RESTRICTED  WORLD TRADE  
ORGANIZATION  G/AG/R/42 
25 May 2005 
 (05-2121) 
Committee on Agriculture  
  
 
SUMMARY REPORT OF THE MEETING HELD ON 16 MARCH 2005 
 
Note by the Secretariat
1 
  
1. The Committee on Agriculture held its fort y-second regular meeting on 16 March 2005 under 
the chairmanship of Mr. Roald Lapperre from the Netherlands.  The agenda of the meeting as 
contained in WTO/AIR/2527 and Add.1 was adopted w ith the addition of the matters raised by New 
Zealand under Art. 18.6 of the Agreement on Agri culture concerning Canada's imports of dairy 
products, and by the United States concerning the European Communities' administration of tariff 
quotas for pork. 
P
ART I:  THE REVIEW PROCESS  
A. MATTERS RELEVANT TO THE IMPLEMENTATION OF CO MMITMENTS UNDER THE REFORM 
PROGRAMME :  ARTICLE 18.6 
(a) Australia:   European Communities – Schedules of export subsidy reduction commitments  
2. In light of the fact that the Schedule of th e EC-15 and the Schedules of the ten new member 
States of the EC had been withdrawn in 2004 , Australia sought clarification concerning: 
 (i) the de facto  limits applied by the EC-25 in terms of budgetary outlay and quantity 
commitments in respect of the expor t subsidy reduction commitments;  
  (ii) the extent to which the products listed in the EC-15 Schedule were also listed in each 
of the Schedules of the ten new member States; 
  (iii) whether EC export refunds were ava ilable to all of the EC-25 member States, 
irrespective of the product coverage of the individual Schedules of export subsidy 
reduction commitments of the ten new member States; and in the affirmative case, how the EC gave effect to the terms of  the WTO accession protocols of Estonia, 
Latvia and Lithuania. 
 3. The EC responded that since 1 May 2004 the EC-15 Schedule was applied to the EC-25.  A 
new EC-25 Schedule would result from Art.  XXIV:6 negotiations under the GATT.  
4. Australia, Canada, Colombia, New Zealand and the United States shared Australia's 
underlying concerns in this  matter.  
                                                     
 
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members or to their rights or obligations under the WTO. G/AG/R/42 
Page 2  
 
 (b) Australia:  Switzerland – Auctioning of tariff quotas for meat
 
5. With respect to Switzerland's recently introduced  system of allocating tariff quotas for meat 
products through auctioning, Australia sought clarif ication concerning (i) the charges directly or 
indirectly applied by Switzerland on imported products  (at the border or in sales for supply to the 
domestic market) as a consequence of that system; (ii)  the effect on prices of imported products vis-à-
vis competing domestic products; and (iii) the cons istency of the new auctioning system with 
Article II of the GATT, given that it involved the imposition of charges in addition to the in-quota tariff rates. 
6. Switzerland responded that auctioning was one of several systems retained by it for the 
implementation of tariff quota commitments.  Aucti oning constituted an internal measure to allocate 
tariff quota shares at the bound in-quota rates.  It  was an allocation method which had a number of 
advantages such as full transparency of the alloca tion process and equal opportunities for all, whether 
these be new entrants or established businesses, near by or distant suppliers.  The system was also 
efficient in ensuring quota fill.  Switzerland did not consider that auctions constituted a charge as 
stipulated in Art. II:1(b) of the GATT since the allocation process was not related to import duties. 
7. Import prices and domestic prices had not increased as a result of the introduction of 
auctioning for meat in 2005;  auctioning simply transferred the quota rents from the quota owners 
(importers) to the Government.  This year, one-th ird of each tariff quota was to be auctioned.  The 
bids for the quotas depended on the meat category,  with the highest bids submitted for beef 
(1
-15 CHF/kg), followed by lamb (1-3 CHF/kg)  and pork and poultry (less than 1 CHF/kg). 
8. Australia reiterated its view that auctioni ng was inconsistent with WTO provisions and 
provided incentives in the importing country to main tain tariff quota restrictions rather than phase 
them out as temporary measures.  Australian exporte rs had also reported that auctioning created a 
range of problems in filling tariff quotas – it unde rmined long-term business relationships between 
exporters and importers, and ther e were hidden costs from additional fees, making imports less 
attractive. 
9. New Zealand shared the concerns of Australia  and endorsed the comments made by Australia, 
while the EC, Chinese Taipei and Norway supported the statement of Switzerland. 
(c) New Zealand:  Canada – Proposed special milk class scheme  
10. New Zealand stated that the Canadian Milk  Supply Management Committee (CMSMC) had 
recently approved a new "special class scheme" to decrease the level of solids non-fat (SNF) on the 
Canadian market.  This proposal involved the creation of a new class of milk ("Class 4(a)1") 
specifically for the sale of SNF into the manufacture of rennet casein and milk protein concentrate 
(MPC) for further use in the production of processed cheese. 
11. New Zealand sought clarification from Canada as to the details of the scheme, including 
implementation; the projected sale price of SNF to manufacturers of rennet casein and MPC; the prevailing market price for rennet casein and MPC;  and Canada's intentions to notify the scheme to 
the WTO. 
12. Canada responded that the CMSMC had recently adopted a motion calling for an extension of 
the domestic milk class 4 to include a new class 4( a)1 for the purpose of making available milk for the 
manufacture of rennet casein (dry or curd) or MPC to  be used in the manufacture of non-standardized 
final products in the processed che ese category.  This motion had b een implemented by the Canadian 
Dairy Commission and, accordingly, class 4(a)1 was currently operational.  The industry had adopted 
the domestic milk class 4(a)1 as a response to new market development opportunities and as a means  G/AG/R/42 
 Page 3 
 
