RESTRICTED  WORLD TRADE  
ORGANIZATION  G/AG/R/47 
22 December 2006 
 (06-6138) 
Committee on Agriculture  
  
SUMMARY REPORT OF THE MEET ING HELD ON  31 OCTOBER 2006 
 
Note by the Secretariat
1 
  1. The Committee on Agriculture held its forty-seventh regular meeting on 31 October 2006
2 
under the chairmanship of Mr. Christian Häberli of Switzerland.   
2. The agenda of the meeting as set out in WT O/AIR/2921 was adopted, with the addition of 
item (x) under Section I, Point A below (question by  the European Communities (EC) to Australia). 
I. THE REVIEW PROCESS  
A. M ATTERS RELEVANT TO THE IMPLEMENTATION OF CO MMITMENTS UNDER THE REFORM 
PROGRAMME :  ARTICLE 18.6 
(i) Australia:  EC – Variable import levies on cereals    
3. Supported by the United States, Australia sought a clarification regarding the application of 
variable import levies to cereal products under the terms of Article 10(2) of  Council Regulation (EC) 
1766/92.  The EC explained that that Regulati on was abrogated in 2003 and replaced by Council 
Regulation (EC) 1784/2003.  Article 10 of the new Regulation set out provisions for the calculation of 
import duties while implementing rules were detaile d in Council Regulation (EC) 440/96.  The EC 
confirmed that the system was fully consiste nt with its WTO Schedule of commitments.   
4. Australia wondered whether the system belonged to the category of measures which had been 
required to be converted into ordinary customs duties, in accordance wi th Article 4.2 of the 
Agreement on Agriculture, given that the calculati on of the variable import levy was based on an 
intervention price and a minimum price for each consi gnment.  In Australia's view, the situation was 
similar to that described in the Chile-Price Band  dispute.   
5. The EC confirmed that a variable levy was ind eed applied to cereals, but reiterated that the 
system was fully WTO consistent.  The EC also  recalled that it had undertaken Article XXVIII 
negotiations in order to examine the headnote to its Schedule.  The EC had found that, at that time, the 
major wheat exporting countries were actually satisfied  with the application of the variable import 
levy system, whereas the EC had been willing to recons ider its position at that stage.  For the EC, the 
reaction of its trade partners had not only been an indication of their satisfaction with the levy system, 
but also proof of its full WTO-compatibility.  Had this not been the case, the EC considered that it 
would have been advised accordingly by the wheat exporting countries participating in the 
Article XXVIII negotiations.  
                                                      
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 The meetings originally planned to be held on 21 September and 23 November 2006 were merged 
into one single session, in response to a request for rescheduling presented to the Chairman by a group of 
Members. G/AG/R/47 
Page 2  
 
  (ii) Australia -  EC - Export subsidy commitments for wheat
  
6. Citing a study by the EC Commission3 according to which wheat exports were forecast to 
increase to levels significantly in excess of th e EC-15 scheduled quantity commitments for wheat, 
Australia sought clarification as to how the EC intended to comply with its scheduled commitment 
levels for wheat in future years.  The EC stat ed that, should products be exported above the EC 
commitments for subsidized exports as defined in the relevant WTO Agreements, then these products 
would be exported without an export subsidy. 
(iii) Australia – EC - Tender sales by the Cereals Management Committee (CMC)   
7. Australia noted that the CMC had conducted a number of tenders for significant quantities of 
export sales from intervention at discounted prices, a ll of which were eligible for export refunds.  
According to Australia, those tenders covered sales from intervention stocks of some of the new EC 
member States, including for quantities in excess of their individual WTO commitment levels and, in 
some instances, for unscheduled products.  In this context, Australia requested information on the bids 
accepted by the CMC for wheat and coarse grain tenders for each new EC member State, including the quantities, price discount from the intervention price and export refunds, since October 2005.   
8. The EC stated that it believed that it was the co mpliance with its commitments, rather than the 
daily management of its agricultural markets, which was the object of the Committee's review 
process.   
9. As regards Australia's query on the total qua ntities and export refunds for wheat and coarse 
grains granted through export licences to each of th e new EC member States over the same period, the 
EC responded that the relevant information would be notified to the Committee on Agriculture in due 
course, in the context of the notifications on export subsidies. 
(iv) Australia:  EC – Production aids and export refunds for processed agricultural products
 
10. Australia reported that the EC maintained arrangements for aids to the manufacturers of 
processed products for the purchase of agricultural products and for export refunds to processed 
agricultural and industrial products in  respect of products containing s ugar, cereals and milk.  Some of 
these arrangements were limited to products of EC orig in.  In this context, Australia sought details on 
the production aids and export subs idy arrangements for the use of cereal, sugar and milk products of 
EC origin in processed goods.  The EC asked Australia  for further clarification of the measures being 
referred to. Assuming Australia's question related to  the EC's commitments for incorporated products, 
the EC stated that these were well defined in its Schedule and that the EC fully complied with such 
commitments.   
11. In the case of the EC processed fruit and vegetabl es regime, Australia sought clarifications on 
Article 18(4) of Council Regulation (EC) 2201/96 which provide for a higher rate of refund if the per-
unit export refund on products containing added s ugar was "insufficient" to allow exports; the 
circumstances under which any refund would be deem ed "insufficient"; and, if the non-sugar refund 
were applied, the scheduled product category under which the EC would allocate the refund.  The EC 
indicated that the allocation to the relevant produc t category was in conformity with the relevant 
requirements of Schedule CXL.  As regards the implementation of these requirements, the EC referred Australia to the reply al ready given in paragraph 8 above.     
                                                     
 
3 Prospects for Agricultural Markets and Income in the European Union 2006-2013 , EC Commission, 
July 2006.  G/AG/R/47 
 Page 3 
 
 
  12. Australia expressed disappointment at EC's response, and reiterated its request for 
clarification of its factual questions.  The United States flagged its interest in the incorporated 
products category and stated that its questions were similar to those posed by Australia.   The United 
States would welcome receiving more details from the EC regarding the provisions addressing sugar 
and the use of sugar.  The EC stated that it was prepared to discuss this issue bilaterally with the 
United States and Australia, and revert to this at a future meeting, in order to better understand what 
further information was being sought.   
(v) Australia:  EC – Consolidation of EC  Schedule as a consequence of enlargement  
13. In the EC's enlargement context, first to EC-25,  and then to EC-27, Australia noted that the 
consolidation of the EC's Schedule for export subsidy and domestic support reduction commitments 
was still outstanding.  In particular, the EC had not yet tabled a draft EC-25 Schedule relating to such 
commitments for Members' consideration. Nor had the EC provided any details on the methodology it 
intended to adopt in preparing that draft.  Australia therefore asked how the EC intended to resolve these outstanding enlargement-related issues, and whet her these would be resolved prior to the EC-27 
enlargement due to take place on 1 January 2007.   
14. The EC stated that it will notify the EC-25 and EC-27 Schedules to the WTO, as required 
under the relevant WTO Agreements. The new Sc hedules will contain modified commitments for 
domestic support and export subsid ies to adequately take account of enlargement. For the 
consolidation of agricultural support commitments, the EC indicated that it had relied on the well-
established WTO approach, using the three most recent years as a reference period.   
15.  Australia explained the reasons for submitting the above questions.  Where domestic support 
and export subsidy commitments were to be modifi ed in Schedules, Australia's understanding was 
that a multilateral process was required.  Australia  therefore strongly opposed the approach advanced 
by the EC, to the effect that it intended to unilatera lly notify the results of its calculations.  Australia 
pointed out that, to date, no proposal had been subm itted to the WTO membership, either as regards to 
the proposed draft methodology for the calculation of the EC-25 domestic support and export subsidy 
commitments, or the draft results of such calculati ons.  Australia respectfully requested the EC to use 
a multilateral process to address this issue, and sought  an indication as to when the EC intended to 
officially provide the WTO membersh ip with all such relevant information.   With regard to the 
current state-of-play of the EC Schedule, the Committee had been previ ously advised that from 
1 May 2004, the EC-15 Schedule applied de facto to the EC-25.
4  Australia also sought confirmation 
whether this was still the case.    
16. The EC confirmed that the EC-15 Schedule contin ued to apply to the EC-25.  The EC also 
recalled that, immediately after the conclusion of the Uruguay Round, the same situation arose as EC 
member States increased from 12 to 15. As part of Article XXIV:6 negotiations, a certain methodology was adopted after intensive discussions between the EC and its major trading partners 
and a tacit agreement was reached.  In the case of  the AMS, the commitmen ts of the three new 
member States were simply added to the global AM S commitment already scheduled for the EC-12.  
By contrast, where export refunds had been applied between the three new member States and the original 12 member States, a "netting-out" exercise had been required.  The EC confirmed that the same pragmatic approach was followed in the cont ext of its enlargement to 25 member States, and 
will again be applied in the future enlargement to 27 member States.  The netting-out exercise for 
export subsidies, as well as tariff quotas, had b een based on the average trade over the reference 
period as notified under the Article XXIV:6 procedure.   
17. Canada, New Zealand and the United States expressed interest in this issue. 
                                                     
