RESTRICTEDWORLD TRADE
ORGANIZATIONTN/AG/R/10
9 September 2003
(03-4698)
Committee on Agriculture
Special Session
SUMMARY REPORT ON THE TWENTIETH MEETING
OF THE COMMITTEE ON AGRICULTURE SPECIAL SESSION
HELD ON 18 JULY 2003
Note by the Secretariat1
1. The Special Session of the Committee on Agriculture, which was established by the General
Council (WT/GC/M/53), is pursuing negotiations under paragraphs 13, 14 and other relevant
provisions of the Doha Ministerial Declaration and held its twentieth meeting on 18 July 2003.
Mr. Stuart Harbinson chaired the meeting.
2. The agenda as contained in WTO/AIR/2143 was adopted.
ITEM A(i):  R EPORT BY THE CHAIRPERSON ON THE MAIN FEATURES OF THE DISCUSSIONS CONCERNING
POSSIBLE MODALITIES , INCLUDING RULES -RELATED ELEMENTS
3. The Chairman presented his summary report of the main features of the informal discussions
on 16 July 2003 that were held on the basis of the Chairman's Report to the TNC dated 7 July 2003(TN/AG/10).  A copy of the summary report is attached (Annex 1).
I
TEM A(ii):  S TATEMENTS BY MEMBERS
4. Switzerland, speaking also on behalf of Bulgar ia, Chinese Taipei, Iceland, Israel, Korea,
Liechtenstein and Norway, referred to statements made by this group of countries during the Special
Session meetings of 28 February and 31 March 2003 and stated that these countries could not accept
the Chairman's revised First Draft of Modalities for Further Commitments (TN/AG/W/1/Rev.1,
hereafter the revised First Draft) as a basis for negotiations.  Switzerland stated that substantialsubmissions made by these Members regarding non-trade concerns remained on the table as their
basis for negotiations.  Switzerland considered that market access openings beyond the Uruguay
Round would reduce the production capacity below the minimum necessary to achieve the non-trade
objectives.  In order to reach an overall acceptable result of the negotiations, Switzerland urged the
Chairman to actively engage this group of Members in  all further preparations for the Fifth Ministerial
Conference in Cancún.  Switzerland stressed that for a successful Ministerial Conference it was
important to have a balanced outcome that reflected the diverse interests of all Members.
5. Barbados, supported by Jamaica and Mauritius, reiterated its willingness to cooperate in
reaching consensus on agricultural modalities and stated that it would be essential for Barbados to
have the opportunity to participate fully in discussions on all aspects of an agriculture text that mightbe put forward to Ministers at Cancún, and especially on the issues of tariff reduction, special
products (SP products), and the special safeguard mechanism (SSM).
                                                     
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.TN/AG/R/10
Page 2
6. Uruguay, supported by Australia and Chile, underlined that in line with the Doha mandate it
was important to maintain a high level of amb ition in all areas of the negotiations, including
agriculture which was of fundamental importance in particular for developing countries.  Uruguay
expressed concern that some Members rejected the revised First Draft as a basis for negotiations.
Since fundamental reform of agricultural trade was an objective of this Round, Uruguay called for an
ambitious formula to fulfill the Doha mandate of substantial improvements in market access,elimination of all forms of export subsidies and substantial reductions in trade-distorting domestic
support.  Uruguay urged all Members to live up to their responsibilities and seek a balanced outcome
in negotiations as a whole and not solely within the area of agriculture.
7. Croatia, speaking also on behalf of Albania, Georgia, Jordan, Moldova and Oman, recalled
the previous statements made by this group on the issue of recently-acceded Members.  Croatia
reiterated the need for real and meaningful specific  flexibility provisions to be included in a future
modalities text which would fully reflect the legitimate concerns and proposals of recently-accededMembers with respect to market access and domestic support.
8. Georgia expressed strong expectations that the legitimate concerns of recently-acceded
Members would be duly reflected in the final modalities for further commitments.  Georgia was
disappointed that the issues raised by recently-acceded Members had thus far not been adequately
addressed and no meaningful flexibility measures were foreseen for those countries.  Georgia recalledthat at Doha Ministers had recognized the extensive commitments undertaken by recently-acceded
Members that often went far beyond those negotiated in the Uruguay Round.  For example, Georgia
had bound export subsidies at zero and had not applied any trade-distorting domestic support
measures.  Further, significant liberalization of agricultural tariffs, the only means of protecting
domestic production, could negatively affect Geor gia's agricultural sector and its producers.
Expressing its commitment to the Doha Development Agenda, Georgia stated that it could not join the
consensus on the modalities unless appropriate meaningful flexibility provisions were provided for
recently-acceded Members.
9. Moldova stated that a longer implementation period alone was not a satisfactory solution to
the call for flexibility for newly-acceded Members, hence it could not accept the revised First Draft.In light of Moldova's recent accession, the need to continue social and economic reforms in the
agriculture sector and the shock of liberalization, Moldova requested greater flexibility to be
elaborated in the next draft of modalities.
10. Oman recalled that it had made far-reaching commitments upon its accession to the WTO and
expected broad-ranging commitments to be undertaken by the developed country Members, withS&D for developing countries playing a central role in addressing the wide diversity of development
levels.  Oman stressed that the issue of newly-acceded countries (paragraph 56 of the revised First
Draft refers) required serious attention as this group of countries offered commitments far surpassing
those expected of them by the Agreement on Agriculture, even to the point of relinquishing some of
the S&D treatment elements embedded in the Agreemen t.  Referring to the recognition given to this
matter in the Doha Declaration, Oman expected that this issue be dealt with as proposed by the newly-
acceded Members.  Oman echoed calls that any new draft modalities put forward to Ministers atCancún be previously deliberated upon in the Special Session.
11. The Kyrgyz Republic expressed disappointmen t with the treatment of recently-acceded
Members in the revised First Draft and considered its paragraphs 56 and 57 only as a basis for future
work.  The Kyrgyz Republic underlined that a fair and equitable solution in agriculture, the most
sensitive area of the Doha Development Agenda, was required.
12. Chinese Taipei emphasized that the interests of all WTO Members should be taken into
account, including the need for flexibility to implement sustainable development policies in
agriculture and address non-trade concerns such as food security, rural development and environmentTN/AG/R/10
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protection.  Chinese Taipei considered that modalities proposed in the revised First Draft would cause
serious damage to the sustainable development of its agriculture which in large part consisted of
small-scale farms.  In addition, the concerns of recently-acceded Members had not been adequately
addressed and further flexibility was needed, such as more moderate extent and longer staging period,
to adjust to the further commitments.
13. New Zealand, supported by Australia, stated that the Cancún Ministerial Conference should
be the occasion to give expression to the Doha mandate not to rewrite it.  The Doha mandate created a
balance, therefore seeking a balance within agriculture itself was not an appropriate objective.  New
Zealand highlighted its objectives:  early elimination of export subsidies, substantial reductions in
domestic support and substantial improvements in market access.  With respect to market access, New
Zealand stated that it could not accept formulae or outcomes that would allow countries to avoid
substantial improvements in access for specific agricultural products or sectors.  Progress was
required on all tariffs, including in-quota tariffs, and tariff quotas.  Irrespective of the final formulaused, an outcome on market access must provide comprehensive coverage – substantial improvements
in market access for all products in all countries.  New Zealand welcomed the EC decisions on CAP
reform and considered that CAP reform's credentials in Geneva would only be established when those
developments were translated into elimination of EC export subsidies and significant improvements in
market access across all products, including the most sensitive.  This was expected from the EC aswell as from the United States, Japan, Korea and other countries with substantial protection of
agriculture.
14. Colombia, supported by Australia and Chile, expressed concern about the lack of ambition in
the revised First Draft and stated that on the basis of this text, the benefits of agricultural reform
through multilateral rules would only be possible in the very long term.  Hence, Members needed tobe more ambitious with respect to:  the deadline fo r eliminating export subsidies;  reducing the Amber
Box with a view to its elimination; revising the  de minimis  level for developed countries, the Blue
Box and direct payment programmes (paragraphs 5, 6, 7 and 11) in the Green Box; limiting the
amount of Green Box support;  the tariff reduction formula; finding effective solutions to tariff
escalation and tariff peaks; expanding tariff quota volumes; binding of tariffs in  ad valorem  terms;
and creating more stringent rules for the administration of tariff quotas which recognized the need for
developing countries to maintain mechanisms to  implement active agricultural policies without
restricting trade.  Regarding preferential schemes (paragraph 14(d) of TN/AG/10 refers), Colombia
regretted that the text appeared to go against other proposals of interest to Colombia concerning
liberalization of trade in tropical products.  Colombia expressed support for sectoral initiatives(paragraph 14(e) of TN/AG/10 refers) such as in the flower sector and the proposal by Benin, Burkina
Faso, Chad and Mali concerning the elimination of subsidies for cotton.
15. With respect to non-trade concerns (paragraph 16 of TN/AG/10 refers), Colombia considered
that these issues were outside the Doha mandate and belonged to the TRIPS Council, the SPS
Committee and the TBT Committee.  Colombia could not accept an extension of GIs to products other
than wines and spirits, especially when the demandeurs were only prepared to make a marginal effort
on market access and domestic support.  If developed countries insisted on negotiations on suchinternal matters as non-trade concerns, Colombia stressed that for developing countries, the
elimination of all trade-distorting subsidies was re quired in order to be able to move ahead with
economic and social development.  Colombia was disappointed that the approval of the EC's CAP
reform had not given the negotiations a new impetus and called for flexibility by all Members.
16. Norway underlined the importance of maintaining the inclusive process in the negotiations
and the need to take into account the interests of  all Members. Norway warned that Members should
not be expected to sign on the dotted line without having had the opportunity to properly influence the
result.  Norway considered that two elements were ne eded with respect to export subsidies:  (i) equal
treatment of all forms of export subsidies, and (ii) an outcome in the other two pillars that contained
the necessary flexibility that enabled each and every Member to sustain a minimum level of domesticTN/AG/R/10
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production to address non-trade concerns.  Norway noted that the Uruguay Round formula, with
appropriate S&D, would have to be the most central element.  It reiterated that Blue Box payments
were required to ensure production activity in disadvantaged areas in order to address non-trade
concerns and added that in such areas fully decoupled measures would not be able to provide
sufficient production incentives.  Norway recalled that with respect to the Amber Box it had proposed
to inflation-adjust the domestic support ceilings and to differentiate the AMS reduction commitmentsaccording to export orientation.  Concerning the Green Box, Norway stressed that it must continue
uncapped.
17. Mexico urged Members to abandon radical positions and gravitate towards a compromise on
the basis of the revised First Draft.  It warned against reopening the negotiations on agriculture or
rewriting the Doha mandate.  Mexico hoped that agreements would be reached making it possible to
fully comply with the Doha mandate.
18. Trinidad and Tobago, supported by Jamaica, stated that it remained unconvinced that the
balance between improved market access and securing development objectives of developing
countries as mandated in Doha had been truly addressed.  In this regard, Trinidad and Tobago
reiterated that a Uruguay Round formula for tariff reduction would be a critical instrument in
improving market access.  It considered that an ambitious approach to market liberalisation must be
tempered by an acceptance of the fact that the playing field was not level.  Trinidad and Tobagostressed that tariffs were its only instrument of protection.  Trinidad and Tobago could not accept the
revised First Draft and stated that the burden of improved market access should not be placed squarely
on the shoulders of developing countries while the major players continued to exploit the concessions
they had secured in the Uruguay Round as evidenced by their continuing use of trade-distorting
domestic support.
19. Trinidad and Tobago highlighted that the inclusion of SP products and the SSM would
address some of its key concerns.  Trinidad and Tobago supported the de-linking of the two concepts
and favoured self-declaration of SP products at th e 4-digit level of the Harmonised System.  In its
view, the following could be used as possible crit eria for such products:  (i) products important for
food security and/or rural development; and (ii) products identified for diversification programmesaway from those products which were dependent on preferential arrangements.  There was also a need
to ensure that no limits were placed on products to be targeted for diversification as these would be in
emerging sectors.
20. Kenya, supported by Uganda and Mauritius, stated that its primary objective in the
negotiations was to correct the imbalances of the current system which had hindered the UruguayRound Agreement on Agriculture from achieving the anticipated results.  Hence, Kenya's aim had
been to establish an internatio nal framework allowing Kenya to exploit the economic and social
potential of its agriculture sector and spur economic development in the country.  Kenya regretted that
its concerns had not been effectively addressed.
21. With respect to market access, Kenya stressed that tariffs were the only policy instruments
available for agricultural development purposes and that they should be treated cautiously in these
negotiations.  Kenya pointed to the discussions in the Negotiating Group on Non-agricultural MarketAccess where it was suggested that countries includ ed in the IDA-only list should be exempted from
tariff reduction.  The list identified countries with relative poverty, lack of creditworthiness and
revenue challenges for financing government expenditure.  Kenya, supported by Honduras, Sri Lanka
and the Dominican Republic, proposed that this approach be explored in the agriculture negotiations.
Further, as S&D and in line with paragraph 13 of the Doha Declaration, developing countries shouldhave the flexibility and the mechanisms necessary to address their food security, rural development
and livelihood security concerns.  Kenya highlighted the importance of the concepts of SP products
and SSM for developing countries and that developing countries must be allowed to define their own
policies, adapted to their specific national needs and situations regarding food security and ruralTN/AG/R/10
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livelihoods.  Only the affected countries could properly identify which products would contribute to
their national development and which products should fall under the SP regime.
22. With respect to the SSM, Kenya considered th at there was a need to have an effective
instrument to address the devastating impact of import surges or a drop in the price of agricultural
products.  This instrument should not be based on the current Article 5 and should apply to all
products irrespective of their source.  In addition, the SSM should be both price- and volume-triggered.  In Kenya's view, linking of SSM and tariff reduction formula was not acceptable because
the SSM was a distinct instrument aimed at assisting developing countries with liberalization
irrespective of the tariff reduction formula.  With respect to the proposed provisions on preferential
schemes (paragraph 16 of the revised First Draft refers), they provided a useful framework to deal
with the impact of the erosion of preferences for products of vital importance to developing countries.
Kenya considered that this was a trade issue and should be handled by the WTO.  Any reference to
other bodies would be complementary to the efforts of the WTO.  Kenya warned against replacingmarket access with technical assistance.
23. Concerning domestic support, Kenya reiterated that all trade-distorting domestic support
should be substantially reduced with the aim of its eventual elimination.  All Blue Box payments
should be included in the Amber Box and reduced.  Regarding the Green Box, there was a need to cap
the trade-distorting elements as well as to tighten the policy specific criteria.  Kenya was not in favourof the expansion of the Green Box.  With respect to export competition, all forms of export
subsidization should be eliminated.  Kenya considered that the Chairman's formula on export
subsidies headed in the right direction except for the timeframe which was too long, especially since
the same modalities proposed a drastic tariff reduction for developing countries over the same time-
period.  Kenya underlined that export subsidies undermined the competitiveness of Kenya's exports ininternational markets and displaced local produce in the domestic market.  Export subsidies should be
eliminated within the first year of the implementation period and no distinction should be made
among the categories of products.  These negotiations should accord concrete, beneficial, effective
and operational S&D for developing countries as well as a mechanism to cushion the NFIDCs from
the negative effects of the reform programme.  Kenya stressed that the draft modalities should bebalanced and take into account the important issues raised by developing countries, including SP
products and SSM.