 
 to diversify production and innovate.  At the pr ovincial level, this new milk class has been 
implemented in the same way as any other domestic milk class.  Since class 4(a)1 was part of domestic milk class 4, there was no need for Canada to notify it to the WTO. 
13. The butterfat price for the new domestic milk class 4(a)1 was set at the 4(a) price, while the 
price of protein and other solids was set at the pr ice established by the industry through the CMSMC 
on a semi-annual basis (1 August and 1 February).  Th is latter price was currently set at Can$1.25 per 
kilogram.  As intermediate products, used as i nputs into further manufacturing, there were no 
published prices for rennet casein and MPC.  The market price for casein was set in relation to the world price as imports were duty free.  In the case of MPC, the price would be a market clearing price in Canada. 
14. New Zealand also sought clarification concerning the expected impact of the scheme on 
imports of rennet casein and MPC, in particular whether it was intended that the casein or rennet 
manufactured under the scheme, or the processed cheese made from casein or rennet produced under the scheme, be exported. 
15. Canada responded that as with any other dair y product manufactured with milk accessed 
under any of Canada's domestic milk classes 1 to 4,  the final destination of the non-standardized 
processed cheese products manufactured with milk acce ssed under class 4(a)1 was unrestricted.  It 
was expected that the processed cheese products ma nufactured under class 4(a)1 would primarily be 
sold on the domestic market.  Rennet casein and MPC were intermediate produc ts which were further 
processed domestically into processed cheese produc ts, and primarily consumed in the domestic 
market.  Canadian processors of non-standardized  processed cheese products were free to use rennet 
casein and MPC manufactured with milk accessed through the domestic milk class 4(a)1 or to import 
these ingredients from Canada's trading partners. 
16. New Zealand sought further clarification con cerning the precise relationship between the 
Canadian casein price and the world price for casein.   Canada took note of the follow-up question and 
undertook to provide a response. 
17. The EC stated that it shared some of the concerns expressed by New Zealand. 
(d) New Zealand:  Thailand – Domestic purchase requirement under the tariff quota for skim 
milk powder  
18. New Zealand sought clarification from Thailand re garding reports that the Thai Government 
had issued policy advice with respect to the skim milk powder (SMP) tariff quota that would require importers to use domestically produced raw milk befo re receiving an import licence.  It appeared that 
where an importer could not meet the domestic pur chase requirement, the in-quota tariff rate had been 
set at a rate above Thailand's bound in-quota rate fo r SMP.  New Zealand considered that the use of 
domestic purchase requirements was contrary to WTO provisions and could severely distort trade. 
19. Thailand responded that the Ministry of Agri culture and Cooperatives was considering a new 
system of tariff quota administration for SMP with an in-quota tariff of 5 per cent which was lower 
than the bound in-quota rate of 20 per cent.  Du e to the general election in February 2005, the 
approval process was delayed.  In these circum stances, should the SMP tariff quota remain under-
utilized at the end of the year, normal practice was to extend import permits beyond the year end. 
20. The United States supported New Zealand regardi ng its concerns about the domestic purchase 
requirement. G/AG/R/42 
Page 4  
 
 (e) United States:  Turkey – New import regime for rice
 
21. The United States reverted to a matter it had firs t raised at the June 2004 meeting and further 
pursued at the November 2004 meeting (G/AG/R/41, paragraphs 22-25).  On 27 August 2004, Turkey 
had announced a new import regime for rice, effec tive until 31 July 2005, which required a domestic 
purchase of rice in order to obtain an import li cense for rice.  The United States questioned the 
consistency of the domestic purchase requireme nt with Article III of the GATT, the TRIMS 
Agreement and Article 4.2 of the Agreement on  Agriculture.  The United States also sought 
clarification as to whether Turkey intended to extend such import licensing regimes to other grains and oilseeds. 
22. Turkey responded that according to the "Deci sion on Implementation of the Tariff Quota on 
Importation of some Forms of Rice" (Official Gazette of 27 August 2004) a tariff quota of 
300,000 tonnes of rice had been allocated to importers , subject to an applied in-quota duty of 43 per 
cent ad valorem  which was lower than the MFN out-of-quota rate of 45 per cent.  Importers received 
import licences equal to the quantity of rice bought on the domestic market. 
23. For its part, Turkey considered that the tariff quota for rice was consistent with WTO rules.  
Moreover, there was no relationship to the TRIMS Agreement since no investment measures had been 
applied under the rice import regime.  Turkey curre ntly had no plans of extending the import licences 
to oilseeds or cereals. 
24. The United States stated that one of the reasons  for having raised this matter recurrently in 
this Committee was that over the last years certain measures had been implemented on an ad hoc basis 
which were limiting the ability of US exporters to  access the Turkish market and had resulted in a 
decline of US exports. 
(f) New Zealand:  Canada – Imports of dairy products
 
25. Ambassador Groser stressed at the outset th at he was intervening as Ambassador of New 
Zealand, not as Chairman of the Special  Session of the Committee on Agriculture. 
26. The factual situation was that the Canadian government, which has a highly protected dairy 
sector, is now under pressure from its domestic dairy lobby to extend protectionism further by 
limiting imports of certain types of dairy products, namely butter oil blends, casein and caseinates.  These products were the exception in an otherwise hi ghly protected global dairy market and relatively 
free of protectionism in a number of export markets.  It came as a matter of deep concern for New Zealand when the few trading opportunities available were threatened by a lobby which had from time 
to time shown a frighteningly effective grip over its own government. 
27. Canada was the fourth-largest exporter of agricu ltural products in the world, with substantial 
interests in promoting trade liberalization, in removing and reducing trade distortions and export 
subsidies, and yet because of the power of its da iry lobby, Canada was the only Member that had 
attempted to evade the very modest disciplin es on export subsidies that had emerged from the 
Uruguay Round.  New Zealand had pursued Canada through the dispute settlement system for ten 
years to make the Canadian dairy industry to rea lize that they too had to play a part in trade 
liberalization.  As a consequence of that, the Canadian dairy lobby was now seeking to evade the 
practical commercial implications by further demand ing import restrictions.  For New Zealand, this 
was a test case for the credibility of Canadian trade policy. 
28. Australia stated that like Ne w Zealand, Australia was a ma jor exporter of dairy products, 
including casein and caseinates.  As Members had agr eed to reduce market distortions in the current 
round of negotiations, this proposal, if adopted, was a move in the wrong direction.  Australia was  G/AG/R/42 
 Page 5 
 
 
 concerned about these developments and fully endo rsed the statement made by the New Zealand 
Ambassador.  Brazil stated that it, too, shared the concerns expressed by the Ambassador of New Zealand. 
29. The EC gave its strong support to the statement made by New Zealand.  It cited a recent case 
where a European exporter had to appeal to the Cana dian International Trade Tribunal to ensure that 
exports of products in the stated category could co ntinue.  The EC would be deeply concerned if 
Canada were to yield to the pressure from its dairy lobby to protect this market. 
30. Canada stated that Canadian dairy farmers ha d proposed that the Government undertake an 
Article XXVIII action under the GATT on a number of dairy products.  It was clear that there were a number of considerations related to such a proposal and the Canadian Government was currently 
examining it in light of these considerations.  Cana da had taken careful note of the statements by 
Members and the context of their concerns. 
(g) United States:  European Communities  – Administration of the tariff quotas for pig meat
 
31. The United States expressed appreciation to th e European Communities for having increased 
the maximum licence allocation limits for each importer from 10 to 20 per cent as of 1 March 2005.  
This was a positive step to help address the con cerns of the United States had raised at the 
November 2004 meeting concerning the low fill rates of the tariff quotas for pig meat (G/AG/R/41, 
paragraphs 15-17 refer).  The United States would m onitor the situation and revert to this matter, 
should problems with tariff quota admi nistration and fill rates continue. 
32. The EC confirmed the change in licence allocations and stated that it would monitor 
developments following the increase in allocation limits. 
B. REVIEW  OF NOTIFICATIONS 
(a) Notifications in respect of which questions have been raised in advance of the issuance of the 
convening airgram  
33. The Committee reviewed the following no tifications as listed in the agenda: 
 (i) relating to imports under tariff and ot her quota commitments (Table MA:2):  from 
Morocco (MAR/30), the Philippines (PHL/32) and the United States (USA/48/Corr.1 
and USA/54); 
 (ii) in the context of the special safe guard (Tables MA:3 to MA:5):  from Japan 
(JPN/104, JPN/103 and JPN/105); 
 (iii) in the context of domestic support commi tments (Table DS:1):  from the European 
Communities (EEC/51) and Japan (JPN/108); 
 (iv) in the context of export subsidy co mmitments (Table ES:1):  from China (CHN/4), 
the European Communities (EEC/52) and Japan (JPN/106);  and 
 (v) in the context of actions taken with in the framework of the Marrakesh NFIDC 
Decision (Table NF:1):  from the European Communities (EEC/50). 
34. Specific points raised with respect to the notif ications listed above and the responses thereto 
are summarized in the Annex to this report. G/AG/R/42 
Page 6  
 
