WTO negotiations in the field of agriculture : negotiation strategies : working paper.
Date: 2002-05-29
Institutions: Directorate-General for Parliamentary Research Services
Subjects: World Trade Organisation, agricultural policy, international negotiations

EUROPEAN PARLIAMENT 

Directorate-General for Research 

WORKING PAPER 

WTO NEGOTIATIONS 
IN THE FIELD OF AGRICULTURE 

NEGOTIATION STRATEGIES 

Agriculture, Forestry and Rural Development Series 

AGRI 136 EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This document is printed in French (original) and English. 

At the end of this document, please find a list of other publications in the Agriculture, Forestry and 
Rural Development Series. 

Editor:  European Parliament 
L-2929 Luxembourg 

Author:  Mrs Odile TROUVÉ-TEYCHENNÉ 

Directorate-General for Research 
Division Agriculture, Regional Policy, Transport and Development 
Tel: +352/43.01.220.91 
Fax: +352/43.01.277.19 
E-mail: dg4-agriculture@europarl.eu.int 

The  opinions  expressed  in  this  document  are  the  sole  responsibility  of  the  author  and  do  not 
necessarily represent the official position of the European Parliament. 

Reproduction  and  translation  for  non-commercial  purposes  are  authorized,  provided  the  source  is 
acknowledged and the publisher is given prior notice and sent a copy. 

Manuscript completed in June 2001. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN PARLIAMENT 

Directorate-General for Research 

WORKING PAPER 

WTO NEGOTIATIONS 
IN THE FIELD OF AGRICULTURE 

NEGOTIATION STRATEGIES 

Agriculture, Forestry and Rural Development Series 

AGRI 136 EN 
01-2002

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WTO agricultural negotiations 

TABLE OF CONTENTS 

LIST OF TABLES AND FIGURES ................................................................................................. 4 

SUMMARY .................................................................................................................................. 5 

INTRODUCTION .......................................................................................................................... 9 

1. The legal framework of the negotiations.......................................................................... 11 

1.1. The agreement on agriculture .................................................................................. 11 
1.2. The measures in question......................................................................................... 11 

2. What stage have the negotiations reached? ..................................................................... 17 

2.1. Common challenges................................................................................................. 17 
2.2. The forces involved ................................................................................................. 17 

3. Key strategies in the proposals.......................................................................................... 27 

3.1. Market access........................................................................................................... 27 
3.2. Export competition .................................................................................................. 31 
3.3. Domestic support ..................................................................................................... 34 
3.4. Special and differential treatment for developping countries .................................. 37 
3.5. Non-trade concerns .................................................................................................. 39 
3.6. The due restraint clause ........................................................................................... 40 

4. Reactions of WTO Members to the EC proposals .......................................................... 43 

4.1. The general reaction................................................................................................. 43 
4.2. Reactions to the detailed proposals.......................................................................... 44 

CONCLUSION............................................................................................................................ 51 

ANNEXES  ................................................................................................................................. 53 

BIBLIOGRAPHY......................................................................................................................... 61 

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LIST OF TABLES AND FIGURES 

Negotiating proposals............................................................................................................... 53 

Table 1: Exempt subsidies........................................................................................................ 54 

Table 2: Summary of EU data on export subsidies.................................................................. 54 

Table 3: Domestic support measure boxes............................................................................... 55 

Table 4: Comparison of the Total AMS commitments specified and notified by 
the EC and the United States.................................................................................................... 55 

Table 5: Proportion of total domestic support accounted for by green box 
measures in some developed countries .................................................................................... 55 

Table 5a: Proportion of total domestic support accounted for by green box 
measures in some developed countries .................................................................................... 56 

Table 6: Producer support estimate (PSE): level and composition.......................................... 56 

Table 7: Special and differential treatment for developing countries ...................................... 56 

Trading importance .................................................................................................................. 57 

Current disputes - state of play................................................................................................. 58 

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SUMMARY 

Multilateral trade negotiations limited to agriculture started again in March 2000. Set out in 
Article  20  of  the  Agreement  on  Agriculture,  they  are  among  the  WTO’s  built-in  agenda 
commitments which Member countries entered into when signing the Final Act Embodying 
the  Results  of  the  Uruguay  Round  of  Multilateral  Trade  Negotiations  in  Marrakech  on  15 
April 1994.  

