WORLD TRADE  
ORGANIZATION  TN/AG/21 
28 November 2005 
 (05-5616) 
Committee on Agriculture  
Special Session  
 
 
 
NEGOTIATIONS ON AGRICULTURE 
 
Report by the Chairman, H.E. Crawford Falconer, to the TNC1 
 
 
1. The present report has been prepared on my own responsibility.  I have done so in response to 
the direction of Members as expressed at the informal Special Session of the Committee on 
Agriculture on 11 November 2005.  At that mee ting, following the informal Heads of Delegation 
meeting the preceding day, Members made it crystal clear  that they sought from me at this point an 
objective factual summary of where the negotiations have  reached at this time.  It was clear from that 
meeting that Members did not expect or desire an ything that purported to be more than that. In 
particular, it was clear that, following the decision  at the Heads of Delegation meeting that full 
modalities will not be achieved at Hong Kong, Members did not want anything that suggested implicit 
or explicit agreement where it did not exist.  
 
2. This is not, of course, the kind of paper that  I would have chosen or preferred to have 
prepared at this point.  Ideally, my task should have  been to work with Members to generate a draft 
text of modalities. But this text reflects the rea lity of the present situation. There will be – because 
there must be if we are to conclude these negotiations – such a draft text in the future.  I look at this 
now as a task postponed, but the precise timing of this is in the hands of Members.  
 
3. As for this paper, it is precisely what it is described to be.  No more, no less. It is the 
Chairman's report and, as such, it goes from me to the TNC.  It is not anything more than my personal 
report – in particular, it is not in any sense an agreed  text of Members.  It does not, therefore, in any 
way prejudge or prejudice the positions of Members on any matter within it or outside of it.  And, it 
certainly does not bind Members in any way.  It s hould go without saying that the agreed basis of our 
work is, and shall remain, the Doha Mandate it self and the July 2004 Framework on Agriculture. 
 4. As to the character of the paper, I have end eavoured to reflect what I discerned as the wishes 
of Members when they directed me to prepare this paper.  I have tried to capture as clearly as I can 
such conditional progress and convergence as has deve loped in the post-July 2004 period.  In doing 
so, I have not tried to brush under the carpet divergen ces that remain, and the paper tries to be just as 
clear on those points.  Of course, it is a summary report.  As such, it cannot – and does not – 
recapitulate each and every detail on each and every issue.  But I took from Members' comments that 
they would prefer a paper which could 'orient' further discussion.   5. In that regard, I hope that anyone reading this pa per would be able to get a pretty clear idea of 
what it is that remains to be done.  Members made it clear that it was not my task as Chair to prescribe 
what is to be done next in a programmatic way.  My task was to register where we are now, but I 
confess to having done so with an eye to genuinely  clarifying where key convergences exist or key 
divergences remain, rather than obscu ring or overcomplicating matters. 
 
                                            
1 This document was originally issued as JOB(05)/306 dated 23 November 2005  TN/AG/21 
Page 2  
6. My own sense, when I review this myself, is the compelling urgency of seizing the moment 
and driving the process to a conclusion as rapidly as possible. We have made – particularly since 
August of this year – genuine and material progress.  Indeed, it has come at a relatively rapid pace.  It is also clear to me that it has been the product of a genuinely negotiating process.  In other words, it has been a case of making proposals and counterproposal s.  That is why the matters covered in this 
report have an essentially conditional character.  As I see it, the reality is that we have yet to find that 
last bridge to agreement that we need to secure m odalities.  But it would be a grave error, in my view, 
to imagine that we can take much time to find that  bridge.  As Chair, I am convinced that we must 
maintain momentum.  You don't close divergences by ta king time off to have a cup of tea.  If you do 
so, you will find that everyone has moved backwards in the meantime. That, it seems to me, is a 
profound risk to our process. I would like to believe that this report at least underlines to us that there 
is indeed something real and important still within our grasp and we ought not to risk losing it.  Our 
over-riding challenge and responsibility is to m eet the development objective of the Doha 
Development Agenda.  To meet this  challenge and achieve this goal, we must act decisively and with 
real urgency.   
7. The future life of this paper, if any, is a matter entirely in the hands of TNC Members to 
decide. This, as I see it, is the proper safeguard of th e integrity of what has come to be described as a 
"bottom-up" process.    
 