 (b) Notifications subject to review in respect of wh ich no questions have been raised in advance 
of the issuance of the convening airgram  
35. The Committee took note of the following notificatio ns, which had been circulated in advance 
of the date on which the notice convening the present meeting was issued but in respect of which no 
questions had been raised by that date unde r the Committee's Working Procedures (G/AG/1): 
 (i) on the administration of tariff and other quota commitments (Table MA:1):  from 
El Salvador (SLV/24) and the United States (USA/55); 
 (ii) relating to imports under tariff and ot her quota commitments (Table MA:2):  from 
El Salvador (SLV/23), Switzerland (CHE/31) and Tunisia (TUN/31); 
 (iii) in the context of the special safegua rd (Tables MA:3 to MA:5):  from Hungary 
(HUN/39), Japan (JPN/102), Morocco (MAR/ 31), Switzerland (CHE/32) and Chinese 
Taipei (TPKM/17/Corr.1 and TPKM/20); 
 (iv) in the context of domestic support commitments (Table DS:1):  from Former 
Yugoslav Republic of Macedonia (MKD/4), Morocco (MAR/32), Slovak Republic 
(SVK/45), Slovenia (SVN/28/Corr.1) and Thailand (THA/51); and  
 (v) on export subsidy commitments (Tabl es ES:1 to ES:3):  from Morocco (MAR/33), 
Myanmar (MYN/4), the Philippines (PHL/31) and Thailand (THA/52). 
 
(c) Notifications circulated or made available af ter the notice convening the meeting was issued  
36. The following notifications were subject to prelim inary review and are to be reverted to at the 
next meeting for substantive review in accordan ce with paragraph 9 of the Committee's Working 
Procedures: 
(i) in the context of the special safegua rd (Tables MA:3 to MA:5):  from Japan 
(JPN/109); 
(ii) on domestic support commitments (Table DS:1):  from Burundi (BDI/2), Guyana 
(GUY/12), Macao, China (MAC/17), New Zealand (NZL/41) and Qatar (QAT/5); 
and 
(iii) on export subsidy commitments (Tabl es ES:1 to ES:3):  from Burundi (BDI/1), 
Macao, China (MAC/16) and Qatar (QAT/4). 
(d) Points concerning notifications raised at previous meetings  
37. There was no discussion under this agenda item. 
(e) Counter-notifications under Article 18.7 of the Agreement  
38. The Committee took note that no counter-notifi cations had been received under Article 18.7 
of the Agreement.  G/AG/R/42 
 Page 7 
 
 
 (f) Deferred replies to questions raised under the Review Process  
39. Panama provided a deferred response to a matter the United States had raised at the 
November 2004 meeting under Art. 18.6 of the Agre ement concerning limitations on imports of 
French fries by Panama (G/AG/R/41, paragraphs 20-21).  Panama confirmed that phytosanitary 
certificates for sliced potatoes were issued auto matically, as long as the processing plant had been 
approved, in accordance with the procedures of  the National Plant Health Directorate. 
40. The United States stated that, in the context of the review of its notification on export subsidy 
commitments (G/AG/N/USA/53) at the September 2004 meeting, the EC had noted a decline in SMP stocks and had requested information regarding th e break-down of destinations accounting for the 
decrease (G/AG/R/40, page 22).  The United States provided the following data  regarding dispositions 
of SMP in fiscal year 2004 as of 30 Septembe r 2004:  deliveries under domestic programmes – 
396,060 tonnes;  deliveries under export programmes – 71,665 tonnes. 
(g) Overdue notifications
 
41. The Committee took note that the Secretariat ha d made available a revised and updated room 
document, dated 15 March 2005, showing the curre nt status of compliance with notification 
obligations. 
42. Australia emphasized once again the need for up-to-date information on domestic support in 
the context of the agricultural negotiations. 
(h) Addenda to Table MA:1 notifications  
43. The Committee took note that the following Members administering tariff quotas had 
submitted the requisite Table MA :1 Addenda in accordance with the General Council Decision of 
December 2000 (paragraph 1.1 of WT/L/384 refers):   Australia, Canada, th e Czech Republic, the  
EC-15, Hungary, Japan, Latvia, New Zealand, No rway, Slovenia, Switzerla nd, Thailand, and the 
United States.  The Chairman urged those Members administering tariff quotas which had not yet done so to provide Addenda to their Table MA:1 no tifications in accordance with the General Council 
Decision in WT/L/384. 
P
ART II:  OTHER MATTERS WITHIN THE PURVIEW OF THE COMMITTEE  
A. IMPLEMENTATION -RELATED ISSUES  
44. The Committee took note that this agenda item concerned the implementation of Article 10.2 
of the Agreement and the related provisions of the Marrakesh NFIDC Decision (G/AG/16, 
Section A). 
45. Argentina recalled its statement at the Sept ember 2004 meeting of the Committee concerning 
the matter of implementation of Article 10.2 of  the Agreement (see G/AG/R/40, paragraph 37). 
B. MARRAKESH NFIDC  DECISION – PROPOSAL BY THE AFRICAN GROUP IN THE CONTEXT OF 
THE REVIEW OF ALL SPECIAL AND DIFFE RENTIAL TREATMENT PROVISIONS BY THE 
COMMITTEE ON TRADE AND DEVELOPMENT  
46. The Chairman informed the Committee that, on 29 November 2004, Ambassador Ismail, in 
his capacity as Chairman of the Special Session of the Committee on Trade and Development, had 
held informal consultations with  the Chairpersons of those bodies to which Category II proposals on 
Special and Differential Treatment (S&D) had been re ferred to.  In the case of this Committee, this G/AG/R/42 
Page 8  
 
 concerned the pending proposal by the African Group (paragraph 52 of TN/CTD/W/3/R
EV.2).  The 
purpose of the meeting was to discuss how efforts c ould be better coordinated to fulfil the mandate 
contained in the July Package with regard to S&D.   Ambassador Ismael made a proposal, which drew 
wide-spread support from the Chairpersons present, that Members re-examine each of the remaining 
agreement-specific proposals with two possible non-ex clusive options in mind.  The first option was 
that the S&D proposal concerned be redrafted or me rged with other similar proposals to make it better 
targeted.  The second option was that Members iden tify the underlying development issues of each 
agreement-specific S&D proposal and address it in th e context of several cross-cutting issues, which 
were elaborated in Ambassador  Ismael's statement at the Trade Negotiations Committee of 14 February 2005 (TN/CTD/11). 
47. The Chairman recalled that under the terms of  the July Package, all Committees to which 
Category II proposals had been referred to, were "to report to the General Council, with clear 
recommendations for a decision, as soon as possible and no later than July 2005" (paragraph 1(d) of WT/L/579 refers). 
C. WTO
 LIST OF NET FOOD-IMPORTING DEVELOPING COUNTRIES :  APPLICATION BY MONGOLIA  
 
