WORLD TRADE  
ORGANIZATION  TN/AG/19 
1 August 2005 
 (05-3461) 
Committee on Agriculture 
Special Session  
 
 
 
AGRICULTURE NEGOTIATIONS: STATUS REPORT II 
LOOKING FORWARD TO THE HONG KONG MINISTERIAL1 
 
Assessment by the Chairman  
 Introduction 
 
1. This assessment should be read alongside what I describe as the ‘foundation document’ of the 
July Framework (WT/L/579) adopted by all Me mbers and building on the Doha mandate and my 
earlier personal status report of 27 June 2005 (JOB(05)/126).
2 
2. As was the case in the earlier status report of  27 June, I am basing this second assessment on 
the following three key operational negotiating principles. 
 
• Progress must continue to be made in a ll three ‘pillars’ of domestic support, export 
competition and market access.  
• The negotiations can only succeed with an incremental approach that seeks 
simultaneous movement on identifiable ‘packages’ of issues.   
 
• The ‘acquis’ of the negotiations remains the July 2004 Framework, adopted by 
Members, and which elaborated in some de tail the Doha Mandate. This fully protects 
all Members positions on issues, including various aspects of the crucial issue of Special and Differential Treatment in favour  of Developing Countries, where limited 
movement has been possible in the last 12 months. 
 
3. The intensive discussions, at both political and o fficial level, since my personal assessment of 
June, have not changed in any deep sense my underl ying thinking on the key issues to be addressed – 
they have not gone away, simply because clear guidance has not yet been provided. However, the discussions have certainly brought more clearly into sight some key political trade-offs that were not 
so clear to me or the Members a month ago.  
 4. The agriculture negotiations are stalled – there is  no way to conceal that reality.  But a set of 
clear political decisions – none of them easy, but at least we can now more readily identify the essential decisions – can restart this negotiation a nd still pave the way for a successful Ministerial 
meeting in December.  The purpose of this brief assessment is to try to highlight those matters. 
Regrettably, the intensive consultations over the last  12 months have shown that we must settle some 
central matters before we can address effectively a much broader range of issues.   
 
 
 
                                                     
 
1  This document was previously  circulated as Job(05)163. 
2  This document is attached. TN/AG/19 
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Export Competition 
 
5. For reasons spelled out in my earlier assessment, this is clearly the most advanced ‘pillar’ of 
the negotiation (precisely because of the clarity of some key political decisions taken earlier).  We 
now need, and the sooner the better, some additional building blocks in ‘parallel commitments’.  With 
respect to STEs, we need to agree quickly on a more  targeted definition of what precisely are the new 
disciplines on the matter of ‘Subsidies, Government  Financing and Underwriting of Losses’ and the 
institutions of primary concern.  On Food Aid, I regr et to report that the concerns of many developing 
countries, which I referred to a month ago, about th e practical effects of any new disciplines still need 
to be addressed.  I still see value in advancing our understanding of what might constitute genuine 
emergency food aid.  This coul d facilitate our work on defini ng the operational disciplines on 
commercial displacement.  6. A negotiating approach based  on finding a reasonable way forw ard here will then permit a 
sharper focus in the autumn on what is clearly th e over-arching issue in this pillar: the schedule and 
modalities for phasing out all forms of export subsidi es and how this might take account of the need 
for some coherence with internal reform steps of Members.  This is a very political matter and of 
major commercial significance.  Our Ministers need  to be put in a position where the centre of the 
matter is the focus of their attention.  
 
Domestic Support 
 
7. My earlier assessment provided a reasonably co mprehensive view of the key issues to be 
addressed in this pillar.  I can now see more clearly , thanks to the intensive discussions, what are the 
first order questions to be settled.  
 8. If we are to continue with an incremental approach in this pillar, two decisions are now 
required.  In my view, however, such decisions will be taken only in the context of a set of decisions 
to unblock the market access formula.  
• A decision – not a discussion – is required on where the three largest users of the Amber Box
3 
fall into the tiered formula.  I see two possible solutions.  It is not a matter where any further 
technical work is needed4.  I am not prepared to describe th e two solutions I can see, because I 
have accepted good advice that sometimes stating the obvious can finally complicate 
Members adjusting their positions. 
 
• The rationale for the ‘Blue Box’ is that it is  a half-way house between highly trade and 
production distorting amber box payments and the low or minimally trade and production distorting payments that properly meet the rigorous criteria of the Green Box.  Decisions on the disciplines to apply on Blue Box payments that will reinforce that reform objective are 
now required.  
 
