RESTRICTED  WORLD TRADE  
ORGANIZATION  G/AG/R/49 
19 November 2007 
 (07-5041) 
Committee on Agriculture  
  
 
SUMMARY REPORT OF THE MEETIN G HELD ON  26 SEPTEMBER 2007 
 
Note by the Secretariat
1 
  
1. The Committee on Agriculture held its forty-ninth regular meeting on 26 September 2007 
under the Chairpersonship of Ms. Valeria Csukasi of Uruguay.  
2. The agenda of the meeting as set out in WTO/AIR/3070 was adopted. 
I. THE REVIEW PROCESS  
A. M
ATTERS RELEVANT TO THE IMPLEMENTATION OF CO MMITMENTS UNDER THE REFORM 
PROGRAMME :  ARTICLE 18.6 
(i) Australia:  European Communities (EC) member States subsidies    
 3. Following up on questions posed in March
2, Australia sought further information on member 
State budgetary support to agriculture that was a dditional to the domestic support financed by the 
European Agricultural Guidance a nd Guarantee Fund (EAGGF).   Australia understood that, under the 
EC's internal arrangements, member States were empowered to provide State aids to agriculture 
financed from their individual budgets, subject to a pproval by the relevant EC authorities; and that, 
additional to such State aids, member States were  required to contribute, from their own budgets, to 
part of the costs of financing domestic suppor t under the Common Agricultural Policy (CAP).  
Consistent with the provisions of Ar ticle 18 of the Agreement on Agriculture , Australia asked the EC 
to provide further information on th e State aids to agriculture, includ ing (a) level of expenditure, types 
of programmes and any product-specific suppor t; and (b) level of member State budgetary 
expenditure in regard to the CAP domestic support programmes (product-specific and other). 
4. The EC clarified that its regular annual notifications to the Committee on Agriculture 
contained the relevant information on member Stat e budgetary support. The EC also confirmed that 
such member State support consisted of (a) the nati onal shares in the financing of measures under the 
CAP, and (b) the State aids approved by the EC.  Th is support was notified by the EC as an aggregate, 
i.e. together with EAGGF support, in accordan ce with the different domestic support categories 
reported in the notification.  The EC reitera ted that it indeed reported as a single entity. 
                                                      
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. 
2 G/AG/R/48, paragraph 25 of Annex 1 refers. G/AG/R/49 
Page 2  
 
  (ii) Australia:  Canada's changes of cheese compositional standards
    
 5. With reference to Canada's proposed amendmen ts to the Food and Drug Regulation and the 
Dairy Product Regulation
3, Australia sought details on the expect ed impacts of the changes to the 
cheese compositional standards on the increase of milk producers' revenues, including an explanation 
as to how that increased revenue would be genera ted, and a breakdown of information by likely 
sources of increased revenue (e.g., from increased pr ices for domestically-produced milk proteins for 
use in cheese-making;  from incre ased prices for milk products used as stock feed as a consequence of 
alternative market outlets becoming available).   
6. Canada reported that a quantitative analysis of the financial impacts of these regulatory 
proposals on milk producers and cheese processors ha d been carried out.  The quantitative analysis 
showed that the increase in the estimated milk-to- milk product ratios would result in a need for 
4,964,776 hl more milk.  It was estimated that, rath er than translating into a need for increased milk 
production, the proposed regulations would imply a shift in current milk utilization towards cheese-
making relative to other dairy products.  The shift in milk utilization away from lower value products 
(such as animal feed) towards cheese production w ould result in an additional $187,074,459 in 
revenue for milk producers. 
7. The EC highlighted its continued interest in Canada's domestic support to the dairy sector.   
(iii) Australia:  China's deposit requirements for agricultural imports for processing   
 8. Australia noted that China was implementing a new policy under which some agricultural 
products which were imported for further processi ng would be subject to deposit requirements.
4  The 
payment of a deposit would be refundable upon the e xportation of further processed products.  In this 
context, Australia wondered whether the domestically -produced like products were subject to similar 
deposit requirements and, if so, sought in formation on their implementation.   
9. China stated that, in order to avoid double ta xation, it applied a policy of importing goods in 
bond for processing trade.  As long as the imported goods were under the supe rvision of the Customs 
Office,  they were exempted from the import tariff and the VAT, i.e. until they were re-exported in a 
further processed form.  China pointed out that th e payment of a deposit was one of the supervision 
methods adopted by the relevant administrative ag encies. Announcement No. 44 of 2007 clearly spelt 
out the scope and payment level of that deposit, wh ich, in any case, was not to exceed the amount of 
import tariff and the VAT that would have been paid otherwise.  As regards the domestically-
produced like products, China indicated that, si nce importation in bond only applied to imported 
foreign products, which was the premise for th e implementation of a deposit payment, this 
requirement did not apply to domestic products. 
(iv) Australia:  Korea's application of  Article 9.4 export subsidies since 2005  
 
10. As a follow-up to the March meeting,5 Australia asked whether the measures in question 
remained available and whether grants ha d been made since the end of 2005.   
                                                      
3 On 16 June 2007, a Regulatory Impact Analysis Statement was published. It concluded that "… the 
proposed changes to the cheese compositional standards would be expected to have a positive impact on milk 
producers in terms of a revenue increase of approximately $187,074,459.00 per yea r."   ( Canada Gazette , Part 
I, pp. 1654-1663). 
4 Ministry of Commerce Announcement No. 44 of 2007 refers. 
5 G/AG/R/48, para. 75 refers (Korea's response to questions posed by Thailand).  G/AG/R/49 
 Page 3 
 
 
  11. Korea responded that the Government had partly supported the packing, sorting and 
transportation expenditures in connection with the e xportation of vegetables, fruit and flowers.  Korea 
considered that such export subsidies were exem pt from the reduction commitments undertaken by 
developing countries, in accordance with Article 9.4 of the Agreement on Agriculture.  Korea further 
indicated that, in 2005, the related expenditures am ounted to 28.9 billion Won and that the same level 
of support would be maintained in 2006. 
(v) New Zealand:  Canada – New expansion of the Special Milk Class Scheme and implications 
for exporters of milk components  
 12. New Zealand noted that the Canadian Milk  Supply Management Committee (CMSM) and 
Canadian Dairy Commission (CDC) had confirmed th e expansion of Special Milk Class (SMC) 4(a)1 
to allow special pricing for industrial milk used  in the manufacture of a number of nutraceutical 
products such as weight gain formulas, meal replac ement products, sports drinks and infant food 
formulations.  New Zealand expressed systemic con cerns about the implications of extending the 
SMC scheme for exporters of milk components and acces s for such products to the Canadian market.  
This was why, in 2007, clarification had been s ought from Canada as regard s the expansion of SMC 
5(c) for ice cream novelties, and why New Zealand was compelled again to raise similar concerns, 
particularly in relation to SMC 4(a)1.   
13. New Zealand pointed out that its concerns rela ted more broadly to recent developments in 
Canadian dairy policy, which, in its view, were lik ely to have serious implications for New Zealand's 
dairy exports.  In particular, Canada's decision earlier this year to invoke GATT Article XXVIII to 
restrict milk protein isolates; and the regulatory process relating to compositional standards for cheese 
(launched by the Government of Canada in Februa ry 2007) had been already raised by New Zealand 
in the framework of th e Committee on Agriculture.
6  As an exporter of dair y products and ingredients 
with longstanding interest in the Canadian mark et, New Zealand was concerned that through such 
measures Canada was undermining its  international commitments to provide access to its dairy sector. 
New Zealand requested Canada to comment on the pr otectionist trend in Canadian dairy policy and 
explain, with specific reference to SMC 5(c) and SMC 4(a)1, why the expansion of the SMC Scheme 
was considered necessary. 
14. Canada replied that developments in respect of SMC 5(c) and the "regular" milk class 4(a)1 
were a reflection of the changing nature of the do mestic demand.  Changes in the scope of these 
classes had been made so as to respond to new market development opportunities as a means to 
diversify production and innovate; and so as to en sure processors of a steady supply of dairy 
ingredients. 
15. New Zealand recalled that challenges to some aspects of Canada's SMC Scheme had been 
considered by the WTO Dispute Settlement Body.  New Zealand requested that Canada provide the 
reasoning behind its answer to New Zealand's question7 at the last Committee on Agriculture meeting 
to the effect that the Special Milk Class Program  was not subject to notification requirements under 
either the Agreement on Agriculture or the Agreem ent on Subsidies and Countervailing Measures.  
Canada clarified that, except for SMC 5(d), wh ich was found to provide export subsidies under 
Article 9.1(c) of the Agreement on Agriculture, none  of the Special Milk Classes constituted subsidies 
within the scope of the Agreement on Agriculture. 
                                                      