 DOMESTIC SUPPORT 
 
8. There has been very considerable potential convergence, albeit on a manifestly conditional 
basis.  
Overall Cut 
 
- There is a working hypothesis of three bands  for overall cuts by developed countries.  
There is a strongly convergent working hypothesi s that the thresholds for the three bands 
be US$ billion 0-10; 10-60; >60.  On this basis, the European Communities would be in the top band, the United States and Japan in  the second band, and all other developed 
countries at least in the third band.  For developing countries, there is a view that either 
developing countries are assigned to the relevant  integrated band (the bottom) or that 
there is a separate band for them.
1 
- Based on post-July 2005 proposals, there has been an undeniably significant convergence 
on the range of cuts.  Of course, this has been conditional.  But subject to that feature, a great deal of progress has been made since the bare bones of the July 2004 Framework.  
The following matrix provides a snapshot: 
 
Bands Thresholds (US$ billion) Cuts 
1 0-10 31%-70% 
2 10-60 53%-75% 
3 > 60 70%-80% 
 
De Minimis 
 
- On product-specific de minimis  and non-product-specific de minimis , there is a zone of 
engagement for cuts between 50% and 80% for developed countries.  TN/AG/21 
 Page 3 
 
 
- As regards developing countries, there are s till divergences to be bridged.  In addition to 
the exemption specifically provided for in the Framework, there is a view that, for all 
developing countries, there should be no cut in de minimis  at all.  Alternatively, at least 
for those with no AMS, there should be no cut and, in any case, any cut for those with an AMS should be less than 2/3 of the cut for developed countries. 
 Blue Box 
 
9. There is important and significant convergen ce on moving beyond (i.e. further constraining) 
Blue Box programme payments envisaged in the July  2004 Framework.  However, the technique for 
achieving this remains to be determined.  One prop osal is to shrink the current 5% ceiling to 2.5%.
2  
Another proposal rejects this in favour of additional criteria disciplin ing the so-called "new" Blue Box 
only.  Others favour a combination of both, incl uding additional disciplines on the "old" Blue Box. 
 
AMS 
 
- There is a working hypothesis of three bands for developed countries. 
- There is close (but not full) convergence on the thresholds for those bands.  There 
appears to be convergence that the top tier should be US$25 billion and above.  There is 
some remaining divergence over the ceiling for the bottom band:  between US$12 billion 
and 15 billion. 
- There has been an undeniably significant c onvergence on the range of cuts.  Of course, 
this has been conditional.  But, that unders tood, a great deal of progress has been made 
since the bare bones of the July 2004 Framework.  The following matrix3 provides a 
snapshot: 
Bands  Thresholds  (US$ billion) Cuts 
1 0-12/15 37-60% 
2 12/15-25 60-70% 
3 >25 70-83% 
 
- There is therefore working hypothesis agre ement that the European Communities should 
be in the top tier, and the United States in  the second tier. However, while the basis for 
Japan's placement as between these two tiers has been narrowed, it remains to be finally 
resolved. 
- For developed countries in the bottom band, w ith a relatively high level of AMS relative 
to total value of agriculture production, th ere is emerging consensus that their band-
related reduction should be compleme nted with an additional effort.  
- What is needed now is a further step to bridge the remaining gap in positions – 
particularly as regards the United States and the European Communities, it being understood that this is not a matter to be reso lved in isolation from the other elements in 
this pillar and beyond. 
- On the base period for product-specific caps, certain proposals (such as for 1995-2000 
and 1999-2001) are on the table.  This needs to be resolved appropriately, including the 
manner in which special and differen tial treatment should be applied. 
 TN/AG/21 
Page 4  Green Box 
 
10. The review and clarification commitment has not resulted in any discernible convergence on 
operational outcomes.  There is, on the one side, a firm  rejection of anything that is seen as departing 
from the existing disciplines while there is, on the ot her, an enduring sense that  more could be done to 
review the Green Box without undermining ongoi ng reform.  Beyond that there is, however, some 
tangible openness to finding appropriate ways to en sure that the Green Box is more "development 
friendly" i.e. better tailored to meet the realities of  developing country agriculture but in a way that 
respects the fundamental requirement of at most minimal trade distortion. 
 
