RESTRICTEDWORLD TRADE
ORGANIZATIONG/AG/R/14
30 April 1998
(98-1776)
Committee on Agriculture
SUMMARY REPORT OF THE MEET ING HELD ON 19-20 MARCH 1998
Note by the Secretariat
1. The Committee on Agriculture held its fourteenth meeting on 19-20 March 1998 under the
Chairmanship of Ambassador Nestor Osorio Londoño of Colombia.  The agenda of the meeting,
contained in WTO/AIR/793, was adopted with the modi fication of the deletion of two questions in the
attachment to the airgram that were erroneously attributed to Argentina (G/AG/N/USA/13 and
G/AG/N/ISR/4 refer).  It was also agreed to take up matters raised under Article 18.6 before
reviewing individual notifications under Part I of the agenda.
Part I:  The Review Process
Matters Relevant to the Implementation of Commitments under the Reform Programme:  Article 18.6
2. The following matters relating to the impl ementation of commitments under the reform
programme were raised pursuant to Article 18.6 of the Agreement:
(a) Canada:  The United States' Peanut Programme
3. Canada sought clarification from the United States as to:  (i) whether the United States
maintained government-mandated minimum prices for restricted quantities of peanuts for sale on the
domestic market and mandated or allowed sales of additional peanuts at lower prices for export;  (ii)
whether any additional peanuts had been sold on the domestic market in the past three years, or any
in-quota peanuts had been sold for export in those years and what the prices were at which such salestook place;  and (iii) whether additional peanuts, and/or peanut products made with additional
peanuts, received export subsidies through this programme.  More generally, Canada sought
clarification with respect to the United States' unde rstanding of two-price systems in relation to WTO
obligations.
4. The representative of the United States responded that:
(i) the Peanut Price Support Program established a loan rate for peanuts produced within
a farm's poundage quota (quota peanuts) and marketed for domestic edible use, and a loanrate for peanuts produced in excess of the farm's poundage quota (additional peanuts) and
marketed for export or crushing.  The loan rate for quota peanuts was set at US$610 per short
tonne for the 1996-2002 crop years.  The loan rate for additional peanuts was set at US$175
per short tonne for the 1998 crop year;
(ii) contract additional peanuts had been so ld in the domestic edible market.  The
United States did not monitor the disposition of quota peanuts after the peanuts had been
marketed.  Given that the domestic price for quota peanuts was significantly higher than the
world price, the opportunities for peanuts moving into export channels were limited.  TheG/AG/R/14
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United States did not have price information for quota peanut sales for export in the past three
years nor did it have price data for additional peanuts for domestic edible use;  and
(iii) contract additional peanuts and/or peanut products made from contract additional
peanuts did not receive an export subsidy.
(b) Chile:  Support to Canned Peaches in the European Communities
5. The representative of Chile thanked the European Communities for its response to a series of
earlier questions regarding subsidies on the production of canned peaches (Part II of the Annex to this
report, refers).  However, the response had given rise to a number of additional questions on which
Chile was seeking clarification from the European Communities.  Chile asked the European
Communities to continue the open and constructive dialogue in the interest of transparency and, inlight of the general interest of the matter, proposed that the Chairman organize an informal meeting
open to any interested Member.
6. The representative of the European Communities stated that numerous meetings had been
held with Chile in Brussels to discuss technical aspects and provide clarifications with regard to the
matter in question.  The representative stressed that the issue was not one of alleged failure of
compliance with WTO commitments since there was no indication that the European Communities
was not respecting relevant commitments in the areas of market access, domestic support or export
subsidies.  The European Communities also wished to  be advised of the issues Chile intended to raise
during a further meeting to be arranged, preferably in Brussels.  The representative of Chile responded
that Chile was not disputing the European Communities' compliance with WTO obligations.  Chile
wished to obtain a better understanding regarding the functioning of the support system and issues of
taxation.
7. The representative of the United States considered informal consultations in Geneva to be
most appropriate since there were subsidies on an ag ricultural product causing trade-distorting effects
involved.  The United States had experienced displacement in the canned fruit market of third
countries which it considered to be the direct result of disproportionately large subsidies and a lack of
enforcement of the EC regulations which had led to fraudulent practices by both peach growers and
processors.
8. The representative of South Africa stated that South Africa supported the actions taken by
Chile and other Members to address the problems and influence of subsidies paid to the EC canning
industry.  The South African canned fruit industry was currently experiencing serious economic
problems.  The Government was concerned about this state of affairs which was the result of subsidiespaid to the EC producers of canned fruit and vegetables.  South Africa's market share of canned
peaches in Japan had declined from 38 per cent in 1983 to 18.3 per cent in 1995, while the market
share of Greece had grown from 0.6 per cent to 27.8 per cent over the same period.   It was
understood that the Greek canned peach industry was the primary beneficiary of subsidies paid to EC
producers of canned peaches.  Furthermore, as a result of declining earnings from exports to theEuropean Communities, the largest South African exporter had withdrawn from the EC market
leading to the closure of a major canning factory, with the accompanying loss of 2,200 jobs, a loss
South Africa could ill afford in the face of unacceptably high unemployment levels.  The problems
were also prevalent in the area of vegetables, particularly canned tomatoes.  Local producers were
losing market share in the domestic market due to highly subsidized imports from the EuropeanCommunities.  The problem had escalated to the point where factories were facing possible closure
due to the problems of subsidized imports.  For a number of years, there had been rumours of fraud
relating to minimum grower prices and a general laxness of controls in the application of the
withdrawal system in Greece. Some of these rumours had been confirmed in the Report of the Court
of Auditors of the European Communities for the 1994 financial year.  Since these rumours were
persisting, South Africa sought clarification (i) as to what had been undertaken by the ECG/AG/R/14
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Commission since publication of the above report to address malpractices in the administration of the
Central Market Organization for canned fruit products, especially in Greece, and (ii) if the EC
Commission was satisfied that controls were currently sufficient to prevent a re-occurrence of the
practices referred to in the Court of Auditors' report.  South Africa requested the EC Commission to
investigate these allegations as a matter of urgency.  Should these allegations be substantiated, drastic
and immediate corrective measures needed to be taken in order to prevent any further damage toworld trade in canned peaches that might arise as a result.   South Africa urged the European
Communities to cooperate with its WTO partners to resolve this problem and wished to participate in
any informal consultations in this regard.  This matter had become especially important in view of the
general negative effects of such trade-distorting measures on third countries' trade patterns.
9. The representatives of Argentina, Australia, Brazil, Canada, Costa Rica, Japan, Mexico,
New Zealand, the Philippines (on be half of ASEAN) and Uruguay took the floor to support informal
consultations on this issue in Geneva within the framework of the Committee on Agriculture andexpressed their interest in joining such consultations.
10. The representative of the European Communities stated that the matter in question was not an
Article 18.6 issue since it did not relate to the implementation of commitments under the reform
programme and that informal consultations as such would therefore be inappropriate.  However, in
light of the considerable interest in the matter the European Communities was willing to organize aninformation meeting in Geneva in the margins of a future meeting of the Committee and would issue
invitations to interested delegations.
11. The Chairman indicated that he would be consulting informally with the parties principally
concerned with a view to facilitating arrangements for this information meeting as appropriate.
(c) New Zealand:  El Salvador - Increases in Dairy Tariffs
12. New Zealand sought clarification from El Salvador:  (i) with regard to tariff increases on a
range of dairy products, including cheese (Resolution No. 7 of 12 January 1998 from the Ministry of
Economy and Treasury);  (ii) as to whether in accordance with the above Resolution the tariff on most
cheeses imported into El Salvador had increased to 40 per cent at the end of January 1998;  and (iii) as
to when El Salvador intended to implement its tari ff quota commitment covering all cheese items at a
20 per cent tariff, given that the applied tariff was now greater than the applicable in-quota tariff.
13. The representative of El Salvador stated that El Salvador was in the process of preparing its
response to the questions raised by New Zealand.
(d) United States:  The Dominican Republic's Uruguay Round Rectification
14. The United States sought clarification from the Dominican Republic as to whether, as
indicated at the November 1997 meeting of the Committee, the rectification of the Dominican
Republic's Schedule would be submitted to the WTO in the first quarter of 1998 and as to whether the
Dominican Republic had finalized the review and implementation of its Uruguay Round rectification.
15. The representative of the Dominican Republic responded that the Dominican Republic hoped
to submit the rectification of its Schedule in the coming months as the negotiations were expected to
be completed shortly.  With regard to the issue of full implementation of commitments, a government
decree had been issued on 17 March 1998 eliminating all non-tariff barriers still in place.  Therepresentative of the Dominican Republic reaffirmed the Dominican Republic's firm will to fulfil its
commitments and to conclude negotiations on rectification as soon as possible.  The representative of
the United States stated that the United States looked forward to receiving and examining theG/AG/R/14
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rectification document, in particular with regard to non-fat dry milk.  The representative of Canada
stated that Canada looked forward to the speedy conclusion of the rectification process but noted that
a number of points remained to be clarified.
(e) European Communities:  Negotiations on Export Credits
16. The representative of the European Communitie s stated that the European Communities was
concerned about the lack of progress towards reaching an agreement on agricultural export credits.  Inaccordance with Article 10.2 of the Agreement, Members had undertaken to work towards the
development of internationally agreed disciplines to govern the provision of export credits, export
credit guarantees or insurance programmes.  This commitment was part of the Uruguay Round
package where a number of Members had made significant commitments to reduce export subsidies.
Regrettably, the negotiations on export credits within the framework of the OECD had run into
difficulties.  The European Communities urged the United States to show more flexibility to make
progress towards an agreed set of disciplines and fulfil the Uruguay Round commitment on exportcredits.
17. The representative of Argentina stated that exports credits were the only tool in trade policy
where no multilateral disciplines existed. In light of the problems currently evident in a number of
Asian countries, there was the risk, if irresponsible use of export credits was made, that a price war
would be triggered to the detriment of exporters and importers.  Argentina urged participants in theOECD negotiations to reach an understanding based on a proposal which had majority support,
including the provision that repayment terms beyond the productive life of a product were to be
considered a financial credit.  The representative of Australia expressed Australia's concern about lack
of progress in the negotiations to fulfil the Article 10.2 commitment, the objective being to stop
circumvention of the disciplines on export subsidies.  Australia urged participants to make the utmosteffort towards reaching agreement on a set of disciplines that imposed real restraints on the use of
export credits.  Australia considered that an agreement should be reached as soon as possible, but in
any event before the end of the implementation period to ensure an overall balance with the
implementation of export subsidy reduction commitments.  Australia was seriously concerned about
the prospect that failure to reach an agreement migh t result in a bidding war with countries trying to
match each other's use of export subsidies.  The representative of Uruguay noted that Uruguay was,
while not participating in the OECD negotiations, affected by the undisciplined use of export credits.
Uruguay urged the participants to make progress within the time-frame set by the Agreement on
Agriculture and considered that the issue was sufficiently important for the Committee to revert to at
future meetings.
18. Brazil, Canada, Colombia, Chile, Japan, New Zealand and the Philippines (on behalf of
ASEAN) endorsed the concerns expressed by the previous speakers.
19. The representatives of the United States responded that the United States was taking very
seriously the concerns expressed by other Members and would provide an appropriate response in due
course.  There were various factors involved that affected the flexibility of the United States in
working towards an agreement on export credits, including the absence of effective disciplines for
state-trading enterprises, the need for progressiv e reductions of export subsidies and the need to
respond to the unanticipated financial crisis in Asia.
20. Deferred replies to questions raised under Article 18.6 of the Agreement at previous meetings
are summarized in Part II of the Annex to this report.G/AG/R/14
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Review of Notifications
21. The Committee reviewed the following notifications as listed on the agenda:
(i) on the administration of tariff and other quota commitments (Table MA:1):  from
Malaysia (G/AG/N/MYS/10), the Philippines (G/AG/N/PHL/12), Switzerland
(G/AG/N/CHE/13) and the United States (G/AG/N/USA/13);
(ii) relating to imports under tariff and other quota commitments (Table MA:2):  from
Australia (G/AG/N/AUS/16), Canada (G/AG/N/CAN/16), Costa Rica
(G/AG/N/CRI/3), European Communities (G/AG/N/EEC/8), Indonesia
(G/AG/N/IDN/8 and IDN/9), Japan (G/AG/ N/JPN/24), Malaysia (G/AG/N/MYS/11),
Norway (G/AG/N/NOR/14), Poland (G/AG/N/POL/15), the United States
(G/AG/N/USA/9 and USA/9/Add.1) and Venezuela (G/AG/N/VEN/10);
(iii) in the context of the special safeguard (Tables MA:3 to MA:5): from Australia
(G/AG/N/AUS/15), Costa Rica (G/AG/N/CRI/2), the Czech Republic
(G/AG/N/CZE/14), Hungary (G/AG/N/HUN/11), Japan (G/AG/N/JPN/25), Malaysia
(G/AG/N/MYS/9), Poland (G /AG/N/POL/16, POL/17 and POL/18) and Switzerland
(G/AG/N/CHE/12);
(iv) relating to domestic support commitments (Table DS:1): from Argentina
(G/AG/N/ARG/4), Australia (G/AG/N/AUS/14), Brazil (G/AG/N/BRA/6/Rev.1 and
BRA/10), Canada (G/ AG/N/CAN/17), Chile (G /AG/N/CHL/ 3/Add.1 and
CHL/6/Rev.1/Add.1), Cuba (G/AG/N/CUB/6), Cy prus (G/AG/N/CY P/3/Rev.1), the
Gambia (G/AG/N/GMB/1), Hong Kong , China (G/AG/N/HKG/2), Hungary
(G/AG/N/HUN/10), Kenya (G/AG/N/KEN/4 and KEN/5), Malaysia
(G/AG/N/MYS/7), Nigeria (G/AG/N/NGA/2), Pakistan (G/AG/N/PAK/5), Poland(G/AG/N/POL/12/Rev .1 and POL/13/Rev.1) and So uth Africa (G/AG/N/ZAF/13);
(v) relating to new or modified domestic support measures exempt from reduction
(Table DS:2):  from Australia (G/AG/N/AUS/18) and Cyprus (G/AG/N/CYP/4);  and
(vi) relating to export subsidy commitments (Tables ES:1 to ES:3):  from Australia
(G/AG/N/AUS/17), Chile (G/AG/N/CHL/7), Costa Rica (G/AG/N/CRI/4), Cyprus
(G/AG/N/CYP/5 and CYP/6), the Gambia  (G/AG/N/GMB/2), Hong Kong, China
(G/AG/N/HKG/3), Indonesia (G /AG/N/IDN/10 and IDN/11), Israel (G/AG/N/ISR/4),
Japan (G/AG/N/JPN/26), Kenya (G/AG/N/KEN/1, KEN/2 and KEN/3), Malaysia
(G/AG/N/MYS/8), Nigeria (G/AG/N/NGA/1), Pakistan (G/AG/N/PAK/2 and
PAK/4), Poland (G/AG/N/POL/14), Slov enia (G/AG/N/SVN/7), South Africa
(G/AG/N/ZAF/11/Rev.1),  the United States (G/AG/N/USA/12)  and Venezuela
(G/AG/N/VEN/9).
22. Specific points raised with respect to the notifications listed in paragraph 21 above and the
responses thereto are summarized in Part I of the Annex to this report.
