WORLD TRADE  
ORGANIZATION  TN/AG/W/4 
1 August 2007 
 (07-3296) 
Committee on Agriculture 
Special Session  
 
  
REVISED DRAFT MODALITIES FOR AGRICULTURE 
 This document is the same as that distributed as  JOB(07)/128 with corrections to a number of 
typographical errors which were included in that document. TN/AG/W/4 
Page 2  
 
   
REVISED DRAFT MODALITIES FOR AGRICULTURE 
  
 The attached document sets out my first revi sion of the draft Moda lities for preparing the 
Schedules for the Agri culture negotiations. 
 
 It is in the form (roughly but not entirely) of a draft text.  It is, therefore, inevitably a 
technical-looking document.  For that reason, it is still  not an easy read to the layperson.  It has to be 
like that.  To anyone that cares to compare it with  the original draft, it represents considerable 
progress in my view.  But there is a reason for th at.  Despite all the setbacks, failures and deadlocks 
that we have experienced over the past year, the underlying fact remains that under the surface very 
considerable progress has been made on all areas of this negotiation since that last draft.  There are, in 
fact, relatively few square brackets now.  They re main in places, but they are now narrowed down to 
what I would consider to be the essentials - either  in the form of a relatively narrow range within 
which we need to (and in my view  we can) settle, or on a precise number which, albeit not agreed, I 
think could serve as a reasonable target in th e circumstances we now find ourselves in.  The 
negotiating linkages that they imply are there for all who have eyes to see (not that everything is 
crudely linked, although I will confess that one pair  of numbers that appears to be similar in two 
separate parts of the text is not coincident ally or randomly so, at least to my mind). 
  Of course, this is my effort as Chair at providing a revised draft text based on what I am hearing from Members in the multilate ral process.  It doesn't represen t precise pre-agreement from the 
Membership to what is in there: that agreement is something that can come only from you as 
Members.  But precisely in order to optimize our chances for getting to that agreement, I am taking 
the initiative of providing something that you can, hope fully, work off and refine from here on in.  I 
know very well that Members have vastly varied a nd contradictory positions.  But all Members know 
that any agreement requires compromise.  And that can only be achieved by  movement from 
established and preferred positions.  Sometimes – an d I have had the clear sense from Members that 
now is precisely such a time – that can be galvanised by having an independent third party express a 
view on the scope for compromise that no Member ca n quite bring themselves to articulate.  I would 
have to say that, even had that not been the case , there comes a moment (and this is just such a 
moment) when the time for cutting to the chase is in fact upon us, and no other option is available. 
 
 Either way, this needs to be done.  We ha ve frankly exhausted all other avenues and the 
prospect of failure is, as a consequence, now so  familiar to us that it can almost present itself 
seductively to us as our friend.  We owe it to oursel ves to at least now make the effort for a sustained 
and serious multilateral engagement on the basis of a working document. 
 
 I feel that this is all the more so incumbent upon us when in fact we have over the past period 
actually made very serious and valuable progress.  So, above all, I would hope that what the revised 
draft text does is to demonstrate, as fairly and as adequately as I can find it in my powers to express it 
as Chair, just what is potentially on offer as we mo ve into what could be – with the right political will 
– a serious closing zone for this negotiation.  It should underline just how relatively narrow the 
differences are now.  Of course, as is always the case, that last effort is always the most difficult even 
if it is a relatively narrow difference that remains to  be bridged.  But it is essential to emphasise that 
we can still do this if we give the ge nuinely multilateral process a fair chance. 
  As a textual document, it is not an appropriat e place to editorialise within it on the political 
and commercial issues at stake in those remaining zones for decision in the way that has been done, 
for instance, in the challenges paper or the earlier reference papers.  They have served their purpose. 
This is now where, as it were, the ru bber hits the road.  Suffice it to say that this document is intended 
to take everyone out of their comfort zones.  That has to happen if we are ever to get an agreement.   TN/AG/W/4 
 Page 3 
 
 
  Some of those narrow ranges or targ et numbers or technical draft text will be very painful, for sure.   
But that pain will be required to get agreement.  I ha ve done my level best to ensure that at least that 
pain is spread in a reasonably balanced way within the terms of the Framework.  Where there are 
narrow ranges, there is still in my view a bit of room (but not much to be sure) for some crucial 
negotiating to be done (and you should not just breezi ly assume that I am implying in each and every 
case that all that is needed is to split the difference).  In some areas I have not shrunk from 
acknowledging that we are further apart, and I have not proposed precise drafting.  To have done so 
would have been arbitrary or artificial.  I would of  course have preferred to  have a document with 
the same level of precision on everything, but the va riability of precision reflects the reality of where 
we are.  But nor would it have been responsible to deliberately understate my sense of where we can in fact get to a large range of issues just because some have not yet got to that level on some others.  
Of course it is clear that nothing can or will be fi nalised until we get to the point where everything is 
developed to the same level of specificity. 
 
 Indeed, the document cannot foist anything on anyone.  It is there to be worked on by you as 
Members.  Any ultimate agreement is under your control – not mine.  As Don and I have made clear, we are not presenting our texts as some kind of tabl ets of stone descended from on high – and even if 
we did, you as Members would hardly treat them that way in any case.  I am certain that you will 
make clear which numbers or which parts of the draft you reject or wish to amend.  I am pretty sure, 
in fact, that I can guess now the interventions of many of you in advance on nearly all of the issues! 
That is exactly as it should be.  But the crucial th ing is to be working off a reference point to make 
subsequent progress rather than multiple options.  So, th is revision is intended to be the next step in 
the process.  We set to intensive work on this in Se ptember and we take as long as it takes.  And there 
will be an inevitable revision after that intensive process. 
 
 I can conclude only by reconfirming to y ou all that I remain committed to facilitating 
convergence in every way possible in  the little time remaining to us. 
 
Yours sincerely 
 
 
 
Ambassador Crawford Falconer 
Chairman 
Committee on Agriculture, Special Session TN/AG/W/4 
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  REVISED DRAFT MODALITIES ON AGRICULTURE 
 
 I. DOMESTIC SUPPORT 
A. O
VERALL REDUCTION OF TRADE -DISTORTING DOMESTIC SUPPORT :  A TIERED FORMULA  
1. Base level 
1. The Base Overall Trade-Distorting Domestic Support shall be the sum of (i) the Final Bound 
Total AMS as defined in Article 1(h) of the Agreemen t on Agriculture plus (ii) 10 per cent of value of 
production in the 1995-2000 base period (this being composed of 5 per cent of value of production for 
product-specific and non-product-sp ecific AMS respectively);  plus (iii)  the higher of existing average 
Blue Box payments, or 5 per cent of the average total value of agricultural production, in the 1995-
2000 base period. 
2. Tiered reduction formula 
2. The base level of Overall Trade-Distorting Domestic Support shall be reduced in accordance 
with the following tiered formula: 
(a) where the base level of Over all Trade-Distorting Domestic  Support is greater than 
US$60 billion, or the equivalent in the monetary terms in which the binding is 
expressed, the reduction shall be [75][85] per cent; 
(b) where the base level of Over all Trade-Distorting Domestic  Support is greater than 
US$10 billion and less than or equal to US $60 billion, or the equivalents in the 
monetary terms in which the binding is ex pressed, the reduction shall be [66][73] 
per cent; 
(c) where the base level of Over all Trade-Distorting Domestic  Support is less than or 
equal to US$10 billion, or the equivalent  in the monetary terms in which the 
binding is expressed, the rate of reduction shall be [50][60] per cent. 
3. Developed country Members with high relative levels of OTDS in th e second tier (at least 
40 per cent of the total value of agricultural production) shall undertake an additional effort.  The additional reduction to be undertaken  shall be equal to the one half of  the difference in the reduction 
rate between the second tier and the top tier. 
4. Small low-income recently acceded Members with economies in transition will not be 
required to undertake reductions in OTDS.  
3. Implementation period and staging 
5. As the first instalment of the overall redu ction, in the first year and throughout the 
implementation period, the sum of all trade-distorting  support shall not exceed 80 per cent of the base 
level of Overall Trade-Distorting Domestic Support.  The remainin g reductions shall be implemented 
in equal steps to the end of the implementation period. 
4. Special and differential treatment 
6. Developing country Members with no AMS Commitments shall not be required to make 
commitments on reductions in Overa ll Trade-Distorting Domestic Support.  TN/AG/W/4 
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  7. For developing country Members with AMS co mmitments, the applicable reduction for 
Overall Trade-Distorting Domestic Support shall be two thirds of the relevant rate specified in 
paragraph 2(c) above. 
8. NFIDCs listed in document G/AG/5/Rev.8 shall be exempt from reduction commitments. 
9. As the first instalment of the overall cut, in the first year and throughout the implementation 
period, the sum of all trade-distorting support shall not  exceed 80 per cent of the base level of Overall 
Trade-Distorting Domestic Support.  As for the second and subsequent years of implementation, the 
remaining reductions shall be implemented accordin g to an implementation period that is longer than 
for developed country Members.    
5. Other 
10. Commitments relating to reductions in Over all Trade-Distorting Domestic Support shall 
apply as a minimum overall commitment.  If necessary, a Member shall be required to make 
additional commitments on reductions or  limits in Final Bound Total AMS, de minimis  and/or Blue 
Box in order to achieve the appropriate reduction in Overall Trade-Distorting Domestic Support.  
B. FINAL BOUND TOTAL AMS:   A TIERED FORMULA  
1. Tiered reduction formula 
(a) Reductions in Final Bound Total AMS 
11. The Final Bound Total AMS sha ll be reduced in accordance  with the following tiered 
formula: 
(a) where the Final Bound Total AMS is greater  than US$40 billion, or the equivalent 
in the monetary terms in which the binding is expressed, the reduction shall be [70] 
per cent;  
(b) where the Final Bound Total AMS is greater than US$15 billion and less than or 
equal to US$40 billion, or the equivalents in the monetary terms in which the 
binding is expressed, the reduction shall be [60] per cent;  
(c) where the Final Bound Total AMS is less than or equal to US$15 billion, or the 
equivalent in the monetary terms in whic h the binding is expressed, the rate of 
reduction shall be [45] per cent. 
12. Developed country Members with high relative levels of Final Bound Total AMS (at least 40 
per cent of the total value of agricultural producti on) shall undertake an additional effort.  Where the 
Member concerned is in the second tier, the additiona l reduction to be undertaken shall be equal to the 
difference in the reduction rate between the seco nd tier and the top tier.  Where the Member 
concerned is in the bottom tier, the additional reduc tion to be undertaken shall be one half of the 
difference in the reduction rate between the first tie r and the second tier.  
13. Small low–income, recently-acceded Members w ith economies in transition will not be 
required to undertake reductions in Final Bound Total AMS.  In the case of such Members, 
investment subsidies and input subsidies generally av ailable to agriculture, interest subsidies to reduce 
the costs of financing as well as grants to cover debt repayment may be excluded from the calculation 
of Current Total AMS. TN/AG/W/4 
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  (b) Implementation period and staging 
14. The reductions in Final Bound Total AMS shall be implemented in equal annual instalments 
over the implementation period. 
(c) Special and differential treatment 
15. The reduction in Final Bound Total AMS applic able to developing country Members with 
Final Bound Total AMS commitments shall be two-th irds of the reduction applicable for developed 
country Members.  The reductions in Final Bound Total AMS shall be implemented in equal annual 
instalments with a longer implementation period than for developed country Members. 
16. NFIDCs listed in document G/AG/5/Rev.8 shall be exempt from AMS reduction 
commitments.  
17. Developing country Members shall have continue d access to the provisions of Article 6.2 of 
the Agreement on Agriculture. 
(d) Other 
18. As provided for under Article 18.4 of the Agreement on Agriculture, cases of extraordinary 
situations shall be dealt with separately  and on a pragmatic case-by-case basis. 
C. P
RODUCT -SPECIFIC AMS  CAPS 
1. General 
19. Product-specific AMS limits shall be set out in the Schedule of the Member concerned.   
20. Article 6.3 of the Agreement on Agriculture sh all be amended to reflect the modalities with 
respect to product-specific AMS caps by the addition of the following: 
Ad Article 6.3: 
 
 A Member shall not exceed the product-specific AMS limits specified in its Schedule. 
 