6 See, for example, G/AG /R/48, paras. 26-31. 
7 G/AG/R/48, para. 35 refers. G/AG/R/49 
Page 4  
 
  16. With reference to Canada's previous statement that there was no way to predict the impacts of 
the expansion of SMC 5(c) on the purchasing decisi ons taken by ice cream manufacturers with respect 
to ingredients,
8  New Zealand requested information on the actual impact of this measure as well as 
the monitoring mechanism in place, given that th e SMC had now been expanded and implemented.  
Canada highlighted that ice cream novelty manufactu rers accounted for 1.5 per cent of total sales 
under SMC 5(c) during the year 2006/07.  In 2006/07, the value of all dairy ingredients purchased 
under SMC 5(c) amounted to approximately $57.6 milli on.  The CDC administered the special classes 
and monitored the level of milk component sales under these classes. 
17. Commenting that the products in question occupi ed very small niche markets, New Zealand 
sought information on their value to the Canadian dairy industry under SMC 4(a)1 and 5(c).  Canada 
noted the lack  of meaningful data that would allow assess ment of the value of the market for the 
targeted nutraceutical and ice cream novelty prod ucts. Canada indicated that ice cream novelty 
manufacturers accounted for 1.5 per cent of the take- up of SMC 5(c).  Although direct conversions in 
monetary terms were not possible, it could be assume d that this would roughly translate to less than 
$1 million in the value of ingredients. As for SMC 4(a)1, which was administered by provincial 
marketing boards, there was no evidence that expansi on of this milk class had resulted in sales of milk 
component in 4(a)1 for nutraceutical products for the 2006/07 dairy year. 
18. Stressing that, in March 2007, Canada had stat ed that there were no plans for a further 
expansion of the SMC Program,9 New Zealand asked what the Canadian Government was doing to 
ensure that this remained the case. Canada  explained that the CMSMC had authority to take decisions 
regarding the Special Milk Classes. The CDC, as the administrator of Special Classes and Chair of the 
CMSMC, consulted regularly with the Government of Canada, notably to ensure that any proposals 
considered for adoption would be consis tent with Canada's trade obligations. 
19. New Zealand sought assurances from Canada that  the competitiveness of their dairy trade 
would not be further eroded through the expansi on of discounted domestic milk pricing through the 
SMC Scheme. Clarification was also requested on the CMSMC's decision-making process as regards 
the SMC Scheme, including with respect to any a dvisory role performed by the Government of 
Canada before decisions were ac tually taken. In particular, New Zealand wondered whether the 
CMSMC sought advice in relation to the impact on imported products and on international trade 
obligations. Canada provide d the relevant Web links to access such information.10 
20. The EC expressed continuing concerns regardi ng developments in Canada in this area. 
(vi) New Zealand:  United States – Mandatory price reporting regulation for livestock and meat  
 
21. New Zealand pointed out that the Agricultural Marketing Service (AMS) of the United States 
Department of Agriculture (USDA) had notified its intention in the Federal Register of 8 August 2007 
to re-establish and revise the reporting regula tion for the Livestock Mandatory Reporting (LMR) 
Program for Swine, Cattle, Lamb, and Boxed Beef. The LMR operated under the Livestock 
Mandatory Reporting Act of 1999 . The statutory authority for the programme had lapsed on 
30 September 2005 and reauthorizing legisla tion had been enacted in October 2006.  
22. New Zealand asked whether the programme had,  to date, delivered the livestock and meat 
price information that it claimed would be necessar y to safeguard US domestic meat producers; and 
                                                      
8 G/AG/R/48, para. 34 refers. 
9 G/AG/R/48, para. 35 refers. 
10 Web links to the information relating to the manner in which pricing decisions are taken for the 
different classes in the SMC permit Program were provided: (a) http://www.cdc.ca/cdc/index_en.asp?caId=124 ; 
and (b) http://www.milkingredie nts.ca/DCP/article_e.asp?catid=168&page=427 .  G/AG/R/49 
 Page 5 
 
 
  how price reporting requirements for imported meat ha d contributed effectively to this purpose.  New 
Zealand considered that the measure required im porting companies to disclose commercially sensitive 
information without necessity or reasonable justifi cation, while also creating burdensome compliance 
costs for these companies. In New Zealand's view, the measure might therefore impede the flow of 
trade of the products in question. 
23. The United States commented that the Federal Register notice on the proposed rule-making 
for LMR addressed the questions raised by New Zealand.  The open comment period provided a 
mechanism to submit concerns for consideration in  the rule-making process.  The LMR was a draft 
regulation which had not been finalized. However, the comment period for the proposed rule closed 
on 24 September 2007.  Since New Zealand had submitted comments and questions regarding the 
proposed rule through the formal rule-making process,  these had been incorporated in the rule-making 
process.  The United States noted that the possib ility to submit comments on this subject had been 
provided both through the internet site,11 and in writing.     
B. R EVIEW OF NOTIFICATIONS  
(i) Notifications in respect of which questions have  been raised in advan ce of the issuance of the 
convening airgram  
 24. The Committee reviewed the notifications as listed in the agenda.  Specific points raised with 
respect to these notifications and the r esponses thereto are summarized in Annex 1  to this report. 
(ii)  Notifications subject to review in respect of  which no questions have been raised in advance 
of the issuance of the convening airgram  
 
25. The Committee took note of the notifications which had been circulated in advance of the 
date on which the notice convening the present me eting was issued, but in respect of which no 
questions had been raised by that date under th e Committee's Working Procedures (G/AG/1).  These 
notifications are listed in Annex 2. 
(iii) Notifications circulated or made availabl e after the notice convening the meeting was issued  
 26. 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: 
(a) in the context of domestic support commitments (Tables DS:1 and DS:2):  from Mexico 
(MEX/13/Rev.1/Corr.1), New Zealand (NZL/50 and NZL/51), Trinidad and Tobago 
(TTO/10) and Tunisia (TUN/39);  and 
(b) in the context of export subsidy commitment s (Tables ES:1 to ES:3):  from Saudi Arabia 
(SAU/1) and Trinidad and Tobago (TTO/9). 
(iv)  Points concerning notificati ons raised at previous meetings
 
 
27. The Chairperson recalled that delegations have the possibility to inform the Committee of the 
outcome of discussions which are of general interest , but which may have been pursued bilaterally as 
a result of the review of notifications.  Th ere was no discussion under this agenda item. 
                                                      
11 See http://www.regulations.gov .  The United States further noted that  this website could also be used 
to search for information on all pending agricultural regulations and regulations in process, including the text of 
the draft rules and all related comments which have been submitted. G/AG/R/49 
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  (v) Counter-notifications
 