23. The following notifications were subject to preliminary review and are to be reverted to at the
next meeting in accordance with paragraph 9 of the Committee's Working Procedures:
(i) relating to the administration of tariff and other quota commitments (Table MA:1):
from Canada (G/AG/N/CAN/19);G/AG/R/14
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(ii) relating to imports under tariff and other quota commitments (Table MA:2):  from
Canada (G/AG/N/CAN/21);
(iii) in the context of the special safeguard (Tables MA:3 to MA:5): from Canada
(G/AG/N/CAN/20) and Uruguay (G/AG/N/URY/12);  and
(iv) relating to export subsidy commitments (Tables ES:1 to ES:3):  from Costa Rica
(G/AG/N/CRI/5), Iceland (G/AG/ N/ISL/10), the United States
(G/AG/N/USA/12/Add.1) and Uruguay (G/AG/N/URY/11).
24. The Committee noted that no counter-notifications had been received under Article 18.7 of
the Agreement.
Other Matters Relating to the Review Process
25. With regard to the issue of deferred replies to questions raised under the review process, the
representative of Mexico acknowledged that Mexico had yet to respond to a number of questions
raised at previous meetings.  The delay was not due to substantive problems but solely related toadministrative changes in the Ministry of Agriculture.  Mexico would provide a response by the next
meeting of the Committee at the very latest.
26. With regard to the question of overdue notifications, the Committee took note that, as
requested at the March 1997 meeting, the Secretariat had made available a Room Document dated
19 March 1998 showing compliance with the Committee's notification obligations.
27. The representative of the United States sought clarification from the European Communities
as to when it would submit the overdue notifications on export subsidies and domestic support.  While
the United States was waiting for the European Communities' export subsidy notification for the 1996
implementation year, its export subsidy notification for the 1995 implementation year had received
considerable interest in the capital.  The outstanding export subsidy notification was consideredimportant to assess the issue of export subsidy roll-over in the context of domestic pressures to use the
Export Enhancement Programme (EEP) up to the lim its set by the United States' WTO commitments.
While acknowledging that the US notification on export subsidy outlays had been overdue, other
Members' notifications were often delayed since only one export subsidy notification was submitted
for a range of products following the end of the last marketing period for the products concerned.  TheUnited States would be interested in discussing th e possibilities of obtaining more timely information.
The representative of the European Communities responded that the European Communities' export
subsidy and domestic support notifications had almost been completed and would be submitted soon.
The delay of the export subsidy notification was due to the fact that the "full picture" notification also
covered food aid and total exports with differing implementation periods of the products concerned.The European Communities, while not making full us e of its export subsidy ceilings on a number of
products, considered the use of export subsidy roll-over to be fully compatible with the Agreement on
Agriculture.  The representatives of Argentina, Japan and Switzerland raised their concerns with
regard to the matters at issue.G/AG/R/14
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Part II:  Other Matters within the Purview of the Committee
Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-
Developed and Net Food-Impor ting Developing Countries
(a) Review of the WTO List of Net Food-Importing Developing Countries
28. The Committee noted that paragraph 3 of the Committee's November 1995 decision on the
establishment of a WTO list of Net Food-Importin g Developing Countries for the purposes of the
Marrakesh Ministerial Decision (G/AG/3) provided that the list shall be reviewed by the Committee at
its regular March meetings.  The purpose of the review included, inter alia , consideration of new
applications for inclusion in the list of Net F ood-Importing Developing Countries.  As there were no
new applications before the Committee on this occasion, the Committee agreed to defer the question
of reviewing the list until the March 1999 meeting.
(b) Follow-up to Paragraph 18(i) of the Committee's Report for the Singapore Ministerial
Conference on the Decision with regard to Food Aid Matters
29. In the context of the Committee's follow-up to the Singapore Ministerial recommendations
with regard to food aid matters (G/L/125, paragraph 18(i) refers), the Committee noted that a decision
to open the Food Aid Convention 1995 for re-negotiation in 1998 had been adopted by the Food Aid
Committee in London in December 1997.   The Committee also noted the communication from the
Executive Director of the International Grains Council regarding these negotiations (G/AG/GEN/20refers).
Chairman's Report on the Process of Analysis  and Information Exchange (AIE process)
30. The Committee took note of the following report by the Chairman on the recent meetings of
the AIE process:
"(i) In line with paragraph 36 of G/AG/R/10, the following is my factual and summary
report as Chairman on meetings of the AIE process held on 20 January and 18 March 1998.
"(ii) First of all, at both meetings there was a wide-ranging and very useful discussion
regarding analysis and exchange of information on  issues of interest to developing countries
and on special and differential treatment.  This was on the basis of informal papers presented
by Pakistan, Peru and the Dominican Republic (AIE/6), by Cuba (AIE/12), as well asSecretariat background notes made available in advance of the March meeting on Special and
Differential Treatment Provisions Relating to the Agreement on Agriculture (AIE/S6) and on
Studies on the Implementation and Impact of the Agreement on Agriculture on Developing
Countries (AIE/S7).  As part of the follow-up to these discussions the Secretariat will prepare
supplementary background material, as appropriate, on trade data and tariff bindings forselected major products of interest to developing countries in line with the suggestions made
in this regard.  Developing country Members were invited to submit country papers on
specific issues, related to their experience in the implementation and impact of the
Agreement, including on import and exporting trends.  It was also indicated that analysis
related to food security and net food-importers will be of relevance.
"(iii) In this general regard I undertook to consult with Members in advance of the next
meeting regarding a possible check-list of issues to be developed, on the basis of the varioussuggestions made by Members, for focusing further work on special and differential treatment
in the contexts of market access, food security, domestic support, export subsidies,G/AG/R/14
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notification requirements and technical assistance.  It would also be my intention to consult
with Members regarding the basis on which ob server international organizations would be
invited to make a specific contribution on an ad hoc basis to a forthcoming meeting of the
AIE process.
"(iv) The special agricultural safeguard mechanism (SSG) and proposals for a Secretariat
background paper on this subject were discussed at the January AIE meeting on the basis ofan informal paper by the United States.  The further discussion on the SSG encompassed the
more recently circulated informal paper by New Zealand (AIE/20) on the operation of the
special safeguard.  Some of the points made in this regard were that:  the use of the SSG
involved no injury test and thus had the potential  to be used in an arbitrary fashion;  that the
volume-based SSG could be implemented on the basis of a zero trigger level or when tariff
quotas were under-filled;  that the price-based safeguard was being applied to minuscule
import quantities;  and that greater transparency regarding the use of the SSG was required.Reference was also made to the limited use thus far made of the SSG and of the need to
review the justification for its continuation.  Amongst other points made it was stressed that
the SSG was an integral part of the tariffication package;  that the Agreement foresees its
duration throughout the reform process;  that relatively tight market conditions in recent years
did not mean that the SSG would not be used  more extensively and would not continue to
have an important general function in the future.  Further AIE discussion on the SSG will be
undertaken on the basis, inter alia,  of an informal background paper which the Secretariat is
to prepare.  In this regard it was suggested that the background paper should, if possible, take
account of the impact of the SSG on imports from developing countries.
"(v) Informal papers presented by the United States (AIE/10), by the European
Community (AIE/14), and by Australia (AIE/15) provided a basis for a discussion on
Article 6.5 Blue Box payments, namely, payments under production-limiting programmes.
Some of the main points addressed were:  whether the Blue Box was or should be a
transitional or a more enduring feature of the Agreement;  the relative advantages and
disadvantages of Blue Box payments in the context of domestic agricultural policy reform,including the role of such payments in relation to non-trade concerns;  and the need to discuss
Blue Box payments in the broader domestic support context, having regard, inter alia , to the
scope for achieving domestic policy objectives and non-trade concerns through minimally
trade-distorting and relatively more efficient Green Box measures.  Several Members
applying Blue Box measures indicated that they intended to submit papers on their experiencein applying such measures as a contribution to the further discussion on this subject.
"(vi) On the subject of State Trading Enterprises (Single Desk Buyers and Single Desk
Sellers) there was a discussion at both the January and March AIE meetings:  the relevant
informal papers were those submitted by the United States (AIE/11), by Australia (AIE/16)
and by New Zealand (AIE/17).  A wide range of points were raised regarding the distortions
to market access and to conditions of competition on world markets which could arise from
the operations of state trading enterprises.  At the same time reflections were made about therole of such enterprises in the stabilization of domestic prices and in ensuring adequate
supplies for food security purposes.  It was also noted that more practical examples were
needed regarding the scope, activities and potential for trade distortion of state trading
enterprises as a basis for further discussions in this area.
"(vii) The discussion on export subsidies at both AIE meetings was focused on a range of
issues, including the downstream flexibility, breaches of commitments, circumvention, and
the problem of late compliance with the notification requirements.  The background paper by
the Secretariat on export subsidies (AIE/S3) and the informal paper submitted byG/AG/R/14
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New Zealand in advance of the March meeting (A IE/18) both constitute very useful inputs to
the continuing discussion in this area.
"(viii) Recently circulated papers by the United States on Domestic Support Policy Reform
(AIE/19) and by Canada on Sectoral Trade Liberalization (AIE/21) were the subject of
general  presentations and are for substantive consideration at the next AIE meeting.  Finally
the opportunity was taken to have an initial exchange of views on the Secretariat background
paper on Ad Valorem, Specific and other Tariffs (AIE/S5), on the basis that this paper would
also be for substantive discussion at the next AIE meeting, which will take place on
24 June 1998."
31. The representative of the European Communities noted that during the discussion on issues of
interest to developing countries as well as special and differential treatment, the suggestion was made
that developed countries provide reports on initiatives they had taken, on an autonomous basis,
particularly with regard to least-developed countries.  The Chairman's report also did not makereference to the fact that on the United States' paper on Domestic Support Policy Reform (AIE/19), a
range of views were expressed, including by the European Communities.  The Chairman responded
that this paper was for preliminary consideration and that he intended to reflect the points that were
made following the substantive discussion of the paper in June 1998.
Requests for Observer Status by International Intergovernmental Organizations
32. The Committee noted that there were three outstanding requests for observer status from the
Secretariats of three regional international organizations, namely the ACP Secretariat, the Inter-
American Development Bank and the Inter-American Institute for Agricultural Cooperation
(G/AG/W/29/Rev.1 refers).  As agreed at the November 1997 meeting, the Chairman had pursued
informal consultations and a consensus was yet to be reached.  The Chairman stated that he intendedto continue his informal consultations with a view to reaching a decision at the June 1998 meeting.
Other Business
33. Under "other business", the representative of the Dominican Republic sought clarification
from the United States on Section 329 of Puerto Rico's Tariff Act of 1930 regarding a tax on
processed coffee imported into Puerto Rico, in particular as to whether the measure in question was aninternal tax or a tariff, and whether it covered all coffee, including coffee imported from the rest of the
United States.  The Dominican Republic also wished to know why the measure had been in force for
so long and if there were any plans for its elimination. The representative of the United States
undertook to respond in writing before the next meeting.
34. The representative of the European Commun ities raised the European Communities' concerns
under "other business" with regard to imports of whea t gluten into the United States.  According to a
recent press release by the International Trade Commission (ITC), the ITC had recommended to the
President of the United States that a quota, i.e. quantitative restrictions, be imposed on wheat gluten
imports and that some countries might be treated in a discriminatory manner, with some to be
excluded entirely from the scope of the proposed action.  The representative of the European
Communities sought clarification from the United States with regard to the procedures being followed
by the United States in this matter and the conformity of the proposed action with Article 4.2 of theAgreement on Agriculture.  The European Commun ities intended to pursue this matter bilaterally
with the United States, while reserving its WTO rights.
35. The representative of the United States responded that the proposed measure was a safeguard
action.  On 18 January 1998, the ITC had made a preliminary determination of serious injury caused
to the domestic industry as a result of increased imports of wheat gluten.  The ITC was to release itsG/AG/R/14
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report on 18 March 1998, including any recommendations to the President.  A notification to the
WTO Committee on Safeguards was in preparation and the full report would be submitted to the
WTO for review by Members with an export interest in the product concerned.  The US intended to
hold consultations pursuant to Article 12.3 of th e Agreement on Safeguards during a 60-day period
beginning on the date of submission of the ITC report to the President.  With regard to the issue of
compliance with Article 4.2 of the Agreement, the United States considered that the footnote theretoallowed the United States to resort to quantitative restrictions as a safeguard measure.  The
representative of the European Communities noted that the exemption from the prohibition of
quantitative import restrictions in the footnote to Article 4.2 referred to measures "maintained" under
non-agriculture specific WTO provisions and not to newly introduced measures.
36. The representative of Argentina stated that, as mentioned by the United States, Argentina had
applied countervailing duty measures on imports of EC wheat gluten which were based on the
definition of subsidies in Article XVI:1 of GATT, the scope of which included direct as well asindirect subsidies.  In this particular case indirect subsidies were involved since wheat gluten was a
co-product of starch production which was heavily subsidized by the European Communities.
Subsidies, a high level of border protection and export subsidies created the conditions of injury or
threat of injury.  The representative of the European Communities stated that the European
Communities did not maintain any subsidies on wheat gluten and considered its support to be incompliance with WTO commitments.  Wheat gluten production in the European Communities might
have a competitive advantage over US production due to differences in the relative importance of
wheat versus maize production.  The issue of indirect subsidization might also be relevant in the case
of United States corn gluten feed which was a co-product of starch production where certain
programmes were in place relating to the production of ethanol.  The representative of Australia notedthat Australia had suffered from EC wheat gluten exports to the United States and was looking
forward to an equitable resolution of the problem.
37. Under "other business", the representative of New Zealand raised a matter concerning
notification procedures and the methodology used in drawing up notifications.  A number of issues
and problems had emerged from the review process, including the use of negative AMS figures,changes with regard to reference prices, inflation adjustment and lack of total production statistics for
comparison purposes.  New Zealand proposed that the Committee take up these issues and work
towards an understanding, in a formal or informal pr ocess, as appropriate, with a view to improving
the transparency, consistency and clarity of notifications.  New Zealand invited Members to reflect on
this proposal and indicated that New Zealand intended to elaborate its ideas at the next meeting of theCommittee.
38.  Two matters were raised under "other business" regarding the summary reports of the
Committee meetings. The representative of Chile request ed that in the future any initiative or decision
of the Committee aimed at resolving issues that had arisen be duly reflected in the reports of the
Committee meetings.  In the view of Chile, this would help avoid misunderstandings in the work of
delegations.  The representative of El Salvador pointed to the long delays with which the Spanish
version of the Committee's summary reports was circulated and requested that an effort be made bythe Secretariat to circulate the Spanish translation at the same time as the English version of the
report.  The Dominican Republic supported this request.
39. The Chairman raised the matter of reportin g to the General Council/Council for Trade in
Goods for the purposes of the Ministerial Conference in May 1998.  The Committee took note that the
Chairman would provide a brief and factual report on the Committee's work since December 1997.G/AG/R/14
Page 11
Re-election of Chairperson
40. The Committee noted that in line with the "G uidelines for the Appointment of Officers to
WTO bodies" (WT/L/31) the Chairperson of the Council for Trade in Goods (CTG) had conducted
consultations on the appointment of the chairpersons of the subsidiary bodies of the CTG, as a result
of which it had been agreed that Ambassador Nest or Osorio Londoño of Colombia be re-appointed as
Chairman of the Committee on Agriculture for a further year.  In accordance with Rule 12 of theCommittee's Rules of Procedure (G/L/142), Ambassador Nestor Osorio Londoño was elected by
acclamation as Chairman of the Committee to hold office until the end of the first meeting in 1999.