21. The product-specific AMS limits  specified in each Member's Schedule shall be the average 
applied product-specific AMS during the Uruguay Round implementation period (1995-2000). 
22. For the United States, the produc t-specific AMS limits will be the resultant of applying the 
average distribution of product-specific support in  the [1995-2004] period to the average Current 
Total AMS for the Uruguay Round implementation period (1995-2000). 
23. Where a Member has introduced pr oduct-specific AMS support above de minimis  after the 
base period, the base period for that product shall be the average of the two most recent years for 
which notifications have been made. 
24. In cases where a product-specific AMS during the base period was below the de minimis  level 
the Current AMS for such products shall not exceed the [current][new] de minimis  level. 
25. Product-specific AMS caps shall be implemented in equal annual instalments in the 
implementation period.  The starting point for im plementation of product-specific AMS caps shall be 
[ ].  TN/AG/W/4 
 Page 7 
 
 
  2. Special and differential treatment 
26. In the case of developing country Members, the Current AMS for individual products shall 
not exceed the respective levels established by one of the following methods:  
(a) the average applied levels during the base period 1995 to 2000 or 1995 to 2004, as 
may be selected by the Member concerned; or 
(b) two times the Member's product-specific de minimis  level; or 
(c) 20 per cent of the Annual Bound Total AMS in any year. 
D. DE MINIMIS  
1. Reductions 
27. The de minimis  levels pursuant to Article 6.4(a) of  the Agreement on Agriculture shall be 
reduced by at least [50] [60] per cent and by a greater   amount if that would be required to adjust to 
the rate of cut of Overall Trad e-Distorting Domestic Support. 
28. Small low-income, recently-acceded Members with economies in transition will not be 
required to make cuts in de minimis .   
29. The new de minimis  levels shall [be effective from the beginning of the implementation 
period][be phased in through equal annual instalments over the implementation period]. 
2. Special and differential treatment 
30. Developing country Members with: 
(a) no AMS commitments; or 
(b) AMS commitments, but that allocate almost all that support for subsistence and 
resource-poor farmers; or 
(c) NFIDCs listed in document G/AG/5/Rev.8  
shall be exempt from reductions in de minimis . 
31. For other developing country Members with AMS commitments, the de minimis  levels 
pursuant to Article 6.4(b) of the Agreement on Agri culture shall be two thirds of the reduction for 
developed country Members with any such additional amount as would be required to adjust to the rate of cut of Overall Trade-Distorting Domestic Su pport if that is greater. In the case of developing 
country recently-acceded Members with AMS co mmitments, an allowance of a further five 
percentage points will be made.   For all these Members, the new de minimis  levels shall be phased in 
over a longer period than for developed country Members. TN/AG/W/4 
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  E. B
LUE BOX 
1. Basic criteria 
32. Subject to the additional criteria set out be low Article 6.5 shall be amended as follows: 
 Article 6.5 
The value of the following direct payments shall be excluded from a Member's calculation of 
its Current Total AMS: 
(a) Direct payments under production-limiting programmes if: 
(i) such payments are based on fixed and unchanging areas and yields; or (ii) such payments are made on 85 per cen t or less of a fixed and unchanging base 
level of production; or 
(iii) livestock payments are made on a fixed and unchanging number of head. 
Or 
(b)   Direct payments that do not require production if: 
(i) such payments are based on fixed and unchanging bases and yields; or  
(ii) livestock payments made on a fixed and unchanging number of head; and (iii) such payments are made on 85 per cen t or less of a fixed and unchanging base 
level of production. 
2. Additional criteria 
(a) Blue Box cap 
33. In addition to the criteria set out in the paragraph immediately above, a Member shall not 
provide support under Article 6.5 in excess of th e amount as determined below.  This will be 
expressed consistently in the value-specific co mmitments set out in that Member's Schedule. 
34. The maximum permitted value of support under Ar ticle 6.5 shall not exceed 2.5 per cent of 
the average total value of agricultural production du ring the base period.  This limit will apply from 
the commencement of the implementation period. 
35. In cases where a Member has placed in the Blue Box an exceptionally large percentage of its 
trade-distorting support – defined as 40 per cent – during the base period, the percentage reduction in 
that support under Article 6.5(a) will equal the percentage reduction that the Member concerned will 
make in the Final Bound Total AMS.  A short impl ementation period may be considered for any such 
Member in the event that immediate implementation is unduly burdensome. 
(b) Other criteria 
36. The value of support provided to an individual product under Article 6.5(a) shall not exceed 
the average value of support provided to it during the period 1995-2000.   
37. The value of support provided to an individual product under Article 6.5(b) shall be no more 
than [110][120] per cent of that product-specific dist ribution under legislated limits as applied to the 
overall Blue Box limit of 2.5 per ce nt of the value of production.   TN/AG/W/4 
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  38. An increase in Blue Box support for any indi vidual product beyond the limitations determined 
under this Article shall be permissible where that amount does not exceed a corresponding and 
irreversible one-for-one reduction in Current AMS support for the product(s) concerned (except for 
cotton, where that rate would be two-for-one).  Where there was no Current AMS support in the base 
period for a particular product, an increase in Blue Box support is permissible for that product where 
the support concerned does not exceed 10 per cent of the overall Blue Box ceiling and the overall 
Blue Box cap is still respected. 
3. Special and differential treatment 
39. For developing country Members, the maximum permitted level for the value of support 
under Article 6.5 shall not exceed 5 per cent of the average total value of agricultural production in 
the base period. 
40. Where a particular product accounts both for more than 25 per cent of the total value of 
agricultural production and 80 per cent of total bound AMS support during the base period, a 
developing country Member that chooses to switch its support from AMS to Blue for that product on 
a one-for-one and irreversible basis will be entitled to  do so even if this woul d lead to exceeding the 
maximum permitted level provided for in the paragraph above. 
F. GREEN BOX 
41. Annex 2 of the Agreement on Agri culture shall be amended as set out in Annex A of this 
document. 
G. COTTON :  DOMESTIC SUPPORT  
Reductions in Support for Cotton Production 
42. AMS support for cotton shall be reduced according to the following formula: 
Rc = Rg + (100 – Rg) * 100  
 3 * Rg 
Rc = Specific reduction applicable  to cotton as a percentage 
Rg = General reduction in AMS as a percentage  
43. This will be applied to the base value of support calculated as the arithmetic average of the 
amounts notified by Members for cotton in supporting tables DS:4 from 1995 to 2000.  The Blue Box cap applicable to cotton shall amount to one thir d of the product-specific cap that would otherwise 
have been the resultant from the methodology generally applicable above.  
1. Implementation  
44. The reductions for trade-distorting domestic s upport on cotton shall be implemented over a 
period which is one third of the implementation period.  
2. Special and Differential Treatment 
45. Developing country Members with relevant AMS and Blue Box commitments for cotton 
otherwise applicable under the relevant provisions of this Agreement shall provid e a  rate of reduction 
for cotton that is two thirds of that which w ould be applicable under paragraph 42 above. TN/AG/W/4 
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  46. Developing country Members shall implement their reduction commitments for cotton over a 
longer time period than for developed country Members.  TN/AG/W/4 
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  II. MARKET ACCESS 
A. TIERED FORMULA FOR TARIFF REDUCTIONS  
1. Basis for reductions 
47. Subject to such other specific provisions as ma y be made, customs duties shall be reduced in 
equal annual instalments from bound duty levels1 using the tiered formula in paragraphs 49 to 53 
below. 
48. In order to place bound non- ad valorem  duties in the appropriate band of the tiered formula, 
Members shall follow the methodology to calculate ad valorem  equivalents (AVEs), along with 
associated provisions, set out in Annex A to TN/AG/W/3 of 12 July 2006. 
2. Tiered Formula 
49. Members shall reduce bound duties in accordance with the following tiered formula:  
(a) where the bound duty or ad valorem  equivalent is greater than 0 and less than or 
equal to 20 per cent the reduction shall be [48-52] per cent;  
(b) where the bound duty or ad valorem  equivalent is greater th an 20 per cent and less 
than or equal to 50 per cent, the re duction shall be [55-60] per cent;  
(c) where the bound duty or ad valorem  equivalent is greater th an 50 per cent and less 
than or equal to 75 per cent, the redu ction shall be [62- 65] per cent; and  
(d) where the bound duty or ad valorem  equivalent is greater than 75 per cent, the 
reduction shall be [66-73] per cent. 
50. Developing country Members, other than those specified in paragraph 52 below, shall reduce 
bound duties in accordance with the following tiered formula2: 
(a) where the bound duty or ad valorem  equivalent is greater than 0 and less than or 
equal to 30 per cent, the reduction shall be 2/3 of the cut for developed in 49(a) 
above; 
(b) where the bound duty or ad valorem  equivalent is greater th an 30 per cent and less 
than or equal to 80 per cent, the reduction shall be 2/3 of the cut for developed in 
49(b) above; 
(c) where the bound duty or ad valorem  equivalent is greater th an 80 per cent and less 
than or equal to 130 per cent, the reductio n shall be 2/3 of the cut for developed in 
49(c) above;  and 
                                                      
1 That is, all out-of-quota duties.  In-quota tariffs shall be subject to commitments under paragraphs 85 
to 87.   
2 Pending final agreement on this aspect of the modalities Members may wish to keep under 
advisement the approach alluded to in the Chair's Challenges paper to the effect that a basic approach analogous to the Uruguay Round could be an overall cut for developing country Members of 36 per cent with a minimum 
cut of 15 per cent on each line. This could also be somewhat moderated both for the Members referred to in 
footnote 3 below and for RAMs. TN/AG/W/4 
Page 12  
 
  (d) where the bound duty or ad valorem  equivalent is greater than 130 per cent, the 
reduction shall be 2/3 of the cut for developed countries in 49(d) above. 
51. The maximum average reduction in bound dutie s any developing country Member shall be 
required to undertake as a result of application of this formula is [36][40] per cent.  Should the above 
formula imply an average reduction of more than  that for a developing country Member, that 
developing country Member shall have the flexibility to apply lesser reductions applied in a 
proportionate manner across the bands, to keep within such an average level. 
52. Small and vulnerable economies
3 will, in respect of each tie r specified above for developing 
countries, be entitled to moderate th e two-thirds cut by a further [10] ad valorem  points in each band. 
Should strict application of this formula result in an  overall average cut higher than [24] per cent, the 
Member concerned would be entitled to  apply lesser reductions at its di scretion, to keep within such 
an average level. 
53. Where a small and vulnerable Member (or a Me mber in the supplementary list specified in 
footnote 3 below) has ceiling bindings or homogeneous low bindings and application of the approach 
specified above would still place an unsustainable adjustment burden upon it, the Member concerned shall not be required to make a tiered reduction but would be subject only to the overall average 
reduction. 
B. S
ENSITIVE PRODUCTS  
1. Designation 
54. Each developed country Member shall have the right to designate up to [4][6] per cent of 
dutiable tariff lines as "Sensitive Products".  Wher e such Members have more than 30 per cent of their 
tariff lines in the top band, there is an option to have the number of Sensitive Products increased to [6][8] per cent, subject also to the conditions outlined in paragraph 59 below. Where application of 
this methodology would impose a disproportionate constraint in absolute number of tariff lines 
because that Member has its import duty commitments at 6-digits level, it may have the equivalent to 
Members at [6][8] per cent. 
55. Developing country Members shall have the right to designate up to one-third more of tariff 
lines as "Sensitive Products". 
2. Treatment - Tariff Cut 
56. Developed Members may deviate from the othe rwise applicable reduction in bound duties on 
products designated as Sensitive.  This deviatio n may be at a minimum of one third and a maximum 
of two thirds of the reduction that would otherw ise have been required by the tiered formula. 
57. Developing country Members shall have the right  to deviate by a minimum of one third and a 
maximum of two thirds of the reduction that wo uld otherwise have been required by the tiered 
formula applicable to developing countries.   
                                                     