 28. The Committee took note that no counter-notifi cations had been received under Article 18.7 
of the Agreement on Agriculture. 
(vi) Deferred replies to questions  raised under the Review Process
 
 
29. There were no deferred replies to questions previously raised. 
(vii) Overdue notifications  
 30. The Chairperson recalled that paragraph 6 of  WTO/AIR/3059 contained a reminder regarding 
overdue notifications.  An updated room document showing the current status of compliance with 
notification obligations was made available by the Secretariat. While noting that 39 new notifications, 
including 16 in the field of domestic support, had be en received since the September meeting of the 
Committee, the Chairperson underlined that notif ications from 78 Members were still outstanding for 
the period 1995-2001.  Moreover, for the period 1995 to 2005, the total number of outstanding 
domestic support notifications from all Members amounted to 545.  The Chairperson emphasized the 
importance of these notifications within the context of reviewing the application of commitments in 
general and from the point-of-view of the ongoing ag riculture negotiations.  The Chairperson urged 
Members to fulfil their notification obligations as soon as possible. 
31. Australia endorsed the Chairperson's comments a nd stressed that the proper functioning of the 
multilateral system is reliant on all Members activel y participating in it, including through timely and 
full notification.  Australia further called on th ose Members who provide large amounts of domestic 
support to submit their outstanding notifications.   
II. OTHER MATTERS WITHIN THE PURVIEW OF THE COMMITTEE 
A. T
RANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF THE 
PEOPLE 'S REPUBLIC OF CHINA (WT/L/432) 
 
32. The Committee held its sixth annual review under paragraph 18 of the Protocol of Accession 
of the People's Republic of China.  The United St ates had submitted questions and comments to China 
in advance of the meeting (G/AG/W/68).   
(i) Statement by China  
 
33. Regarding Value Added Tax (VAT) exempti on for some agricultural products, China 
reported that the products, including grain which farmers produce and sell by themselves to the 
market were currently exempted from VAT. In th e meantime, as many other WTO Members, China 
granted a VAT rebate for grain products when these were exported.  However, pursuant to the Interim 
Regulation of the P.R.C. on VAT , entities involved in domestic purchase or importation of grain (other 
than producers of primary agricultural commodities)  must pay VAT for these products at the rate of 
13 per cent, which would be rebated during exportati on, at the same rate.  China believed that such 
practice was in line with GATT Article III and with  Article 3 of the Agreement on Subsidies and 
Countervailing Measures (SCM).  
34. Regarding VAT exemption for some industrial pr oducts, China believed that this issue would 
be dealt with more appropriately in the framewo rk of the SCM Committee rather than in the 
Committee on Agriculture.   G/AG/R/49 
 Page 7 
 
 
  35. Regarding the disclosure of tariff quota related in formation to the public, China indicated that, 
since its accession to the WTO, it had been faithfull y implementing its transparency obligations.  All 
information relating to annual tariff quota quantities,  application procedures, allocation methods and 
reallocation mechanisms in place for unused tariff quotas, was promptly published on the website of 
the competent Government agencies, such as the websites of Ministry of Commerce (MOFCOM) and 
the National Development and Reform Co mmission (NDRC).  For example, NDRC Announcement 
No. 64 of 2006  published information regarding the initia l tariff quota allocation for cotton for the 
year 2007, while NDRC and MOFCOM Announcement No. 47 of 2007  contained information 
regarding the reallocation of that tariff quota for 20 07.  Both documents could be accessed through the 
NDRC website. China therefore believed that it had fully honoured its commitment on transparency 
with respect to tariff quota administration.   
(ii) Follow-up questions and comments by  Members and China's responses thereto  
 36. The United States expressed appreciation for the information made available on the website.  
However, in the case of cotton, for example, the tariff quota was relatively small, while the actual 
imports were well above the tariff quota volume.  The United States had concerns regarding these 
additional increases in imports as well as regarding th e administration of the tariff quota for cotton in 
general. 
(iii) Report to the Council for Trade in Goods
 
 37. With respect to the Committee's report on the Tr ansitional Review to the Council for Trade in 
Goods, the Committee took note th at the Chairperson would submit a factual report on her own 
responsibility.  The report would make reference to all relevant documents su bmitted in the context of 
this review and make reference to the Secretaria t's summary report of this meeting reflecting the 
discussions held under this agenda item.
12 
B. I MPLEMENTATION -RELATED ISSUES  
 
38. The Chairperson noted that the Committee was required to consider three distinct issues under 
this standing agenda item namely (i) elaborating di sciplines on export credits, export credit guarantees 
or insurance programmes as per Article 10.2 of the Agreement on Agriculture, (ii) examination of the 
implementation of NFIDC Decision, and (iii) admini stration of tariff quota regimes and submission of 
related addenda.   
39. As regards the NFIDC Decision, the Committee was also considering the proposal by the 
African Group13 relating, inter alia , to the establishment of a revolvi ng fund as a possible means to 
address short term difficulties of LDCs and NFID Cs in financing commercial imports of basic 
foodstuffs.  A first report had been submitte d three years ago to the General Council14, followed by 
another factual update in June 2006.15  The Chairperson indicated that her May and July 2007 reports 
to the General Council on the Committee's consider ation of the proposal by the African Group 
essentially reiterated that the situation had remained unchanged since May 200616.  The Chairperson 
had also indicated that she remained available to  hold consultations to resolve this matter.   
                                                      
12 The report was subsequently circulated in document G/AG/24. 
13 Paragraph 52 of TN/CTD/W/3/Rev.2 (dated 17 Ju ly 2002).  The proposal was initially submitted to 
the Committee on Trade in Development in Special Session. 
14 G/AG/16 (dated 4 July 2003) 
15 G/AG/16/Add.1 (dated 13 June 2006) 
16 G/AG/22 (dated 16 May 2006) G/AG/R/49 
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  40. Cuba stressed that the disproportionate rise in fuel and food prices had adversely affected 
governments' ability to guarantee food security for their populations.  This was particularly the case for net food-importing developing countries and least- developed countries.  Cuba recalled that, in the 
context of the negotiations on export credits
17, it had submitted a concrete  proposal concerning the 
repayment period mentioned in the Chairperson's Re vised Draft Modalities for Agriculture. Cuba also 
pointed out that some developing countries ha d supported the granting of additional flexibilities 
within the new disciplines set out in paragraphs 7 a nd 8 of Annex D.  In Cuba's view, the question of 
the effective implementation of the Marrakesh Ministerial Decision did not only arise in the 
negotiation area.  It should also continue to be de bated in the framework of the regular Committee on 
Agriculture, pursuant to the Decision taken by the Doha  Ministerial Conference.   Cuba hoped that the 
discussions and work would resume on the basis of  the proposal submitted by the African Group. 
41. Argentina stated that, without prejudice to the provisions of Article 10.1 of the Agreement on 
Agriculture with respect to circumvention of ex port subsidy commitments, the establishment of 
additional and specific disciplines on export cr edits, export credit guarantees and insurance 
programmes remained an outstanding implem entation issue resulting from the Uruguay Round 
Agreement on Agriculture.  Argentina therefore request ed that this item be re tained on the agenda of 
the Committee on Agriculture in regular session. 
C. O THER BUSINESS  
 (i) Annual Report to the Council for Trade in Goods (CTG)
 
 
42. In line with past practice, a short and factual draft report for the CTG on the work undertaken 
by the Committee in the course of 2007 had been circul ated before the meeting in order to facilitate 
Members' consideration of this matter.  The Commi ttee took note of the report and agreed that, after 
updating as appropriate, it would be submitted to  the CTG on the Chairperson' responsibility.18  
(ii) Date of next meeting  
 
