwitzerland responded thattheconditions forthetender, which werefixed bytheGrain Producers '
Organization, might nothavebeensufficiently attractive.G/AG/R/12
Page11
(l) United States: Turkey 'sbanonimported cattle
47. TheUnited States expressed concerns withregard torecent reports according towhich Turkey
intended toextend itsbanonimported cattle. Thebanappeared tobenolonger linked toanimal health
concerns butwasusedasamechanism toprotect thedomestic cattle industry. TheUnited States sought
clarification astowhen Turkey would liftthebanonimported cattle.
48. Therepresentative ofTurkey responded thattherestrictive import policy forcattle wasrelated
toanimal health concerns rather thanbeing amechanism toprotect thedomestic industry. Therationale
forthetemporary suspension ofcattle imports hadbeencommunicated tothecountries concerned.
Thecompetent authorities ofTurkey would review thecaseon1November 1997 forthepurpose of
resuming cattle imports. Therepresentative oftheUnited States noted thattheUnited States wasnot
satisfied withTurkey 'sresponse thattheimport ban,which wasfirstimposed inAugust 1996, was
solely based onsanitary concerns, since theUSsanitary andphytosanitary authorities hadindicated
thatthebancould notbejustified onSPSgrounds. TheUnited States would follow uponthismatter.
Therepresentative ofNewZealand sought clarification astowhether theimport banwasapplied to
frozen andchilled meataswellascattle. Therepresentative ofTurkey undertook toprovide aresponse.
(m) Australia: United States -Implementation ofsugar tariff quota
49. Therepresentative ofAustralia noted thattheUnited States hadrecently announced revisions
withrespect totheadministration ofitssugar tariffquota forthe1997/98 fiscal year. Australia sought
clarification: (i)astowhen theUnited States would notify thechanges totheCommittee; (ii)asto
whytheUnited States hadintroduced shipping restrictions forsome countries; (iii)astowhether these
shipping restrictions applied totheadditional allocations; (iv)astowhether theadditional allocations
were fixed at200,000 tonnes orwhether theadditional allocations would beincreased intheevent
ofasignificant increase inimport demand during theyear; (v)withregard totheassumptions onwhich
thesugar import estimates for1997/98 werebased (thecalculation ofthestock-to-use ratio), whether
theinitial quota quantity of1.2million tonnes ortotalpotential imports of1.8million tonnes hadbeen
usedasastarting point; and(vi)astowhytheinitial tariffquota quantity for1997/98 hadbeenreduced
by30percent.
50. Therepresentative oftheUnited States responded that:
(i) anychanges regarding theUSsugar policy andadministration werepublished inthe
Federal Register Notice andalsoreported intheUSDepartment ofAgriculture 's(USDA) press
release. Anylatenotification could onlybeduetoanoversight. TheUnited States would
shortly provide fullnotification ofrecent changes totheCommittee;
(ii) theUnited States hadnotintroduced shipping restrictions butcontinued touseshipping
patterns toassist intheorderly marketing offoreign sugar intotheUSmarket. The
United States allowed forfullutilization ofallallocated tariff quotas;
(iii) intheeventofadditionalallocationstothisyear'sannouncedtariffquota,thesequantities
could beimported anytimesubsequent totheUSTR 'sannouncement oftheallocation. The
additional tranches would notbesubject toshipping patterns;
(iv) theUSDA hadestablished thesizeoftheunallocated tranches at200,000 tonnes each
and,furthermore, hadreserved therighttoincrease thetariff quota atanytime, should there
beneedforadditional sugar imports;G/AG/R/12
Page12
(v) forthestocks-to-usecalculationsintheWorldAgriculturalSupplyandDemandEstimates
reports, theUSDA would usetheannounced tariffquota quantity of1.8million tonnes infiscal
year1998;
(vi) although theUSDA hadestablished thetariffquota forfiscal year1998atapproximately
700,000 tonnes above theUSminimum access requirement, thisvolume wasbelow thetariff
quota established forfiscal year1997. Thisreduction wastheresult oftheUSDA 'sforecast
thatduring thefiscal year1998 there would beincreased imports ofsugar outside thetariff
quota.
51. Therepresentative ofAustralia registered serious systemic concerns withregard tothelast
response toitsquestions. Australia wasconcerned -assuming thattheUnites States 'reference to
increased outside quota imports waswithrespect toexpected preferential imports -thattheopening
ofMFN tariff quota access might bereduced significantly forthebenefit ofpreferential suppliers at
theexpense ofother, including traditional, suppliers. Therepresentative oftheEuropean Communities
sought clarification withregard totheUnited States 're-export programme forsugar-containing products
andastowhether thenewadministrative arrangements forthesugar import regime were partly in
response toitsrecent agreement withCanada. Therepresentative oftheEuropean Communities noted
thattheEuropean Communities would examine closely anycountry allocations intheforthcoming US
notification astowhether Article XIIIoftheGATT wasrespected. Intheview oftheEuropean
Communities, thenewimport arrangements alsoraised thegeneral issueastowhether countries with
country-specific allocations, suchasCanada, could compete forimports allocated to"others". The
representative oftheUnited States responded thattheUSre-export programme forsugar wasdesigned
toallow sugar mills toprocess sugar sourced fromtheworld market rather thanthedomestic market.
(n) Canada: United States -Milk marketing intheState ofCalifornia
52. Therepresentative ofCanada sought clarification astowhether theUnited States could confirm
thatmilk marketing plans established bytheState ofCalifornia provided lower prices fordairy
components tobeusedinthemanufacture ofyogurt, softfresh cheese, cottage cheese andcream for
export, thanfordairy components tobeusedformanufacturing similar products forsalewithin the
United States. Therepresentative oftheUnited States undertook toprovide aresponse.
(o) Thailand: European Communities -Export subsidies onpoultry products
53. Thailand reverted tothismatter (seeG/AG/R/11, paragraphs 21to23)inlightofreports that
theEuropean Communities hadutilized "unused" export subsidies forpoultry meatcarried overfrom
1995/96 tothecurrent marketing yearandthatasaresult theEuropean Communities might exceed
itsexport subsidy commitment levelinthe1996/97 marketing year. Thailand sought clarification from
theEuropean Communities: (i)astothereasons fortheincrease ofsubsidized exports ofpoultry meat
between 1995/96 and1996/97; (ii)astohowtheEuropean Communities applied itsexport subsidy
scheme forpoultry meat in1996/97; (iii)astothemethod ofcalculating thevalue andquantity
commitment levels forsubsidized exports ofpoultry meatin1996/97; and(iv)astothevalue and
quantity ofexport subsidies forpoultry meatinthecurrent marketing year.
54. Thefollowing replies totheforegoing questions weresubsequently provided bytheEuropean
Communities:
(i) according toprovisional information available, theECestimated thatsubsidized exports
forpoultry meat forthe1996/97 marketing year, invalue andquantity terms, will
bebelow thelevels ofsubsidized exports forthemarketing year1995/96 andbelow
thelevels indicated inSection IIofPartIVofSchedule CXL;G/AG/R/12
Page13
(ii) theEChasapplied theusual Community procedures asregards subsidized exports to
exports ofpoultry meatin1995/96 and1996/97;
(iii) thecommitment levels onsubsidized exports ofpoultry meatarelaiddown inSection II
ofPartIVofSchedule CXL andareapplied together withtherelevant provisions in
theAgreement onAgriculture, inparticular Article 9thereof; and
(iv) themarketing year1996/97 forpoultry meatrunsfrom1July1996until30June1997.
TheECiscurrently inthecourse ofpreparing itsnotification onexport subsidies for
themarketing year1996/97 forallproducts concerned. Assoonasthenotification
iscomplete itwillbesubmitted totheWTO.
55. Deferred replies toquestions raised under Article 18:6oftheAgreement atprevious meetings
aresummarized inPartIIIoftheAnnex tothisreport.
Other Matters Relating totheReview Process
56. Withrespect tooutstanding replies byMexico, therepresentative ofMexico stated thatMexico
wasintheprocess ofpreparing thereplies toquestions raised bythree Members attheJunemeeting.
57. Withregard tothequestion ofoverdue notifications theCommittee tooknotethat,asrequested
attheMarch 1997 meeting, theSecretariat hadmade available aRoom Document dated
24September 1997 showing compliance with thenotification obligations oftheCommittee on
Agriculture.
PartII:Other Matters within thePurview oftheCommittee
(a) Chairman 'sreport ontheprocess ofanalysis andinformation exchange (AIE process)
58. TheCommittee tooknoteofthereport bytheChairman ontheprocess ofanalysis and
information exchange (G/AG/R/10, paragraph 36):
"(i) TheCommittee 'sdecision onthefollow-up totheSingapore Ministerial Declaration
regarding theprocess ofanalysis andinformation exchange (now referred toasthe"AIE
Process") provides that"fortransparency purposes anitemrelating totheprocess would be
included ontheagenda ofregular meetings oftheCommittee toenable theChairperson tomake
afactual andsummary report totheCommittee ontheprocess." Inthislight, following the
firsttwosessions oftheAIEprocess reported onatthelastmeeting oftheCommittee
(G/AG/R/11, paragraph 44refers), aninformal open-ended meeting oftheCommittee was
heldon23and25September. Theinformal papers circulated prior totheprevious meetings
were reconsidered, i.e.:
AIE/1: byAustralia onAdministration ofTariff Quotas
AIE/2: bytheUnited States onCircumvention ofExport Subsidy Commitments
AIE/3: bytheUnited States onDataSupplied Through Notifications
AIE/4: byAustralia on"Green Box" Domestic Support
plustwopapers submitted were considered forthefirsttimeatthismeeting:
AIE/5: byNewZealand onTariff Quota Administration
AIE/6: byPakistan, PeruandtheDominican Republic onIssues ofInterest toDeveloping
Countries.G/AG/R/12
Page14
Inaddition, abackground paper ontariff andother quotas bytheSecretariat (AIE/S1) was
made available totheinformal meeting.
"(ii) Asindicated would bethecaseinmyreport tothelastmeeting, theAIEmeeting
focused oncertain aspects ofissues raised under thetopicoftariffquota administration. Once
again therewere, inmyview, veryfruitful discussions. Concerning thepurpose oftariffquotas,
whileMembersagreedthatthetariffquotasthemselveswerethebasisofMembers'commitments
inthisarea, many Members believed itwasalsonecessary tokeepinmind theorigins of
different tariff quotas andwhatthatmayimply interms oftheiradministration.
"(iii) Ontheissues ofthemethods ofallocation oftariff quotas andaccess toimport
licences, Members proposed anumber ofcriteria thatcould beusedtoexamine different
administration methods (including, forexample, equity, predictability, non-restrictiveness, and
economic efficiency). Some Members noted thatinmany cases shortcomings ofparticular
allocation methods could beovercome andthisconcept should alsoform partoffuture
discussions along withthelimits imposed bytheWTO framework.
"(iv) Detailed discussions were alsoheldonthevalidity andtiming oflicence periods,
thesub-allocationofbroadly-definedtariffquotastospecificproductsandadministrativebarriers.
Among many other points, itwasunderlined thatintheadministration oftariffquotas Members
mustkeepinmind implications andeffects onthebusiness community, bothdomestically and
abroad. Thediscussion wasnotexhaustive andthetopics aresuretoberevisited inthefuture.
"(v) Apaper wasintroduced intotheprocess byPakistan, Peru andtheDominican
Republic andwelcomed byalargenumber ofMembers. Asubstantive discussion onthepaper
willbeheldatthenext(November) meeting under theAIEprocess.
"(vi) Inconcluding themeeting Inoted thatthenextmeeting would cover thePakistan,
PeruandtheDominican Republic paper andother newpapers received bythethree week
deadline -anumber ofMembers indicated suchpapers were likely tobeforthcoming. The
papers thathadalready beensubmitted ondomestic support andexport subsidy issues would
alsobeforfurther discussion along withmore issues intheareaoftariff quota administration
withreference topapers already presented. TheSecretariat confirmed that,asrequested by
Members, itwould continue itsfactual work.
"(vii) This being said, inconcluding myreport ontheAIEprocess Iwould liketo
remindMembersthat,asagreed,theprocess"wouldbeundertakenthroughopen-endedinformal
meetings oftheCommittee onthebasis, interalia,ofpapers tobesubmitted byMembers"
(G/AG/R/10, paragraph 36).Iamreiterating thisinorder toencourage Members toensure
thatalltopics ofinterest tothem canbediscussed intheprocess andtoremind youthatthe
presentation ofapaper isnotaprerequisite foranissue tobediscussed asIamaware ofthe
difficulties faced bysome Members inpreparing papers."
(b) Followuptoparagraph18(i)oftheCommittee'sreportfortheSingaporeMinisterialConference
ontheMarrakesh Ministerial Decision onMeasures Concerning thePossible Negative Effects
oftheReform Programme onLeast-Developed andNetFood-Importing Developing Countries
59. TheChairman recalled thatthemonitoring oftheimplementation oftheMarrakesh Ministerial
Decision concerning netfood-importing developing countries wasautomatically ontheagenda ofthe
November meeting under theCommittee 'sWorking Procedures (G/AG/1, paragraph 18).Henoted
thatsince thelastreview 13Members hadsubmitted notifications intheTable NF:1 series (food and
otheraidprovided toleast-developed andnetfood-importing developing countries) which wererelevantG/AG/R/12
Page15
fortheNovember monitoring exercise. TheChairman urged other Members toalsosubmit theirNF
notifications wellinadvance oftheNovember meeting sothattheannual review could beaproductive
one.
60. Inamessage totheCommittee, theExecutive Director oftheInternational Grains Council
(IGC) recalled thatinhisintervention attheJunemeeting oftheCommittee reference wasmade to
consultations between members oftheFood AidConvention (FAC) andpotential newdonors andwith
relevant international organizations aswellaswithfood-aid recipients (G/AG/GEN/2). FACmembers
hadheldfurther informal discussions on25September 1997when donors initiated discussions ofspecific
submissions covering areas where afuture Convention might bemodified oradded to.Some donors
indicated thattheywould elaborate theirpositions assoonaspossible, sothattheFood AidCommittee
could takefurther stepsatitssession inDecember 1997. Thiswould likely include adecision toextend
theFood AidConvention, 1995, foroneyearafter30June1998, toavoid anylegal vacuum when
thecurrent Convention expired andnegotiations ofchanges toanewonewere being completed.
61. TherepresentativeoftheFAOnotedthattheFAOhadpreparedadocumentwhichwasdiscussed
attheFood AidCommittee inLondon andwhich contained anumber ofpreliminary ideas onways
toimprove theFood AidConvention (G/AG/GEN/3). TheFAOproposals wereaimed atbroadening
thedonor andcommodity baseoffoodaidwithaview toincreasing theoverall levels offoodaid.