48. The Committee noted that the Co mmittee's November 1995 decision on the establishment of a 
WTO List of NFIDCs for the purposes of the Marrak esh NFIDC Decision provided that the list shall 
be reviewed by the Committee at its regular March m eetings (paragraph 3 of G/AG/3 refers).  In this 
regard, an application had been received from Mongo lia.  The relevant statistical data, submitted by 
Mongolia in line with paragraph 2 of the Committe e's decision on the establishment of the list, was 
available for consultation in the Agriculture and Commodities Division. 
49. Mongolia stated that it had been facing serious food shortages for the past 15 years due to 
severe winter and summer droughts.  This came in addition to the abrupt discontinuation of 
Government subsidies that were provided to th e sector during the time of the centrally planned 
economy.  These "shocks" had substantially deplet ed household coping mechanisms and had resulted 
in increased poverty.  According to the FAO, near ly 35 per cent of the total population lived below 
the poverty line, and in some urban areas, 70 per cent. 
50. Mongolia had been affected negatively by the re form measures in agriculture that included the 
privatization of the livestock and crop farms and the full liberalization of trade in agricultural 
products.  For the past 10 years, Mongolia had imported over 60 per cent of its basic foodstuff 
consumption;  for most of the basic foods the impor t share was 100 per cent.  According to the latest 
FAO Global Information and Early Warning Syst em on Food and Agriculture report, Mongolia 
continued to suffer from a substantial food shorta ge during 2004/2005.  Since the country had a 
serious balance-of-payments problem, commercial im ports covered only a minor part of its food 
needs.  Mongolia would, therefore, continue to  depend on food aid and other types of assistance from 
the international institutions and bilateral donors.  To be eligible  for more aid and assistance, 
Mongolia needed to be classified as a net food- importing developing country.  Mongolia expressed 
the hope that Members would support its applica tion and, thus, help Mongolia cope with food 
shortages. 
51. The Committee agreed to include Mongolia in the WTO List of NFIDCs (G/AG/5/Rev.8). 
D. E LECTION OF CHAIRPERSON  
 
52. The Committee took note that the Council for Trad e in Goods had agreed, at its meeting on 
11 March 2005, inter alia , on the nomination of Dr. Magdi Farahat for election as Chairperson of the 
regular meetings of the Committee on Agriculture.  The Committee confirmed, by acclamation, the  G/AG/R/42 
 Page 9 
 
 
 election of Dr. Magdi Farahat as Chairperson of th e Committee to hold office until the end of the first 
meeting in the year 2006 under Rule 12 of the Committee's Rules of Procedure (G/L/142). 
53. The Committee thanked the outgoing Chairman, Mr. Roald Lapperre, for the sovereign 
manner in which he had conduc ted the Committee meetings. 
E. M ATTERS RAISED UNDER "OTHER BUSINESS " 
Date of Next Meeting  
54. The next regular meeting of the Committee on Agriculture will be held on Thursday, 
2 June 2005.  The airgram convening the meeting a nd containing the draft agenda will be issued on 
Monday, 23 May 2005. G/AG/R/42 
Page 10  
 
 ANNEX
 
 
  Page  
 Review of notifications by the Committe e on Agriculture at the meeting on  
16 March 2005   
 
 (i) imports under tariff and othe r quota commitments (Table MA:2 ):  Morocco 
(MAR/30), the Philippines (PHL/32) and the United States (USA/48/Corr.1 and 
USA/54); 11 
    
 (ii) use of the special safeguard (Tables MA:3 to MA:5 ):  Japan (JPN/104, JPN/103 
and JPN/105); 13 
    
 (iii) domestic support commitments (Table DS:1 ):  the European Communities 
(EEC/51) and Japan (JPN/108); 15 
    
 (iv) export subsidy commitments (Tables ES:1 to ES:3) :  China (CHN/4), the 
European Communities (EEC/52)  and Japan (JPN/106); and 24 
    
 (v) actions taken within the framewo rk of the Marrakesh NFIDC Decision 
(Table NF:1) :  the European Communities (EEC/50). 26 
    
   
    
    
   
  G/AG/R/42 
 Page 11 
 
 
 ANNEX  
 
Review of notifications by the Committee on Agriculture at the meeting on 16 March 2005 
 
Summary of specific points raised and responses thereto  
Table MA:2 Notifications 
 
Morocco    G/AG/N/MAR/30     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Australia – Whether Morocco intends to modify its 
tariff quota regime or move to a tariff-only regime for 
sheep meat, sorghum and colza seeds because of very 
low or zero fill rates of the tariff quotas concerned. 
New Zealand – Reasons for the further decline of the 
fill rate of the sheep meat tariff quota from 
approximately 50% in 2001 to around 4% in the 2002 
reporting period. Sheep meat  (HS 0204).  An analysis of imports of 
sheep meat shows that the tariff quota fill rate was, 
on average, 25% during 1995-2002, although in 1997 
it reached 86%.  The tariff  quota utilization for sheep 
meat is a function of the consumption habits of the 
population in Morocco wh ich has a preference for 
beef.  In fact, total imports of beef were 1.5 to 2.5 
times higher than the tariff quotas for beef during 
1995-2002. 
Sorghum (HS 1007) .  The average tariff quota fill rate 
for sorghum was 38% during 1995-2002.  In 1996 
and 1999 the utilisation rates exceeded 100%.  Substitution between maize, barley, certain grains 
and sorghum accounts for th e low fill rate of the 
sorghum tariff quota.  The fill rates of the barley and maize tariff quotas were always in excess of 100% 
during 1995-2002.  Total maize imports registered, 
on average, an increase of 419% over the average tariff quota quantity during 1995-2002.  For barley, 
the increase in the same period was 22,654%. 
Moreover, the applied tariff on sorghum imports 
(25%) is significantly lower than the bound in-quota 
rate for this product (165%).  The administration 
method of this tariff quota is first-come, first-served.  
Colza (HS 1205) .  The average tariff quota fill rate 
for colza was 50% during 1995-2002, although in 
1995, 1996, 1998 and 2000 the fill rates were in 
excess of 100%.  Substitution between the various 
oilseeds, on the one hand , and the preference for 
soybeans, on the other hand, because of strong 
demand for soybean oilcakes as feedstuff accounts 
for the low fill rate of the colza tariff quota, particularly in recent years. 
Furthermore, the tariff currently applied on colza 
imports (2.5%) is significantly lower than the bound 
in-quota rate for this product (146%).  The 
administration method of this tariff quota is first-come, first-served.  
 