By  the  end  of  the  first  phase  of  the  negotiations,  which  continued  to  March  2001,  45 
proposals and three technical submissions had been lodged. They address the main trade and 
non-trade concerns raised by the multilateral liberalisation of agricultural trade for which the 
WTO Agreement on Agriculture provides a framework.  

Despite this heavy output, discussions have so far made only measured progress. This wait-
and-see  approach  has  been  shaped  by  various  factors,  among  which the most  important  are 
the EU’s wish to launch a broad negotiating round, the waiting game played to some extent 
by the Americans until the result of the Presidential elections in November 2000 was known, 
mistrust  on  the  part  of  the  developing  countries,  the  existence  of  a  whole  range  of  trade 
disputes and, not least, the lack of an agreed conclusion date. While many countries, and in 
particular the developed countries, share a manifest interest in pursuing the liberalisation of 
trade  in  agricultural  products,  reconciling  their  points  of  view  continues  to  be  problematic. 
This  has  much  to  do  with  one  of  the  main  challenges  of  these  negotiations,  i.e.  finding  a 
balance between the control of agricultural policies and the appropriate inclusion of concerns 
that are not strictly trade-related. It also has to do with the play of oppositions and alliances 
that  vary  depending  on  the  interests  involved,  the  focal  points  of  which  are  the  ‘Friends  of 
Multifunctionality’, led by the EU, the ‘anti-subsidy’ front led by the Cairns Group and the 
United States, and the developing world.  

At the end of the first phase, there was continuing disagreement in four main areas: 

•  between  Members  in  favour  of  a  broad  negotiating  round  (led  by  the  EU,  supported 
chiefly  by  Japan  and  the  Republic  of  Korea)  and  Members  which  would  like  to  keep 
strictly  to  the  Agreement  on  Agriculture  (such  as  the  Cairns  Group  and  the  developing 
countries, in particular India and Pakistan);  

•  between  countries  (in  particular  the  Cairns  Group)  which,  in  order  to  achieve  a  better 
organised  and  more  equitable  multilateral  trade  system,  attach  priority  to  further  trade 
liberalisation,  and  countries  which  consider  that  no  progress  can  be  made  with 
liberalisation  unless  the  agricultural  exception  is  respected.  The  EU,  in  particular, 
considers  that  trade  rules  separate  from  those  for  the  industrial  sector  need  to  be 
maintained under this exception because of the particular place that agriculture occupies 
in  the  identity  of  every  nation  and  the  notion  of  goods  of  public  interest  (better 
environment, biological diversity, living rural economy) that underpins it.  

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•  between States,  depending on the approach that  they  are taking  to the inclusion  of  non-
trade concerns (in particular those relating to environmental sustainability, food security, 
rural development, product health safety), the scope and place that should be attached to 
them in the Agreement on Agriculture and the way in which the policies implemented to 
achieve them can be made compatible with the process of multilateral trade liberalisation. 
Rather  than  limiting  negotiations  to  the  traditional  ‘tripod’  (market  access,  export 
competition and domestic support), the EU and the countries that are most in favour of its 
proposals  would  like  to  tackle  the  question of multilateral trade in agricultural products 
from angles that are not strictly trade-related in order to respond not just to the aspirations 
of the developing countries but also to those of civil society. The Cairns Group countries, 
by contrast, feel that finding this balance is unnecessary and consider that it merely needs 
to  be  taken  into  account  in  order  to  achieve  the  objective  of  establishing  a  fair  and 
market-oriented trading system for agricultural products.  