Date of Next Meeting
41. The next regular meeting of the Committee on Agriculture will be held on Thursday and
Friday, 25-26 June 1998, and the airgram convening the meeting and containing the draft agenda will
be issued on Friday, 12 June 1998.G/AG/R/14
Page 12
ANNEX
Page
Part1 Summary of specific points raised on notifications and responses
thereto (19-20 March 1998 meeting)13
(i) on the administration of tariff and other quota commitments
(Table MA:1): Malaysia (MYS/10), Philippines (PHL/12), Switzerland
(CHE/13) and the United States (USA/13);13
(ii) relating to imports under tariff and other quota commitments
(Table MA:2): Australia (AUS/16) , Canada (CAN/16), the European
Communities (EEC/8), Indonesia (IDN/8 and 9), Japan (JPN/24),
Malaysia (MYS/11), Norway ( NOR/14), Poland (POL/15), the
United States (USA/9 and Add.1) and Venezuela (VEN/10);19
(iii) relating to the use of the special safeguard (Tables MA:3 to MA:5):
Japan (JPN/25) and Poland (POL/18);26
(iv) relating to domestic support commitments (Table DS:1):  Argentina
(ARG/4), Australia (AUS/14) , Brazil (BRA/6/Rev.1), Canada
(CAN/17), Chile (CHL/3/Add.1 a nd CHL/6/Rev.1/Add.1), Cuba
(CUB/6), Cyprus (CYP/3/Rev.1), Hungary (HUN/10), Kenya (KEN/4
and KEN/5), Malaysia (MYS/7), Pakistan (PAK/5), Poland
(POL/12/Rev.1 and POL/13/Rev.1)  and South Africa (ZAF/13);27
(v) relating to new or modified domestic support measures exempt from
reduction (Table DS:2):  Cyprus (CYP/4);46
(vi) relating to export subsidy commitments (Tables ES:1 to ES:3):  Cyprus
(CYP/5 and CYP/6), Indonesia (IDN/ 10 and IDN/11), Israel (ISR/4),
Pakistan (PAK/2), Poland (POL/14), South Africa (ZAF/11/Rev.1), theUnited States (USA/12) and Venezuela (VEN/9).47
Part II Deferred Replies to Questions raised under Article 18.6
of the Agreement at previous meetings53
Chile - Support for canned peaches in the European Communities
(G/AG/R/13, paragraph 22 et seq.)53G/AG/R/14
Page 13
ANNEX - Part I
Review of Notifications by the Committee on Agriculture at its Meeting on 19-20 March 1998
Summary of Specific Points Raised and Responses Thereto
Table MA:1 Notifications
Malaysia   G/AG/N/MYS/10   Tariff  Quota Administration (Table MA:1)
Points raised by other Members Response by Notifying Member
New Zealand - Why did Malaysia change the
administration of the tariff quota for wheat flour?
Confirmation requested that imports of wheat flour
are no longer subject to any limitation in terms of
volume.Undertook to respond in writing.
Australia/European Communities/Argentina -
Could Malaysia confirm that the applied tariffs on
imports of wheat and meslin flour are equal to, or
lower than, the bound in-quota tariffs?Undertook to respond in writing.
Philippines  G/AG/N/PHL/12  Tariff Quota Administration (Table MA:1)
Points raised by other Members Response by Notifying Member
Canada - Does the notification include the
amendments to the "Department of Agriculture
Administrative Order No.8, Series of 1997"?Amendments to the "Department of Agriculture
Administrative Order No.8, Series of 1997" are
not reflected in this notification and will be
notified shortly (PHL/13 refers).
Canada - Clarification sought regarding the
"initial quota year" referred to under item(b)(ii).  What are the products for which 1998 is
deemed to be an initial quota year?1998 represents the initial allotment for live
animals (HS 0101, 0102, 0103, 0104 and 0105)and sugar.  The tariff quotas for live animals
were not opened earlier because of the notion
that the tariff rate structure within the 4-digit
heading does not favour in-quota importation,
and that it was more viable to import breedinganimals which are lighter, and on the
importation of which a much lower tariff rate is
imposed.  The tariff quota for sugar has been
implemented since 1995.  However, local sugar
producers contested the implementation of thistariff quota for the importation of sugar by non-
producers.  The Court of Appeals issued a
temporary order on 10 April 1997, directing the
Department of Agriculture to maintain the status
quo pending resolution of the case.
Canada  - Confirmation sought as to whether thetariff quota for pork was implemented for the
third year.Affirmative.G/AG/R/14
Page 14
Philippines  G/AG/N/PHL/12  Tariff Quota Administration (Table MA:1)
Points raised by other Members Response by Notifying Member
Canada - Why are federations, associations and
other groups eligible to apply for licences on
behalf of their members, if their members are
also eligible to apply?  Are these organizationsalso able to apply for a licence on behalf of
members who are not eligible?Federations, associations and other groups are
allowed to apply for licences only on behalf of
eligible members for reasons of administrative
convenience and based on the law of agency.
Canada - Confirmation sought as to whether the1998 allocation took into account the utilization
of import licences in 1997?The 1997 utilization rates of licensees were
taken into account for purposes of establishing
qualification to the priority distribution under
the Beginning Year Pool (BYP).  However, as
the penalties imposed under the original version
of AO 8 were intended to apply prospectively,penalties have not been imposed affecting 1998
allocations based on 1997 utilization rates.
Canada - Is the "Mid-Year Pool" (MYP)allocation in effect in 1998?In 1997, licences were surrendered for beef and
pork only.  The unused tariff quota quantities
were accordingly taken into account inestablishing the MYP in 1997.
Canada - Are regular licensees allowed to retain
prior-year volumes from the MYP?Regular licensees do not retain prior-year
volumes which they obtain from the MYP.
Volumes allocated from the MYP represent
volumes that are temporarily surrendered by
licensees.  Those who surrender have the rightto apply for these volumes in the following
year, subject to a 10% penalty on voluntary
surrenders.  Such penalties on voluntary
surrenders form part of the BYP.
Canada - Could the Philippines confirm that anew entrant benefiting from a first-come/first-
served allocation under the MYP would becomea qualified entrant for the BYP in the following
allotment year?Affirmative, provided that the new entrant
imports at least the minimum import volume for
the product concerned.
Canada - How do the Philippines allocate the
BYP and MYP when demand exceeds the
quantity available?The method of allocation is laid down in
Section I.I.1.c. of Administrative Order No.8.
Canada - If a lottery method is used to allocate
over-subscribed pools, could the Philippinesclarify whether federations, associations and
other groups would be considered as a single
applicant, or whether they would be permitted
to draw lots for each of their members?Federations, associations and other groups
applying on behalf of their members areconsidered as a single applicant for the purposes
of drawing lots and are entitled to draw only
one lot for each round.
Canada - Information requested concerning thefunctioning of lottery system.Qualified applicants or their designated
representatives must be present when the lotterytakes place.  Calls for applications are published
in at least two national newspapers on the second
and third Mondays of October for the BYP, and
on the second working day of June for the MYP.G/AG/R/14
Page 15
Philippines  G/AG/N/PHL/12  Tariff Quota Administration (Table MA:1)
Points raised by other Members Response by Notifying Member
Canada - Are penalties applied when the
licensees utilize less than 80 per cent of their net
allocation?Affirmative.
Canada - How are unutilized allocations
reallocated?Unutilized tariff quota quantities are added to
the minimum access quantity and constitutedinto a BYP.  If a licensee voluntarily surrenders
his licence, the quantities are constituted into
the MYP.
Canada - The reclassification of applicants(from holders of historical market shares to
regular licensees) appears to shift the bulk of the
allocations from producers to traders andprocessors.  Could the Philippines elaborate on
this shift and indicate the expected allocation
between traders and processors?The percentage of the tariff quota for pork
allocated to the producers decreased from
67 per cent in 1997 to 49 per cent in 1998.
For poultry meat, the tariff quota share ofproducers decreased from 90 per cent in 1997 to23 per cent in 1998.G/AG/R/14
Page 16
Switzerland  G/AG/N/CHE/13  Tariff Quota Administrati on (Table MA:1)
Points raised by other Members Response by Notifying Member
Australia - Clarification sought as to whether any
auction premia are included in the notified in-quota
tariffs?  How do auction premia relate to the boundin-quota or applied tariffs?Auctioning is an internal measure used to allocate tariff
quotas at the bound rates, primarily intended to increase
competition and to shift the quota rent from importers tothe Government.  Auctioning is a transparent method ofallocating tariff quotas and provides equal marketopportunities to all Members.
Australia - Noted that, in 1997, the average auctionpremium amounted to SwF 0.80 per litre of white
wine whereas the applied in-quota tariff was SwF
0.50 per litre and considered that Switzerlandmight have breached its in-quota bound tariffs.Could Switzerland provide a recent estimate of theauction premia and total charges imposed onimports of white wine?The average auction premium amounted to SwF 0.89
per litre of white wine in 1997.  The applied in-quota
tariffs in 1997 were as follows:
SwF per 100 kgs.
grossWhite wine imported- in containers not exceeding 2 litres of content 50- in other containers:
with an alcohol content in excess of 13%  46
with an alcohol content not exceeding 13% 34
Canada - Noted that Switzerland had increased theshares of the quota allocated through auctioningfor tariff quotas No. 5 ("Animals for slaughter;meat mainly produced on the basis of greenfodder") and No. 6 ("Animals for slaughter;  meat
mainly produced on the basis of concentrated
fodder") from 20 per cent in 1996 to 30 per cent in1997 and 40 per cent in 1998.  Could Switzerlandprovide data with regard to tariff quota fill in1997?  What is Switzerland's practical experiencewith auctioning, in particular for these two tariff
quotas?  How does Switzerland determine the type
of feed used to produce the meat referred to intariff quotas Nos. 5 and 6?  What are the accessprovisions for meat produced by feed other than"green and concentrated fodder"?Imports under both tariff quotas exceeded the
commitment levels.  Quota allocation throughauctioning took place for only a small sub-quota(certain meat products).  The experience has been verypositive inasmuch as new entrants came in and
increased competition resulted for quotas hitherto
allocated to historical importers only.  Thedesignations of "white meat" and "red meat" aremerely used to describe the contents of the two tariffquotas from the point of view of Swiss consumers.There are no access restrictions, related to the
descriptions "red" or "white" meat, nor component
used.
Canada - Does the tariff quota No. 9 "Eggs inshell" (page 9 refers) include hatching eggs?Affirmative.
Canada - What are the measures or requirements in
place to ensure that grains not intended for humanconsumption are not imported under the tariffquotas No. 27 "Bread grains, other cereals andcereal products, for human consumption" and No.28 "Coarse grains for human consumption"
(page 18 refers)?Importers are required to declare to the Federal
authorities the intended type of use (end-usecommitment).  Regular monitoring ensurescompliance.
Canada - Clarification sought regarding the
general remarks which state that "producers of
agricultural products and their marketing entitiesare not usually entitled to tariff quotas if they areprotected by commitments undertaken for theallocation of tariff quota" (Part A, item (b)(ii),page 2 refers).  In what circumstances would a
producer or marketing entity be entitled to a tariff
quota share?Producers and their marketing entities are presently
not entitled to tariff quotas for products subject to
"prise en charge".  Otherwise, producers and theirmarketing entities have the same right to apply fortariff quotas as other eligible entities.G/AG/R/14
Page 17
United States   G/AG/N/USA/13   Tari ff Quota Administration (Table MA:1)
Points raised by other Members Response by Notifying Member
Brazil - Clarification sought regarding
footnote No. 3 which indicates that an
additional tariff quota of 25,000 tonnes of
refined sugar is reserved for NAFTA access
(page 4 refers).  Does this mean that Mexicoand Canada which have access, respectively, of
2,954 and 10,300 tonnes of refined sugar can
benefit from this additional quantity?In fiscal year 1998 the global tariff quota for
refined sugar amounts to 50,000 tonnes. The
bound tariff quota of 22,000 tonnes was
increased by 3,000 tonnes and allocated as
follows:  (i) 7,090 tonnes administered on a first-come/first-served basis, (ii) 10,300 tonnes for
Canada, (iii) 2,954 tonnes for Mexico and (iv)
4,656 tonnes reserved for specialty sugars and
administered on a first-come/first-served basis.
In addition, Mexico has tariff quota access of
25,000 tonnes (raw or refined sugar) negotiated
under the  NAFTA, i.e. 27,954 tonnes of refinedsugar can be imported from Mexico.  Canada
does not have any additional access under the
NAFTA.
European Communities/Japan - Noted that the
tariff quotas for "Other cane or beet sugars or
syrups" and "Sugar containing products" areallocated to "Canada, Mexico and others"
whereas these tariff quotas were not subject to
country allocation in the previous notification
(G/AG/N/USA/11).  Does this mean that
preferential imports which were not indicatedin the Schedule are taking place in 1998?  Is
there any difference between the in-quota tariff
and the applied tariffs on imports from Mexicoand Canada?The tariff quotas for "Other cane or beet sugars
or syrups" and "Sugar containing products" were
allocated on the basis of historical trade inaccordance with Article XIII, paragraph 2(d) of
the GATT.  The in-quota tariff is the same for all
imports.
Japan - Do products under "Other cane sugar orbeet sugars or syrups" referred to in TableMA:1 coincide with "Refined sugar" referred toin "Table MA:1 Annex"?Affirmative.
Japan - Noted that imports of "specialty sugar"
under item "Other cane or beet sugars or
syrups" were subject to a "specialty sugar
certificate".  On what criteria is this certificategranted?Applicants must submit the following
information to the US Department of Agriculture
Certifying Authority:  (i) the name and address;
(ii) a statement of the anticipated quantity ofspecialty sugars to be imported, if known;  (iii)
the appropriate six digit HS subheading number;
(iv) a description of the sugar the importer
expects to import during the period of the
certificate;  (v) sufficient evidence to permit theCertifying Authority to make a reasonable
determination that such sugars are specialty
sugars within the definition of specialty sugars;
(vi) the name of the anticipated consumer of the
specialty sugars, if known at the time of theapplication;  and (vii) the anticipated date of
entry, if known at the time of application.G/AG/R/14
Page 18
United States   G/AG/N/USA/13   Tari ff Quota Administration (Table MA:1)
Points raised by other Members Response by Notifying Member
Japan - Clarification sought regarding
differences between the tariff quota notified for
"refined sugar" (20,344 tonnes, excluding
"specialty sugar") and the access commitment
for "Other cane or beet sugars or syrups"
(22,000 tonnes) as referred to in Additionalnote 2 to Chapter 17 of the United States'
Schedule.The global tariff quota for "refined sugar"
amounts to 25,000 tonnes, of which 4,656 tonnes
is sub-allocated to "specialty sugar".
Mauritius - In case Mexico exports the
25,000 tonnes as indicated in Table MA:1 as
refined sugar, would an equivalent quantity be
reallocated to other quota holders for export asraw sugar?No, because Mexico's access of 25,000 tonnes
may be shipped as either raw or refined sugar,
this volume is reflected in both the refined sugar
tariff quota of 50,000 tonnes (25,000 tonnes
most- favoured-nation access, and 25,000 tonnes
Mexican access) and the raw cane sugar tariffquota.  Consequently, any balance of raw orrefined sugar will not be reallocated.
Mauritius - In case total imports of raw canesugar under the tariff quota increase from
1.2 million tonnes, to a higher figure, will the
quantities assigned to Mexico remain the same?Yes, under the provisions of the North American
Free Trade Agreement, Mexico's maximum
annual access is 25,000 tonnes.  This level of
access is provided only if, during annualconsultations, Mexico is determined to be a net
surplus producer of sugar.  As this level of
access is currently allocated during the initial
raw cane tariff quota allocation, Mexico does not
receive additional access if there are subsequenttariff quota allocations.  If Mexico is not a net
surplus producer, access is the "minimum
boatload" amount of 7,258 tonnes.