 G/AG/R/42 
Page 12  
 
 Philippines     G/AG/N/PHL/32     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Australia – Whether the Philippines intend to modify 
the tariff quota regime or move to a tariff-only 
regime because of very low fill rates of most TQs. By the end of the implementation period (30 June 
2005) all in-quota tariff rates will be harmonized with 
their corresponding out-of-quota tariff rates, except 
for three products.  The Philippines will therefore 
apply a single tariff system by the end of the 
implementation period. 
 
 
United States     G/AG/N/USA/48/Corr.1 and USA/54     Tariff Quota Fill (Table MA:2) 
Points raised by other Members  Response by Notifying Member 
Australia –  Reasons for the very low or zero fill rates 
of the TQs for cotton products.  
 
  The United States implements its TQs in a 
transparent and WTO-consistent manner.  Demand 
for cotton is primarily filled from domestic 
production since the United St ates are a producer and 
exporter of cotton.  Imports under TQ reflect special 
import needs for niche markets, such as high quality 
cotton from Egypt.  In addition, an ever-increasing amount of cotton is imported in the form of textiles 
and apparel. 
 
 
  G/AG/R/42 
 Page 13 
 
 
 Tables MA:3 to MA:5 Notifications 
 
Japan     G/AG/N/JPN/104     Volume-Based Special Safeguard (Table MA:3) 
Points raised by other Members  Response by Notifying Member 
United States – Clarification sought regarding the 
precise reporting periods used in 2001 to 2003.  The notification covers the annual period of October 
to September, in accordance with the cycle of 
production of starch.  
Clarification sought regard ing the source of the 
import data in the calculation of the trigger volume 
for maize starch since th e notified volumes are not 
consistent with import data reported by Japan 
Customs for the same products (HS 1108.12). 
Follow-up question by the United States:  
Confirmation sought that the source of the trade data 
was as cited by the United States. The volume of imports and the data of origin come 
from the trade statistics but the calculation is made on 
the basis of the starch period.  
United States – Whether the consumption data refer 
to maize starch only or  include all starch.  The consumption data are for maize starch only. 
Information sought concerning the applied duty for 
maize starch imported outsi de the starch TQ of 
157,000 tonnes. The out-of-quota tariff is yen 119 per kilo of corn 
starch.  
Requested information regarding the procedures for 
filling the starch TQ for all imports under HS 1108 
(starches).  Enquired if there are any provisions for allocating the TQ between the different starches and 
products incorporated in the TQ. The fill rate of the TQ for starch, inulin and starch-
based preparations has been stable at around 90% 
over the last years.  The amount of quota that is returned unused is subsequently redistributed 
together with the amount that has not been allocated.  
The tariff quota applies to all products and the choice of the goods to be imported is left to each importer. 
Whether Japan has notified a special safeguard price 
trigger or volume trigger for any other products under 
the HS code 1108 (starches), for example, 
cassava/manioc starch (1 108.14), potato starch 
(1108.13), or other starches. Japan notified special safeguard actions (price-based 
or volume-based) for manioc (cassava) starch 
(1108.14); other starches (1108.19); inulin (1108.20) 
and wheat starches (1108.11090). 
Whether Japan has assessed any additional duty on maize starch since the special safeguard became 
effective on 1 December 2004.   In accordance with Article 5.4 of the Agreement, one 
third of 119 yen per kilo has been levied as an 
additional duty.  
 
 G/AG/R/42 
Page 14  
 
 Japan     G/AG/N/JPN/103 and JPN/105     Price-Based Special Safeguard (Table MA:4) 
Points raised by other Members  Response by Notifying Member 
Australia –  In accordance with the transparency 
requirements set out in Article 5.7 of the Agreement, 
could Japan provide information concerning the level 
of duty levied on the products (including the method 
of calculation). 
 
 
  
Follow-up comment by Australia:  Expressed concern 
about the price-based special safeguard and noted 
that the data requested are needed to understand how 
the trigger operates. The information submitted is in conformity with the 
standard format of the Committee on Agriculture and 
the Agreement on Agriculture .  Japan considers that 
the measure is sufficiently transparent.  In order to 
ensure confidentiality of the import declarations of 
business activities, Japan never publishes import 
prices for products covered by the measure nor the amount of the additional duty.  The method of 
calculating the additional duty is defined in 
Article 7.4 of the "Law on temporary Customs duty measures", a law which is based on Article 5.5 of the 
Agreement on Agriculture. 
United States – Whether Japan assessed an additional duty on any products from tariff item 1904.10-212 (also known as 1904.10.0212 – prepared foods 
obtained by the swelling or roasting of cereals or cereal products) since it became effective on 
8 December 2004; and in the affirmative, what was 
the country of origin of  the affected product? 
 
Follow-up comment by the United States : 
Clarification sought whether information concerning 
the country of origin is also confidential. The price-based speci al safeguard on rice 
preparations was only applied on 8 December 2004 and has not since been applied for this type of 
product. 
See also the reply given above to Australia.  
 
  G/AG/R/42 
 Page 15 
 
 
 Table DS:1 Notifications 
 
European Communities   G/AG/N/EEC/51      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Green Box 
Pest and disease control  
Australia/Canada – Explanation sought for the 
increase in expenditures from €726.2 million to 
€1.72 billion.   
The level of spending in 2000/2001 of approx. €700 
million was exceptionally low in comparison with 
previous years.  The expenditures of €1.7 billion in 
2001/2002 are a return to the normal level including 
the expenditure not executed in 2000/2001. 
General services:  "Other farm services"  
Australia/New Zealand – Reasons for the increase 
from €36.2 million in 2000/01 to €164.1 million in 
2001/02 for "other farm services".  Clarification 
sought regarding what constitutes "farm relief" and whether this support would be better notified under 
paragraph 8 of Annex 2.  
The figure for 2001/2002 will be corrected and 
should read €43.5 million. The payments are not 
made directly to producers and, therefore, should not 
be notified under para. 8 of  Annex 2 of the Agreement. 
Payments for relief from natural disasters  
Canada – Clarification sought as to how the damage 
threshold of "20% of normal production in the 
less-favoured areas" (Article 11.3.1 of 2000/C28/02) 
and the multi-year accumulation of damage (Article 
11.3.4 of 2000/C28/02) meet the criteria of paragraph 8(a) of Annex 2.  
Clarification sought regarding the programme in 
question.   
Structural adjustment a ssistance provided through  
producer retirement programmes  
Australia – Reasons for the increase of expenditures 
for producer retirement programmes from 
€663.1 million in 2000/01 to €802.4 million 2001/02.  Noted two types of payments and requested info 
about the proportion of funding spent on 'aid for early 
retirement from farming' and the guidelines for the 
eligibility.   
 