43. The next (50th) regular meeting of the Committee on Agriculture is scheduled for 
Wednesday, 21 November 2007 .  The convening airgram will be issued on Friday, 9 November 
2007, and the reminder airgram on Friday, 26 October 2007. 
(iii) Provisional schedule of meetings for 2008  
 
44. According to the Committee's rules of procedur es, regular meetings of the Committee are to 
be held in March, September and November.  Th e Committee took note of the provisional schedule of 
meetings for 2008.  The dates for each regular m eeting would continue to  be confirmed at the 
preceding meeting of the Committee.  The question of  whether there was a need for a regular meeting 
in June 2008 would be determined by the Chairperson following the March 2008 meeting in 
consultation with Members.  Moreover, the following  schedule may need to be re-visited in light of 
developments in the agriculture negotiations:  
[18 and 19] March 2008  
[24 and 25]  June 2008 
 [17 and 18] September 2008  [26 and 27] November 2008. 
                                                     
 
17 Annex D, TN/AG/W/4. 
18 The report was later circulated in  G/L/828 (dated  5 October 2007).  G/AG/R/49 
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  Annexes 
  
   Page
 
 
Annex 1 Summary of points raised with respect to notifications 10 
 Annex 2 Notifications subject to review  in respect of which no questions 23 
  have been raised in advance of the issuance of   the convening airgram  
 
    
 
  G/AG/R/49 
Page 10  
 
  Annex 1 
 
Summary of points raised with respect to notifications
 
 
 
 
Page  
 
(i) administration of tariff and other quota commitments (Table MA:1): 
- Chile G/AG/N/CHL/24 11 
- United States G/AG/N/USA/57 11 
 
(ii) imports under tariff and other quot a commitments (Table MA:2): 
- Australia G/AG/N/AUS/66 12 
- Chinese Taipei G/AG/N/TPKM/50 13 
- Tunisia G/AG/N/TUN/37 13 
 
(iii) special safeguard (Tables MA:3 to MA:5): 
- Japan G/AG/N/JPN/128 14 
- Chinese Taipei G/AG/N/TPKM/49 14  
(iv) domestic support commitments (Table DS:1): 
- Brazil G/AG/N/BRA/23 15 
- Mexico G/AG/N/MEX/13/Rev.1 19  
(v) new or modified domestic support measures exempt from reduction (Table DS:2): 
- Mexico G/AG/N/MEX/14 21 
- Switzerland G/AG/N/CHE/35/Rev.1 21   
________________ 
  G/AG/R/49 
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  (i) Table MA:1 
 
 Chile    G/AG/N/CHL/24  
 
1. Question by Thailand - What are the criteria used for country allocation of raw and 
refined sugar?  Why are only certain types of  end users, namely food industry and sugar 
processing, eligible for import quota allocation?  
 The 60,000 tonne, duty-free sugar tariff quota w as created as a result of Chile's renegotiation 
of its bound sugar tariff under GATT Article XXVIII in 2001.  The sp ecific country allocation within 
that tariff quota is the result of the negotiation Chile  undertook with its main sugar suppliers in that 
context.  The shares allocated to each country corr espond to their respective shares in Chile's sugar 
imports in the three years preceding the start of GATT Article XXVIII negotiations.      Concerning user eligibility for allocation of the sugar tariff quota, the current arrangement 
responds to the fact that the food industry is  the main user of imported sugar in Chile. 
 
 United States   G/AG/N/USA/57
 
 
2. Question by Thailand - What are the criteria used for country allocation of raw and 
refined sugar?  Why did some countries like Do minican Republic and the Philippines receive a 
large proportion of the sugar tariff quota?  Wh y do others like Thailand receive a much smaller 
volume?  What is "specialty" sugar?  
 The allocations for raw sugar are based on historical shipments during 1975-81.  The 
allocations to Canada and Mexico  for refined sugar are also based on historical shipments.  The 
remainder of the refined sugar tariff quota is una llocated.  All allocation shares are based upon trade 
during 1975-81.  The Dominican Republic shipped th e largest quantity of sugar to the United States 
during 1975-81.  Thailand's share is also based upon  its sugar shipments to the United States during 
1975-81, a period during which Thailand did not ship much sugar to the United States.   Specialty sugar is a sugar that fits the follo wing criteria:  brown slab sugar (also known as 
slab sugar candy), pearl sugar (also known as perl s ugar, perle sugar, and nibs  sugar), vanilla sugar, 
rock candy, demerara sugar, dragees for cooking a nd baking, fondant (a creamy blend of sugar and 
glucose), ti light sugar (99.2 per cent sugar with the residual comprised of the artificial sweeteners 
aspartame and acesulfame K), caster sugar, golden syr up, ferdiana granella grossa, golden granulated 
sugar, muscovado, molasses sugar, sugar decorations, sugar cubes, organic suga r, and other sugars, as 
determined by the U.S. Trade Representative, th at would be considered specialty sugar products 
within the normal commerce of  the United States.  In addition, speci alty sugars must be described in 
subheading 1701.11.10, 1701.12.10, 1701.91.10, 1701.99.10, 1702.90.10, or 2106.90.44 of the 
Harmonized Tariff Schedule (HTS) of the United States.  G/AG/R/49 
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  (ii) Table MA:2 
 
 Australia    G/AG/N/AUS/66
 
 
3. Questions by the Philippines - Could Australia  please elaborate on the change made in 
the reporting period of imports under tariff quota from calendar to financial year basis, 
particularly on un-manufactured tobacco?  How wo uld this change improve the transparency of 
tariff quota fill rates?  
 Australia has changed its reporting period for MA :2 notifications from a calendar to financial 
year basis in an effort to incr ease transparency. There has not been  any change in the administration 
of these tariff quotas. 
  Since 1995, Australia had been notifying in-quota imports on a calendar year basis, however the Australian cheese and curd tariff quota has been  administered on a financial year basis (July-
June).  Moving from a calendar to a financial year basis synchronises the WTO reporting period with 
the tariff quota administration period, improving the clarity and consistency of presentation of tariff 
quota fill rates.    Changing the reporting period basis has no imp lications for the Australian un-manufactured 
tobacco tariff quota, which, as outlined in the notifi cation, has not been applied since 1 January 1995. 
The customs duties for all imported goods under HS heading 2401 are set at zero.  4. Question by the Philippines - With reference to  footnote 1, could Australia provide more 
information on how its collection of excise equivalent duty on imports of un-manufactured tobacco ensures consistency in treatment for both imported and domestic goods in the 
Australian market?  
 Where goods that would otherwise be subj ect to excise are imported, the Australian Customs 
Tariff Act 1995  provides for the equivalent amount of excise duty to be collected upon importation. 
This allows for equity in the tax treatment  of both domestic and imported excisable goods. 
  The principle of "national treatment" (imported products should not be subject to any internal 
taxes or charges in exce ss of those applied to like domestic products) is found in Article III:2 of 
GATT 1994 and allows the excise equivalent duty to be applied to imports of un-manufactured 
tobacco.  
5. Questions by the Philippines - In footnote 2, it was indicated that the reported tonnage 
does not include tobacco which is imported temp orarily and subsequently re-exported.  Does 
this data reporting procedure also apply to p revious notifications on un-manufactured tobacco, 
e.g., in G/AG/N/AUS/55?  If not, could Australia  provide the reason for this change in data 
notification?  
 The additional information provided by Australia  is aimed at improving the transparency of 
tobacco import data.  It is important to remember that the Australian un-manufactured tobacco tariff quota has not been applied since 1 January 1995.  The customs duties for all imported goods under HS 
heading 2401 are set at zero. 
  The technical reason for the improvement is as follows. In previous notifications, there was a negligible difference between the amounts of un-manufactured tobacco imports entering the Australian domestic market and total un-manufactur ed tobacco imports (domestic plus re-exports). 
This situation changed in  2003/04.  For this reason Australia  has decided to provide additional 
information on the composition of tobacco imports.  G/AG/R/49 
 Page 13 
 
 
   Chinese Taipei   G/AG/N/TPKM/50  
 
6. Question by Thailand – Please clarify why th ere were no imports of banana (08030000), 
mango (08045020), and shaddock (08054020), despite the fact that the proportional volumes of import quota are allocated on an MFN basis.  Request for detailed additional information 
regarding tariff quota administration and import requirements for these 3 products.  
 The reason for the nil tariff quota fill rate for bananas, mangoes and shaddocks is that the 
related products from the main exporting countries do not meet with Chinese Taipei's SPS 
requirements.  In addition, the tariff quota administra tive process for bananas is on a "first-come, first-
served" basis, and for mangoes and shaddocks it is by auction.  For further information, please visit 
the website: http://www.bot.com.tw
. 
 