Mauritius - According to the NAFTA
arrangements, the quantity allocated to Mexico
will increase from 25,000 tonnes to a maximumof 250,000 tonnes as from the year 2000.  How
will this increased quantity be treated in the
tariff quota of the United States?This has not been determined.G/AG/R/14
Page 19
Table MA:2 Notifications
Australia  G/AG/N/AUS/16  Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Switzerland - Noted that the tariff
quota underfill for cheese was around
20 per cent.  How is this tariff quotaallocated?  Are newcomers allowed to
import under this tariff quota?  Is there
a possibility of transfer of quota shares
from one importer to a new importer?
If yes, is there a transfer price and how
much is it?  How is the transfer price
compatible with Article II of GATTand Article 4 of the Agreement onAgriculture?
Switzerland – Responded that if a
government permitted trade in import
licences, it became part of the process.
This fact called for an examination ofthe matter with respect to WTO
obligations, including GATT Article II
and Article 4 of the Agreement on
Agriculture.  Proposed that the issue
be taken up in the context of thediscussion on tariff quota
administration.The tariff quota for cheese is administered by the
Australian Customs Service on behalf of the Government
on the basis of a 23-month rolling average of importperformance (ending on the 31 May immediately
preceding the allocation year).  Unused tariff quota shares
are not reallocated during the course of a year and are not
carried over to the following year, except where there are
exceptional circumstances preventing the landing of a
consignment in the period immediately before the new
tariff quota period begins.  No penalties apply toindividuals or companies that do not utilize their quota.
However since allocations are based on historical trade
performance, individuals or companies that do not utilize
their tariff quotas will either lose their allocation or have
it reduced.  New importers are able to purchase tariffquota from existing quota holders.
The transfer of quota between importers within a year is a
commercial transaction, i.e. undertaken independently of
government.  Consequently, the Commonwealth does not
receive any "rents" through the transfer of quota.Australia sees no connection between the transferability
of cheese quota and GATT Article II and Article 4 of the
Agreement on Agriculture.  The transferability of quota is
a commercial arrangement between private parties and
takes place according to market conditions and reflectsthe conditions of supply and demand in the market place.
It is an efficient method of maximizing quota usage
according to demand for product.  Indeed in this context it
enhances access beyond what might arise with either non-
transferability or reliance on official reallocation ofunused quota.G/AG/R/14
Page 20
Canada   G/AG/N/CAN/16   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
United States - The notification includes
wheat (HS 1904.20.11 and 1904.20.21)
and barley (HS 1904.20.13 and
1904.20.23) which are not listed inCanada's Schedule.  Why did Canada
notify these products?  Why did Canada
not notify imports of barley products (HS2309.90.41)?These changes are the result of 1996 amendments
imposed by the International Convention on the
Harmonized Commodity Description and Coding
System in accordance with Article 16 of the HSConvention.  Prepared foods obtained from unroasted
cereal flakes or from mixtures of unroasted cereal
flakes and roasted cereal flakes or swelled cereals
were removed from 1904.90 and incorporated in the
new subheading 1904.20.  This change preserves the
same level of product coverage for the wheat and
barley tariff quotas as provided in Canada'sSchedule V.  Proposed changes to Canada's tariff
schedule resulting from the HS 96 were notified to the
WTO in G/SECRET/HS 96/7 on 10 January 1996.
With regard to 2309.90.41 or 2309.90.42, Canada had
initially included these tariff items in Schedule V in
the relevant tables.  These codes were later removed,see rectifications in notification G/RS/24 circulated
15 December 1994.  These tariff items were never
implemented and no longer exist.
United States - Clarification sought
concerning the very low tariff quota fill
rates for wheat and barley.The tariff quotas for wheat, barley and barley
products were not filled due to the overall
competitiveness of Canadian grains on the Canadianmarket (Canada's response in G/AG/R/13, page 19
refers).  The tariff quotas are administered on a first-
come, first-served basis and through two GeneralImport Permits that may be invoked freely.
Imports of wheat increased in the marketing year
1996/97 because of supply conditions.  Competitive
domestic prices account for the generally low rate of
fill, as Canadian wheat and barley production iscompetitive in the world market.  Canadian producers
produce for both the domestic and international
market at world market prices.  As in the case of the
wheat tariff quota, low fill of the barley tariff quota is
attributable to the fact that Canadian wheat and barleyproduction is competitive.  The fill rate for the barley
products tariff quota is approximately the same as in
1995/96, at about 70-75 per cent, reflecting the
modest import demand for the types of products
covered by this tariff quota as well as thecompetitiveness of Canada's domestic production and
processing sector for processed barley products.G/AG/R/14
Page 21
European Communities   G/AG/N/EEC/8   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Argentina/Australia - Why was the tariff quota for
meat of bovine animals (HS 0201) under-filled?One of the reasons for the under-utilization of the tariff
quota was the BSE crisis which led to a general declinein import demand.
Australia - Noted that in-quota imports areexpressed on the basis of authorizations to importfor a number of products.  Australia considers thatin-quota imports should be notified on the basis ofactual imports.  Could the EC advise whetheractual import data are available?
Australia - Responded that if the data provided are
not actual imports, it was difficult to determinewhether obligations had been met.The tariff quotas in question are monitored on the basis
of import licences issued.   Data on actual imports arenot recorded for the purpose of quota fill.
There is no obligation to import with respect to tariff
quotas that were opened up.
Australia - Why were the tariff quotas for thefollowing products under-filled:  meat of bovine
animals (HS 0202), durum wheat (HS 1001), andoats (HS 1004)?Under-utilization of the tariff quota for oats was
attributable to a large domestic production which led to
a lack of demand for imports.  The applied tariff onimports of durum wheat is zero.
Australia - Confirmation sought as to whetherFinland's market access commitments on sugar
have been included in the notification?Access commitments resulting from the enlargement of
the EC are included in the tariff quota quantities.
Finland's commitments on sugar have been included in
the notification as indicated in footnote 3 (page 9refers).
Australia/Brazil/Canada/Japan - Why was the tariff
quota for meat of swine (HS 0203) under-filled?Under-utilization of the tariff quota for pigmeat is due
to the competitiveness of the domestic productionleading to a lack of interest for imports.  The EC'ssanitary rules may also have had a role to play.
Brazil - Why was the tariff quota for buffalo meat
(HS 0202.30.90) under-utilized?Demand for buffalo meat has never been very high.
Brazil - Data requested on the quantity of boneless
chicken cuts (HS 0207.14.10) effectively importedduring the first semester of 1996 and the marketingyear 1996/97
(July-June)?The European Communities cannot provide
information on actual imports because the quota inquestion is managed and monitored on the basis ofimport licences issued.  In order to obtain quotalicences operators have to pay a security which they
lose if (part of) the licence is not used.  The security is
set at a level at which there is a clear economic interestfor the importers to make optimal use of the quotaaccess opportunities.  With regard to the breakdown oflicences issued for the first semester of 1996 and themarketing year 1996/97, according to footnote (3) of
this notification the tariff quota was not opened on 1
January 1996 but on 1 July 1996.  The tariff quotaopened was the sum of the quota quantity which shouldhave been opened for the first six months of 1996 plusthe quota quantity for the marketing year 1 July 1996
to 30 June 1997. Consequently, no licences were
actually issued during the first six months of 1996.G/AG/R/14
Page 22
European Communities   G/AG/N/EEC/8   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Canada - Noted that tariff quota fill has not
been notified for a number of products in
1995 and 1996.  When will the EC submit anotification?As regards butter, the EC is not in a position to
provide the information due to the question of
definition of products eligible under the tariff
quota.  For the other products, tariff quotas are the
result of the GATT Article XXIV:6 negotiationsand were opened from 1 January 1996.  Therefore
no quota fill has been notified in 1995.
Japan/United States - Why was the tariff
quota for "Poultry eggs for consumption"(HS 0407.00.30) under-filled (page 7 refers)?The EC has a large internal production of eggs
and imports have traditionally been low.
Japan - Why was the tariff quota for sausagesnot filled (page 5 refers)?Due to the competitiveness of EC pigmeat,
including sausages, there is only limited interest
of operators for the different tariff quotas.
Another possible factor might be that certain
quotas are opened up for the first time and it
normally takes some time before trade interestsare established.  In addition, veterinary and
sanitary aspects may have played a role.
New Zealand - Noted a small tariff quota
underfill for the following products:
emmental cheese, gruyère cheese, cheddar
cheese for processing and other cheeses.
What are the mechanisms in place to
reallocate unused licences?  Does the ECintend to modify the administration of tariffquotas in order to improve quota fill?There is no mechanism in place to re-allocate
unused import licences.  In order to get a licence
importers have to pay a security which is not
reimbursed if importers do not import theallocated quantity or part of it.
Indonesia   G/AG/N/IDN/8 and 9   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
European Communities - Do in-quota importsnotified represent total imports of rice?  Whatwere the tariffs applied to in-quota imports of
rice in 1995 and 1996?  Could Indonesia give
a product-by-product breakdown of the riceimports?The notified import levels represent total imports
of rice.  Tariffs applied on imports under"minimum access" were 90 per cent.
Australia - What was the tariff applied to out-quota imports?Tariffs applied on out-quota imports did not
exceed the bound rate of 160 per cent.
European Communities/Australia - Why didIndonesia not notify imports of milk andcream (HS ex 0402)?Due to technical reasons in-quota imports of milk
and cream have not yet been notified.  Indonesiawill submit a notification shortly.G/AG/R/14
Page 23
Japan   G/AG/N/JPN/24   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
United States - Clarification sought regarding
the low quota fill for "Whey and modified
whey for feeding purposes" (HS 0404.10)
and "Prepared whey for infant formula"
(HS 0404.10 and HS 0410.90) (page 2refers).The low tariff quota fill for "Whey and modified
whey for feeding purposes" was largely
attributable to the decrease in the number of
livestock.  As regards "Prepared whey for infant
formula", the decline in the number of new bornbabies and the increasing interest in breast-feeding
has reduced the demand for imports.
Malaysia  G/AG/N/MYS/11  Tari ff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Argentina/Australia/Japan - Why did
Malaysia not record any imports for the
following tariff quotas: live fowl, fatty livers
of geese and ducks, hen's and other eggs,
meat of swine, fresh, chilled or frozen,
bellies, bacon and others?Undertook to provide a response.
Canada/European Communities/New
Zealand - When will Malaysia notify imports
of wheat and wheat flour? What is the tariffcurrently applied to imports of wheat andmeslin flour?Undertook to provide a response.
Canada - In cases where in-quota imports
exceed tariff quota commitments, do in-
quota imports notified represent total
imports?  What were the tariffs applied?Undertook to provide a response.
European Communities - Could Malaysia
explain its method of increasing market
access commitments during the
implementation period 1995 to 2004?Undertook to provide a response.
Brazil/Japan - Explanation sought regarding
the low quota fill for refined sugar.  Could
Malaysia explain the import licence system?
Was the import licence system a contributingfactor?Undertook to provide a response.G/AG/R/14
Page 24
Norway G/AG/N/NOR/14   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Canada - Information requested concerning
the tariff quota for tongues of bovine animals
(HS 0206.21, page 3 refers).  What is the
current tariff applied on imports?  Why did
imports decline from 1995 to 1996?On 1 July 1995, Norway reduced its tariffs to the
final bound levels indicated in its Schedule.
Accordingly, imports of tongues of bovine animals
were subject to the bound tariff rate of
Nkr 23.56 per kg.  A tariff-only regime has beenapplied to this product.  Low quota fill is due to the
lack of demand for imports.
Canada - Explanation sought regarding the
low quota fill for rye in 1995 and 1996 (HS1002, page 14 refers).Imports of rye were subject to the bound tariff rate
of Nkr 2.13 per kg.   A tariff-only regime has been
applied to this product.  Under-fill was probably
due to a larger grain harvest in 1996 than in 1995.
Poland   G/AG/N/POL/15   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Canada - Why were the tariff quotas for meat
and bovine animals, and apples under-filled
(pages 2 and 7 refer)?The tariff quota for meat and bovine animals was
not filled due to the BSE crisis and a surplus in
domestic production which led to a lack of demand
for imports.  Low quota fill for apples is attributed
to negligible differences between in-quota andMFN tariffs.
Canada - Why did Poland not record any
imports for the following tariff quotas:  milk
and cream concentrate and cut flowers?The tariff quota for milk and cream concentrate
were not filled due to market mechanisms.  In 1997
importers did not submit any import requests
within the tariff quota.  As regards cut flowers,
under-utilization of the tariff quota is due tonegligible differences between in-quota and MFNtariffs.G/AG/R/14
Page 25
United States   G/AG/N/USA/9 and Add. 1   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Imports of dried buttermilk and whey from Canada and
New Zealand up to 224,981 kgs. may be entered at the"low-tier-duty" (161,161 kgs. and 63,820 kgs.respectively, from Canada and New Zealand).  In
addition, imports not exceeding 71,019 kgs. may enter at
the "low-tier-duty" from any country (including Canadaand New Zealand).  This tariff quota is administered ona first-come/first-served basis.  Imports of driedbuttermilk and whey during the period 1995-97 were as
follows (in kilograms):Switzerland - Sought clarification concerning thetariff quota for dried buttermilk and whey (page 2
refers).  Can the United States confirm thatimports from Canada and Mexico (224,981 kgs.)are qualifying for "low-tier-duty" and importsfrom other suppliers (71,019 kgs.) can also
benefit from the "low-tier-duty" on a first-come-
first-served basis?  What were the import levelsand market shares over the period 1995-1997?Do preferential tariffs apply to imports under theCaribbean Basin Economic Recovery Act, theUnited States-Israel Free Trade Agreement and
the Andean Trade Preference Act?  What are the
MFN, NAFTA and other preferential duty rates?Were these tariffs introduced after the signing ofthe Marrakesh Agreement?Canada
NewZealandAny
country
TOTAL1995
158,125
59,85060,125
278,1001996
160,000
63,00070,146
293,1461997
0
63,00063,775
126,775
Switzerland - Raised concerns with regard to the
significant underfill which was possibly due tothe country reservations.  Switzerland also notedthat the United States afforded preferential accessto parts of its WTO tariff quotas.In-quota and out-of-quota imports were subject to a
tariff of 3.3 cents per kg. and 92.7 cents per kg. in 1998,
respectively.  The tariff applied on out-of-quota imports
will be reduced gradually to 87.6 cents per kg. by theyear 2004.  Tariff applied on in-quota imports under theUnited States-Israel Free Trade Agreement, CaribbeanBasin Economic Recovery Act and the Andean TradePreference Act are duty free.  In-quota imports from
Canada under NAFTA enter duty free.  No new
preferential tariffs have been introduced since theMarrakesh Agreement.
Venezuela   G/AG/N/VEN/10   Tariff Quota Fill (Table MA:2)
Points raised by other Members Response by Notifying Member
Canada/United States - Why did imports of
poultry meat decrease from 268 tonnes in 1995to 0 tonnes in 1996?   What is the currentlyapplied tariff?Undertook to provide a response.
Canada - Information requested regarding the
import requirements and the tariffs applied for
pigmeat.  Why did imports of pigmeat decline
from 1995 to 1996?Undertook to provide a response.
Canada - Clarification sought concerning the
decline of imports for yellow maize from 1995to 1996.  What is the currently applied tariff?Undertook to provide a response.