 
3 The Members concerned are those that meet the criteria set out in paragraph 134 and are listed in 
Annex C.  As is made clear in the Framework, SVEs are not meant to create any new category of Members. Bearing that principle in mind, the following Members could also be deemed to be eligible for this treatment, 
should they choose to avail themselves of it, despite not being Members of the SVE group of countries per se  
given that this treatment could be deemed to be broadly comparably appropriate: Côte d'Ivoire and Nigeria (plus other Members that can provide data that show that they meet the criteria in paragraph 137). These latter 
Members would also have freedom to opt for varying bands for the tiers. 
  TN/AG/W/4 
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  3. Tariff Quota Expansion 
58. Tariff quotas arrived at through the use of the Sensitive Products provision pursuant to 
paragraphs 54 and 55 above and 59 to 64 below shall, for developed Members, result in new access 
opportunities equivalent to no less than [4][6] per ce nt of domestic consumpti on expressed in terms of 
physical units where the maximum deviation of two thirds is used. Where th e minimum deviation of 
one third is used, the new access opportunities shall be no less than [3] [5] per cent. 
59. Where a Member is entitled to, and chooses to exercise its entitlement to have a higher 
number of Sensitive Products pursuant to paragrap h 54 above, the relevant amounts specified in the 
preceding sentence will be maintain ed for all products, as a minimum, but the Member will have an 
obligation to ensure that a higher overall average of [4.5] [6.5] per cent is also  achieved.  In addition, 
should there be any Member which, after applicat ion of its commitments for reductions in bound 
duties, would still retain more than 5 per cent of its dutiable tariff lines in excess of 100 per cent ad 
valorem , it will also need to meet this additional latter requirement increased by a further [  ] per cent. 
60. Where, current bound duties are greater than 50 pe r cent (that is in the tariff bands in 49(c) or 
49(d) above) and MFN imports are already occurring at an amount in excess of 50 per cent of those entering under existing tariff quotas (and those tariff quotas are already providing for at least 2 per 
cent of domestic consumption) and the minimum de viation is used, the tariff quota expansion 
obligation may be moderated (reduced) by one quarter. For the other two bands, where such 
conditions apply, it may be moderated (reduced) by one fifth. 
61. Where imports under an existing bound tariff quota already represent 10 per cent or more of 
domestic consumption and the minimum deviation is used, the expansion in the tariff quota under 
paragraph 58 above need not be more than [2.5][3.5]  per cent.  Where those imports are at 20 per cent 
or more of domestic consumption, the expansion need not be more than [2] [3] per cent. 
62. Where, in the application of its commitments fo r reductions in bound duties, a Member finds 
that imports over the reduced MFN tariff have increa sed by an amount that is  more than [two][three] 
times the increase in the new tariff quota commitment  expressed in terms of percentage of domestic 
consumption, the new tariff quota commitment may be  reduced by up to one half. This provision will 
not, however, be applicable in any case where ther e is any other WTO consistent measure raising or 
supplementing the MFN tariff, in place. 
63. For developing country Members, the tariff quotas shall be two thirds of the amount for 
developed. For developing country Members, domestic consumption shall not include self-
consumption of subsistence production. 
64. Expansion of the tariff quota for a Sensitive Product shall be on a most-favoured-nation basis 
only. 
C. O
THER ISSUES  
1. Tariff escalation 
65. The fact is that we are not in a zone where we can yet define the centra l issues in a way that 
facilitates imminent decision.  We have made only  small progress on this, despite, latterly, some 
genuine engagement.  Clearly we cannot close this negotiation nor have a final text without bringing 
this issue to resolution also.  But there is nothing to be gained by pretending we have a close basis for 
agreement when we do not.  This issue requires even more intensive work than some other areas 
before we can revise this draft text.  We have to do  that, and precisely in order to emphasise that need, TN/AG/W/4 
Page 14  
 
  I am not going to invent something artificial to act as nothing more than a fig leaf.  At most there are 
certain points I would emphasise. 
66. First, I stand by the tenor of my remarks in th e Challenges paper.  The subsequent informal 
discussions seemed to me to reinforce that impression. 
67. Second, the mandate cannot be ignored or brus hed under the carpet, so there is no escaping 
the fact that we need to address the issue and achieve an outcome. 
68. Third, the issue is of interest to a number of Members, but more particul arly so for developing 
country Members and those of them that have strong  interests in commodities and tropical products – 
which of course have particular mandates of their own, serving only to reinforce the necessity of 
dealing with this. 
69. Fourth, we do have particular proposals on the table, and we need to deal with these in a 
constructive spirit.  My sense is that such proposal s are too far-reaching in their present form and will 
not command agreement in their entirety.  They cannot in that sense constitute a "basis" in any formal 
sense for our work, but our work should use them (non -exclusively) in the near term to help focus the 
discussion. 
70. Fifth, we also have to be realistic about this in the overall context.  By this I do not mean that 
we should neglect the issue, but that we need to have a practical and realistic recognition of what is 
the clear political reality that the primary driver of  tariff liberalisation will be the tiered formula, and 
there is no prospect of this specific elem ent being seen to become some kind of de facto  dominant 
modality that would "trump" the main formula in any general sense.  It will have a part to play in 
supplementing the formula in certain situations, but it will be a part. 
71. Sixth, I would suggest we keep a focus on cases of this which are what I would say 
demonstrable and quantifiable.  That way we may be less likely to get lost in abstract chains of value 
added which may be more theoretical than real but, be that as it may, will be impracticable to deal 
with through the relatively rough and ready instrume nts of tariff-cutting that we have to hand. 
72. Seventh, we should perhaps think about some kind of de facto  threshold benchmark for 
priority attention.  In other words find a proxy meas ure for cases that are more egregious rather than 
go looking for each and every case – actual or potential – that might exist mathematically.  If that was the case we could orientate ourselves by some kind of minimum spread concept e.g. measured by how 
wide the spread is in ad valorem  terms.   
2. Commodities 
73. In the event that adverse effects of tariff escal ation were not to be eliminated via the tiered 
formula for reductions in bound duties and such speci fic measures on tariff escalation as are provided 
for, Members shall engage with commodity-dep endent producing country Members to ensure 
satisfactory solutions. 
74. Consistent with this, the following approach shall be applicable: 
(a) commodity-dependent developing countries , individually or as a group, shall 
identify and present products  of interest to them for purposes of addressing tariff 
escalation to be adopted as part of the m odalities.  In doing so, they will indicate the 
match of products on which tariff escalation should be addressed;    TN/AG/W/4 
 Page 15 
 
 
  (b) developed countries and developing countr ies in a position to do so will undertake 
tariff escalation reductions  in the identified products; 
(c) at the end of the implementation period, the difference between the identified 
primary and processed products shall not exceed [x] percentage points.  For this 
purpose, all non- ad valorem  duties on the products identified by developing 
countries shall be bound in ad valorem terms.  
75. Provision shall be made also for suitable pr ocedures for negotiations on the elimination of 
non-tariff measures affecting trade in commodities. 
76. Provision will be made to ensure the possibility that Members may take joint action through 
adoption of suitable measures, including through adoption of intergovernmental commodity 
agreements, for stabilization of prices for exports of agricultural commodities at levels that are stable, 
equitable and remunerative. 
77. Action for negotiations and adoption of in tergovernmental commodity agreements in 
pursuance of the provisions of the paragraph above may be taken either jointly by producing and 
consuming countries or by commodity-dependent producing countries only. 
78. Such intergovernmental commodity agreements may be negotiated and adopted by the 
countries themselves, or adopted after negotiations  undertaken under the auspices of the WTO, 
UNCTAD or international commodity organizations. 
79. Intergovernmental commodity agreements may be  negotiated and adopted on an international 
or regional basis. 
80. Such agreements may provide for participation of association of producers. 
81. The general exceptions provisions of Article XX(h) shall also apply to intergovernmental 
commodity agreements of which only producing  countries of the concerned commodities are 
Members. 
82. Technical assistance shall be provided for, inter alia , the improvement of world markets for 
commodities and adoption and implementation of  intergovernmental commodity agreements. 
83. Financial resources required by the internati onal trade and other organizations for providing 
technical assistance in accordance with the provisions of paragraphs 81 and 82 above shall be 
monitored through the mechanism established in WTO for administering Aid for Trade. 
3. Tariff simplification 
84. All bound duties on agricultural products shall be expressed as simple ad valorem  [or specific 
and compound] duties no later than the end of the implementation period . In any case, no import duty 
may be bound in a form more complex than the current binding.  Highly complex forms of bound 
duties, such as complex matrix tariffs, shall be el iminated or at least simplified in a transparent and 
verifiable way.  In all cases of simplification, Members shall supply supporting data with their draft 
Schedules (or in the Committee on Agriculture in an y cases where this occurs after commencement of 
implementation) that demonstrates that the simplif ied bound duty is representative of the original 
more complex duty. TN/AG/W/4 
Page 16  
 
  4. Tariff quotas 
(a) Bound in-quota duties 
85. This remains to be precisely negotiated.  I would propose the following by way of orientation. 
86. In-quota duty rate s should be reduced to a level which ensures that trade will be capable of 
flowing effectively over them.  At the very minimum, in no case should any variability in the rate of 
reductions in MFN duty and the rate of reduction in th e in-quota duty lead to an effective increase in 
the relative margin between the two to the detriment of in-quota access.  If this principle is reasonable, 
a reasonable safeguard against this would be that re ductions of in-quota duties would in no case be 
less than the rate of cut in the re spective band.  It is clear, however, that a number of Members will 
see the negotiations as leading to an outcome in this area that marks an improvement in terms and 
conditions of access over and above maintaining exis ting relativities – albeit at a lower overall level. 
If so, this is a matter of determining where, along a spectrum from this point to total elimination of all 
or some in-quota duties, a nego tiated outcome will be struck.  
87. Reductions in in-quota duty rates would not count for purposes of calculating average cuts 
either within the bands or over all averages (if applicable).  
(b) Tariff quota administration 
88. The administration of bound tariff quotas shall be subject to disciplines to be developed 
taking into account the proposals on the table.  Th is is an important issue and must be part of the 
modalities.  It will require further intensive work to arrive at a draft. 
5. Special Agricultural Safeguard 
Either: 
89. Article 5 of the Agreement on Agriculture sha ll expire for developed country Members at the 
end of the implementation period.  To this end, Members shall reduce the number of tariff lines 
eligible for the SSG under the Urugu ay Round Agreement on Agriculture by no less than 50 per cent 
at the start of the implementation period and by subsequent equal annual instalments. 
Or: 90. Developed country Members will be entitled to re tain an SSG for tariff lines equivalent in 
number to their entitlement under the Sensitive Product provision.  [However, the terms and 
conditions of such an SSG will be  streamlined to ensure that:  
(a) in respect of the quantity trigger, it would be available where imports have 
increased by more than 25 per cent compared  to the previous three-year average and 
the remedy would be a maximum of an add itional one third of the applied duty; and  
(b) in respect of the price trigger, the restri ctiveness of the present provisions under 
Article 5 would be effectively halved by modifying the specific amounts currently 
provided in paragraphs (b) through (e ) of paragraph 5 of Article 5.]    TN/AG/W/4 
 Page 17 
 
 
  D. SPECIAL AND DIFFERENTIAL TREATMENT  
1. Special Products 
(a) Selection 
91. This is clearly a fundamental element of the mo dalities, but it is simply not yet developed 
well enough to go to precise text without that being either meaningless through the number of square brackets that would have to be inserted, or being an artificial construct with no underlying consensus 
in the Membership.  I see no point in trying either at this point.  That said there has recently been a 
much more constructive sense of practical engagement and we are well beyond the utterly entrenched 
positions of a year ago.  I am therefore suggesti ng some possible orientation below that might help 
intensify our work in September. 
92. Each developing country Member shall have the right to self-designate an appropriate number 
of tariff lines as "Special Products".  Designation shall be guided by the indicators (to be finalised) 
which are based on the criteria of food security , livelihood security and rural development for 
individual developing country Members.  A ll commitments would be on a MFN basis. 
93. Beyond that, I would suggest the following by way of orientation to facilitate an intensive 
drafting process in September. 
94. First, that we work off the G-33 indicators list (JOB(07)/35).  This is not to make the 
assumption that these are, in their present form, formally "agreed" as a basis.  But we need to work off 
something as a text and this makes the most sense in practical terms. 
95. Second, that we try to quantify operationally the concepts that are present in that document 
(e.g. terms such as "significant proporti on", "relatively low proportion", etc.). 
96. Third, that we agree that the indicators have to be transparent (which means accessible), 
objective and, thereby, open to verification. These would utilise data that is either internationally 
collected and diffused or is available at national level in a form that is also accessible to other 
Members. 
97. Fourth, we discard any view that we will end up  with a rigidly applic able, one-size-fits-all 
approach as regards selection, given the inherent country-specific nature of a Special Product provision under the Framework and the Hong Kong Agreement.  One option is, of course, that we 
have no a priori  number whatsoever and accept whatever derives from the indicators when agreed. 
Another option is to adopt a more tailored approach, along something like the following broad lines: 
(a) that, whatever the indicators provide by guidance, there would in any case be an 
assurance that no less than a certain minimum percentage of Special Products 
would be made available. That number wo uld in fact be higher than the Sensitive 
Products allowance; 
(b) specific additional flexibilities would be available for RAMs; and 
(c) for those developing country Members including SVEs and others referred to in 
footnote 3 above, their threshold could be set at a proportionately higher level. 
There would be no ceiling for those Members above that threshold. TN/AG/W/4 
Page 18  
 