Theproposals alsosought toimprove theflexibility offoodaidsothatitcould better respond tovariable
needs, including those under theDecision. These ideas were ofapreliminary nature andtheFAO,
together withtheother organizations concerned, would beprepared toelaborate further onthese
proposals. Furthermore, theFAO waspresently carrying outastatistical study onthefoodsecurity
situation inthecountries covered bytheDecision which sought toreveal trends indomestic food
availability, expenditures onfoodimports overtimeandhowthese related tocountries 'ability topay
forsuchimports. TheFAOwould beprepared toshare theresults ofthisexercise withtheCommittee
attheNovember meeting.
(c) Requests forobserver status byInternational Intergovernmental Organizations
62. TheCommittee noted thatthere werethree outstanding requests forobserver status, namely
bytheACP Secretariat, theInter-American Development Bank andtheInter-American Institute for
Agricultural Cooperation (G/AG/W/29/Rev.1 refers). Asagreed attheCommittee 'smeeting in
June1997, theChairman hadconsulted informally onthisissue. TheChairman would continue his
informal consultations withaviewtoreaching adecision attheNovember meeting.
Other Business
(a) Report oftheCommittee onAgriculture totheCouncil forTrade inGoods
63. TheCommittee agreed thattheChairman would prepare ashort andfactual draftreport for
theCouncil forTrade inGoods (CTG) forconsideration bytheCommittee atitsNovember meeting
andthattheChairman would submit thereport totheCTG onhisresponsibility asChairman.G/AG/R/12
Page16
(b) Schedule ofmeetings for1998
64. TheCommittee tooknoteofthefollowing schedule ofregular meetings in1998 (namely,
meetings inMarch, September andNovember, asprovided forintheCommittee 'sWorking Procedures,
plusallowance foraregular additional meeting, ifnecessary, inJune). Provision wasalsomade for
informal meetings oftheCommittee under theAIEprocess:
19-20 March 1998 (informal meeting: 18March 1998)
[25-26 June1998] [informal meeting: 24June1998]
29-30 September 1998 (informal meeting: 28September 1998)
17-18 November 1998 (informal meeting: 16November 1998).
(c) Uruguay -Issues relating tointernational trade inrice
65. Under "other business", therepresentative ofUruguay raised anumber ofconcerns withrespect
tothericetrade withJapan andtheDominican Republic.
66. Therepresentative ofUruguay stated thatUruguay hadencountered difficulties withrespect
totheimplementation ofJapan'smarket access commitments forricewhich hadbeendivided intotwo
tranches ("minimum access" (ordinary imports) andtheSimultaneous-Sell-and-Buy (SBS) system).
On16September 1997, Uruguay hadreceived notice thata"minimum access" tender would beopened
on19September 1997 forapproximately 120,000 tonnes, ofwhich 110,000 tonnes wasreserved for
theUnited States, Australia andThailand andtheremainder reserved fortrading companies which
werefreetodecide onthecountry oforigin. However, Uruguay wasinformed bythetrading companies
thatoffers could notbeaccepted fromUruguay sinceithadnotbeenauthorized toparticipate inprevious
"minimum access" tenders. Uruguay hadpreviously onlyparticipated inSBStenders. Uruguay
considered thatitsaccess opportunities hadbeenimpaired because of:(i)unduly short notice; (ii)the
reservation ofminimum access tocertain Members which wasnotspecified inJapan'sSchedule; and
(iii)Uruguay 'selimination fromtheresidual global tender asaresult ofnon-participation inprevious
"minimum access" tenders. Uruguay considered thisproblem tohavesystemic implications andwould
liketodiscuss thematter bilaterally. Therepresentative ofJapan tooknoteoftheissue raised by
Uruguay andexpressed Japan'swillingness totalkbilaterally withUruguay.
67. Therepresentative ofUruguay alsosought clarification from theDominican Republic with
respect toarecent government tender forrice.According totheconditions ofatender of10July1997,
onlyonesingle country waseligible asasupplier, acondition which wasnotspecified intheSchedule
oftheDominican Republic. Uruguay sought clarification withrespect tothegeneral procedures for
ricetenders bytheDominican Republic andthereasons why, inthisparticular case, thesupply was
limited toonecountry. Therepresentative oftheDominican Republic tooknoteofthematter raised
byUruguay andundertook toprovide aresponse.
(d) EuropeanCommunities-PotentialmarketaccessproblemsforagriculturalproductsinVenezuela
68. TherepresentativeoftheEuropeanCommunitiesraisedconcernsunder"otherbusiness"regarding
potentialmarketaccessproblemsinVenezuela.TheEuropeanCommunitiesunderstoodthatthefarmers'
federationhadrequestedtheGovernmentofVenezuelatorestrictimportsofcertainagriculturalproducts,
including milkpowder. Itappeared thatagreement hadrecently beenreached between theMinister
ofAgriculture andthefarmers 'federation ontheimposition oftemporary import restrictions byway
oflicences orquotas. TheEuropean Communities wasalsoconcerned about plans toimplement supply
andquality control testsonallimports ofmilkpowder. Therepresentative ofVenezuela tooknote
ofthematter andundertook toprovide aresponse.G/AG/R/12
Page17
(e) European Communities -Annual consultation under theprovisions ofArticle 18:5ofthe
Agreement onAgriculture
69. Therepresentative ofEuropean Communities noted thatArticle 18:5oftheAgreement on
Agriculture provided forannual consultations withrespect toMembers 'participation inthenormal
growthofworldtradeinagriculturalproductswhich,accordingtotheCommittee'sWorkingProcedures,
were scheduled tobeheldattheNovember meetings. TheEuropean Communities requested the
Secretariat toprepare, forthepurposes ofthese consultations, abackground notefortheconsultations
byMembers atthenextmeeting oftheCommittee. TheSecretariat tooknoteoftherequest.
DateofNext Meeting
70. Thenextregular meeting oftheCommittee onAgriculture willbeheldonThursday andFriday,
20-21 November 1997, andtheairgram convening themeeting andcontaining thedraftagenda will
beissued onFriday, 7November 1997.G/AG/R/12
Page18
ANNEX
PartI
(i)
(ii)
(iii)
(iv)
(v)
PartII
(i)
(ii)
(iii)
PartIII
(a)
(b)Summary ofspecific points raised onnotifications andresponses thereto
(25-26 September 1997 meeting)
ontheadministration oftariff andother quota commitments (Table MA:1):
Ecuador (ECU/1), theEuropean Communities (EEC/3), Korea (KOR/11),
Poland (POL/10), Thailand (THA/21, 22and24)andVenezuela (VEN/6);
relating toimports under tariff andother quota commitments (Table MA:2):
Brazil (BRA/8), Colombia (COL/3), theEuropean Communities (EEC/4 and
EEC/7 andCorr.1), Hungary (HUN/9), Iceland (ISL/8), Korea (KOR/12),
Morocco (MAR/8), Poland (POL/9), Slovenia (SVN/6), South Africa
(ZAF/12), Tunisia (TUN/9), theUnited States (USA/9 andAdd.1) and
Venezuela (VEN/3 andCorr.1);
relating todomestic support commitments (Table DS:1): Bahrain (BHR/2),
Chile (CHL/6/Rev.1), Colombia (COL/6 and7),Cyprus (CYP/3), Iceland
(ISL/9), Japan (JPN/21 andCorr.1), Korea (KOR/14), Morocco (MAR/7),
Poland (POL/12), Romania (ROM/8 and9),Switzerland (CHE/11 and
Corr.1), Thailand (THA/23), Tunisia (TUN/7), theUnited States (USA/10)
andVenezuela (VEN/4 andRev.1);
inthecontext ofnewormodified support measures exempt from reduction
(Table DS:2): South Africa (ZAF/10); and
relating toexport subsidy commitments (Tables ES:1 toES:3): Korea
(KOR/16), NewZealand (NZL/11), Poland (POL/11), Romania (ROM/7),
Thailand (THA/20), Tunisia (TUN/8), Turkey (TUR/5) andVenezuela
(VEN/5 andRev.1).
Deferred replies toquestions onnotifications raised atprevious meetings
ontheadministration oftariff andother quota commitments (Table MA:1):
European Communities (EEC/3);
relating toimports under tariff andother quota commitments (Table MA:2):
Canada (CAN/14) andtheEuropean Communities (EEC/4); and
relating todomestic support commitments (Table DS:1): Japan (JPN/21 and
Corr.1) andTunisia (TUN/7).
Deferred replies toquestions raised under Article 18:6oftheAgreement at
previous meetings
United States -Costa Rica'sfailure toestablish tariff quotas forpoultry and
dairy products (G/AG/R/11, paragraph 32); and
NewZealand andtheUnited States -TheEuropean Communities 'inward
processing arrangements forcheese (G/AG/R/11, paragraphs 14and15)Page
19
24
30
43
44
47
48
50
55
55G/AG/R/12
Page19
ANNEX -PartI
Review ofNotifications bytheCommittee onAgriculture atitsMeeting on25-26 September 1997
Summary ofSpecific Points Raised andResponses Thereto
Table MA:1 Notifications
Ecuador G/AG/N/ECU/1 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
Australia/European Communities/Japan/New
Zealand/United States -Noted thatEcuador hasnotyet
opened tariff quotas fortheproducts listed in
Section I-BofitsSchedule. Aretheapplied tariff rates
forimports ofthese products equal to,orlower than,
thebound in-quota tariffs? When does Ecuador intend
toopen itstariff quotas?Willprovide written answer.
United States -Reiterated concerns regarding the
imposition ofdiscretionary import licensing restrictions
onimports offruitintoEcuador. Why areSPS
certificates subject totheapproval oftheUnder
Secretary forPolicy andTrade whohasnojurisdiction
overhealth andsafety matters? What steps isEcuador
envisaging toimprove theissuance oftheSPS
certificates?Willprovide written answer.
European Communities G/AG/N/EEC/3 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
Brazil -Thenotification indicates that"inthe
caseofimports ofhusked (brown) rice
originating incertain countries, animport
licence must beaccompanied byanexport
licence issued bythecompetent authorities of
theexporting country" (item (c),page 34
refers). Towhich countries does this
requirement apply?Thisrequirement applies toThailand andAustralia.
Korea G/AG/N/KOR/11 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
New Zealand/Mexico -What arethecurrent
tariffs applied ontheimports ofswine,
poultry andorange juice?Undertook toprovide aresponse.G/AG/R/12 Annex -PartI(cont'd)
Page20
Poland G/AG/N/POL/10 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
Australia -Information requested withrespect
totheadditional notified tariff quotas.Tariff quotas notified have been opened duetothe
increase oftheapplied tariffs above thein-quota tariffs
asof1January 1997. Tariff quotas previously notified
arestillinoperation.
New Zealand -Poland 'sSchedule setsout
market access commitments attheHS4digit
level. Why didPoland open tariff quotas at8
or9digit levels?Tariff quotas were opened atthe8or9digit level
because theydidnotapply toallitems covered byone
4digit category. Theapplied rates ofdutyforsome
products were lower thanthebound in-quota tariffs.
New Zealand -Noted thatimports offruitand
vegetables were subject totimelimitation.
Why didPoland introduce such time
limitations, inparticular fortomatoes and
cucumbers (pages 3-6refer)? Must importers
apply foreach individual period orisonlyone
licence required fortheentire period?Tariff quota access isgranted forspecific periods due
tothecustoms regime. Thetariff quota for"fresh and
chilled cucumbers" wasnotopened from 1November
totheendofFebruary because theapplied tariff (20
percent) waslower thanthebound in-quota tariff. At
thebeginning of1997, Poland replaced "advalorem
tariffs" by"specific tariffs" andtherefore opened a
tariff quota on1March 1997 asnotified in
G/AG/N/POL/10.
New Zealand -Noted thatthere areanumber
ofinconsistencies between thegrouping of
products intheMA:1 notification andthe
grouping intheSchedule. Why didPoland
divide theproduct group "potatoes, starches"
(HS0701, 1105 and3505) into2sub-
categories (HS1105 andHS3505) inthe
MA:1 notification? What isthetariff applied
forthetariff lineHS0701? Arethere any
possibilities ofre-allocating unused licences
foroneproduct toanother product within the
same tariff quota?Aglobal tariff quota wasspecified intheSchedule for
three categories. Theapplied tariffs fortwoproducts
(HS1105 and3505) arehigher thanthein-quota
tariffs, whereas thetariff applied forpotatoes HS0701
islower thanthein-quota tariff. Therefore theglobal
tariff quota of203,620 tonnes hasbeen broken upinto
tariff quotas of400tonnes forHS1105 and300
tonnes forHS3505 onthebasis oftheavailable data
onconsumption forthese products. Forthetime
being there isnopossibility toswitch from one
product toanother within thesame tariff quota.
New Zealand/Argentina -Doin-quota imports
include preferential trade?Preferential trade isnotcounted against tariff quota
quantities.
United States -Clarification sought with
respect toitem(b)(iii) which states thatthe
quantity allocated toeach importer maybe
"limited".Tariff quotas areallocated onafirst-come/first-served
basis. However thequantity allocated toeach
importer maybelimited forthefollowing reasons:
(i)when acompany applies foraquota allocation for
thewhole year, whereas thelicences areissued fora
period notexceeding three months; (ii)when demand
forquotas exceeds thequantity available; and
(iii)when thetariff quota available isvery small
(tomato concentrate, poultry meat).
New Zealand -How does Poland allocate the
licences when thedemand exceeds thequantity
available?Will revert tothequestion.
New Zealand -Expressed concern regarding
theshort validity period ofimport licences for
anumber ofproducts.Poland considers thatthispractice does notlimit the
ability toexport toPoland.Annex -PartI(cont'd) G/AG/R/12
Page21
Thailand G/AG/N/THA/21 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
Brazil -Clarification sought regarding
thebasis onwhich thetariff quotas for
"instant coffee" and"raw silk" are
allocated (pages 4and5refer). Are
there anyprovisions fornewentrants?
Incases where atariff quota isnotfilled
byoneofthetwoimporters, isthere
anypossibility oftransferring tariff
quota totheother importer?Thetariff quota forinstant coffee isallocated asfollows:
80percent(103.46 tonnes) tojuridical persons onthebasis
ofhistorical import performance during 1993-1995 and
20percent(25.87 tonnes) tojuridical persons without
historical import performance which allows market access
fornewentrants. In1997, thetariff quota isopen from
31January until 31December.