United States - Why was the tariff quota for
sorghum under-filled?Undertook to provide a response.G/AG/R/14
Page 26
Tables MA:3 to MA:5 Notifications
Japan  G/AG/N/JPN/25  Volume-Based Special Safeguard (Table MA:3)
Points raised by other Member s Response by Notifying Member
Canada/EC - Clarification sought as to
whether the tariff quotas for milk andcream and condensed milk were filled
when the special safeguard was applied.The tariff quota for condensed milk was filled when the SSG
was invoked.  As regards milk and cream the tariff quota wasunder-filled though the quota had been fully allocated.  The SSGwas invoked since total imports (in-quota and out-of-quota)exceeded the trigger level.  Trigger levels are based on imports
during the three preceding years according to Article 5.4 of the
Agreement.  The SSG is invoked when imports exceed thetrigger level whatever the quota fill is.  Accordingly there is nodirect linkage between quota fill and the application of the SSG.Import levels notified represent total imports (in-quota and out-
of-quota imports).
Canada - Why did Japan not take into
account domestic consumption tocalculate the trigger level for milk andcream?There are no statistics available with regard to domestic
consumption that correspond to the HS tariff code of milk andcream.
Poland   G/AG/N/POL/18   Use of the Special Safeguard (Table MA:5)
Points raised by other Member s Response by Notifying Member
New Zealand - What were the import
volumes subject to the SSG for the following
products:  cut chrysanthemums, cut roses andwhite sugar?  What was the level of duty forthese products and how much additional duty
was levied?Poland will provide import data at a later stage.  Additional
duties were calculated according to Article 5.5 of the
Agreement.  An example of the calculation of additionalduties for cut roses is given below:
The threshold price (B) equalled 0.62 PLN/piece.The import price (A).
Import price (A)If (A) ≥ 0.56 PLN/piece
If  0.37 ≤ (A) < 0.56
PLN/pieceIf  0.25 ≤ (A) < 0.37
PLN/piece
If  0.16  ≤ (A) < 0.25
PLN/pieceIf  (A) < 0.16 PLN/pieceAdditional duty imposed
0
0.1674 - 0.3 (A)0.3534 - 0.8 (A)0.6944 - 1.8 (A)1.3447 - 3.8 (A)
The same method of calculation was used for cutchrysanthemums and white sugar.
Australia - Clarification sought with regardto the application of the SSG to cut roses andchrysanthemums.  Since it appears fromPoland's Table MA:2 notification for 1997that imports under tariff quota for bothproducts were zero, how can the price-based
SSG be triggered if there are no imports
(POL/15, page 6 refers)?Undertook to provide a response.G/AG/R/14
Page 27
Table DS:1 Notifications
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1)
Points raised by other Members
Canada - While welcoming statements of Argentina's intent to "rectify its commitments" as set out in the
explanatory note to G/AG/N/ARG/4, we should appreciate it if Argentina would provide more information
on the process that it anticipates using.  What steps does it propose to take and when for a rectification of itscommitment?
The Total AMS commitment level from Section I of Part IV of Argentina's Schedule is zero.  Why and onwhat basis has Argentina indicated a commitment level of  90,595,918 pesos for 1995 in this notification?
Article 18.4 provides that "in the review process Members shall give due consideration to the influence ofexcessive rates of inflation on the ability of any Me mber to abide by its domestic support commitments".
In our view, this means that if a Member calculates its domestic support, and finds that due to excessiverates of inflation that it is in breach of its commitment, then other Members may take this into account.However, it does not enable a Member to make an infl ation adjustment in advance through the notification.
Please provide detailed calculations of the level of support for tobacco in 1995/96, compared to the base
period, without taking inflation into account.
What has been the rate of inflation in Argentina annually between the base period of 1986-88 and 1995-96?On what grounds is the rate of inflation deemed "excessive"?  We note that the excessive rate of inflation iscalculated as the difference between the inflation rates experienced in the US and Argentina over theperiod, taking into account the wholesale price index an d the exchange rate.  Does this mean that any
inflation rate higher than that experienced in the United States is "excessive"?
For the product-specific support provided to tobacco reported in Supporting Table DS:8, please provide thedata source for the administered price.  Does this price take inflation into consideration and, if so, how?What is the name of the programme under which this support is delivered?  How does the programmeoperate?
Please also provide detailed calculations and data sources on how the Base Total AMS of 91,817,085 pesos(reported in the explanatory note) was derived.  Is it the value of the amber tobacco programme inG/AG/AGST (86,529,749 pesos) adjusted for domestic inflation during the period January 1992 to
December 1995?  Please also provide detailed calculations and data sources on how the figure reported in
G/AG/AGST was derived?
In Supporting Table DS:1 the reporting period is indicated as 1996, while the Supporting Tables DS:4 andDS:8 indicate 1995/96.  Would Argentina please clarify whether the reporting period is 1996 or 1995/96?
In Supporting Table DS:1, how does providing development loans for farmers affected by adverse weatherconditions meet the criteria for payments for relief from natural disasters under Annex 2, paragraph 8(a)-(e)?
How is the assistance provided to wool producers in the Patagonia region?  Is the assistance available to
other producers in the same region?  How does it meet the criteria as a regional assistance programme
under Annex 2, paragraph 13(a)-(f)?
How does the NEA credit and technical support programme for small producers operate?  How does it meet
the criteria as a regional assistance programme under Annex 2, paragraph 13(a)-(f)?
Supporting Table DS:1 lists a Special Fund for Tobacco.  What is the structural disadvantage that is being
addressed?  How does the Special Fund for Tobacco (1 995/96) operate?  What is the base period that is
being used for this programme?  How long is it fore seen that the programme will be necessary?  Please
show how this programme meets the criteria of Annex 2, paragraph 11(a)-(f)?  Is there any linkage between
this programme and the product-specific support reported for tobacco in the AMS?G/AG/R/14
Page 28
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
European Communities - According to the notif ication Argentina has no support subject to
reduction commitment.  However Argentina requests now a base AMS for the year 1995/96
amounting to US$90,595 and during that year Argentina has granted subsidies which amount to
US$122,779.  Could Argentina provide more information relating to its commitment?
New Zealand - We recognize that a clear mistake has been made in Argentina's Schedule. What
formal WTO process is Argentina intending to use to rectify its Schedule? Argentina hasincreased its base period support from $86 million to nearly $92 million, an adjustment for
inflation.  Could Argentina please explain the basis on which it has done so?  Argentina has
exceeded its "new" commitments for 1995/96.  How is Argentina planning to bring its level of
support for tobacco within its AMS commitments for future years, and how does it intend to
compensate for this breach?  Can Argentina expl ain what the Special Fund for Tobacco is, how it
relates to AMS support for tobacco, and how this programme meets the Annex 2 criteria?
Australia - Could Argentina please provide descriptions of the following programmes listed by
name in Supporting Table DS:1;  senasa, iascav, promsap, inta, inase, cambio rural, minifundio,
finagro and prohuerto?  Could Argentina please provide a description of the NEA credit and
technical support programme including an explanation of how this programme meets criteria
provided under Annex 2, paragraph 13 as a regional assistance programme?
Response by Notifying Member
Once this notification has been considered in the Committee on Agriculture, Argentina will notifythe WTO of its request for technical rectification of Section I of Part IV of its Schedule LXIV -
Domestic Support, including the relevant supporting tables in the 1995 document
G/AG/AGST/Vol.1, in accordance with the  provisions of the Decision of 26 March 1980 onprocedures for modification and rectification of schedules of tariff concessions (BISD 27S/25).
As explained in document G/AG/ N/ARG/4, paragraph 1, when the original supporting tables
relating to domestic support were submitted in December 1993, the interpretation was that,
tobacco being the only product that received such support, the domestic support for tobacco and
the AMS coincided and, consequently, that this support should be compared with the total value
of agricultural production for the purpose of determining whether it was covered by the de
minimis  provisions.  As the support for tobacco was 0.7 per cent of the value of total agricultural
production, no specific reduction commitments were undertaken.  During the process of
verification of schedules by the participants in the Uruguay Round between January and March
1994, there were no objections to this approach from any of the present Members of the WTO.
It should also be pointed out that the period co vered by this notification G/AG/N/ARG/4 is that
extending from December 1995 to November 1996, which is consistent with the original
supporting tables, and the tobacco production and marketing cycle, and not 1995 as indicated in
Canada's questions.G/AG/R/14
Page 29
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
Only in preparing the notification for 1995/96, after taking into account the experience
accumulated in applying the Agreement on Agriculture, did it emerge that Argentina's Schedule
and original supporting tables should have been compiled by comparing the domestic support for
tobacco with the sectoral gross value of tobacco production and not with the gross value of total
agricultural production.  This comparison indicates that the support level, in the case of tobacco,
exceeded the de minimis level for developing countries (10 per cent). Consequently, the valuedeclared in the original supporting tables should have undergone reduction;  tobacco should have
been included in the AMS and, in these circumstances, the resulting level of support should have
been subject to a 13.3 per cent reduction over a period of ten years.
The level of support resulting from the application of this methodology, for the first year of
reduction, is Arg$90,595,918 (see G/AG/ N/ARG/4).  The method of c onversion used to arrive at
this figure is explained below.
As already explained and in the notification on domestic support relating to the period 1995/96
made to this Committee in November 1997 (G/AG/N/ARG/4), in Argentina's original Schedule
when it was estimated that domestic support for tobacco fell within the de minimis provisions, the
product-specific support for tobacco was compared with the gross value of Argentina's total
agricultural production.  Consequently, it was considered that there was a sufficient margin to
increase the domestic support and continue to comply with the de minimis provisions of theAgreement.  In preparing the notification for the period 1995-96, when the question was reviewed
it was noted that the calculation methodology should have been different and the necessary
measures were immediately taken to ensure that the budgetary appropriations for this domestic
support did not exceed the levels committed, in accordance with the said adjustment.
In the case of the 1996/97 agricultural year, the adoption of these measures made it possible to
adjust the budgetary outlay to the commitment value notified in document G/AG/N/ARG/4.  We
are able to inform the Committee that, in acco rdance with the values assigned in the 1996/97
agricultural year, domestic support for tobacco reached a total of US$86,442,000.
We consider that question 3 is actually a comment.  Argentina began to apply its reductioncommitment on the basis of the notification subm itted to the Committee, without this involving
an interpretation of the provisions of Article 18.4 in terms of Members' rights.
We consider it important to point out that, under these conditions, the comparative information
requested by Canada could lead to confusion since up to the time of preparation of the
notification G/AG/N/ARG/4 Argentina had assumed, as previously pointed out, that the domestic
support for tobacco was more than covered by the de minimis provisions and that the subsidyfigure actually recorded was consistent with the latter.  With respect to the second part of the
question, the level of support for 1995/96 was Arg$122,719,312.  The domestic support for
tobacco in 1995/96, in January 1992 pesos, could have been Arg$85,378,900.  In accordance with
the tables notified in November 1997 by the Argentine delegation, the applicable value in this
respect was Arg$90,595,918.
In the tables included in the document containing Argentina's original supporting tables,G/AG/AGST/Vol .1, the base AMS for 1986-88 was converted into January 1992 pesos.  This was
because Argentina had experienced very high inflation rates which reached 196 per cent on a
monthly basis in June 1989.  As may be seen from the International Monetary Fund's document
International Financial Statistics, the inflation recorded in Argentina between 1986-88 and 1994-96
was, at the wholesale level, 3434.43 per cent and, at the consumer price level, 6960.71 per cent.G/AG/R/14
Page 30
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
Between January 1992 and December 1995 the increase in Argentine wholesale prices was
15.4 per cent. Retail prices increased by 29.2 per cent.  The price conversion to January 1992
included in the reference tables in document G/AG/N/ARG/4 should be understood only as a
procedure intended to maintain consistency with the methodology or price calculation base
employed in the original supporting tables.
In addition, it should be taken into account that the Argentine peso is tied at a fixed parity of
one-to-one to the United States dollar within the framework of a legal system of full convertibility
(Law 23.928).  Between April 1991, the date of  introduction of this parity system and
December 1995-November 1996, when the period covered by this notification began, Argentina'sinflation rate was higher than that of the United States, thus distorting the figures expressed in
January 1992 pesos up to this latter date.
Considering that January 1992 pesos were used in compiling these original supporting tables, the
only way of maintaining consistency was to adopt the same base or approach, by taking the pricesin effect in the notification period 1995-1996 and converting to the original basis of calculation.
Hence the need to introduce this conversion.  Argentina did not intend to define, for the purposes
of this notification, the concept of excessive inflation.  It is only a question of making a technical
rectification of a methodological nature to Argentina's original schedule.
The source for the calculation of tobacco support is Resolutions such as those mentioned below.
It is a specific current price support per kilogram of product produced.  The name of theprogramme is the Special Fund for Tobacco.  The component considered in this question is that
relating to the price support that forms part of this programme.
As already explained, the base AMS, expressed in January 1992 pesos, was converted using the
change in the wholesale price indices of Argentina and the United States between January 1992and December 1995.
Wholesale indices were used rather than retail indices which would have produced a higherconversion coefficient, as it was considered that the wholesale price index more adequately
reflects the producer prices received by the tobacco producers.  In this connection, the provisions
of Article 1(b) of the Agreement on Agriculture were taken into account.G/AG/R/14
Page 31
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
The indices used and the conversion coefficient are as follows:
Price Indices
Year Argentina United States
wholesale1producer2
January 1992 93.36 115.6
December 1995 107.72 125.7
Sources:1National Institute of Statistics and Censuses (INDEC).
2US Bureau of Labor Statistics Data (USIS). All commodities.
Adjustment Indices
Wholesale prices
Index December 1995/Index January 1992
Argentina 1.154
United States 1.087
Adjustment coefficient 1.061
Adjusted AMS 91,817.085 pesos
Source:  Own estimate based on INDEC and Bureau of Labor Statistics (USIS);  all commodities.
The base AMS in the original supporting tables (86,529,749 pesos) was multiplied by 1.061, which
gave an AMS of 91,817,085 pesos.
For the original supporting tables, submitted during the Uruguay Round, the base was the tobacco
outlays in nominal values corresponding to the period 1986, 1987 and 1988 and, for the reasons
explained above, these were converted into January 1992 pesos.
The information on the prices for each type of tobacco comes from the Resolutions of the Ministry
of Agriculture, Fisheries and Food (SAGPyA).  Duri ng the marketing year in question the following
were approved:
- Res.SAGPyA:  No 179 (27 March 1996);
- Res.SAGPyA:  No 195 179 (10 April 1996);- Res.SAGPyA:  No 257 (7 May 1996);
- Res.SAGPyA:  No 386 (27 June 1996);
- Res.SAGPyA:  No 479 (5 August 1996).
The prices notified in Table DS:8 are nominal prices.
The Law establishing the Special Fund for Tobacco (Law 19.800) and its amendments, as
implemented by Decree 3478/75, is that which governs the country's tobacco activities.  The
implementing body is the SAGPyA.  The components of the income received by the producer are
determined through the application of this legislation.G/AG/R/14
Page 32
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
As already mentioned, for the 1996/97 marketing year domestic support for tobacco was
86.4 million current pesos.  It is the intention of the Argentine Government to take as a basis for the
application of its reduction process up to 2004 the table included in the domestic support notification
submitted in November 1997 (G/AG/N/ARG/4), which will replace the existing one as the original
Supporting Table.
For the Annex 2 measures (Green Box) included in supporting Table DS:1, the period notified was1996 because we took the budget year, which coincides with the calendar year.  This procedure is
based on the normal timetable for budget approval in Argentina.
The information in Table DS:1 corresponds to budgetary outlays determined on an annual basis bythe national budget and to tax revenue foregone.  In Argentina's case the Government budget is
executed from January to December of each year and the draft law must be submitted to Congress
before 31 October of the preceding year.