 
EXPORT COMPETITION  
 
End Date 
 
11. While concrete proposals
4 have been made on the issue of an end date for elimination of all 
forms of export subsidies, there is at this st age no convergence.  There are suggestions for the 
principle of front-loading or accelerated elimination for specific products, including particularly cotton.  
Export Credits 
 12. Convergence has been achieved on a number of el ements of disciplines with respect to export 
credits, export credit guarantee or insurance progra mmes with repayment periods of 180 days and 
below.  However, a number of critical issues remain.
5  
 
Exporting State Trading Enterprises 
 
13. There has been material convergence on rules to address trade-distorting practices identified 
in the July 2004 Framework text, although there ar e still major differences regarding the scope of 
practices to be covered by the new disciplines.  Fundamentally opposing positions remain, however, 
on the issue of the future use of monopoly powers.   There have been concrete drafting proposals on 
such matters as definition of entities and practices to be addressed as well as transparency.  But there 
has been no genuine convergence in such areas. 
 
Food Aid 
 
14. There is consensus among Members that the  WTO shall not stand in the way of the provision 
of genuine food aid. There is also consensus that wh at is to be eliminated is commercial displacement. 
There have been detailed and intensive discussions, so me of which have even been text-based, but not 
to a point where a consolidated draft text could be  developed.  This has been precluded by Members 
clinging to fundamentally disparate conceptual prem ises.  There are proposals that in the disciplines a 
distinction should be made between at least two types of food aid: em ergency food aid and food aid to 
address other situations. However, there is not  yet a common understanding where emergency food 
aid ends and other food aid begins, reflecting con cerns that this distinction should not become a 
means to create a loophole in disciplines. A fund amental sticking point is whether, except in 
exceptional, genuine emergency situations, Members should (albeit gradually) move towards untied,  
in-cash food aid only, as some Members propose but other Members strongly oppose.6  
  TN/AG/21 
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Special and Differential Treatment 
 15. Framework provisions for special and differen tial treatment, including with respect to the 
monopoly status of state trading enterprises in developing countries and an extended lifetime for Article 9.4, have been uncontroversial, but details remain to be established. 
 Special Circumstances  
16. Work on the criteria and consultation procedur es to govern any ad hoc temporary financing 
arrangements relating to exports to developing coun tries in exceptional circumstances is not much 
developed.  
 
MARKET ACCESS 
 
Tiered Formula 
 
- We have progressed on ad valorem  equivalents.
7  This has successful ly created a basis for 
allocating items into bands for the tiered formula. 
- We have a working hypothesis of four bands for structuring tariff cuts. 
- There has been very considerable converg ence on adopting a linear-based approach for 
cuts within those bands.  Members have, of course, by no means formally abandoned 
positions that are even more divergent.8  We need now to narrow the extent of divergence 
that remains.  This will include whether or  not to include any "pivot" in any band. 
- Members have made strong efforts to promot e convergence on the size of actual cuts to 
be undertaken within those bands.  But, even though genuine efforts have been made to 
move from formal positions (which of course rema in), major gaps are yet to be bridged.  
Somewhat greater convergence has been achieved as regards the thresholds for the bands.  
Substantial movement is clearly essential to progress. 9 
- Some Members continue to reject completely the concept of a tariff cap.  Others have 
proposed10 a cap between 75-100%. 
Sensitive Products  
- Members have been prepared to make conc rete - albeit conditional - proposals on the 
number of sensitive products.  But, in a situation where proposals extend from as little as 
1% to as much as 15% of tariff lines, furthe r bridging this difference is essential to 
progress. 
- The fundamental divergence over the basic a pproach to treatment of sensitive products 
needs to be resolved.11  Beyond that, there needs to be convergence on the consequential 
extent of liberalisation for such products. 
Special and Differential Treatment 
 