Theallocation ofthetariff quota forrawsilkismade ona
quarterly basis asfollows: 40percenttojuridical persons
withhistorical performance and60percenttojuridical
persons having production plans forsilkfabric orrawsilk
import arrangements.
Todate, thetariff quotas forthese products have notbeen
filled. Therefore, thetransfer ofquota between thetwo
categories hasnotbeen applied.
Canada/European Communities -
Clarification sought regarding the
administration ofthetariff quotas for
soya beans andsoya beans cake (pages
10and11refer). Arethese tariff quotas
currently being implemented? What are
thecurrently applied tariffs?Thetariff quota forsoya beans isallocated toend-users only
(soya bean oilextraction andrefinery plants, feedmill
factories andfood industry factories), which arethemajor
consumers, inorder toavoid unnecessary importation costs
orquota rents. Asregards soya beans cake, thetariff quota
isallocated totheSwine Raiser Association, thePoultry
Promotion Association ofThailand, theThai Broiler
Processing Exporters Association, Broiler Raiser for
Exporting Association, theAssociation ofBreeders ofDuck
forTrading andExport, Thai Feed MillAssociation andthe
Soya Meal Traders andImporters Association. Tariff quotas
areopened from 1January to31December 1997. Thetariff
quota system isbeing maintained. However, duetothe
current level ofdomestic demand, bothproducts areallowed
tobeimported inunlimited quantities. Thecurrently applied
tariffs ofzeropercentforsoya beans and5percentfor
soya beans cake arebothsignificantly lower thanthe
in-quota tariffs.
European Communities/New Zealand -
Clarification sought regarding thetariff
quota allocation forpotatoes (page 3
refers). Why areonly291tonnes
allocated toanyjuridical person while
4,400 tonnes areallocated tothePublic
Warehouse Organization (PWO)?In1997, thetariff quota forpotatoes (291.11 tonnes) was
allocated onafirst-come/first-served basis andwasfully
utilized intheearly partoftheyear. Owing totheincrease
indemand forimported potatoes, additional tariff quota
quantities (4,400 tonnes) were allocated tothePWO inorder
tomonitor closely thepotato market andcontrol quality.
Additional details ontheactivities ofthePWO regarding
potatoes have been notified totheWorking Party onState
Trading. Tariffs applied toimports made byjuridical
persons equal those applied tothePWO.
European Communities/New Zealand -
Why isthetariff quota foronions
allocated exclusively totheOnion
Grower 'sCooperative Federation of
Thailand, Ltd.(page 12refers)?Small farmers grow onions inaspecific region ofNorthern
Thailand andhave nopower tobargain vis-à-vis traders,
processors andconsumers. Inorder tooffset thisimbalance,
theOnion Grower 'sCooperative Federation wasestablished
andisgranted theexclusive right toimport under thetariff
quota. Thefullutilization ofthetariff quota available
indicates thewillingness oftheassociation tofulfil
Thailand 'smarket access commitments.G/AG/R/12 Annex -PartI(cont'd)
Page22
Thailand G/AG/N/THA/21 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
New Zealand -Why isthetariff quota
forgarlic allocated exclusively tothe
Public Warehouse Organization (PWO)
(page 15refers)?Thesmall tariff quota isallocated tothePWO inorder to
avoid thefragmentation ofthequota, unnecessary
importation costs andquota rents. ThePWO isoperated on
acommercial basis inlinewithArticle XVII ofGATT 1994.
European Communities -Onwhat
criteria aretheimport licences forrice
allocated (page 16refers)?Theglobal tariff quota forriceisallocated onafirst-
come/first-served basis intwosteps: 114,240.41 tonnes
during theperiod May-August 1997 and126,265.70 tonnes
during theperiod September-December 1997. Anyjuridical
person wishing toimport isrequired tosubmit anapplication
form totheDepartment ofForeign Trade within 30days of
theannouncement dateofthenotification forthefirsthalf
(19May-18 June 1997) andforthesecond half
(1-31 August 1997) ofthemarketing year. Ifapplications
exceed thetariff quota quantities, licences aredistributed on
aproratabasis.
New Zealand -What does "juridical
person" mean? How do"prorata
allocations" work?Allocations aremade onthebasis ofhistorical dataandona
proratabasis ifapplications exceed tariff quota quantities.
Ajuridical person means anylegal entity constituted or
otherwise organized under Thailand 'slaws, whether for
profit orotherwise, whether privately- orgovernmentally-
owned, including anycorporation, registered ordinary
partnership, solepartnership, limited company, association,
registered foundation, temple orchurch.
Thailand G/AG/N/THA/22 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
Australia -Clarification sought regarding theproduct
coverage oftheglobal tariff quota "milk andcream,
notconcentrated, norcontaining added sugar orother
matters (including flavoured milk)" (page 2refers).Asindicated inThailand 'sSchedule, thisglobal
tariff quota covers thefollowing tariff items:
HS0401 (raw milk) andHS2202.90 which
includes "ready-to-drink milk", "recombined
milk", UHT milk and"added-flavour milk".
New Zealand -Noted thattheglobal tariff quota
"milk andcream, concentrated" (HS0402) hasbeen
splitintotwosix-monthly allocations of44,000
tonnes. Isthere anyprovision tocarry over unused
tariff quota tothesecond period ofallocation?Theunused tariff quota ofthefirsthalfof1997
wascarried over tothesecond halfoftheyear.
Thailand G/AG/N/THA/24 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
New Zealand -Why didThailand
restrict theimportation period forcopra
andcoconut oiltoNovember-December
1997 (pages 4and5refer)?Theimportation period isrestricted inorder tominimize the
administrative costandburden associated withtheimport
procedures. However, inpractice, importers canlodge their
applications inadvance andcommence importing promptly at
thebeginning oftheallocation period.Annex -PartI(cont'd) G/AG/R/12
Page23
Venezuela G/AG/N/VEN/6 Tariff Quota Administration (Table MA:1)
Points raised byother Members Response byNotifying Member
Australia/European Communities/New
Zealand/United States -Clarification
sought regarding therequirements for
importing yellow maize (corn) and
sorghum within thetariff quota. How
does Venezuela claim thatthedomestic
consumption requirement isin
conformity withArticle 4ofthe
Agreement onAgriculture? Isthere any
possibility fornewentrants?90percentofthetariff quota for"yellow maize (corn) and
sorghum" isallocated tohistorical importers and10percent
isreserved fornewentrants. Inbothcases theapplicants
have tomeet therequirements established bythe
Government andspecified inthenotification, including
providing information onimports during thetwopreceding
years, production estimates, marketing plans forthecurrent
yearandstatistics ondomestic purchases ofcereals. The
Ministry ofAgriculture grants thelicence after receiving a
favourable opinion from theInter-Ministerial Committee
composed oftheMinistries ofAgriculture, Industry, Trade
andFinance. These provisions aredesigned toassess
compliance withtheagro-food policy byassuring abalance
between themost sensitive products andproductive activities
inspecific regions. They donotconstitute anobstacle to
importation. Asof27September, Venezuela hadimported
700,000 tonnes ofyellow maize compared withatariff quota
commitment of583,000 tonnes. Theapplied tariff was
lower thanthebound in-quota tariff. Venezuela considers
thatthelicensing import scheme wasfully inconformity
withtheprovisions ofArticle 3oftheImport Licensing
Agreement withregard tonon-automatic licensing. Import
licences aregranted onafirst-come/first-served basis until
thequota hasbeen filled.
Australia -Why didVenezuela
implement atariff quota forsorghum
although thelevel ofimports waslow?Venezuela implemented atariff quota forsorghum duetothe
highdegree ofsubstitutability between yellow maize and
sorghum.
Australia -Clarification sought
regarding thepossible extension ofthe
validity period ofimport licences (item
(d),page 2refers).Thevalidity oftheimport licence canbeextended inorder
torestore anyimbalance resulting from climatic conditions.
Australia -Why wasthetariff quota for
sorghum notfilled?Importers mayoptforsorghum oryellow maize according
totheir interests. Applications were onlymade formaize.
Theapplied tariff forsorghum islower thanthebound
in-quota tariff.
European Communities/New
Zealand/Australia -Areapplicants for
import licences required tobea
producer ofsorghum oryellow maize?Anyone iseligible foranimport licence.G/AG/R/12 Annex -PartI(cont'd)
Page24
Table MA:2 Notifications
Brazil G/AG/N/BRA/8 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia/European Communities -
Clarification sought onthestatus ofthe
implementation ofthetariff quota for
wheat.Brazil notified inApril 1996 itsintention towithdraw itstariff
quota forwheat asindicated initsSchedule. Brazil is
pursuing consultations under Article XXVIII ofGATT 1994
withtwoMembers.
European Communities -What arethe
tariffs applied toimports ofpears and
apples? Doin-quota imports notified
represent totalimports?Thetariff quotas forpears andapples were notimplemented
duetothefactthattheapplied MERCOSUL common external
tariff (10percent) islower thanthebound in-quota tariff
(15percent). Imports notified inTable MA:2 aretotal
imports.
Colombia G/AG/N/COL/3 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia/United States/Canada/New
Zealand -Clarification sought regarding the
lowquota fillforanumber ofproducts
including fresh bovine meat, butter, malt,
fatsandoils. Wastherequirement of
"domestic absorption" acontributing factor?Thetariff quotas forfresh bovine meat andbutter were
notfilled dueanincrease indomestic production which
ledtoalackofdemand forimports. Under-utilization of
thetariff quota formalt(67percent) isattributable to
theincrease ofdomestic malt production using imported
barley. Asregards oilsandoilseeds, lowin-quota
imports areduetoachange indemand andsubstitution
between oils.
New Zealand/Uruguay -Areimports of
beefanddairy products subject totariff
quotas ortoatariff-only regime?Beef anddairy products arenotsubject toanytypeof
quantitative restrictions. In1996, theapplied tariffs were
lower thanthebound in-quota tariffs (respectively 20per
centand16percent).
European Communities -Could Colombia
provide abreakdown ofthetariff quotas
under minimum andcurrent access?Undertook toprovide aresponse.
European Communities G/AG/N/EEC/7 andCorr.1 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -When willtheECsupply anotification
showing actual imports?Thenotification indicates thatimports notified are
based onactual imports orlicences issued
depending ontheproduct concerned. Since the
ECrequires aguarantee forthelicence issued,
thisnormally means thattheproduct concerned is
imported.
Australia -When willtheECnotify imports for
butter (HS0405), millet (HS1008.2000), raw
cane sugar (HS1701.1110) andboneless poultry
cutsandoffal (HS0207.1410)?Imports ofthese products except forbutter willbe
included inthenotification covering themarketing
year1996/97. Asregards butter theECneeds
further internal clarification ontheproduct 's
definition.Annex -PartI(cont'd) G/AG/R/12
Page25
European Communities G/AG/N/EEC/7 andCorr.1 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -Why were thetariff quotas fora
number ofproducts notfilled including sheepmeat
(HS0204), cheese (HS0406) anddurum wheat
(HS1001.1050)?Thereasons forunder-fill relate totheevolution of
theworld market, internal domestic prices and
consumer preferences. There isnolinkbetween
tariff quota management andtheunder-fill.
Australia -Why areimports foranumber of
products equal tothetariff quota commitments?Because these tariff quotas have been fully
utilized.
Australia -Isthere anypossibility foracountry to
apply foranunder-utilized country-specific tariff
quotas, inparticular forsheepmeat?Country-specific allocations arebased onhistorical
trade performance andquota shares arereserved
forthedesignated country.
Japan -Clarification sought ontherelationship
between thetwonotifications EEC/7 based onthe
calendar year1996 andEEC/4 based onthe
marketing year1995/96.Thenotification EEC/7 includes tariff quotas
opened for,orduring, calendar year1996, while
EEC/4 relates totariff quotas managed during
marketing year1995/96 (1July-30 June).
New Zealand -Why were thetariff quotas fora
number ofproducts notfilled, including cheddar,
cheese forprocessing, sweet potatoes, apricots and
various grain products?Tariff quotas forcheddar cheese forprocessing
have been increased in1996 totakeintoaccount
theresults oftheGATT Article XXIV:6
negotiations. Under-utilization might bedueto
theadditional access opportunities which have not
yetbeen taken upbytraders. Imports ofsweet
potatoes have never been high. Asregards
apricots, noimports have taken place. The
applied tariff onimports ofdurum wheat iszero.
Theinternal demand foroatswaslow.
Mexico -Hasthetariff quota forlemons been
opened?Thetariff quota forlemons wasopened forthe
period 15January 1997 to14June 1997 and
imports willbeincluded inthenextnotification.
Hungary G/AG/N/HUN/9 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -How does Hungary intend toimprove
thequota fill? What arethetariffs applied onin-
quota imports?Under-utilization ofsome quotas isnotattributed
toHungary 'stariff quota administration method.
Should anyproblem arise inthefuture the
authority incharge isready toconsider thematter.
Hungary isapplying bound in-quota tariffs forthe
products notified.G/AG/R/12 Annex -PartI(cont'd)
Page26
Iceland G/AG/N/ISL/8 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
New Zealand -Explanation sought for
lowimports under minimum access
commitments foranumber ofproducts,
including sheep, horses andbutter.Iceland stillmaintains animport banonfresh andfrozen
meat forsanitary reasons. Asstated lastyear, theMinistry
ofAgriculture hasallowed theimportation ofpoultry and
pigmeat onthebasis ofthechief veterinary officer 's
recommendations (G/AG/R/7, page 18refers). Under or
non-utilization oftariff quotas forpoultry andpigmeat were
duetofavourable prices onthedomestic market. As
regards butter, thetariff quota wasdulyadvertised butthere
wasnodemand forimports. Thiscould beattributable to
lower domestic prices.
Korea G/AG/N/KOR/12 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
New Zealand -Why were tariff quotas
forwhole milk powder, other milk and
cream andpotatoes under-filled?Korea hasexperienced a"circumvention" ofimports of
dairy products. Imports ofmilk powder blend have
increased sharply inorder toavoid hightariffs onimports
ofmilk powder. Asregard potatoes, import licences are
distributed onafirst-come/first-served basis. Noimports
have taken place duetothesmall price gapbetween
domestic andworld market prices.Annex -PartI(cont'd) G/AG/R/12
Page27
Morocco G/AG/N/MAR/8 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia/Brazil -Clarification sought asregards
thefootnote indicating thatlowquota fillfor
sheepmeat andwhite meat were duetothe
substitution ofthese meats bybovine meat (page 2
refers).Theopening ofatariff quota does notnecessarily
mean anobligation toimport. Consumption of
meat inMorocco islinked tocultural andreligious
considerations aswellaseating habits. Under-
utilization oftariff quotas forsheepmeat andwhite
meat were duetotheimport substitution ofthese
products bybovine meat.