24. Noting the EC's CAP reform package, Japan re ferred to its own substantial and on-going
reforms of domestic policies since the Uruguay Round Agreement.  Japan recalled that, based on
these reforms, it had submitted specific and comprehensive proposals that meet the Doha mandate in arealistic and balanced manner. In Japan's view, flexibility among commodities, continuity of reform
and balance between importing and exporting Members should be among the key principles to
establish modalities for further commitments.  These principles would be able to accommodate
interests and concerns of all Members, especially those who had been making serious efforts to
reform their farming sectors so as to properly address both trade and non-trade concerns.  With regard
to tariff reductions, Japan considered that the Uruguay Round formula was the only option consistent
with these principles and was well designed to provide flexibility to address concerns of developingMembers – hence the support of the majority of Members.
25. The representative of the Philippines, on behalf of the Alliance for SP and SSM (Cuba, the
Dominican Republic, Honduras, India, Indonesia, Keny a, Mauritius, Nigeria, Pakistan, Panama, Peru,
the Philippines, Turkey, Uganda, Venezuela, and Zimbabwe) presented a joint Statement and
Declaration (see Annex 3).  In the opening remark s, the Philippines underlined that the Alliance
consisted of countries well-spread across the continents, ranging from the very small to the very big
and accounting for the bulk of the world's resource-poor farmers.
26. Nigeria, supported by Uganda, expressed concern about the state of the agriculture
negotiations.  It recalled that developing countries,  including Nigeria, had called for the modalities inTN/AG/R/10
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all three pillars to be closely inter-linked and had insisted that any reductions in tariffs could only take
place if there were significant reductions in overall levels of export subsidies and domestic support.
In the view of Nigeria, no attempt had been made to establish such linkage in the proposed modalities
text.  Instead, developing countries had been asked to further open up markets when no real reform
had been undertaken by the countries that distorted trade on the world agricultural market.
27. Nigeria was disappointed about the lack of political will among the trading partners to
commit to genuine reform in agriculture.  Agriculture was key to the Doha Round because the
livelihood and food security of millions of people were at stake and it was also central to countries'
development strategies.  Nigeria noted that rural livelihood and food security constituted vital public
concerns, which were not negotiable, yet the SP and SSM provisions requested by developing
countries, including Nigeria, had become topics of controversy.  Nigeria considered that agricultural
products critical for employment, poverty alleviat ion and food security should be classified as SP
products on the basis of self-declaration and be exempted from reduction commitments.  The SSMshould be established with no trade-offs and drastic tariff cuts.  As long as the overall levels of
subsidies in OECD countries were not capped and reduced to a negligible amount, Nigeria should not
be expected to undertake tariff reductions.
28. Nigeria did not support the inclusion in the agriculture modalities of provisions for additional
protection for GIs, authoritative interpretations of Article 5.7 of the SPS and Article 2 of the TBTAgreements, as well as traditional and non-traditional concerns with respect to agricultural products.
These issues should be addressed in the appropriate WTO bodies. Also, Nigeria did not support the
extension of the Peace Clause because the Doha mandate gave no such directive.  Nigeria considered
that the outcome of the agriculture negotiations would by itself determine to a large extent, the
developmental component or deficit of the Doha R ound.  In this regard, Nigeria noted the recent EC
attempt to reform its CAP and encouraged the EC  to do more in order to achieve the goal of
establishing a fair and market-oriented system, free from distortions.  Nigeria supported the initiative
by the four West and Central African countries on a decision in Cancún regarding the accelerated
reduction or elimination of cotton subsidies.
29. Pakistan stated that the outcome of negotiations resulting in tariffs over 25 per cent would not
entail a substantial improvement in market access.  Regarding export subsidies, they should be
eliminated in a three to five-year time-frame, at th e latest.  In line with the revised First Draft, all
other forms of export subsidies should be subject to strict disciplines.  Blue Box payments should be
merged with the Amber Box and eliminated.  Criter ia for Green Box payments should be strengthened
to avoid shifting of support from the Blue to the Green Box.  De minimis  should be eliminated as
halving the ceiling may not be sufficient.  Pakistan welcomed the EC's CAP reforms but expected a
paper from the EC containing details with respect to sugar, cereals, dairy products, etc. Pakistan
supported the sectoral initiative on cotton and further considered that no subsidized products should
be allowed to be exported.
30. With respect to Chairman's Report to the TN C (TN/AG/10 refers), Thailand feared that the
agriculture trade reform might not be as significant as expected.  Thailand was of the view that the
commitment to phasing out export subsidies had been challenged by the reinterpretation of themandate and trade-distorting domestic support woul d be shifted from one box to another without real
overall reductions.  Market access would be marginal as there was resistance to address tariff peaks
and tariff escalation as well as the expansion of TRQ volumes. In addition, there may be exceptions to
liberalization of some products of export interest to Thailand as well as exceptions from liberalization
to some groups of Members.  While huge amounts of trade-distorting export subsidies and domesticsupport as well as restrictive market access for agricultural products would still remain in place,
Thailand would have to open its own market for non-agricultural products, services and probably to
embark on negotiations on the Singapore issues.  Thailand recalled that it had joined the
comprehensive round of negotiations with the expectation of substantial agricultural trade reforms as
reflected in the Doha mandate and urged Members to maintain the level of ambition on agriculture. ItTN/AG/R/10
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called on the major trading partners who advocated a comprehensive round of negotiations to show
leadership in advancing the negotiations according to the Doha mandate.
31. Iceland underlined the importance of an inclusive and transparent process in the short time
leading up to Cancún.  Since the launch of the negotiations, Iceland had sought to draw attention to
the particular circumstances of Icelandic agriculture, its sensitivities and challenges as well as, based
on its experience in implementing the Uruguay Round reform, the need for flexibility.  Icelandreiterated that its vulnerable agricultural sector must  be afforded a realistic opportunity to adapt to the
realities imposed by substantial reform and advancement of the long-term goals of the Agreement on
Agriculture.
32. Iceland considered that a Uruguay Round approach to market access would be the most
appropriate way forward so as to provide the necessary flexibility for all Members to meet their
diverse policy objectives within a framework of substantial reform and that the special safeguard
should remain in place for the duration of the reform process, as stipulated by the Agreement onAgriculture.  With respect to domestic support, Iceland stressed the interlinkages between possible
scenarios in the respective boxes.  Iceland was opposed to capping or reducing the Green Box but
supported the retention of the Blue Box criteria.  With respect to the Amber Box, it was prepared to
consider substantial reductions, keeping in mind the need to maintain a certain level of agricultural
production so as to safeguard non-trade concerns.  On export subsidies, Iceland was prepared tocontemplate their eventual abolition, provided that a comprehensive approach was applied to the more
general issue of export competition and the right balance was found across the spectrum of the
negotiations.  Iceland underlined that due consideration must be given to the development dimension
across all three pillars.
33. In the view of Venezuela, achieving progress in agriculture that was consistent with the Doha
mandate was key to facilitating movement in other areas of negotiations.  To this end, the central
focus should be on S&D.  The revised First Draft contained well-designed instruments such as the
concepts of SP products and SSM and they should be retained as essential elements in the new
Agreement on Agriculture.  Expressing frustrati on with the progress of negotiations, Venezuela noted
that its demands were now limited to a few items of greatest importance (i.e. SP products that couldbe self-determined and enjoyed flexibility in other areas such as quotas, and SSM that was easily
accessible and flexible) but this did not mean that Venezuela would be prepared to accept a new
agreement unless it dealt with subsidies and distorting support as prescribed in the mandate.  At
Cancún, Venezuela hoped to see a stronger political determination to give the Round a real impetus
that would provide valid responses for development.
34. Peru reiterated its position that it had accepted the revised First Draft as a basis for
negotiations.  Peru expressed concern, however, with the imbalances introduced in paragraphs 16 and
29 of the Chairman's Report to the TNC (TN/AG/10 refers).  Peru also stated that the concepts of SP
products and SSM were essential elements of the S&D.  Peru underlined that the level of ambition
with respect to export competition and domestic support should be raised, including eliminating
export subsidies as soon as possible with an initial reduction of 50 per cent and greater disciplines and
better transparency in the application of domestic support disciplines by having only the Green andthe Amber Box.  Also, the Green Box needed to be subject to clear rules to avoid shifting support
from one box to another.
35. Burkina Faso stated that agriculture and in pa rticular commodities played a vital role in its
development.  Hence, its objective was to ensure the capacity to feed its people and defend their right
to food.  Survival of agriculture in developing countries, and especially in LDCs, depended on easieraccess to markets and protection from various types of subsidies which had a distorting effect on
trade.  While being mindful of the interests of NFIDCs, Burkina Faso called for the elimination of
subsidies on products that affected the production capacity of developing countries and referred to its
recent initiative with respect to cotton.TN/AG/R/10
Page 8
36. Costa Rica, supported by Australia, considered that the revised First Draft fell short of finding
solutions to the major distortions that affected trad e in agriculture and that the Ministerial Conference
in Cancún would be an opportunity to continue moving ahead towards a result that would be
acceptable to all Members as well as focussed on development.  Costa Rica noted that developing
countries would be reluctant to open their markets if high levels of subsidies remained in place.  In
Costa Rica's view, agriculture was a key to the Round and domestic support was a key to agriculture.Costa Rica attached the highest importance to the substantial reduction in trade-distorting domestic
support, regardless of boxes.  It supported improving the disciplines and establishing a cap on direct
payments in the Green Box.  With respect to market access, Costa Rica considered that Members had
to guarantee greater and better access as provided for in the Doha mandate.  Costa Rica supported
Colombia regarding greater liberalization in tropical products.  As regards export subsidies, Costa
Rica favoured elimination of all forms of export subsidies as soon as possible.
37. Honduras pointed out that its agricultural tariffs were below 35 per cent and it did not apply
quotas nor could it invoke Article 5 of the Agreement on Agriculture. For Honduras, the SP products
and the SSM were indispensable since the needs for rural development, food security and poverty
alleviation were not negotiable.  In this regard, S&D should be established so as to eliminate the
existing imbalance in the Agreement on Agriculture.   Honduras considered that the serious problems
that some Members were facing in the negotiations could be solved by using the IDA-only list ofcountries to exempt those countries from further tariff reductions.
38. Sri Lanka reiterated that the revised First Draft provided a good basis for negotiations to
move forward but underlined the importance of maintaining a high level of ambition in all three
pillars of the agricultural negotiations to ensure an ambitious outcome of the Doha Round.  While the
banded approach to tariff reductions was a good basis for further negotiations, Sri Lanka consideredthat tariffs over 100 per cent should be harmonized below that level.  Sri Lanka underlined that the
Uruguay Round formula would not address high tariffs and tariff escalation. Among Sri Lanka's
objectives were:  SP products and SSM, longer repayment period and exemptions from cash payments
as well as other elements in Chairman's attachment on export credits, and a broader definition of food
aid.  In the view of Sri Lanka, all these issues should be an integral part of modalities.  With respect toSP products and the SSM, Sri Lanka warned that they  should not be used for protectionist purposes
but should address legitimate and genuine concerns of developing countries. Concerning S&D
treatment, Sri Lanka wondered whether a-one-size-fits-all-approach to S&D any longer provided
answers to specific problems of specific group of developing countries and encouraged Members to
look at the concept of "differentiated treatment" under S&D in all Doha Development Agendanegotiations.  In this context, LDCs plus countries on the IDA-only list should be considered.  Sri
Lanka stated that Members needed to explore how differentiated treatment could or would address
specific problems of groups of developing countries.
39. The Dominican Republic emphasized the need to establish effective and meaningful S&D
treatment for developing countries so that the serious imbalances inherent in the Agreement on
Agriculture could be redressed. The concepts of SP products and SSM would be crucial for reaching
agreement on the negotiating modalities.  In response to suggestions that the Uruguay Round formulawould be sufficient to cover the developing countries' food security and rural development needs, the
Dominican Republic stressed the importance of the SP package consisting of lesser tariff reductions,
no expansion of tariff quotas for such products and no mandatory reduction of in-quota tariffs. The
Dominican Republic supported the proposal that the highly indebted countries on the IDA-only list
should be exempt from reduction commitments in view of their very difficult economic situation.  TheDominican Republic requested that the two primary tools proposed by developing countries in the
area of S&D treatment – SP products and SSM - should not be eroded or restricted.
40. Australia urged Members to redouble efforts to prepare for Cancún.  To ensure that the Doha
Round was not another marathon, leadership not brinkmanship, engagement and flexibility were
needed.  Underlining its commitmen t to the Doha Round, Australia sought results that reflected theTN/AG/R/10
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Ministers' decision at Doha and considered that a key item in preparing for Cancún was an Agreement
on Agriculture modalities that was faithful to the objectives set out at Doha.
41. Korea noted that given the heavy task of establishing modalities and the short time-frame, a
realistic approach was essential.  Korea pointed out that the majority of Members supported the
Uruguay Round formula and in its view it was the only realistic formula in terms of consistency,
flexibility and acceptability for all Members.  Korea stated that SP products and a new SSM should beintegral elements of modalities.  Supporting the Philippines' statement  regarding the role of the SP,
Korea reiterated that the SP concept was crucial to the developing countries as a practical and
effective tool to address their non-trade concerns, including food security, rural development and
livelihood.  Given the diverse situations of different countries, the coverage of SP should be decided
on the basis of self-declaration.  With respect to tariff-quota expansion, Members should consider that
the tariff quotas were part of the tariffication mechanism – a result of a balancing mechanism between
importing and exporting countries during the Uruguay Round negotiations.  In order to ensure aprogressive agricultural reform of the less competitive Members, the proposed AMS reduction rates
should be lowered to be realistic.  Korea stated that the Green Box was one of the most effective ways
to incorporate non-trade concerns into the curren t Agreement on Agriculture, hence Attachment 9 of
the revised First Draft and especially paragraphs 2 and 3 of this Attachment had significant
implications for developing countries.
42. Mindful of its development, rural employment, food security and livelihood security goals,
Turkey was not ready to make ambitious tariff reductions and favoured the Uruguay Round formula.
With respect to SP products, Turkey supported self-declaration at the 4-digit level.  Any limits on the
number of SP products would have devastating effe cts on developing countries:  there would be
strong competition between powerful interest groups and the diverse agricultural production patterncould be destroyed, making the poor even poorer.  Turkey underlined that SP products and the SSM
were solid and concrete instruments for developing countries.