- Just as for developed countries, there is  a working hypothesis of four bands for 
developing countries.  There is no disagree ment on lesser cuts within the bands.  A 
certain body of opinion is open to considering cuts of two-thirds of the amount of the 
cuts for developed countries as a plausible z one in which to search more intensively for 
convergence.12  But significant disagreement on that remains, and divergence is, if TN/AG/21 
Page 6  
anything, somewhat more marked on the c onnected issue of higher thresholds for 
developing countries.
13  
- Some Members continue to reject completely  the concept of a tariff cap for developing 
countries.  Others have proposed14 a cap at 150%. 
- For sensitive products, there is no disagreement that there should be greater flexibility for 
developing countries, but the extent of this needs to be further defined.15 
 
Special Products 
 
- Regarding designation  of special products, there has been a clear divergence between 
those Members which consider that, prior to establishment of schedules, a list of non-
exhaustive and illustrative criteria-based i ndicators should be established and those 
Members which are looking for a list which would act as a filter or screen for the 
selection of such products. Latterly, it h as been proposed (but not yet discussed with 
Members as a whole) that a developing c ountry Member should have the right to 
designate at least 20 per cent of its agricu ltural tariff lines as Special Products, and be 
further entitled to designate an SP where, for that product, an AMS has been notified and 
exports have taken place.  This issue needs to  be resolved as part of modalities so that 
there is assurance of the basis upon which Members may designate special products. 
- Some moves toward convergence on treatment of Special Products have been made 
recently. Some Members had considered that  special products should be fully exempt 
from any new market access commitments what soever and have automatic access to the 
SSM.  Others had argued there should be some degree of market opening for these 
products, albeit reflecting more flexible tr eatment than for other products.  In the 
presence of this fundamental divergence, it had clearly been impossible to undertake any definition of what such flexibility would be . Genuine convergence is obviously urgently 
needed. There is now a new proposal for a tr ipartite categorization of Special Products 
involving limited tariff cuts for at least a pr oportion of such products which remains to 
be fully discussed. It remains to be seen whether this discussion can help move us 
forward.   
 
Special Safeguard Mechanism 
 
- There is agreement that there would be a sp ecial safeguard mechan ism and that it should 
be tailored to the particular circumstances a nd needs of developing countries.  There is 
no material disagreement with the view that it should have a quantity trigger.  Nor is there disagreement with the view that it should at least be capable of addressing effectively what might be described as import "surges".  Divergence remains over 
whether, or if so how, situations that are less er than "surge" are to be dealt with.  There 
is, however, agreement that any remedy should be of a temporary nature.  There remains strong divergence however on whether, or if  so how, a special safeguard should be 
"price-based" to deal specifica lly with price effects.  
- There is some discernible openness, albeit at vary ing levels, to at least consider coverage 
of products that are likely to undergo signifi cant liberalisation effects, and/or are already 
bound at low levels and/or are special produc ts.  Beyond that, however, there remains a 
fundamental divergence between those consid ering all products should be eligible for 
such a mechanism and those opposing such a blanket approach.  TN/AG/21 
 Page 7 
 
 
Other Elements 
 
17. There has been no further mate rial convergence on the matters covered by paragraphs 35  and 
37 of the July 2004 Framework text.  The same ma y be said for paragraph 36 on tariff escalation, 
albeit that there is full agreement on the need for this to be done, and a genuine recognition of the 
particular importance of this for commodities exporte rs.  Certain concrete proposals have been made 
on paragraph 38 (SSG) and met with  opposition from some Members. 
 18. Concrete proposals have been made and discu ssed on how to implement paragraph 43 of the 
July 2004 Framework on tropical and diversificati on products.  But there remains divergence over the 
precise interpretation of this section of the July Framework
16 and no common approach has been 
established.  
 
19. The importance of long-standing preferences pur suant to paragraph 44 of the July 2004 
Framework is fully recognised a nd concrete proposals regarding pref erence erosion have been made 
and discussed.17  There seems not to be inherent difficulty with a role for capacity building.  However, 
while there is some degree of support for e.g. lo nger implementation periods for at least certain 
products in order to facilitate adjustment, there is far from convergence on even this.  Some argue it is 
not sufficient or certainly not in all cases, while  others that it is not warranted at all. 
  