 
4 See G/AG/R/42, paragraph 3, and G/AG/R/44, paragraph 3, for previous replies given by the EC.  G/AG/R/47 
Page 4  
 
  (vi) Australia:  United States – Export subsidi es on dairy products;  Export Trade Certificate 
programme  
18. Australia observed that, according to its most  recent notification, the United States was 
exporting quantities in excess of its scheduled reduc tion commitment levels.  Australia requested 
information on the quantities accounted for by the "Cooperatives Working Together" (CWT) as well 
as on the federal and state subsidies provided to producer members of CWT.  The United States 
replied that the US Government did not maintain data on CWT activities and that no federal or state 
subsidies were provided to the CWT. 
19. Australia also enquired whether the Export Trade Certificate programme for exporting 
cooperatives conferred access to fe deral financing, including EXIM  (Export Import Bank) loans or 
other concessional financing; or to US food aid programmes.  The United States confirmed that the 
Export Trade Certificate programme did not confer acce ss to either federal financing or US food aid 
programmes. 
(vii) New Zealand:  EC – Proposed internal regulation on " de minimis " subsidies  
20. Referring to a media report5, New Zealand sought details on a proposed internal regulation on 
so called "de minimis"  subsidies to marketing and processi ng of agricultural products and loan 
guarantees, exempting them from state aid regula tions.  New Zealand wondered how the proposed 
regulation was consistent with the EC's obligations  to notify all agricultural support to the Committee 
on Agriculture and requested clarification as to how the EC intended to ensure that relevant data on all 
expenditures labelled according to the EC's internal definition of "de minimis"  would continue to be 
gathered from member States and notified appropriately .  The EC stated that collection of data on 
state aids for Table DS:1 notification purposes was not related to reporting obligations for an annual 
overview of de minimis  support; and that the scope of data collection for the purposes of the EC's 
Table DS:1 notifications included de minimis state aids. 
(viii) EC:  New Zealand – Notification of dairy entity as state trading enterprise  
21. According to the EC, the Dairy Industry Restructuring Act (DIRA) adopted by the 
Government of New Zealand grants an exclusive ri ght to one dairy enterprise to export to designated 
markets such as the Dominican Republic, Canada, the United States and the European Union.  The EC 
asked whether New Zealand intende d to notify that dairy entity as a state trading enterprise under 
Article XVII of GATT 1994, or in the alternative, th at an explanation be provided for not doing so. 
22. New Zealand stated that notification of state trading enterprises under Article XVII of 
GATT 1994 did not fall within the ambit of the Agreement on Agriculture, but rather under the WTO 
Working Party on State Trading Enterprises.  Ther efore, New Zealand believed that the EC question 
was not within the purview of the Committee's review of Members' implementation of their 
commitments. New Zealand, however, stated that it did not believe that there were any exclusive or 
special rights or privileges in the sense of the U nderstanding on the Interpreta tion of Article XVII of 
GATT 1994 that required it to notify any dairy entity as a state trading enterprise.   
23. Following up on this matter, the EC requested confirmation that the statute books of New 
Zealand contained certain provisions in favour of a dairy entity.  New Zealand referred the EC to the 
Working Party on State Trading Enterprises for similar queries.   
                                                      
5 See Annex 1.  G/AG/R/47 
 Page 5 
 
 
  (ix) EC:  Canada – Excise duty on Canadian-grown agricultural products  
24. Citing a number of Canadian excise duty notices6 , the EC understood that, from 1 July 2006 
onwards, an excise duty on imported wine and b eer was paid whereas wine grown from 100 per cent 
Canadian-grown agricultural products was fully exem pted, and an excise duty reduction for beer or 
malt liquor applied for all Canadian brewers. The EC  sought confirmation that its interpretation of the 
various notices was correct.  If so, the EC requested  an explanation of how the application of such 
measures complied with Article III of GATT 1994.   The EC assumed that the legislative process was 
still on-going as some of these measures were before Pa rliament, but at the same time it appeared that 
some of the exemptions were already de facto  being applied.   
25. Canada was aware of the EC's interest in this matter as it has been pursued bilaterally . Canada 
undertook to refer EC's specific questions, which were received at a late stage,  back to capital.  The 
EC stated that a few other Members applied similar measures, and that it intended to pursue such matters in the Committee as well.  
(x) EC:  Australia – Wheat
 
26. The EC enquired whether Australia had in place any export restrictions on wheat, in view of 
the drought currently affecting the production conditions  in Australia.  Australia invited the EC to be 
more precise in its question and undertook to supply a response upon receipt of the question in writing. 
B. R
EVIEW OF NOTIFICATIONS  
(i) Notifications in respect of which questions have been raised in advance of the issuance of the  
convening airgram  
27. The Committee reviewed the notifications as liste d in the agenda. Specific points raised with 
respect to these notifications and the r esponses thereto are summarized in Annex 3  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  
28. 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 4. 
(iii) Notifications circulated or made availabl e after the notice convening the meeting was issued  
29. 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) relating to imports under tariff and other quota commitments (Table MA:2):  from China 
(CHN/9); 
(b) in the context of domestic support comm itments (Tables DS:1 and DS:2):  from 
Honduras (HND/21 and HND/22) and Nigeria (NGA/3); and 
                                                      
6 See Annex 2. G/AG/R/47 
Page 6  
 
  (c) in the context of export subsidy commitm ents (Tables ES:1 to ES:3):  from China 
(CHN/10) and Nigeria (NGA/4). 
(iv)  Points concerning notificati ons raised at previous meetings
 
30. The Chairman 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. 
(v) Counter-notifications  
31. 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  
32. There were no deferred replies to questions previously raised. 
(vii) Overdue notifications  
33. The Chairman recalled that paragraph 6 of  WTO/AIR/2879 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.  Underlining that, for the 1995-2000 
period alone, notifications from 70 Members were s till outstanding, the Chairman re-emphasized the 
importance of notifications in the context of the implementation of commitmen ts in general, and in 
the negotiations context in particular.  The Chairman stressed that the Committee had, for some years, 
been faced with an unsatisfactory situation in re lation to accumulating notification delays.  In his 
view, however, a critical point, had been reached, for two reasons.   
34. First, these delays hindered not only the work of the Committee on Agriculture, but also 
constituted a growing obstacle to the transparency principle advocated by the WTO, which was the 
very basis of its efficiency and success.  The Chairm an pointed out that it might even be argued that 
the disparity between Members that notified on ti me and the others also undermined the balance 
between Members' rights and obligations.  Second,  the Chairman believed that there was a link 
between the Doha negotiations, wh ich had, unfortunately, been suspended, and the non-compliance 
with notification obligations.  Wit hout updated notifications, the negotiators were obliged to base their 
calculations on information sought from outside the WTO.  That information was not always drawn 
from reliable sources, nor was it accessible to all Me mbers.  Accordingly, this created a further 
imbalance between delegati ons with substantial human resources and small delegati ons which, quite 
simply, did not have the means to obtain all such information.   
35. While the delays affected all the pillars of th e reform process, the Chairman considered that 
the problem was particularly acute in the area of domestic support.  It was true that notification 
obligations had to be fulfilled by all Members, a nd that the decision to notify or not was one which 
lay with each delegation – consistent with its obligations under the Ag reement on Agriculture.  
However, the Chairman believed that, without any fi nger-pointing, it was the outstanding notifications 
from Members with a substantial share of world tr ade which could play a preponderant role in the 
Doha negotiations.  In his capacity as Chairman of a committee which has a clear mandate to 
contribute to the transparency and smooth conduct of WTO activities in general, the Chairman felt 
therefore compelled to dwell rath er "heavily" on this issue.  G/AG/R/47 
 Page 7 
 