Canada -Noted thatMorocco notified for1995
and1996 aquota fillforsoftwheat (HS1001.90),
whereas thecommitment relates toallwheat (HS
1001). Could Morocco clarify what terms and
conditions apply todurum wheat (HS1001.10)?Morocco 'sSchedule shows atariff quota forwheat
(HS1001) which wasfilled in1996. Asthe
notification indicates, Morocco imported soft
wheat, which reflected themarket needs. Tariffs
applied toimports were 57percentand64per
centfordurum andsoftwheat, respectively.
Canada -Noted thatMorocco notified asingle
tariff quota foroilseeds, whereas thecommitment
relates tothree separate tariff quotas: cotton seeds
meal, colza meal andsunflower meal. Why did
Morocco aggregate these tariff quotas? Could
Morocco provide abreakdown oftheimports for
each product?
Canada reiterated itsrequest regarding the
breakdown oftheimports product-by-product.Prices ofvarious products intheoilseeds sector
arecorrelated andconsequently there isaheavy
substitution between theoilseed products.
Importers opted forthecheapest product.
New Zealand -Why aretariff quota quantities for
anumber ofproducts equal tothe1995 levels
(column 3,page 2refers)?Morocco 'sauthorities arelooking atways and
means toremedy thesituation.
Poland G/AG/N/POL/9 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -Incases where tariff quotas were not
opened because applied tariffs arebelow in-quota
tariffs, could Poland supply import data?Table MA:2 provides dataonproducts imported
within thetariff quota. Poland willsupply import
dataforalltheproducts listed inPartI,
Section I-BofitsSchedule atalater stage.
Australia -Concerns raised regarding thelow
quota fillforanumber ofproducts, including
fresh/chilled andfrozen bovine meat. How does
Poland intend toimprove thequota fillforthese
products?Low in-quota imports ofbeefareduetotheBSE
crisis which ledtoageneral decline indemand for
imports. Inorder toincrease thesupply ofbeef,
theCouncil ofMinisters established autonomously
aquota of14,000 tonnes atzeroduty(theDecree
waspublished on19December 1995 inthe
Official Journal, item 762). Thisquota was
opened in1996. Asthesupply isnowsufficient
andthedemand forbeefisdeclining, thisquota is
nolonger open.G/AG/R/12 Annex -PartI(cont'd)
Page28
Poland G/AG/N/POL/9 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -Clarification sought inregard tothe
different quantity units intheMA:2 notification
andtheSchedule forlivepoultry (HS0105) and
cigars (HS22.04).Asregards poultry (HS0105), Poland hasatariff
quota commitment of1,000 tonnes. In-quota
imports notified inTable MA:2 (5million pieces)
relate totariff item0105.11 only, which canbe
converted intotonnes using arateofconversion of
onepiece equals 185grams. Other products
under tariff item HS0105 aresubject toatariff
ratelower thanthein-quota rate. Inorder to
convert tonnes ofcigarettes intopieces, Poland
usesaconversion rateofonecigarette equals
1gram.
Slovenia G/AG/N/SVN/6 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia/New Zealand -Concerns raised
regarding thelowquota fillforanumber of
products. How does Slovenia intend toimprove
thequota fill?Slovenia isconsidering possible improvements of
tariff quota administration: atariff-only regime in
thecaseofimports atmore favourable tariff rates
andthefirst-come/first-served system forproducts
where there isaclear lackofcommercial interest
orwhere thequotas aresmall. Slovenia will
provide information totheCommittee indue
course.
Australia/New Zealand -Clarification sought with
respect totheAnnex toTable MA:2 (page 4
refers). What doimports at"more favourable
rates" and"regular imports" mean?Imports at"more favourable rates" means thatthe
applied tariff islower thanthein-quota tariff
whereas "regular imports" aresubject tothe
regular MFN tariff.Annex -PartI(cont'd) G/AG/R/12
Page29
South Africa G/AG/N/ZAF/12 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
New Zealand -Why were tariff
quotas notfilled foranumber of
products including, dairy products
anddried vegetables?24tariff quotas outof53have been filled. Under-utilization is
related tomarket forces. Foronethird ofthe29tariff quotas
trade didnottakeplace despite zeroorlow(<5percent)
tariffs. Asregards fresh milk andcream (HS0401), trade is
verylimited intheSouthern African region duetotransport costs
andlowdomestic prices. Many reasons account fortheunderfill
ofthetariff quota formilk powder (HS0402) (imports:
1,907 tonnes /commitment: 4,470 tonnes). Theincreased whey
powder imports atzerotariff areasubstitute formilk powder and
would have contributed tolower imports ofmilk powder. Import
permits for4,086 tonnes ofmilk powder were issued butimport
datareflects tariff quota imports ofonly1,907 tonnes.
Industries 'sources claim ahigher utilization ofimport permits.
Customs andexcise datashow total imports ofmilk powder of
8,050 tonnes. Oneofthereasons forunder-utilization ofthe
tariff quota forcheese (HS0406) isthesmall difference between
theapplied rateandthein-quota rate. Over thepastfouryears
totalcheese imports have increased from 1,250 tonnes in1993 to
3,860 tonnes in1996. South Africa hastherefore initiated an
investigation, including intodairy dutylevels, inorder toclarify
anomalies.
New Zealand -Doin-quota imports
referred toincolumn 4include
preferential trade?In-quota imports shown incolumn 4include preferential trade,
where applicable.
Tunisia G/AG/N/TUN/9 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -Clarification sought astowhether with
theimplementation oftariff quotas from July1996
theapplied tariffs hasbeen increased.Tariff rates applied have notbeen increased as
compared tothose applied prior tothe
implementation oftariff quotas.
United States G/AG/N/USA/9 andAdd.1 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Brazil -Why were tariff quotas for"harsh
cotton" and"cotton waste" notfilled ?These tariff quotas areadministered onafirst-come/first-
served basis. Under-utilization wasduetohighdomestic
production andlowinternal prices.
Venezuela G/AG/N/VEN/3 andCorr.1 Tariff Quota Fill(Table MA:2)
Points raised byother Members Response byNotifying Member
Australia -Why wasthetariff quota forsorghum
under-filled? How does Venezuela intend to
improve thequota fill?What isthetariff applied?Low quota fillisduetothelackofdemand for
imports.G/AG/R/12 Annex -PartI(cont'd)
Page30
Table DS:1 Notifications
Bahrain G/AG/N/BHR/2 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia/New Zealand -Clarification sought
regarding the"poultry company" referred toin
Supporting Table DS:2 (page 3refers). How does
themeasure meet thecriteria ofArticle 6:2ofthe
Agreement onAgriculture?Thequestion willbeconveyed totheauthorities of
Bahrain.
Australia -Clarification sought asregards the
measure entitled "crop andanimal production
inputs" referred toinSupporting Table DS:2 (page
3refers).Thequestion willbeconveyed totheauthorities of
Bahrain.
Chile G/AG/N/CHL/6/Rev.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Canada -Clarification sought regarding therole
played bythegrain marketing board (COTRISA).COTRISA purchases wheat onlyonthedomestic
market atthedomestic price without subsidies.
COTRISA purchased 55,000 tonnes which
represents 0.3percentoftheproduction for
marketing year1996/97. COTRISA isaprofit
making company anddoes notconstitute a
monopoly.
Canada -Understood thattheInstitute forExport
Development (PROCHILE) created aspecial fund
in1995 inorder topromote exports ofagricultural
products. Why didChile notnotify thismeasure
which involved anamount ofUS$10 million in
1995 andUS$7.1 million in1996? Could Chile
confirm thatthisprogramme isstilloperational?
Ifso,howdoes theprogramme work andwhich
products arecovered?Thisprogramme provides support tosmall and
medium sizeenterprises inorder topromote
exports oftheir agricultural products. Thefund is
runjointly bytheprivate andpublic sectors onan
equal funding basis. US$10 million wasinvolved
in1996, i.e.lessthan0.25 percentofthetotal
value ofagriculture andforestry exports inChile.
Duetoanerror, Chile didnotnotify this
programme asaGreen Boxmeasure andwill
submit another notification.
Canada -Understood thataprogramme entitled
"programa arrocero" (rice programme) hasbeen in
place toencourage farmers toswitch tocattle
production. Asthisprogramme hasnotyetbeen
notified, could Chile confirm whether this
programme isstillimplemented? Ifso,howdoes
itwork?Rice isgrown bysmall producers inthecentre
andthesouth ofthecountry. Theprogramme is
intended, ontheonehand toincrease productivity
bychanging thevariety ofriceused andonthe
other hand toencourage conversion intolivestock
activities orforestry development. Theamount
involved totalled 118million pesos in1995 which
represented asmall percentage ofthevalue ofrice
production. Duetoanerror, Chile didnotnotify
thisprogramme asaGreen Boxmeasure andwill
submit another notification.
United States -Information requested regarding the
"promotion programme"(PROFO) referred toin
Supporting Table DS:1 (item (f),page 3refers).Chile referred totheanswer given atthe
September meeting applies (page 27,
G/AG/N/R/11 refers).Annex -PartI(cont'd) G/AG/R/12
Page31
Colombia G/AG/N/COL/6 and7Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Information requested regarding
"developments programmes" referred toinSupporting
Table DS:5 (page 5refers) which were notincluded in
document G/AG/AGST/COL. When didColombia
introduce these programmes? Why didColombia notify
"forestry programmes" inSupporting Table DS:2?Willprovide written answer.
Australia -Noted thattotal market price support equals
zeroforanumber ofproducts referred toincolumn 8of
Supporting Table DS:5. What does thismean?Willprovide written answer.
Australia -Clarification sought regarding the"specific
tariff discount" asanon-exempt direct payment referred
toinSupporting Table DS:6 (page 7refers).Willprovide written answer.
Australia -What isthenature ofthesupport provided in
Supporting Table DS:7 (pages 8-10 refer)?Willprovide written answer.
Cyprus G/AG/N/CYP/3 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Noted thatCyprus calculates
market price support (MPS) forbarley
(Supporting Table DS:5) whereas the
G/AG/AGST/CYP table indicates aproduct-
specific equivalent measurement ofsupport
(EMS). Didthenature ofthesupport
change?Thenature ofthesupport forbarley hasnotchanged
since theUruguay Round Agreement. MPS forbarley
wasincluded inSupporting Table DS:6
(G/AG/AGST/CYP, page 2refers) which corresponds to
Supporting Tables DS:5 andDS:7 notified in1996.
Australia -Noted thatsupport for
groundnuts andolive oilwere calculated
using equivalent measurements ofsupport
(EMS) inG/AG/AGST/CYP, whereas the
notification indicates theuseofaproduct-
specific aggregate measurement ofsupport
(AMS). How does Cyprus determine each
yearwhich products receive product-specific
andnon-product-specific support?IntheG/AG/AGST/CYP tables Cyprus undertook
product-specific equivalent commitments foranumber of
products which were subject toprice fixing bythe
Government (beef, sheep andgoatmeat, eggs, poultry
meat, pork, groundnuts andolive oil). Thepolicy isto
abolish price fixing andthishasalready been done for
beef, sheep andgoatmeat andgroundnuts. Inorder to
dealwithtemporary problems, such asdrought and
disease, producers mayreceive limited payments onan
adhocbasis.
Australia/New Zealand -Clarification sought
regarding the"area citrus subsidy" referred
toinSupporting Table DS:1 (page 6refers).
Isthissubsidy maintained? Ifyes,onwhat
basis isthesubsidy granted?Support tocitrus isaimed atsupplementing farm
incomes affected bydrought orother adverse weather
conditions, disease andbadmarketing results. The
subsidy ispaidonaperhectare basis andisnotlinked
tothelevel ofproduction. TheGovernment undertook
nocommitment tomaintain thesubsidy andhas
announced thatthescheme willbeterminated asfrom
1998.G/AG/R/12 Annex -PartI(cont'd)
Page32
Cyprus G/AG/N/CYP/3 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Supporting Table DS:4 indicates
thatdomestic support isprovided within the
deminimis level forapples, kiwis, cherries,
sheep andgoatproducts. Could Cyprus
provide information ontheapplied
measures?Support toapple andkiwiproducers isaimed atcovering
partoftheadditional costincurred forcoldstoring of
considerable quantities ofapples andkiwis. Support to
cherry producers isaimed atsupplementing farm
incomes affected bydifficulties indisposing ofearly
varieties ofcherries aswellasofaparticular variety of
cherry suitable onlyforcanning. Direct income support
isprovided tosheep andgoatproducers onaperhead of
animal basis andconstitutes asocial policy measure.
Australia -Why didCyprus calculate an
equivalent measurement ofsupport (EMS)
forolive oil,pork, poultry andeggs whereas
external andapplied administered prices
were available?Cyprus undertook tocalculate equivalent measurements
ofsupport forthese products inthedocument
G/AG/AGST/CYP. Although administered prices were
available during thebaseperiod, noc.i.f. orf.o.b.
external reference prices could beused because Cyprus
wasself-sufficient inmost years andimports didnot
takeplace. Prices ontheinternational market were
variable andvery much affected byexport subsidies by
thesupplying countries. Cyprus 'commitments were
undertaken onthebasis ofthedifferences between future
contemporaneous prices, i.e.future administered and
future external reference prices.
Australia/New Zealand -Why didCyprus
useexternal reference prices based onthe
average 1989-91 period?Cyprus undertook acommitment onlyonthebasis ofthe
difference between future contemporaneous prices, i.e.
future administered andfuture external reference prices.
New Zealand -Reiterated their concerns
regarding the"wine grapes areasubsidy"
referred toinSupporting Table DS:1
(page 6refers). How does Cyprus claim
thatthismeasure hasnoeffect onthelevel
ofproduction?Support towine growers isaimed atsupplementing farm
income inspecific regions ofCyprus (southern slopes of
theTroodos mountains) whodepend almost exclusively
onwine growing fortheir livelihood. Farm incomes are
lowinthese regions duetonatural disadvantages and
small sizes ofholdings. Thesubsidy wasintroduced
many years agoinorder toprevent abandonment ofthe
landandrural depopulation. Only existing vineyards are
eligible toreceive thesubsidy which ispaidonaper
hectare basis andnotlinked tothelevel ofproduction.
Even withthesubsidy, farm incomes inthese wine
growing areas remain farbelow average income levels.Annex -PartI(cont'd) G/AG/R/12
Page33
Iceland G/AG/N/ISL/9 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
New Zealand -Why didIceland useanother setofexternal
reference prices ascompared toits1995 DS:1 notification?