Follow-up comments:   Thailand noted that since this issue related to SPS requirements, Thailand 
would follow up with any further comments or questions in the SPS Committee.   Tunisia   G/AG/N/TUN/37
 
 
7. Question by Canada - Can Tunisia explain th e low fill rate for milk powder in 2005 and 
2006?  
 The tariff quotas for the covered products – including milk powder – are open, in accordance 
with the tariff quota management procedure issued  and notified to the Committee on Agriculture.  
Imports of milk powder and other tariff quota prod ucts reflect market demand for imports, and the 
low fill rate of this particular tariff quota is due to  the fact that there was little intention to import 
during the periods in question.  
 
8. Questions by the United States - The United States continues to notice that there is low 
quota fill for almonds.  We feel that the tariff quota administration could be more transparent. 
We also wonder whether the higher valued tax on  imported almonds over domestic products 
(22.5 per cent vs. 18 per cent); or the 10 per cent advance in income tax paid on tree nuts; could also be possible causes for the underut ilization of the almond tariff quota.   
 The tariff quota management and allocation pr ocedure is contained in Decree No. 1119, 
published on 10 June 1996 and establishing the pro cedure for tariff quota management.  The Decree 
provides for three alternative tariff quota management methods.  The choice of method is based on the 
rules of the GATT 1994 and on other relevant provis ions of the WTO Agreements. In practice, the 
choice of method affects neither agricultural impor t transactions nor the importers themselves.  
Indeed, the distribution of tariff quotas over the p ast few years has been conducted according to the 
traditional flow method, which ensures that new importers have a share of economic interest. 
 
 As regards VAT, there is no discriminatory impact on the imported product.  Indeed, any 
importer registered for VAT that sells the imported product to a buyer subject to VAT, charges tax on 
the cost price of the imported product increased by its value added, at a rate of 18 per cent.  The 22.5 per cent rate applies only when the imported pr oduct is re-sold by the importer to a buyer that is 
not subject to VAT.  The importer charges VAT at the increased rate of 22.5 per cent, and deducts the 
22.5 per cent VAT amount paid at the time of importation. 
  The 10 per cent pre-payment due on certain imports is an advance in income tax or business tax, not a consumption tax.  It is deducted from the total tax amount payable.  Any amount paid in 
excess is refunded to the importer.  The advan ce payment is for tax base control purposes and to 
ensure a more effective collection of taxes.  It does not in any way increase the overall tax amount G/AG/R/49 
Page 14  
 
  paid.  It does not, therefore, place any restriction on almond imports (reply provided subsequent to the 
meeting).  
 Follow-up comments
:  The United States noted continuing concerns regarding Tunisia's organization 
and structure of tariff quota administration.   
 
(iii) Tables MA:3 to MA:5 (SSG) 
 
 Japan    G/AG/N/JPN/128   
 
9. Questions by Australia - Australia notes that  the SSG was triggered several times on  
food preparations, i.e. on HS 1901.90.179, during the reporting period.  What was the duration of the application of the price-based SSG ?  Where volume-based SSG actions have been triggered (HS 0401.20.190 and HS 0402.21.119), ca n Japan please indicate the corresponding 
trend in domestic production for these products?  
 A price-based SSG measure is applied to ever y individual freight whose importing price falls 
below the trigger price.  A price-based SSG is not invoked for a certain duration but applied on a 
freight-by-freight basis.  There is no data of domestic production available for each tariff line in 
Japan.  However, the product-based data, which includ es relevant tariff lines, show a slight decline in 
the level of domestic production for recent years.  For example, domestic production of drinking milk 
(including HS 0401.21.119) was 4,957 thousand tonnes in 2003 and 4,738 thousand tonnes in 2005.  More detailed data are availa ble in Japan's national data Food Balance Sheet
.19  For reference, whole 
milk powder (HS 0401.21.119)  was subject to a price-based SSG.   
 10. Question by Thailand - Please clarify, with detailed calculation, the consistency of 
Japan's invocation of volume- and price-based SSG for the following products: HS 0401.20.190, HS 0402.21.119, HS 1006.30.090, HS 2106.90.119, HS 2106.90.129 with Article 5 of the Agreement on Agriculture.  
 The price- and volume-based SSG measures in question were invoked in  a consistent manner 
with Article 5 of the Agreement on Agriculture.  Th e calculation details are indicated in the following 
notifications: G/AG/N/JPN/121, JPN/41, JPN/75, JPN/116 and JPN/35. 
  Chinese Taipei    G/AG/N/TPKM/49
 
 
11. Question by Thailand - For each notified  product, please clarify with detailed 
calculations, Chinese Taipei's invocation of the price-based SSG, as well as consistency with 
Article 5 of the Agreement on Agriculture.   
 The use of 1990 to 1992 as the reference period fo r the calculation of the SSG price trigger is 
in accordance with Chinese  Taipei's accession commitments.  Details of the calculations are shown in 
the notification concerned, and are in accordance with footnote 2 of the Agreement on Agriculture.  
 
                                                      
19 See http://www.kanbou.maff.go.jp/www/fbs/fbs-top.htm   G/AG/R/49 
 Page 15 
 
 
  (iv) Table DS:1 
 
 Brazil    G/AG/N/BRA/23  
 
12. Questions by Australia - Supporting Table DS:1  – Can Brazil provide further 
information on expenditure relating to infrastr ucture and acquisition of equipment, currently 
notified under paragraph 2(a), of Annex 2 — including whether this expenditure may be more appropriately notified under paragraph 2(g)?  Ca n Brazil also confirm that such expenditure on 
infrastructure is directed to the provision or co nstruction of capital works only in accordance 
with the requirements of paragraph 2(g)?  
 Expenditure on general services relating to resear ch (under paragraph 2(a)) includes basically 
operation and maintenance of public agricultural rese arch stations and operation and maintenance of 
public meteorological observation stations. In princi ple, the activation of any programme of price 
support mechanism occurs when the market price is below the mini mum price. The minimum prices 
are annually established taking into account prosp ective scenarios of the products, production costs 
for different regions, and an intern ational parity price.  This met hodology allows for lower levels of 
governmental intervention, as market prices, as a rule, are minimum prices. Nevertheless, the 
activation of the programmes depends  on the budget availability at the moment. For this reason, the 
usage of existing mechanisms is limited to frontier regions far from consumption areas, sites with inadequate infrastructure, or regions with high percen tages of low-income or resource-poor producers.     
 13. Question by the EC - Supporting Table DS:1
 - Brazil notifies US$133 million for 
"Agrarian organisation and agrarian reform settlement ".  Could Brazil give a description of the 
type of support covered under this heading in 2004?  
 Expenditures on "Agrarian organisation and agra rian reform settlement" include: preparatory 
actions and resources to buy land; infrastructure to  agrarian reform settlement; consolidation and 
emancipation of agrarian reform settlements; capac ity building and actions to alleviate agrarian 
conflicts; education services to the beneficiaries of agrarian reform settlements; social, technical and 
judicial assistance to the beneficiari es of agrarian reform settlements. 
   