 
  36. Australia agreed with the Chairm an's statement in every respect, including with regard to the 
Chairman's reference to the serious situation th at the absence of some important notifications, 
particularly in one pillar – domestic support, had, not only for the work of the Committee on Agriculture, the transparency of the agricultural trade regime to which the Agreement was to have 
made a major contribution, but also for the Doha  round of negotiations.  In Australia's view, the 
Secretariat compendium had done an excellent job in highlighting the notifications gap created by 
some very large domestic support users in the WTO.  A gap of at least four to five years existed with 
regard to three Members in particular, thus placing many Members at a grave disadvantage. 
37. Brazil pointed out that a Chairman could not do better than calling Members' attention to the 
importance of notifications and welcomed the Chairm an's intervention on this subject.  Brazil agreed 
that it was all Members' duty to fulfil the establishe d transparency requirements, but that duty fell 
especially on those Members that were most responsible  for the distortions in world agricultural trade.  
In Brazil's opinion, this mostly concerned the de veloped countries, and among them, the major ones. 
Brazil regretted the suspension of the negotiati ons as well and supported the Chairman's call for 
delegations to promptly update th eir notifications given their importance for the technical work that 
remained to be carried out.   
38. The EC objected to the idea that  larger Members were more trade-distorting, and announced 
that its domestic support notifications for the ma rketing years 2002/03 and 2003/04 would be shortly 
submitted.
7   
39. Canada thanked the Chairman for raising this cr itical issue.  Canada had taken steps to bring 
itself up-to-date and urged others to do the same.   Beyond the imbalances arising from the absence of 
notified information that were cited by the Chairm an, Canada stressed that, even where information 
was available on expenditures under different kinds of programmes, many changes in agricultural 
policies had also taken place.  In that context,  Canada considered that it was as important for 
negotiators to know where, and how , such support policies were going to be classified before some 
substantive issues could be dealt with.   
40. The Committee took note of these statements. The Chairman urged Members to fulfil their 
notification obligations as soon as possible. 
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) 
 
41. The Committee held its fifth 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/67 and Corr.1).   
42. In its opening remarks, China stated that its notifications were available to the Committee, 
and that it had taken note of the questions raised by the United States under the present agenda item.  
Before going into detailed responses, China wish ed to see whether there were any other comments 
from Members.   
43. In its opening comments, the United States stated that it continued to believe in the usefulness 
of the Transitional Review Mechanism as it helped to  provide additional transparency of China's trade 
regime.  The Review also provided Members with  a multilateral forum for conveying their concerns 
with China's WTO compliance efforts.  The United States clarified that the first set of questions 
                                                      
7 This notification was i ssued as document G/AG/N/ EEC/53 on 8 December 2006. G/AG/R/47 
Page 8  
 
  (relating to VAT policies) was in fact a follow- up to some questions raised under the April 2006 
Trade Policy Review mechanism (TPR).  As Ch ina had already responded in detail to the US 
questions about VAT policies, the United States wish ed to place on record that the responses by China 
under the TPR mechanism had been very much apprec iated.   The United States would welcome any 
additional comments on the other questions it ha d about VAT, tariff rate quotas, and cotton. 
(a) Statement by China
 
 44. China took note of the comments made by the United States.  China also believed that the 
review process undertaken by the Committee was very im portant, particularly in view of the fact that 
some of the notifications from major Members remained outstanding.   
45. China confirmed that the VAT is applied unif ormly to any particular product, including 
grains, with no difference whether it is under state tr ading or not.  As for the tariff quota allocation 
system, the application period for 2007 tariff quota allocations was between 15 and 30 October in 
2006.  Specific requirements had already been published in the  International Business Daily  and the  
China Economic Herald as well as the websites of the Ministry of Commerce and the National 
Development and Reform Commissi on, one month in advance of the application period.  China 
confirmed that all 2007 tariff quota quantities would be allocated no later than 1 January 2007.   
46. Regarding the disclosure of a list of the en terprises which are importing under tariff quota 
arrangements, China's competent authorities consider ed that such a request involved confidentiality 
issues relating to business information.  Some of these enterprises were concerned that releasing such 
information might negatively affect their competitiven ess.  China held the view that this concern was 
legitimate and should be taken into account, especia lly when considering some provisions of the 
WTO Agreement, for example, paragraph 3 of GA TT 1994 Article XIII.  However, for the purpose of 
exploring alternative ways of enhancing transparen cy, China stated that it was prepared, after this 
review, to work closely with the relevant Chinese authorities and consult with those enterprises that 
had expressed such concerns, in order to see whet her an appropriate solu tion could be found.  
47. Lastly, regarding the tariff quota for cotton, Ch ina believed that providing additional market 
access opportunities on a voluntary basis in response to special market ci rcumstances was quite 
different from making new binding concessions.  China stated that, at present, it was not in a position 
to eliminate the tariff quota system in place for cotton.  
(b) Follow-up questions and comments by Members and China's responses thereto
 
 
48. The United States thanked China for its very  detailed replies and acknowledged China's 
willingness to engage on bilateral and multilateral fo llow-up to some of these questions.  The United 
States looked forward to that effort.  Clarification was also sought as to the amount of the VAT charged for each type of enterprise.  China rep lied that the VAT was uniformly applied on products, 
and all kinds of enterprises. 
(c) Report to the Council for Trade in Goods
 
 49. With respect to the Committee's report on the Tr ansitional Review to the Council for Trade in 
Goods, the Committee took note that the Chairman  would submit a factual report on his 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.
8 
                                                      
8 The report was subsequently circulated in document G/AG/23.  G/AG/R/47 
 Page 9 
 
 
  B. A NNUAL CONSULTATION UNDER ARTICLE 18.5  WITH RESPECT TO MEMBERS ' PARTICIPATION 
IN THE NORMAL GROWTH OF WORLD TRADE IN AGRICULTURAL PRODUCTS WITHIN THE 
FRAMEWORK OF THE COMMITMENTS ON EXPORT SUBSIDIES  
 50. The Committee took note of the statistical background paper prepared by the Secretariat for 
the purposes of the annual consultations under Article 18.5.
9  The document provided, for selected 
exporters and selected agricultural products/pro duct groups, statistical data on export volumes 
(including international food aid) and shares in world exports, covering the Uruguay Round base 
period for export subsidy reduction commitments, i.e. 1986-90, as well as the period comprised between 1997 and the most recent year for which data  were available.  The charts showed the world 
market shares of the leading exporters fo r the products/product groups concerned.  
C. A
NNUAL MONITORING EXERCISE ON THE FOLLOW -UP TO THE MARRAKESH NFIDC  DECISION 
UNDER ARTICLE 16.2 
 51. The annual monitoring exercise is undertaken on the basis, inter alia , of contributions by 
Members, including Table NF:1 notifications, as we ll as contributions by the observer international 
organizations.  The Chairman recalled that the notifi cation requirement under the NF series relates to:  
the quantity of food aid provided to LDCs and NF IDCs, with an indication of the proportion provided 
in fully grant form or on appropriate concessional terms; technical and financial assistance provided; 
and other relevant information with respect to ac tions taken within the framework of the Decision. 
52. The Committee took note of the circulation of notifications in the NF:1 series since the 
January 2006 monitoring exercise, as follo ws: Australia (G/AG/N/AUS/60), Canada 
(G/AG/N/CAN/57), New Zealand (G/AG/N/NZL/45) and United States (G/AG/N/USA/56). A revised background note for the purpose of fac ilitating the annual monitoring exercise was also 
circulated by the Secretariat.
10  
53. The representatives of the Food and Agriculture Organization of the United Nations (FAO) and 
the World Bank made contributions to the monitoring exercise.11   
54. The United States thanked both representatives for their respective contributions and looked 
forward to receiving the statements in written form in order to better understand the work undertaken 
by both organizations.   
55. The Philippines referred to one of the findings  of the work undertaken at the World Bank, 
which underscores: " the importance of liberalizing reforms in  agricultural trade on the part of both 
developing and industrialized countries, and the pote ntial for the concepts of sensitive and special 
products to create significant exemptions, which would undermine this objective ".  Based on the 
reading of the representative of the World Bank, th e Philippines initially disagreed with the view that 
the concept of special products defeats trade liber alization objectives.  The Philippines reserved its 
rights to review the World Bank statement in writte n form and provide comments at a later stage.  
56. Cuba supported the intervention made by the Ph ilippines, especially as it related to the World 
Bank findings.  Cuba wished to introduce a note of caution, as the World Bank statement referred to some concepts which were presently under negotiati on.  In this respect, Cuba emphasized that the 
agenda item was entitled "Annual Monitoring Exer cise on the Follow-up to the Marrakesh NFIDC 
Decision under Article 16.2 of the Agreement on Agricu lture".  Cuba reserved its rights to review the 
World Bank statement in written form and rai se this matter again in future meetings. 
                                                     