  98. Fifth, as regards treatment, you know my vi ews as expressed in the Challenges paper.  A 
number of you have made clear to me that you disa gree with that view.  But I also know that you as 
Members have yet to reach any other agreement on this.
4 
2. Special Safeguard Mechanism 
99. This is clearly a fundamental element of the mo dalities also, but it is simply not yet developed 
well enough to go to precise text without that being either meaningless through the number of square brackets that would have to be inserted, or an artif icial construct with no underlying consensus in the 
Membership.  I see no point in trying either at this  point.  That said, there has been recently a much 
more constructive sense of practical engagement  and we are well beyond the utterly entrenched 
positions of a year ago.  I am therefore suggesting some possible orientation below – following on the 
constructive discussion we had pursuant to the Challenges paper – that might help intensify our work 
in September. 
100. There will be two distinct triggers: price and qu antity.  The Hong Kong declaration was clear 
about this. 
101. The Special Safeguard Mechanism is there to respond to the needs of farmers in developing 
countries, that is, rural development, food security  and livelihood security needs.  It is not just a 
measure applicable to imports per se .  This strongly implies that the fundamental direction of this is 
for domestically-produced products and substitutes of these products. 
102. SSM is not about providing protection to pref erential suppliers.  For that reason, if 
preferential trade is to be counted in when calculatin g the triggers, then the remedy must apply also to 
preferential trade.  If preferential trade is not to be  subject to remedy, it should not be counted in when 
calculating the triggers.  In practical terms it would seem unlikely that preferential trading 
arrangements would permit such remedy.  Therefore, the working assumption could be that no preferential trade would be counted in the trigger. 
103. It also seems to be generally accepted that the price- and quantity-based remedies would not 
be applicable at the same time to the same product.     
104. Whatever the detailed triggers end up being, ther e is clear agreement that this is not to be set 
in such a way as would permit this mechanism to be literally triggered hundreds or scores of times by 
developing country Members.  That is not what an y Members intend. This mechanism is meant to be 
used as its name implies: in "special" situations. 
105. The triggers and the remedy should not give ri se to situations where "normal" trade is 
occurring.  In other words it should not be applied in a way that is disruptive to such trade where fluctuations upwards and downwards are the norm : it is to address more unusual or excessive 
movements. 
106. The triggers and the remedy are meant to be  usable by the developing country Members 
concerned: for that reason alone the mechanism must not be unduly complicated or burdensome for 
such Members to use. 
                                                     
 
4 In the event that this remains an intractable issue after further intensive work, Members may wish to 
reflect further on the merits of the approach referred to in footnote 2 above which, if applied, would obviate the 
need for this element in anything approaching its current complexity.  TN/AG/W/4 
 Page 19 
 
 
  107. Drawing on these elements it might be worth considering some areas where we could end up, 
knowing that there are varying positions and that to get agreement there will simply need to be 
reasonable compromise. 
108. On the quantity trigger, if we are to deal with  agreement that we not disrupt "normal" trade or 
make the mechanism over-sensitive to relatively mi nor movements, you need  a reasonable benchmark 
against which to judge that.  Previous 3 or 5 years?  If the trigger is sitting too close to that historical 
level, virtually any increase will trigger it, but obviou sly it needs to be able to apply if levels fluctuate 
too rapidly or excessively.  Somewhere around 110 per cent? 
109. On price, there are parallel considerations. Monthly movement could set the trigger off very 
easily. Too long a period of years will potentially mask significant movement.  Maybe somewhere 
around 12-18 months would be worth looking at.  Should the remedy be the full difference between 
the average benchmark price and the actual import price (whatever these are negotiated to be)? 
110. It would also seem anomalous if the practical effect of applying the SSM was, through its 
application, to actually reduce the base level of trade for subsequent years so that future triggering 
actually becomes more regressive.  This would tend to suggest that the remedy would be applicable to the end of the calendar, financial, marketing or what ever 12 month period is applicable for the product 
in question. 
111. It does not seem likely that we will easily reach  agreement that this measure can be applied in 
such a way that existing Uruguay Round bound rates can also be exceeded (except, perhaps, in the 
case of least-developed Member countries), as this would have the effect of going backwards.  The 
most that might be feasible here would be some very restricted and tailored circumstances targeted 
perhaps to a more severe level of fluctuation than the norm and focussed on those least-developed 
countries.  
3. Fullest liberalization of trade in tr opical and diversification products 
112. The fact is that we are not in a zone where we can yet define the centra l issues in a way that 
facilitates imminent decision.  We ar e still too far apart on this issue.  We have made some progress.  
We have had, latterly, some genuine engagement.  Clearly we cannot close this negotiation nor have a 
final text without bringing this issue to resolution also.  But there is nothing to be gained by 
pretending we have a close basis for agreement when  we do not.  This issue requires even more 
intensive work than some other areas  before we can revise this draft text.  We have to do that, and 
precisely in order to emphasise that need, I am no t going to invent something artificial to act as 
nothing more than a fig leaf. At most there ar e certain working hypotheses that I can propose. 
113. First, as regards the "list", that list will be Uruguay Round list "plus".  This is not just a 
consequence of whatever view one takes as to the stat us of the word "indicative".  It is a negotiating 
reality that there is a body of the Membership which is arguing for a wider embrace than just the 
Uruguay Round indicative list.  That will have to be recognised and dealt with, and, as with any 
negotiation, concession and compromise will be needed.  That said , nobody ever gets everything that 
they seek in a negotiation either.  So any ultimate lis t will have to be "less" than the Cairns Group list 
in its present form. 
114. Second, there is no obligation for any Member to "separate out" "diversification" products.  
But some Members did indicate their preparedness to  identify these, and I believe it would indeed be 
a helpful step if they were ab le to carry through on that.  
115. Third, the words "fullest liberalisation" must be given meaning.  Any liberalisation that is 
"less" than a maximum cut in bound duties is not going to be, by definition, "fullest".  What will that TN/AG/W/4 
Page 20  
 
  maximum cut be?  As you have seen elsewhere in this document, the rate I have seen as the range to 
continue to negotiate over for the top band cut for de veloped countries is [66][73] per cent.  It seems 
unavoidable, therefore, that once that  is established, we are looking gene rally at tariff cuts for tropical 
and diversification products that may be  more, but are no less, than that. 
116. Fourth, the Secretariat has estimated the way in which items on the indicative Uruguay Round 
tropical products list that were not already duty-free, were moved to duty-free in that Round (see 
Attachment 1 at the end of this document).  One option is that we should, at a bare minimum, set 
ourselves a target of improving by an appropriate mul tiple the outcome in this Round.  This note also 
indicates the relative distribution of remaining du ties – a very large proportion of which are under 
10 per cent ad valorem . 
117. Fifth, we have to be mindful that in this area we need to reconcile what we do with, most 
notably, the terms of the mandates on tariff escalation, commodities and on preference erosion. 
4. Preference erosion 
118. We are still a bit too far apart on this issue to be able to properly frame the essentials for 
imminent decision.  We have made some good pr ogress, and some aspects are I believe, somewhat 
clearer than others.  We have had, latterly, some  genuine engagement.  Clearly we cannot close this 
negotiation nor have a final text without bringing this  issue to resolution also.  But there is nothing to 
be gained by pretending we have a close basis for agreement when we do not.  This issue is among 
those that require even more intensive work than some  other areas before we can revise this draft text.  
We have to do that, and precisely in order to emph asise that need, I am not going to invent something 
artificial to act as nothing more than a fig leaf.  At most there are a few provisional proposals and 
working hypotheses that I would suggest. 
119. First, there is a certain range of what can be ca lled "big ticket" items that are, for agriculture, 
at the heart of the issue.  There is no mystery about what those products are.  For the moment I 
consider that, as regards, sugar, the comments in the Challenges paper remain valid.  Bananas are 
obviously the other major product at issue.  While there are doubtless other items, they are not in the 
same league when it comes to significance. 
120. Second, we need to keep a sense of perspective.   Preference erosion will occur as a result of 
this negotiation.  What is important is focussing not on the pure mathematical inevitability of that, but 
on the precise items where there is a genuine impact. 
121. Third, we should orientate ourselves by sensible proxies for arriving at judgements on that.  I 
have suggested certain possibilities in the Challenges  paper.  I am not wedded to them, but I suspect 
we need something broadly along those kinds of lines. 
122. Fourth, non-trade based solutions are a given, but they will not be the exclusive response to 
genuine cases where preference erosion is at issue.  Inevitably, to some degree, there will be some 
trade-based measures involved and this reflects the fact that the cases requiring such measures are not 
likely to be pervasive by any means.  In such cases  some lengthening of the implementation period is 
likely to be the practical outcome. 
123. Fifth, as an aid to advancing this work I am attaching some analytical work done by the 
Secretariat in Attachment 2 at the end of this document.  The methodology used is without prejudice 
to anyone's substantive position on the issue, but I think it could help us focus in more clearly on 
where the practical issues are most likely to lie.   TN/AG/W/4 
 Page 21 
 
 
  E. RECENTLY ACCEDED MEMBERS  
124. Saudi Arabia, the Former Yugoslav Republic of Macedonia and Vietnam, as very recently-
acceded Members will not be obliged to make any new commitments under this Agreement.  
125. For all other RAMs, to the extent that, in implementing commitments undertaken in acceding 
to the WTO there would be actual overlap with  commitments to be otherwise undertaken in 
association with these modalities, the start of implementation of commitments undertaken in association with these modalities shall begin 1 year  after the end of impl ementation of accession 
commitment. 
126. The implementation period for recently-acceded Members may be prolonged by up to [2] 
years after the end of the implementation period for other Members. 
127. Recently-acceded Members will be entitled to moderate the cuts they would otherwise have 
been required to make under the tiered formula by up to [5] ad valorem  points in each band, and 
bound duties below 10 per cent in a developing recently-acceded Member shall be exempt from 
reduction.  
128. Small low-income, recently-acc eded Members with economies in transition shall not be 
required to undertake reductions in bound duties. 
129. More specific provisions can be found in the relevant sections of this document. 
F. L
EAST -DEVELOPED COUNTRIES  
130. Least-developed country Members are not required to undertake reductions in bound duties.  
131. Developed country Members shall, and developi ng country Members declaring themselves in 
a position to do so should5: 
(a) Provide duty-free and quota-free market acce ss on a lasting basis, for all products 
originating from all LDCs by 2008 or no later than the start of the implementation 
period in a manner that ensures stability, security and predictability. 
(b) Members facing difficulties at this time to provide market access as set out above 
shall provide duty-free and quota-free market access for at least 97 per cent of 
products originating from LDCs, defined at the tariff line level, by 2008 or no later 
than the start of the implementation period.   In addition, these Members shall take 
steps to progressively achieve compliance with the obligations set out above, taking 
into account the impact on other developi ng country Members at similar levels of 
development, and, as appropriate, by in crementally building on the initial list of 
covered products. 
(c) Developing country Members shall be perm itted to phase in their commitments and 
shall enjoy appropriate flexibility in coverage. 
(d) Ensure that preferential rules of origin  applicable to imports from LDCs are 
transparent and simple, and contribute to facilitating market access. 
                                                      
5 The text of this paragraph is the "Decision on Measures in Favour of Least-Developed Countries" in 
Annex F of the Hong Kong Ministerial Declaration (WT/MIN(05)/DEC). TN/AG/W/4 
Page 22  
 
  G. C
OTTON MARKET ACCESS  
132. Developed country Members and developing coun try Members in a position to do so shall 
give duty- and quota-free access for cotton exports  from least-developed country Members from the 
commencement of the implementation period. 
133. Developing country Members that are not in a position to give duty- and quota-free access for 
cotton exports from least-developed country Members from the commencement of the implementation period shall undertake to look positively at possibilities for increased import 
opportunities for cotton from least-developed country Members. 
H. S
MALL , VULNERABLE ECONOMIES  
134. For the purposes of this Agreement, this term applies to Members with economies that, in the 
period 1999 to 2004, had an average share of (a) world merchandise trade of no more than 0.16 per cent or less, and (b) world trade in non-agricultural products of no more than 0.1 per cent and 
(c) world trade in agricultural products of no more than 0.4 per cent.  
135. Developed country Members and developing coun try Members in a position to do so shall 
provide enhanced improvements in market access fo r products of export interest to Members with 
small, vulnerable economies. 
136. More specific provisions are to be found in relevant sections of this document.  TN/AG/W/4 
 Page 23 
 