9. With respect to the Green Box, I can only repeat the earlier view in my assessment a month 
ago: there is the basis of a political deal whereby:  
• existing heavy users of Green Box payments examine sympathetically some proposals for 
clarifying the criteria that would not undermine their reforms; and, at the same time, 
 
• the Membership agree that it would be desirable to develop some new provisions that would 
meet the realities of developing country agricultu re but still clearly subject to, and consistent 
                                                     
 
3 More technically, Final Total Bound AMS. 
4 A mild overstatement but I wish to keep a political focus here.   TN/AG/19 
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with, the key test that such payments would met the fundamental test of at most minimal trade-distortion. 
 10. Such a broad political direction to experts to pursue the middle ground here, might then allow 
the experts to develop some real incremental progr ess in the review and clarification of the Green 
Box.    
Market Access 
 
11. This is by far the most complex matter and w ill still require more time than other pillars to 
build convergence.  Pursuing a ‘step by step’ appr oach to building up the structure of modalities 
means identifying sets of issues that, for political reas ons alone, need to be settled at the same time 
without crossing over to the fatal mistake of trying to settle too much at once.  It is a matter of making 
responsible judgements, given that the argument can always be made that ‘everything is linked to 
everything else’. 
 12. I was grateful to the G20 in providing a comprehensive proposal providing their answers to the four key questions I posed in the first assessme nt a month ago.  I note in particular that the 
principle of Special and Differential Treatment in fa vour of Developing Countries is an integral part 
of this proposal.  
 13. Following guidance from many Members, I have used the G20 proposal as a starting point for the most recent consultations.  Some Members of course have reservations about aspects of the G20 comprehensive market access proposal, but it is clear th at this approach is a constructive initiative to 
map out the middle ground and provided others with a platform to raise associated ideas, including the 
possibility of introducing some degree of additional pr ogressivity into the formula.  It was notable that 
certain Members with the greatest  difficulties in this area found the related discussion on sensitive 
products the most useful yet.  Although any imme diate solution is not apparent, this is hardly 
surprising, given its relationship to the tariff formula.  
14. It is evident from discussions based on the G20 proposal that a key issue is whether there is to 
be any flexibility within the formula or all such flexibilities would be provided in some other way.  Members with exporter interests at the forefront of their attention ar e not going to give a blank cheque 
on flexibilities.  With respect to providing any flexib ility within the formula, there would, therefore, 
need to be a high level of specificity  on what such flexibilities would be.  
 
15. Additionally, since any such flexibility, by its very nature, reduces the market opening for 
some products and avoids the TR Q expansion envisaged for ‘sens itive products’, exporters would 
expect to see a more robust formula agreed upon.  It  also needs to be borne in mind that, without any 
such constrained flexibility at all in the formula,  it will be even more difficult for Members with 
difficulties in this area to agree to a higher level of  ambition when the moment arrives to define the 
size of the cuts.  
 16. I am very much aware that this highly focu ssed commentary on the last few weeks’ market 
access discussions has not taken forward our thinking on, say, the types of indicators that might be 
agreed to give operational force to the criteria estab lished for Special Products in the July Framework, 
how the fullest liberalisation for Tropical Products, the treatment of Recently Acceding Members or 
how we might address preference erosion, might be advanced.  I simply repeat my strong concern that these, and other issues of great interest to many Me mbers, cannot be left to one side for too long and 
an attempt be made to ru sh through some ‘fix’.  
 
17. It is imperative therefore that the above key elements relating to the structure of the market 
access pillar be settled as quickly as possible. TN/AG/19 
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The Sub-Committee on Cotton 
 
18. Work in the Sub-Committee on Cotton with r espect to the ‘development track’ seems finally 
to be producing a more focussed effort by the donor  countries, and not just with respect to the cotton 
proponent countries.  However, the urgent matter re lated to the current sharp price decline remains a 
matter of acute concern, particularly for those developing country cotton producers with a very high 
dependence on the world market.  19. With respect to the ‘trade track’, represen tatives of cotton produci ng developing countries 
with whom I have consulted closely in recent week s will have seen that some decisions on the above 
set of issues in all three pillars are crucial to a dvancing the ‘trade track’ of the work of the Sub-
Committee on Cotton.   20. I can add little here to what I said a month ago: the longer it takes to provide answers to such core concerns, the more difficult it will be to  envisage reaching agreement at the Hong Kong 
Ministerial Meeting on the agreed objective of an ‘ambitious, expeditious and specific’ treatment of 
cotton within the agriculture negotia tions.  Members need to bear this  additional dimension very much 
in mind as they reflect on this assessment of  the state of the agriculture negotiations. 
  