For supporting Tables DS:4 and DS:8 relating to the AMS we took the marketing cycle which runsfrom 1 December to 30 November of the following year.
Law 22.913 establishes the "Agricultural Emergency Regime".  This law was approved on
15 September 1983.  The disciplines applicable in the WTO are those contained in Annex 2,
paragraph 8.
Agricultural states of emergency or disaster areas are first declared by the province affected which
requests the National Agricultural Emergency Co mmission set up by the Law to take a similar
decision at the national level.
Eligibility under the provisions of this Law requires that the following conditions must be satisfied:
- The producers in the areas declared to be in a state of agricultural emergency must
have at least fifty per cent (50%) of their production or production capacity affected;
- the producers in the disaster areas must have had at least eighty per cent (80%) of
their production or production capacity affected.
Once a state of agricultural emergency or a disaster area has been declared, producers may benefitfrom the following measures:
(a) In both situations, SAGPyA reduces the interest rate on loans and refinancing
granted by the Banco de la Nación Argentina, by 25 per cent or 50 per cent
depending on whether it is a question of an agricultural emergency or a disaster;
(b) from the tax standpoint, the due dates for filing returns and paying the income tax on
the affected livestock are extended for farms affected when they fall within the
period of existence of the state of agricultural emergency or the disaster area.  Thedue date for the payment of the tax may be extended for up to ninety (90) days.G/AG/R/14
Page 33
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
The objective is to allow the development of the small- and medium-sized business undertakings of the
region's producers in order to encourage the harmonious and sustainable development of Patagonia region.
Within the framework of the three-year programme for promotion and development of the small andmedium-sized enterprise, the programme intended for wool producers in the Patagonian region is governed byDecrees 2586/92 and 991/93 and by implementing resolutions.  In 1996, the total support allocated was only
Arg$63,337 or, for illustration purposes, the same amount in US dollars.
There is also a programme for subsidizing the interest rates on targeted and supervised loans for agricultural
and agro-industrial production in the Patagonian region (Order 195/94) for only Arg$286,899 (or the sameamount in dollars), from which 374 producers have benefited.
The above-mentioned loans had various objectives, one of the most important being the diversification and/orconversion of production.  By this means it has been possible to introduce activities other than sheep-farmingin order to reduce the problems by dependence on a single product.  Thus, some producers who were initiallywool producers have moved over to other activities such as, for example, beef production.
The main objective of the credit and technical support programme is to raise the income of smallholdersthrough assistance programmes intended to ensure their competitive, fair and sustainable integration into the
product, import and credit markets.  Decree 1283/89 provides the framework for these activities.
The more important of the measures under this programme are intended to promote producer self-managementorganizations under different forms of association;  to  train producers and technicians in various technological,
organizational and economic aspects through courses, traineeships and fieldwork;  to identify non-traditionalproductive activities;  to coordinate and transfer technology;  and to regularize land tenure.
The financing for this programme comes from the International Fund for Agricultural Development (IFAD),the Inter-American Development Bank (IDB), and the contribution made by the provincial governments andthe Ministry of Agriculture, Fisheries and Food (SAGPyA).
The criteria for providing this support, as regional assistance, are set out in the above-mentioned Decree andare consistent with paragraph 13 of Annex 2 to the Agreement on Agriculture.  Basically, the national
legislation provides for this programme to be directed towards strengthening the productive base of smallfarms in the north-east region through the granting of loans and support for the training, organization and
promotion of groups of small producers, adaptation and technology transfer.
The priority objectives of the Green Box components  included in the Special Fund for Tobacco are to
modernize, restructure and diversify the tobacco-produci ng sector.  In particular, to help tobacco production
respond more efficiently to the signals from the domestic and international markets, taking into account theprevailing oligopsony, and to support the improvement of the infrastructure in the areas devoted to tobacco
production.  Another structural probl em of tobacco supply is the predominance of smallholders with very low
incomes (80 per cent at national level).
The implementation of the support connected with structural adjustment or productive restructuring is based
on financing for:
(a) Support for the restructuring, diversification and financial rehabilitation of the tobacco producers bymeans of a grant distributed in accordance with aver age production for the previous three years (period
1992/93 to 1994/95), in compliance with paragraph 6 of Annex 2;G/AG/R/14
Page 34
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
(b) support for small producers and development of pilot areas by financing productive continuity
activities intended to create alternative income fo r small producers, such as strawberry or garlic
growing and greenhouse crops, as well as the production of poultry and pigs, beekeeping andimprovements in beef cattle production (paragraph 11 of the Annex);
(c) coverage for weather risks and other risk factors, thereby helping the producer to insure against
damage due to hail and wind in tobacco growing (covered in the provisions of paragraph 7 of
Annex 2);
(d) research, technical assistance, training and administration;
(e) support for alternative agro-industrial undertakings;(f) credits for restructuring, diversification and marketing.
Most of these programmes will have to be maintained as long as the international market continues to be
distorted by protection and subsidies.
It should be recalled that tobacco growing is a regional  development tool with a powerful multiplier effect in
the areas concerned and has been used to replace as a source of employment and income crops such as sugar
which, in the eighties, was the principal source of production and exports in these regions but which, becauseof the climate of protection and subsidization that prevails on the world market for this product, had to bepartially abandoned.  At that time, Argentina was the world's tenth-ranking sugar exporter.
Finally, we should point out that there is no connection between domestic tobacco price support and the
programmes mentioned above.
Description of the organizations and programmes providing agricultural services:
SENASA (National Animal Health Service1):  This is a technical and scientific organization responsible for
supervising the health and quality of animals and animal by-products.  Its functions include fighting diseases
such as foot and mouth disease, brucellosis, and trichinosis.  It also administers quarantine centres and isresponsible for the development of inspection programmes which guarantee the health of products of animalorigin.
IASCAV (Argentine Plant Health and Quality Institute):  performs functions similar to those of SENASA but
for plants.  The budgetary outlays notified under "General Services" mainly correspond to expenditure underthe programmes for eradicating the cotton boll weevil and fruit fly, the construction of a quarantine centre and
the provision of equipment for phytosanitary barriers.
PROMSA (Programme for the Improvement of Agricult ural Services): It is a coordination unit whose
objectives are, among others, supervision and technical, economic, legal and administrative control of the
programme components, in support of the organizational areas of the Ministry of Agriculture and thedecentralized bodies;  it is also responsible for the fo llow-up and supervision of the task of institutional
strengthening of the various departments and organizations required to achieve the specified results;  andinstitutional strengthening (Ministry of Agriculture) through assistance in formulating and evaluatingagricultural projects.  The economic activities involved are:  animal health, plant health, geneticimprovements, seed quality, etc.
                                                     
1In 1997 this institution and IASCAV were merged into a new joint institution called the National
Agri-Food Health and Quality Service (SENASA).G/AG/R/14
Page 35
Argentina   G/AG/N/ARG/4   Domestic Support (Table DS:1) (continued)
Response by Notifying Member
INASA (National Seed Institute):  This is the technical organization responsible for monitoring, and
ensuring, for the producer, the identity and quality of the seed he purchases in order to improve the
efficiency of seed production and marketing.  It also has certain responsibilities in connection with
the protection of intellectual property in the agricultural field.
INTA (National Institute of Agricultural Technology):  This is the technical and scientific assistance
and field organization responsible for researching, developing, adapting and advising on the basic
technology connected with the agricultural sector.  It also carries out three special programmes:
CAMBIO RURAL, MINIFUNDIO and PROHUERTA.
CAMBIO RURAL (Federal Productive Reconversion Programme for the Small and Medium-Sized
Agricultural Enterprise):  The main purpose of this programme is to offer training and technicalassistance to small and medium-sized producers so as to contribute to the modernization of the
agricultural enterprise.  About 19,000 producers in 1,600 groups are participating directly in the
programme.  Each producer is helped to draw up his reconversion proposal and receives help incarrying it out and, when necessary, his relations with the source of financing are facilitated.
MINIFUNDIO:  The purpose of this special INTA programme is to provide group training and
technical assistance for about 20,000 mini-producers.
PROHUERTA:  The purpose of this special INTA project is to provide training and technical
assistance in connection with the development of family, community and school vegetable gardens
in urban and rural environments.  The programme involves more than 2,200,000 people through
8,800 schools and 340,000 family vegetable garden projects.  The work is carried out in cooperationwith local government organizations (social, educational, etc.) and non-governmental organizations
(public welfare institutions, educational bodies, environmental and human development
organizations, etc.) to increase the multiplier effect of the proposal.
FINAGRO:  This is a Ministry of Agriculture programme (DEC. 2586/92) designed to facilitate the
reconversion and restructuring of SMEs, includin g agricultural SMEs.  Among other things, the
programme provided for a 4 per cent interest rate subsidy to reduce the high real rates which this
group of enterprises was being charged during the reference period.  It should be pointed out that at
that time Argentina was emerging from a hyper-inflationary process with knock-on effects on the
local banking and trading systems.  The terms for the repayment of the loans varied between 36 and
48 months.  The subsidized credit programme was in effect between 1993 and 1995, but at present
new loans are not being granted.  At the moment it is performing credit supply advice and follow-up
functions for the agricultural sector.
Further Comments by other Members
European Communities/Japan - Stated that they would consider the appropriateness of using the
technical rectification procedures in this case.
Hungary – Reserved its position and WTO rights on this issue.Canada - In the view of Canada, a technical rectification appeared to be appropriate in this case due
to a clear mistake in the AGST tables.  Canada was not unduly concerned by Argentina's breach of
its "new" total AMS commitment for 1995/96 since th e support was provided in good faith without
knowledge of the mistake.  However, if Argentina's approach with regard to inflation were accepted,
Argentina would be, by virtue of rectifying a mist ake, the only Member to recoup inflation between
the base period (in this case 1992) and the initial commitment period (1995/96).
New Zealand - Endorsed Canada's statement.  Considered that the basis for rectification should be
1992 numbers.  Expressed the view that the Committee would deal fairly and appropriately with an
Argentine notification which showed recent support levels compared with rectified 1992 base levels.G/AG/R/14
Page 36
Australia   G/AG/N/AUS/14   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
United States - Noted that producers
of dairy products receive payments
which are financed through a levy
imposed on all milk production andthe exemption from that levy is
contingent upon the export of the
dairy product which might be
considered as an export subsidy.
Does Australia intend to notify
exports of dairy products under this
programme as subsidized exports?The support arrangement for manufacturing milk
introduced on 1 July 1995 constitutes a domestic support
measure and therefore is included in the calculation of the
AMS.  Manufactured dairy products are taxed on the basisof the fat and protein content of the milk used.  The
proceeds of this tax are paid to farmers as a subsidy.  The
effect of the tax is to increase the gross domestic prices and
to create a financial transfer from consumers to farmers.
The indirect tax is rebated on exports.  This support does
not fall within Article 9 of the Agreement and Australia
does not intend to notify exports under this scheme assubsidized exports.  The arrangement will be terminated on30 June 2000.
United States - The "Sugar IndustryInfrastructure Programme" (SIIP)
referred to in Supporting Table DS:1
(page 6 refers) appears to be aproduct-specific investment aid
benefiting the sugar industry and
hence would not qualify as a Green
Box measure.  Why was this
programme not included in thecalculation of the total AMS?  What
is the monetary value of this
programme as a percentage of the
total value of sugar production?
How is the programme financed?Sought clarification regarding the
"Cane tramway system":  are
producers or millers assessed acharge for utilization?Projects funded under the SIIP are of the same type as other
infrastructural services, including roads, other means of
transport (i.e. cane tramways), dams and drainage schemes.
"Off-farm" projects only are covered by the SIIP.  Thesupport provided under the SIIP meets the criteria in
paragraph 1 of Annex 2 to the Agreement:  the SIIP (i) has
no, or at most minimal, trade-distorting effects or effects on
production; (ii) does not provide price support to producers;
(iii) grants support through a publicly-funded governmentprogramme;  (iv) does not cover "on-farm" measures and
(v) does not benefit individual producers.  Australia does
not consider that the commodity-specific nature of the SIIP
results in this programme being ineligible for the Green
Box.  Support granted under the SIIP programme amountedto $A 3.93 million in 1996/97, i.e. 0.34 per cent of the total
gross value of sugar production ($A 1,147 million).
Industry funds are provided by both producers and millers.
Projects funded under the SIIP are chosen by a panel
composed of producers and millers.
With respect to the "Cane tramway system", charges are
imposed on the utilization of cane tramways.  Pricing
arrangements between producers and millers include acomponent based on the tonnage of the individual growers.
Millers are responsible for the maintenance of the cane
tramway system.
United States - Is the "Rural and
Adjustment Scheme (Regional)"
referred to in Supporting Table DS:1under item (k) (page 16 refers)
product-specific support?  What
percentage of the support went tosugar producers in Queensland?Support provided under the "Rural and Adjustment Scheme
(Regional)" is available to all agricultural producers in
Australia.  No data is available regarding the percentage ofsupport granted to the sugar industry under the programme.
The programme has been replaced with a package of
assistance entitled "Agriculture-advancing Australia"notified under Table DS:2 (AUS/18 refers).G/AG/R/14
Page 37
Australia   G/AG/N/AUS/14   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Mauritius - Information requested
regarding the "Sugar Research and
Development" programme  referred
to in Supporting Table DS:1 (page 4
refers).  What is the nature and
scope of this programme?The Sugar Research and Development Corporation (SRDC)
is aimed at fostering an internationally competitive and
sustainable Australian sugar industry.  The SRDC funds
research and development projects aimed at benefiting the
sugar industry.  Through plant improvement, improved crop
management and crop protection systems, improvedharvesting and transport, enhanced efficiency of sugar
manufacture, enhanced marketing, improved
environmental/natural resource management and improvedindustry competitiveness.
Brazil   G/AG/N/BRA/6/Rev.1   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
United States - Brazil notified product-
specific support for a number of
commodities. Clarification sought on whyBrazil's total AMS is zero?Product-specific AMS did not exceed the de
minimis level of 10 per cent for developing
countries (G/AG/R/13, page 46 refers).
European Communities - Clarification soughtwith respect to the monetary value of the"public stockholding for food security" and
the statement that "expenditures are
necessary to cover the difference between the
market price value of the stocks and their
purchase price and holding costs" (page 5refers).Undertook to respond in writing.G/AG/R/14
Page 38
Canada   G/AG/N/CAN/17   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Australia - Information requested regarding
"marketing and promotional services"referred to in Supporting Table DS:1 (page 3refers).  What is the nature of the supportprovided?  What are the requirements forparticipating in the promotional activities?Who is funding this programme?The expenditure reported under marketing and promotional
services consists principally of the operating and capital budgetof the Market and Industry Services Branch of Agriculture andAgri-Food Canada (AAFC), which includes the domestic andinternational market development aspects of the department'smandate.  Other expenditures include general marketing andpromotional programmes funded by AAFC, including Agri-Food Trade 2000 (AFT-2000).  AFT-2000 is a cost-sharedcontribution programme designed to support Canadian agri-food industry activities in areas of market readiness, marketaccess and market development.  Contributions are based on aproportion of eligible costs.  The programme is available toagriculture and food producers, processors, and exportersworking collectively through non-profit associations oralliances.
Programmes at the provincial level provide general assistance
for promotional activities at fairs and exhibitions, as well as forgeneral marketing and promotional activities to promoteagricultural products.  None of the assistance provided could beused to reduce the selling pri ce or confer a direct economic
benefit to purchasers.
Australia - What is the difference
between the "Net Income Stabilization
Account (NISA)" and the "Net Income
Stabilization Account Enhancement"
referred to in Supporting Table DS:9
(page 19 refers).The Net Income Stabilization Account (NISA) is a
voluntary whole farm income stabilization programme.