 
  III. EXPORT COMPETITION 
A. GENERAL PROVISIONS ON EXPORT COMPETITION  
137. Nothing in the modalities on export competition can be construed to give any Member the 
right to provide, directly or indirectly, support to exports of agricultural products in excess of the 
commitments set out in Members' Schedules or in  conflict with the terms of Article 8 of the 
Agreement on Agriculture.  Furthermore, nothing can be construed to imply any change to the obligations and rights under Article 10.1 or to diminish in any way existing obligations under other 
provisions of the Agreement on Agriculture or other WTO Agreements. 
138. The following provisions will give effect to the detailed modalities ensuring parallel 
elimination of all forms of export subsidies and di sciplines on all export measures with equivalent 
effect pursuant to the July 2004 Agreed Framew ork and the Hong Kong Ministerial Declaration. 
B. E
XPORT SUBSIDY COMMITMENTS  
139. Developed country Members shall eliminate their other export subsidies by the end of 2013.  
This will be on the basis of budgetary outlay commitments being reduced by 50 per cent by end 2010 
with the remaining budgetary outlay commitments being eliminated in equal annual instalments so 
that all forms of export subsidies are eliminated by the end of 2013. 
140. Quantity commitment levels will [be reduced in equal annual instalments from the applicable 
Uruguay Round commitment levels][apply as a standstill from the commencement until the end of the 
implementation period at the lower of either the then current actual applied quantity levels or the 
Uruguay bound levels reduced by 20 per cent].  
141. Developing country Members shall eliminate thei r export subsidies by [ ] in equal annual 
instalments. 
142. In accordance with the Hong Kong Ministerial Declaration, developing country Members will 
continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture for five years 
after the end-date for elimination of  all forms of export subsidies. 
C. EXPORT CREDITS , EXPORT CREDIT GUARANTEES OR INSURANCE PROGRAMMES  
143. Export credit, export credit guarantees or insu rance programmes shall comply with the 
detailed disciplines set out in Annex D. 
144. The disciplines set out in Annex D, shall apply from the first day of the implementation 
period of the Doha Round for developed country Members and the maximum repayment term of 180 
days shall be phased in according to the following schedule [ ]. 
D. AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES  
145. Agricultural exporting state trading enterprises shall comply with the detailed disciplines set 
out in Annex E.  
E. INTERNATIONAL FOOD AID 
146. International food aid shall comply with th e detailed disciplines set out in Annex F. TN/AG/W/4 
Page 24  
 
  F. C
OTTON  
147. All forms of export subsidies fo r cotton shall be eliminated by developed countries by the 
start of the implementation period and by developing countries by:  .  
148. The extent to which disciplines and commitment s for the parallel elimination of all forms of 
export subsidies and disciplines on  all export measures with equivalent effect for export credits, 
agricultural exporting state trading enterprises and international food aid, apply to cotton and their 
scheduling shall be specified in the lists of commitments. 
IV. MONITORING AND SURVEILLANCE 
149. This is a vital area.  It has been subject to two very recent major proposals: by the Cairns 
Group and the G-20 (JOB(07)/88 and JOB(07)/97,  respectively) and these have not yet been 
discussed. We will intensively address these very re cent proposals with a view to finalising a text in 
this area in September. 
V. OTHER ISSUES 
A. [SECTORAL INITIATIVES ] 
B. [DIFFERENTIAL EXPORT TAXES ] 
C. [GIS] 
D. EXPORT PROHIBITIONS AND RESTRICTIONS  
150. In order to strengthen the existing disciplines on export prohibitions and restrictions, 
Article 12 of the Agreement on Agriculture will be modified to include the following elements. 
151. Existing prohibitions or restrictions in Members'  territories shall be notified to the Committee 
on Agriculture within 90 days of the coming into force of these provisions. 
152. As provided in paragraph 7 of Article 18 of the Agreement on Agriculture, any Member may 
bring to the attention of the Committee on Agricultu re such measures which it considers ought to have 
been notified by another Member. 
153. [As of day one of the implementa tion period, a term of one year shall be established for the 
elimination of those export prohibitions or restrictions in foodstuffs and feeds. 
154. The above is proposed notwithstanding that, any Member instituting export prohibitions or 
restrictions and the affected importing Member may agree to set a term exceeding one year, as long as 
the term agreed on is not in excess of 18 m onths.  Notice shall be given to the Committee on 
Agriculture of the agreement reached in this respect.] 
155. A Member instituting those measures  shall give notice of the causes that justify its keeping it. 
156. The Committee on Agriculture shall provide fo r annual notification update and surveillance 
of these obligations.  TN/AG/W/4 
 Page 25 
 
 
  ANNEX A 
 
ANNEX 2 OF THE AGREEMENT ON AGRICULTURE SHALL BE AMENDED AS FOLLOWS : 
Government Service Programmes 
General services (paragraph 2) 
Add the following subparagraph (h) to the existing paragraph 2: 
(h) policies and services related to fa rmer settlement, land reform programmes, 
rural development and rural livelihood security in developing country Members, 
such as provision of infrastructura l services, land rehabilitation, soil 
conservation and resource management, drought management and flood 
control, rural employment programmes, nutritional security, issuance of 
property titles and settlement programmes, to promote rural development and poverty alleviation. 
Public stockholding for food security purposes 
Modify the existing footnote 5 as follows: 
  For the purposes of paragraph 3 of this Annex, governmental stockholding 
programmes for food security purposes in developing countries whose operation is 
transparent and conducted in accordance with officially published objective criteria or 
guidelines shall be considered to be in conformity with the provisions of this 
paragraph, including programmes under whic h stocks of foodstuffs for food security 
purposes are acquired and released at administ ered prices, provided that the difference 
between the acquisition price and the external  reference price is accounted for in the 
AMS  The difference between the acquisition price and the external reference 
price may be covered by the de minimis  percentage of the developing country 
Member concerned pursuant to Article 6.4 of this Agreement.    
Decoupled income support (paragraph 6) Modify the existing subparagraph (a) as follows: 
(a) Eligibility for such payments  shall be determined by clea rly-defined criteria such as 
income, status as a producer or landowner, factor use or production level in a defined , 
and
 fixed and unchanging historical  base period  which shall be notified to the 
Committee on Agriculture.  An exceptional update is not precluded, but any 
such update would only be permissible where (i) the updated base period is itself a significant number of years in the past and (ii) the result of the updated base 
period is either neutral with respect to support to producers or reduces that 
support.  Developing country Members who have not previously made use of this 
type of payment, and thus have not notified, shall not be precluded from 
establishing an appropriate base period
7, which shall be fixed and unchanging 
and shall be notified. 
  7  Developing country Members may not have the capacity to fully assess the 
impact of innovation in their agricultural  policies. Accordingly, the base period 
of a time-limited experimental or pilot programme may not be taken as the fixed 
and unchanging base period for the purposes of this paragraph.  TN/AG/W/4 
Page 26  
 
   
Payments (made either directly or by way of go vernment financial participation in crop insurance 
schemes) for relief from natural disasters (paragraph 8) 
Modify the existing subparagraphs (a), (b) and (d) as follows: 
(a) Eligibility for such payments shall arise : 
(i) In the case of direct payments related to disasters  only following a formal 
recognition by government authorities that a natural or like disaster (including disease 
outbreaks, pest infestations, nuclear acciden ts, and war on the territory of the Member 
concerned) has occurred or is occurring;  and shall be determined by a production 
loss
8 which exceeds 30 per cent of the average of production in the preceding three 
five-year period or a three-year average based on the preceding five-year period, 
excluding the highest and the lowest entry.   I n  t h e  c a s e  o f  d e v e l o p i n g  c o u n t r y  
Members, payments for relief from natural disasters may be provided to 
producers when the production loss is le ss than 30 per cent of the average of 
production in the preceding five-year period or a three-year average based on 
the preceding five-year period.  
(ii) In the case of government financia l participation in crop or production 
insurance schemes, eligibility for such payments shall be determined by a 
production loss which exceeds 30 per cent of the average production in a period 
demonstrated to be actuarially appropriate.   In the case of a developing country 
Member's government's financial participation in crop or production insurance 
schemes, eligibility for payments may be provided to producers when the 
production loss is less than 30 per cent of the average of production in the 
preceding five-year period or a three-year average based on the preceding five-
year period. 
(iii) In the case of the destruction of anim als or crops to control or prevent pests, 
diseases, disease-carrying organisms or  disease-causing organisms named in 
national legislation or international standards, the production loss may be less 
than 30 per cent of the average of production referred to in paragraph 8(a)(i) or 
8(a)(ii), as applicable. 
(b) Payments made under this paragraph  following a disaster shall be applied only in 
respect of losses of income, crops, livestock (including payments in connection with 
the veterinary treatment of animals), la nd or other production factors due to the 
natural disaster or destruction of animals or crops  in question. 
(d) Payments made under this paragraph  shall not exceed the level required to prevent 
or alleviate further loss as defined in criterion (b) above. 
  8  Developing country Members may determine the production loss of the 
affected sector(s) or region(s) on an aggregate basis.  
  TN/AG/W/4 
 Page 27 
 
 
  Structural adjustment assistance provided through investment aids (paragraph 11) 
Modify the existing subparagraph (b) as follows: 
(b) The amount of such payments in any given year shall not be related to, or based on, 
the type or volume of production (including livestock units) undertaken by the 
producer in any year after the base period  other than as provided for under criterion 
(e) below.  The base period shall be fixed and unchanging and shall be notified to 
the Committee on Agriculture.  An exceptional update is not precluded, but any such update would only be permissible where (i) the updated base period is itself 
a significant number of years in the past and (ii) the result of the updated base 
period is either neutral with respect to support to producers or reduces that 
support.  Developing country Members who have not previously made use of this 
type of payment, and thus have not notified, shall not be precluded from 
establishing an appropriate base period
9, which shall be fixed and unchanging 
and shall be notified. 
 9  Developing country Members may not ha ve the capacity to fully assess the 
impact of innovation in their agricultural policies. Accordingly, the base period of a time-limited experimental or pilot programme may not be taken as the fixed 
and unchanging base period for the purposes of this paragraph.  
Payments under regional assistance programmes(paragraph 13) Modify the existing subparagraphs (a), (b) and (f) as follows: 
(a) Eligibility for such payments shall be limited to producers in disadvantaged regions.  
Each such region must be a clearly desi gnated contiguous geographical area with a 
definable economic and administrative iden tity, considered as disadvantaged on the 
basis of neutral and objective criteria clear ly spelt out in law or regulation and 
indicating that the region's difficultie s arise out of more than temporary 
circumstances.  Developing country Members shall be exempted from the 
condition that a disadvantaged region must be a contiguous geographical area. 
(b) The amount of such payments in any given year shall not be related to, or based on, 
the type or volume of production (including livestock units) undertaken by the 
producer in any year after the base period other than to reduce that production.  The 
base period shall be fixed and unchanging and shall be notified to the Committee 
on Agriculture.  An exceptional update is not precluded, but any such update 
would only be permissible where (i) the updated base period is itself a significant number of years in the past and (ii) the result of the updated base period is 
either neutral with respect to support to producers or reduces that support.  
Developing country Members who have not previously made use of this type of 
payment, and thus have not notified, shall not be precluded from establishing an 
appropriate base period
10, which shall be fixed and unchanging and shall be 
notified.  
 (f) The payments shall be limited to the extra costs or loss of income involved in 
undertaking agricultural production (including livestock production)  in the 
prescribed area. 
 10  Developing country Members may not have  the capacity to fully assess the 
impact of innovation in their agricultural policies. Accordingly, the base period TN/AG/W/4 
Page 28  
 
  of a time-limited experimental or pilot programme may not be taken as the fixed 
and unchanging base period for the purposes of this paragraph.   TN/AG/W/4 
 Page 29 
 
 
   
ANNEX B 
 
LIST OF INDICATORS FOR 
DESIGNATION OF SPECIAL PRODUCTS 
 
 
To be finalised TN/AG/W/4 
Page 30  
 
  ANNEX C 
SMALL, VULNERABLE ECONOMIES 
 
 
1. The data are based on the methodology that was used to prepare a previous Secretariat paper 
on shares of WTO Members in world non-agricultural trade, 1999-2004 (TN/MA/S/18).  Individual 
Members' data were extracted from the United Nati ons Comtrade database on 6 June 2007.  World 
export and import totals, excluding significant re-exports were taken from the Secretariat's 
International Trade Statistics Report 2006.  This time period has been updated to 2000-2005 and a cif-
fob adjustment has been applied to world export s by commodity group to derive respective world 
imports, but this does not change the overall results
1.  The country averages are calculated on the basis 
of the years for which data are available.  
2. A small, vulnerable economy is defined as one whose average share for the period 1999-2004 
(a) of world merchandise trade does not exceed 0.16 per cent and (b) of world NAMA trade does not 
exceed 0.10 per cent and (c) of world agri cultural trade does not exceed 0.40 per cent. 
3. The attached table does not include those Members that are defined as least-developed 
countries by the United Nations Economic and Soci al Council and those Members for which no data 
are available. 
 