_______________ 
 
  TN/AG/19 
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ATTACHMENT 
 
JOB(05)/126 
Committee on Agriculture 27 June 2005 
Special Session 
 
  
AGRICULTURE NEGOTIATIONS - STATUS REPORT 
KEY ISSUES TO BE ADDRESSED BY 31 JULY 2005 
 
Assessment by the Chairman
 
 
OVERVIEW 
 
Behind the phrase 'First Approximation' lies a straightforward objective: to prepare an 
adequate structure in all three pillars for that more political phase from September to December.  We 
can only make progress incrementally and we can onl y make progress from a 'bottom up' approach.  A 
'top down' approach, imposing 'elegant' technical so lutions to deeply unresolved political questions, 
does not work.  
 
That was the whole logic of having developed a 'Framework' rather than attempting the 
impossible task of moving directly to 'Full Modalities'  – i.e. combining structure with the precise rules 
and fully elaborated formulae to define the level of  ambition of the Doha Mandate in precise terms.  
While we focus on the key issues highlighted in th is Paper, I would encourage informal discussion 
amongst Members aimed at giving greater precision on the level of ambition in the Doha Mandate in 
the pillars of domestic support and market access.  Such informal discussion may assist the formal, 
text-based negotiation.   
As a step in the direction towards that 'First Approximation' for the end of July, I need some 
clearer guidance from the Membership on some critical  areas.  Building on what we have already in 
the Agreed Framework, in my view, we need to  have in place by 31 July 2005 the following: 
 
• In the domestic support pillar
, the structure of the reduction commitments (not the size of the 
reductions) relating to Trade-Distorting Domest ic Support as well as some elements of the 
rules (i.e. criteria); in particular it may be  possible to develop convergence on aspects of the 
Green Box by 31 July. 
 
• In the export competition pillar , where we have already both structure and the agreed end 
point (i.e. 'elimination'), further elaboration of parallel commitments, in particular in the areas 
of STEs and Food Aid, since we have at least some 'building blocks' for parallel commitments 
in export credits.  
 
• In the market access pillar , the structure of at least some central elements of the core market 
access formula, and further elaboration of a number of 'flexibilities' (particularly aspects of Special and Differential Treatment such  as SP, but also 'sensitive products'); 
 
If we cannot settle these issues, we are simply transferring all these matters to the September 
to December period with the distinct likelihood that, once more, Ministers will be put in an acutely difficult position.  I have the 'AVE lesson' very much in my mind and I hope it is in yours. TN/AG/19 
Page 6 
 
 
A Development Round - The Crucial Role of Agriculture 
 
This is a Development Round and I can assure Memb ers that this is at the forefront of my 
thinking and approach as the Chair.  Agriculture is critical to ensu ring that we get a 'development 
return' from the Round.  It is critical for two broad reasons: 
 
• The first reason is because many developing country Members and LDCs, including the 
cotton proponents, either already have substa ntial economic interests, relative to their 
economies, in world agriculture markets and can build on this; or, because they can see a 
future for themselves, once the massive trade dist ortions are either eliminated or substantially 
reduced.  The interlocking nature of the domestic  and international reform 'tracks' here will 
result in substantial new trade opportuniti es if we can successfully complete this 
Development Round. 
 
• The second reason is somewhat different. Many developing countries, and particularly LDCs, 
have deeply vulnerable people dependent on ag riculture.  Integrating these parts of their 
agriculture sectors into any emerging reform  framework is deeply sensitive.  Such 
sensitivities have to be accommodated as the refo rm process takes shape.  They have a 
different character to other countries' sensitivities, politically crucial though they  are in 
steering this reform through successfully , domestically and internationally.  
 
