JOB/AG/100  
 
17 July 2017  
(17-3872) Page: 1/2 
Committee on Agriculture  
Special Session  Original: English  
 
EFFECTIVELY CONSTRAI NING TRADE -DISTORTING  
DOMESTIC SUPPORT USI NG FIXED CAPS  
SUBMISSION  BY NEW ZEALAND, AUSTRAL IA, CANADA AND PARAG UAY 
The following submission , dated 17 July 2017, is being circulated at the request of the 
aforementioned Members . 
 
_______________  
 
 
I. KEY POINTS  
 Fixed caps could meaningfully constrain future spending limits in a way that floating limits, 
based on a percentage of the value of production (currently growing at over 10 % on 
average for major Members), would not.  
 Introducin g fixed caps on trade -distorting domestic support, expressed as 
numerical/monetary values, would provide global markets, exporters and Members with 
transparency and certainty on Members ' domestic support limits.  
 Fixed caps would support the reform process without increasing the transparency burden 
on Members, as they do not entail any additional notifications.  
II. BACKGROUND  
1.   There is a consensus among the WTO 's diverse Membership that existing limits on trade -
distorting domestic support do not provide suffici ent discipline. Any new disciplines which address 
this problem must effectively constrain spending but be transparent and easy to calculate. It is 
essential that exporters and producers be able to predict the upper limits of Members ' domestic 
support outla ys, allowing them to predict market behaviour and hedge against risk. It is also 
essential that Members providing such support are certain that they will not breach their 
commitments due to external factors (such as an unexpected value of production drop).  Fixed 
numerical caps on Members trade -distorting domestic support commitments are the only means of 
calibrating overall limits which meet all these objectives.  
III. FIXED CAPS ARE AN EF FECTIVE MEANS OF CON TINUING THE REFORM P ROCESS  
2.   Fixed caps would establish enduring and meaningful constraints on trade -distorting domestic 
support over time.  This would incentivize  governments to continue ref orms which move away from 
trade -distorting domestic support. Floating limits based on a percentage of annual value of 
production (VoP) will, for the majority of Members, grow annually and therefore become a less 
meaningful constraint on spending. This would do nothing to combat the existing asymmetry 
between Members that provide trade distorting subsidies and Members which do  not, whether due 
to a lack of resources or a policy decision.    
IV. FIXED CAPS PROVIDE M EMBERS AND GLOBAL MA RKETS WITH GREATER 
CERTAINTY  
3.   A fixed cap expressed as a numerical/monetary value would be a single figure that does not 
alter or change over time. The maximum levels of Members ' future outlays would thus be known 
with absolute confidence. A variable limit based on a percentage of VoP, on the other hand, is a JOB/AG/100  
 
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  limit that changes – potentially significantly – year-on-year, making it considerably more di fficult 
to predict both for the mark et, and for the Member itself. Fixed caps would provide certainty and 
transparency as the maximum amount of permissible trade -distorting domestic support can be 
predicted with complete accuracy. This will allow Members t o more efficiently allocate budgets for 
future years, and provide the market with greater confidence around domestic support outlays and 
the accurate assessment and monitoring of Members ' compliance with their obligations.  
V. FIXED CAPS PROVIDE T RANSPARENCY W ITHOUT INCREASING TH E NOTIFICATION 
BURDEN  
4.   The transparency and certainty provided by fixed caps would come without any additional 
burden on Members, either through the individual notification obligations or in the WTO Committee 
on Agriculture review proce ss. Fixed caps do not require additional annual notifications as they are 
fixed and immutable. Moreover, compliance with the caps can be easily demonstrated through 
minor adjustments to the existing DS:1 notification.  As Graph 1 indicates, many Members hav e 
already fallen considerably behind in their notifications. Members ' compliance with their domestic 
support (DS:1) notification obligations is at less than 70% over the past 11 years .1 Fixed caps 
would ensure such Members can continue to focus on getting up to -date with their current 
obligations without having to grapple with additional notification requirements.   
Graph 1 – DS:1 Notifications submitted by Members2 
 
Source:  G/AG/GEN/86 /Rev.28 . 
 
VI. CONCLUSION  
5.   In direct contrast with a floating limit, introducing fixed caps on trade distorting support would 
meaningfully constrain trade distorting outlays, create predictability for markets and Members, 
create little to no administrative burd en and should be easily accommodated within existing 
notification practices. Fixed caps therefore offer a legitimate and viable way forward on curtailing 
what the majority of Members have identified as an unacceptable level of permissible trade 
distorting support under the existing Agreement on Agriculture.   
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1 In document G/AG/GEN/86/Rev.28, the Secretariat notes that only 25 Members have a 100 % 
compliance rate, while 31 Members with an obligation to notify have never submitted a DS:1 notification.  
2 DS:1 notifications are required to be submitted annually by all Members with base and annual 
commitment levels specified in Section I of Part IV of their Schedules. All other Members, except Least -
Developed Country (LDC) Members, should submit an annual Table DS:1 notification. LDC Members are 
required to submit Supporting Tables DS:1 to DS:3 every other year.  
 0%10%20%30%40%50%60%70%80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Percentage of DS:1 notifications submitted as of 24 May 2017