 
9  See G/AG/W/32/Rev.9 (dated 2 October 2006). 
10 See G/AG/W/42/Rev.9 (dated 27 October 2006). 
11 These statements were subsequently circulat ed in G/AG/GEN/73 (dated 2 November 2006). G/AG/R/47 
Page 10  
 
  D. I
MPLEMENTATION -RELATED ISSUES  
 57. Paragraph 2 of the Doha Ministerial D ecision on Implementation-Related Issues and 
Concerns
12 instructs the Committee to follow up on three di stinct issues:  (a) Members must develop 
disciplines on export credits as per Article 10.2 of  the Agreement on Agriculture;  (b) the Committee 
must examine possible means for improving the eff ectiveness of the implementation of the NFIDC 
Decision;  (c) the Committee must al so ensure that Members' tariff quota regimes are administered in 
a transparent, equitable and non-discriminatory manne r, keeping such regimes under review.  In this 
context, the Chairman recalled that a first report had been submitted three years ago to the General 
Council.13  The discussions held in 2006 have enabled th e Committee to submit a factual update to the 
General Council at its meeting on 27 July 2006.14 
58. Moreover, the Chairman reported that, on 27 July 2006, he had also provided an oral report to 
the General Council concerning the Committee's consid eration of a proposal by the African Group15   
as part of its follow-up to the NFIDC Decision as well as in the context of the Doha Ministerial 
Decision on Implementation-Related Issues and Concerns.  The Chairman had essentially informed 
the General Council that since his May 2006 report16, the situation had remained unchanged. 
59. 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 implementation issue resulting from the Agreement on Agriculture of the Uruguay Round.  Argentina theref ore requested that this item be retained on the 
agenda of this Committee.   
60. Cuba supported Argentina's statement and requ ested that the implementation of the NFIDC 
Decision be maintained as an agenda item in the present Committe e's work programme. 
E. M
ATTERS RAISED UNDER OTHER BUSINESS  
 
(i) Annual Report to the Council for Trade in Goods (CTG)  
 61. In line with the Committee's pr actice in the previous years,  the Committee took note that a 
short and factual draft report for the CTG on the wo rk undertaken by the Co mmittee in the course of 
2006 had been circulated before this meeting, in orde r to facilitate consideration of this matter.  The 
Committee took note of the report and agreed that  the report, updated as appropriate, would be 
submitted to the CTG on the responsibility of the Chairman.
17  
(ii) Provisional schedule of meetings for 2007  
 62. According to the Committee's rules of procedures,  regular meetings of the Committee shall be 
held in March, September and November.  The Committee took note of the provisional schedule of 
meetings for 2007.  The dates for each regular m eeting would continue to  be confirmed at the 
preceding meeting of the Committee.  The questions  of whether there was a need for a regular 
meeting in June 2007, or whether 2-day meetings would be required, would be determined by the 
                                                     
 
12 WT/MIN(01)/17 (dated 14 November 2001). 
13 G/AG/16 (dated 4 July 2003). 
14 G/AG/16/Add.1 (dated 13 June 2006). 
15 Paragraph 52 of TN/CTD/W/3/Rev.2 (dated 17 July 2002). 
16 G/AG/22 (dated 16 May 2006). 
17 The report was later circulated in G/L/796 (dated 6 November 2006).  G/AG/R/47 
 Page 11 
 
 
  Chairman following the March 2007 meeting in cons ultation with Members.  Moreover, the following 
schedule may need to be re-visited in light of developments in the agriculture negotiations:  
28 [and 29] March 2007  
[21 and 22 June 2007]  
 26 and 27 September 2007 
 21 and 22 November 2007 
(iii) Date of next meeting  
 63. The next (48th) regular meeting of the Committee on Agriculture is scheduled to be held on 
Wednesday, 28 March 2007 .  On this basis, the convening airgram will be issued on Friday, 
16 March 2007, and the reminder airgram will be  issued on Wednesday, 28 February 2007. G/AG/R/47 
Page 12  
 
  Annexes 
  
   Page
 
 
Annex 1 Media report on proposed EC regulation on " de minimis " subsidies 13 
 Annex 2 Excise duty notices of the Canada Revenue Agency 14  Annex 3 Summary of points raised with respect to notifications 15 
 
Annex 4 Notifications subject to review  in respect of which no questions 
  have been raised in advance of the issuance of   the convening airgram 26  
 
     
  G/AG/R/47 
 Page 13 
 
 
  Annex 1 
 
Media report on proposed EC regulation on " de minimis " subsidies  18 
 
 
 
New 'de minimis' farm rules unveiled  
 
Agra Europe Weekly 
Wednesday September 20 2006 
 
Future projects by member states to market and process agricultural products will be subject to new rules on de 
minimis, exempting them from state aid regulations, said the European Commission on Wednesday. 
 
The Commission presented a draft consultation suggesting that subsidies worth €200 000 or less should no 
longer be considered as state aid.  
 
Likewise, guarantees -- where the amount  of the underlying loan does not exceed €1.7 million -- should also be 
exempt from state aid law, according to the proposal. 
 
The current regulation on de minimis aid states that financial aid must not exceed €100 000 over a period of 
three years and be deemed to have no substantial effect on competition and trade between member states for it 
not to constitute state aid. 
 
                                                      
18 See paragraph 20. G/AG/R/47 
Page 14  
 
  Annex 2 
 
Excise duty notices of the Canada Revenue Agency
19 
 
  
1. Excise Duty Notice no. 9
  (June 2006) 
"As a result of consultations concerni ng the May 2006 Budget, the Minister of 
Finance announced on June 28, 2006, a proposal to extend the reduced rates of duty for the first 75,000 hectolitres of beer or malt liquor brewed to all Canadian brewers" 
whereas "imported beer is not eligible  for the reduced rates of excise duty". 
2. Excise Duty Notice no. 11
 (May 2006): 
"On Tuesday, May 2, 2006, the Minister of  Finance tabled a Notice of Ways and 
Means Motion to provide an exemption of the excise duty imposed on wine that is 
made from 100% Canadian-grown agricultural products".   
3. Excise Duty Notice no. 14  (June 2006) 
"Where packaged wine is imported on or af ter July 1, 2006, it will be subject to 
additional duty equal to excise duty at the new rates." 
4. Excise Duty Notice no. 15  (June 2006)  
"The exemption will be available to all wine  licensees on wine, as defined in section 
2 of the Excise Act, 2001 (including cider, wine coolers, fruit wines and sake), that is 
packaged on or after July 1, 2006. Th e responsible wine licensee claiming this 
exemption must have sufficient evidence to confirm that the wine put into the 
package was wholly composed of Ca nadian-grown agricultural products." 
                                                      
19 See paragraph 24.  G/AG/R/47 
 Page 15 
 
 
  Annex 3 
 
Summary of points raised with respect to notifications  
 
 
 
Page  
 
(i) administration of tariff and other quota commitments (Table MA:1) 
- Colombia G/AG/N/COL/35 16 
 