To advance the first aspect of developing country interests – cal l them 'offensive' or 'export' 
interests – we must address initially the structure of commitments in all three pillars aimed at the 
source of the problem.   
In practice, we cannot address in the next few weeks all
 features of the instruments 
foreshadowed in the Framework to address the sec ond aspect of developing country interests – i.e. 
instruments designed specifically to take account of the realities of much developing country 
agriculture, such as SSM.  This can only be done when  we have some basic st ructures in place in the 
domestic support and market access pillars (we ha ve the basic structure in place in the export 
competition pillar, thanks to key decisions taken in July 2004). 
 
However, I am not  suggesting in this paper that all  these 'instruments' are to be left aside for 
the post-July phase of this negotiation.  You will see this when you read the pillars on domestic 
support (Green Box, the Final Bound Total AMS reductions, for example) and market access (the 
need to have comparable level of specificity in elaborating SP as with 'sensitive products').  But the 
ineluctable logic of this negotiation, and of this pape r, is that we need structure on the matters that are 
primarily responsible for the large distortions in world agriculture markets.  
 
I do not wish to imply here that the major de veloped countries are not fully seized of this – 
that would be quite unfair to the developed countries.   In some cases, deep  reforms are underway and 
pave the way for important international reforms.  In other cases, some developed countries have only 
limited work to do to contribute to international reform.  All will play their part, of course. 
 
I also have to consider the important matter of the work of the Cotton Sub-Committee, which 
has two tracks to it – the trade and development tracks.  To maintain the confidence of the 
Membership that the Agriculture Negotiations can ind eed deliver concrete results in the field of trade 
reform related to cotton, we have to have something credible to show for our efforts in the agriculture 
negotiations in the 12 months that have passed since the adoption of the July 2004 Framework. 
  TN/AG/19 
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KEY ISSUES FOR JULY 
 
It is particularly important that this pape r be read in conjunction with the July 2004 
Framework5.  That paper, endorsed by the Member ship, and building on the Doha Mandate, 
represents the 'acquis'  of the agriculture negotiation to date.  There are a number of key matters in the 
Framework which, for good reasons ge nerally related to a prudent 'sequencing' of such a complex 
negotiation, are not  covered in this discussion paper; thei r standing in this negotiation remains 
therefore fully intact.  All these issues have been subject to intense and numerous consultations since 
adoption of the July Framework. 
 
I believe that the Membership fully understands that not all issues – even vital ones – can be 
progressed simultaneously.  There are some issues  which, for purely logical reasons, cannot be 
addressed until certain prior matters become somewhat clearer.  That is, there is a certain unavoidable 'sequencing' of issues in any complex negotiation.   It is, I would argue, impossible to consider 
seriously how we factor in, say, 'tariff escalation', or  the concerns of Recently Acceded Members, into 
our market access equation before we have some r easonable shape of the core market access formula. 
Yet at the same time, given the concerns of Me mbers behind these and other important issues, they 
cannot be left aside to the last minute.  
By the end of July, I thus hope to be in a position to put down a paper capturing the level of 
convergence on key issues in each of the three pillars of export competition, domestic support and 
market access.  However, I need guidance from the Membership to do this and I need it now.  
 
Realistically, I do not expect any Member, havi ng reflected on the questions I put, to come 
back to Geneva with an entirely 'new position' fu lly coordinated with its constituencies, lobbies and 
political decision-making procedures.  Rather, I hope th at Members might return with a clearer idea of 
what is possible, where negotiating 'openings' can  be offered to your partners on previously 
intractable positions – and expect comparable treatmen t in return.  In some cases, you will need to 
consult your Ministers, at least informally, and gi ve them a frank and honest assessment of how your 
respective negotiating positions are aligned with th e current needs and real timetable for these 
negotiations. 
 
 
DOMESTIC SUPPORT  
 
In this pillar, there are two broad matters that n eed to be settled by the end of this negotiation: 
the disciplines and commitments on Trade-Dist orting Domestic Support and the review and 
clarification of the disciplines (rules) to ensure th at Green Box measures have no or at most minimal 
effects on trade and production.   
Trade-Distorting Domestic Support 
 
I believe that by 31 July 2005 we need the structure
 of a tiered formula for the cuts in Final 
Bound Total AMS and the structure  of a tiered formula for cutting overall TDS.  Without settling 
some of the broad parameters on the structure of these formulae, it is difficult to see how far more 
difficult decisions can be taken in the more ' political phase' from September to December 2005. 
 