43. Chile took up the views expressed by Switzerla nd and others who had declared that they
could not accept a market-opening approach th at went beyond Uruguay Round formula because it
would reduce their production capacity necessary to meet their non-trade objectives.  Chile consideredthat this position implied that other countries, including Chile, would not be able to have access to the
benefits that they hoped to obtain from these negotiations.  Chile stated that as a political
consequence, the latter countries would have little incentive to undertake ambitious liberalization
commitments in other areas of negotiations.  Chile noted that adjustment in access conditions did not
take place overnight.  The results of negotiations had always been implemented over a period of timein order to facilitate the adjustment.  The greater the level of liberalization would be, the more time
would be required for adjustment.  Chile was of the view that due to their intransigence, wealthy
nations protected their privileges and at the same time prevented others from realizing their potential.
Chile urged Members to reflect on what kind of international cooperation should be promoted within
the multilateral trading system.
44. In response to Chile, Switzerland recalled that the FAO Food Summit had established the
right to food production.  These negotiations were one part of a reform process which Switzerlandsaw as a longer process than some other delegations but the timeframe, as Chile stated, was indeed of
utmost importance.  Switzerland noted that the adjustment of agricultural policies must be continuous
but one had to be mindful of the declining labour force in agriculture and consider this aspect in the
discussions on time-frame.
45. As an LDC, Uganda hoped that the agriculture modalities would usher in better opportunities
for growth for this group of countries for whom agriculture played a central role in development.
Uganda reiterated that preferences were a trade and development issue that should be addressed
within these negotiations with a view to according the preference beneficiary countries time to reform
and adjust.  Grateful for the EBA, AGOA, the GSP and other schemes, Uganda considered that theTN/AG/R/10
Page 10
WTO should be supportive and help countries benefit from these schemes.  Hence, Uganda supported
paragraph 16 of the revised First Draft as a useful basis in seeking a solution concerning the erosion
of preferences.  Uganda attached great importance to SP products as a means for addressing food
security, rural development and livelihood concerns.  The SP products should be maintained
regardless of the tariff reduction formula to be adopted and should be based on self-declaration.  A
new SSM must be established as an essential tool for developing countries to address temporaryimport surges and dumping.  Uganda urged Members to unconditionally exempt LDCs from reduction
commitments and grant duty- and quota-free access for all products.  Uganda supported elimination of
all forms of export subsidies and considered that trade-distorting domestic support must be disciplined
and the Green Box should be capped, not expanded.
46. India reiterated the need for phasing out all forms of export subsidization and substantial
reductions in domestic support coupled with Green Box reforms.  As a co-sponsor of the statement
presented by the Philippines, India considered SP products and the SSM as integral components ofS&D.
47. Bolivia regretted that there had been no progress in the agriculture negotiations, one of the
central areas of the Doha Development Agenda and crucial for progress in other areas under
negotiation.  Bolivia considered that the Chairman's Report to the TNC (TN/AG/10 refers)
represented a reference for the start of real negotiations.  Bolivia underlined that it was fundamental tostrictly comply with the Doha mandate and that Cancún would be a success if Members were able to
agree on measures that led to greater and effective participation of developing countries in world trade
through an ambitious opening up of markets and elimination of trade-distorting subsidies.
48. Jamaica reiterated that any modalities to be adopted had to demonstrate a balanced reflection
of the interests of all WTO Members and represent a coherent approach to agriculture reform inaddressing the inter-linkages among the three pillars in an equitable manner.  With respect to market
access, Jamaica supported the Uruguay Round formula for tariff reductions, but much depended on
how the modalities treated long-standing preferenti al arrangements, how they provided access to a
new SSM and how SP products would be addressed.  In this context, Jamaica welcomed the statement
by the Philippines on behalf of a number of developing countries.  Jamaica noted that mostdeveloping countries were not in a position to provide domestic support, whether trade-distorting or
not, hence the modalities should address the currently lax situation regarding the Green Box.
49. With respect to the draft modalities in Ch airman's Report to the TNC (TN/AG/10 refers),
Mauritius recalled that the majority of Members supported the Uruguay Round formula.  Referring to
paragraph 4 of the statement by the Alliance for SP and SSM, Mauritius highlighted that liberalizationshould not be pursued for its own sake but in consonance so that Members could address their socio-
economic needs.  With respect to preferences, Maur itius considered that the issue of compensation for
the erosion of trade preferences raised two questions:  first, the amount, and second, who would pay –
the countries who gained better access or the preference-giving countries?  Mauritius was not in
favour of zero-for-zero or sectoral initiatives.  It welcomed provisions for LDCs and NFIDCs in the
areas of export credits, food aid and STEs and expected similar provisions with respect to export
subsidies.  Concerning domestic support, Maurit ius underlined the link between certain forms of
domestic support and preferences.  With respect to measures under Article 6.2 and Annex 2,
Mauritius pointed out that countries with inadequate budgetary resources would not be able to use
such measures.  For many vulnerable countries, pr edictable earnings from preferences would provide
the necessary means to use these types of measures.
50. Côte d'Ivoire underlined that agriculture, through its multifunctionality, constituted an
important development and poverty alleviation factor. Côte d'Ivoire called for equity and
consideration of the needs of the most vulnerable among Members.  It also urged Members to make
concessions in order to overcome the stumbling blocks before Cancún.TN/AG/R/10
Page 11
51. The representative of the European Communities (EC) recalled the points made during the
informal Special Session on 16 July.  The EC also stated that there was a need to find sufficient
flexibility within agriculture so that all Members could continue moving down the path of reform
while being able to build in the necessary flexibilit y in that process.  The EC was pleased to see the
recognition of the importance of its decisions with  respect to reforming the CAP.  Reaffirming its
commitment to the Doha Round, the EC looked fo rward to the establishment of comprehensive
modalities in Cancún covering the three pillars, non-trade concerns, the Peace Clause and factoring in
the issues raised by developing countries with respect to S&D.
52. Trinidad and Tobago, also speaking on behalf of Barbados, supported the statement by the
Philippines with respect to SP products and the SSM and underlined the importance for these
instruments to be an integral part of modalities.
53. With respect to the questions posed in paragraph 25 of the Chairman’s Report to the TNC
concerning LDCs, Bangladesh, speaking on behalf  of the LDC Group, argued that the LDCs had
liberalized unilaterally and their applied tariffs on agricultural products were less than one third of
corresponding bound rates.  Hence, Bangladesh expected that the Membership would support the
proposal that LDCs should not be required to undertake reduction commitments.  With respect to the
proposal that developed countries shall provide duty- and quota-free access for all imports from
LDCs, Bangladesh underlined the importance of this  issue to the LDCs and expected that Members
would also support it.  Concerning export subsidies, Bangladesh preferred an early phasing out of
export subsidies applied by developed countries to products of export interest to LDCs.  It welcomed
the concept of SP products provided it would not create barriers to exports from LDCs.  As regards
export credits, longer implementation periods and provisions to exempt LDCs from cash payments
should be provided.  Bangladesh also noted that all 49 LDCs were net food-importers and, as theyfaced chronic food deficits, provisions for bilateral food aid to help achieve development objectives
should be made.
54. The United States considered that the Doha Declaration clearly identified the objectives for
agricultural reform.  The United States reiterated its commitment to making a serious active effort
leading up to Cancún to make progress on the specific terms of the core modalities in each pillar.  Inits view, technical solutions could be identified for the rules and for scheduling reform commitments.
The United States considered that the question was whether the political will existed for all Members
to make meaningful commitments.  The United Stat es indicated that its efforts leading up to Cancún
would be oriented towards finding creative solutions to the technical issues, and it was looking
forward to suggestions from other Members.
55. Zimbabwe recalled that the Doha Declaration called for S&D to be an integral part of all
elements of the negotiations to allow developing countries to take account of their developmental
needs, including food security and rural development. In light of the imbalances in the present
Agreement on Agriculture, Zimbabwe hoped that the modalities to be adopted would address the
capping of the Green Box as well as the elimination of export subsidies.  Zimbabwe supported the
sectoral initiative in favour of cotton.
56. Hungary agreed with Argentina that agriculture was the first domino which had to fall but in
order for this to take place there had to be adequate assurances that the other elements of the work
programme would follow suit.  These assurances were still lacking.  As examples, Hungary pointed to
the state-of-play of negotiations on the establishment of the multilateral registry for wines and spirits
and the work on labelling in the TBT Committee.  Mo vement in those areas of the negotiations was
crucial for achieving progress in agriculture.  Hungary considered that New Zealand was wrong inasserting that the stumbling-block in the negotiations was a request by some Members for a balance to
be established within agriculture.  Hungary, for its part, did not seek full sectoral balance.  Instead,
Hungary stressed that every Member had to contribut e in a meaningful way to the reform process andTN/AG/R/10
Page 12
called on Members to end the efforts to hide sensitive aspects of domestic agricultural policy by
attempts to unilaterally narrow down the mandate of negotiations.
57. In response to New Zealand's claim that balance had to be found in the negotiations as a
whole, Bulgaria did not share this view and stated that for its part balance had to be achieved within
agriculture.  Bulgaria disagreed with Argentina's domino analogy that agriculture was an area where
movement had to be shown first and stressed that implementation issues should have been resolvedbefore that, by the end of December 2002.
58. Brazil, China, Honduras, India, Mauritius, Chinese Taipei and Thailand requested that their
respective statements made at the informal Special Session held on 16 July form an integral part of the
record of the formal Special Session (see Annex 2).  Argentina, Brazil, China, El Salvador, Nigeria,
Paraguay and the Philippines requested that the full text of their respective statements made at the
formal Special Session on 18 July be annexed to this report (see Annex 3).
59. In concluding this agenda item, the Chairman stated that many expressions of goodwill,
willingness to work hard to find solutions as well as  some recognition of the urgency of the situation
were made.  At this stage, the question was whether Members could translate these positive
sentiments into concrete progress given the short time-frame remaining to establish modalities.
I
TEM A(iii):  P OVERTY REDUCTION :  SECTORAL INITIATIVE IN FAVOUR OF COTTON , JOINT PROPOSAL
BY BENIN , BURKINA FASO, CHAD AND MALI
60. The Chairman recalled that the proposal set out in document TN/AG/GEN/4 had been
presented to the Trade Negotiations Committee by President Blaise Compaoré of Burkina Faso on
10 June and had been discussed at the Special Session of the Committee on Agriculture on 1 July.  At
that meeting, varying degrees of support for the proposal were expressed but since further discussion
was needed, the Special Session had agreed to revert to it at its meeting on 18 July.
61. Speaking on behalf of the four co-sponsors, Benin provided further details on the proposal
with a view to facilitating the search for a solution to a problem that, if left unresolved, could destroy
West and Central African cotton production.  Benin recalled that cotton was one of the sole products
where the four countries had a comparative advantage but due to the subsidies provided by some
producing countries, their economic growth potential had been nullified.
62. Benin appealed to Members to uphold the very principles of the multilateral trading system
based on fair and equitable rules that sought to benefit all so that Members could fully utilize their
comparative advantage.  Benin asked Members to distinguish between, on the one side, the general
problem of subsidies and, on the other side, the specific issue of cotton subsidies - a problem which
was a vital issue for poor countries that depended on cotton production.  Benin requested that an"early harvest" decision be taken at Cancún to safeguard cotton's crucial role for development and
poverty reduction.  Benin argued that this initiative was embedded in the Doha Round agricultural
negotiations, but the situation was urgent and required immediate action.  Hence, the proposal
consisted of two items:  full elimination of all cotton subsidies and an interim compensation
mechanism for LDC producers and exporters of cotton.
63. Benin considered that full elimination of production and export support was effectively the
only sustainable way to ensure that cotton could develop its full potential and contribute to povertyreduction. Mindful of the fact that subsidizing countries would have to prepare their producers to the
changing situation and facilitate the necessary adjustments, Benin envisaged that this could be
undertaken within a reasonable time-frame.  Hence, the proposal called for the full elimination of all
cotton subsidies in equal annual instalments over three years, from 2004 to 2006.  Benin pointed out
that in the medium- to long-term the benefits would accrue to both the countries that would be able toTN/AG/R/10
Page 13
exploit their comparative advantage as well as those that would have reduced or abandoned their
"non-economical" production to replace it with activities in competitive sectors.
64. With respect to the compensation mechanism, Benin explained that its objective was to
compensate cotton producers for the losses suffered due to subsidies as long as they persisted
(therefore the longer the elimination period the higher the global compensation amount).  While
compensation was only a stop-gap solution, this transitory measure was very meaningful as it wouldallow West and Central African cotton producers to maintain their production and encourage them to
undertake the necessary investments to adapt to the evolution of the market and further improve their
competitiveness.
65. Benin stated that the beneficiary LDCs would commit to ensure that the compensation
amounts be effectively channelled to local cotton producer associations in charge of assuring and
overseeing the transparent utilisation of the funds.  It was the cotton producers or the village
associations in the cotton growing areas that were in the position to decide how best to use the fundsin order to ensure the preservation of their asset, cotton, until such time as they could truly benefit
from their full participation in the free international cotton market.  Furthermore, local associations
would have an opportunity to strengthen their capacities and broaden their experiences in self-
management.
66. With respect to calculating and distributing the compensation amount, the co-sponsors
envisaged four principles for the contributors to the fund, i.e. the countries that subsidized cotton, and
the beneficiaries, i.e. the cotton producing and exporting LDCs.
67. First, the annual compensation amount must correspond to the estimated losses suffered,
calculated on the basis of a reference period covering three years of cotton production:  1999/2000,
2000/2001 and 2001/2002.  According to a recent study, the average annual export revenue losssuffered by West and Central Africa was approximately US$250 million.  If indirect losses were to be
included, the loss amount would be about four tim es higher, i.e. approximately US$1 billion.
68. Second, the compensation amount should direct ly relate to the simultaneous subsidy
reduction efforts on the part of the countries called upon to contribute to the fund.  Specifically, the
decrease in subsidies, at a rate of 33 per cent per year according to the proposal, would lead to anequivalent decrease in the annual contributions to be paid to the compensation fund.
69. Third, with regard to countries called upon to contribute to the interim compensation fund,
their contributions (percentage) would be calculated on the basis of their respective shares in the total
amount of subsidies granted to cotton worldwide, as published in the annual statistics of the
International Cotton Advisory Committee (ICAC). In line with this principle, the countries'contributions would decrease in proportion to their cotton subsidy reduction efforts.
70. Fourth, the share to be allocated to each bene ficiary LDC would be calculated on the basis of
its respective share in total cotton production by that group of countries, as published in the ICAC
annual statistics.
71. Benin underlined that the main goal was to keep the principles simple and the compensation
mechanism transitory to ensure a quick transition to  a free market system. Benin stressed that a rapid
solution to the problem of cotton subsidies would br ing benefits to the international community as a
whole and a decision at Cancún would demonstrate that the multilateral trading system was
favourable to the integration of all its Members, including the least developed and most vulnerable.