14. Questions by the EC - Supporting Table DS:1  - Public stockholding for food security 
purposes  - Brazil notifies US$65.3 million under this  heading (up from US$5.9 million in 2003) 
stating that the expenditures cover the " difference between the market price of the stocks and 
their acquisition price plus charges ".  Could Brazil inform, per product :  (a) what quantities for 
food security purposes were acquired during the reporting period?  (b) how the market price and the acquisition price for public stockholding were established during the reporting period?  (c) the average per unit difference for the year 2004 between the acquisition price and the 
market price?  Have differences between the acquisition prices and the external reference prices 
been accounted for in the AMS? If so, how much was accounted for?  (d) what quantities were released from stockholding for food security pur poses?  What methods for stock disposal, such 
as auction or fixed price sales, were used?  What quantities from public stockholding for food security purposes have been released sp ecifically for domestic food aid?  
 The notification under this heading includes only management of the food supply system, and 
pest and disease control of public stocks. The public stock is made unde r minimum price support 
measures (notified as such), and at market pri ce from low-income and resource-poor farmers under 
Programme to Strengthen Household Agriculture  (PRONAF). The expenditures of the latter in 2004 
were US$ 40 million, mainly for acquisition of beans.  G/AG/R/49 
Page 16  
 
  15. Questions by the EC - Supporting Table DS:1 - Domestic food aid
 - Brazil notifies 
US$347.8 million and mentions that domestic food aid concerns " activities related to 
expenditures with food assistance pr ogrammes targeted to the poor ".  Could Brazil give examples 
of such activities?  Have quantities of domestic food aid been provided from sources other than public stockholding for food security purposes? If so, at what prices have these quantities been 
procured?  
 The only activity notified under this heading was expenditures of public schools for 
acquisition of food.  
16. Questions by the EC - Supporting Table DS:5 - Price support
 - In 2003/2004, in most 
cases, the applied administered price is under th e external reference price whereas in 1995 the 
support price was higher than the external ref erence price.  Has any price support been 
operated in 2003/2004 with the administrative prices notified in column 4 on page 8? If so, what support mechanisms were used?  Why is, with the exception of maize and wheat, the eligible production for price support zero in 2003/04?  Why is the price support indicated in Supporting 
Table DS:5 negative whereas the support given for " public stockholding for food security 
purposes " notified in the Green Box is positive?  
 The administered price was notified in S upporting Table DS:5. The mechanism utilized to 
support maize and wheat were acquisitions by the Government through AGF (Federal Government 
Acquisition) or through Contract Option as notified.  The mechanisms of price support were not put in 
practice because the minimum price was below the market price and/or because there was no budget 
available to fund these programs.  The measures notified as Green Box were only related to the 
management of the food supply system, and pest  and disease control related to the public stocks. 
 
17. Questions by the EC - Supporting Table DS:5 - Price support
 - Could Brazil explain the 
difference in functioning between the two price support measures " Minimum price support " and 
"Contract option acquisition " for wheat and maize?  
 When support is notified as "minimum price support", it means that the Government bought 
the product directly from producers, usually after the harvest period, paying the minimum price established at the beginning the agricultural year.   When support is notified as "Contract option acquisition", it means that the Government 
bought the product directly from producers paying the minimum price established at the beginning of 
the agricultural year and added the cost of carryi ng the stock for a few months. Usually, the contract 
option is released during the harvest period to  be exercised a few months ahead.    
 
18. Questions by the EC - Supporting Table DS:7 - Other product-specific support
 –  
i. Please describe what measures are contained under " production & marketing 
credit " mentioned in column 3?   
The programmes under "Production and Marke ting Credit" are (a) mandatory private 
credit to be lent to producers in which the Government establishes the interest rate; (b) 
credit where the Government provides e qualization of interest rate; and (c) 
Governmental credit with interest rates below market interest rate.    G/AG/R/49 
 Page 17 
 
 
  ii. How does this measure differ from the production credit notified in Supporting 
Table DS:2?   
The production credit notified at Supporting Ta ble DS:2 refers only to the production 
credit provided to low-income and resource-poor farmers under " Programme to 
Strengthen Family Agriculture " (PRONAF) and investment credit (Article 6.2).  The 
Supporting Table DS:7 refers to the remain ing production credit and all the marketing 
credit provided to farmers eligible for the programme. 
iii. Why does Supporting Table DS:7 not show a heading " debt rescheduling 
programmes " like the ones mentioned in Supporting Tables DS:7 and DS:9?   
This is because the debt rescheduling programmes were not related to specific 
products.   
iv. Do the amounts notified in Supporting Ta ble DS:7 represent the interest benefit 
that accrues to the producers (i.e. the diff erence between the interest rate for the 
credits notified and representative market rates at the time)?  
Yes. The amounts notified represent the interest benefit that accrues to the producers. 
v. If so, what was the average interest benefit expressed in percentage points over 
the reporting period?   
The interest rate for the main production and marketing credit was 8.75 per cent, and 
SELIC interest rate (used as representativ e market rate) was 10.98 per cent for the 
same period. 
vi. Are support elements other than interest benefit included in the amounts notified 
in Supporting Table DS:7?   
Yes. PEP for cotton, maize and wheat, as notified.   
vii. What were the total credit availabilities a nd how much credit was used of those 
availabilities for all credit programmes notified under Supporting Tables DS:2, 
DS:7 and DS:9 taken together?   
The availability for credit programmes be nefiting from more favourable conditions 
were R$24.4 billion, as notified, and the cr edit used was R$19.1 billion in 2004.  
Regarding the debt rescheduling programs, the debt in values of December 2002 under 
"Securitização " Programme and under PESA Progr amme were R$7.9 billion and 
R$8.7 billion, respectively, but the cost estimates to the Government were actually much higher. The values notified reflected not the debt values but the cost to the 
Government during the implementation of the programmes. 
viii. Can Brazil confirm that there are credit fa cilities for milk? If so, where were the 
benefits accruing to the producers notified? 
Yes. There is credit available for milk under the same conditions as for the other 
sectors/products. This kind of benefit is no tified as non-product-specific because there 
is no allocation of credit for specific sector s/products. Nevertheless, even with no 
product-specific credit allocation, Brazil notifies as product-specific support all the credit provided for products covered by minimum prices (this is not the case of milk). G/AG/R/49 
Page 18  
 
   
19. Question by the United States - It appears th at the following has been omitted from the 
calculations.  Please explain.  Brazil reports under " Contract Option Acquisition " for maize and 
wheat but the Ministério da Agricultura, Pecuária e Abastecimento (MAPA)/CONAB reports "Contract Option Acquisition " expenditures for maize, whea t, cotton, rice, and sorghum.
20   
 Attachment 121 provides the information of all contracts sold by CONAB. The term " Contract 
Option Acquisition " refers only to the contracts exercised by  CONAB.  As no cotton, rice, or sorghum 
contract was exercised in this period, the title " Contract Option Acquisition " was not notified. 
 
20. Question by the United States - The notification reports other product-specific 
budgetary outlays for marketing support for co tton, maize and wheat under the PEP (Prêmio 
para Escoamento de Produto) programme.  However, MAPA/CONAB also includes US$2.39 
million (R$5.13 million) in PEP subsidies for cotton, and these are not included in the 
notification.22 
 Attachment 223 provides data from September 2004 to December 2004, and the notification 
covers the period from July 2003 to June 2004. 
 