While the Republic of Korea, Norway and the countries with transition economies (some of 
which are awaiting accession to the EU) agree with the main points of view put forward by 
the  EC,  many  other  Members  are  critical  of  the  attempt  to  preserve  the  status  quo  evident 
from Community  proposals. Although less isolated, largely as a result of efforts to open up 
the European market to almost all products from the poorest countries, the EU continues to be 
alert to criticisms and to proposals that run counter to its interests, in particular as regards: 
- 
-  blue  box  aid  -  indispensable  if  the  reform  of  the  CAP  is  to  be  successfully  pursued  - 
whose abolition  is  being proposed by  the  United  States,  which  has  made more progress 
with decoupling; 
the principles of the CAP that the developing countries, long marginalised from decision-
making procedures and disappointed by the results of recent trade liberalisation, consider 
to have destabilising effects on local production, regional integration and consumption.  

agricultural subsidies that all Members, including Japan, would like to abolish; 

- 

These differences are fuelling various disagreements in the detailed proposals: 

• 

In the area of market access, the European Communities are among the few Members 
to  defend  the  status  quo  in  the  approach  to  tariff  liberalisation,  i.e.  an  overall  average 
reduction  of  bound  tariffs  together  with  a  minimum  reduction  per  tariff  line  using  the 
same  methods  as  in  the  Uruguay  Round.  The  other  Members  are  in  contrast  proposing, 
using different time-scales and different methods, substantial reductions of each tariff line 
in  order  to  tackle  disparities  in  tariff  levels,  tariff  peaks  and  tariff  escalation.  Everyone 
agrees, however, that tariff regimes and tariff rate quotas need to be simplified and made 
more  transparent.  There  has  been  much  criticism  of  the  proposal  to  keep  the  special 
safeguard clause put forward by the European Union, Japan, Norway and Switzerland, the 
ASEAN  countries  and  the  Republic  of  Korea,  especially  by  the  United  States,  on  the 
grounds  that  this  provision  had  been  accepted  only  as  an  adjunct  to  the  tariffication 
process  which  is  now  complete.  In  order  to  prevent  improper  use  of  this  clause,  some 
developing countries, supported by the Cairns Group, are calling for an instrument that is 
more in keeping with their concerns and are keen to prohibit the use of this mechanism by 
the developed countries.  

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• 

• 

• 

In the area of export competition, most countries (United States, Cairns Group, Japan, 
ASEAN,  etc.)  are  not  in  support  of  the  EC’s  proposal  that  new  reductions  of  export 
subsidies  should be linked  to  an extension of  WTO rules to all forms of subsidy in this 
area. Their aim – with varying degrees of commitment to its achievement – is rather the 
unconditional elimination of these subsidies. The EC’s demand that the focus should not 
just be  on  export  subsidies but also  on the reduction or even abolition of other types of 
measures  that  have  distorting  effects  has  nevertheless  been  echoed  by  other  Members 
(Mercosur  and  associated  countries,  Japan,  Norway,  India,  Turkey,  Switzerland,  Egypt 
and Poland). As well as abolishing export subsidies and introducing negotiated disciplines 
for export credits, Members agree overall that stricter conditions need to be agreed on the 
use  of  food  aid,  the activities of state trading enterprises and the maintenance of  export 
restrictions, in a shared concern to ensure that operations are more transparent. 