Producers can deposit up to 3 per cent of the eligible net
sales and receive a matching contribution by the Federal
and Provincial Governments (3 per cent total matched
contribution).  Withdrawals are triggered when the farm'sgross margin (net sales from all agricultural commodities
less eligible expenses) falls below the average gross
margin for the past five years or when income from all
sources falls below a minimum income threshold.  The
minimum net income threshold is Can$10,000 for anindividual or Can$20,000 for a family.  The NISA covers
all primary agricultural commodities with the exception
of dairy, poultry and eggs.  It is available in all ten
provinces to any farmer who files an individual income
tax return reporting farming business income loss.Corporations, cooperatives or communal organizations
which file an income tax return reporting farming
business income loss and meet specified eligibility
criteria are also eligible.  In addition to a participant's
matchable deposit allowed under the NISA agreement,
participants in some provinces may make an enhanced
matchable deposit into their NISA accounts.  Theenhanced matching contributions are available to
participants in several provinces ranging between 1 and
3 per cent of eligible net sales.G/AG/R/14
Page 39
Canada   G/AG/N/CAN/17   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
United States - Supporting Table DS:6
indicates that potato producers receive
Can$7.2 million in Provincial Direct
Payments.  Could Canada provide
detailed information regarding the natureand scope of the direct payment
programme, and the eligibility criteria to
participate in the programme?
Do the provincial governments provide
any indirect subsidy, such as reduced
energy costs to potato producers?
Supporting Table DS:9 indicates a series
of non-product specific programmes.  Do
potato producers in Canada receive anyform of support from the Net Income
Stabilization Account (NISA)
programmes?  If so, what is the nature of
the support granted to potato producers
under this programme and otherprogrammes listed in Supporting
Table DS:9?The provincial price-related direct payments regarding
potatoes (Can$7.2 million) which are notified in
Supporting Table DS:6, Col. 7 of G/AG/N/CAN/17,
represent payments to potato producers in the province of
Québec under the Farm Income Stabilization InsuranceAct.  Payments are made by the Régie des Assurances
Agricoles du Québec (Québec Bureau of Agricultural
Insurance) as a price-related direct payment.  Payments
are based on the difference between a farmer's net annual
income from the sale of each unit of a product lessexpenditures and depreciation and the farmer's stabilized
net annual income guaranteed under the FISI Act.  The
other provincial non-exempt direct payments regarding
potatoes (Can$0.1 million) represent payments to
producers in the province of Nova Scotia under the LandImprovement Policy to assist in land clearing and
improvements.
Other than the expenditures in Nova Scotia noted above,
there are no other indirect subsidies which are provided to
potato producers.
Supporting Table DS:9 enumerates support which is, by
definition, not product specific.
The Net Farm Income Stabilization Account (NISA) is a
voluntary whole farm income stabilization programme.
Since it operates as a whole farm income programme, it is
not possible to identify support to individual
commodities.  NISA covers all primary agriculturalcommodities with the exception of dairy, poultry and
eggs;  therefore, producers of potatoes and all other crops
are eligible.G/AG/R/14
Page 40
Chile   G/AG/N/CHL/3/Add.1 and CHL/6/Rev.1/Add.1   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Australia/Canada - Noted that the Supporting
Tables DS:4, DS:6 and DS:7 are expressed in
pesos whereas the previous Supporting Tables
were expressed in US$.  Could Chile confirm
the currency to be used in reporting itsdomestic support commitments?Internal support measures are expressed in pesos
and therefore the currency to be used in Chile's
domestic support notification is pesos.
Canada/New Zealand - Clarification sought asto whether the support granted to rice is a"non-exempt direct payment" referred to in
Supporting Table DS:6 or an "other-product-
specific support" referred to in Supporting
Table DS:7?  How did Chile calculate the
support provided?Supporting Table DS:6 was included in the
notification by mistake.  This programme isaimed at replacing short-grain by long-grain rice
varieties for which there is more internal demand.
It provides technical assistance and loans to riceproducers in specific regions.
New Zealand - Could Chile confirm that forthe de minimis  calculation it has compared the
support to rice with the total value of rice's
production (page 2 refers).Affirmative.
Cuba   G/AG/N/CUB/6   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Canada - Noted that the notification covers
the calendar year 1996.  When will Cuba
submit a notification for the calendar year1995?Undertook to provide a response.
Canada - Clarification sought regarding the
"domestic food aid" programme which wasnot included in the AGST Table.  Is this a
new programme?  Could Cuba provide
information to confirm the programme's
consistency with the criteria in paragraph 4
of Annex 2 of the Agreement onAgriculture?  Could Cuba indicate thecurrency used in the notification?Undertook to provide a response.
Cyprus   G/AG/N/CYP/3/Rev.1   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Australia - Clarification sought regarding the
"Citrus area subsidy" referred to inSupporting Table DS:1 (page 6 refers).  How
does this programme comply with the criteria
of Annex 2 to the Agreement on Agriculture?Undertook to respond in writing.G/AG/R/14
Page 41
Cyprus   G/AG/N/CYP/3/Rev.1   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
New Zealand - Clarification sought regarding
the footnote to Supporting Table DS:4 (page
10 refers).  What is the difference between
the "institutional prices" and the "fixed
prices"?  Which price corresponds to theeffective administered price?Undertook to respond in writing.
Hungary   G/AG/N/HUN/10   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Australia/Canada - Clarification sought
regarding the product aggregations, which
differ from the ones used in Hungary's AGST
Tables.Since the base period Hungary has changed its
agricultural subsidization mechanism from
product-specific support towards general
agricultural support.  Accordingly these changeshave eliminated the rationale for monitoring
agricultural support at the level of product
disagregation reported in the AGST document.
Australia/Canada/New Zealand - Noted that
Hungary had granted market price support
and direct payments for a number of productsduring the base period.  Could Hungary
confirm that the market price support has
been removed for all of these products?The market price support in the form of
compulsory purchase prices has been removed for
all products.  In 1995, product-specific supportwas limited to milk, grains, cattle, pigs and sheep.
However, these support programmes did not
become operational in 1995 since domestic market
prices remained above the guaranteed prices
throughout the year.
Canada/New Zealand -  Clarification soughtwith respect to the "interest subsidy for
structural reorganization" notified in
Supporting Table DS:1 and which was not
included in the  Table (page 3 refers).  Is this
a new measure?  For how long will thesubsidy be granted?  How does the measure
comply with the criteria of Annex 2 to the
Agreement on Agriculture?This programme was introduced in 1992 and will
be phased out over 7 years.  It is intended to
facilitate the organization and structural
adjustment of the agricultural sector in the context
of reprivatization of agricultural land in
accordance with paragraph 11 of Annex 2 to theAgreement.  The structural disadvantages being
addressed is the separation of land and asset
ownership caused by the dissolution of
cooperatives.  The support provided is in the form
of interest rate subsidies on investment loans forthe purchase of assets (buildings, equipment,
machinery, lorries and trucks) and additional
investments necessary to operate these assets.  The
payments are not linked to any specific type of
production.G/AG/R/14
Page 42
Hungary   G/AG/N/HUN/10   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Canada/New Zealand - Clarification sought
regarding "support for amelioration" notified
in Supporting Table DS:1 (page 3 refers).  Is
the support provided in the form of direct
payments to producers?  How does the
measure comply with the criteria of Annex 2to the Agreement on Agriculture?This programme is aimed at co-financing soil
conservation measures and their feasibility studies
in order to protect farmland, encourage farmers to
use sound soil and water conservation practices
and reduce erosion.  Activities, such as terracing,
establishing belt ditches and embankments,protecting lines of trees, grass sowing and
drainage are eligible for support.  Since this
programme does not meet all the criteria of the
"regional assistance programme" category, yet it
fulfils the criteria in paragraph 6(b)-(e) (decoupled
income support) of Annex 2, Hungary intends to
reclassify this measure as a direct payment exemptfrom reduction commitments in accordance with
paragraph 5 of Annex 2 to the Agreement and will
submit a corrigendum shortly.
New Zealand - How do payments under
"support for amelioration" relate to the
support entitled "Income subsidies for theusers of the land in disadvantages areas"
referred to in Supporting Table DS:9 (page 6
refers)?The measures are separate programmes.  Under the
programme "income subsidies for the users of the
land in disadvantages areas" additional paymentswere granted to farmers based on land values as
well as regional per-capita income and
unemployment rates relative to national averages.
Since land values are involved, the regions
benefiting from such payments could not in allcases be clearly designated contiguous
geographical areas and the payments were not
made at a degressive rate.  This form of assistance
has therefore been listed as non-product-specific
support.
New Zealand - Could Hungary provide moredetailed descriptions of the measures referredto in Supporting Table DS:1 (page 3 refers)?"Advisory services" and "agricultural research
programmes" meet the criteria in paragraph 2 of
Annex 2 to the Agreement.  The Government
grants financial support to (i) research institutes
which perform general and sector-specific research
in the field of agriculture and (ii) providers ofadvisory services, e.g. in the form of partial
financing of training, computerization and
publishing of brochures assisting farming.  As
regards the payments for relief from natural
disasters, support was granted to farmers affectedby severe drought in the southern part of Hungary,
in compliance with paragraph 8 of Annex 2 to the
Agreement.G/AG/R/14
Page 43
Kenya G/AG/N/KEN/4 and 5   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
New Zealand - Clarification
sought as to whether the support
notified under "agricultural
research" for the financial year
1996/97 is a new support measure.The  "agricultural research" programme is not a new support
measure.  In the 1995/96 financial year both "research and
extension services" were consolidated as one type of
domestic support measure.  However, in 1996/97 financial
year, in the budget allocation, "research and extensionservices" were treated as two different types of domestic
support measures and were notified separately.
Malaysia   G/AG/N/MYS/7   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Canada - Could Malaysia indicate how each of the
programmes notified in Supporting Table DS:1 meets thecriteria of Annex 2 to the Agreement on Agriculture?Undertook to respond in writing.
Canada - How does the "Price Subsidy and Guaranteed
Minimum Price" in Supporting Table DS:1 comply with thecriteria in paragraph 1(b) of the Annex to the Agreement on
Agriculture?Undertook to respond in writing.
New Zealand - Why did the level of support through
"drainage and irrigation facilities" and "Price Subsidy andGuaranteed Minimum Price" increase from 1995 to 1996?Undertook to respond in writing.
Pakistan   G/AG/N/PAK/5   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Australia/New Zealand - Why did Pakistan
notify the support in US$ instead of national
currency which was used in the AGST
Tables?Pakistan has experienced a high rate of inflation
since early 1990s and at the same time the
Pakistan rupee has undergone substantial
depreciation.  Therefore, an AMS calculation in
Pakistan rupee would have presented a distorted
picture of the domestic support.  To exclude thepossible effect of these factors, Pakistan chose to
calculate the AMS in US dollars - a currency
which remained stable in value terms during theperiod under reference.
Australia/New Zealand - Why did Pakistansubtract the negative AMS reported for wheatfrom the total AMS (Supporting Table DS:4,page 4 refers)?
Argentina/Australia/Canada/New Zealand -
Registered their concerns with respect to
Pakistan's use of negative figures in the
calculation of the AMS.Pakistan believes that the negative value of AMS
is an implicit tax on producers and hence wouldneed to be subtracted from the current total AMS.G/AG/R/14
Page 44
Pakistan   G/AG/N/PAK/5   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Australia/New Zealand - Could Pakistan
provide total values of production to support
the de minimis claim made in Supporting
Table DS:4 (page 4 refers)?See Attachment 1.
New Zealand - Confirmation sought as to
whether the support through the "tubewell
subsidy", "fertilizer subsidy", and the
"agricultural credit subsidy" notified in1995/96 (PAK/3) has been removed.Affirmative.  The agricultural credit carries no
credit subsidy element as the lending interest rate
represents the market rate.
Thailand - Why was the support provided forwheat negative (- US$72.41) (Supporting
Table DS:5, page 5 refers)?The support price during the reporting period
July 1996-June 1997 was below the external
reference price of the base period, hence thenegative market price support.
Poland   G/AG/N/POL/12/Rev.1   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
United States - Why did Poland not notifyany market price support for sugar inSupporting Table DS:5?  What is the nature
and scope of the support provided to sugar
processors?  What are the requirements toparticipate in this programme?Poland did not grant any specific support to sugar
producers.  Preferential credits for purchasing andstorage of finished products, such as sugar, were
granted to processors of raw materials.  This
programme was notified in Supporting Table DS:9
under the item "Subsidized interest rates on credits
for agriculture" (page 6 refers).
Poland   G/AG/N/POL/13/Rev.1   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Brazil - Information requested regarding
"Subsidies on fertilizers" and "Subsidies on
improved seed" referred to in SupportingTable DS:9 (page 6 refers).  How do these
programmes work and which products are
eligible?"Subsidies on fertilizers" are only provided to
enterprises which manufactured or acquired calcium
fertilizers.  The subsidies totalled PLN 13,500 andPLN 17,310, respectively, in 1995 and 1996.
Certified seeds eligible for subsidies included
cereals, seed potatoes, grass, lupine and white clover
seed intended for production and seed reproduction.
These subsidies amounted to 15-20 per cent of theselling price for seeds and are granted to operators
authorized in seed trade.G/AG/R/14
Page 45
South Africa   G/AG/N/ZAF/13   Domestic Support (Table DS:1)
Points raised by other Members Response by Notifying Member
Canada -  Could South Africa
elaborate on the change in the
method of calculating the price
support for sugar (G/AG/N/R/13,
page 42 refers).  Could South Africaexplain how the change in external
reference prices is consistent with
paragraphs 8 and 9 of Annex 3 to the
Agreement on Agriculture?  Could
South Africa provide the sources ofthe exchange rates used?South Africa, conscious of the effect of substantial inflation
and the reduction in the value of the Rand, has applied the
fixed US dollar prices of the base period in measuring its
market price support in the implementation years 1995 and
1996.  This follows since the Government's procedure fordetermining statutory price levels (administered prices)
annually took account of actual external prices denominated
in foreign currency.  Therefore the use of the actual but fixed
US dollar reference prices for calculating market price
support is not only a natural procedure which is consistentwith Annex 3 but also is referenced in the footnote to
Section I Part IV of South Africa's Schedule.
South Africa applied the same methodology in calculating the
level of support in the base years and in 1995 and 1996.  In
the interest of transparency, the results of these calculationswere presented in 1995 as equivalent measures
(G/AG/N/ZAF/5 Supporting Tabl e DS:8 and Annex).  The
proforma market price support notification would not have
fully reflected the calculation methodology.  South Africa
also wished to indicate that only part of the support to the
sugar industry benefited producers.  The equivalent format
seemed to offer more flexibility and scope in notifying.Having explained the methodology in 1995 and in
recognition of the nature of the support South Africa elected
in 1996 to notify it in the more appropriate format as market
price support, achieving the same clarity by footnotes
(G/AG/N/ZAF/13 Supporting Table DS:5).Exchange rates are contained in the annual reports of the
South African Reserve Bank.G/AG/R/14
Page 46
Table DS:2 Notifications
Cyprus    G/AG/N/CYP/4   New or Modified Domestic Support (Table DS:2)
Points raised by other Members Response by Notifying Member
Australia/Canada/New Zealand - Since the support to
Carob tree growers is dependent on production and the
amount paid is in the form of a subsidy per tonne in
proportion to the quantity delivered, how does thisprogramme meet the fundamental requirements of the first
paragraph of Annex 2 to the Agreement?  Could Cyprus
clarify how the subsidy per tonne of fruit can be classified
as an exempt payment under Annex 2, paragraph 12
(environmental programmes)?Undertook to respond in writing.