While noting thatArticle 18.4 oftheAgreement on
Agriculture provides forconsideration tobegiven tothe
influence ofexcessive rates ofinflation ontheability of
Members tomeet their domestic support reduction
commitments, theobligations onMembers over theuseof
external reference prices areclear -these aretobebased
ontheyears 1986 to1988. There isnoprovision toadjust
these atall,whether onthebasis ofinflation orexchange
ratemovements. Itseems thatcountries donotfollow the
guidelines andhave atendency tounilaterally modify their
reference prices.Theexternal reference prices used in1996
arebased ondocument G/AG/AGST/ISL,
adjusted inorder totakeaccount ofthe
exchange rateevolution since thebase
period.
Argentina -Clarification sought regarding themeasures
notified under items (d),(h)and(l)referred toin
Supporting Table DS:1 (pages 3-4refer).TheFarmers 'Pension Fund receives a
government contribution toenable farmers
toenjoy thesame pension rights asothers.
Elderly farmers would otherwise have
limited pension rights, i.e.duetothefact
thattheFPFwasestablished later than
other similar funds. Theprogramme has
noeffect onproduction orrelated costs.
Thegovernment bought upsheepmeat
quotas in1991-1992 toremove livestock
from agricultural production. Payments
have been made ininstalments andthe
programme willsoon come toaclose.
Payments relating totheaccumulation and
holding ofstocks ofsheepmeat between
slaughter periods were elaborated onin
theCommittee lastyear(G/AG/R/7,
page 17refers).
Japan G/AG/N/JPN/21 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Noted thatadditional products (dried
leguminous vegetables, groundnuts andtubers
ofKonnyadu) areeligible toreceive non-exempt
direct payments. Does thissupport constitute a
newsupport measure?These measures, newly introduced in1995, are
provided within thedeminimis level asshown inthe
notetoSupporting Table DS:7 (page 17refers).
Australia -Why hasJapan notincluded eggs
andvegetables initstotal AMS calculations
referred toinSupporting Table DS:4 (page 7
refers)?Thesupport forthese products isprovided within the
deminimis level asshown inthenotetoSupporting
Table DS:7 (page 17refers).G/AG/R/12 Annex -PartI(cont'd)
Page34
Japan G/AG/N/JPN/21 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Information requested onthe
calculation ofthemarket price support forsugar
andstarch referred toinSupporting Table DS:5
(pages 9-10 refer).Market price support forsugar andstarch is
calculated using theprice gapbetween thefixed
external reference price andtheapplied administered
price converted intothecorresponding price gapfor
each basic product andmultiplied bytheproduction.
Australia/Canada -Clarification sought asto
whether Japan hasintroduced deficiency
payments forsoybeans, milk, beefandveal,
meat ofswine andsilk-worm cocoons?Soybeans, milk, beefandvealandmeat ofswine are
subject todeficiency payments. The corrigendum to
thenotification indicates thatsilk-worm cocoons are
thesubject ofpayments related toprice.
Canada -Information requested asregards the
measure entitled "structural adjustment"
referred toinSupporting Table DS:1 under
item(g)(page 5refers). Isthepayment subject
tothecondition thatthefarmer leaves totally
andpermanently marketable agricultural
production?Japan undertook toprovide responses upon receipt of
written questions.
Canada -Clarification sought regarding the
measure entitled "structural adjustment provided
through investments aids" referred toin
Supporting Table DS:1 under item (i)(page 6
refers). How does Japan claim thatthis
measure meets thecriteria setoutin
paragraph 11ofAnnex 2oftheAgreement on
Agriculture?Japan undertook toprovide responses upon receipt of
written questions.
Canada -Clarification sought astowhytotal
production differs somuch from eligible
production asreferred toinSupporting
Table DS:5 forsweet potatoes andmilk (pages
10-11 refer)?Japan undertook toprovide responses upon receipt of
written questions.
European Communities -Information requested
on"payments related tothevolume of
production" referred toinSupporting
Table DS:6 forbarley, rice, milk, beefandveal
(pages 13-14 refer).Japan undertook toprovide responses upon receipt of
written questions.
European Communities -Could Japan provide
more information regarding thenewdeficiency
payments introduced formilk, beefandvealand
pigmeat, aswellasfornewpolicies ondried
leguminous vegetables, groundnuts andtubers
ofkonnyadu?Japan undertook toprovide responses upon receipt of
written questions.Annex -PartI(cont'd) G/AG/R/12
Page35
Korea G/AG/N/KOR/14 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Argentina -Clarification sought asregards theterm "wholesale
agricultural market" referred tounder item(a)(7)
infrastructural services (page 3refers). Who setupthe
wholesale market?Willanswer inwriting.
Argentina -Thenotification indicates thatKorea provided
support topublic stockholding forfood security purposes. Are
there anyprovisions inthenational legislation regarding
"predetermined targets" inconformity withparagraph 3of
Annex 2totheAgreement onAgriculture?Willanswer inwriting.
New Zealand -Noted thatbeefhasbeen included inthetotal
market price support calculation ascompared tothebase
period calculations inG/AG/AGST/KOR. What isthe
reference period used tocalculate theexternal reference price
forbeef?Willanswer inwriting.
Morocco G/AG/N/MAR/7 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia/New Zealand -Thenotification
indicates thatastorage subsidy isgranted for
wheat whereas the1995 notification showed
market price support. Could Morocco
confirm thatitnolonger provides price
support forwheat? Thesame question
applies forsunflower seeds, soybeans, colza
seeds andcotton seeds.In1996 Morocco deregulated thefood grain chain and
asaresult producer prices forwheat arenowfree.
However, in1996, duetothegood harvest andinorder
toavoid acollapse indomestic prices, theGovernment
granted astorage subsidy foralimited amount ofwheat
forasix-month period. Asregards sunflower seeds,
soybeans, colza seeds andcotton seeds, price support is
nolonger provided.
New Zealand -Noted that"domestic food
aid(compensation lesslevies)" referred toin
Supporting Table DS:1 (page 3refers) has
increased sharply since 1995. What does
theterm "compensation lesslevies" mean?
Who iseligible forthissubsidy?Thissubsidy isgranted tothepoor population and
covers theprice gapbetween theinternational price and
thesubsidized consumer price forbasic agricultural
products. Thenetsubsidy equals theamount given by
theState lessthelevies attheborder resulting from the
tariffication. Theincrease ofthesubsidy isduetothe
substantial riseinimport prices. Thesubsidy isallocated
totheconsumers andtherefore isexempt from the
reduction commitments.
Poland G/AG/N/POL/12 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
New Zealand -Clarification sought regarding thelow
level ofproduction used inorder tocalculate market
price support formilk andcommon wheat referred to
inSupporting Table DS:5 (page 5refers).Thesupport isprovided bytheagricultural
market agency which hasalowpotential to
support farmers.G/AG/R/12 Annex -PartI(cont'd)
Page36
Romania G/AG/N/ROM/8 and9Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Clarification sought asto
whether themeasure entitled "budgetary
expenditures forenvironmental
protection measures" isanewmeasure.
Does Romania intend tonotify this
measure using Table DS:2?Inorder toprotect theenvironment against some actions
having adverse effects onit,Romania hasintroduced this
measure asfrom 1995 andisconsidering notifying itasa
newGreen Boxmeasure.
New Zealand -How does themeasure
entitled "budgetary allocations inorder
tostimulate theincrease oflivestock"
meet thecriteria ofAnnex 2tothe
Agreement onAgriculture?Thedismantling oftheformer agricultural cooperative of
production, duetotheprivatization process inagriculture,
hasledtoadramatic reduction inlivestock numbers, in
particular inthebovine sector, after 1991. Romania has
introduced thisnewmeasure inorder tohelpincrease
livestock andtocreate theconditions foraneconomic
exploitation offarms. Duetothescarcity ofthebudgetary
resources, theprocess ofraising livestock numbers was
slowed down butnotreversed. Romania considers thatthe
measure meets thecriteria inparagraphs 6and11ofthe
Annex 2totheAgreement onAgriculture.
New Zealand/United States -
Information requested regarding the
"price difference forinputs provided to
producers inorder toencourage theuse
ofhighquality andproductive seeds".Romania isacountry intransition andadeveloping country.
Thisprogramme isintended tohelplowincome and
resource-poor farmers inorder toencourage them to
purchase highquality selected seeds. Thismeasure is
generally available toallfarmers andisnotsubject toany
undertaking.
Switzerland G/AG/N/CHE/11 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia/European
Communities/United States -
Information requested regarding
Cantonal spending onagriculture
referred toinSupporting
Table DS:1 (page 3refers). Could
Switzerland explain thebasis ofthe
newcalculation?Cantonal expenditures for1996 arebased onFederal Finance
Department statistics. They aremore accurate andcoherent than
theprevious estimates duetothefactthattheyexclude all
payments made byCantons onbehalf ofandwithfunds from the
Federal Government. Cantonal spending, which totalled
SwF267.6 million, wasasfollows (inSwFmillion): 11.9 for
administration, 156.6 forstructural improvements, 16.6 for
measures inthelivestock sector, 5forepizootic control, 14.3 for
measures inthecrop sector, and63.2 forsocial measures.
Cantonal spending wasfor:(i)co-financing Federal Government
projects (theCanton hastofund between 60and100percentof
theGovernment participation); and(ii)funding other cantonal
projects.Annex -PartI(cont'd) G/AG/R/12
Page37
Switzerland G/AG/N/CHE/11 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
European Communities/United
States -How does Switzerland claim
that"family allowances forsmall
farmers" and"family allowances for
agricultural workers" referred toin
Supporting Table DS:1 (page 3
refers) meet thecriteria in
paragraph 2ofAnnex 2tothe
Agreement onAgriculture?These twomeasures constitute anelement ofSwitzerland 's
general social policy andtheyhave been notified forthesakeof
transparency andcompleteness.
United States -How dothe
programmes onmilk quality control,
fruitandjuice quality control and
grape harvest control referred toin
Supporting Table DS:1 (page 3
refers) operate?These measures areinconformity withtheprovisions of
paragraph 2(e)ofAnnex 2totheAgreement onAgriculture.
They areclassified as"inspection services" astheyinvolve
quality control, consumer protection andexport certification.
Expenses oftheorganizations orCantons incharge ofinspection
services arereimbursed.
United States/European
Communities -How does
Switzerland claim thatguarantee
stocks (forpotatoes andapple juice
concentrate) referred toin
Supporting Table DS:1 (page 4
refers) meet thecriteria in
paragraph 3ofAnnex 2tothe
Agreement onAgriculture?These expenses (SwF1.9million) arerelated tothestocks
established forreasons offood security inemergency situations.
Theprogramme isimplemented bytheprivate sector onthe
basis oftransparent criteria.
United States -How does domestic
food aidwhich consists ofsales at
reduced prices ofpotatoes andfruit
referred toinSupporting
Table DS:1 (page 4refers) work?Sales ofpotatoes atreduced prices topersons inneed were
abolished in1994. Asregards fruit(plums andcherries) the
Government decides onprice reductions when thefruitare
bought byspecific customers. Thedistribution offruit, which is
managed byproducers 'associations, benefits families withmany
children inthemountain areas.
New Zealand/European
Communities/United States -How
dodecoupled income support
measures asreferred toin
Supporting Table DS:1 (page 4
refers) meet thecriteria in
paragraph 6ofAnnex 2tothe
Agreement onAgriculture?Inorder topromote theextensive useofland, farmers whouse
milk forbreeding andfattening upcalves andforholding mother
cows receive apayment peranimal. Thecriteria ofparagraph 6
ofAnnex 2totheAgreement onAgriculture aremetasfollows:
(i)thecategory ofbeneficiaries isclearly defined; (ii)the
contribution peranimal isnotlinked totheproduction ofmeat,
cattle ormilk; (iii)theamount paidisadjusted from timetotime
according totheevolution ofthemilk price inorder tomaintain
income parity between producers ofmilk andowners ofcattle
whodonotmarket milk.
Direct additional payments areaimed atmaking acontribution to
themultiple functions ofagriculture andinvolve payments per
farm, payments perareaandperanimal. They areclearly
defined andnotlinked toproduction andtherefore comply with
thecriteria setoutinparagraph 6ofAnnex 2totheAgreement
onAgriculture. In1996, duetothelosses ontheslaughter cattle
market, anadditional payment perfarm unitwasgranted forthe
period 1996-1998. Therecipients have todedicate atleast 5per
centoftheir total area(areas offruits andvegetables are
deducted) toecological compensation orcultivation ofrenewable
rawmaterials forindustrial (non- feed/food) uses.G/AG/R/12 Annex -PartI(cont'd)
Page38
Switzerland G/AG/N/CHE/11 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
United States -Information
requested regarding item(h)"relief
purchasing" referred toin
Supporting Table DS:1 (page 5
refers).When supply exceeded demand onthecattle market and
production needed tobeadjusted, purchasing programmes took
place inorder towithdraw animals from themarket. This
measure isfinanced bytheGovernment andisconsidered asan
instrument ofregional policy.
United States -Information
requested regarding theprogrammes
under item(i)"structural adjustment
assistance through investment
support" referred toinSupporting
Table DS:1 (page 5refers)."Assistance toimprove livestock breeding" covers thefinancial
support provided tobreeders 'organizations inorder toimprove
theperformance oftheanimals andtoassist breeders with
modern techniques. Thesubsidy isnotlinked toproduction.
"Assistance tosmall farms" provides credit atzerointerest rate
tofarmers indifficult financial situations. Support for
"agricultural structural adjustment" isgranted totheCantons for
collective constructions (roads, buildings, water supply). The
"investments credit" programme offers credit tofarmers, most of
thetime atzerointerest rates, inorder tosupport farm
investments (new buildings andtheir renewal).
Australia/New Zealand/United States
-Information requested asregards
themeasures under item(j)
"environmental programmes"
referred toinSupporting
Table DS:1 (page 5refers). Are
"payments forsummer pasturing" a
newsupport measure? Ifyes,why
didSwitzerland notnotify this
measure using Table DS:2? On
what basis arethepayments for
"special ecological services" andfor
"extensive cereal production"
allocated?"Payments forsummer pasturing" were notified in1995 under
item(d)"decoupled income support" andtherefore donot
constitute anewmeasure. These payments aregranted tofarms
located inmarginal areas according toecological criteria, such as
concentration oflivestock, manuring, pasture upkeep andfodder
supply. Payments for"special ecological services" aredesigned
tocompensate thelossofincome duetotheuseofextensive or
ecological methods ofproduction. They respond to
environmental objectives (reduction ofnitrates, phosphates and
pesticides, improvement ofbiodiversity) aswellastheprotection
ofanimals. Five programmes areinvolved: ecological
compensation, integrated production, organic farming, freerange
programmes forlivestock andaprogramme ofstalling systems
forthewell-being oftheanimals. Thefarmers 'participation has
increased duetothefinancial compensation andtheinterest in
using labels fororganic farming, integrated production or
programmes forlivestock. Participants inthese programmes
have tocomply withspecific requirements.