LEAST-DEVELOPED COUNTRIES 
 20. There is no questioning of the terms of paragra ph 45 of the July Framework agreement, which 
exempts least-developed countries from any reduction requirement.  The stipulation that "developed 
Members, and developing country Members in a position to do so, should provide duty-free and 
quota-free market access for products originating from least-developed countries" is not at this point 
concretely operational for all Members.  At this  stage, several Members have made undertakings.  
Proposals for this to be bound remain on the table.
18 
  
COTTON 
 
21. While there is genuine recognition of the probl em to be addressed and concrete proposals 
have been made, Members remain at this point shor t of concrete and specific achievement that would 
be needed to meet the July Framework direction to address this matter ambitiously, expeditiously and 
specifically. There is no disagreement with the view  that all forms of export subsidies are to be 
eliminated for cotton although the timing and speed remains to be specified.  Proposals to eliminate 
them immediately or from day one of the implementa tion period are not at this point shared by all 
Members.  In the case of trade distorting support, proponents seek full elimination with "front-loaded" 
implementation.
19  There is a view that the extent to whic h this can occur, and its timing, can only be 
determined in the context of an overall agreement.  Another view is that there could be at least 
substantial and front-loaded reduction on cotton speci fically from day one of implementation, with the 
major implementation achieved within twelve mont hs, and the remainder to be completed within a 
period shorter than the overall im plementation period for agriculture.20   
  
RECENTLY-ACCEDED MEMBERS  
 
22. Concrete proposals have been made and discu ssed, but no specific flexibility provisions have 
commanded consensus. TN/AG/21 
Page 8   MONITORING AND SURVEILLANCE 
 
23. A proposal has been made but there is no material advance at this point. 
  OTHER ISSUES 
 
24. On paragraph 49 (sectoral initiatives, differen tial export taxes, GIs) certain positions and 
proposals have been tabled and/or referred to.  They are issues that remain of interest but not agreed. 
 
25. At this point, proposals on paragraph 50 have not advanced materially. 
 26. In the case of small and vulnerable economies, a concrete proposal has been made recently.  It 
has not yet been subject to consultation.  
27. There is openness to the particular concerns of commodity-dependent developing and least-
developed countries facing long-term decline and/or sh arp fluctuations in prices.  There is, at this 
point (where, overall, precise modalities are still pe nding), support for the view that such modalities 
should eventually be capable of addressing effectively key areas for them.
21 
  TN/AG/21 
 Page 9 
 
 
Notes 
 
1 On the proposed basis that cut remains to be determ ined for those developing countries with an AMS.  
In any case, there is a view (not shared by all) that cuts for developing countries should be less than 2/3 of the cut for developed countries. 
2 The exact extent of the flexibility to be provided pursuant to paragraph 15 of the July 2004 
Framework remains to be agreed. 
3 Of course, this needs to be viewed as illustrative rather than overly literally, if for no other reason 
than that these are conditional figures.  For instance, while the European Communities has indicated it could be 
prepared to go as far as 70% in the to p tier, they make it clear that this is acceptable only if the United States 
will go to 60% in the second tier.  The United States for its part, however, has only indicated preparedness to go 
to that 60% if the European Communities is prepared to go as high as 83% - which it has not indicated it is 
prepared to do. 
4 One Member has proposed the year  2010 for "export subsidies", with accelerated elimination for 
"specific" products.  Another group of Members have proposed a period "no longer than five years" for all 
forms of export subsidies, with "direct" export subsidies subject to front-loading within that period.  
5 This includes, but is not limited to: exemptions, if any, to the 180 day rule; whether the disciplines 
should allow for pure cover only or also permit direct financing;  the appropriate period for programmes to fully recover their costs and losses through the premia levied from the exporters (principle of self-financing - there 
needs to be convergence between position which range from one year to fifteen years);  the disciplines regarding 
special circumstances;  and the ques tion of special and differential treatment, including whether, as some 
Members argue, developing countries should be allowed longer repayment terms for export credits extended by 
them to other developing countries and the specifics of differential treatment in favour of least-developed and net food-importing developing countries. 
6 This fundamental divergence ha s effectively precluded converge nce on such matters as what 
disciplines, if any, should be esta blished with respect to monetization of food aid or the question of the 
provision of food aid in fully grant form only. The importance of operationally effective transparency 
requirements is generally acknowledged, but details have still to be developed, particularly those relating to the 
role of the WTO in this context.  Further work is requir ed to clarify the role of recipient countries and relevant 
international organizations or other entities in triggering or providing food aid. 
7 The method for calculating the AVEs for the sugar lines is still to be established. 
8 At one end of the spectrum, as it were, a "harmoni sation" formula within the bands; at the other end 
"flexibility" within the formula. 
9 The matrix below is an illustrative table that portrays the extent of divergences that remain, even on 
the basis of post-August 2005 proposals.  This does not entirely cover all the subtleties of those proposals to utilize a "pivot" (although most are in fact within the ranges  tabulated), but is intended to convey a snapshot of 
the status of average cu ts proposed post-August. 
 Thresholds Range of cuts (%) 
Band 1 0% - 20/30% 20-65 
Band 2 20/30% - 40/60% 30-75 
Band 3 40/60% - 60/90% 35-85 
Band 4 >60/90% 42-90 
 