Again, I emphasise the relationship here in this pillar and the work of the Sub-Committee on 
Cotton.  
                                                     
 
5 More accurately expressed , 'Annex A to the 'Doha Work Prog ramme: Decision Adopted by the 
General Council on 1 August 2004’ .  Since this is universally referred to as the 'July Framework' I prefer to use 
this term. TN/AG/19 
Page 8 
 
 
There seems general convergence in the Member ship around the concept of developing these 
two tiered formulae on the basis of absolute, no t relative, levels of TDS.  This reflects a 
fundamentally important fact:  we are focussing on 'fixing the real problem' of the large distortions in world agriculture markets caused by high levels of TDS, not 'scoring a political point'.  
 
Nevertheless, before I were to ask the Membersh ip to formalise a real consensus on this key 
matter, it is clear that there is an expectation that  certain developed countries with very high relative
 
levels of TDS, but which (because of their limited si ze of their agriculture sectors in world terms, do 
not constitute large shares on an ab solute basis) make a serious c ontribution to the reform effort. 
There is, in effect, a 'trade-off' here:  the Membersh ip is prepared to be 'reasonable' to them, provided 
they in turn are 'reasonable' to the Members in this negotiation.    
The Formula for Final Bound Total AMS 
 
Given that we are targeting absolute levels of distortion, it is already clear that any formula 
we might agree on will be driven by the absolute  scheduled levels in three Members:  the EC 
(US$59.8 billion), the US (US$19.1 billion) and Japan (US$35.9 billion)
6.  This already accounts for 
some 82% of the sum of all scheduled AMS support for all WTO Members.   
With respect to the numbers of tiers, most Members are reflecting on either 3 or 4 tiers.  I 
need some clarity here.  However, the fundament al question – and it must be addressed now – is 
where the three largest users of TDS fit into the tiers, whether the tiers number 3 or 4.  
 
There is an additional important question as to how about 17 developing country Members 
with scheduled Final Bound Total AMS commitments be treated. 
 
Arithmetically, all these developing countries, gi ven their absolute levels of Final Bound 
Total AMS, would seem to fall into any lowest tier.   There appears to be broad convergence on this 
key point.  Is it therefore technically difficult in this
 context to ensure that the over-arching principle 
of lesser cuts over longer time frames is met?   Overall Reduction in TDS 
 
Similarly, the structure of this formula will be driven by the data.  There is a high degree of 
convergence amongst the Members that, with this partic ular formula, there would be three bands, with 
the largest single user in the top band and the next tw o highest users in the middle band.  This already 
provides, in effect, the foundation element of the structure of the overall TDS formula and paves the 
way for decisions in the post-July phase on the level of harmonised cuts.   
The treatment of developing countries in this formula raises complex issues for reasons I do 
not intend to summarise here
7.  Unless I get clear guidance from the Membership in July, this may 
need to be resolved in the subsequent negotiating phase from September to December. 
 
                                                      
6 Exchange rates for 2000, the final year for implem entation of the results of the Uruguay Round so as 
to reflect the Final Boun d Total AMS in Schedules. 
7 The underlying reason is that most developing c ountries do not have AMS commitments. It is too 
complex, and not necessary, to explain here the implications of this in the overall reduction. But the problem is understood and will need to be addressed in the subsequent phase.  TN/AG/19 
 Page 9 
 
 
Product-Specific AMS Caps 
 
Within the architecture of disciplines over trade-distorting domestic support, we have an 
agreement in the July Framework to  develop product-specific AMS caps. 
 
There are some difficult issues to be negotiate d here and, for a variety of reasons, a few 
countries would face acute difficulties with almost any common base that might be negotiated for the purpose of setting the caps.  We will need  to address these issues in due course. 
 
The general matter of product-specific AMS cap s is something far better addressed in depth 
when we have greater precision on the structure of the TDS formulae and some insight into the depth 
of cuts.   
De Minimis 
  
For developed countries, this is simply a matter of the size of the cut.  The logic of this paper 
is to put all such matters concerning the size of reductions (i.e. level of ambition) in the domestic 
support pillar into the negotiation process after the Summer Break.  
For developing countries, there are particular sens itivities in the light of the fact that for most 
developing countries, de minimis  and the 5% cap on Blue Box en titlements are the only 'allowances' 
for providing TDS.  This is not the right moment to address solutions to these issues, but we need to 
keep them in mind.  
 
Blue Box Criteria 
 
The review of the criteria of the Blue Box is  an important element in the area of trade-
distorting support.  The objective here is to ensure  that Blue Box payments are less trade-distorting 
than AMS measures.  We have a number of proposals and ideas on the table but strictly limited 
convergence at this stage.  
 