New Zealand -Why didSwitzerland
notconsider thepayments for"set
aside pasture land" asmeasures
covered byArticle 6.5ofthe
Agreement onAgriculture?Thismeasure isnotaninstrument toregulate production butto
pursue ecological functions. Land issetaside foroneortwo
cropperiods andtherefore ithasadirect impact onproduction.
Themeasure isinforce until 1998.Annex -PartI(cont'd) G/AG/R/12
Page39
Switzerland G/AG/N/CHE/11 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia/New Zealand/European
Communities/United States/Brazil -
Information requested asregards the
measures under item(k)"regional
assistance programmes" referred to
inSupporting Table DS:1 (page 6
refers). How dothese measures
meet thecriteria inparagraph 13of
Annex 2totheAgreement on
Agriculture?"Non-silage allowances" areaimed atcompensating the
disadvantages duetotheproduction ofmilk forcheese without
silage. Beneficiaries arelocated inmountainous areas and
therefore itisconsidered asregional assistance. "Allowance for
milk processed intocheese" isdesigned togetthebestadded
value outofthemilk produced. Thesupport isgranted to
traditional cheese processors located inmountainous areas and
therefore ensures regional development, bothsocially and
economically. "Supplements forthemanufacture ofhard
cheese" areintended topartly compensate farmers and
processors forthefinancial losses duetothefactthattheir
"dairy 'svillages" runonlyinsummertime. Thisscheme willbe
abolished after atransitional period inthecontext ofthereform
process. "Premiums foramalgamation inthecheese industry"
abolished afewyears ago,were aimed atpromoting better
structures inthecheese processing sector andtheexisting
premium were running out. "Allowances forthecosts ofcattle
owners inmountain andhillareas" introduced in1964 are
designed tomaintain aminimum level ofagriculture inthese
specific regions. These allowances areimplemented intheform
ofacontribution peranimal andwasnotified in1995 under item
(d)"decoupled income support". "Compensatory payments" are
granted perhectare inorder tocompensate forthedisadvantages
ofcultivating inmountain andhillareas.
United States -Clarification sought
regarding themeasures under
item(l)"other" referred toin
Supporting Table DS:1 (page 6
refers). Why arethese measures
notclassified as"general services"?
How dothese measures meet the
criteria inparagraph 5ofAnnex 2
totheAgreement onAgriculture?These programmes provided support tomarketing organizations
forgeneric advertisements. Tosome extent certain ofthese
measures meet thecriteria setoutinparagraph 2ofAnnex 2to
theAgreement onAgriculture.
Australia -DidSwitzerland change
thenature ofthesupport provided
forpigmeat andpoultry meat as
referred toinSupporting
Table DS:5 (page 5refers)?Thenotification contains anerror. Asindicated incorrigendum
G/AG/N/CHE/11/Corr.1 support isprovided topigmeat and
poultry meat intheform of"price support".
European Communities -Why do
external reference prices used to
calculate market price support for
beefandpigmeat differ from those
used inthebaseperiod (pages 9-10
refer)?Theprices notified arethesame asthose used inthebaseperiod.
United States -Clarification sought
regarding thetotal AMS referred to
inSupporting Table DS:7 (page 13
refers).Thenotification contains anerror. Total AMS amounted to
SwF3,659.1 million asnotified incorrigendum
G/AG/N/CHE/11/Corr.1.G/AG/R/12 Annex -PartI(cont'd)
Page40
Thailand G/AG/N/THA/23 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Could Thailand confirm
thatonlyriceandonions received
product-specific support?
New Zealand -Dofresh milk, garlic,
soybeans andsugar continue toreceive
price support?Rice andonions received product-specific support in1996.
Theother products received product-specific support within the
deminimis level andthelevel ofthesupport asapercentage of
thetotal value oftheproduction isasfollows: garlic 6.9;
shallots 1.4;rawmilk 0.31; chicken eggs 0.14; duck eggs
0.02; durians 0.87; palm oil6.05; longans 6.7;lemons 0.67;
pineapples 0.97; lychees 1.46 andrambutans 0.13.
New Zealand -Why didthesupport
provided toonions increase by400per
centoverthe1995 level?Thereason forthisincrease wasduetotheover-supply onthe
domestic market which ledtoasubstantial decline inonion
prices atthefarm gate. Thisover-supply maybeduetothe
over-importation ofonion seeds in1996 asreported inMA:2
notification.
Tunisia G/AG/N/TUN/7 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
New Zealand -Why didTunisia notusethe
external reference prices from thebaseperiod?Tunisia used theexternal reference prices from the
baseperiod andadjusted them totakeinflation and
theevolution oftheexchange rateintoaccount.
United States G/AG/N/USA/10 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia/Brazil/European
Communities/New Zealand -
Information requested onthe"State
programmes foragriculture" referred
toinSupporting Tables DS:1 and
DS:9 (pages 4and36refer). What is
themethodology used tomeasure the
value ofState credit subsidies? Do
State Governments grant direct
payments toproducers?TheState programmes notified include theState credit
programme reported inthenon-product-specific AMS
(US$48,806) andtheaggregate State expenditures classified in
theGreen Box. AstheBureau oftheCensus didnotprovide
anyquantitative details onthecomposition ofthisaggregate
amount, anestimate ofthefeesandtaxes paidbyproducers to
State Governments hasbeen subtracted from thereported total
expenditure. Credit subsidies attheState level areestimated
from asurvey ofState credit programmes. Aninterest rate
subsidy wascalculated foreach programme ineach State by
multiplying observed interest ratedifferentials bytheamount
ofdebtoutstanding. TheBureau oftheCensus conducts an
annual survey among theState Departments ofAgriculture to
determine what State expenditures were granted toagriculture.
According tothecriteria ofAnnex 2totheAgreement on
Agriculture theUSDA reports theprogrammes under "general
services". State Governments grant nodirect payments to
producers except theState ofVermont which provided one-
timepayments todairy producers in1987 and1988.Annex -PartI(cont'd) G/AG/R/12
Page41
United States G/AG/N/USA/10 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Canada -Could theUnited States
explain whytheForeign Agricultural
Service (FAS) andtwoofitsmarket
promotion anddevelopment
programmes arenotincluded in
Supporting Table DS:1?Theprogrammes oftheForeign Agriculture Services include
export market promotion programmes andtherefore arenot
required tobereported intheAMS notification. TheMarket
Access Programme (MAP), formerly theMarket Promotion
Programme (MPP), isacost-share programme which uses
funds from theDepartment ofAgriculture 'sCommodity Credit
Corporation (CCC) inorder toassist agricultural producers,
exporters andother trade organizations infinancing promotion
activities (consumer activities, market research, technical
assistance andtrade servicing). Products covered bythis
programme areasfollows: grain andfeeds, oilseeds and
products, horticultural products, cotton, forest products,
seafood, livestock, poultry anddairy. TheForeign Market
Development Programme (FMD) alsoknown asthe
Cooperator Programme isadministered bytheForeign
Agricultural Service (FAS) oftheDepartment ofAgriculture
(USDA). Thisprogramme isatrade promotion partnership
between theUSDA andagricultural producers andprocessors
whoarerepresented bycommodity ortrade associations called
Cooperators. Under thispartnership, USDA andthe
cooperators pooltheir technical andfinancial resources to
conduct market development activities outside theUnited
States. Theprogramme allows allsegments ofagriculture to
participate inefforts tobuild export markets.
Canada -Information requested onthe
programmes referred toinSupporting
Table DS:1 under item(j)
"environmental programmes"
(pages 9-10 refer). How dothe
measures meet thecriteria in
paragraph 12ofAnnex 2tothe
Agreement onAgriculture?Theprogrammes listed under "environmental programmes"
involve payments toproducers which meet thecriteria in
paragraph 12ofAnnex 2totheAgreement onAgriculture
except twoofthem: "Conservation Operations" and"Resource
Conservation andDevelopment" programmes which donot
grant payments toproducers andwhich could beincluded in
the"general services" category.
European Communities -Clarification
sought asregards "domestic food aid"
referred toinSupporting Table DS:1
(pages 6and7refer).Theprices paidforcommodities distributed under different
programmes arebased onopen market bidding. Purchasing
agents request commercial marketing institutions tosubmit
bids, andthelowest bidisthesuccessful bid.
Australia -What wasthelevel of
support granted totheproducts listed
inSupporting Table DS:3 in1992
(page 13refers)?Support granted tothese products in1992 amounted to
US$8.24 billion.
Australia -How didtheUnited States
calculate theexternal reference price
forsugar referred toinSupporting
Table DS:5 (page 16refers)?Thereference price forsugar iscalculated forthebaseperiod
(1986-88) onthebasis ofthesumofaquoted Caribbean price
fortheyears 1986 to1988 andassumed fixed transportation
costofUS$28.66 pertonne. TheCaribbean prices represent
theaverage of12monthly prices reported as"Contract No11-
f.o.b. stowed Caribbean port, including Brazil, bulkspot
price" (Sugar andSweetener Situation andOutlook,
ERS/USDA). Themarketing yearisfrom 1October through
30September.G/AG/R/12 Annex -PartI(cont'd)
Page42
United States G/AG/N/USA/10 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Canada -Clarification requested on
theadministered prices fordairy,
sugar andpeanuts referred toin
Supporting Table DS:5 (page 16
refers)?Theapplied administered price fordairy wasderived from the
announced national support level formanufacturing grade milk
(national average milk fattestof3.67 percent). Asregards
sugar, theapplied administered price represents thenational
average loanrateforrawcane sugar (18cents perpound or
US$396.832 pertonne). Regarding peanuts, theapplied
administered price represents thenational average loanratefor
quota peanuts (US$678.36 pershort tonwhich is
approximately US$0.339 perpound). These administered
prices arefrom theUSDA, Farm Service Agency, Commodity
FactSheet -1996-97 Dairy price support programme
(August 1997), Table 2-Sugar programme (August 1996) and
Peanuts (June 1995), respectively.
Japan -Why didSupporting
Table DS:5 notinclude wheat, rice,
corn, barley, soybeans (page 16
refers)?Allmeasurable domestic support isincluded inthecalculation
ofthetotal AMS intheform ofeither actual orcalculated
direct payments orasinterest subsidies oncommodity loans
(sometimes referred as"price support loans"). TheUnited
States usesthesame methodology thatwasused inthe1986-88
baseperiod.
Canada -Clarification requested on
theadministered prices used to
calculate thedeficiency payments for
barley, corn, cotton, oats, sorghum
andwheat referred toinSupporting
Table DS:6 (pages 17-27 refer)?Theapplied administered prices foreach ofthese commodities
arethetarget prices which aresourced from theUSDA, Farm
Service Agency, Commodity FactSheets, 1995 orUSDA,
Economic Research Service, Provisions oftheFederal
Agriculture Improvement andReform Actof1996, Agriculture
Information Bulletin No.729(September 1996), Appendix
Table 1.
Canada -Noted thatadministered
prices arelisted foranumber of
commodities asloanrates whereas no
calculation ofprice-related direct
payments areincluded. Does this
mean thatproducer prices arehigher
thantheloanrates?Noprice-related direct payments were calculated foranumber
ofcommodities duetothefactthatdirect payment support is
reported aspartof"other non-exempt direct payments" in
Supporting Table DS:8. Loan rates areindicated for
information andtherefore itwasnotnecessary toreport them
anywhere else.
Canada -Could theUnited States
explain whythevalue of"water
subsidies forirrigation" referred toin
Supporting Table DS:9 (page 34
refers) hasnotchanged since thebase
period?According tothelatest estimation thewater subsidy for1994
amounted toUS$381 million andtherefore thetotalhas
changed (Department ofInterior, Bureau ofReclamation).
Venezuela G/AG/N/VEN/4 andRev.1 Domestic Support (Table DS:1)
Points raised byother Members Response byNotifying Member
Australia -Why didVenezuela useexternal reference
prices based ontheyears 1993 to1995 tocalculate
theAMS forrice, coffee, tomatoes andcertified seeds
(Supporting Table DS:5, page 7refers)?Intherevised notification Venezuela used
reference prices forthe1986-88 baseperiod.Annex -PartI(cont'd) G/AG/R/12
Page43
Table DS:2 Notifications
South Africa G/AG/N/ZAF/10 New orModified Domestic Support Measures Exempt from
Reduction (DS:2)
Points raised byother Members Response byNotifying Member
Australia -Could South Africa explain why
"interest subsidy toco-operatives" isnotified asa
Green Boxmeasure whereas thissubsidy was
considered asanon-product-specific support inthe
1995 notification (document G/AG/N/ZAF/5,
page 5refers)?Thenewmeasure notified isaseparate programme
which waspartofadisaster relief package in
order tomitigate theeffects ofthe1991/92
drought. Thisprogramme wasdesigned to
provide aidintheform ofaninterest subsidy on
debtandmade possible theamalgamation ofco-
operatives inorder toprevent acollapse ofbasic
infrastructure inthedrought-stricken rural areas
where shrinking turnover andincreasing debt
threatened closures.G/AG/R/12 Annex -PartI(cont'd)
Page44
Tables ES:1 toES:3 Notifications
Korea G/AG/N/KOR/16 Export Subsidies (Tables ES:1 andES:3)
Points raised byother Members Response provided byNotifying Member
New Zealand -Could Korea provide totalexport
values forfruits andflowers?Undertook toprovide responses upon receipt of
written question.
New Zealand G/AG/N/NZL/11 Export Subsidies (Tables ES:1 andES:2)
Points raised byother Members Response byNotifying Member
Switzerland -Itappears that, inNew Zealand, aircraft fuelis
subject toaValue-Added Taxof12.5 percentfordomestic
flights, butthatsuch fuelisVAT-exempt when used on
international flights. How does New Zealand view this
difference intaxation inthelight ofArticle 9.1(e)ofthe
Agreement onAgriculture? Inparticular, would notsuch a
difference qualify asanexport subsidy subject tonotification
andreduction, notwithstanding footnote 1intheAgreement
onSubsidies andCountervailing Measures (given that
Article 21oftheAgreement onAgriculture alsoapplies).Undertook toprovide responses upon
receipt ofwritten question.