72. Mali supported the full elimination of all cotton subsidies and highlighted that the transitional
measure was intended to compensate cotton producers for the losses they had suffered as well as to
allow them to maintain production and make the necessary investments.  The methodology proposedTN/AG/R/10
Page 14
for the calculation and distribution of compensation amount took into account the efforts of countries
that subsidized as well as the interests of the beneficiary LDCs.  Mali stated that three million people
in four regions of the country were involved in cotton production and that agriculture and cotton
production were crucial to Mali's development, rural employment and poverty alleviation.  Mali
appealed to Members for a rapid decision at Cancún so that people whose livelihoods depended on
cotton production could be given a sign of hope.
73. Pakistan shared the views that the elimination of cotton subsidies would be beneficial to the
international community as a whole and a decision at Cancún would support development and be a
first concrete showpiece of the Doha Development Agenda.  Studies had shown that the cotton
subsidies by one major economy had caused a 10 per cent decline in the average income of poor
cotton producing countries, a 12 per cent increase in poverty among cotton farmers and a 4 per cent
increase in national poverty.  If the Doha Round were to resolve issues of interest to developing
countries, Pakistan underlined that Members should agree on such a pro-development proposal as an"early harvest".
74. Nigeria supported this initiative and underlined its importance in light of the vital role that the
cotton sector had played in the economic development policies and poverty reduction programmes of
many developing countries, including Nigeria.  Nigeria shared the concerns expressed in the proposal
with respect to the support measures of some Members that distorted global market prices of cotton.Nigeria considered that the elimination of domestic support and export subsidies would result in better
competition and an increase in cotton prices in globa l markets.  It would also serve as a catalyst for
poverty reduction in many countries.  Hence,  an early decision at Cancún was needed.
75. Uganda referred to the negative impact of subsidies on economies of cotton-producing
countries which were competitive in this sector.  Uganda supported the proposal and hoped that theWTO Membership would be ambitious in rolling-back  the subsidies with a view to helping the most
vulnerable among the developing countries.
76. Senegal supported the proposal and considered that the total elimination of cotton subsidies
was a reasonable request since it would be carried out progressively over a three-year time-frame.
With respect to the proposed compensation mechanism, Senegal considered it useful in light of theeconomic and financial difficulties that the countries concerned were facing.
77. Paraguay supported this initiative because it was in line with the objective of establishing an
equitable and market-oriented system that encompassed reforms to address distortions.  In addition, at
Doha, Members undertook to take into account the interests of developing countries, in particular the
poorest among them.  This initiative was of importance to Paraguay as cotton was one of the mainactivities that generated employment and income in its rural sector, especially on small-size farms.
78. Chad pointed out the importance of this initiative to the co-sponsors.  Chad also expressed
concern that Benin and Chad were third parties in the Brazil-US cotton dispute but as yet did not have
the Geneva-based representatives to follow the panel proceedings.
79. Burkina Faso stressed that the LDCs were not asking for a favour but to be able to live from
the fruit of their efforts.  The compensation m echanism was a transitional measure to avoid the
collapse of the cotton sector - the foundation of the economy.  In fact, the proponents were counting
on the free play of markets to make it possible to operate in a sector where they were competitive.
With respect to this proposal being extended to other products, Burkina Faso shared the view that
cotton was not the only sector where action was required but for the four proponents only the cotton
sector played a strategic role.  Burkina Faso underlined that the people who were struggling for
survival in this sector would be disappointed if there was no solution at Cancún.TN/AG/R/10
Page 15
80. Côte d'Ivoire shared the difficulties brought about by heavy subsidies in the cotton sector and
supported the proposal put forward by the four proponents.
81. Supportive of the initiative, Brazil underlined that Members should act to integrate all
countries into the world trading system.  In its view, the proliferation of initiatives, including a panel
regarding cotton and trade-distorting domestic support in general, indicated the gravity of the situation
affecting developing countries.  These issues should be taken up and result in action in Cancún so asto make the Doha Development Agenda worth its name.
82. Botswana, on behalf of the ACP Group, supported the initiative on cotton put forward by the
four LDCs and highlighted that it underscored the harmful effects to the economies of ACP countries,
especially the single-commodity-dependent countries.  Botswana noted that the ACP Council of
Ministers had endorsed this initiative and urged all WTO Members to lend their full support in
Cancún.  Botswana considered that this represented an opportunity to address issues of poverty
alleviation in accordance with the object ives of the Millennium Development Goals.
83. Togo stressed the need for a rapid and radical solution to the fall in cotton prices which was
an important source of revenue for many developing countries.  As an LDC, Togo appealed to
Members to take into account the concerns of West and Central Africa.
84. New Zealand stated that the elimination of all trade-distorting support and protection for
cotton would make a strong and positive contribution to the economic advancement of the fourproponents and many other developing countries. It supported the early harvest but noted that the
elimination of support for cotton production had to entail a corresponding reduction in Members’
Total AMS before the overall agreed modalities for domestic support reductions were applied.
Otherwise, there would be a risk that support previously applied to cotton could be diverted to other
products.  In New Zealand's view, sectoral initiatives should be a complement to, rather than areplacement for, broader liberalization.  A comprehensive approach to liberalization, including
product-specific domestic support reductions, the complete elimination of export subsidies and
substantial improvements in market access would deliver the best and the most development-friendly
outcome for all developing countries.  New Zeala nd welcomed the compensation idea but would have
to study it in detail.
85. The Philippines supported the joint proposal and shared the views of Benin with respect to the
impact of trade-distorting support on small producers and the economy in general.  Making real policy
reforms required that changes be made not only in market access but in trade-distorting support.
Noting that in a way this initiative revived the Philippines' earlier proposal on automatic balancing
mechanism through the interlinkage of pillar commitments, the Philippines called on Members to helpthe proponents and all Members to deliver the requested result.
86. Norway shared the concerns raised by the proponents as to the effects of certain support
measures on their cotton production and exports and therefore saw a justification for a special
arrangement in the case of cotton.  Norway also noted that it had granted duty- and quota-free access
to all LDCs.
87. In the view of Kenya, the issues raised required attention in light of the critical role that the
cotton sector plays in the economic development and poverty alleviation in the cotton-growingcountries in Africa.  Kenya expressed hope that a decision to address these concerns be taken at
Cancún.
88. India supported the initiative on cotton as well as the extension of sectoral or complementary
initiatives in the areas of domestic support and export subsidies.  India noted that the UNDP's Human
Development Report 2003 stated that for a number of developing countries, cotton was the onlyproduct that they could export competitively and that they had undertaken reforms that significantlyTN/AG/R/10
Page 16
improved their productivity and cut their production costs to among the world's lowest levels.
However,  in the face of rising direct financial assistance to cotton producers in the subsidizing
countries, the domestic reform efforts of these developing countries had been undermined.  India
noted that the International Cotton Consultative Committee and the IMF also considered that cutting
domestic and export subsidies for cotton would return international prices to competitive levels and
help raise the incomes of poor cotton exporters.
89. Australia reiterated its support for this proposal and noted that the negative effects brought
about by the subsidies and protection were not limited to cotton.  Australia reiterated its suggestion
that a comprehensive approach to liberalization could encompass apart from cotton such products as
for example sugar, tropical products and processed products derived from tea, coffee and cocoa.
Nevertheless, if there were a risk of overloading the initiative, Australia would support it as a stand
alone as well.
90. The EC shared the concerns of West and Central African countries regarding the low world
market prices for cotton.  The EC noted that it was the largest importer of cotton in the world and the
largest share of its imports came from the co-sponsors at zero duty.  The EC stated that it granted aids
to domestic cotton production as this activity had played an important social-economic role in certain
areas but its cotton production was only about 2 per cent of world production and no export subsidies
were applied.  Hence, its policy did not have a significant impact on the trend in world prices.  TheEC had undertaken to present proposals to reform  its cotton support system within the next few
months.  In the view of the EC, world cotton prices were determined by the largest cotton producing
countries and for some of them by their support system.  The EC underlined that it was fully
committed to substantially reducing trade-distorting domestic support for agricultural products,
including deficiency payment-type subsidies, with in the context of the Doha Round.  The EC recalled
that it also intended to obtain a series of market access measures in favour of developing countries,
including a provision that no less than 50 per cent of developed country agricultural imports should
come from developing countries at zero duty.  The EC had also tabled a proposal for all developed
and advanced developing countries to grant duty- and quota-free access for all products from the
LDCs.  As the Doha Development Agenda needed to be conducted on a comprehensive basis, the ECdid not favour sectoral approaches to address domestic support issues.
91. Mauritius referred to the recent meeting of the Heads of State of the African Union at which
the issues of preferences and the sectoral initiative in favour of cotton were highlighted as critical for
Africa. Mauritius cautioned, however, that the legitimate interests of African countries should not be
used by other Members to canvass support for other sectoral initiatives.  Mauritius recalled that theEBA initiative by the EC gave duty- and quota-free access to the LDCs and stated that LDCs should
obtain such treatment in other markets.
92. The Chairman concluded that significant amount of support in varying ways had come from
delegations and flagged that this matter would likely be further pursued in the context of the
preparatory process for the Cancún Ministerial Conference.
I
TEM B:  S PECIAL AND DIFFERENTIAL TREATMENT PROVISIONS UNDER CONSIDERATION BY THE
GENERAL COUNCIL
93. The Chairman recalled that on 28 May he had circulated to participants a copy of a letter from
the Chairman of the General Council concerning four proposals from the African Group in the area of
special and differential treatment contained in TN/CTD/W/3/Rev.2.  These four proposals had been
referred to the Special Session for consideration and, in accordance with the directions from the
Chairman of the General Council, the Chairman woul d prepare, on his own responsibility, a report to
the General Council for its last meeting before Ca ncún.  Following a preliminary discussion on 1 July,
the Special Session had agreed to revert to this matter at this meeting.TN/AG/R/10
Page 17
94. Egypt, supported by Mauritius, recalled that at the last Special Session, it had been indicated
that the concern by the African Group with respect to Article 14 of the Agreement on Agriculture had
already been addressed in the SPS Committee.  Egypt clarified that the proposal it had made in the
SPS Committee did not concern Article 14 of the Agreement on Agriculture but was aimed at
enhancing transparency of S&D treatment for developing countries according to Article 10 of the SPS
Agreement.  Egypt stated that the proposal of the African Group currently under consideration by theSpecial Session sought to make Article 14 more effective.
95. Kenya, supported by Mauritius, requested that it be reflected in the Chairman's report to the
General Council that in the absence of engaged discussion on the four proposals, all of them remained
on the table.
96. Mauritius stated that for the overall balance of the Agreement and the ongoing work, the
inclusion of these four proposals in an effective manner would go a long way in helping with many of
the issues that were relevant to the African Group.
97. The Chairman considered that the proposals were before the General Council, hence in that
sense they remained on the table.  The Chairman outlined his preliminary thoughts on his report
concerning the four proposals and indicated that it would be for the General Council to consider how
to pursue this matter further.
I
TEM C:  O THER BUSINESS
Date of the next Special Session
98. The Chairman informed that the next Special Session would be held on 6-9 October 2003.TN/AG/R/10
Page 18
Annex 1
Twentieth Special Session of the Committee on Agriculture
Summary Outline by the Chairman of the Disc ussions Undertaken at the Informal Special
Session Held on 16 July 2003
This is my report on the informal Special Session held on 16 July.  As always, this report is
made on my own responsibility and it does not attempt to provide details but to give an outline of the
discussions that took place.
On Wednesday the agenda covered three areas:  export subsidies;  domestic support;  and
market access.  As I stressed at the start of the in formal meeting this agenda was not meant to suggest
any order of priority or that any other aspect of the negotiations had been agreed.
Our work was organized around the questions and issues highlighted in the relevant parts of
the Chair's recent report to the TNC (TN/AG/10 refers).
Export subsidies
In introducing the subject of export subsidies I indicated that this had been included in the
agenda because we had held extensive consultations on other aspects of export competition.  On someof these issues there had been useful progress at the technical level - particularly on export credits and
international food aid although less so on state trading export enterprises.  It was therefore appropriate
that there should now be an opportunity to revert to the question of possible modalities on export
subsidies as such.  Despite this introduction, a number of delegations reiterated that all aspects of
export competition had to be addressed and the subsidy element of all other means of supportingexports had to be treated in a similar way to direct export subsidies.  These delegations felt that more
work was needed to achieve this objective.
Some delegations stated that they interpreted the Doha Ministerial Declaration as meaning
that this round of negotiations should not necessarily result in the elimination of export subsidies.However, they confirmed that they were prepared  to make substantial contributions in this area,
provided all forms of export support, including expo rt credits, abuse of food aid and exporting state
trading enterprises, were treated on equal footing.
Others interpreted the Doha Ministerial Declaration differently.  They stated that export
subsidies were the most trade-distorting form of all kinds of support.  In their view the issue was not
whether export subsidies were to be phased out but within what time-frame.  They felt that thetime-frame foreseen in the Revised First Draft of Modalities was too long.  Several of these
participants confirmed that they were seeking similar disciplines on other forms of export
subsidization.  Furthermore, the linkage between modalities on export subsidies, on the one hand, and
domestic support and market access was also stressed by a number of participants.
Domestic support
The recent decision by the European Communities on CAP Reform was welcomed by a
number of participants as a move in the right direction, although they reserved their final judgment
until they saw how this reform would translate in  the EC's negotiating position.  The EC confirmed
that the Reform would enable them to make substantial reductions in trade-distorting domestic
support because the reform shifted support towards direct payments decoupled from production.
Therefore, there was now room for manoeuvre in respect to Blue Box payments.  However, the Blue
Box could not be treated in the same way as the Amber Box because subsidies in this categoryTN/AG/R/10
Page 19
distorted trade to a lesser extent.  Movements on the Blue Box would also depend on other matters
such as the elimination of the de minimis  provisions for developed countries, special disciplines with
regard to deficiency payments and the preservation of the Green Box.  Other delegations also
indicated their willingness to make reductions in trade-distorting support but they stressed that the
current structure of the Green, Blue and Amber Boxes had to be preserved.
A number of other participants stated that they wanted to see much greater reductions or the
elimination of all forms of trade-distorting support.   For some of these delegations this meant some
types of direct payments to farmers currently covered by the specific criteria of the Green Box would
also have to be reduced or eliminated.  Several participants also stated that the magnitude of subsidies
given by some Members under the Green Box meant they distorted trade and, therefore, an overall
limit should be placed on subsidies in this category of support.  However, it was noted by others that
the Doha Ministerial Declaration referred to substantial reductions in trade-distorting domesticsupport, and that, by definition, the Green Box only covered subsidies that had, at most, a minimal
effect on trade or production.
There were also a number of comments made on special and differential treatment under the
Amber Box and the de minimis provisions, Article 6.2, and the Green Box.  Although there was some
support for the direction suggested in the Revised First Draft of Modalities some delegations stated
that any amendment to the Green Box should not permit trade-distorting subsidies and that there
should not be any overlap between the Article 6.2 exemptions for developing countries and special
and differential treatment provisions in the Green Box.