 
 
 
 
 
 
   
  
 
 
 
 
 
 
   
 
 
______________________________ 
 
 1  Cif-fob factors were estimated based on the ratio of imports to exports for a matched group of 
reporters in Comtrade.  World imports by commodity group were derived by applying these cif-fob factors to 
the WTO's world exports by commodity group and aligning the resulting figures to the WTO's world total 
imports  Intra-trade of the 25 member States of the Eu ropean Communities was then subtracted from the totals.  
   TN/AG/W/4
 Page 31 
 Share of total merchandise trade 
(%) Share of world agriculture 
(AOA) trade (%)  Share of non-agriculture 
(NAMA) trade (%) 
WTO Member Total 
(exports + 
imports Exports Imports Total 
(exports + 
imports Exports Imports Total 
(exports + 
imports Exports Imports 
Worlda 100 100 100 100 100 100 100 100 100
Albania 0.019 0.008 0.029 0.050 0.008 0.087 0.017 0.008 0.026
Antigua and Barbuda 0.004 0.001 0.007 0.011 0.000 0.020 0.004 0.001 0.006
Armenia 0.015 0.010 0.019 0.040 0.018 0.060 0.013 0.010 0.016
Barbados 0.013 0.005 0.020 0.037 0.022 0.050 0.011 0.004 0.019
Belize 0.006 0.004 0.008 0.023 0.029 0.017 0.004 0.001 0.007
Bolivia 0.032 0.032 0.032 0.102 0.143 0.065 0.028 0.025 0.030
Botswana 0.057 0.061 0.053 0.075 0.030 0.116 0.056 0.065 0.048
Brunei Darussalam 0.050 0.078 0.025 0.029 0.000 0.056 0.053 0.086 0.023
Cameroon 0.036 0.038 0.035 0.112 0.140 0.087 0.032 0.032 0.032
Cuba 0.063 0.034 0.089 0.240 0.223 0.256 0.052 0.022 0.080
Dominica 0.002 0.001 0.002 0.007 0.005 0.008 0.001 0.001 0.002
Dominican Rep. 0.068 0.018 0.113 0.154 0.115 0.189 0.063 0.011 0.111
Ecuador 0.110 0.112 0.108 0.326 0.515 0.154 0.098 0.087 0.107
El Salvador 0.051 0.026 0.075 0.173 0.136 0.206 0.044 0.018 0.068
Fiji 0.014 0.010 0.018 0.047 0.055 0.040 0.012 0.007 0.017
FYR Macedonia 0.033 0.026 0.039 0.076 0.069 0.083 0.027 0.024 0.030
Gabon 0.031 0.046 0.017 0.026 0.004 0.046 0.032 0.051 0.015
Georgia 0.014 0.009 0.020 0.052 0.044 0.060 0.012 0.006 0.018
Ghana 0.057 0.044 0.067 0.221 0.302 0.144 0.047 0.027 0.063
Grenada 0.003 0.001 0.004 0.009 0.006 0.012 0.002 0.001 0.004
Guatemala 0.086 0.053 0.116 0.319 0.416 0.231 0.072 0.030 0.110
Guyana 0.010 0.009 0.010 0.037 0.052 0.024 0.008 0.007 0.010
Honduras 0.041 0.026 0.056 0.190 0.223 0.160 0.032 0.013 0.049
Jamaica 0.044 0.024 0.063 0.114 0.091 0.136 0.040 0.020 0.059
Jordan 0.079 0.052 0.104 0.198 0.120 0.269 0.071 0.049 0.092 
  TN/AG/W/4 
Page 32  Share of total merchandise trade 
(%) Share of world agriculture 
(AOA) trade (%)  Share of non-agriculture 
(NAMA) trade (%) 
WTO Member Total 
(exports + 
imports Exports Imports Total 
(exports + 
imports Exports Imports Total 
(exports + 
imports Exports Imports 
Kenya 0.052 0.037 0.065 0.215 0.314 0.126 0.041 0.019 0.062
Kyrgyzstan 0.011 0.010 0.012 0.029 0.032 0.026 0.010 0.009 0.011
Macao, China 0.049 0.049 0.048 0.055 0.013 0.093 0.050 0.053 0.046
Mauritius 0.037 0.032 0.041 0.096 0.102 0.090 0.034 0.028 0.038
Moldova 0.018 0.013 0.022 0.089 0.132 0.051 0.013 0.006 0.021
Mongolia 0.013 0.011 0.014 0.025 0.017 0.033 0.012 0.011 0.013
Namibia 0.030 0.030 0.029 0.072 0.073 0.070 0.028 0.028 0.027
Nicaragua 0.023 0.012 0.034 0.102 0.129 0.079 0.018 0.004 0.031
Panama 0.038 0.016 0.059 0.105 0.091 0.114 0.035 0.011 0.056
Papua New Guinea 0.032 0.042 0.023 0.070 0.086 0.056 0.030 0.040 0.022
Paraguay 0.032 0.022 0.042 0.173 0.280 0.077 0.023 0.005 0.040
Saint Kitts and Nevis 0.002 0.001 0.003 0.006 0.002 0.009 0.002 0.001 0.003
Saint Lucia 0.004 0.001 0.006 0.016 0.009 0.022 0.003 0.001 0.005
Saint Vincent and the Grenadines 0.002 0.001 0.003 0.011 0.009 0.012 0.002 0.000 0.003
Sri Lanka 0.102 0.092 0.112 0.249 0.284 0.217 0.095 0.081 0.107
Suriname 0.009 0.009 0.011 0.017 0.007 0.027 0.009 0.009 0.010
Swaziland 0.019 0.018 0.019 0.068 0.082 0.056 0.015 0.014 0.016
Trinidad and Tobago 0.086 0.102 0.071 0.086 0.072 0.098 0.088 0.107 0.071
Uruguay 0.047 0.044 0.050 0.209 0.333 0.096 0.037 0.025 0.048
Zimbabwe 0.037 0.037 0.039 0.151 0.280 0.067 0.030 0.021 0.037
 
Source: All data are from the United Nations Comtrade data base except for World totals, which are WTO estimates. 
a  Excludes intra-trade of the European  Communities and sign ificant re-exports.  TN/AG/W/4 
 Page 33 
 
 
  ANNEX D 
 
POSSIBLE NEW ARTICLE 10.2 OF THE AGREEMENT ON AGRICULTURE 
 
EXPORT CREDITS, EXPORT CREDIT GUARANTEES OR INSURANCE PROGRAMMES 
 
General Provisions  
1. Subject to the provisions of this Agreement and other WTO Agreements, Members shall not, 
directly or indirectly, provide support or enable sup port to be provided for, or in connection with, the 
financing of exports of agricultural products, including the credit and other risks associated therewith.  
Each Member accordingly undertakes not to provide export financing support otherwise than in 
conformity with this Article. 
Forms and Providers of Export Financing Support Subject to Discipline 
 
2. For the purpose of this Article, the term "export financing support" includes any of the 
following forms of support for, or in connection with, the financing of exports of agricultural 
products:  
(a) direct financing support, comprising direct credits/financing, refinancing, and 
interest rate support; 
(b) risk cover, comprising export credit in surance or reinsurance and export credit 
guarantees; 
(c) government-to-government credit agreements covering the imports of agricultural 
products exclusively from the creditor countr y under which some or all of the risk is 
undertaken by the government of the exporting country;  and 
(d) any other form of governmental export credit support, direct or indirect, including 
deferred invoicing and foreign exchange risk hedging. 
3. The provisions of this Article shall apply to export financing support provided by or on behalf 
of the following entities, hereinafter referred to as "export financing entities", whether such entities 
are established at the national or at the sub-national level: 
(a) government departments, agencies, or statutory bodies; 
(b) any financial institution or entity engaged in export financing in which there is 
governmental participation by way of equity, provision of loans or underwriting of 
losses; 
(c) agricultural export state trading enterprises; and 
(d) any bank or other private financial, credit insurance or guarantee institution which 
acts on behalf of or at the direc tion of governments or their agencies. 
Terms and Conditions 
 
4. Export financing support shall be provided in conformity with terms and conditions set out 
below.   TN/AG/W/4 
Page 34  
 
  (a) Maximum repayment term:   The maximum repayment term of a supported export 
credit, the period beginning at the starting point of credit
1 and ending on the contractual 
date of the final payment, sh all be no more than 180 days2. 
(b) Payment of interest:   Interest shall be payable.  "Interest" excludes premiums and other 
charges for insuring or guaranteeing suppli er or financial credits, banking fees or 
commissions relating to the export credit, and withholding taxes imposed by the 
importing country. 
(c) Minimum interest rate:   The applicable Libor (London Interbank Offered Rate) for the 
currency in which the credit is denominated (not inclusive of and separate from risk-
premium reflective of, as th e case may be, the buyer/comme rcial, country/political and 
sovereign credit risks covered) plus a margin  of at least [50] basis points shall be 
applicable in respect of expo rt financing support and in respect of invoiced amounts 
benefiting from deferred payment under an export contract. 
(d) Premiums in respect of coverage of risks of non-repayment under direct financing 
support, export credit guarantees or export credit insurance/reinsurance:  
Premiums shall be charged, shall be market-based or, in the absence of market-based 
premiums, shall be risk-based and shall ensure that the programme or part of the 
programme which is subject to the provisions of these disciplines is self-financing as 
defined in paragraph 3.4(g).  Premiums sh all be expressed in percentages of the 
outstanding principal value of the credit and sha ll be payable in full no later than the end 
of the month following the month in which the exports are made.  Premium rebates shall 
not be accorded.   
(e) Risk sharing:   Cover provided in the form of export financing support shall not exceed 
[90] per cent of the value of a transaction. 
(f) Foreign exchange risk:   Export credits, export cr edit insurance, export credit 
guarantees, and related financial support sha ll be provided in freely traded currencies.  
Foreign exchange exposure deriving from cred it that is repayable in the currency of the 
importer shall be fully hedged, such that the ma rket risk and credit risk of the transaction 
to the supplier/lender/guarantor is not increased.  The cost of the hedge shall be 
incorporated into and be in addition to the premium rate determined in accordance with 
this paragraph. 
(g) Self-Financing:   Export financing support programmes or parts thereof which are 
subject to the provisions of this Article sha ll be self-financing.  Self-financing shall be 
considered as the ability of such programmes, or parts thereof, to operate in a manner by 
which the premiums charged cover all operati ng costs and losses over a period of [4][5] 
years.3  Each successive period would need to respect the self-financing rule.     
                                                      
1 The "starting point of a credit" shall be no later than the weighted mean date or actual date of the 
arrival of the goods in the recipient country for a contract under which shipments are made in any consecutive six-month period. 
2 Exceptions will be made for seeds ([12] months) and breeding cattle ([24] months). In case of non-
payment within the agreed re-payment period the exporter shall be entitled to claim indemnification from the 
export credit agency only within a fixed period of time which shall not exceed [ ] months. 
3 It is understood that this would be assessed net of the consequence of any rare case where there has 
been an catastrophic situation (i.e. war, extensive climatic upheaval, wide scale natural disaster such as 
Tsunami) giving rise to an extraordinary default.  TN/AG/W/4 
 Page 35 
 
 
  (h) Loss preventative measures:   Other than may be agreed multilaterally, pari passu  
rescheduling debt arrangements, debts shall not be rescheduled or otherwise restructured 
in a manner that results in circumvention of  the terms and conditions of this paragraph. 
Non-conforming Financing Support 
 
5. Export financing support, which does not confor m with the provisions of paragraph 3.4 of 
this Article or which is provided in circumstances  as may otherwise be allowable under Article 3.3 
and Article 9 of this Agreement, hereinafter referred to as "non-conforming export financing", 
constitute export subsidies for the purposes of this Agreement and are therefore, to be eliminated 
within the binding levels of Members' export subsidies elimination Schedules. 
Special and Differential Treatment 
 