Poland G/AG/N/POL/11 Export Subsidies (Table ES:1)
Points raised byother Members Response byNotifying Member
Australia/Canada/New Zealand/United States -Noted thatPoland
hascarried over"unused" export subsidy quantities forsugar
from the1995 tothe1996 implementation yearaccording to
Article 9,paragraph 2(b)oftheAgreement onAgriculture.
Poland exported 143,000 tonnes ofsugar in1996,
i.e.20,100 tonnes above itannual quantity commitment level
(122,900 tonnes). Australia -Considered thatPoland had
breached itscommitment.
United States/Canada/New Zealand/Argentina -Considered that
thecarry over ofunused export subsidy quantities oroutlays
from oneimplementation yeartoanother wascontrary tothe
spirit oftheAgreement onAgriculture andcould setadangerous
precedent.
European Communities/Norway -Considered thatanyMember
hastheright tocarry overunused export quantities from one
implementation yeartoanother according toArticle 9:2(b) ofthe
Agreement onAgriculture.
Uruguay/Chile/Colombia/Brazil/Mexico/South Africa -Shared
theconcerns expressed bytheUnited States, Canada, New
Zealand andArgentina.
Philippines/Thailand/Japan -Expressed their concerns inthis
matter.
Australia/Canada -Does Poland intend toutilize further carry-
overs?Inconformity withArticle 9,
paragraph 2(b)(ii) oftheAgreement
onAgriculture Poland hasused its
right tocarry over unused export
subsidy quantities from the1995 to
the1996 implementation year,
which involved 126,638.5 tonnes of
sugar. Poland exported
143,000 tonnes ofsugar in1996,
i.e.106,538.5 tonnes lessthanits
possibilities.
Canada -Could Poland provide totalexports fortheproducts
subject toexport subsidy commitments?Poland willsubmit anES:2
notification.Annex -PartI(cont'd) G/AG/R/12
Page45
Romania G/AG/N/ROM/7 Export Subsidies (Table ES:1)
Points raised byother Members Response byNotifying Member
Australia -Could Romania provide totalexports forthe
products subject toexport subsidy commitments?Romania willnotify total exports for1995
and1996.
Thailand G/AG/N/THA/20 Export Subsidies (Table ES:1)
Points raised byother Members Response byNotifying Member
Australia/New Zealand -Could Thailand
provide total exports interms ofquantity
andvalue foreggs andrice?In1996, total exports ofeggs andriceamounted to
64.5 million pieces and5.4million tonnes, respectively, and
theexport value ofthese exports totalled 98.3 million baht
(US$3.93 million) and50,734 million baht
(US$2,029 million), respectively.
Australia/New Zealand/Japan -How do
thesubsidies relate totheactual costof
marketing/transport costs? What isthe
budget allocated fortheprovision of
such subsidies? When didThailand
introduce these subsidies?Thericesubsidy isaimed atreducing thecostofmarketing
exports (moisture control, ricegrading, packaging, storage)
andamounted to150million baht(US$6 million) which
represented 17percentofactual marketing costs. As
regards eggs, thesubsidy amounted to6million baht
(US$0.24 million) which represented 19percentofactual
transportation costs. These export subsidies areinlinewith
theprovisions ofArticle 9.1paragraphs (d)and(e)forrice
andeggs, respectively.
Tunisia G/AG/N/TUN/8 Export Subsidies (Table ES:1)
Points raised byother Members Response byNotifying Member
Australia -Could Tunisia provide totalexport
datafortheproducts subject toexport
subsidies?Tunisia willnotify total exports.
Australia -Information requested onthenature
ofthe"payments" provided forcitrus fruit,
tomato concentrate andwine inbottles which
donotappear indocument
G/AG/AGST/TUN. When didTunisia
introduce these measures?These payments aredesigned toreduce thecostof
marketing andrepresented thedifference between
prices agreed bypurchasers andprocessing costs for
tomato concentrate andbottled wine. Asregards
citrus fruit, thesubsidies covered thepreparation of
theproducts forexportation. They were introduced in
1995 andnotified totheCommittee onAgriculture.G/AG/R/12 Annex -PartI(cont'd)
Page46
Turkey G/AG/N/TUR/5 Export Subsidies (Tables ES:1 andES:2)
Points raised byother Members Response byNotifying Member
Australia/New Zealand/Canada -When will
Turkey provide dataoftotalexport forthe
non-subsidized products?In1996, Turkey granted export subsidies for5products
outofthe46products withscheduled export subsidies
commitments. Thelackofofficial dataisduetothe
implementation ofthecustom union withtheECwhich
hasledtotherestructuring ofTurkey 'sstatistical system.
Turkey willprovide total exports foralltheproducts
listed initsSchedule.
Canada -Clarification sought regarding
exports ofpotatoes.Details ontheexport subsidy programme forpotatoes
willbenotified totheCommittee onSubsidies and
Countervailing Measures.
Venezuela G/AG/N/VEN/5 andRev.1 Export Subsidies (Tables ES:1 andES:2)
Points raised byother Members Response byNotifying Member
Australia/Canada -Noted thatsubsidized exports in
terms ofvolume andoutlays exceed, foranumber of
products, thecommitment levels. How does Venezuela
intend toremedy theviolation?Asindicated inVEN/5/Rev.1, Venezuela
granted export subsidies inconformity with
itsSchedule ofcommitments.G/AG/R/12
Page47
ANNEX -PartII
Deferred replies toquestions onnotifications raised atprevious meetings
Table MA:1 Notifications
European Communities G/AG/N/EEC/3 Tariff Quota Administration (Table MA:1)
Points raised byother Members atthe
June 1997 meetingResponse byNotifying Member
New Zealand -Does thetariff quota forbeef
(page 19refers) relate toNew Zealand 's
country-specific tariff quota allocation? Ifso,
whyhastheECput"none" under theitem
"allocation ofquota tosupplying countries"?Following theenlargement oftheECtoFinland,
Austria andSweden under Article XXIV:6 ofGATT,
theECundertook toopen acountry-specific tariff
quota for"high quality beef" of300tonnes reserved
toimports from New Zealand. TheEC'sSchedule
indicates thatthebeefmust comply withaspecial
definition andtheallocation ofimport licences is
subject tothesubmission ofacertificate of
authenticity issued bytheexporting country, i.e.the
New Zealand Meat Producers 'Board, butnocountry
allocation isforeseen.
Japan -Thenotification includes country
allocations which were notincorporated inthe
EC'sSchedule forthefollowing products: raw
cane sugar forrefining, husked (brown) rice
andsemi-milled orwholly milled rice. How
does theECjustify country-specific
allocations?These specific-country allocations were allocated to
traditional suppliers according toArticle XIIIof
GATT even though theyarenotincluded intheEC's
Schedule.
Canada -Noted thatthenotification covers the
marketing year1995/96. Dothese import
arrangements apply alsoforthemarketing
years 1996/97 and1997/98?TheEChassubmitted MA:1 notifications in1995
(documents G/AG/N/EEC/1 andAdd.1) andin1996
following accession ofAustria, Finland andSweden
(document G/AG/N/EEC/3). Since these
notifications, nochange hasoccurred inthetariff
quotas 'administration.
Australia -Noted thattheallocation ofimport
licences forrawcane sugar issubject tothe
condition thatapplicants undertake torefine the
quantity ofrawsugar before 1Julyfollowing
thedateofimportation (page 14refers). Was
thisrequirement included inFinland 'sUruguay
Round commitments? Isthere anyprovision
fornewentrants?Thistariff quota (85,463 tonnes) wastransposed from
Finland 'sUruguay Round commitments totheEC's
newSchedule according toArticle XXIV:6 ofthe
GATT. According toArticle 3,paragraph 1,ofthe
implementing regulation No.1507/96 relating tothe
tariff quota forsugar, import licences areallocated to
refiners whoimport fortheneeds oftheir refineries.G/AG/R/12 Annex -PartII(cont'd)
Page48
Table MA:2 Notifications
Canada G/AG/N/CAN/14 Tariff Quota Fill(Table MA:2)
Points raised byother Members attheJune
1997 meetingResponse byNotifying Member
European Communities -Could Canada provide
details ontheapplied tariff?SeeAttachment.
European Communities G/AG/N/EEC/4 Tariff Quota Fill(Table MA:2)
Points raised byother Members at
theJune 1997 meetingResponse byNotifying Member
New Zealand -Clarification sought on
themethodology used tocalculate tariff
quotas implemented onamarketing year
basis. Why arethecommitments from
Schedule LXXX-European Communities
referenced asapplying forthefull
calendar year1995, whereas theEChas
implemented itscommitments asfrom
1July1995?Tariff quotas administered onamarketing year(July 1995
toJune 1996) have been established byadding uphalfofthe
volumes listed ineach ofthetwoSchedules (LXXX- and
CXL-European Communities) inaccordance withheadnote
2ofPartI,Section I-BofSchedule CXL-European
Communities.
New Zealand/Australia -Why were a
number oftariff quotas forbovine
animals andsheepmeat notfilled (pages 2
and3refer)?Oneofthereasons forunder-utilization ofthetariff quota
forbeefistheBSEcrisis which ledtoageneral decline in
demand forimports. Asregards thetariff quota forbuffalo
meat (2,250 tonnes) there have always been fewimports
within thistariff quota. Inbothcases thetariff quota
administration didnotinfluence quota fill. Thetariff quota
forsheepmeat wasnotfilled duetothereduction ofstocks
insome supplying countries.
Canada/New Zealand -Thenotification
isindicated asprovisional formarketing
year1995/96 andcalendar year1995.
When willtheECsubmit afinal
notification?Thenotifications submitted forcalendar year1995 and
marketing year1995/96 (G/AG/N/EEC/4) arenotlikely to
besubject torevision.
Canada/New Zealand -Noted thattariff
quota fillhasnotyetbeen notified for27
products. When willtheECnotify quota
fillfortheremaining products?Thisomissions areduetotworeasons. First, inthecontext
ofGATT Article XXIV:6 negotiations relating tothe
accession ofAustria, Finland andSweden, theECopened
uptariff quotas (certain fruits andvegetables, rice, millet)
initsnewSchedule CXL-European Communities which
tookeffect onlyon1January 1996. Secondly, tariff quotas
foranumber ofproducts were notopened inthefirst
implementation yearsince their initial quota quantity equals
zeroasindicated intheECSchedule.
Japan -Why were thetariff quotas for
thefollowing products notfilled: sweet
potatoes, manioc starch, bran, sharps and
other residues?Thereason forunder-utilization ofthesweet potato tariff
quota waslackofdemand forimports. Asregards manioc
starch, theprovision intheECSchedule relating totheend-
useoftheproduct have been removed andtheEChas
reduced in-quota tariffs from April 1996. Imports ofbran,
sharps andother residues areincompetition withcertain
animal feeds available within theECandother imports from
third countries.Annex -PartII(cont'd) G/AG/R/12
Page49
European Communities G/AG/N/EEC/4 Tariff Quota Fill(Table MA:2)
Points raised byother Members at
theJune 1997 meetingResponse byNotifying Member
Japan -Clarification sought regarding
footnote 1,which provides details onthe
calculation ofthetariff quota forbovine
meat formarketing year1995/96
(page 14refers). How does theEC
justify thiscalculation? How does the
ECjustify thecarry overofapartofthe
tariff quota tothefollowing year?Thetariff quota forbeefisadministered onamarketing
yearbasis (July-June). Duetotheenlargement oftheEC,
theyearly quantity wasincreased on1January 1996 from
34,000 to37,200 tonnes. According toheadnote 2ofPart
I,Section I-BofSchedule CXL-European Communities, the
tariff quota (36,050 tonnes) hasbeen established byadding
uphalfofthevolumes listed ineach ofthetwoSchedules
(LXXX- andCXL-European Communities). Dueto
transitional problems theECopened atariff quota of
35,300 tonnes for1995/96 andtherefore hasmade available
anadditional quantity of750tonnes formarketing year
1996/97.
Canada -Clarification sought onthe
utilization ofimport licences. How does
theECcollect information from member
States? How isthisinformation made
available toexporters?Importers submit anapplication tothecompetent authorities
oftheECmember States whoreport totheCommission.
Onthebasis oftheapplications received, theCommission
allocates tariff quotas andreports tothemember States who
inform theimporters andissue theimport licences.
Member States report back totheCommission thequantities
oflicences used.
Brazil -Why were tariff quotas fora
number ofproducts notfilled, including
buffalo meat, manioc, orange juice and
swine meat?Demand forimports ofbovine meat hasdeclined inthe
European Communities inrecent years duetotheBSE
crisis. Forbuffalo meat, thedemand isverylow. As
regard manioc, under-fill maybeattributed totheutilization
ofmanioc forinternal purposes inthesupplying countries
andavailability ofanumber ofcompeting products onthe
ECmarket. Under-utilization ofthetariff quota forpigmeat
isrelated tothelowmarket price intheECleading toa
lackofinterest inimports.G/AG/R/12 Annex -PartII(cont'd)
Page50
Table DS:1 Notifications
Japan G/AG/N/JPN/21 andCorr.1 Domestic Support (Table DS:1)
Points raised byother Members atthe
June 1997 meetingResponse byNotifying Member
New Zealand/Canada/European Communities -
Clarification sought regarding "public
stockholding" referred toinSupporting
Table DS:1 under item(b)(page 5refers).
How does Japan claim thatthemeasures meet
thecriteria ofAnnex 2totheAgreement on
Agriculture?
New Zealand -Clarification sought regarding
"agricultural insurance" programme referred to
inSupporting Table DS:1 under item (f)(page 5
refers). How does Japan claim thatthe
measures meet thecriteria ofAnnex 2tothe
Agreement onAgriculture?With respect to"public stockholding", the
Government purchases rice, wheat, barley, soya
beans andfeedgrains atcurrent prices andsellsthem
ataprice level notlessthanthedomestic market
price.
The"agricultural insurance" fund isaimed at
subsidizing farmers 'future insurance payment for
relief from natural disasters.
New Zealand/Canada -Areprefectural
government support measures andsub-national
support measures included intheAMS
calculation?Sub-national support measures areincluded inthe
notification. Thenational government isresponsible
forstable food supply policies, which include market
price programmes. Thelocal governments
implement research andextension services for
regional products andinsurance policies andthese
mostly fallunder theGreen Boxmeasures.
New Zealand -Information requested with
respect tosupport provided tonewfarmers.