In the area of domestic support, proposals agree that a framework is needed for aid, but 
differ as to the methods, size and scope of the necessary reductions. The position that the 
EU,  supported  by  Japan,  the  Republic  of  Korea,  Poland,  Norway  and  Switzerland,  is 
defending,  i.e.  maintaining  the  current  framework  of  rules  and  disciplines  on  domestic 
support  and  in  particular  the  advantages  and  utility  of  blue  box  measures,  has  been 
criticised.  Opposition  has  come  from  the  USA  and  some  developing  countries  which 
consider  that  the  rules  on  domestic  support  need  to  be  simplified  –  more  drastically  in 
some  cases  than  in  others  –  and  the  non-exempt  support  of  each  Member  limited. 
Opposition has also come from the Cairns Group which would like not just to eliminate 
disparities  between  support  levels  but  also  completely  to  eradicate  support  that  distorts 
trade and production, and from Members such as Canada and India which are also calling 
for  a  cap  on  total  support  limited,  or  not  limited,  to  the  developed  countries.  Most 
Members are  critical of  the lack  of arguments  put forward by  the  EU to justify keeping 
the blue box and, at the very least, its exemption from precise limits and stricter criteria 
making  it  possible  to  ensure  that  the  measures  that  it  covers  are  compatible  with  the 
reform process. All Members agree, however, that green box criteria need to be reviewed, 
although  there  is  disagreement  about  the  scope  and  the  purpose  of  this  review.  Some 
Members  consider  that  more  account  needs  to  be  taken  of  non-trade  concerns  (the  EC, 
Japan,  the  Republic  of  Korea).  Other  Members  consider  that  steps  need  to  be  taken  to 
ensure  that  the  measures  exempted  do  not  have  trade-distorting  effects  (USA,  Cairns 
Group,  India)  or  would  like  to  obtain  special  criteria  geared  towards  developing 
countries’ needs in the areas of food security, poverty alleviation and rural development 
in particular (ASEAN, India). 

In  the  area  of  special  and  differential  treatment,  the  various  proposals  highlight  the 
need for an appropriate, flexible and comprehensive system for developing countries, that 
takes  a  flexible  approach  to  the  implementation  of  exemptions  from  reduction 
commitments,  and  for  differential  treatment  (in  particular  stepping  up  the  exemption  of 
domestic  support  programmes  geared  towards  these  countries’  development  objectives 
and  needs  and  further  improving  access  opportunities  and  criteria  for  their  products). 
Some Members are also calling for targeted contributions by the developed countries, as a 
token  of  efficiency  and  credibility,  and  for  a  review  of  the  Ministerial  Decision  on 
Measures Concerning the Possible Negative Effects of the Reform Programme on Least-
Developed and Net Food-Importing Developing Countries in order to ensure that it can be 
effectively implemented. Motivated chiefly by the concern to maintain food security, the 
vitality of rural areas and rural employment in these countries and to alleviate poverty, 

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this flexibility could take the form of granting them more autonomy as regards methods of 
action (ASEAN) and more flexibility as regards their implementation (EC, Poland, Japan). 
With  the  same  concern  for  better  protection  in  terms  of  security  of  access  and  food 
security, some of the smaller, more vulnerable or island developing countries would like to 
go  much  further  and  are  calling  for  supplementary  provisions  in  keeping  with  their 
situation that would take account of their structural weaknesses and the efforts that some 
of them have made in the area of trade liberalisation.  

•  In the area of non-trade concerns, these small countries often partner the EC, Norway, 
Japan and Switzerland in supporting the multifunctional role of agriculture. They are not 
supported, however, by the other developing countries which take a more guarded view of 
the validity of such measures in the developed countries. India, in addition to pointing to 
the need for clarification of the relevant concepts, has in particular cautioned its developed 
partners about any improper attempts to erase the basic differences that exist between the 
non-trade  concerns  of  the  developing  countries  –  food  and  subsistence  security  and  the 
development of genuine food autonomy being at the top of the list – and those put forward 
by other developed countries under the pretext, in particular, of the multifunctional role of 
agriculture.  The  same  reservations  greeted  Community  proposals  on  the  quality  of  food 
products and animal welfare. The EC’s concern to step up the legal protection of products 
and  to  gain  recognition  for  the  use  of  the  precautionary  principle  as  a  way  of  satisfying 
consumers’ legitimate concerns and needs in the areas of food safety and information has 
been  assessed  in  different  ways.  A  number  of  countries,  including  Argentina,  Malaysia 
and Thailand in  the  Cairns Group, also consider  that  issues connected  with geographical 
designations  or  labelling  should  not  be  among  the  issues  to  be  included  in  these 
negotiations.  