(ii) imports under tariff and other quota commitments (Table MA:2):   
- Ecuador G/AG/N/ECU/17 16 
 
(iii) special safeguard (Tables MA:3 to MA:5):  
- Japan G/AG/N/JPN/116, 117 and 118 16-17 
- Chinese Taipei G/AG/N/TPKM/39 17   
(iv) domestic support commitments (Table DS:1):   
- Armenia G/AG/N/ARM/9 18 
- Canada G/AG/N/CAN/60 18 
- Colombia G/AG/N/COL/30/Rev.1 19 
- Cuba G/AG/N/CUB/27 19 - European Communities G/AG/N/EEC/49 & Corr.1 and       51 & Corr.1 20 - Former Yugoslav  
   Republic of Macedonia G/AG/N/MKD/6 21 
- Mexico G/AG/N/MEX/13 22 - New Zealand G/AG/N/NZL/41 23 - Thailand G/AG/N/THA/59 23  
(v) new or modified domestic support measures ex empt from reduction (Table DS:2):   
- Armenia G/AG/N/ARM/8 25 
- Switzerland G/AG/N/CHE/35 25 
 
________________ 
 G/AG/R/47 
Page 16  
 
  (i) Table MA:1 -  Colombia    G/AG/N/COL/35
 
 
1. Question by Australia -  Explanation of the criterion for approving import licences for 
fowl, turkey and duck imports under the tariff quota .  The notification indicates the criterion 
for approval being "protection of the domestic industry".  
 As stated in notification G/AG/N/COL/35, Colombia applies non-automatic import licensing 
for the administration of tariff quotas for fowl (pou ltry, turkey and duck).  Import applications are 
examined by the Imports Committee, taking into account unused quota shares and the quality of second-hand goods or used goods.  
 Colombia introduced the concept of used goods, second-hand goods and unused quota shares 
when it joined the GATT.  Since demand is genera lly covered by domestic production, there are few 
import applications. 
 
(ii) Table MA:2  -  Ecuador    G/AG/N/ECU/17
 
 
2. Question by Australia - The over-quota tariffs  in force were documented as below the 
in-quota tariff rates for many of the products accounting for the nil fill rates.  Has Ecuador 
considered whether it is necessary to retain these tariff quotas if the fill rates are zero and all 
trade is flowing over-quota?  
 Ecuador has met all of its commitments as a WTO Member, in particular, under the 
Agreement on Agriculture.  To that end, it has kept  its tariff quotas open to the private sector and has 
never, under any circumstance, exceeded the bound ce ilings, either within the quotas or outside them. 
 
3. Question by New Zealand  - The tariff quota for milk powder during the period 
reported, 2001 to 2005, has not been filled – in fa ct there have been no imports.  Why has this 
been the case?  Is Ecuador considering reviewing  tariff quota administration or changing to a 
tariff-only scheme for milk powder?  
 The failure to use the in-quota volumes for pow dered milk is merely due to current market 
circumstances in which, owing to increasing prices on the international market, tariff rates below the 
bound tariff level for the powdered milk quota were a pplied in order to ease the domestic prices of 
one of the country's staple products. Ecuador ne vertheless reserves the right to consider, where 
appropriate, any change in the administration of  its tariff quotas or in its system of quota 
commitments.  
(iii) Tables MA:3 to MA:5  
  Japan    G/AG/N/JPN/116
  
 
4. Question by Australia - Japan has only used one c.i.f. price from the reference period 
1986 to 1988 to calculate the trigger price for the sp ecial safeguard on food preparations.  Is this 
the most appropriate alternative price, as is refer red to in footnote 2, of subparagraph 1(b) of 
Article 5 of the Agreement on Agricult ure, or are other alternatives available?  
 It is impossible to obtain the c.i.f. prices of the product concerned in 1986 and 1987 because 
the corresponding tariff line did not exist before  the introduction of the Harmonized System 
nomenclature in 1988.  So, as described in the notifi cation, we use the c.i.f. price in 1988 as the basis 
for the trigger price.  
  G/AG/R/47 
 Page 17 
 
 
   Japan    G/AG/N/JPN/117  
 
5. Question by New Zealand - Despite maintaining a tariff quota system on milk powder, 
Japan has invoked the special safeguard.  Why was this considered to be necessary and what 
amount of trade was involved?  Were the tariff  quotas filled prior to the safeguard being 
applied to over-quota imports?  Volumes affected  by the safeguard in other tariff lines covered 
by the notification?  
 The special safeguard measure in milk powder w as applied when the price of the freight to be 
imported out of the tariff quota fell below the trigge r price of the price-based special safeguard.  The 
measure is fully consistent with Artic le 5 of the Agreement on Agriculture. 
 
 With regard to the amount of trade involve d in this safeguard me asure, as a price-based 
special safeguard measure is applied to each indi vidual freight, the publication of that amount would 
lead to the disclosure of information on individual import declarations that are related to commercial 
activities of particular traders.  Japan does not offi cially publish information relating to the volume of 
freight involved in price-based special safeguards. 
 Follow-up question
:  Argentina sought clarification rega rding the second question above, posed by 
New Zealand, i.e. whether safeguard action had been applied even though the corresponding tariff 
quotas remained unfilled.  Japan stated that sa feguard action had been applied on out-of-quota 
imports, not on in-quota imports. 
 
 Japan   G/AG/N/JPN/118  
 
6. Question by Australia - Japan has used a tr ade-weighted average when calculating the 
trigger price for the special safeguard on broad beans.  There is no mention of applying trade-
weights when calculating the average price in Article 5 of the Agreement on Agriculture.  Why 
did Japan not calculate a standard simple average , which would have resulted in a lower trigger 
price?  
 Article 5 of the Agreement on Agriculture prescribes  that the trigger price shall, in general, be 
the average c.i.f. unit value of the product concerne d.   However, Article 5 does not mention whether 
the average price is to be calculated using a simple , or a weighted, averaging method.  As a weighted 
average is a more accurate reflection of the actual state of changing import, Japan has always 
calculated a trigger price using a weighted averagi ng method in accordance with the Article 7.4 of the 
Temporary Tariff Measures Law of Japan.  It should be noted that a simple average is not necessarily 
lower than a weighted average.  
Follow-up comment by Australia
:  In the present case, the calcula tions do actually result in a lower 
trigger price, a situation which is adverse to expor ters.  Japan pointed out that it has consistently 
applied the weighted averaging methodology over the years.   Chinese Taipei    G/AG/N/TPKM/39
 
 7. Question by New Zealand - Chinese Taipei is applying the special safeguard on "other 
liquid milk", and the liquid milk tariff quota was underfilled in the previous year.  Confirmation sought that: (a) the "other liqui d milk" quota has been filled this year, and 
(b) any additional safeguard duties are not applied on imports within the tariff quota.  
 The calculation and action of SSG is fully in accordance with Article 5 of the Agreement on 
Agriculture. The related provisions of this Article  indicate that there is no link between the SSG G/AG/R/47 
Page 18  
 
  application and tariff quota fill.  Furthermore, Chinese Taipei confirms that no SSG duties will be 
applied to the in-quota imports. 
 