Market access
In the discussion on market access there was little sign of movement.  The proponents of the
Uruguay Round formula for tariff cuts, on the one hand, and those of the Swiss formula, on the other
hand, did not show a willingness to compromise.  On most other aspects of market access views weresimilarly polarized although there was some support for some of the special and differential treatment
provisions in the Revised First Draft of Modalities.
In addition, participants concerned about the erosion of preferences maintained their position
while indicating that the approach in the revised First Draft of Modalities was moving along the rightlines.
There were some interesting ideas put forwar d that might become the basis for possible
compromises in some areas.   Indeed, it was a more diverse discussion and there were some signs that
participants were beginning to search for solutions that would lead to achieving substantial
improvements in market access.  Having said this, however, overall there was no concrete progress on
which to report.
Conclusion
The Cancún Ministerial Conference is only a few weeks away but there is still a lot more
work needed on agriculture.  On the basis of the discussion at the informal Special Session it is clearthat significant movement is needed in order to fi nd solutions acceptable to all.  There is an urgent
requirement for intense negotiations among participants.  It is to be hoped that the focused way in
which delegations worked at the informal meeting of the Special Session is a positive indication that
participants are indeed now prepared to identify solutions.  Time is short and compromises by all
participants simply must be made in this critical area of the Doha negotiations as a whole.TN/AG/R/10
Page 20
Annex 2
Statements by Members at the Informal Special Session of the Committee on Agriculture
Held on 16 July 2003
Statement by Brazil
Initial comments
This is our last session prior to the Fifth Ministerial Conference in Cancún.  Although the
discussions held in the last four years (including the AIE phase) have clarified to a great extent the
issues at stake, from what we heard this morning so far, we still find ourselves a long way fromreaching a compromise.
We still believe that it is possible to reach a compromise.  Not only for agriculture, but also
for all other negotiating fronts, provided the necessary breakthrough takes place in agriculture.
We note that the Chairman has decided to conduct the work of this Special Session based on
his report to the TNC.  In general terms, it is a balanced report, but in any way it does not replace the
Revised First Draft of Modalities as the basis for our discussion.
At most, very much in the way of the "overview paper", the report to the TNC addresses
questions to Ministers with a view to focusing their deliberations in certain key aspects picked up at
the Chair's discretion.  We expect that this approach  will allow us "to give two steps forward after
having given one step backwards".  Following your request, I will confine my short comments now
on export subsidies.
Export subsidies
We would have preferred a much higher level of ambition in the time-frame to phase out
export subsidies.  Your formula, in our view, addresses the key aspects concerning reductions in
volume and in budgetary allowances and also keeps the necessary level of disaggregation ofcommitments.
Let me make a point very clear.  It would be a very bad signal should we display hesitation
concerning the total elimination of export subsidies, the most distorting means to displace
competition.  There is no economic, social, or ethical justification for the continuation of such
subsidies.  Ambassador Spencer has made the case very eloquently.  It is important to note that Brazil
and Australia are together on this.
The elimination of export subsidies will very much assist us in getting rid of equivalent forms
of export subsidies such as export credits and food aid.
Often, we do witness the EC and the US criticizing each other on the recourse to different
practices to distort export competition.  Unfortunately, one has to acknowledge that both are right in
finger-pointing the wrongdoing of the other.  Both must change their policies.  We hope they will do
it sooner than later.
We are dismayed that in the CAP reform very few steps were taken that may have a
repercussion on the export competition pillar.  We are confident that the EC will come forward and
agree to eliminate export subsidies thus allowing positive linkages to take place within the pillar of
export competition.TN/AG/R/10
Page 21
Domestic support
We have not changed our opinion regarding the Chair's proposals on the domestic support
pillar.  We would have preferred them to be more ambitious, so as to level the playing field between
those few rich countries who resort to subsidies and those who do not.
It is critical to agree on the levels of reduction of the Amber and Blue Boxes, but it is also
essential to focus on the need to enhance Green Box disciplines.  Loose disciplines in the Green Box
would mainly result in merely renaming "trade-distorting domestic support" as "support without
reduction commitments".  This would undermine the very basis of the Agreement on Agriculture's
treatment of subsidies.
No tinkering should be admitted in relation to the Green Box.  It is to be kept really and
essentially green as it was conceived.  Of course, policies dealing with general services, public
stockholding for food security and public goods are non-distorting by their very nature.  This is why
the Cairns Group proposals deal mainly with direct  payment with a view to avoiding their possible
"re-coupling", through updating of base areas and other practices so widely disseminated.
Furthermore, capping must be envisaged so as to avoid the so-called income and wealth effects.
It is useful to have in mind the fact that the Green Box payments in a context of an overall
distorting orientation of the agricultural policy have a tendency to amplify the effects of the distorting
policies.  As a consequence, only when Amber and Blue Box payments are totally eliminated, will we
be in a position to enjoy to the fullest the non-trade-distorting character of Green Box policies.
Finally, in domestic support, we are confronted with a similar situation to that prevailing in
export competition.  The two majors resort to different types of policies and have distinct levels of
support in them.  Both are equally harmful.  Distortions are distortions irrespective of their level and
irrespective of where they come from.  Both American and European distorting support programmesshould be dismantled according to the Doha Mandate.  Otherwise there will be no agricultural
liberalization worth that name.
Recent decisions by the EU Council of Ministers have instilled some momentum to our
negotiation by creating additional manoeuvring room to the Commission in domestic support.  We areyet to assess the full implications of the often contradictory elements contained in the Mid-Term
Review of the CAP.  The EC would add further momentum if it could explain to us how is it going to
translate its recent internal reforms in actual negotiating proposals.  We can have some educated
guesses but we would need an authoritative statement as to how far the Commission is willing to go.
Similarly, we would invite the US to come forward with a clear indication of its level of flexibility.TN/AG/R/10
Page 22
Statement by China
I. Export subsidies
Export subsidies have the most direct and significant distorting effects on agricultural trade.
Reform in this respect should be accelerated so as to create a fairer and more rational environment for
international agricultural trade.  We are of the view that the budget outlays and quantitative
commitments should be reduced by 50 per cent from the final bound level as specified in the
Member's schedule at the beginning of the first year of the implementation period, with the
remainders to be eliminated in equal annual instalment in the successive three years for developed
Members, and six years for developing Members.  And the developed Members should undertake the
reduction commitments on a disaggregate or product-specific basis.
II. Domestic support
The huge gap and imbalance between the developed and the developing Members in domestic
support is one of the major issues to handle in the current agricultural negotiations.  China holds thatthe Blue Box measures should be incorporated into the Amber Box and be included in AMS
calculation for further reduction;  all trade-distorting domestic supports laid down in the Amber Box
and Blue Box for developed Members should be substantially reduced through a disaggregate
approach;  the de minimis  level for developed Members should be lowered by a big margin;  the rules
for Green Box measures should be strengthened and the aggregate level of all domestic support ofdeveloped Members should be capped.
III. Market access
Tariff Reduction Formulas
The long-term objective of the Doha mandate is to establish a market-oriented and fair trading
system, which requires not only substantial improvements in market access, but also the elimination
of serious imbalances, inequity and huge disparities in the three pillars.  Therefore, the formula for
tariff reduction to be adopted should not only adequately address the outstanding market access issuessuch as tariff peaks, tariff escalation and the complex of the tariff regime, but also address the huge
disparity and inequity among Members in tariff level and tariff structure.
Taking into consideration the significant importance in food security, rural employment and
poverty elimination, as well as the limited macro-control ability of developing Members, the special
and differential treatments enjoyed by the developing Members in market access should be sufficient
to offset the imbalances they suffered in other two pillars and to enable them to effectively takeaccount of their developing needs including food security and rural development.  China supports the
introduction of the notion of SP products.
Tariff Quota Expansion
Tariff quota regime has its positive role in expanding market access opportunities, and
addressing specific concerns of certain Members over some sensitive products.  China holds that the
minimum market access for grains should be maintained at 5 per cent of domestic consumption;
meanwhile the minimum market access for non-grain products should be increased to 8-10 per cent,
considering that a big share of agricultural output, particularly of grain crops is self-consumed by thelarge number of subsistence and low-income farmers in developing Members.  We believe that
commitments on TQ volume shall be based on the total consumption of the marketed products so as to
duly reflect the special situations of the developing Members.TN/AG/R/10
Page 23
SSG & SSM
China proposes to terminate the application of SSG mechanism by the developed Members.
The developing Members shall be granted with effective instruments in the form of new SSM to
properly tackle the import surges under the process of trade liberalization via tariff reductions and
TQs.  In the meantime, the new SSM shall not hinder the normal trade among Members, especiallyamong the developing Members.  The new Mechanism shall cover all the products in which tariff
rates are under a certain level;  in particular, the measures triggered by prices shall be applied to tariff
quota products with in-quota rates under a certain level.  We also believe it is necessary to establish a
special countervailing mechanism, as proposed by Argentina with a group of other Members, for the
developing Members to address the importation of highly subsidized products from the developed
Members.TN/AG/R/10
Page 24
Statement by Honduras
I should like to start by thanking you for your efforts to reflect the different interests of the
Members of this Organization in this document.  Nevertheless, I should like to emphasize once again
that the document continues to be a cause of concern to my country.
Mr Chairman, for the majority of developing countries, the experience of implementing the
Agreement on Agriculture has been negative;  since the beginning of these negotiations, we have
made proposals to deal with this concern and, as the sole response to our requests, you, Mr Chairman,
have included the concept of strategic products and the new special safeguard mechanism, which we
welcome because they are essential in order to comp ly with the Doha mandate as far as special and
differential treatment is concerned.  Nevertheless, Mr Chairman, special and differential treatment inthe terms defined during the Uruguay Round negotiations, just as lesser tariff reductions and longer
implementation periods, do not suffice to meet our needs in respect of rural development, food
security and poverty reduction.
As you yourself have requested, I shall refer specifically to the following paragraphs.Regarding paragraph 11, we realize that it is necessary to reduce tariff peaks and tariff
escalation in order to improve market access and the approach adopted in the Uruguay Round does
not resolve this problem, but at the same time because of food security, rural development and
poverty reduction needs, my country cannot apply drastic tariff reductions.  This is why, throughoutthis period, we have laid emphasis on strategic products;  we are not opposed to trade liberalization
provided that it allows my country's needs to be met but the level of ambition in this document is not
the one for which we hoped as regards substantive reduction, elimination of export subsidies and
international-trade-distorting domestic support.
In connection with paragraph 13, you indicate that retaining the concept of strategic products
in the text of the modalities depends on the tariff reduction formula agreed by Members and,
moreover, that retaining the concept means deciding on the criteria or approaches to be used to
determine strategic products.  In this respect, I should like once again to state that the concept of
strategic products is independent of the tariff reduction formula used.
My country's position throughout this negotiating process has been to exempt strategic
products from tariff reductions.  The Uruguay Round approach requires that there must always be a
minimum reduction per tariff line;  if the Members decide on this approach, my country insists on
retaining the concept of strategic products without tariff reductions.  In addition, we insist on our
proposal that developing countries themselves must define what are strategic products on the basis of
their rural development, food security and poverty reduction needs.
With regard to paragraph 14, once again you establish a link between the special safeguard
and the tariff reduction formula.  This is unacceptable to Honduras and, as we have already stated, the
special safeguard mechanism is needed to remedy situations where there is price instability andTN/AG/R/10
Page 25
significant increases in volumes of highly-subsidized  imports, and this is not related to the reduction
formula adopted or, which amounts to the same, the market-access commitments.
In addition, Mr Chairman, we consider that your text does not take into account the problem
of lack of balance posed by this issue because many Member countries have the right to turn toArticle 5 of the Agreement whereas others do not ha ve such a right and this has been amply discussed
in the technical consultations which you skilfully conducted.  Regarding these technical consultations,
my delegation wishes to state that we accepted the draft text dated 7 March 2003 as a basis for future
negotiations, but we continue to have serious problems with some points in the text and, without
prejudice to our views expressed in the technical consultations, I should like to mention the fact that
the negotiations on this new mechanism appear to be  moving towards a highly restrictive mechanism
for an extremely limited group of products and the elaboration of criteria to determine which productswill be eligible for recourse to the mechanism.  In this respect, we emphasize that the trigger
mechanisms we agree must be the only means used to define what product may be eligible for the
safeguard measure at any particular time, and the mechanism must also be applicable to all imports
irrespective of their origin.  The text of 7 March requires further work in order to reach consensus
among Members.
Regarding paragraph 14(e), we view sympathetically the proposal on cotton by a group of
four African countries.  We believe that their concerns are legitimate, but that the participation of
Members in negotiating sectoral initiatives on market access may only be on a voluntary basis.  If this
type of approach is approved, the commitments must include elimination and substantial reduction ofexport subsidies and distorting domestic support.TN/AG/R/10
Page 26
Statement by India
Market Access
I must begin by acknowledging the sensitivity shown by you to certain key concerns of
developing countries like mine in your revision of draft modalities and in your report to the TNC,
particularly to the issue of livelihood security.  The livelihood security of our 650 million farmers
continues to be jeopardized by the massive subsidies being given to agriculture by developed
countries, which is why my delegation has been repeatedly pointing out the importance of "inter-
linkage" and balance between the three pillars.
The mandate of my delegation is, therefore, to protect our farmers because of the poor
implementation record of genuine reforms in domestic and export subsidization as mandated by
Ministers at Doha.  It is in this context Mr. Chairman that your concept of SP & SSM is of particular
interest to us and here I would like to clarify that  we view SP & SSM as Uruguay plus and not just in
the context of any formula to safeguard our livelihood concerns.  During the last informal session, we
had engaged ourselves in detailed consultation with several developing countries on this issue.  Asyou would be aware, there was a welcome convergence of the views on the flexibility offered by SP
& SSM because the options before developing countries to protect the interests of their farming
community are rather limited.  What else do we have, besides border measures, to protect our farmers
from the onslaught of highly subsidized products?
We have heard some delegations link the scope and reach of SP and SSM products to import
liberalization.  However, as the mandate for negotiations makes it clear, this negotiation is not about
increasing the import dependence of developing countries like India, but about levelling the playing
field for them in agricultural trade.  Accordingly, India reiterates that the number of SP and SSM
products should be large enough to serve the objectives set out in the proposed modalities, namely,food security, rural development and/or livelihood security concerns.  We have indicated that the
number could be agreed as a percentage of the tariff lines where domestic agricultural production has
taken place in a recent representative period in the country concerned.  Moreover, as we elaborated at
the last session in some detail, the only manner in which the varied interests and circumstances of
various developing countries can be taken into  account is through self-declaration of SP and SSM
products.  Clearly, criteria beyond that already set out in the modalities may be difficult to establish.