Behind this lies a number of complex negotiatin g linkages.  But a key linkage for many 
Members relates to the size of cuts in the formul ae governing Trade-Distorting Domestic Support.  
Put in the simplest terms, the more m odest the final decision on cutting AMS and de minimis , the 
more pressure Blue Box users, current or potentia l, can expect to see on additional criteria – even 
given the provision in the Framework to cap the Blue Box at 5%.  
We need further work on this during July.  But the size of the cuts will – at least according to 
the assumptions behind this paper – be a matter for the post-Summer Break negotiating phase.  Green Box 
 
Fundamentally, there are two broad directions, or 'strands' in thinking, involved in this review 
and clarification:   
• Those developed and developing country Members which are at most light users of any form 
of subsidisation, are seeking reassurance that the complex specific provisions of the Green 
Box are indeed consistent with the overarching criterion of 'no or at most minimal trade-
distorting effects or effects on production' 
8 
 
                                                      
8 This is the key language from the chapeau to Annex 2 of the UR Agreement on Agriculture. TN/AG/19 
Page 10 
 
 
• The wish of developing countries to introduce ne w provisions or language that take account 
of the types of programmes suited to the realiti es of developing country agriculture and which 
could meet the fundamental test of at most minimal trade-distorting support.  They argue that some provisions of the Green Box are difficult to apply in a developing country context or there is no suitable explicit provision for them.  
 
There is a danger here of the Membership talki ng past each other.  With respect to the first 
broad direction, those developed countries embarked  on deep reform of coupled support policies are 
deeply concerned that any change to the exis ting language might have the perverse effect of 
undermining their reforms.  
 
With respect to the second broad 'strand' or dir ection in this review and clarification of the 
Green Box (i.e., introducing 'development friendly' language), those existing large users of the Green Box and some other Members are worried that intr oducing 'development friendly' language into the 
Green Box may open a 'Pandora's Box' for large-scale subsidisation by developing countries in the 
future. 
   
Clearly, both sides need to accept that there ar e legitimate concerns on both sides and listen 
carefully and rationally to constructive proposals from each side.  I think many understand this.  
 
Ultimately, with respect to introducing some 'development friendly' provisions suited to the 
specific realities of developing country agricultu re, lies a potential 'win-win' outcome.  It is in 
everyone's interests to encourage developing countr ies to avoid repeating the chequered history of 
developed countries' subsidisation.  That is, in order to achieve their social and other non-trade 
concerns, it is obviously desirable that developi ng countries, as they gain increasing financial 
strength, look directly to the Green Box as the appropr iate avenue for policies, targeted at their social, 
political and other non-trade concerns, rather  than utilising trade-distorting support. 
 
We should, in my personal view, accommodate th is reform impetus by introducing at least 
some of the core ideas of the proponents.  If we  could establish a general political-level understanding 
on both sides, the specific drafting by technical experts should follow much more easily.   EXPORT COMPETITION 
 
We already have both structure and the agreed end point ('elimination') in this pillar. The 
remaining issues are: 
 
• To flesh out the parallel commitments in export credits, STEs and Food Aid.  Further progress 
here is essential by 31 July.  We have 'building blocks' in some elements of parallelism.  More 
are required by the Summer Break. 
 
• Defining the 'credible end date' and the implemen tation path.  There is a strong view within 
the Membership that these issues are bette r left to the post-Summer Break phase. 
 
We have in practice focussed on identifying wh ich policies, within the scope of export 
credits
9 with repayment terms of 180 days or below, cer tain types of Food Aid, and certain practices 
of exporting STEs, might be considered (in the prec ise language of paragraph 17 of the Framework) 
under either of the headings:  
• 'All forms of export subsidies' 
                                                     
 
9 I am using the term 'export credits’ to describe 'all export credits, export credit guarantees or 
insurance programmes', in the more formal language of the Framework.  TN/AG/19 
 Page 11 
 
  
• 'export measures with equivalent effect'   
 
These agreed criteria clearly define the scope of our examination at the general level.  
Additionally, there are further provisions within th e Framework that focus our attention on certain 
measures.  With the above in mind, I would like the Membership to focus on the following matters. 
  