(iv) Table DS:1  
 Armenia    G/AG/N/ARM/9
 
 
8. Question by Australia - The following progr ammes notified under payments for relief 
from natural disasters appear to be new measur es for which Table DS:2 notifications have not 
been made:  (a) " Payments to farmers of ma rz (regional) communities [. ..]"; and (b) " Appropriate 
funds for Armavir Regional Council  [...]".  How do these measures meet the rules of 
paragraph 8, Annex 2?  When does Armenia intend to submit Table DS:2 notifications for these 
measures?  
 In order to relieve the damages of the na tural disasters, respectively million AMD 300, and 
million AMD 42.5, were provided from the state budg et according to Government Decision N 1412-A 
of 25 August and Government Decision  N 1414-N of 1 September 2005.  The support corresponds to 
the requirements of paragraph 8 of Annex 2 as the Government officially recognized the occurrence 
of the natural disasters taking into consideration the f act that the damages exceeded the level stated in 
the Agreement.  Payments compensated for not more  than the total cost of replacing the losses.   
  Armenia undertook to submit, in a few days, an addendum to its former Table DS:2 
notification G/AG/N/ARM/6 (dated 19 July 2005) relating to these measures.
20 
  Canada   G/AG/N/CAN/60
 
 
9. Questions by the United States - Under the Canadian Farm Income Program (CFIP), 
notified under Annex 2, paragraph 7, were any additional provincial payments made?  If so, 
please explain the federal-provincial relat ionship with respect to the CFIP?     
 The provincial governments did not make additional payments under the CFIP.  The 
provinces paid their share of the payments as per th e terms and conditions of the Program.  Like many 
Canadian agricultural programmes, these are done pursuant to federal and provincial agreements. 
 10. Question by the United States - Canada adds price-related direct government payments 
to the value of production in Supporting Table DS:4 .  How is this addition consistent with the 
apparent consensus in the Doha negotiations for a definition of value of production?     
 This approach is consistent with the method used by Canada in establishing the base period 
data in the Uruguay Round, i.e. G/AG/AGST/CAN, and in all subse quent Table DS:1 notifications 
filed by Canada.  It is based on the need to neut ralize the differences across products or countries 
stemming from differences in how support is provide d.  When support is provided as market price 
support, production is valued at world prices plus th e price gap.  When support is provided through 
direct payments to producers, production is valued at  world prices.  Unless the value of production is 
adjusted upward in the latter case, products or  countries relying on direct payments would 
automatically show higher percentage support than if the same amount of support were provided as 
market price support.  Thus the value of produc tion denominator includes price-related direct 
payments for each product in Supporting Table DS:6.  An amount from column 7 of Supporting Table 
DS:6 is added to the value of production of each product.   
  When a new agreement is in place, Canada  will apply the rules of that agreement. 
                                                     
 
20 Subsequently issued as G/AG/N/ARM/6 /Add.1 (dated 16 November 2006).  G/AG/R/47 
 Page 19 
 
 
   
11. Question by the United States - The quantitie s of eligible production for milk in 
Supporting Table DS:5 grossly understate the suppor t for milk.   Does Canada not agree that all 
milk produced in Canada, with the exception of that which is exported as products under 
appropriate export subsidy commitments, receive s the benefit of supported domestic prices?  
Market price support is calculated on the basis of the administered prices for products to 
which such prices apply, namely butter and skim milk powder.  All produc tion of butter and skim 
milk powder that is eligible to receive the suppor t price is counted as eligible production in the 
calculation of market price support. 
12. Question by the United States - Can Canada  explain the Canada-Manitoba and Canada-
Saskatchewan Adjustment Programs II? Were there similar programs called Adjustment 
Programs I?  
 A complete description of the Canada-Manitoba and Canada-Saskatchewan Adjustment 
Programs can be found in Table DS:2 (G/AG/N/CAN/ 36).  These programs were notified in Canada's 
Table DS:1 for 2000 as decoupled income support, as noted on page 5 of G/AG/N/CAN/53.  Both of 
these programs were subsequently extended for one year and the base periods were updated.  Since 
paragraph 6(a) of Annex 2 does not allow updati ng of the base period, the Canada-Manitoba and 
Canada-Saskatchewan Adjustment Programs II have been notified as AMS support in Canada's Table 
DS:1 notification for 2001 (G/AG/N/CAN/60).     Colombia    G/AG/N/COL/30/Rev.1
 
 
13. Question by Australia - Colombia has no tified support for forest products under 
investment subsidies generally available to agricult ure.  As forest products fall outside the scope 
of product coverage listed in Annex 1, in future no tifications it is not necessary for Colombia to 
continue to notify expenditure against this measure.   
 Colombia will take account of the suggestion not  to include support for forest products in any 
new notifications on domestic support since they fall  outside the scope of the agricultural framework 
defined by the WTO.   
14.  Question by Australia - Co lombia is not claiming de minimis  exemptions in Supporting 
Table DS:7.  As a developing country, under Articl e 6, Colombia is entitled to exempt support 
from calculation in the AMS if it does not exceed 10 per cent of the gross value of production for 
the specific product.  It appears that Colombia could claim de minimis  exemptions for a number 
of products resulting in a lower current total AMS.  
 Colombia is working on the calculation of the de minimis  percentages with a view to 
amending the notifications made in the peri od 1995-2004.  These values will be removed from 
Colombia's current total AMS where support does not exceed the de minimis  level of 10 per cent of 
total value of production and 10 pe r cent per product to which deve loping countries are entitled under 
the special and differential treatment prov isions in the Agreement on Agriculture. 
  Cuba   G/AG/N/CUB/27
 
 15. Question by Australia – Explanation of the increase in expenditure in natural disaster 
relief payments.  Details sought on measures noti fied under the heading of natural disaster relief 
payments, and on consistency with pa ragraph 8(a) to (e) of Annex 2.   G/AG/R/47 
Page 20  
 
   Expenditure related to natural disaster relief and pest and disease control rose as a result both 
of the increased funding granted to alleviate the hardship caused by the long and intense drought 
which afflicted the central and eastern regions, and of  the additional costs incurred to counteract the 
effects of the tropical storms and hurricanes whic h lashed the island in 2005.  All natural disaster 
relief payments made in relation to drought contro l and hurricane damage were consistent with 
paragraph 8(a) to (e) of Annex 2.  
  The long and intense drought required urgent State intervention to offset the ever-increasing loss of revenue suffered by agricultural producers an d the adoption of emergency measures to ensure 
by all possible means the supply of water to the a ffected people, animals and crops.   From 2003 to 
2005, Cuba had to contend with the most severe drought of the last hundred years.  At the most 
critical juncture, reservoir water levels fell to 26.7 per cent of total capacity, 42 per cent of underground basins were seriously de pleted and water had to be supplied by pipeline to more than 
2.6 million inhabitants. Major losses were record ed.  The year 2005 alone saw the production of 
vegetables and other crops fall by 15 million quint als, milk production decline by 77 million litres and 
the loss of 57,000 tonnes of grain, to mention but the more significant items.  The overall economic 
impact to the end of 2005 is estimated at US$1,350 million.    In addition to the drought, Cuba was adversel y affected in 2005 by an intense cyclone season 
with the impact of five tropical cyclones.  Tropi cal Storm Arlene passed over national territory in 
June, Category 4 Hurricane Dennis struck in July an d, although Hurricanes Katrina, Rita and Wilma 
did not cross Cuba, several regions of the country were hit by strong winds, heavy rain and coastal 
flooding.  Hurricane Dennis caused c onsiderable damage in ten provi nces; initial estimates set losses 
at US$1,400 million, with the destruction of 142,343  tonnes of goods.  Cuba was also affected by 
Hurricanes Rita and Wilma.  The cost of dama ges was calculated at US$704.2 million for Wilma and 
at US$207 million for Rita. 
 
16. Question by Australia – Details sought on the Turquino-Manati Development Plan for 
Mountain Areas, and more specifically, on consis tency with paragraph 13(a) to (f) of Annex 2.  
 The Turquino-Manati Development Plan for M ountain Areas was created with a view to 
ensuring the sustainable development of Cuba's mountain regions and their communities from the 
ecological, economic and social perspectives.  Th e specific objectives of th e Plan are as follows: 
(a) boost production and services related to the econo my of the mountain regions;  (b) contribute to 
the systematic improvement and maintenance of  the social and living conditions of mountain 
communities to ensure their continued presence in  these regions; (c) encour age the introduction and 
development of scientific and technical activities to  guarantee the sustainable development of these 
regions, and; (d) oversee work ensuring sustai nable development, ecosystem protection and 
reforestation activities in these regions. 
  The Plan applies to a clearly designated contiguous geographical area encompassing three 
mountainous massifs and the Ciénaga de Zapata re serve and representing around 20 per cent of Cuban 
territory and six per cent of the population, conditio ns which are consistent with paragraphs 12 and 13 
of Annex 2. 
 