The  EU  has  opted  for  a  ‘firm,  but  constructive’  stance  in  order  to  find  the  right  balance 
between  further  liberalisation  of  agriculture,  the  inclusion  of  non-trade  concerns  and  the 
defence of the European model which was given substance by the last Agenda 2000 reform 
of the CAP. Its comprehensive proposal intentionally took a middle line, moreover, in order 
to rally the developing countries. The fact that many of these countries have welcomed new 
commitments in their favour, especially in the area of market access, does not mean that their 
support can be taken for granted as these countries are far from a homogeneous group. Many, 
supporting the proposals of the  Cairns Group or India, still have reservations about the line 
that the Community is taking. Their support for non-trade concerns is shaped by their desire 
better  to  justify  the  special  and  differential  treatment  that  they  are  expecting  from  the 
Agreement on Agriculture and to find answers to the non-trade concerns that they consider to 
be  important  on  the  basis  of  the  context  of  their  agriculture  and  their  economic  and  social 
priorities. 

The second phase of the negotiations therefore seems set to be more challenging. The EC will 
have to take a firm negotiating stance, bearing in mind that there is also no consensus as to 
whether  the  peace  clause,  which  the  EC  are  very  keen  to  retain,  should  be  retained  or 
abolished. The timetable could nevertheless work in their favour. It seems likely, in view of 
the differing stances and perceptions of the reform process, that these agriculture negotiations 
will  become  harder-hitting  and  take  more  time;  the  timetable  of  these  sectoral  negotiations 
could  well  be  disrupted  by  the  timetable  of  a  new  negotiating  round  if  such  a  round  is 
actually  decided  at  the  forthcoming  WTO  Ministerial  Conference  scheduled  for  9-13 
November 2001 in Doha in Qatar. 

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INTRODUCTION 

New multilateral trade negotiations limited to agriculture and services began again in March 
2000. Set out respectively in Article 20 of the Agreement on Agriculture and Article XIX of 
the General Agreement on Trade in Services (GATS), these sectoral negotiations are among 
the WTO’s built-in agenda commitments which Member countries entered into when signing 
the  Final  Act  Embodying  the  Results  of  the  Uruguay  Round  of  Multilateral  Trade 
Negotiations in Marrakech on 15 April 1994. They are taking place independently from the 
consultations that the WTO is holding on the various questions left in abeyance following the 
failure  of  the  third  WTO  Ministerial  Conference,  held  in  Seattle  in  the  USA  from  30 
November to 3 December 1999, on the launch of a new comprehensive round of multilateral 
trade negotiations.  

In the case of agriculture, as it proved impossible to draw up a precise negotiating mandate at 
the Seattle Conference, the objective of the negotiations is shaped by the framework set out in 
Article 20 mentioned above1, i.e. to continue the ongoing reform process on the basis of the 
programme  of  progressive  liberalisation  of  the  sector  implemented  since  1995.  While 
recognising  that  Members  can  take  account  of  ‘non-trade  concerns’  and  special  and 
differential  treatment  for  developing  countries,  the  Article  sets  up  two  safeguards  for  the 
continuation of the process: on the one hand, account has to be taken of the results obtained 
in  the  area  of  agricultural  trade  liberalisation  and,  on  the  other  hand,  a  fair  and  market-
oriented agricultural trading system has to be sought.  

Multilateral agricultural trade negotiations take place in Geneva at the Special Sessions of the 
Committee on Agriculture which are held following the Committee’s Ordinary Sessions. The 
timetable  of  discussions  has  been  split  into  two  phases:  the  presentation  of  Members’ 
negotiating  proposals,  followed by  detailed  discussion of  these  proposals.  At  the end of the 
first phase, which was completed in March 2001, 45 negotiating proposals and three technical 
submissions had been lodged (Annex 1). They came chiefly from the USA, the Cairns Group, 
Canada,  Japan  and  various  developing  countries  and  dealt  chiefly  with  trade  and  non-trade 
concerns  connected  with  the  multilateral  liberalisation  of  agricultural  trade  (market  access, 
domestic  support,  export  competition  and  subsidies,  special  and  differential  treatment  for 
developing countries and non-trade concerns). 