In relation to the proposed new SSM for developing countries, we have still not understood
the rationale for limiting the products to be designated as SSM products by some Members.  We note
that Article 5 SSG products remain determined by developed country Members without establishment
of multilaterally agreed criteria, and with numbers which run into hundreds of products.  Moreover,
by its very nature, the SSM would be invoked by developing country Members only when the marketbased circumstances set off the price or volume triggers.  Thus, the SSM should ideally remain
applicable to all products.
As far as Annex 2 of your report on the possible architecture of the SSM is concerned, in
reference to paragraph 2 thereof, we believe that due importance should be given to the criteria ofrural development and livelihood security, as also for food security concerns.  India also believes that
it may be appropriate to designate SSM products at the 4-digit level, and not the 8-digit level
proposed in Annex 2.  We note that apart from the volume trigger, which will be based on the average
volume of imports in an agreed base period, you have also suggested in paragraph 4, that the level of
import access opportunities should not be less than the average annual imports in the period 1999-2001.  Members are aware that we had stated that the base period for the price and volume triggers
may be the period 1996-98, which is exactly 10 years after the 1986-88 base period of the Uruguay
Round, and which is not cluttered by abnormal market conditions unlike later periods.  In any event,
we believe that the provisions of paragraph 4 will create confusion in interpretation by prescribingTN/AG/R/10
Page 27
average annual imports for two separate periods – the base period for the triggers, and the period
1999-2001 for import access opportunities.
Furthermore, we do not understand the rationale for excluding application of the SSM to
imports of designated products originating in developing countries.  On the same subject, we believe
that the volume trigger should be 110 per cent of the average volume of imports, without prescribing alimitation on the additional duty not to exceed 30 per cent ad valorem .
Mr. Chairman, you are also aware that we have studiously gone along with a majority of
Member countries for adoption of Uruguay Round (UR) formula for tariff reduction.  You have
yourself acknowledged the "Strong and widespread" support for this approach.  "Harmonization" of
tariff is difficult to sell back home because of the inherent inequities between countries which have
money to spend on subsidization and those which do not.
Another important issue is how to make our prod ucts competitive when so many subsidies are
being given, and how do we break SPS barriers?   The studies find that non-tariff barriers, including
SPS/TBT measures and complex rules of origin, all create a web of conditions which cannot be
satisfied by imports from developing countries.  Clearly, "substantial improvements in market access"can not leave these issues to a loophole to be exercised by the major agricultural products importing
nations.  We look forward to your guidance on this matter.
We welcome the initiative of disciplining tariff quota administration in the draft modalities
and hope that ongoing technical work in this regard will be completed soon.  A transparent and non-discriminatory TRQ administration will help the developing countries in securing market access.
However, the draft modalities must consider that the TRQs established as part of Article XXVIII
negotiations cannot be equated with TRQs established on account of the tariffication deal of 1995
and, therefore, should not be subjected to any expansion.  Also, that TRQ expansion in developing
countries like India will erode your genuine concern for livelihood security expressed in the marketaccess provisions.
We have already stated earlier that complementary approaches to the tariff formula can at best
be voluntary, and without any implication for the acceptance of draft schedules presented by Members
on the basis of the application of the formula alone.  Moreover, we hope that Members will agree toadopt complementary approaches on the other two pillars, including on cotton subsidies.
Domestic Support
I would like to draw your attention to the ya wning gap between the expectations and outcome
of the AoA on account of imbalances and distortions perpetuated by the existing architecture of
domestic support.  Though, there have been efforts to reduce the support in the Blue Box and AmberBox in the proposed draft of modalities, no provisions have been made to ensure that there is no
migration of these supports to Green Box.  Green Box also provides scope for unlimited support,
which are not non-trade distorting.
The Doha mandate has been specific in seeking substantial reduction in trade-distorting
domestic support.  It had not envisaged any trade distorting support described wrongly as less or
minimal trade-distorting support in the Green Box.  In this context, our proposal for removing support
under paragraphs 5, 6 and 7 in Annex 2, from the Green Box to the Amber Box is therefore consistent
with the Doha Declaration and needs urgent consideration.
We support a definitive time frame for reducing trade-distorting Amber Box and Blue Box
support, which should be merged, to the de minimis  of 2.5 per cent for the developed countries over a
five-year period.  For developing countries, we can concur with the modalities proposed by you in
paragraphs 48 and 52 of the revised draft.  We appreciate the recognition in the draft modalities thatTN/AG/R/10
Page 28
flexibility to credit any negative product-specific-support to non-product-specific de minimis  support
remains a reality for some developing countries like India.  As in the pre-revised draft, we reiterate
that the full amount of the negative support should be explicitly permitted to be credited to the
positive non-product-specific support.
The proposal for capping the Amber Box support in paragraph 47 of the revised first draft is a
step in the right direction.  However, we believe that the modalities cannot disregard the fact that for
the more highly subsidized products in the OECD countries, after 1986-1988, domestic support has
increased by more than US$9-10 billion.  My delegation had shared its assessment of some of the
product-specific support across such commodities at the last Special Session in some detail.
Therefore, establishing 1999-2001 as the base period for capping product-specific support would
merely legitimize these increases and skew agricultural trade rules further in their favour.
Finally, we should like to reiterate the strong inter-linkage between support given and market
access sought in agricultural trade.  It needs to be appreciated that unless conditions are created in
which the end result of subsidies given by different countries to their agricultural produce is
harmonized, the reform process will not be balanced.  Tariff reduction alone cannot restore that
balance.  Therefore, it is necessary to cap and adequately reduce such domestic support which hasdistorting effect on trade, even though they have found their way into the Green and Blue Boxes.
Studies are a plenty which rationalize the need for special and differential treatment towards
developing countries in the face of subsidized exports from developed countries creating serious
problems for low income and resource poor farmers in developing countries.  These studies point tothe fact that subsidized products are sold at prices that bear no relationship to the costs of production,
and to the need to offset structural and development status related disadvantages faced by developing
countries.  On the one hand they prescribe flexibility in tariff policy of developing countries to
safeguard their interests, and on the other hand they uphold maintaining a broad spectrum of domestic
support options such as those enunciated in Attachments 9 and 10 of the revised first draft.  In thetechnical consultations held by you, India has already elaborated its position in this regard.
We hope that these issues will be addressed properly to have real and meaningful discipline of
domestic support and further strengthen the reform process.
Export Competition
India extends its appreciation of the proposal made by you in your report to the TNC on
export competition.  It provides a way to move forward and poses a number of critical issues for WTO
Membership to ponder over and agree upon in the few weeks we have before Cancún.
We would like to see that all distortions posed by export subsidy, export credit, food aid,
STEs, insurance and guarantees are removed in this round.  We are confident that the discussions that
are taking place under your stewar dship will achieve these objectives, enshrined in the Doha mandate.TN/AG/R/10
Page 29
Statement by Mauritius
We have taken very good note of pa ragraph 15 of document TN/AG/10  and in particular the
part which refers to " the need to secure the viability of rura l areas in all countries, including in
areas with disadvantaged or high-cost agricultural production conditions" .  This is a clear
recognition of the diversity of agricultural systems and takes us up to the 1996 Rome Summit where
our political leaders agreed that agriculture had the right to thrive in all countries irrespective of their
having high or low potential areas.
We are going to refer to the various paragraphs of TN/AG/10.  As per your reply to our query
on the advisability of cross referring to paragraph 57 (flexibility for certain groupings), we are going
to address the issue of flexibility when addressing the issues you have highlighted in the conveningfax.
Paragraph 11
The issue of formula has to be addressed after taking into consideration two key elements,
substantial improvements in market access and the need to take into account developmental needs.
These two elements have equal importance in para 13 of the Doha Declaration, many tend to refer to
the first and forget the second one.
The UR formula would deliver an average cut of 60% in tariffs in two rounds and this is to
any reckoning a substantial improvement in market access.
Does the UR formula address other main concerns of Members?(i) Flexibility to all : Yes
(ii) the S&D element : Yes
(iii) Safeguard of preference : Yes
It is no wonder therefore that the majority of WTO Members subscribe to the UR approach.
Regarding paragraph 57 (TN/AG/W/1/Rev.1) flexibility it is proposed that the 1.3 escalation
factor referred to in paragraph 8 should not be applicable to the countries described in paragraph 57.
Paragraph 13
(i) We welcome the concept of strategic products, the term " strategic " is preferred to
"special ".
(ii) The SP issue has to be viewed in conjunction with the flexibility afforded by the UR
approach.
(iii) Self declaration is critical for the SP to be effective and meaningful.
Paragraph 14(a)
Welcome the reservation of a certain share of tariff quotas.  This was requested in the African
Group submission on S&D (Job(02)/187).TN/AG/R/10
Page 30
Paragraph 14(b)
It is essential to maintain the SSG as pr ovided for in Article 5.9 of the Agreement on
Agriculture.
Paragraph 14(c)
Support the EU on the necessary complementarity between the SSM and the UR formula.
Paragraph 14(d)
(i) The proposals on preferences of TN/AG/W/1/Rev.1 are fully supported by the
declaration of the WTO of the African Union Summit of Maputo, namely:
"STRONGLY WELCOME  proposals on preferences as contained in the Harbinson
text and CALL UPON  the WTO Members to address the issue of erosion of
preferences;"
(ii) We would work with others to refine paragraph 16.  In this regard, Mauritius and its
allies, following the advice of the Chair, has already engaged, and will continue to do
so, in bridging of gap discussions with countries who have expressed reservations on
preferences generally and on paragraph 16 in particular.
(iii) Nonetheless, the best  way to safeguard preferences still remain the UR approach and
the maintenance of the SSG.
(iv) Paragraphs 10 and 16 of TN/AG/W/1/Rev.1 are not in contradiction, but are in fact
addressing different constituencies which can and have to exist.
(v) Some countries advocating radical trade liberalisation have in a cursory manner tried
to send the preference receiving countries to the IMF/World Bank which would,
according to these countries, devise means to address the issue of preference erosion.
This approach has to be cautioned given that the IMF and World Bank are not easyinstitutions to deal with and given that in the past funding institutions have not
delivered, to wit the NFIDC issue.  A moderate approach to tariff reduction is
undoubtedly the best one to avoid preference erosion.
Paragraph 14(e)
(i) Complementary approaches:
(a) Request and offer : Yes
(b) Zero for zero initiatives : No
(c) Sectoral initiatives : No, given the radical proposals on such
initiatives in the first elements for modalities ofthe NAMA.
(ii) Cotton
(a) The AU Summit of Maputo has agreed to the following:
"EXPRESS  our full solidarity with our Member States that are affected by
subsidies on cotton provided by developed countries and strongly supportTN/AG/R/10
Page 31
actions initiated by some of them in the WTO to urgently remedy the negative
consequences of those subsidies that affect millions of Africa's farmers;"
(b) The AU Summit in its wisdom has clearly  pointed out that both the
preference and cotton issues are critical for Africa.
(c) Some countries should not use the legitimate interests of African countries to
canvass support for other sectoral initiatives, such as those on sugar, whichwould be highly detrimental to African and vulnerable countries.
Paragraph 57 – Flexibility on Market Access
Future modalities should incorporate the contents of subparagraph (v) of paragraph 26 of the
Overview Paper, namely:
"(v) to extend to small island developing states the facility currently available for
LDCs that enables special WTO compatible market access arrangements withdeveloped countries on terms that do not require extension of reciprocal
preferences."
Linkages
Is the link referred to in paragraph 14(a) on TRQ the only possible one or would there be
possible linkages between Market Access and domestic support and export subsidies?  For instance,major reductions in the latter two pillars would considerably improve market opportunities and this
has to be factored.  Would such reductions imply low and moderate reductions in tariffs?
Paragraph 18
Three elements have to be considered:
(i) striking the right balance between the interests of exporters and importers;
(ii) equal treatment in respect of all elements of export competition and in particular
regarding LDCs and NFIDCs:
(a) there are provisions on LDCs and NFIDCs in export credits, quite interesting
ones indeed, food aid and STEs but there is none in respect of exportsubsidies;
(b) the proposals in paragraph 9 of Job(02)/182 should be incorporated in the
modalities on export subsidies;
(iii) interpillar linkage, indeed what is the link between depth of cuts in export subsidies
and cuts in tariffs.  Cuts in export subsidies mean enhanced market opportunities.
Paragraphs 23 & 24
Reiterate point made by Swaziland on the link between domestic support and preferences.
Article 6.2 and Annex 2 are interesting for those countries that have adequate budgetary
resources, for many vulnerable countries, predic table earnings from preferences procure the means
necessary to implement the measures described in these two provisions of the Agreement on
Agriculture.TN/AG/R/10
Page 32
Statement by Chinese Taipei
My delegation considers the Blue Box measure to be a crucial tool in the transition process
from market price support to non trade-distorting measures.  With this in mind, we are of the view
that the Blue Box should not be reduced at this stage.  Capping during a certain period while on BlueBox should also not be introduced, because it would be unfair to Recently-Acceded Members.
The long-term objective of the Agreement on Agriculture is to establish a fair and market-
oriented trading system, which is the right goal for us to be aiming at.  It is difficult for us to see,
however, how Members' agricultural policies and programmes, which aim at the long-term objective,
can be peacefully and smoothly carried out if there is no consistency and continuity with this reform
process during our negotiations.  In this regard, my delegation supports the proposal that the export-oriented AMS should be dramatically reduced, because it provides trade-distorting protection.  At the
same time, however, we believe that the other AMS should be cut by 20 per cent, as mandated by the
Uruguay Round results, on an aggregated basis without capping for individual products.
Under the present Agreement, the  de minimis for developed Members is where product-
specific domestic support does not exceed 5 per cent of total value of production of a basic
agricultural product, or where non-product-specific domestic support does not exceed 5 per cent of the
value of total agricultural production.  Such support has very limited trade-distorting effects, therefore
my Government is of the view that this de minimis  level should be maintained to ensure the
sustainable development of agriculture and thus to secure Members' non-trade concerns.
My delegation would like to emphasize the fact that it considers agricultural trade
liberalization should be a gradual and on-going process.  Members need the appropriate and adequate
instruments in order to be able to implement tari ff reductions while respecting the specific needs of
their economies and their farmers.  And in this progressive liberalization process, non-trade concernscan only be properly addressed if there is sufficient flexibility.  Consequently, any modalities that go
beyond the Uruguay Round Approach will have seriou s negative implications for the implementation
of long-term agricultural policies and programmes.  Any over-ambitious modalities that were not
mandated by the Ministers in Doha will result in the disappearance of many agricultural products
within small-scale farming Members.   For the sake, therefore, both of non-trade concerns and indeed
the very survival of vulnerable small family farms in developing as well as developed countries, my
delegation strongly supports the use of the Uruguay Round formula as the fundamental basis for tariff
reduction.
As for the special safeguard provision, my delegation firmly believes that the SSG is an
effective measure to secure the non-trade concerns for all Members, both developing and developed.
We therefore consider that the SSG provision should NOT cease to apply for developed countries.