Export Credits 
 
We have already a provision in the July Framework on the key issue – export credits 
exceeding
 180 days: they are to be eliminated.  Ne vertheless, additional disciplines need to be 
developed on export credits of 180 days or less.  They may be a far smaller problem in world 
agriculture markets today than long-term export cr edits, but in a future without long-term export 
credits, and equally importantly, wit hout export subsidies, the pressure could build – even in countries 
that are today relying on the other export competiti on policy instruments - to exploit any 'looseness' in 
provisions relating to short term export credits.  
Further work here will be requi red.  We have made some pr ogress on this deeply technical 
issue but it is unlikely to be completed by 31 July.   Exporting State Trade Entities 
 
Future Use of Monopoly Powers 
 
The 'issue of the future use of monopoly powers' remains under negotiation, as specified in 
the Framework.  This more general, and deeply sensitive, question would, in my view, be better 
considered in the subsequent 'more po litical' phase from September to December.  
 
Subsidies, Government Financing and Underwriting of Losses  
 
We have achieved some important convergen ce of views amongst key participants on the 
above.  Let us take advantage of this progress a nd move the discussion forward on specific details and 
so establish at least some 'building bl ocks' in this area of parallelism. 
 
I recommend we develop, by 31 July, lan guage foreshadowing new disciplines here. 
 
Other Issues 
 
Beyond subsidies, Government financing a nd underwriting of losses, we are making little or 
no progress.  I see two problems:  
• Some Members are concerned that proposed definitions
 of entities to be covered by the new 
provisions could have unintended e ffects for all manner of entities.  
 
• There is a closely associated concern th at some proposals for new disciplines  could have 
unforeseeable legal consequences for what many Members consider legitimate practices. 
 
I need further guidance from the Membership here. 
 TN/AG/19 
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Developing Country STEs 
 
We have an explicit provision in the Fram ework that STEs in developing countries which 
enjoy special provisions to preserve domestic price st ability, and to ensure food security will receive 
'special consideration for maintaining monopoly status'.  
 
I am assuming in this paper that the over-arching question of the monopoly status  of even 
exporting STEs in developed  countries is a matter for negotiation in the next, post-Summer Break 
phase.  At that point, I am confident that the sp ecial position of such STEs in developing countries 
with these objectives at the heart of their ope rations will be taken fully into account.  
 
With respect to developing country STE specifi c practices – even when their focus is on 
facilitating their exports rather than the criteria refe rred to immediately above , it is difficult to take 
this further, given the lack of convergence on 'other  issues'.  It may be necessary to take into account 
the actual impact of such developing country STEs on world trade, since the trade flows concerned 
are, in many cases, very small. 
 
 
Food Aid 
 
We have some helpful guidance here in the Framework, but there has been little or no 
convergence on Food Aid since July 2004.  I believe it is essential that some building blocks are put 
in place by 31 July 2005.  
There are proposals on the table that aim to change fundamentally the existing food aid 
system via WTO disciplines.  If there were agreement to do this, it would not be the first time that the 
WTO had deeply refashioned disciplines and ins titutional machinery in areas of international 
cooperation – even in agriculture.  
These proposals have generated some concerns.  Within the Membership, the main concern is 
that such potential new disciplines might have ne gative implications for meeting humanitarian and 
development needs.  This fear is very strongly held by certain Members. 
 
My sense is that all Members firmly believe  that any WTO rules aimed at preventing 
'commercial displacement' we might develop must no t compromise efforts to help the most vulnerable 
people in developing countries.  Their interests must be put first. 
 
With this perspective very much in mind, I s uggest that our discussions up to the end of July 
focus strongly on developing language to ensure that food aid in emergency situations is not 
compromised.  This will provide important reassura nce to vulnerable populations as well as ensure 
that we are making some progress on 'parallelism' with respect to food aid.   
A focus in July on emergency situations will need input from those with expertise broader 
than trade negotiators, given the sensitivities involved.   
If this were successful, then beyond July, a num ber of other major issues will need to be 
addressed, such as aid in fully grant form, in-kind aid and monetization. 
 
 
MARKET ACCESS 
 
This is the most complex and least advanced pillar of the three.  Conditional, sequential 
progress is the only way to move forward, given the interrelationship of so many of the market access 
elements of the Framework.  Nothing could have demonstrated this more clearly than the last  TN/AG/19 
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 intensive consultation on the fullest liberalisation fo r Tropical Products.  At the end of the discussion, 
a number of delegations (approaching the matter fr om quite different perspe ctives) observed that it 
was impossible to move that question forward without  some structure in place in the core market 
access formula.  The same applies to a whole range of  issues.  This is why I believe that, by 31 July, 
Members need to reach some convergen ce on at least some of the basic st ructural issues of this pillar.  
 