6. Developing countries providers of export financing support shall be eligible to benefit from 
the following elements: 
(a) the maximum repayment term shall be [twi ce] that provided for developed country 
Members; 
(b) the minimum interest rate as provided for under paragraph 4(c) may be adjusted to 
take into account withholding taxes on in ternational borrowings and additional 
borrowings for capital required to conform to Basel II norms.  Such elements shall 
not be considered export subsidies for the purpose of this Article; 
(c) as an exception to the provisions of pa ragraph 4(f), developing country Members 
may hedge in non-freely traded currencies; 
(d) the self-financing period contained in paragraph 4(g) for developing countries shall 
be at least [6][7.5] years; 
(e) for the purpose of paragraph 4(h), when wa rranted by genuine financial difficulties 
the rescheduling of debt should be on the same terms and conditions as those for 
commercial tenders in order to prevent or curtail planned defaults; 
(f) [other] 
7. Least-developed countries and net food-impo rting developing countries as listed in 
G/AG/5/Rev.8 shall be accorded differential and more favourable treatment comprising allowance for 
a repayment term in respect of them of 270 days and [ ]. 
8. At the request of an importing developing country Member, in exceptional circumstances 
which can not be adequately covered otherwise by international food aid, commercial export credits 
or preferential international fina ncing facilities, Members may provide ad hoc  temporary government 
financing arrangements to underwrite agricultural expo rt credits that are not otherwise in conformity 
with the terms of conditions of paragraph 4(b) to (g).  The importing developing country Member 
concerned shall notify the Committee on Agriculture  in writing of the circumstances which justify 
more favourable terms than are permitted under the re levant provisions of this Article, together with 
details of the product(s) concerned so that intere sted exporting Members shall have the opportunity to 
respond.  Members shall provide ex ante  notifications on the more favourable terms provided for in 
such exceptional circumstances.  The maximum repayment term for exceptional circumstances 
temporary government financing arrangements shall not exceed 360 days.  TN/AG/W/4 
Page 36  
 
  9. Members shall ensure that, in the event that exceptional circumstances provided for under the 
preceding paragraph arise, actions will be taken stri ctly consistent with the terms and conditions of 
that paragraph so as not to undermine or circumvent their export subsidy commitments and 
obligations under this Agreement.   TN/AG/W/4 
 Page 37 
 
 
  ANNEX E 
 
POSSIBLE NEW ARTICLE 10 BIS OF THE AGREEMENT ON AGRICULTURE 
 
AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES 
 
1. Members shall ensure that agricultural exporting state trading enterprises are operated in 
conformity with the provisions specified below and,  subject to these provisions, in accordance with 
Article XVII, the Understanding on the Interpretation of Article XVII an d other relevant provisions of 
GATT 1994, the Agreement on Agriculture and other WTO agreements. 
Entities 
2. For the purpose of this Article, an agricultura l exporting state trading enterprise shall be 
considered to be : 
Any governmental or non-governmental enterprise, including a marketing board, which has 
been granted exclusive or special rights or privileges, including statutory or constitutional powers, in the exercise of which the enterprise  influences through its purchases or export 
sales the level or direction of agricultural exports. 
 
Disciplines 
3. In order to ensure the elimination of trade-di storting practices with respect to agricultural 
exporting state trading enterprises as  described above, Members shall:  
(a) eliminate, in parallel and in proportion to the elimination of all forms of export subsidies 
including those related to food aid and export credits: 
(i) those export subsidies, defined by Article 1(e) of the Agreement on Agriculture, 
which are currently provided to or by an agricultural exporting state trading 
enterprise; 
(ii) government financing of exporting state tr ading enterprises, preferential access to 
capital or other special privileges with respect to government financing or re-
financing facilities, borrowing, lending or government guarantees for commercial 
borrowing or lending, at below market rates;  and 
(iii) government underwriting of losses, either  directly or indirectly, losses or 
reimbursement of the costs or write-downs or write-offs of debts owed to, or by 
export state trading enterprises on their export sales. 
(iv) [by 2013, the use of export monopoly powers for such enterprises.]  
(b) ensure that any use of monopoly powers by such enterprises is not exercised in a manner 
which, either de jure  or de facto  effectively circumvents the provisions set out in sub-
paragraphs (i) to (iii) above. 
Special and Differential Treatment 
 4. Notwithstanding paragraph[s 3(a)(iv) and] 3(b)above: 
(a) agricultural state trading enterprises in least-developed countries (including those 
which enjoy special privileges to preserve  domestic consumer price stability and to TN/AG/W/4 
Page 38  
 
  ensure food security) will be permitted to maintain or use monopoly powers for 
agricultural exports to the extent that they would not be otherwise inconsistent with 
other provisions of this Agre ement and other WTO Agreements; 
(b) agricultural state trading enterprises in developing country Members which enjoy 
special privileges to preserve domestic consumer price stability and to ensure food 
security will be permitted to maintain or use monopoly powers for agricultural 
exports to the extent that they would not  be otherwise inconsistent with other 
provisions of this Agreement and other WTO Agreements;  and  
(c) where a developing or least-develope d country Member has an agricultural 
exporting state trading enterprise with export monopoly powers, that enterprise may 
continue also to maintain or use those po wers, even if the purpose for which that 
enterprise has such privileges could not be deemed to be characterised by the 
objective: "to preserve domestic consum er price stability and to ensure food 
security".  Such an entitlement, however, would be permissible only for such an 
enterprise whose share of world exports of the agricultural product or products concerned is less than 5 per cent, such that  the entity's share of world exports of the 
product or products concerned does not exceed that level in 3 consecutive years, 
and to the extent that the exercise of those monopoly powers is not otherwise 
inconsistent with other provisions of this Agreement and other WTO Agreements. 
Monitoring and Surveillance 
5. Any Member that maintains an agricultural exporting state trading enterprise shall notify to 
the Committee on Agriculture, on an annual basis, relevant information regarding the enterprise's 
nature and operations.  This will, consistent with standard WTO practice and normal commercial 
confidentiality considerations, require timely and tr ansparent provision of information on any and all 
exclusive or special rights or privileges granted to such enterprises within the meaning of paragraph 1 
above sufficient to ensure effective transparency.   Members shall notify any benefits, not otherwise 
notified under other WTO disciplines, that accrue to a state trading export enterprise from any special 
rights and privileges including those that are of a financial nature.  At the request of any Member, a 
Member maintaining a state trading export enterprise shall provide, subject to normal considerations of commercial confidentiality, in formation requested concerning the enterprise's export sales of 
agricultural products, the product exported, the volu me of the product exported, the export price and 
the export destination.  TN/AG/W/4 
 Page 39 
 
 
  ANNEX F 
 
POSSIBLE NEW ARTICLE 10.4 OF THE AGREEMENT ON AGRICULTURE 
 
INTERNATIONAL FOOD AID 
 
1. Members reaffirm their commitment to maintain  an adequate level of international food aid 
(hereinafter referred to as food aid1), to take account of the interests of food aid recipients and to 
ensure that the disciplines contained hereafter do not unintentionally impede the delivery of food aid 
provided to deal with emergency situations.  Me mbers shall ensure the elimination of commercial 
displacement caused by food aid. 
General Provisions 
 
2. Members shall ensure that all food aid transactions, whether in the Safe Box or outside, are 
provided in conformity with the following provisions: 
(a) they are needs-driven; 
(b) they are provided in fully grant form; 
(c) they are not tied directly or indirectly to commercial exports of agricultural 
products or of other goods and services; 
(d) they are not linked to the market development objectives of donor Members; and 
(e) agricultural products provided as food aid shall not be commercially re-exported. 
Non-commercial re-exportation is permissi ble, but only where, for logistical 
reasons and in order to expedite the provision of emergency food aid for another 
country in an emergency situation, this occurs as an integral part of a food aid 
transaction initiated by a relevant United Nations agency, relevant regional or 
international intergovernmenta l agency or organization. 
3. The provision of food aid shall take fully into account local market conditions of the same or 
substitute products.  Members shall refrain from providing in-kind food aid in situations where this would create, or would risk to create, an adverse e ffect on local or regional production of the same or 
substitute products.  Members are encouraged to procure food aid from local or regional sources to the 
extent possible, provided that the availability and prices of basic fo odstuffs in these markets are not 
unduly compromised.  Members commit to making their best efforts to move increasingly towards more cash-based food aid. 
Safe Box for Emergency Food Aid 
 
4. To ensure that there is no unintended impedime nt to the provision of food aid during an 
emergency situation, food aid provided under such circ umstances (whether cash or  in-kind) shall be in 
the ambit of the Safe Box and, therefore, not actionable, provided that: 
(a) there has been a declaration of an emergency by the recipient country, or, the Secretary-
General of the United Nations; or 
                                                     
 
1  Unless otherwise specified, the term food aid is used to refer to both in-kind and cash-based food aid 
donations. TN/AG/W/4 
Page 40  
 
  (b) there has been an emergency appeal from a country
2, a relevant United Nations agency, 
including the World Food Programme and  the United Nations Consolidated Appeals 
Process;  the International Committee of th e Red Cross and the International Federation 
of Red Cross and Red Crescent Societies; [a relevant regional or international 
intergovernmental agency, a non-governmental humanitarian organisation of recognised 
standing traditionally working in conjunction with the former bodies]; and  
(c) there is an assessment of need undertaken by a relevant United Na tions agency, including 
the World Food Programme;  the International Committee of the Red Cross and the 
International Federation of Red Cross and Red Crescent Societies;3 [a relevant regional 
or international intergovernmental agency, a non-governmental humanitarian organisation of recognised standing traditionally working in conjunction with the former 
bodies]. 
5. Following the triggering, there may well be a period where the needs assessment outcome is 
pending. For the purposes of this agreement, this pe riod will be deemed to be [3] months in duration. 
During this period, the food aid concerned will in  any event be non-actionable (provided that the 
relevant UN agency responsible fo r the needs assessment has not, within this period, given a negative 
assessment). Where, within or by the end of this period, the relevant UN agency has carried out a 
positive needs assessment, the food aid concerne d will remain in the Safe Box thereafter. 
6. [There will be no monetization for food aid inside the Safe Box.] 
7. A notification will be required on an ex-post  basis by donors at six month intervals in order to 
ensure transparency.  
8. The provision of food aid in conformity with paragraph 4 may be provided for as long as 
necessary subject to an assessment of continued ge nuine need as a result of  the initial onset of the 
emergency.  It is for the relevant UN agency to make such determination. 
Disciplines for Food Aid in Non-emergency Situations 
 
9. Food aid outside the Safe Box as provided  above will be actionable where it leads to 
commercial displacement.  In-kind food aid provided in situations other than defined above, and 
which fails to meet the following criteria will be de emed to create such commercial displacement and 
thereby circumvent export subsidy commitments. 
10. In-kind food aid provided outside the Safe Box shall be: 
(a) based on an assessment of need by an identified multilateral third party 
organization, which may include humanitarian non-governmental organizations working in partnership with spec ialized United Nations agencies; 
(b) targeted to a well-identified vu lnerable population group;   
(c) provided to address specific developmen tal objectives or nutritional requirements; 
and 
                                                     
 
2 It is understood that an NGO can be involved in this triggering wh ether by working with a donor or 
recipient country. 
3 Needs assessment should be done with the involvement of the recipient government and may involve 
a relevant regional intergovernmental organization or a NGO.  TN/AG/W/4 
 Page 41 
 
 
  (d) the monetisation of in-kind food aid shall be [prohibited except][permissible, but 
Members will endeavour to constrain it to  situations] where is it necessary to fund 
activities that are directly rela ted to the delivery of the food aid to the recipient, or 
for the procurement of agricultural inputs.  Such monetisation shall be carried out 
under the auspices of a relevant United Nations agency and the recipient 
government.   
Monitoring and Surveillance 
 11. Food aid donor Members shall be required to notify to the Committee on Agriculture, on an 
annual basis, the following data:  TN/AG/W/4 
Page 42  
 
  ATTACHMENT 1 
Tropical Product Tariffs 
(Uruguay Round indicative list) 
 
United States 
 
Total tropical  products with 0 base duty (start of implementation) 110 
Total tropical products with 0 bound duty (end of implementation) 150 
Number of lines brought to zero by the UR 40 
Total tropical products with non-zero duty (current) 276 
# lines less than 5% 132 
# lines less than 10% 203 
 
European Communities 
 
Total tropical  products with 0 base duty (start of implementation) 97 
Total tropical products with 0 bound duty (end of implementation) 146 
Number of lines brought to zero by the UR 49 
Total tropical products with non-zero duty (current) 441 
# lines less than 5% 54 
# lines less than 10% 164 
 
Japan 
 
Total tropical  products with 0 base duty (start of implementation 87 
Total tropical products with 0 bound duty (end of implementation) 115 
Number of lines brought to zero by the UR 28 
Total tropical products with non-zero duty (current) 245 
# lines less than 5% 67 
# lines less than 10% 111 
Note – for technical reasons it was not possi ble to match Japan's tariff bindings with ad valorem  
equivalents.  Assume all non ad valorem  tariffs are greater than 10 per cent. 
 