The increase in 2001/2002 is a return to the level of 
expenditure before 2000/2001 which was around 
€800 million.  In 2000/2001 a new programming period for the structural fu nds became effective that 
has caused delays in the payments for some of the 
programmes.  Programmes had to be redesigned and 
adopted anew; the role of subsidiarity in the 
programmes was reinforced .  The guidelines under 
which applicants are eligib le to receive aid can be 
consulted in Chapter IV of Regulation 1257/99 and in 
Chapter I Section 4 of Regulation 445/2002. G/AG/R/42 
Page 16  
 
 European Communities   G/AG/N/EEC/51      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Structural adjustment a ssistance provided through 
resource retirement programmes  
Australia – Reasons for expenditures being 
significantly lower in this notification (€91.5 million) compared to the previous year (€448.8 million).  
Does this imply that land has moved out of permanent set aside?  
Is there a link between the new Blue Box payments 
for voluntary set-aside (€37.7 million) and the 
reduction in the resource retirement payments?  
 
Referred to its reply at the meeting on 23 September 
2004 (see G/AG/R/40, page 23) where the figure for 2000/2001 had been corrected to €88.4 million.
  
There is no link between voluntary set-aside and 
resource retirement payments.  They are of a different 
nature. 
Wine subsidies  
United States – Reasons for the difference between 
the notified expenditures for restructuring in the wine 
sector and the published EC expenditures. 
Whether the total expenditures were only for the 
purpose of vineyard restructuring or whether other EC expenditures for restructuring of the wine sector 
are included elsewhere in the domestic support 
notification?  
 
The figure has been corrected from €448.8 million in 
2000/01 to €88.4 million (G/AG/R/40, page 23, 
refers).  A corrigendum for EEC/49 will be provided. 
Expenditure for vineyard restructuring is included in 
Structural Adjustment through Investment aids. 
Expenditure for grubbing up is included in Structural 
adjustment through resource retirement. 
Requested an update concerning EC member State 
utilization of this measures in the 2001/2002 period 
and confirmation sought regarding the status of use or non-use with respect to Art. 14.4 Regulation 
1493/99.   Member States have not used Art 14.4 of Regulation 
1493/99 until now. 
Clarification sought regarding the anticipated time-frame for this measure, taking into account the 
criteria in Annex 2, paras. 11(d) and (e). At the level of the produ cer, the payments are only 
given for the period of time necessary for the 
realisation of the investment.   G/AG/R/42 
 Page 17 
 
 
 European Communities   G/AG/N/EEC/51      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Structural Adjustment A ssistance provided through 
Investment Aids  
Australia – In relation to "aid for young farmers", 
Regulation 1257/99 permits setting-up aid to facilitate the establishment of young farmers as head 
of the holding for the firs t time.  The stated policy 
objective is to increase the levels of investment in 
agriculture which … is most likely to take place 
following the establishment of younger farmers "new entrants".  Clarification sought as to how this 
initiative meets the criteria of Annex 2, 
paragraph 11(f).  How does the EC determine the economic value of the struct ural disadvantage that is 
being compensated? 
What proportion of spending under this heading was 
provided under the Aid for Young Farmers initiative? 
Follow-up comment by Australia:  The question 
concerns the issue of how the economic value of the 
structural disadvantage of th is measure is determined 
that the EC is compensating for.   
 
The payments for structural  disadvantages for which 
compensation is provided, are indicated in section 2 of Regulation 445/2002, currently Regulation 
817/2004.  
 
  
 
  
 
Expenditures were approx. €200 million.
 
 The payments are intended to raise the level of skills 
and knowledge, and the maximum amount is fixed 
per farm.  
Organic marketing support  
United States – Marketing support for organic 
products, including a German organic logo, was 
announced in 2001 by Germany at a level of €7.5 million.  What is the value of marketing 
programmes provided by each member State for 
organic products in 2001?  Are these programmes included in the notification?  Enquired about the 
eligibility to utilize the German or other member 
State organic logos and any requirements or restrictions.  
The value of marketing programmes for organic 
products per member State is not available.  The 
aggregate expenditures are notified under para. 2(f) of Annex 2, including other marketing and promotion 
expenditures.  The German organic logo as well as 
other organic logos which are in use across the EC may be used by producers in other member States 
and non-EC countries, provided that the product on 
which the logo is displayed complies with the conditions for its use. 
What is the value of EC and member State support 
for conversion to organic farming, including any 
additional support provided to organic farmers after 
the organic conversion process?  
 The value of domestic support for organic farming is 
included in the amounts notified under para. 12 of 
Annex 2.  The expenditure for organic farming is not 
available because it is paid in the context of 
integrated programming at the regional level.  The support framework for agri-environmental 
commitments is defined in Articles 22, 23 and 24 of 
regulation 1257/99.  Implementation may vary according to local conditions. G/AG/R/42 
Page 18  
 
 European Communities   G/AG/N/EEC/51      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Blue Box 
Australia/Canada/New Zeala nd –  Requested a Table 
DS:2 notification for the new programme of 
"voluntary set aside" payments.  
Follow-up comment by New Zealand: Explanation 
sought how this measure meets the criteria in Art. 
6.5(a) of the Agreement.  This measure is an integral  part of the Agenda 2000 
package notified in notification G/AG/N/EEC/17 of 
17 September 1999.  
Undertook to provide a response. 
 
Amber Box 
Support for olive oil  
Australia – Price support for olive oil increased from 
€2,070.4 million to €2,675.7 million.  Whether the 
payments were made to producers or processors and 
how the volume of support to each producer/processor was calculated.  Enquired if 
support was calculated on the basis of the difference 
between a Community price and the average price in 
competing third countries, and which third country 
markets and methodology were used.   
The current AMS notified is based on a price gap 
calculation.  The external reference price was 
calculated on the basis of refunds used in relation to 
internal support prices for the main EC export markets and subsequently fixed in the Uruguay 
Round negotiations and used as a reference value 
ever since. 
 
Support to beef  
Canada – Explanation sought on how the referenced 
payment support is accounted for in the price gap 
calculation and why the paym ents are not reported 
separately from market pr ice support.  Are these 
payments accounted for in G/AG/N/EEC/49 or in G/AG/N/EEC/51?  
The Amber Box support in the beef sector is covered 
by a price gap calculation.  The Blue Box direct 
payments are not included and are notified separately 
(G/AG/N/EEC/51, page 5). 
United States – Requested information about additional beef subsidies to producers by EC member 
States.  Referred to the reply given to Canada.  In addition, a 
breakout of the price- gap calculation for each 
member State is not available. 
Support for pig producers  
Australia – Noted a substantial increase in 
exceptional support measures  for pig producers from 
€9.6 million to €32.7 million.  Enquired about the 
form of support, eligibility for receipt of this support 
and the calculation of support.   
This  concerns direct payments to producers on the 
basis of Art 20 of Regulation 2759/75.  The figure 
should read €2.7 million instead of €32.7 million.  A 
corrigendum will be provided.  
Canada – Request for corrigenda for previous year concerning subsidies for private storage of pig meat,  
as announced by the EC at the June 2004 meeting.  Confirmation sought that no subsidies for private 
storage of pig meat were provided in 2000/01 and 
2001/02 since the referenced Regulation 1046/01 does not provide for private storage. The figure should read  €2.7 and not  €32.7 million. 
Confirmed that payments  are private storage 
contracts to producers.  Confirmed the inclusion of the subsidies for  private st orage in the notification. 
Since de minimis  applies, the total AMS figure is not 
affected.  G/AG/R/42 
 Page 19 
 