At  the  initiative  of  Mr Cunha,  rapporteur  for  WTO  negotiations,  the  Committee  on 
Agriculture and Rural Development asked the Directorate-General for Research to draw up a 
study  of  ‘Strategies  of  the  main  Members  of  the  World  Trade  Organization  in  connection 
with  the  forthcoming  agriculture  negotiations’.  This  working  document  is  the  outcome.  It 
comes  halfway  through  the  timetable  laid  down  by  the  Committee  on Agriculture,  i.e.  after 
the  presentation  of  Members’  comprehensive  or  specific  proposals  and  prior  to  the  more 
political discussions of the content and scope of the negotiations. After looking briefly at the 
legal framework surrounding the current negotiations and introducing the forces involved, the 

1   Article  20  ‘Continuation  of  the  Reform  Process’  of  the  Agreement  on  Agriculture:  ‘Recognizing  that  the  long-term  objective  of 
substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process, Members agree that 
negotiations for continuing the process will be initiated one year before the end of the implementation period, taking into account:   
(a) 
(b) 
(c)  non-trade  concerns,  special  and  differential  treatment  to  developing  country  Members,  and  the  objective  to  establish  a  fair  and 
market-oriented agricultural trading system, and the other objectives and concerns mentioned in the preamble to this Agreement;  and  

the experience to that date from implementing the reduction commitments;   
the effects of the reduction commitments on world trade in agriculture;  

(d)  what further commitments are necessary to achieve the above mentioned long-term objectives’. 

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report endeavours to pinpoint what strategic approaches are being taken in the main proposals 
submitted to the WTO and to assess the force of conviction of Community proposals from the 
reactions that they are causing. 

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1. THE LEGAL FRAMEWORK OF THE NEGOTIATIONS 

1.1. The agreement on agriculture  

All the WTO agreements and understandings on trade in goods apply to agriculture which is 
also covered by certain provisions of the WTO Agreements on Trade in Services (GATS) and 
on  Trade-Related  Aspects  of  Intellectual  Property  Rights  (TRIPS).  A  particular  feature  of 
agriculture  is  that  it  has  a  specific  agreement,  the  Agreement  on  Agriculture,  whose 
provisions take precedence. 

The  Agreement  on  Agriculture  came  into  force  on  1  January  1995.  It  is  one  of  the 
supplementary agreements annexed to the General Agreement on Tariffs and Trade (GATT) 
for  goods.  It  takes  account  of  the  general  principles  (non-discriminatory,  transparent  and 
predictable trade) and specific provisions (such as special treatment for developing countries) 
set out in GATT. It also relies on the commitments made by each country in the Schedules 
annexed  to  the  Marrakech  Protocol  which is an integral part of the GATT Agreement. It is 
supplemented in particular by the Ministerial Decision on ‘Measures Concerning the Possible 
Negative  Effects  of  the  Reform  Programme  on  Least-Developed  and  Net  Food-Importing 
Developing Countries’ and the Agreement on the Application of Sanitary and Phytosanitary 
Measures (SPS). 

The Agreement on Agriculture implements, over a six-year period2, a programme to reform 
trade  in  agriculture  whose  aim  is  to  establish  order  in  this  trade  and  to  create  a  more 
competitive  environment.  It  therefore  represents  a  turning  point  in  international  trade 
negotiations  since  it  makes  the  agricultural  sector  genuinely  subject  to  multilateral  rules.  It 
sets  out  binding  and  specific  commitments  in  three  main  areas,  market  access,  domestic 
support  and  export  competition,  to  be  achieved  in  practice  through  a  twofold  obligation  to 
reduce market protection  and  to  reduce aid to agriculture. It does, however, allow for some 
flexibility  in  the  implementation  of  these  commitments  by  the  WTO’s  developing  country 
Members, for which it makes provision for special and differential treatment, and for LDCs 
and net food-importing developing countries, for which there are special provisions. Finally, 
the  Agreement  contains  a  due  restraint  clause  intended  to  curb  any  risks  of  differences  or 
disputes. 