Norway 
 
Total tropical  products with 0 base duty (start of implementation 95 
Total tropical products with 0 bound duty (end of implementation) 97 
Total tropical products with non-zero duty (current) 178 
Number of lines brought to zero by the UR 81 
# lines less than 5%, greater than 0 73 
# lines less than 10%, greater than 0 80 
 
 
  
   TN/AG/W/4
 Page 43ATTACHMENT 2 
Preferences analysis 
European Communities – Tariff lines where the G-20 reductions woul d result in a loss in the prefer ence margin of more than 10 p ercentage points 
 
Tariff 
Line Basic Description Tariff Line Description Current 
Bound New 
Bound  Trade Value 
($000) Main Exporters 
02013000 Beef, chilled - Boneless 85.2 21.3  73,817.5 Botswana, Namibia 
07099070 Courgettes -- Courgettes 27.6 12.4  1,516.7 Kenya, South Africa, Zambia 
07141091 Roots & tubers with high 
starch content --- Of a kind used for human consumption, in immediate packings of a net 
content not exceeding 28 kg, either fresh and whole or without skin and frozen, whether or not sliced 50.1 17.5  2,341.7 Cameroon, Ghana 
07141099 Roots & tubers with high 
starch content --- Other 118.9 29.7  159.6 Benin, Cameroon, Côte 
d'Ivoire, Ghana 
08030019 Bananas -- Other 117.1 29.3  625,177.7 Cameroon, Côte d'Ivoire, 
Dominican Republic 
08061010 Grapes ---- Of the variety Emperor (Vitis vinifera cv.) from 1 to 31 December(2) 22.6 10.1  366,475.2 Namibia, South A frica 
11031310 Corn groats & meal --- Of a fat content not exceeding 1,5 % by weight 62.1 21.7  590.5 Lesotho 
11031390 Corn groats & meal --- Other 38.9 17.5  159.7 Tanzania 
17011110 Sugar --- For refining(2) 130.3 32.6  947,282.2 Fiji, Guyana, Jamaica, 
Mauritius, Swaziland 
17011190 Sugar --- Other 161.1 40.3  79,235.3 Malawi, Mauritius 
17019910 Sugar --- White sugar 168.7 42.2  28,541.4 Côte d'Ivoire,Kenya, 
Madagascar, Mauritius, 
Zambia 
19041090 Prepared foods from 
cereals -- Other 24.4 11.0  54.8 Ghana, Kenya 
19042095 Prepared foods from 
cereals --- Obtained from rice 30.9 13.9  79.3 Bangladesh  
  TN/AG/W/4 
Page 44 Tariff 
Line Basic Description Tariff Line Description Current 
Bound New 
Bound  Trade Value 
($000) Main Exporters 
20082071 Prepared/perserved 
pineapples ---- With a sugar content exceeding 19 % by weight 20.8 9.4  1,511.8 Kenya 
20082090 Prepared/perserved 
pineapples ---- Of 4,5 kg or more 20.9 9.4  20,647.8 Kenya, South Africa, 
Swaziland 
20084090 Prepared/perserved pears ---- Of 4,5 kg or more 20.9 9.4  2,161.2 South Africa 
20088090 Prepared/perserved 
strawberries ---- Of 4,5 kg or more 22.0 9.9  60.2 Fiji 
20091119 Frozen orange juice ---- Other 33.6 15.1  110.7 Jamaica 
20098036 fruit or vegetable juice ----- Juices of tropical fruit 21.0 9.5  52.0 Dominican Republic 
20098038 fruit or vegetable juice ----- Other 33.6 15.1  98.3 Dominican Republic 
20098086 fruit or vegetable juice ------ Other 29.4 13.2  83.8 Dominican Republic 
22071000 Undenatured alcohol - Undenatured ethyl alcohol of an alcoholic strength by volume of 80 % vol or 
higher 43.0 19.3  21,460.1 South Africa, Swaziland, 
Zimbabwe 
22084099 Rum & tafia ---- Other 24.6 11.1  26,455.3 Dominican Republic, Guyana, 
Jamaica 
24013000 Tobacco - Tobacco refuse 31.3 14.1  14,031.4 Malawi, Tanzania, Zambia, 
Zimbabwe 
24021000 Cigars, cigarettes - Cigars, cheroots and cigarillos, containing tobacco 26.0 11.7  29,773.3 Dominican Republic 
24022090 Cigarettes -- Other 57.6 20.2  113.0 Nigeria 
 
Note – for the three highlighted cells, ther e is a concordance issue with the data.  
 
Assumptions: 
Tariff lines are those included in the ACP list for which there is a non- reciprocal preference, the total ACP trade value is gr eater than US$50,000, the MFN duty 
is greater than zero and the margin of preference is at least 5 per cent.  
  
G-20 thresholds and cuts for developed countr ies are applied.  Tariff lines are then se lected as those where the tariff formula  would result in a reduction of the 
preference margin of more than 10 percentage points.  It is assumed that the import duty under preferences is zero.   
   TN/AG/W/4
 Page 45 
United States – Tariff lines important for preferences 
 G-20 reductions would result in any loss in the preference margin (loss of more than 10 percentage points for one tariff line w hich is highlighted) 
 
Tariff Line Basic Description Tariff Line Description Current 
Bound New 
Bound Trade Value 
($000) Main Exporters 
0603108000 Cut Flowers Cut flowers and flower buds suitable for bouquets or 
ornamental purposes, fresh  6.4 3.5 3,327.0 Dominican Republic 
0709590000    0.0 731.2 South Africa 
0709602000 Chili's Chili peppers, fresh or chilled    3.8 2.1 506.2 Dominican Republic 
0709604000 Capsicum Fruits of the genus capsicum (peppers) (ex. chili peppers) or of 
the genus pimen 3.0 1.7 2,727.5 Dominican Republic 
0709900500 Jicamas, pumpkins Jicamas, pumpkins and breadfruit, fresh or chilled 0.0 429.5 Dominican Republic, Jamaica 
0709909100    0.0 422.3 Ghana, Jamaica 
0710223700 Frozen beans Frozen beans nesi, not reduced in size                                         4.0 2.2 87.7 Bangladesh 
0710291500 Leguminous 
vegetables Lentils, uncooked or cooked by steaming or boiling in water, 
frozen              0.1 0.1 64.1 Bangladesh 
0710807000 Other vegetables Vegetables nesi, uncooked or cooked by steaming or boiling in 
water, frozen, not 11.3 6.2 202.7 Bangladesh, Sierra Leone 
0710809700 Other vegetables Vegetables nesi, uncooked or cooked by steaming or boiling in 
water, frozen, red 14.9 8.2 132.6 Bangladesh, Dominican Republic 
0710909100 Vegetable mixtures  0.0 582.7 Dominican Republic 
0802901500 Nuts Pecans, fresh or dried, shelled                                                  3.6 2.0 1,101.4 South Africa 
0802908000 Nuts Nuts nesi, fresh or dried, in shell                                              0.4 0.2 1,125.0 Malawi, South Africa 
0802909800 Nuts Nuts nesi, fresh or dried, shelled                                               0.8 0.4 33,845.2 Kenya, Malawi , South Africa 
0804304000 Pineapples Pineapples, fresh or dried, not reduced in size, in crates or 
other packages     2.1 1.2 476.8 South Africa 
0804400000 Avocadoes Avocados, fresh or dried                                                         7.1 3.9 17,219.9 Dominica n Republic 
0804504000 Guavas, mangoes, 
and mangosteens Guavas, mangoes, and mangosteens, fresh, if entered during 
the period September  8.0 4.4 3,965.0 Dominican Republic 
0804506000 Guavas, mangoes, 
and mangosteens Guavas, mangoes, and mangosteens, fresh, if entered during 
the period June 1 thr 10.8 5.9 3,561.2 Haiti  
  TN/AG/W/4 
Page 46 Tariff Line Basic Description Tariff Line Description Current 
Bound New 
Bound Trade Value 
($000) Main Exporters 
0804508000 Guavas, mangoes, 
and mangosteens Guavas, mangoes, and mangosteens, dried                                 0.7 0.4 456.9 South Africa 
0806102000 Grapes Grapes, fresh, if entered during the period February 15 
through March 31, inclus 0.2 0.1 1,413.6 South Africa 
0806201000 Raisins Raisins, made from dried seedless grapes                                    1.5 0.8 3,331.5 South Africa 
1006309000 Rice Rice semi-milled or wholly milled, whether or not polished or 
glazed, other than 2.5 1.4 190.9 Bangladesh 
1701111000 Sugar Cane sugar, raw, in solid form, w/o added flavoring or coloring, 
subject to add. 7.6 4.2 120,097.7 Dominican Republic, South Africa 
2005905000 Prepared/preserved 
vegetables Pimientos, prepared or preserved otherwise than by vinegar or 
acetic acid, not f 8.1 4.5 1,601.7 South Africa 
2005909700 Prepared/preserved 
vegetables Vegetables nesoi,& mixtures of vegetables,prepared or 
preserved otherwise than b 11.2 6.2 2,911.0 Dominican Republic 
2008921000 Prepared/preserved 
fruits Mixtures of fruit or edible parts of plants, in airtight cont. excl. 
apricots, c 5.6 3.1 84.1 Dominican Republic 
2008991000 Prepared/preserved 
fruits Avocados, otherwise prepared or preserved, nesi                         5.8 3.2 741.6 South Africa 
2008999000 Prepared/preserved 
fruits Fruit nesi, and other edible parts of plants nesi, other than pulp 
and excluding 6.0 3.3 3,826.2 Jamaica 
2009110000 Frozen orange juice Orange juice, frozen, unfermented and not containing added 
spirit                38.9 17.5 19,382.1 Belize 
2009396000 Fruit or vegetable juices  0.0 1,470.6 South Africa 
2009904000 Fruit or vegetable 
juices Mixtures of fruit juices, or mixtures of vegetable and fruit 
juices, concentrate 8.9 4.9 1,765.6 South Africa 
2103204000 Sauces Tomato sauces, nesi                                                              11.6 6.4 4,352.5 Dominican R epublic 
2103908000 Sauces, mixed 
condiments, 
seasonings Mixed condiments and mixed seasonings, not described in add 
US note 3 to Ch. 21  6.4 3.5 6,933.1 Dominican Republic, Jamaica 
2103909000 Sauces, mixed 
condiments, seasonings Sauces and preps, neosi                                                          6.4 3.5 5,254.9 Dominican Republic, Jamaica 
2204215000 Wine Wine other than Tokay (not carbonated), not over 14% alcohol, 
in containers not  1.4 0.8 37,628.5 South Africa  
   TN/AG/W/4
 Page 47Tariff Line Basic Description Tariff Line Description Current 
Bound New 
Bound Trade Value 
($000) Main Exporters 
2204218000 Wine Grape wine, other than "Marsala", not sparkling or 
effervescent, over 14% vol. a 1.9 1.0 5,880.1 South Africa 
2208402000 Rum and tafia Rum and tafia, in containers each holding not over 4 liters, 
valued not over $3/ 9.6 5.3 673.7 Dominican Republic 
2401208300 Tobacco Tobacco, partly or wholly stemmed/stripped, threshed or 
similarly processed, not 12.0 6.6 19,734.9 Malawi 
2401208500 Tobacco Tobacco, partly or wholly stemmed/stripped, threshed or 
similarly processed, not 11.1 6.1 26,155.3 Malawi 
2402108000 Cigars, cheroots, 
cigarillos Cigars, cheroots and cigarillos containing tobacco, each 
valued 23 cents or over 2.3 1.3 188,754.6 Dominican Republic 
2402208000 Cigarettes Cigarettes containing tobacco but not containing clove, paper-
wrapped            8.6 4.7 6,599.9 South Africa 
 
Assumptions: 
Tariff lines are those included in the ACP list for which there is a non-reciprocal preference, the total ACP trade value is gr eater than US$50,000, the MFN duty is greater than 
zero and the margin of preference is at least 5 per cent. 
   G-20 thresholds and cuts for developed countries are applied.  Tariff lines are then selected as those where the tariff formula  would result in any reduction of the preference 
margin.   
 It is assumed that the import duty under preferences is zero.    
For only the highlighted tariff line would the resulting tariff reductions reduce the margin of preference by more than 10 perc entage points.  In effect all of the other bound duties 
are too low for the preferences to be highly valuable and thus the reduction in the preference margin is small. 
 
__________