 
 European Communities   G/AG/N/EEC/51      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Fruit and vegetable subsidies  
United States – Information sought regarding the 
total value of subsidies allocated by EC member 
States to producer organizations in 2001 and whether 
any of these subsidies are included in this 
notification.   
Total expenditure was €343 million and is 
Community funded. 
What are the requirements for participation by 
producer organizations and is there a list of approved 
producer organizations by EC member State? Requirements for being recognized as a producer 
organization are listed in article 11 of Council 
regulation 2200/96.  More detailed provisions are set 
out in Commission regulation EC n°1432/2003 and member States are allowed to set more stringent 
criteria. Member States ar e obliged to inform the 
Commission of each recognition and withdrawal which takes place. 
Given that members of producer organizations are 
eligible to participate in intervention schemes for 
various products (e.g. apples, apricots, tangerines, peaches, etc.), what is th e value of both EC and 
member State intervention payments to producers 
through producer organizations in 2001? The total amount of EC expenditures for withdrawal 
in this respect is €117 million  for products covered 
by Regulation 2200/96.  Estimated expenditures for withdrawal by producer organisations of products 
outside Regulation 2200/96 have been notified on 
page 13 of G/AG/N/EEC/51. 
Production value of "Potatoes for processing to 
starch"  
Australia – Explanation sought for the increase in the 
production value of potatoes for processing to starch 
from €380.6 million in 2000/2001 to €6,494 million 
in 2001/2002.   
 
The figure for 2000/2001 will be reviewed.  The 
€6,494 million in 2001/2002 concerns the total value 
of potato production. 
 
 G/AG/R/42 
Page 20  
 
 Japan   G/AG/N/JPN/108      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Green Box 
Structural adjustment a ssistance provided through 
producer retirement programmes:  "Farmers pension 
programmes"   
Australia – Clarification sought as to how the 
farmers' pension programme confirms to the 
requirements of paragraph 9, Annex 2, including  conditions of eligibility, other than the required 
transfer of management.  Whether recipients are no 
longer involved in ma rketable agricultural 
production?  Information sought concerning the 
number of farmers having  received payments and 
whether the payment is one-off or provided on a regular basis.    
 
Confirmed the condition of total and permanent 
transfer of the management and withdrawal from 
production of marketable farm products and compliance with the conditions in Annex 2, 
paragraph 9 of the Agreement.  Other eligibility 
criteria are the following: th e recipient must transfer 
all of his cropland (i) prior to his 65
th birthday and 
(ii) to (a) a successor of le ss than 60 years of age, or 
(b) another agricultural produ cer of less than 60 years 
of age.  As the transfer of management is a condition 
to receive this pension, the pension would be stopped 
if the farmer went back to agricultural management.  
Payments are made quarterly  (February, May, August 
and November).  There were 644,000 beneficiaries in 2001 and 632,000 in 2002 (year-end figures).  
United States – Reasons for the increase in 
expenditures.  Enquired about changes in the 
programme’s eligibility criteria, payment structure, or other management details and whether the recipients 
of the payments permanently  retire from agricultural 
production once they participate in this programme.  Because of concerns about financial failure of the 
pension system of farmers, the system of budgetary 
equilibrium  which serves as an insurance premium for the affiliates has been  replaced by a funded 
system.  At the time of th is replacement, the state's 
contribution was also due to the disequilibrium between programme revenue and expenses.  See also 
response to Australia above. 
Environmental programmes: Payments for 
conversion from rice production  
Australia – Clarification sought regarding the 
eligibility criteria for this programme and the 
government authority responsible for ensuring the 
retired paddy fields are kept in good condition. 
Enquired about the average payment per hectare / acre under the programme and whether the returns 
from alternative products being grown on the land 
were deducted when calculating the amount of payments.  
 
This policy is based on supplementary support  
measures calculated on th e basis of the production 
area, intended for producers that switch from rice 
production to other agricultural products for the 
maintenance of paddy fields, to avoid adverse impacts on the environment.  Conditions include 
switching to products, other than rice, and adjustment 
of production as a result of a programme for each producer, whereby rules for management are pre-
defined by the authority regarding non-productive 
rice fields.  
The average subsidy per hectare is around 200,000 
yen.   
The returns from alternative crops are not removed in 
the calculation of the amount of payments.  G/AG/R/42 
 Page 21 
 
 
 Japan   G/AG/N/JPN/108      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Follow-up questions by the United States:  
Production conversion programmes may be covered 
by paragraph 12 of Annex 2 under environmental 
programmes.  In the past, Japan answered questions 
regarding this programme by stating that its objective 
is to "preserve favourable environment of paddy fields by growing crops other than rice or by adopting 
other appropriate practices." To comply with 
paragraph 12 of Annex 2, payments must relate to the extra costs or foregone income, in complying with 
the government programme.  Enquired why payments 
are based on the production of specific crops, such as wheat, barley, soybeans, or vegetables, given that 
preservation of paddies for environmental reasons is 
the main objective and not production of other crops.  
The payments are based on the amount of area 
planted to a specific crop and vary according to the 
crop or activity chosen.  There is a relationship 
between the payments recei ved for planting specific 
crops relative to the extra costs for complying with the programme or income foregone, as required in 
paragraph 12 of Annex 2.  However, income is not 
foregone; income is earned from planting other crops.  How do higher payments for planting wheat, barley, 
or soybeans reflect higher costs or greater foregone 
income than planting green manure or vegetables 
(activities that receive lowe r per-hectare conversion 
payments)?  Explanation sought how the payments to farmers that switch to other crops meet the criteria 
contained in paragraph 12 of Annex 2.  
Documentation requested (regulations or legislation) that describes how a payment can be received 
without planting a particular crop. 
The payments made under this programme have had 
an effect of increasing planted area for some 
commodities and do not appear to be minimally production- or trade-distorting.  Explanation sought 
why the rice diversion payments made for planting 
tradable commodities should not properly be notified as commodity-specific Amber Box payments.   
According to Japan's domestic support notifications, 
diversion payments increased sharply from: 
115.6 billion yen in FY 2000 as notified in 
G/AG/N/JPN/61 to 166.7 billion yen in FY 2001 as notified in G/AG/N/JPN/108 to 200.6 billion yen in 
FY 2002 as notified in G/AG/N/JPN/108.  Reasons 
for this significant increase.  Explanation sought 
which crops have expanded as a result of this 
payment.   
Undertook to provide a response.  G/AG/R/42 
Page 22  
 