Canada/New Zealand -  Since Annex 2, paragraph 12
requires that the amount of payment be limited to the extra
cost of complying with the government programme, whatare the extra costs incurred in applying the basic cultural
practices and harvesting the crop under the programme,
compared to the cost of carrying out basic cultural
practices and harvesting the crop outside of the
programme?  How does this compare to the subsidyprovided?Undertook to respond in writing.G/AG/R/14
Page 47
Table ES:1 to ES:3 Notifications
Cyprus   G/AG/N/CYP/5 and 6   Export Subsidies (Tables ES:1 and ES:2)
Points raised by other Members Resp onse provided by Notifying Member
New Zealand - Noted that Cyprus exceeded its
commitment level for cheese in 1995.  How doesCyprus intend to compensate for this breach?Undertook to respond in writing.
Argentina/Australia -  Could Cyprus confirm
that exports above the annual quantity
commitment levels were not subsidized?Undertook to respond in writing.
Australia - Could Cyprus provide data for
sheepmeat exported in 1995?Undertook to respond in writing.
Indonesia   G/AG/N/IDN/10 and 11   Ex port Subsidies (Tables ES:1 and ES:2)
Points raised by other Members Response by Notifying Member
Canada - When will Indonesia submit Table
ES:2 notification concerning total exports of
vegetable oils?Technical problems had been encountered in
preparing the relevant export subsidy
notification.  Indonesia undertook to provide a
response in writing.
Israel   G/AG/N/ISR/4   Export Subsidies (Tables ES:1 and ES:2)
Points raised by other Members Response by Notifying Member
Australia/Canada/New Zealand - Clarificationsought as to why subsidized exports of
vegetables (90,000 tonnes) exceeded Israel's
commitment level of 89,300 tonnes.New Zealand - Clarificat ion sought as to how
Israel intended to rectify the breach of its volume
commitment?
European Communities - Expressed the view that
this breach raised a question of principle whichought to be addressed at some stage.Subsidized export volumes of vegetables
exceeded Israel's commitment level for 1995/96.
The exceeding quantity amounted to only 700
tonnes of vegetables, i.e. 0.8 per cent of the totalexport subsidy quantity.  The subsidy outlays
(US$2.877 million) were significantly lower
than the commitment level (US$8.804 million).
The minor excess in terms of subsidized export
volume was due to a larger than expectednumber of producers which led to a
miscalculation.  For the marketing year
1996/97, the preliminary estimate shows that
exports of vegetables are within the
commitment level.
Canada/Australia - Could Israel confirm that noexport subsidies have been granted for the
quantity exported above the annual commitment
levels for the following products: cut flowers,fruits (not citrus), citrus fruits?  Could Israel
confirm that exports of goose liver and cotton
were not subsidized?Affirmative.  Moreover, the only fruits that
benefited from export subsidies were grapes and
mangos.G/AG/R/14
Page 48
Pakistan   G/AG/N/PAK/2   Export Subsidies (Table ES:1)
Points raised by other Members Response by Notifying Member
Canada - What is the percentage of exports of
fruits, vegetables and flowers which benefit from
the transportation subsidy regime as compared to
the total volume of these exports?The transportation subsidy represented 2.9 per
cent of the total value of exports of fruits,
vegetables and flowers.
Poland   G/AG/N/POL/14   Export Subsidies (Table ES:2)
Points raised by other Members Response by Notifying Member
Canada - Could Poland confirm that exportsof products other than sugar were not
subsidized?  Did Poland change its exportpolicy?Exports of products other than sugar were not
subsidized.  However, this is without prejudice to
Poland's rights concerning export subsidies inaccordance with its Schedule and the Agreement on
Agriculture.
South Africa   G/AG/N/ZAF/11/Rev.1   Export Subsidies (Tables ES:1 to ES:3)
Points raised by other Members Response by Notifying Member
Canada/European Communities -
Clarification sought with regard to the
phasing out of the General Export Incentive
Scheme (GEIS).  Does the elimination of the
programme mean that South Africa will no
longer grant export subsidies for agriculturalproducts?
European Communities/Japan - Noted that
South Africa had exceeded it commitment
levels in terms of value for cocoa and cocoa
preparations, and in terms of volume andvalue for wine and "vegetable, fruit and nut
preparations including fruit juices".  Could
South Africa clarify the situation?South Africa terminated the GEIS on 11 July 1997,
six months earlier than planned.  The Government
has decided to provide supply side assistance, where
necessary, taking into account South Africa's WTO
commitments.
Chile - Data requested regarding export
subsidies (in terms of volume and value) and
total exports for the following products:
vegetables, fruit and nut preparations
including fruit juices (HS 2001 to 2009) and
wine (HS 2204, 2205 and 2207)?A breakdown of the subsidies granted to products is
not available since the GEIS data does not
correspond to the standard HS codes.  For total
exports, see Attachment 2.G/AG/R/14
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United States   G/AG/N/USA/12   Export Subsidies (Table ES:1)
Points raised by other Members Response by Notifying Member
Australia - Reiterated its request for a
breakdown of subsidized products for each
group of products notified in 1995 and 1996.See Attachment 3.
Brazil - Why did the United States utilize
different periods of time to report its
subsidized exports as referred to in footnote 2
(page 2 refers)?Article 1(i) of the Agreement on Agriculture allows
member the flexibility to choose a period (calendar,
fiscal or marketing year) for reporting its
commitments.  Budgetary outlay commitments are
implemented on a fiscal year basis
(1 October-30 September) and quantitycommitments are implemented during the period
1 July through 30 June.
Venezuela   G/AG/N/VEN/9   Export Subsidies (Tables ES:1 and ES:2)
Points raised by other Members Response by Notifying Member
United States - Noted that there were a
number of inconsistencies between the annual
commitment levels notified and Venezuela's
Schedule.  Could Venezuela explain thesediscrepancies?  Could Venezuela provide the
corresponding Harmonized System codes for
the products notified?Undertook to provide a response.G/AG/R/14
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ATTACHMENT 1
Table of de minimis  Calculations Repor ted in G/AG/N/PAK/5
Pakistan
Value of Agricultural Products
1996-97
US$'000
Wheat 1,932.2
Rice Basmati 621.3Rice others 430.8Seed cotton 2,417.0Sugarcane 674.0Gram 161.0Potato 161.8Onion 161.5Soybean 3.5Sunflower 37.5Safflower 0.3
Other agricultural products 12,322.7
Total value of agricultural production
(provisional)18,923.6G/AG/R/14
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ATTACHMENT 2
Quantity of Total Exports Re ported in G/AG/N/ZAF/11/Rev.1
South Africa - Exports 1996
(1) Vegetable, fruit and nut preparations including fruit juices:
Tariff code Export volume ('000 tonnes)
2001 1
2002 0
2003 0
2004 0
2005 8
2006 0
2007 12
2008 2152009 76
(2) Wine
Tariff code Export volume ('000 tonnes)
2204 120
2205 02207 408G/AG/R/14
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ATTACHMENT 3
Breakdown of Subsidized Produc ts Reported in G/AG/N/USA/12
United States of America:  Subsidized Exports
(Cheese, Coarse Grains, and Rice)
Product FY 1995 FY 1996
(MT) (MT)
Cheese:
0406.30 Processed cheese, not grated or powdered 972 742
0406.90 Other cheese (including mozzarella cheese, 2,303 2,278
1,496 tonnes2)
Total 3,275 3,020
Coarse grains:
1107.10 Malt 282 0Total 282 0
Rice:
1006.30 Long grain milled rice 9,900 0
Total 9,900 0
                                                     
2Mozzarella cheese was classified under subheading 0406.90 in the Uruguay Round base period.  Due to changes
in the Harmonized System, the product was later reclassified under subheading 0406.10.G/AG/R/14
Page 53
ANNEX - Part II
Deferred Replies to Questions Raised under Article 18.6
of the Agreement at Previous Meetings
Chile - Support for canned peaches in the European Communities (G/AG/R/13, paragraph 22 et seq.)
(i) Chile - Have measures to encourage the formation of peach producer's associations been used
in the European Communities as from 1990?  If this is the case, what is the total amount of aidgranted and to how many producer's organizations in each member country have aids been extended?
What has been the global evaluation of the functioning of these organizations?
European Communities - A regime to promote the creation of producer organizations in the
fruit and vegetable sector exists since 1972. This regime is applied during five years following the
recognition of the producer organization without  distinction between the type(s) of fruit(s) or
vegetables produced by the producer members.  There are no statistics available on the impact of this
regime on the peach sector.  Generally, producer organizations concentrated their activities mainly onwithdrawal rather than on the development of the marketing of the production of their members.  The
objective of the recent reform of the common market organization in the fruit and vegetable sector,
which entered into force in January 1997, is to reverse this situation and therefore after a transitional
period of 5 years, the withdrawn quantity must be inferior to 10 per cent of the production marketed
by a producer organization.
(ii) Chile -  The European Communities provides two measures:  (a) withdrawal by producer
organizations and (b) buying-in by bodies of natural or legal persons appointed by the member States.
As for modality (a) Chile would like to receive a detailed description of how this system operates with
regard to peach producers.  Furthermore, Chile is interested to know how the withdrawal price level
and the compensation to producers is determined and what the destination of the products withdrawnis. With regard to the withdrawal price, what are the parameters taken into account?  How are the
differences in varieties of peaches, the difference of quality and the seasonal factors taken into
account?  Are withdrawal prices calculated by me mber country, region or otherwise?  Do withdrawal
prices differ according to different varieties of peaches?  It is particularly important to clarify if one
single withdrawal price exists for peaches for canning purposes and if this price remains validthroughout the whole withdrawal period. Could th e EC Commission provide us with the following
statistical information per member country and for the marketing years 91/92, 92/93, 93/94, 94/95,
95/96 and 96/97:  production of peaches, withdrawn quantities, quantities of peaches processed with
aid, withdrawal prices and compensation paid to producers?  What percentage of withdrawal
payments is assigned to clingstone and what percentage to freestone peaches?
European Communities -  The EC system, and particularly as regards withdrawal, was
modified with the introduction of the reform of the common market organization in January 1997.
The basic price, the buying-in price and the withdr awal price have been abolished.  A unique amount
(i.e. the EC withdrawal compensation applicable in case of withdrawal of products from the market) is
determined by product for the next six marketing years (see Council Regulation (EC) No. 2200/96 on
the common organization of the market in fruit a nd vegetables, OJ No. L 297 of 21.11.1996).  There
is no information that allows to make a distinction between expenditures for withdrawal related tofresh peaches for the market and expenditures for withdrawal related to fresh peaches for processing.
(iii) Chile -  As for measure (b), has this type of aid to peach producers been used as from 1991
onwards in the different EC member countries?  Wh at has been the amount of this type of aid per
country?G/AG/R/14
Page 54
European Communities -  There is no information available on buying-in.  This kind of
operation was marginal and abolished with the reform in the fruit and vegetable sector.
(iv) Chile - With respect to aid to production of canned peaches, this aid is conditional on
payment of a minimum price to producers and the amount of this aid is set to compensate for the
difference between the price level of EC products resulting from the minimum producer price and that
of third country products.  How is the minimum producer price determined?  What are the specificfactors which intervene and how is the difference in the variety and quality of peaches taken into
account?  Is the minimum price determined per EC country, per region or otherwise? How is the price
level for third country products determined?  How is the information provided by the main producer
countries used?  What specific factors intervene?  How are the different varieties and qualities of
peaches and the seasonability of the products taken into account?  Could the European Communities
complete the table on the aid for the production of canned peaches for the marketing years 95/96 and
96/97 and provide a breakdown of all the information per member country?
European Communities -  The minimum prices to be paid to producers is calculated on the
basis of:
(a) the minimum prices applying during the previous marketing year;
(b) the movement of market prices in the fruit and vegetables sector;  and
(c) the need to ensure normal market disposal of basic fresh products for the various uses,
including supply to the processing industry.
The minimum prices are fixed before the start of each marketing year.  There is one single
minimum price for the European Communities and for all varieties and producers.   The price levels
of raw material in third producing and exporting countries are communicated to the EC Commission
by these countries and confirmed by the United States on the basis of the procedure specified underthe "EU/US Canned Fruit Agreement".  The world market price is calculated on the basis of these
communications and according to the "methodolo gy" specified in the "EU/US Canned Fruit
Agreement".  The world market price is equivalent to the weighted (weighted on the basis of the
exported volumes) average of all prices communicated by third countries to the EC Commission after
conversion to US dollars.  Monetary coefficients, which lead to a differentiation of the level ofproduction aid between the member States in order to take account of monetary disparities, were
applied for the last time during the marketing year 1994/95.  The abolition of these coefficients is
justified given the reduction of the monetary disparities within the new agri-monetary system.
Consequently, the production aid is identical in all member States.
(v) Chile - The European Communities subsidize suga r exports.  How is this subsidy allocated to
sugar exports in the case of canned peaches?  Could the European Communities provide figures of
export subsidies with regard to the sugar added to canned peaches?  Statistical data on this particular
aspect, detailed according to member countries of origin and markets of destination would be highly
appreciated.
European Communities - Export refunds can be granted upon request for sugar incorporated
in canned peaches.  The restitution level is fixed every week on the basis of the development of the
world market price for sugar and reflects the difference between the European Communities' internalprice and the world market price for sugar.  The per unit amount (per kilogram of incorporated sugar)
of the restitution is identical for all member States and all destinations.  The global amounts of export
restitution is low.G/AG/R/14
Page 55
(vi) Chile - Does the Community grant any other type of aid to the production or marketing of
canned peaches?  It would be particularly interesting to know if aid for the utilization of energy and/or
production of tinplate is being granted.
European Communities - The European Communities do not grant any other type of aid to the
production or marketing of canned peaches.
(vii) Chile - As for canned peaches, are the amounts of aid granted for domestic and export
purposes fixed amounts, independently of the market of destination?  Are there any limits as to the
quantities producers of canned peaches are authorized to export to different markets?
European Communities - Support measures are not differentiated according to the destination
of the exported product.
(viii) Chile - The Court of Auditors manifest ed doubts about the proper functioning of the
withdrawal system for peaches, particularly in Greece (Official Journal C 303, 14.11.95, page 88).
Does this mean that there is a problem regarding the control and management of fruit withdrawals andthe processing aid system in Greece, or eventually in some other member countries?
In the hypothesis of absence of control or flaws in the European Communities' control system,
would it be possible for the European Communities to make sure that the totality of the peaches
withdrawn by producer organizations of a member country is not presented for withdrawal a second
time or sold to processors?
European Communities - All systems of EC aid are subject to checks at different levels.  First,
checks are made by member States, then by the EC Commission and then by the Court of Audit.
With the reform of the common market organization for fruit and vegetables provisions related to
checks and penalties have been reinforced.  According to Article 15 of Commission Regulation (EC)
No. 504/97 (Official Journal L 78/97) the competent au thorities in the member States have to verify
each marketing year processors' records and to conduct on-the-spot sampling checks of aid
applications covering at least 25 per cent of the quantities of finished products in question, to ensure,
in particular, that:
- the quantities of raw materials used for processing correspond to those indicated in the
aid application;
- the price paid for the raw materials processed into finished products is at least equal to
the minimum price laid down;  and
- the raw materials comply with the quality requirements.
In addition the competent authorities conduct each marketing year sampling checks covering
the weight of the raw materials delivered to processing plants and the bank or post-office transferorders related to the minimum price paid for the raw materials by processors.
__________