Arethemeasures included intheAMS
calculation?TheManagement Commencement Fund which
provides loans toyoung farmers inorder toacquire
agricultural technical skills and/or management
methods isnotified inSupporting Table DS:1 under
item (a)"general services" (extension advisory
services). TheFund forFarmland Acquisition which
grants loans tofarmers inorder toacquire farmland
isnotified inSupporting Table DS:1 under item(i)
"structural adjustment assistance provided through
investment aids".
New Zealand -Clarification sought asregards
totheprogramme introduced toalleviate the
Uruguay Round 'simpact onJapanese farmers.
How didJapan include themeasures inthe
AMS calculation?"Post Uruguay Round measures" arenotified either
asGreen Boxmeasures orasAmber support. Most
ofthese measures areclassified into"Green Box".Annex -PartII(cont'd) G/AG/R/12
Page51
Tunisia G/AG/N/TUN/7 Domestic Support (Table DS:1)
Points raised byother Members at
theJune 1997 meetingResponse byNotifying Member
New Zealand/Argentina/Australia -
Clarification sought onthemethod used to
calculate thetotalAMS. What reference prices
didTunisia usetocalculate theproduct-specific
AMS (Supporting Table DS:5, page 6refers)?
Why didTunisia subtract thenegative AMS
values reported forsugarbeet andolives from
thetotalAMS? Noted thatbyadding upthe
positive product-specific AMS, Tunisia exceeds
itscommitment level.Thenegative AMS values forsugar andolive oil
reflect duties paidbyproducers through producers '
collection organizations andshould beconsidered as
zero. Asregards olive oil,theduties aredesigned to
fulfil phytosanitary obligations. Duties paidby
sugarbeet producers areallocated toprocessing
factories forharvesting andtransporting production.
Tunisia willprovide acorrigendum tothenotification
inorder toputthese amended figures incolumn 7of
Supporting Table DS:5.G/AG/R/12 Annex -PartII(cont'd)
Page52ATTACHMENT
ILLUSTRATIVE TARIFF TREATMENT WITHIN TARIFF RATE QUOTAS REPORTED ING/AG/N/CAN/14
Tariff ratequota HScode (1) Product description Tariff rates in1996 (2)
Broiler hatching eggs
andchicks -eggs0407.00.11.00 Bird’seggs, inshell, hatching, offowls
ofthespecies Gallus domesticus ,for
broilers, within access commitmentMFN: 2.84¢/dozen
U.S.: 0.6¢/dozen
-Chicks 0105.11.21.00 Live fowls ofthespecies Gallus
domesticus ,weighing notmore than
185g,broilers fordomestic production,
within access commitmentMFN: 1.62¢ each
U.S.: 0.4¢ each
Eggs andeggproducts -
shell eggs
-eggproducts
-eggproducts0407.00.18
0408.91.10.00
0408.99.10.90Birds’eggs offowls ofthespecies
Gallus domesticus inshell, fresh,
preserved orcooked, notelsewhere
specified, within access commitment
Birds’eggs, notinshell, dried, within
access commitment
Birds’eggs, notinshell, cooked by
steaming orbyboiling inwater,
moulded orotherwise preserved,
whether ornotcontaining added sugar
orother sweetening matter, within
access commitmentMFN: 2.84¢/dozen
U.S.: 0.6¢/dozen
MFN: 16.2%
U.S.: 4%
MFN: 12.5¢/kg
U.S.: 3¢/kg
Chicken, live, meat and
products -livebirds
-meat0105.93.91.00
0207.13.91.00Fowls ofthespecies Gallus domesticus
weighing more than2,000 g,other than
forbreeding purposes, other thanstarted
pullets andspent fowl, within access
commitment
Cuts offowls ofthespecies Gallus
domesticus ,fresh orchilled, other than
spent fowl, within access commitmentMFN: 3.57¢/kg
U.S.: 0.8¢/kg
MFN: 10.1% butnotlessthan8.93¢/kg ormore than
17.86¢/kg
U.S.: 2.4% butnotlessthan2.2¢/kg ormore than4.4¢/kgAnnex -PartII(cont'd) G/AG/R/12
Page53Tariff ratequota HScode (1) Product description Tariff rates in1996 (2)
Beef andveal 02.01-02.02 Meat ofbovine animals, fresh, chilled
orfrozen, within access commitmentMFN: Free
G.P.: Free
U.S.: Free
Mexico: Free
Turkey, live, meat and
products -livebirds
-meat0105.99.11.00
0207.27.91.00Live turkeys, weighing more than
185g,within access commitment
Turkey cutsandoffal, excluding livers,
frozen, within access commitmentMFN: 3.57¢/kg
U.S.: 0.8¢/kg
MFN: 10.1% butnotlessthan8.93¢/kg ormore than
17.86¢/kg
U.S.: 2.4% butnotlessthan2.2¢/kg ormore than4.4¢/kg
Fluid milk 0401.20.10.00 Milk andcream, notconcentrated, nor
containing added sugar orother
sweetening matter, ofafatcontent, by
weight exceeding 1%butnotexceeding
6%,within access commitmentMFN: 14.2%
G.P.: 11.5%
U.S.: 3.4%
Concentrated milk and
cream0402.91.10.00 Milk andcream, other thaninpowder
form, notcontaining added sugar or
other sweetening matter, within access
commitmentMFN: 5.35¢/kg
U.S.: 1.3¢/kg
Yogurt 0403.10.10.00 Yogurt, within access commitment MFN: 12.2%
U.S.: 3%
Powdered buttermilk 0403.90.11.00 Powdered buttermilk, within access
commitmentMFN: 6.25¢/kg
U.S.: 1.5¢/kg
AUS/NZ: 0.75¢/kg
Other products ofmilk
constituents0404.90.10 Products consisting ofnatural milk
constituents, within access commitmentMFN: 12.2%
U.S.: 3%
Cheese 04.06 Cheese, within access commitment [rate
depends onvariety]MFN: 5.35¢/kg -6.25¢/kg
U.S.: 1.3¢/kg -1.5¢/kg
NZ: 0.75¢/kg -0.95¢/kg
AUS: 0.95¢/kg (forcheddar andcheddar types only)G/AG/R/12 Annex -PartII(cont'd)
Page54Tariff ratequota HScode (1) Product description Tariff rates in1996 (2)
Other dairy 1901.90.33 Food preparations ofgoods ofheading
Nos.04.01 to04.04, containing more
than10% onadryweight basis ofmilk
solids, other thanicecream mixes orice
milk mixes, notinretail packaging,
within access commitmentMFN: 12.6%
G.P.: 6%
U.S.: 3%
Margarine 1517.10.10.10 Margarine, excluding liquid margarine,
within access commitmentMFN: 14.2%
G.P.: Free
U.S.: 3.4%
Mexico: Free
Source: 1996 Customs Tariff, Departmental Consolidation, Revenue Canada.
Notes
(1) Foreach tariff ratequota, oneortwoindividual tariff lines have been selected toillustrate themargin ofpreference. Thefullproduct coverage ofthese
tariff quotas isindicated inG/AG/N/CAN/14.
(2) MFN :Most Favoured Nation Tariff
G.P. :General Preferential Tariff
U.S. :United States Tariff
NZ:New Zealand Tariff
AUS :Australia TariffG/AG/R/12
Page55
ANNEX -PartIII
Deferred Replies toQuestions raised under Article 18:6
oftheAgreement atprevious meetings
(a) United States -Costa Rica'sfailure toestablish tariff quotas forpoultry anddairy products
(G/AG/R/11, paragraph 32)
Therepresentative ofCosta Ricastated, withreference totheUnited States 'questions and
bilateral consultations heldwithNewZealand concerning Costa Rica'stariffquotas fordairy products
andpoultry, thatthetariff quotas hadbeenopened fortheperiod 1997/98, effective 21July1997.
Therelevant notification would besubmitted shortly. Costa Ricawillallow importation under thetariff
quota for1997untiltheendofJanuary 1998soastopermit fullutilization ofthetariffquota. Moreover,
Costa Ricahadgonebeyond itsobligations withrespect totariff quotas byaccelerating reduction of
thebound in-quota tariffs andbyliberalizing products originally included inthetariff quota.
(b) New Zealand andtheUnited States -TheEuropean Communities 'inward processing
arrangements forcheese (G/AG/R/11, paragraphs 14and15)
With respect toitsinward processing arrangements forprocessed cheese, theEuropean
Communities provided responses toquestions thattheUnited States hadraised attheJunemeeting
oftheCommittee (G/AG/R/11, paragraph 15)andanumber ofwritten questions posed byNewZealand
(G/AG/R/11, paragraph 14).
NewZealand hadsought clarification: (i)astowhytheEuropean Communities didnotconsider
thatexports ofprocessed cheese benefiting fromthemechanism inquestion hadtobecounted against
theEC'sexport subsidy commitments forthefinalproduct cheese; (ii)astowhyprocessed cheese
exported fromtheEuropean Communities wasnottobecounted against theEC’scheese commitments,
given thattheproduct descriptions intheAnnex toPartIVSection IIoftheECSchedule indicated
thatcheese andcurdunder HSCode 0406.30 came under thecheese commitment; (iii)astowhen
theproduct wasdeemed tohavelefttheEuropean Communities foranonward destination, given that
theEuropean Communities claimed that,ontheonehand, therateofexport refunds fixedforthebasic
(i.e.component) products varied according tothefinalmarket destination oftheend-product and,on
theotherhand, export refunds weregranted onlyonthedomestic components “exported ”tothecustoms
controlled areaunder theinward processing arrangement; (iv)astohowtheEuropean Communities
wasabletomeetthetestunder Article 10:3oftheAgreement onAgriculture thatproduct exported
fromtheinward processing areas werenotexported withtheassistance ofexport refunds; and(v)as
towhatproportion, ifany,ofthefinalvalue oftheproduct orfinalphysical composition oftheproduct
wasrequired tobeimported from outside oftheEuropean Communities fortheprocessed cheese
production tobeclassified andeligible asaninward processing arrangement.
Interms ofageneral response, theEuropean Communities considered thatithadnotintroduced
anewexport refund scheme forprocessed cheese buthadextended existing refund schemes forproducts
from theECmarket usedunder inward processing procedures. These procedures allowed products
fromthirdcountries tobesubject toprocessing operations within theEuropean Communities without
being subject tocustoms duties provided theprocessed products were re-exported. Theprocessing
could becarried outwithorwithout incorporating ECproducts inthere-exported product. Inward
processing procedures werereferred toinAnnex E.6oftheKyoto Convention (International Convention
ontheSimplification andHarmonization ofCustoms Procedures) which defined inward processing
asthecustoms procedure under which "goods canbebrought intoacustoms territory conditionally
relieved from payment ofimport duties andtaxes; suchgoods must beintended forre-exportationG/AG/R/12 Annex -PartIII(cont'd)
Page56
within aspecific period afterhaving undergone manufacturing, processing orrepair". Italsodefined
theterm"compensating products" as"theproducts obtained during orasaresult ofthemanufacturing,
processing orrepair ofthegoods temporarily admitted forinward processing". Since thecompensating
product -inthiscaseprocessed cheese -had,totally orpartly, paidnoimport duties, itwould be
economically unjustified totreattheproducts asaproduct produced within theEuropean Communities.
Consequently, theEuropean Communities didnotgrantexport refunds forthere-exported compensating
product andthustheprocessed cheese didnothavetobecounted against theEC'sexport subsidy
commitment. IftheEuropean Communities weregranting export refund onprocessed cheese, other
countries could withgood reason accuse theEuropean Communities ofprice undercutting since the
products imported forprocessing under inward processing procedures should beconsidered asbought
atworld market prices. TheEuropean Communities didgrant export refunds forcertain products from
theECmarket thatwereincorporated orusedinthemanufacturing ofthecompensating product. The
export refunds forsuchproducts werecontingent onexport performance andtheexports were thus
counted against theEC'sexport subsidy commitments fortheproducts concerned. With respect to
theconditions ofpayment forexport refunds, therelevance ofthese questions inrelation totheEC's
compliance withitsexport subsidy commitments wasnotclear. However, anyexport refund forEC
ingredients usedunder inward processing would onlybepaidoncethecompensating products hadbeen
exported, i.e.when theingredients hadleftthecustoms territory oftheEuropean Communities. In
addition, anumber ofother provisions must becomplied with.
Interms ofthespecific questions raised bytheUnited States, theEuropean Communities
responded that:
(i) asaresult oftheregulations referred tobytheUnited States processed cheese could
bere-exported asa"compensated product". Such re-exportation wasnotcounted against theEC's
export subsidy commitments forcheese. IfECproducts wereusedintheprocessing, suchproducts
were exported from theEuropean Communities andmight benefit from export refunds. Thelatter
werecounted against theEC'sexport subsidy commitments, e.g.forskimmed milkpowder orbutter;
(ii) productsimportedundertheEC'sinwardprocessingarrangementremainedundercustoms
control untilthecompensating products werere-exported. IfECproducts wereincorporated intothe
compensating products andexport refunds wereclaimed, thegeneral rulesforgranting export refunds
hadtoberespected. Forexample, export refunds claimed forbutter would onlybepaidiftheexporter
ofthecompensating products hadrequested anexport licence forthebutter (with reference totheHS
codeforbutter), thequantity ofbutter incorporated intothecompensating products wasestablished
andthecompensating products hadlefttheECcustoms territory. Thebutter export would becounted
against theexport subsidy commitment based ontheexport licence issued; and
(iii) theinward processing procedures didnotforesee minima ormaxima fortheuseof
imported products. While theEuropean Communities could specify limits forexport refund purposes
ithadnotdoneso.
Interms ofthespecific questions raised byNewZealand, theEuropean Communities responded
that:
(i) there-exported processed cheese wasnotmanufactured within theterritory oftheEC's
domestic market andcould nottherefore benefit from export refunds;
(ii) theproduct exported from theEC'sdomestic market wascounted against theEC's
export subsidy commitments;
(iii) inorder toobtain export refunds, aproduct must, interalia,haveleftthecustoms
territory oftheEuropean Communities;Annex -PartIII(cont'd) G/AG/R/12
Page57
(iv) thesaleofaprocessed product produced under inward processing procedures didnot
constitute anexport andtherefore thequestion withregard toArticle 10:3didnotariseinthiscase.
However, when theprocessed product included rawmaterials fromtheEuropean Communities which
benefitted from export refunds, these ingredients wereconsidered tobeexported withthebenefit of
export refunds andweretherefore counted against theEC'sexport subsidy commitments fortheproduct
group concerned; and
(vi) theinward processing procedures didnotforesee minima ormaxima fortheuseof
imported products. While theEuropean Communities could specify limits forexport refund purposes
ithadnotdoneso.