 
Tiers and Formula   
We need to develop a 'single approach' to achieve 'substantial improvements in market 
access….for all products'
10 with two additional objectives in mind: (a) 'progressivity' – i.e. deeper cuts 
in higher tariffs; and (b) providing for more fl exibility to deal with a range of sensitivities. 
 
With respect to the negotiation of a tiered fo rmula, the discussion to-date has focussed on two 
schools of thought:  proposals to achieve 'progressivity' solely through the number of tiers11 and 
proposals that rely both on the number of tiers and on  the nature of the formula(e) within the tiers to 
achieve 'progressivity'.  It is unlikely therefore that we can settle by 31 July the number of tiers 
without agreeing at least on a description  of the type of formula(e) to be used within the tiers. 
 
There is a parallel and intimately related discussion taking place on how to deal with 
sensitivities.  The Framework identifies certain 'tools'  to address those sensitivities – such as 'sensitive 
products' and 'Special Products' based on criteria of 'food security, livelihood security and rural 
development needs'.  Additionally, some argue th at the formula itself should provide a means to 
address at least some of those sensitivities.  
We should aim to have some agreed structur e in place for the market access formula by 
31 July.  This would require convergence on:   
• The number of tiers; 
 
• Their thresholds; 
 
• At the minimum, a description of the nature of the formula(e) within the tiers; 
 
• At the minimum, some further elaboration of how sensitivities might be handled. 
 
Although this will be difficult, I believe it can be done without defining with greater precision 
the level of ambition
12, which will be determined in the subsequent phase. 
 
With respect to the 'sensitivities', it would be necessary to take closely into account, as agreed 
in the Framework, Members' tariff structures and the very sensitive needs related to the Special 
Products category.  
The immediate task prior to th e July Agriculture Week is to  undertake a process of deep 
reflection on the above.  After that, it may be possibl e to formulate a straight choice between different 
combinations of these variables.  
                                                     
 
10 Paragraph 29, last dot point, July Framework. 
11 Broadly speaking, the higher number of tiers, the more 'progressivity’ will be achieved, even with a 
linear formula applied to each tier. 
12 Ultimately, the choice of the nature of the formula(e) within the bands is irrelevant to the level of 
ambition.  One can illustrate this by deliberately extreme examples.  A linear (often loosely referred to as 'a 
Uruguay Round approach' that  involved a 99% average cut or a non-linea r formula (often loosely referred to as 
a 'Swiss Formula') with a coefficient of 1000 would cause both sides to this debate to switch sides. TN/AG/19 
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Once again, I recognize that there are many othe r issues of vital importance to all Members. 
Matters raised by developing country Members su ch as SSM, or addressing the issue of preference 
erosion will take considerable time to elaborate.  But, for the reasons summarised in this paper, the 
Membership has found it impossible to develop conv ergence on these and other matters without some 
structure of a market access formula in place.   
THE SUB-COMMITTEE ON COTTON 
 
The analysis immediately above needs to take in to account the very particular issue of cotton 
– reflected in the General Council's deci sion to establish this sub-committee.  
 
Progress in both the development and trade tracks is vital.  Within the West and Central 
African 'proponent countries', intense pressure is bu ilding up on their producers with the recent fall in 
prices.  This calls for immediat e action on the development front.  
 
With respect to the trade track, I have drawn a ttention on several occasions in this paper to the 
need to advance the agriculture negotiations with co tton in mind.  Members have already agreed to a 
mandate for an 'ambitious, exped itious and specific treatment' of cotton within the agriculture 
negotiations.  In this respect, we have received an ambitious proposal from the Proponent Countries to 
this effect.   
If and when some structure emerges more cl early on each of the three pillars in the 
Committee on Agriculture in Special Session, then a parallel evaluation of their possible implications 
for the cotton sector can play a powerful role. 
 
Equally, it is obvious that if we do not
 reach convergence on key points in each of the three 
pillars by 31 July within the ag riculture negotiations generally, it will become increasingly difficult to 
fulfil the specific mandate for the work of Co tton Sub-Committee, with the Hong Kong meeting only 
round the corner.  
 
  
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