My Government welcomes the proposals submitted by some African countries on a sectoral
initiative for cotton.  As a small-scale farming Member ourselves, my Government fully recognizes
the difficulties these countries are facing, especially in respect of the cotton industry.  In order to
improve the economic situation and secure the welfare of vulnerable farmers, the sustainabledevelopment of agricultural industries must be safeguarded.  Therefore, my delegation is in favour of
special consideration being given to these Single Commodity Producers.  My delegation would also
like to see market access opportunities for cotton greatly improved and the related trade-distorting
subsidy for cotton production in developed Members dramatically reduced.  Moreover, we welcome
the principle proposed by you of "special products" and fully endorse the idea that cotton shouldclearly be identified as one of the special products for the African countries.TN/AG/R/10
Page 33
Statement by Thailand
Export subsidies
Thank you very much for your report to the TNC that reflects the contentious issues among
Members.  I believe we need to narrow down the differences in order to agree on the modalities.
It was accepted by all Members, even President Chirac, that export subsidies are the most
trade distorting and cause great damages to the economies of the poor developing countries, not only
in Africa but all over the world.
We need to get rid of export subsidies as soon as possible so as to create a level playing field
among Members. We proposed 3 years for the phasing out of export subsidies with a 50 per cent
down payment on the first year and the remaining on an equal annual reduction.
We found your reduction formula unnecessarily complicated and too long an implementation
period.  It is not only unfair to the vast majority of Members that are not allowed to subsidize theirexports, but it also discourages other Members to make commitments on substantial improvement in
market access.
The exemption of developing countries under Article 9.4 should be sufficient for developing
countries during the implementation period.
In this respect we wish to hear those who still maintain high export subsidies on how and how
long they are planning to phase them out.
Domestic support  (paragraphs 23 and 24 of the Chair's report to the TNC)
Paragraph 23
Both the Amber Box and Blue Box are trade-distorting domestic support.  The Blue Box is
worse as it has been utilized without limitation.  Your proposal, Mr. Chairman, is less ambitious onthis issue.  To answer your questions 23(a) and (b) we would like to propose that the Blue Box and the
Amber Box be put together (maybe under the Red Box) and be reduced to zero within 5 years for
developed countries and 9 years for developing countries with 50 per cent down payment on the first
day of implementation.
On paragraph 23(c), de minimis  for developed countries should be reduced to zero within
5 years on an equal annual basis as well.  De minimis  for developing countries are to be maintained at
the current level.
Paragraph 24
To make the Green Box really Green we need to apply strict discipline to the Green Box as
well as to cap and reduce decoupled payments.  This is to prevent too high support that Members may
give to farmers in this area and may impede the objective of decoupling the support with production.TN/AG/R/10
Page 34
Annex 3
Statements by Members at the Formal Special Session of the Committee on Agriculture
Held on 18 July 2003
Statement by Argentina
We welcome your ongoing efforts to achieve progress in these negotiations.  We also
welcome your report, which we shall study carefully.
Bearing in mind that this is the last meeting of the Special Session of the Committee on
Agriculture before the Cancún Ministerial Meeting, as well as the fact that the fate of all the
negotiations depends to a large extent on the outcome of the agricultural negotiations, we shallconfine ourselves to making comments of a general nature on this occasion.
Argentina is committed to the success of the Doha Round.  In view of not only our own
growth needs but also the uncertainties prevailing in the current global economic situation, which call
for a strong positive message from this Organization.
In this process, Argentina is a "demandeur" in the broad sense of the word;  because it does
not accept the current imbalances in the multilateral trading system.  This is still the case despite the
results of the Uruguay Round or, more precisely, because of those results.
In those specific areas in which we are not "demandeurs", we are prepared to be constructive.
We abide by the principle of the "single undertaking" and realize that we must contribute to a proper
cost/benefit balance.
Naturally, we have our limits, which are defined by requests that are not supported by
mandates and, consequently, distort the delicate balance arising from Doha.
In any event, we are ready to contribute to the success to the extent of our possibilities and
our situation as a developing country.  There are shared responsibilities but not equal responsibilities.
The current situation in the negotiating process does not leave room for optimism or
complacency.  Today, we have not made enough progress as we should have and the Cancún Agenda
is overloaded, while there is nothing to indicate that in five days we will be able to resolve what could
not be agreed in almost two years of negotiations.
Just as Members do not all have equal responsibilities, not all the agenda items have the same
weight as far as seeking a consensus is concerned.
In this context, this means finding a solution in  the first place for highly symbolic issues such
as those pending in regard to TRIPS and public health, special and differential treatment and
implementation issues, which constitute legitimate interests of developing countries, and a formula
must be found to give renewed impetus to the agricultural negotiations.
Regarding the latter aspect, we emphasize that it must realistically be accepted that the
possibility of making progress in all areas of negotiation is linked to substantive progress in the
agricultural sphere.
As in the proverbial game of dominoes, agriculture must be the first tile to fall if it is hoped
that the other tiles will also fall.TN/AG/R/10
Page 35
Because of the close links among the three pillars and the obvious vulnerability of developing
countries to an opening up of their markets, it also appears necessary that – sequentially the
determination of developed countries to dismantle support and subsidies should first be demonstrated
as an initial and necessary step before developing countries can assume commitments on market
access.
As far as possible, this should of course be accompanied by "safety net" type mechanisms to
reinforce the confidence of such countries and to make substantive progress on access.
Likewise, my delegation is also prepared to support measures such as those intended to
compensate for the injury caused to beneficiary countries by the erosion of preferences, which are
only to be expected in any trade liberalization process.
We can accept and endorse those concepts, however, to the extent that they contribute to the
common aim of helping developing countries during the transition to a more open agricultural trading
system.  We are convinced that, particularly in the agricultural sector, the special rules for developingcountries are often used as an excuse to allow developed countries to try to avoid making adjustments
to their own policies.
Allow me to conclude by stating that even though the overview of the negotiations does not
appear very optimistic today, we have not lost hope that, bearing in mind the implications of failure,
the major actors in the system will make every effort  to facilitate the search for a solution that is
beneficial to all.
If this solution reflects the Doha Mandate and respects the cost/benefit balances established
therein, you can be sure that many of us will support welcome it.TN/AG/R/10
Page 36
Statement by Brazil
During the informal meeting, my delegation intervened on the agenda items concerning
export subsidies and domestic support.  We would request to have these points reflected in the
minutes of the formal session.
As this is the last meeting prior to the Fifth Ministerial Conference, we wish to place on
record our dismay at the fact that despite many years of discussion on agriculture, we still do not see
light at the end of the tunnel.
My colleagues from Argentina, Paraguay and Uruguay have expressed much of what Brazil
would wish to state.  Let me associate myself with  my MERCOSUR brothers to stress that agriculture
continues to be the ship in the convoy of the Round that lags behind, even though it has been the first
to depart.  And yet we all know that without tangib le progress in agriculture, it will be impossible to
move this Round forward.
Recent events within the European Union bring some hope to the negotiations, although we
still wait for clarification as to how CAP reform will translate into clear negotiating positions in
Geneva.
Leadership is clearly needed in domestic suppor t and export competition.  None of the two
majors is free from responsibility.  They resort to different types of programmes but the consequencesare the same.  It would be of great importance to the Round should they compound their differences.
It would be disastrous, if they decide to compromise at the expense of the mandate and of the "acquis"
of the negotiations.  A result that contradicts the spirit of the Doha Development Agenda will not be
acceptable.  This implies a result that is short from the mandate and that does not take into account the
need to substantially cut all trade-distorting domestic support, eliminate all forms of export subsidiesand avoid the corruption of the Green Box.
Hardly is there any disagreement on the difficulties that lie ahead in the area of market access.
There are many more shades of grey (146 – that is the total of Members in this Organization - to be
precise) than in domestic support and export competition pillars in which economic, social and ethicalconsiderations clearly require that developed countries correct their course and refrain from distorting
markets.
A satisfactory outcome in market access is contingent upon a satisfactory solution to
subsidies, since adjustment in distorting polices claims precedence over market access.  How can
developing countries - counting only with border measures for their protection - feel confident to
undertake further tariff reductions unless they have clear indications that their markets and vulnerablefarmers will not be affected by subsidized imports?  How can we discriminate between inexpensive
imports originating from efficient producers and those coming from countries that subsidize their
products?
The dilemmas we face in market access do not lend themselves to easy solutions.  We must
be creative.  We must keep our minds open;  but we should never lose our sense of direction, nor our
commitment to the integrity of the Doha mandate.  In any case, it is clear to us that the developed
country package should have as a priority to combat tariff peaks and tariff escalation, while the
developing country package should maintain the commitment to continue the liberalization process,
so as not compromise South-South Trade and, at the same time, ensure that the livelihood of resource
poor farmers will not be endangered.  There is no shortage of ideas, but we need to devise a balanced
solution to these multiple requirements.  Of course, should we agree on the method to approach a
problem we would be giving a step in the right direction to solve it.TN/AG/R/10
Page 37
As we approach the Fifth Ministerial, let me reassure you, as well as the Chairman of the
General Council and the DG, of the full cooperation of the Brazilian delegation.TN/AG/R/10
Page 38
Statement by China
The Chinese delegation would like to express its appreciation and thanks to you and the
Secretariat for the efforts made in preparing the report to the TNC.  In the previous two days,
Members have had intensive and focused discussions on the selected issues with a purpose to bridgethe existing gap.  However, although the Cancún Ministerial Conference is approaching pretty soon,
we have to realize that Members' positions are still remaining apart from each other on the key points
of the three pillars.  We are looking forward to substantive progress to be made in agricultural
negotiations in the coming days to ensure that the Fifth Ministerial Conference at Cancún will come
to fruition.
Since all of us have heard China's position at various occasions, I will not repeat it any more,
but would like to emphasize the following:
We have heard many Members at the informal meeting stressing the imbalance amongst the
three pillars and disparity between the developed and developing Members.  China is also of the view
that great efforts should be made in substantially improving market access and eliminating seriousimbalances, inequity and huge disparities prevailing in the current agricultural trading system.  We
believe that the special and differential treatments enjoyed by the developing Members in market
access should be sufficient to offset their sufferings from the highly trade- and production-distorting
support by the developed Members, and to enable them to effectively take account of their
development needs including food security and rural development.  Furthermore, the realities of therecently-acceded Members should be duly reflected, and the substantive differential treatment for
them should be embodied in the modalities to be established.
Finally, I would like to repeat China's consistent stand in promoting the ongoing round of
agriculture negotiations and we are fully prepared to join the efforts together with the other WTO
Members to fulfil the Doha mandate and to achieve the objectives of establishing a fair and
market-oriented trading system.
The Chinese delegation would like to ask the Secretariat to include our remarks made at the
informal meeting on 16 July into the minutes of this formal session.TN/AG/R/10
Page 39
Statement by El Salvador
I would like to begin by thanking you on behalf of my delegation for having convened this
meeting and for the efforts that you and your team have made to further the work of this Committee
with a view to obtaining results to submit to the Ministerial Conference.
With regard to tariffs, our country has, on previous occasions, shown its support for an
ambitious reduction formula that is in keeping with  the mandate given by Ministers in Doha.  It is
important to note that this is a major step for a developing country like El Salvador, taking into
account the fact that we are making reduction commitments for tariffs that are already considered to
be low.  Nevertheless, as has been the tradition of my country – one that has been so hard hit
throughout history – we are ready to rise to a new challenge, on the condition that ambition isbalanced across the three pillars of agriculture as was agreed in Doha, enabling us to carry our people
forward in accordance with our legitimate objectives.
In particular, we would like to stress, as many Members have done at this week's informal
meeting, that developing countries cannot be requested to be ambitious in opening up their marketswhile certain developed Members continue to apply market-distorting measures and, worse still, want
to continue to do so, selling us the idea that the problem is solved simply by focusing more on one of
the three pillars of this negotiation.
While the reforms undertaken by a Member with respect to its domestic agricultural policy
are a good starting point, it has become clear, as stated on other occasions, that we are still waiting for
these so-called historical reforms to bring greater flexibility to the effort, which, we are certain, will
help us to break the current deadlock.
We agree that a more ambitious approach is needed to reduce the distortions contained in both
the Blue and the Amber Boxes.  At the same time, the Green Box measures should be revised,
establishing stricter rules and parameters to prevent certain harmful practices from being dissimulated
within the Green Box or new measures being incorporated into this box, which as it is, already causes
major distortions in agricultural trade.
As regards the spaces for flexibility needed by the developing countries, my delegation is
convinced that the concept of strategic products shou ld be maintained as an essential part of the
modalities.  We do not agree with those who think that the application of a less ambitious formula will
provide enough flexibility to address our concerns regarding what we have called strategic products.
This type of mechanism allows the sensitivities of the developing countries to be protected, taking
into account, as mentioned, the economic and social importance of this sector.  We are convinced that
there are legitimate aims and objectives that justify maintaining this type of flexibility for developing
countries, since certain agricultural activities are crucial to rural development and the food security of
our people.
We agree with all those delegations who referred to the other market access issues set out in
paragraphs 15 and 16 of the document under cons ideration (TN/AG/10).  These issues do not form
part of this negotiation.  The incorporation of such elements will not only contribute to polarizing
views but could also result in lengthier negotiations.  If they are to be addressed, a decision should be
made at the Ministerial Conference on pursuing our negotiations with additional elements that were
never considered to be part of this negotiating agenda, at least not as some Members suggest or would
like to have us believe, since the challenges that we are taking on per se  are very difficult in
themselves without taking on new ones that could put us at an even greater competitive disadvantage.
Lastly, we fully agree with those delegations that have indicated that it will be impossible for
Ministers to resolve in a few days what it has been impossible to resolve in months of intensive work.TN/AG/R/10
Page 40
Sufficient time should be given to analysing the decisions that we would be prepared to take in view
of the significance of what is at stake for thousands and millions of people.  Indeed, it would be very
difficult to support something that would have harmful consequences for our people in the economic,
political and social spheres.
Thank you very much.  My delegation is fully prepared to help you to carry out the task
assigned to you in a way that will produce fair and balanced results.TN/AG/R/10
Page 41
Statement by Nigeria
Let me start by thanking you for your untiring efforts in trying to move the process of
agriculture negotiations forward.  We fully support the statements made by the delegations of the
Philippines on behalf of the Alliance of developing countries, of which Nigeria is a co-sponsor;Paraguay;  Kenya and other Friends of SP and SSM concepts.
The state of agriculture negotiations gives my delegation much to be concerned.  Since the
start of the negotiations, developing countries, including Nigeria, have called for the modalities on all
the three pillars to be closely inter-linked.  We have  insisted that any reductions in tariffs can only
take place if there are significant reductions in overall levels of export subsidies and domestic
supports.  We are deeply disturbed that no attempt has been made to establish such linkage in theproposed modalities text.  Instead, we are being asked to further open our markets when no real
reform is being undertaken by the countries that distort trade on the world agricultural market.