 European Communities    G/AG/N/EEC/49 & Corr.1 and EEC/51 & Corr.1
 
 
17. Question by United States - The EC is undertaking a reform of its wine program.  We 
have raised questions regarding EC wine suppo rt on several occasions and continue to have 
concerns, including on the transparency of na tional/community financial envelopes and on 
consistency with Green Box criteria.  While we recognize the EC has not yet adopted new wine measures, we would be interested to know at this  point how the draft wine reform will address 
these concerns.   G/AG/R/47 
 Page 21 
 
 
   The EC is well aware of the concerns that the United States has on its wine program.  We 
know each other's position on the Green Box compatibility of the current wine restructuring measure.  
For the transparency of envelopes and eligible regi ons, we refer back to the reply given in January 
2006.21   The European Commission has called for a root-and-branch reform of the Common Market 
Organisation for wine on the basis of proposals in  line with other recent reform efforts.  In the 
ongoing work for the reform in the wine sector the criteria of Annex 2 of the Agreement on 
Agriculture have been taken into consideration.  Ho wever, at this stage we cannot anticipate the final 
Council Decision on the Commission proposals. Inte rested Members are invited to consult the 
different options at the following EC Commission website:  at http://ec.europa.eu/agriculture/capreform/wine/index_en.htm
 . 
 
Follow-up comments :  Canada indicated that it was following this issue quite closely. 
  Former Yugoslav Republic of Macedonia    G/AG/N/MKD/6
 
 18. Question by Australia –  Information sought on the introduction of public stockholdings 
for food security purposes.    
 The introduction of public stockholdings for food security purposes in 2004 is based on the 
new Law on Stock Reserves (Official Gazette 68/2004) .  The accumulation and holding of stocks of 
products are an integral part of the Food Security Programme for 2004, which was adopted by the Government pursuant to Article 6 of the Law on Stock Reserves.  The maintenance of stock reserves 
for food security purposes in the preceding years was in accordance with the previous law (Official 
Gazette 47/1987; 13/1993), except in 2003 when th ere were no food purchases in relation to the 
accumulation of stock reserves.  
19. Questions by Australia –  Explanation fo r the large increase in AMS from 2003 to 2004 
and for the introduction of product-specific AMS for maize, barley, sugar beet, sunflowers, pigs 
and honey.  Information requested on the operation of the direct payments for these 
commodities.   
 This is due to the shift of agricultural polic y towards direct payments in accordance with the 
Programme for Agricultural Development Incentives for 2004 (PADI 2004), published in the Official 
Gazette No. 30/2004.   The introd uction of product-specific AMS for maize, barley, sugar beet and 
sunflowers aims at supporting sustainable devel opment of the economy in the rural areas and the 
provision of cheaper fodder.  All farmers who have so wn these crops on at least 0.5 ha of farming area 
with limited soil and climatic conditions for efficient fa rming, are eligible for such support.  In the pig 
farming sector, the financial support is intended for the maintenance of the b asic flock. In the bee-
farming sector, farmers are also encouraged to proc ure a certain number of quality bee hives in order 
to increase the economic potential of the sector.   The direct payments for such commodities have 
been operated through the Ministry of Agriculture, Forestry and Water Economy, in conformity with 
the conditions stipulated in PADI 2004. 
 
20. Question by Australia –  Confirmation that "eligible production" for the calculation of 
market price support for wheat is total wh eat production in Supporting Table DS:5.  
 Confirmed.   
 
                                                     
 
21 See G/AG/R/45, page 17. G/AG/R/47 
Page 22  
 
   Mexico    G/AG/N/MEX/13
 
 
21. Questions by Canada – Payments under envi ronmental programs are claimed as exempt 
under paragraph 12 of Annex 2 for the first time in 2003.  Mexico indicates that these payments 
promote the sustainability of irrigation districts with water availability problems, and 
encourage sustainable development in areas frequently affected by adverse weather.  
Conformity of these payments with each and every criterion of paragraph 12 of Annex 2.  Outstanding submission of the required Table DS:2 notification.  
 Payments under the Water-Use Acquisition Programme meet the criteria laid down in 
paragraph 2 of Annex 2 to the Agreemen t on Agriculture, as explained below: 
 
(a) Eligibility for such payments shall be determ ined as part of a clearly-defined government 
environmental or conservation programme and be  dependent on the fulfilment of specific 
conditions under the government programme, including conditions related to production 
methods or inputs. 
 
The Water-Use Acquisition Programme aims to promote the sustainability of irrigation districts with water availability problems,  by supporting programmes for the 'productive 
conversion' of such areas and full compensation for previously granted water rights. The payments are made to civil associations of users of irrigation facilities or producers enjoying water exploitation or user right s for agricultural or livestock purposes in 
irrigation districts where technical studies of water volume sustainability in water supply 
sources have identified water availability pr oblems, and the eligibility of which is 
determined by the location of the production unit within the areas capable of being re-
dimensioned and converted, according to th e sustainable availability of water. 
 
(b) The amount of payment shall be limited to th e extra costs or loss of income involved in 
complying with the government programme.  
 
The funds allocated to this programme are s ubsidies to supplement investments made by 
the users of irrigation facilities themselves.  They are granted to producers so that the 
latter will give up the share of granted wate r volume that jeopardizes the sustainable use 
of water resources.  The maximum amount is determined by the productive conversion 
project, taking into account the re-dimensioning of the irrigation district, the type of productive conversion project for areas proposed for reclaiming or withdrawal from productive activity and the proposed volume of  water to be withdrawn from the users' 
concession titles. 
 
The Table DS:2 notification will be circulated shortly.  
22. Questions by Canada – The resources grante d to BANRURAL claimed as exempt from 
reduction commitment under S&D in 2002 seem to be a new or modified measure requiring a 
Table DS:2 notification.  When will Mexico submit such a notification?  Details sought on the 
allocation of the large amount described as "p referential rates for agriculture as a whole", for 
example to preferential interest rates on outstanding debts and/or the writing-off of any outstanding debts?  To what extent does this  allocation also include any capital resources 
granted to the newly created Financera Rural ?   
 The amount notified as subsidies in the form of  transfers through interest rates consists of 
funds allocated to Financiera Rural  in order to build up the initial capital of this decentralized body. 
The Basic Law establishing Financiera Rural  (Official Journal of 26 December 2002) provides for 
the creation of a fund with resources to be used to meet Financiera Rural 's objectives. Article 2 of the  G/AG/R/47 
 Page 23 
 
 
  Law stipulates that the purpose of  Financiera Rural  is to implement the State's priority activity for 
promoting the development of agricultural and associ ated economic activities.  It will thus grant loans 
in a sustainable manner and provide other fina ncial services to rural producers and financial 
intermediaries, in order to help ensure that they ar e better organized and contribute to their continuous 
improvement. 
 
 In view of the above and in accordance with  Article 6.2 of the Agreement on Agriculture, 
which stipulates that investment subsidies that ar e generally available to agriculture in member 
countries and agricultural input subsidies genera lly available to low-income or resource-poor 
producers in developing countries shall be exempt  from domestic suppor t reduction commitments, 
Mexico considers that the transfers in question meet these criteria, since the loans granted to 
producers via Financiera Rural  (development bank) are subsidies designed for producers who do not 
have access to commercial bank credit conditions and who require capital input for agricultural 
production.  
 The Table DS:2 notification will be circulated shortly. 
 
23. Questions by Canada - Subsidies for electri city charges for agricultural use and for 
agricultural diesel are claimed as exempt from reduction commitment under the heading "Investment subsidies generally available to agric ulture".   Subsidies for such operating inputs 
as electricity and diesel fuel are very different from investment subsidies.  Since these input 
subsidies are not provided only to low-income or resource poor producers (they are claimed to 
be generally available to agriculture), could Mexi co please explain why these input subsidies are 
not reported as non-exempt AMS support?  
 Subsidies for agricultural diesel and electricity ar e indeed input and not investment subsidies.  
In view of this, Mexico will acco rdingly modify its notifications.
 