21. Question by the United States - There is no notification for anim al products, however 
Banco do Brasil reports livestock commodity-sp ecific credit for production and investment.24 
Credit for production and investment for animal products is notified as non-product-specific, 
as the budget for production and investment credit is not allocated to specific sectors and/or products. 
Only credit provided for products with minimum price established is notified as product-specific. 
22. Question by the United States - Regarding debt rescheduling (Supporting Tables DS:2 
and DS:9), how is Brazil differentiating between the US$16.3 million in S&D debt rescheduling versus the US$679 million in non-product-specific AMS debt rescheduling?  The amount of rural debt increased significantly in 2004 and 2005,  and continues to be rescheduled. Total rural 
debt (public and private) is currently estimated at R$131 billion (US$69 billion, at the current 
exchange rate): how is Brazil categorizing the debt rescheduling?   
 The only reason for categorizing the debt r escheduling is because part of it comes under 
programmes for low-income and resource-poor producer s. Therefore, Brazil cons iders that this must 
be notified under Article 6.2. The previous notification covering 1998/1999 to 2002/2003 
(G/AG/N/BRA/22) presents the figures broken down  according to this categorization as well.  
 23. Question by the United States - Regarding  market price support (Supporting Table 
DS:5), according to a table previously publishe d on MAPA's website (and now missing), Brazil 
spent R$200 million on contract option acquisition s for the specified amount of corn and R$282 
million for wheat.  Given this, how can th e total market price support be negative?  
 " Contract Option Acquisition " is clearly market price support. Therefore, the methodology to 
calculate the subsidy is based on the difference betw een the price of support and the reference price. 
As the price of support is lower than the reference price for corn in 2003/2004, there was no subsidy 
to be notified. Both figures were notified and can  be calculated simply by multiplying "applied 
                                                     
 
20 See www.conab.gov.br/conabweb/download/comercia lizacao/operacoes_2003/14-vda-produto-uf.xls. 
21 This Attachment was not made available to the Secretariat. 
22 See www.conab.gov.br/conabweb/download/comercializacao/operacoes_2004/08_pep.xls. 
23 This Attachment was not made available to the Secretariat. 
24 See www.bcb.gov.br/htms/CreditoRural/2003/rel5114.pdf .  G/AG/R/49 
 Page 19 
 
 
  administered price" (column 4) for "eligible production" (column 6) less “associated fees/levies” 
(column 7). The results are US$69.9 million for maize and US$101.1 million for wheat.   
24. Questions by the United States - Regarding product-specific AMS, how is Brazil 
calculating the outlay for PEP in US dollars?  According to MAPA (in the table), the 2004 PEP 
expenditure published by MAPA in R$ million is near ly the same as the amount notified to the 
WTO in US$ thousands.  What exchange rate is Brazil using?  Does the WTO notification cover 
bureaucratic costs not published elsewhere?  
 The PEP expenditures published by MAPA are th e same as the amount notified to WTO. 
Nevertheless, the MAPA table pr ovides data from September 2004 to December 2004, and the present 
notification covers the period from July 2003 to June 2004.   
 
25. Questions by the United States - What programmes are included under " Production and 
Marketing Credit "?  This year was a low point for " commercialization support " in Brazil.  Usage 
of PEP began in 2004, PROP began in 2005,  and PEPRO began in 2006.  In these three 
programmes alone, the MAPA table states that th e cost increased from R$47 million in 2004, to 
R$540 million in 2005, to R$1, 672 million in 2006.  Meanwhile , the Real has appreciated 
approximately 40 per cent against the US dolla r since July 2004 (making the expenditure per 
cent increase even greater in  US dollars than in R$).  
 The programmes under " Production and Marketing Credit " are mandatory private credit to be 
lent to producers in which the Government establish es the interest rate; credit where the Government 
provides equalization of interest rate; and Governme ntal credit with interest rates below market 
interest rate. The 2003/2004 notification actually reflects the very low level of governmental 
intervention during this period. Usage or PEP bega n in 1995, not in 2004 (see notifications covering 
the previous reporting periods). In fact, recent exch ange rate movements with the Real appreciating 
against the US dollar increased expenditures in US dollars  to a greater extent than in R$.  It is to be 
noted, however, that the value of production me asured in US dollars has also increased.  
 Follow-up comments
:  In relation to Brazil's response to th e first question, the United States noted 
that Attachment 125 seemed to have a lot of values for cott on, rice and sorghum and it seemed that 
those were not acquisitions or expenditures made under the contract options acquisition programme.  
The United States expected to have follow-up questions at the next meeting.  
 
 Mexico  G/AG/N/MEX/13/Rev.1  
 
26. Question by Australia - Supporting Table DS:1  - In the reporting period 1999, Mexico's 
total expenditure on programmes listed under Gen eral Services relating to infrastructure was 
475.4 million constant 1991 pesos. This include d expenditure on infrastructural works in:  
irrigation areas, storm zones, non-agricultural production, and livestock.  Can Mexico confirm 
that expenditure on infrastructure is directed to the provision or construction of capital works 
only, and is in conformity with paragraph 2(g) of Annex 2, which excludes the subsidized provision of on-farm facilities and subsidized inpu ts or operating costs?  Can Mexico provide an 
outline of the infrastructure projects that receive d funding in 1999?  Can Mexico confirm that 
expenditure on infrastructural work in non-agricultural production provides services or 
benefits to agriculture or the rural community in accordance with the chapeau of paragraph 2 
of Annex 2?  
                                                     
 
25 This Attachment was not made available to the Secretariat. G/AG/R/49 
Page 20  
 
   In response to the question concerning expend iture on infrastructure, support listed in this 
category comes under General Services and is in conf ormity with paragraph 2(g) of Annex 2 of the 
Agreement on Agriculture.  Resources are destined for irrigation districts in order to maintain dams 
and water drainage channels and to prevent flooding, thus protecting potentially vulnerable production 
areas. 
 
 Regarding the question on infrastructure projects, Mexico has 6.5 million hectares under irrigation, of which 24 per cent is estimated to have efficient water-use and –saving systems.  In order 
to develop, operate and maintain the hydro-agri cultural infrastructure, the National Water Board 
(Comisión Nacional del Agua  – CONAGUA) implements a variety of programmes aimed at 
encouraging the efficient use of water in farm ing activities and protecting the soil from salinity.  
These include the programmes for the rehabilitati on and modernization of irrigation areas and 
sustainable use of the Río Bravo and Lerma Chapala basins.   As regards the third question concerning expenditure on non-agricultural infrastructure 
projects, there is an error or a misunderstandi ng stemming from the translation, since the report 
concerns non-hydraulic agricultural production, whic h is not the same as non-agricultural production.  
Mexico requested that the Secretariat is sue a revision to correct this mistake
26. 
 
27. Question by Australia - S upporting Table DS:2 - (2001)  - Australia notes that electricity 
subsidies are generally available to low-inco me and resource-poor producers.  Can Mexico 
please provide more information about this pr ogramme, specifically the criteria under which 
applicants are eligible to receive payments, th e method of programme administration and the 
nature of these payments?  
 The answer relating to the question on the strategic inputs support scheme can be found in 
Supporting Table DS.2.  Support is provided in the form of a preferential rate set by the Ministry of 
Finance and Public Credit and is granted to low- income producers using agricultural pumping and re-
pumping equipment.  The support cove rs expenditure up to a certain threshold, estimated on the basis 
of extraction volume per fiscal year, dynamic load, minimum electro-mechanical pumping performance, and average annual consumption for li ghting on the site where the pumping equipment 
is located.  
 The scheme defines low-income producers as producers with a maximum of 20 hectares of 
irrigated land or up to 40 hectar es of rain-fed land and whose main ac tivity is agriculture;  or livestock 
producers with up to 70 head of cattle in tropical zon es or up to 50 head in the rest of the country, or 
their equivalent in small livestock;  or aquacu lture producers with an output capacity of up to 
100 tonnes who use semi-intensive farming methods. 
 