We are equally disappointed by the lack of political will of our trading partners to commit to
genuine reform in agriculture trade so far.  We have said a number of times that agriculture is key tothe present round of negotiations because the livelihood and food security of millions of our people
are at stake.  Agriculture is central to our development strategies.  Rural livelihood and food security
constitute vital public concerns, which are not negotiable, yet the "SP" and SSM" provisions
developing countries, including Nigeria, have requested to address those concerns are currently topics
of controversy.  We wish to reiterate our position that agricultural products that are critical for
employment, poverty alleviation and food security be classified as "Strategic Products" on self-
declaration basis, exempted from reduction  commitments.  The "Special Safeguard
Mechanism" to deal with import surges and pri ce drops should be established with no trade-
offs and drastic tariff cuts.  In as far as the overall levels of OECD subsidies are not capped and
reduced to negligible amount, Nigeria shall no t be expected to undertake tariff reductions.
We do not support the inclusion in the agriculture modalities of provisions for additional
protection for GIs, authoritative interpretations of Article 5.7 of the SPS and Article 2 of the TBT
Agreements, as well as traditional and non-traditional concerns with respect to agricultural products.
Our position is that these issues should be addressed in the appropriate WTO bodies.  We do notsupport the extension of the "Peace Clause" of Article 13 of the Agreement on Agriculture because
the Doha Mandate gave no such directive.
Given the paramount importance of agriculture for developing countries, the outcome of
agriculture negotiations would by itself determine to a large extent, the developmental component or
deficit of the Doha Round.  In this regard, we note the recent EU attempt to reform its CAP and we
wish to encourage them to do more in order to achieve the goal of establishing a fair and market-oriented system, free from distortions.
We fully support the initiative and proposal by the four West and Central African countries to
have a decision in Cancún on accelerated reduction or elimination of cotton subsidies.
Finally, Nigeria will continue to engage in constructive consultations with you and other
Members in order to achieve a successful outcome in the agriculture negotiations.TN/AG/R/10
Page 42
Statement by Paraguay
Paraguay thanks you for your information document on the negotiations on agriculture,
TN/AG/10.  We would like to make some comments on certain issues of concern to us and also to
express our support on other matters.
First of all, we would like to take this opportunity, at the last formal session of the
negotiations on agriculture before the 5th Ministerial Conference in Cancún, to reaffirm that in this
round of negotiations Paraguay remains determined to achieve the long-term objective of establishing
a fair and market-oriented agricultural trading system in which all countries benefit from the
expansion afforded by the global trading system.
The imbalances and distortions that persist in trade in agricultural products must be remedied
in the short term so that the far-reaching reform envisaged for the long term becomes an achievable
reality and not simply an utopian dream.
Last Wednesday, it was indicated that a "brief operative text" would shortly be submitted and
considered at the meeting of the WTO's General Council on 24 July so that, if they so decide,
Ministers in Cancún can adopt the "modalities" for continuation of the negotiations on agriculture.
We have confidence in your capacity and impartiality to ensure that this "operative text" will
deal with the issues and help the Ministers to take the necessary decision so that due account is takenof the concerns of developing countries such as Paraguay, a landlocked developing country in which
agricultural goods account for almost 80 per cent of total exports and where the majority of the
population depends on this sector.
It is not necessary to repeat what my delegation has already said on several occasions during
these negotiations concerning the high cost incurred by Paraguay's economy as a whole and by the
majority of its population as a result of the distortion caused by subsidies and domestic support
granted by some developed countries to different sectors, and above all by the substantial
discrepancies in the terms of market access for agricultural and other products.  We must remedy this
imbalance in these negotiations and put the solution into effect as of 1 January 2005.
This is why we would like to refer to the following issues in your report to the TNC:Market Access :  We endorse and support your proposal to use a tariff reduction formula and
this is why, as a member of the Cairns Group, Paraguay has suggested and supported an ambitious
formula that covers tariff peaks and tariff escalation.  The Swiss formula with the coefficients
proposed would allow a maximum tariff of 25 per cent ad valorem  for any tariff item at the end of the
implementation period.
Mr Chairman, if we are unable to reach a consensus on this issue, my delegation would
support your proposed formula.  We do not accept the proposal by other Members to repeat the
formula used in the Uruguay Round.  We have already explained the reasons for this during the priorinformal consultations on this issue.
Regarding the expansion of tariff quotas , as you rightly point out in your report, we wish to
see a certain share of tariff quotas and their expansion reserved for small suppliers and there should be
fair distribution of quotas so that all developing countries, including Paraguay, can participate even ifthey have not traditionally had access or have only participated in this modality to a limited extent.
With regard to the Special Safeguard  in Article 5 of the Agreement on Agriculture, we
repeat our request for its elimination in respect of developed countries and support a new specialTN/AG/R/10
Page 43
safeguard mechanism for developing countries such as the proposed Compensatory Special Safeguard
for those developing countries that feel they are being submerged by the volume of subsidized
agricultural products.
In relation to issues concerning preferential schemes , Paraguay is not opposed to the
granting of "tariff preferences" to developing countries by developed countries provided that thefundamental basis for their granting is the Enabling Clause.  Paraguay is a "small economy" and a
landlocked developing country that currently faces discrimination under all the preferential schemes,
with the exception of the GSP, and such systema tic discrimination seriously injures its economy and
prevents more active participation and full integration into the multilateral trading system.  We
therefore consider that the paragraph on this point should be reviewed on the basis of the principle of
the Enabling Clause.
Regarding the proposal by four African countries , the Paraguayan delegation refers to its
statement made at the last formal session of this Group.  We are seeking a systemic and lasting
solution to the problem.
Non-trade concerns :  As we have already indicated at another informal session, our
interpretation of the Doha mandate is sufficiently clear and precise regarding which "non-trade
concerns" should be covered in these negotiations:  food security and the need to protect the
environment.
Under no circumstances can we accept that these concerns are outside the mandate and during
this process if some Members wish to incorporate or negotiate issues such as geographical indications,
labelling, food safety or the precautionary principle, they should request the Ministers in Cancún or at
another meeting to grant a new mandate for this purpose.
We consider that these are "trade concerns" that are legitimate for all Members of the WTO,
especially developing countries, and indeed this Organization has dealt with them in the relevant
forums:  geographical indications in the TRIPS Council, food safety in the Committee on Sanitary and
Phytosanitary Measures, labelling in the Committee on Technical Barriers to Trade.
With regard to issues related to export competition  and domestic support , the Uruguay
Round disciplines regulating these questions are not adequate and have not led to a determined
attempt to eliminate these various types of subsidy and domestic support which distort trade and
production.  This is why the delegation of Paraguay joins others that have repeatedly requested their
prompt elimination throughout this process in order to achieve a fair and equitable balance in this
sector.
In relation to the additional flexibility mentioned in your text for other groupings of
developing countries and as a contribution to inte gration into the multilateral trading system and
support for the diversification of the production or export base, which is a requirement for many
developing countries, we consider that develope d countries and other Members that so wish should
grant duty-free and quota-free market access on an autonomous basis for all products of interest from
developing countries that are insufficiently integrated into the multilateral system and have few exportproducts.
This delegation believes it necessary to raise this point because the objectives of integrating
countries into the multilateral system and diversifying  their production and exports is and continues
to be one of the objectives of the mandates given by Ministers at both the Conferences in Singapore in1996 and Doha in 2001 so it should be taken into account and extended to all developing countries
that are not sufficiently integrated into the multilateral system and that have very few exports and
destinations for their products.  These criteria could be verified through the technical work on theTN/AG/R/10
Page 44
integration of countries into the system and the percentages of export products and destinations within
the WTO and within other specialized organizations.
According to the WTO's statistical data, almost 80 per cent of our exports in 2000 were
agricultural products, of which 50 per cent were soya beans and their by-products.
Lastly, as regards the Peace Clause , as we have already pointed out on other occasions during
the agricultural negotiations, together with the Cairns Group, it is not the subject of negotiation and
the time has come to eliminate it.  The expiry date is 1 January 2004 pursuant to the agreement
reached in the Uruguay Round.TN/AG/R/10
Page 45
Statement by the Philippines
The positions taken, and proposals forwarded, by the Philippines are well-known, and we do
not intend to repeat them here.  Our statement will be general but more focused, as will be apparent in
the "Statement and Declaration" that we shall shortly present.
The Philippines is pleased and honoured to share its voice with 15 other Members that
constitute the Alliance for SP and SSM:  Cuba, Dominican Republic, Honduras, India, Indonesia,
Kenya, Mauritius, Nigeria, Pakistan, Panama, Peru, Turkey, Uganda, Venezuela, and Zimbabwe.  We
likewise acknowledge and thank the delegation of I ndonesia for providing coordinative leadership in
this Alliance.
As is apparent from this list, the Alliance binds countries well-spread across the continents.
They range from the very small to the very big.  Altogether they account for the bulk of the world's
resource-poor farmers.
(Please refer to attached "Statement and Declaration".)On behalf of our delegations, the hundreds of millions of farmers and the billion people from
across the globe that we represent, we thank you.TN/AG/R/10
Page 46
Statement and Declaration by the Alliance for SP and SSM1
Throughout these negotiations, developing countries have singularly and consistently
dedicated themselves to addressing the gross imbalances of the subsisting Agreement.  Our
agriculture sectors, more particularly their abilities to support our basic legitimate development goalssuch as food and livelihood security, rural development and the full and unhampered expression of
our competitiveness, have been unduly prejudiced by the unfairness of this Agreement.
Beyond the gross handicaps that have effectively prevented us from even the minimal
exploitation of our just benefits under the multilateral trading system, our domestic markets have been
deluged by the foreign competition that are heavily supported by trade distorting export competition
and domestic support measures.  Even as we have been exhorted to exercise due restraint, theAgreement has effectively legitimized these trade distorting measures to the extreme prejudice of our
trade and developmental interests in markets domestic and international.  What we got were S&D
provisions that were unequivocal only in the element that even spelled the diminution of our only
available instrument of defence and protection:  tariffs.
Rural and agricultural populations typically dominate our societies and economies.  The
impact of the gross unfairness of the existing international trading environment is the persisting undue
extreme stress on our agricultural systems and economies.  We each have our own limited areas of
competitiveness and yet trade distortions, not to men tion other barriers, have either prevented us from
the exploitation of market access benefits or altogether shut us out of the competition.  Moredisturbing is that even in our own markets our ow n producers are in increasing distress, significant
proportions are destitute.  Progressive government  development programmes have been effectively
frustrated and negated and the precious but scarce resources they entail utterly wasted away.
Unbridled trade liberalization that has singularly and mistakenly focused only on tariffs
elimination and blind to the other equally important elements and pillars, not to mention our
development needs, has no human face and is fast dismantling, rather than helping us build, our
launching pads to economic and social development – the true intent of the multilateral trading
system.  Such liberalization contradicts the Doha Mandate.
As in the current Agreement, balance, fairness and equity seem to be remote objectives in
these negotiations.  But in faithfulness to the Doha Declaration and its developmental mandate, the
Chair's draft provides developing countries with two key elements in SPs and SSM that can at least
provide us with some flexibility and shield to enable us to undertake our own further internal
adjustments while the adverse environment of trade distortions and inaccessible export markets
persist.
We hereby declare that no agreement in the modalities of the agriculture negotiations can ever
be viable without these two elements together as a package in the market access pillar.  Further, that
any such agreement, to be viable, must first and foremost specify SP and SSM modalities that no less
than fully address, in the exact words of the Chair and the Doha Declaration, " … special and
differential treatment for developing countries (shall be an integral part of all elements) … so as to beoperationally effective and to enable developing countries to effectively take account of their
development needs, including food security and rural development."
We do not believe that rural livelihood and food security concerns can be negotiated in
exchange for market access.  These are vital public concerns and are therefore non-negotiable.  Yet
                                                     
1 This Alliance Statement and Declaration is supported by Cuba, Dominican Republic, Honduras,
India, Indonesia, Kenya, Mauritius, Nigeria, Pakistan, Panama, Peru, Philippines, Turkey, Uganda, Venezuela,
and Zimbabwe.TN/AG/R/10
Page 47
the provisions which developing countries are asking for in order to address these serious issues have
not been favoured with meaningful engagement by key parties in these negotiations.  We believe that
trade-offs are unacceptable given the lack of reform in domestic support.
On SPs, we maintain that there is no viable and operationally effective, and therefore
acceptable, modality other than self-determination and self-declaration.  We maintain that what needsto be negotiated is the number of domestically produced products, important to food and livelihood
security and rural development, with due consideration of the specific situations of developing
country Members.  As this provision directly relates to our internal policy instruments that address
adjustments to persisting conditions in the intern ational trading environment, we maintain it but
proper that measures arising from this S&D flexibility and where they should be applied be the
autonomous internal decision of each developing country.
Further, we view the SP provision, far from being a regressive element as alleged, as an
important, if partial, balancing element for developing countries in the market access pillar.
The other partial, but equally important, balancing element is the SSM.  We maintain that the
SSM, which must be an improvement over the existing SSG, is an essential and necessary measurethat addresses the particular susceptibility of developing country markets to import surge
disturbances.  Developing country markets are susceptible not only to disturbances that are seminal
from the highly distorted trading environment, but other factors as well, owing to lower levels of
development and transmission efficiencies.
Developed countries, with their vast array of measures from the various coloured boxes, can
adequately deal with such episodes of market perturbations, if and when they occur.  Thus, we
maintain that the SSM be an S&D provision, exclusive recourse being available to developing
countries.
We have been told in various occasions and ways that developing countries, by maintaining
this position on the SP + SSM package, would need to 'pay the price'.  We maintain that that 'price',
which we have then deemed as ‘investments' in the global reform process, had been paid well in
advance, through our commitments under the current Agreement.  We have taken the hard and painful
policy decisions much earlier.  It is only now that some of the major developed country parties tothese negotiations are beginning to undertake th eir own glacial process of resolving policy reform
issues.  We maintain that these recent decisions can never compare in difficulty with those that we
have made as early as a decade ago.  We have weighed them and found them wanting when ranged
against what we have already undertaken.
Given the political difficulties of some of the major developed country Members, we have not
even come to 'collect' on our earlier 'investments' or 'pre-payments'.  We have come to demand for ajudicious stay in, and a viable defence agains t, any further onslaught on our unduly endangered
strategic agricultural sectors that spell the very survival of our rural economies, the peace and
development of our societies.
We exhort all Members, particularly the developed countries, to help each other deliver this
outcome through meaningful engagement and dialogue to flesh out the appropriate viable modalities
in these elements.  We are ready, as we have been through these years, to engage all Members in
arriving at a reasonable consensus on these particular developmental aspects of the Doha
Development Agenda within the few remaining weeks to Cancún.TN/AG/R/10
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We also express our thanks to the Chair for the uncommon wisdom, under most difficult
circumstances, in proposing these two important elements.  We unanimously declare our full support
for the Chair's efforts in fleshing out the necessary integration of meaningful S&D provisions in all
the relevant elements and pillars of these negotiations so as to ensure the viability of rural areas in all
countries, including countries with disadvantaged and vulnerable agricultural systems.
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