 Japan   G/AG/N/JPN/108      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Blue Box 
Australia – Information requested regarding the 
approach used in setting the base period for the 2001 
and 2002 notifications and reasons for the decline of 
payments over the period 2000 to 2002.  The rice based revenue "base level of production" is 
the average of the total quantity of production and the 
quantity of the production from the "production 
adjustment area", multiplied by the "quantity of the harvest".  The statistics given correspond to the 
period 1995 to 1997.  
The actual "amount payable" is calculated when the 
market price of the year's harvest is lower than the 
"compensation standard price".  The aid will be 80 per cent of the difference between these two prices 
multiplied by the quantity of goods dispatched.  
The "compensation standard price" for 2001 is the 
average market price of the preceding three years 
(1998-2000); for 2002, this figure is the average over 
the preceding five years (1995 – 2001), exclusive of 
both the highest and the lowest market prices.  
Since 2000, the decline in the trigger price has 
diminished the difference between the trigger price 
and the market price which explains the decrease in 
the amount of payments.     G/AG/R/42 
 Page 23 
 
 
 Japan   G/AG/N/JPN/108      Domestic Support (Table DS:1)  
Points raised by other Members  Response by Notifying Member 
Amber Box 
Support for wheat and barley  
Australia – In Supporting Table DS:5 the production 
of wheat and barley refers to the government 
purchased volumes.  In the 2001 notification only 
1,400 tonnes are reported as eligible production and 
in the 2000 notification only 400 tonnes was identified as eligible production.  Clarification sought 
as to why Japan chose not to include the total volume 
of production for wheat and barley in these notifications?  The total volume of production is 
provided for other products benefiting from market 
price support, namely sugar and starch. 
Follow-up comment by Australia: Expressed concern 
about the level of AMS support to wheat and barley, which is similar to what happened in the case of rice, 
where the real level of support to the product has not changed.  The level of the AMS does not represent 
the level of support in Japan.  The level of support for 
wheat and barley is not reflected by the amount of purchases by the Japanese government but is 
determined by other factors within the control of the 
Japanese government.  
Follow-up comment by  New Zealand: Shared 
concerns in relation to the Japan environmental 
programme for rice, the production-limiting 
programme for rice and the AMS market price 
support issue, especially, the question of eligible production and how this relates to the AMS.  
Until 1999, the Japanese government purchased a 
large part of the domestic wheat and barley 
production to support the domestic price.  As from 
2000, most of domestic wheat and barley production 
has been marketed via the private sector.  This has resulted in the quantity of domestic production 
receiving price support bei ng substantially reduced to 
the amount purchased by the government.  Market price support is calculated on the basis of the quantity 
of production actually purchased by the government 
and eligible to receive th e administered price, in 
accordance with paragraph 8 of Annex 3 of the 
Agreement. 
In the past Japan has used for certain agricultural 
products the total quantity of production as the 
quantity for the AMS calculation. However, in the 
case of wheat and barley, the products are primarily 
marketed through the privat e sector since 2000, and 
government purchases are very limited.  The price 
paid by the government has no support effect on the 
price of these products. 
 
Milk subsidies  
United States – In 2000 milk subsidies were listed in 
Supporting Tables DS:5 and DS:6.  Clarification 
sought why no milk subsidies were notified for 2001 and 2002.  
In 2001 Japan eliminated the standard transaction 
price (the transaction price of milk for manufacturing 
use) for establishing an  appropriate price which 
reflects the real supply/demand situation. G/AG/R/42 
Page 24  
 
 Table ES:1 to ES:3 Notifications 
 
China     G/AG/N/CHN/4    Export Subsidies (Tables ES:1)  
Points raised by other Members  Response by Notifying Member 
United States – China has reportedly announced 
plans to increase rebates of its value-added tax 
(VAT) for exports of agricultural commodities by 
increasing the "base price" upon which the VAT 
rebate is calculated.  Clarification sought as to how the base price for calculati ng the rebate of the VAT 
for agricultural commodities, which are exported, is 
determined and what the current base price is. 
 
  
 
  The prices of agricultural products have become 
market oriented since the accession to the WTO.  
This reform had led to price fluctuations responding 
to the changes of supply and demand in domestic 
market. The base price in the calculation of the VAT varies in different marketing periods and amongst 
different regions.  
The operations are as  follows: For export 
commodities of farm producers, the VAT rebates are 
calculated taking the sum in the VAT special invoices as the base.  For commodities produced by 
exporters their own VAT rebates are calculated based 
on the FOB price in the export invoice.  
Clarified that the Chinese government had never 
announced any plan to increase the rebates of its 
VAT on exports of agricultural products by 
increasing the "base price".  
 
 
European Communities     G/ AG/N/EEC/52    Export Subsidies (Tables ES:1, ES:2 & ES:3)  
Points raised by other Members  Response by Notifying Member 
United States – Reasons fo r the re-introduction of 
export subsidies for wheat. 
Follow-up comment by Australia/Canada/New 
Zealand/Argentina: Expressed concern about the re-
introduction of export subsidies at this point of 
negotiations.  Current export subsidies are not yet up for review.  
The EC will respect its WTO commitments and the 
export subsidies will be notified in the relevant future 
export subsidy notification.  
United States – Enquired what percentage of food aid 
donations reported came from commodities produced 
in the EC. 
 
  
 
  The donations reported on page 2 are assumed to 
come from within the EC. The quantities reported on 
page 8 (Table ES:3) come from other origins.  If donations were not attributable to a specific origin, 
they were assumed to originate in the EC.  The 
quantities notified are almost fully untied food aid, as EC food aid is essentially given in cash form.  The 
support is demand driven.  Food aid does not need to 
be provided from Community origins and will in most cases be sourced locally. 
Encouraged the US to include  ES:3 Tables in future 
notifications.  
 
  G/AG/R/42 
 Page 25 
 
 
 Japan     G/AG/N/JPN/106    Export Subsidies (Tables ES: 3)  
Points raised by other Members  Response by Notifying Member 
New Zealand - Questioned whether the food aid was 
in fully grant form or provided on concessional 
terms. Confirmation sought whether any food aid was 
intended to be (or was in fact) monetised in the recipient countries. 
 All notified food aid is entirely in fully grant form. 
Food aid from Japan is carried out on request from 
international organisations or from the recipient 
countries to contribute to their development.  Such aid is utilized under the responsibility of the 
recipient.  G/AG/R/42 
Page 26  
 
 Table NF:1 Notifications 
 
European Communities     G/AG/N/EEC/50   Marrakesh NFIDC Decision (Table NF:1)  
Points raised by other Members  Response by Notifying Member 
United States –  Clarification sought regarding the 
scope of the aid transactions included in this 
notification.  Are the transactions limited to those 
undertaken by the EC on behalf of the European 
Communities, or do they include all, or part of, EC member State transactions of this nature? The notification is based on data also provided by 
member States. 
The footnote to the table provides for a mixture of actual expenditures together with planned, but not yet 
executed budgetary amounts.  Clarification sought as to which items are mixtures and as to the percentage 
of actual to unutilized allo cated budgetary amounts. The amounts are commitments.  The footnotes will 
be changed to make this clear. 
 
 
__________