28. Question by Australia – Supporting Tables: DS:4 – (2004)
 - Australia notes that a 
production value for cotton is  not available despite cotton rece iving a product-specific AMS or 
equivalent measure of support.  When will Mexi co provide the missing production values for 
cotton?  
 Mexico did not have the production value for cott on at the time of notification in 2004, and it 
was therefore reported as "not available".  In  2004, the production value for cotton amounted to 
414.96 million 1991 pesos.  An adde ndum will be sent to the Secretariat for incorporation in the 
relevant notification.  
                                                     
 
26 G/AG/N/MEX/13/Rev.2, dated 25 October 2007 refers.  G/AG/R/49 
 Page 21 
 
 
  (v) Table DS:2 
 
 Mexico    G/AG/N/MEX/14  
 
29. Questions by Canada – Would Mexico plea se explain how the following measures meet 
the policy-specific criteria of the stated paragraphs in Annex 2:  Temporary Employment 
Programme  – paragraph 13;  Programme for Acquiring Water Use Rights  (PADUA) – paragraph 
12;  Comprehensive Programme for Sustainable Agriculture and Conversion of Production in 
Areas Liable to Recurrent Damage  (PIASRE) – paragraph 12.   
 Temporary Employment Programme :  This programme is intended to alleviate the structural 
problem affecting rural employment, especially in highly or very highly marginalized areas27, by 
encouraging sustainable agricultural production in keeping with the prevailing regional and micro-
regional conditions and by applying technologies ta ilored to such conditions.  Activities under the 
programme include tilling and conservation;  clearing,  building and repairing terraces;  creating and 
rehabilitating orchards and forest plantations;  diggi ng ditches and laying pipes for the installation of 
irrigation systems;  cleaning drainage trenches and canals;  rehabilitating harvest tracks;  repairing 
fences and regenerating pasturela nd;  building drinking troughs;  backyard infrastructure;  and 
plantations in arid zones.  
 Programme for the Acquisition of Water Use Rights (PADUA) :  The aim of this programme is 
to promote the sustainability of irrigation district s facing water supply problems, primarily as a result 
of recurrent droughts and the evid ent decrease in sources of supply, determined in the technical 
studies conducted by the National Water Board ( Comisión Nacional del Agua  – CAN), through the 
acquisition of concessionary rights granted by the C AN for the exploitation, use or development of 
water resources for agricultural, livestock or forestry  purposes.  In particular, it is intended to promote 
the recovery of volumes of water for aquifers a nd hydrological basins and to support producers in 
such a way that, on the basis of joint responsibilit y and commitment criteria, the medium- and long-
term viability of the sustainability of water supply sources for agricultural, livestock and forestry use 
is guaranteed.   Comprehensive Programme for Sustainable Agriculture and Conversion of Production in 
Areas Liable to Recurrent Damage (PIASRE) :  The aim of this programme is to promote, as a 
preventive measure and depending on agro-ecological  conditions, the sustainable development of 
regions and areas frequently affected by adverse weather that lowers productivity, by converting 
production to sustainable schemes as an alternativ e in order to make better use of local natural 
resources, and encouraging the development of comprehensive projects. 
  Switzerland   G/AG/N/CHE/35/Rev.1
 
 
30. Questions by Australia – Supporting Table DS:1  - The land improvement payments for 
the renovation of basic agricultural infrastructure or the rehabilitation of cultivated land 
following severe weather conditions or a rock fall or landslide have been notified as 
"infrastructural services, including land improvements".   In view of the provisions contained in paragraph 2(g) of Annex 2, and noting that the contributions are also for the rehabilitation of cultivated land, can Switzerland-Liechtenstein co nfirm that none of the payments are for on-
farm infrastructure or land improvements?   
                                                     
 
27 On the basis of the Marginalization Index calculated by the National Population Council ( Consejo 
Nacional de Población – CONAPO). G/AG/R/49 
Page 22  
 
   The contributions paid following severe weat her conditions were moved from paragraph 8 to 
paragraph 2 in 2007, the reason being that these are not payments to producers but allocations to the 
cantons, which are managed by the cantons themselv es – at times through the communes.  They are 
general services, and it is therefore entirely fitting th at they should come under paragraph 2(g).  Under 
this programme, payments for the rehabilitation of  cultivated land represent a minimal share of the 
contributions paid following severe weather co nditions, which are chiefly destined for the 
rehabilitation of public farm tracks.  For the years 2002-2004, for example, such payments accounted 
for 1.6 per cent of the total amount notified under pa ragraph 2(g).  The term "land improvement", in 
the case of contributions paid following severe we ather conditions, does not imply improvements of 
any kind, only rehabilitation.  
 
31. Question by Australia - Can Switzerland- Liechtenstein please explain how they 
distinguish between cultivated land and on-farm land?   
 The term "cultivated land" is used in a broade r sense than the term "on farm land".  The term 
"cultivated land" includes on-farm land, summer pasturing areas and environmental compensation 
areas, such as river banks, for instance.   The term  "cultivated land" is used in paragraph 1 of the 
notification because it is the most encompassing.  G/AG/R/49 
 Page 23 
 
 
   
Annex 2 
 
Notifications subject to review in respect of which no questions have been raised  
in advance of the issuance of the convening airgram  
 
(i) administration of tariff and other quota commitments (Table MA:1):   
- El Salvador  G/AG/N/SLV/28 
- Guatemala G/AG/N/GTM/32   
 
(ii) imports under tariff and other quota commitments (Table MA:2):   
- Chile  G/AG/N/CHL/25  
- China  G/AG/N/CHN/11  
- Guatemala G/AG/N/GTM/33 
- New Zealand G/AG/N/NZL/48 - Panama G/AG/N/PAN/13  
 
(iii) special safeguard (Tables MA:3 to MA:5):   
- Australia G/AG/N/AUS/67  
- Canada G/AG/N/CAN/68  - New Zealand  G/AG/N/NZL/49  
- Tunisia G/AG/N/TUN/38 
 
(iv) domestic support commitments (Table DS:1):  
- Armenia G/AG/N/ARM/12  
- Bahrain G/AG/N/BHR/4  - Costa Rica G/AG/N/CRI/19/Corr.1  - Georgia G/AG/N/GEO/7  - Georgia G/AG/N/GEO/8 
 - Hong Kong, China G/AG/N/HKG/22 
 - Japan G/AG/N/JPN/129  - Korea G/AG/N/KOR/37/Corr.1  - Macao, China G/AG/N/MAC/21  - New Zealand G/AG/N/NZL/46  - Nigeria G/AG/N/NGA/5  
- Trinidad and Tobago  G/AG/N/TTO/8  
 
(v) new or modified domestic support measures exempt from reduction (Table DS:2): 
- Armenia G/AG/N/ARM/11 
 
(vi) in the context of export subsidy commitments (Tables ES:1 to ES:3): 
- Chile G/AG/N/CHL/23 
- China  G/AG/N/CHN/12  - Georgia G/AG/N/GEO/9  - Japan G/AG/N/JPN/127  
- Macao, China G/AG/N/MAC/20  
- New Zealand G/AG/N/NZL/47  - Nigeria G/AG/N/NGA/6  - Trinidad and Tobago G/AG/N/TTO/7  
 
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