10 As an element in certain cond itional proposals on overall market  access, tabled post-July 2005. 
11 Some see this as being tariff quota based and expressed as a percentage of domestic consumption, 
with proposals of up to 10%.  Others propose pro rata  expansion on an existing trade basis, including taking TN/AG/21 
Page 10  
 
account of current imports.  Some also  propose no new TRQs, with sensitivity  in such cases to be provided 
through other means, e.g. differentia l phasing.  There is also a proposa l for a "sliding scale" approach.  
12 In this pillar, as well as in the other two, there is general convergence on the point that developing 
countries will have entitlement to longer implementation periods, albeit that concrete precision remains to be 
determined. 
13 The matrix below is an illustrative table that portrays the extent of divergences that remain, just on 
the basis of post-August 2005 proposals. 
 Thresholds Range of cuts (%) 
Band 1 0% - 20/50% 15-25* 
Band 2 20/50% - 40/100% 20-30* 
Band 3 40/100% - 60/150% 25-35* 
Band 4 >60-150%  30-40* 
*There is also a proposal that cuts for developing countries should be "slightly lesser" than the upper tariff cuts 
for developed countries shown in th e preceding table (i.e.: "slightly le sser" than 65, 75, 85 and 90%). 
14 As an element in certain cond itional proposals on overall market  access, tabled post-July 2005. 
15 While the eventual zone of convergence for developed countries undoubtedly has a bearing in this 
area, it has been proposed by a group of Members that the principles of sensitive products generally and for 
TRQs specifically should be different for developing countries. Another group of Members has proposed, in the 
post-August period, an entitlement for developing countries of at least 50% more than the maximum number of lines used by any developed Member.  This would (based on developed country proposals) amount to a potential 
variation between 1.5% and 22.5% of tariff lines. This latter group has also proposed that products relating to 
long-standing preferences shall be designated as sensitive and that any TRQ expansion should not be "at the detriment of existing ACP quotas". This particular view has been, however, strongly opposed by other Members 
which take the firm position that tropical and diversifica tion products should not at all be designated as sensitive 
products.  
16 It is argued by some Members that this is to be interpreted as meaning full duty- and tariff quota-free 
access, but by others as less than that. 
17 Note 15 above refers. 
18 It is also proposed that this should be accompa nied by simple and transp arent rules of origin and 
other measures to address non-tariff barriers. 
 
19 Concrete proposals have been made, with a three- step approach:  80% on day one, an additional 10% 
after 12 months and the last 10% a year later.  
20 A Member has indicated that it is prepared to implement all its commitments from day one and, in 
any case, to autonomously ensure that its commitmen ts on eliminating the most trade-distorting domestic 
support, eliminating all forms of expo rt subsidies and providing mfn duty-  and quota-free access for cotton will 
take place from 2006.  
 
21 This would appear to include in particular such a matter as tariff escalation, where it discourages the 
development of processing industries in the commodity producing countries.  The idea of a review and 
clarification of what the current status  is of GATT 1994 provisions relating to the stabilisation of prices through 
the adoption of supply management systems by producing countries, and the use of export taxes and restrictions under such systems is also on the table.  Proponents would seek something more than this such as more concrete 
undertakings in the area of non-tariff measures and actual re vision of existing provisions.  There is, at this point, 
no consensus in these latter areas, but an apprecia tion at least of the underlying issues at stake. 
_________