  
New Zealand   G/AG/N/NZL/41  
24. Question by the EC - New Zealand notified an amount of $NZ 7.945 million for the 
Sustainable Farming Fund in the Green Box und er "research".  Does the Fund also allow the 
financing of promotion activities?  If so, conformity with paragraph 2 of Annex 2.  
The purpose of the Sustainable Farming Fund (t he Fund) is to support projects that will 
contribute to improving the financial and enviro nmental performance of the land-based productive 
sectors through applied research and extension to farmers.  Projects address a range of topics including: adding value and making market connecti ons; demonstration projects;  information and 
technology transfer;  identifying barriers to and options for improved land use and management;  
technical investigations supporting the better use and allocation of water resources; and improving 
management decision support.  The Fund does not allow for the financing of industry promotion 
activities. 
Thailand   G/AG/N/THA/59
 
25. Question by Australia - Information sought on the form of the market price intervention 
for rice, lychees, maize, manioc, coffee, onions , rambutan and mangosteen listed in Supporting 
Table DS:7 in 2002, 2003 and 2004?  
 The market price intervention of products listed in Supporting Table DS:7 in 2002-2004 is 
aimed at relieving social, economic and political tensi ons when the market price dramatically falls as 
it usually occurs during the early of harvesting seasons. The government agency will buy those G/AG/R/47 
Page 24  
 
  products at the intervention price.  This measure  is a temporary measure and depends on supply of, 
and season for various products.  Follow-up comment
:  Given that Thailand has clarified that market price intervention is indeed taking 
place, Australia hoped that an updated notification would be presented soon, whereby a Supporting 
Table DS:5 (market price support) would be  tabled for the products in question. 
 
26. (a)  Questions by the EC – Operation of the market price intervention mechanism for 
rice.  Level of support prices for the years 2002-20 04.  Share of the rice harvest eligible for that 
support.  Method used to calculate the amount of support notified to WTO in this regard.  
Reason for the increase in expenses between 2002 and 2004.  
 (b)  Questions by the Philippines - Support ing Table DS:4: reasons for (i) the 16% 
increase in the level of support for rice in 2002 compared to 2001; (ii) the 23% increase in 2004 compared to 2003.  Supporting Table DS:7: natu re of the support measures provided to rice, 
namely, the paddy pledging scheme, soft loan measure, and market price intervention.   
 
The objective of such measures is to relieve so cial, economic, and political tensions when the 
market price of rice dramatically falls due to th e seasonal increase of rice supply.  Support measures 
for rice can be classified  into three types:  
- Paddy Pledging Scheme: farmers can sell paddy rice to the government at the 
guaranteed price.  They can buy it back from the government and sell it later on the 
domestic market at the prevailing market price.   
- Soft Loan Scheme: the government provides so ft loans in terms of favourable interest 
rates in order to help farmers for the rice growing during the following year. 
- Market price intervention: the government agency will buy rice from farmers at the 
intervention price. 
 In notifying support to the WTO, fiscal budge tary outlays allocated to these schemes are 
aggregated adjusting for actual spending.  In 20 02-2004, the increase in subsidies was due to the 
fluctuation of rice production.    
27. Questions by the Philippines - Considering that it is the world leading rice exporter, 
could Thailand further explain the need for su ch subsidies, and why there appears to be a 
concentration of support on rice compared to ot her products?  For instance, in 2004, we would 
like to seek clarification on why 95 per cent of Thailand's current total AM S has been allocated 
to rice.  
Even though Thailand is the majo r exporter of rice, our farmers still need support due to the 
fact that Thailand has approximately 3.7 million households of rice growers who are poor and live in 
rural areas.  Most of their paddy fields are not in  irrigated areas.  The rice growing, then, depends on 
natural water. This makes it difficult for farmers to  control the level of production.  Hence, the 
government has to support rice production in order to stabilize the price.  G/AG/R/47 
 Page 25 
 
 
  28. Questions by the EC – Explanation sought on  whether the sugar market in Thailand is 
regulated through a guaranteed price and/or throug h a quota system.  Is it correct that a quota 
is dedicated to domestic consumption and that a second quota is available for export?  Details 
sought on the operation of the support system and corresponding regulations.  Explanation as to 
why Thailand considers that this support system does not have to be notified to the WTO.   
 It should be noted that sugar production is  not supported by government funds. The sugar 
market mechanism is operated by the private sector .  Sugar processors establish contracts with cane 
growers and set up prices and revenue sharing details .  According to the sugar mechanism, sugar is 
divided into three quotas. The first quota is refined sugar directly sold to domestic market. The second 
and third quotas are raw and refined sugar respec tively, which are for export. The government only 
regulates the system by setting maximum domestic  price for domestic sugar consumption.  No 
government budget is spent on the sugar market system. 
 
(v) Table DS:2 
  Armenia    G/AG/N/ARM/8
 
 
29. Questions by Australia - Information sought  on the implementation of the Japanese 
Grant Program of the "Development of Agricu ltural and Small Scale Enterprises" with the 
support of the World Bank (JGP).  Does this measure include direct payments to producers?   
 The purpose of the JGP is to promote the de velopment of small- and medium-scale rural 
businesses by way of improving the ability of farmer s and rural entrepreneurs to access markets and 
by stimulating market-oriented private and public investments in rural areas.  In this respect, the 
following services were provided in 2006:  improve d information and financial services, improved 
inputs and technologies, support for marketing ac tivities and proposals on availability of quality 
planting material.  The JGP does not include direct payments to producers.  
30. Question by Australia - Information sought on the "Capital rebuilding of the objects 
having agricultural importance"?  Does this me asure include infrastructure works on farms?  
 There is a mistake in connection with the description of this measure.   A revised submission 
shall be presented.
22 
  Switzerland   G/AG/N/CHE/35
 
 31. Question by Canada – Explanation of ho w the "Severe Weather Conditions" measure 
meets all of the criteria of paragraph 8 of A nnex 2, in order to supplement the information 
already provided in G/AG/R/45.  Specifically, will Switzerland please advise whether eligibility 
for payments requires a "production loss which exceeds 30 per cent of the average of production in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and the lowest entry" (paragraph 8(a))?  
 Switzerland is currently studying whether th e measure in question has been adequately 
notified under paragraph 8 of Anne x 2.  A re-classification of th e measure in paragraph 5 would 
appear to be more appropriate, and the relevant compliance criteria (paragraph 6, (b)-(e)) are being 
carefully examined.   Any decision in this resp ect will be duly notified to the Committee.   
                                                     
 
22 Subsequently issued as G/AG/N/ARM /8/Corr.1 (dated 30 November 2006). G/AG/R/47 
Page 26  
 
  Annex 4 
 
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):   
- Chile  G/AG/N/CHL/20   
- Switzerland  G/AG/N/CHE/13/Add.8 and Corr.1   
(ii) imports under tariff and other quota commitments (Table MA:2):   
- Canada  G/AG/N/CAN/63  
- Chile  G/AG/N/CHL/21  - Latvia  G/AG/N/LVA/13  - Switzerland  G/AG/N/CHE/36   
(iii) special safeguard (Tables MA:3 to MA:5):   
- Ecuador  G/AG/N/ECU/18  
- Japan  G/AG/N/JPN/120 and 121  - Chinese Taipei  G/AG/N/TPKM/37 and 38   
(iv) domestic support commitments (Table DS:1):  
- Armenia G/AG/N/ARM/5/Rev.2  
- Colombia G/AG/N/COL/36  - Ecuador G/AG/N/ECU/19  - Hong Kong, China G/AG/N/HKG/20  - Hungary G/AG/N/HUN/40  
- Jordan G/AG/N/JOR/9  
- Latvia G/AG/N/LVA/15  - Oman  G/AG/N/OMN/1/Rev.1, 3 and 4  
 
(v) new or modified domestic support measures exempt from reduction (Table DS:2): 
- Canada CAN/64 and CAN/65   
 
(vi) in the context of export subsidy commitments (Tables ES:1 to ES:3): 
- Armenia G/AG/N/ARM/7  
- Chile G/AG/N/CHL/22  - Colombia G/AG/N/COL/33 and 34  
- Cuba G/AG/N/CUB/28  
- Ecuador G/AG/N/ECU/20  - Hong Kong, China G/AG/N/HKG/19  - Japan G/AG/N/JPN/119  - Jordan G/AG/N/JOR/8  - Latvia G/AG/N/LVA/14  
- Slovak Republic G/AG/N/SVK/50  
- Switzerland G/AG/N/CHE/37  
__________