1.2. The measures in question 

1.2.1. Market access  

The  provisions  of  the  Agreement  are  intended  to  improve  market  access.  To  achieve  this, 
they impose: 
-   a  tariffication  programme  under  which  it  is  mandatory  for  WTO  Members  to  convert 

existing non-tariff trade barriers into tariff equivalents – bound customs duties; 
a reduction of the tariff equivalents obtained in this way; 

- 

2   From 1995 to 2000 for developed countries; 10 years (1995-2004) for developing countries. 

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- 

a ban on the re-introduction of any new non-tariff protection measures (Article 4.2). 

Two  remedies,  the  special  safeguard  clause  and  special  treatment,  set  out  respectively  in 
Article  5  and  Annex  5  of  the  Agreement,  moderate  its  binding  nature. In order  to  maintain 
imports  existing  prior  to  the  entry  into  force  of  the  Agreement  and  in  order  to  provide 
opportunities  for  additional  imports  up  to  a  certain  level  and  at  non-prohibitive  rates, 
commitments  also  make  provision  for  the  maintenance  of  current  and  minimum  market 
access opportunities for products subject to tariffication. 

The  tariff  concessions  (or  bound  rates)  contained  in  the  national  Schedules  of  commitments  annexed  to  the 
Marrakech Protocol have been calculated on the basis of an average reduction of customs duties of 36% for the 
1995-2000  implementation period, together with a minimum reduction of 15% per tariff line. These reduction 
objectives  have  been  made  more  flexible  for  developing  countries  and  were  not  required  for  the  LDCs  (see 
Special and differential treatment). 

The special safeguard clause makes it possible, in some circumstances (falling prices or increasing imports) and 
according  to  certain  methods,  to  apply  additional  duties  to  products  subject  to  tariffication.  Special  treatment 
makes it possible, under certain circumstances, for a country to maintain import restrictions up to the end of the 
implementation period (Annex 5, Section A) and to exempt a basic agricultural product that is the predominant 
staple in the traditional diet of a developing country from the provisions of Article 4 (Annex 5, Section B). Four 
countries have already used this mechanism: Japan, the Republic of Korea and the Philippines for rice and Israel 
for sheepmeat, wholemilk powder and certain cheeses3. 

Although the Uruguay Round measures, and in particular those relating to tariffication, have 
been implemented4, the expected improvements in market access have failed to materialise.  

• 

In  contrast  to  the  duties  applied  to  industrial  products,  tariff  duties  for  agricultural 
products  have  remained  high.  Far  from  reducing  the  level  of  tariff  protection,  the 
conversion  of  all  non-tariff  quantitative  restrictions  into  customs  duties  has  led  to  an 
increase  in  duties,  often  of  more  than  15%,  to  the  detriment  of  products  exported  from 
developing countries.  The main agricultural  staple products  (meat, sugar, milk and milk 
products,  for  which  duties  often  exceed  100%;  fruit  and  vegetables,  and  agri-food 
products,  for  which  rates  exceed  30%  in  a  number  of markets) continue therefore  to be 
among the products to which the highest customs duties are applied. 

•  The fact that tariff rate quotas have been administered and allocated in ways that are not 
very transparent has  also played a part in lessening the effects of the reform. Data from 
the  WTO  Secretariat  highlight  the  unequal  distribution  of  quotas  by  country  and  by 
product  and, in  some cases, their evident  under-fill. The  fact that this under-fill is more 
substantial  for some Members or some products has raised concerns about the potential 
impact of the different methods by which they are administered. 

3  

In  addition  to  these  specific  provisions,  Member  countries  may  have  recourse  to  the  general  measures  of  GATT  or  of  other  WTO 
agreements that apply to marketed products (in particular the SPS Agreement and the Agreement on Technical Barriers to Trade), by 
invoking  the  ‘balance-of-payment’,  ‘safeguard’  or  ‘general  exception’  measures  (in  the  latter  case,  specifically  paragraph  b  on  the 
protection  of  human,  animal  or  plant  life  or  health  or  paragraph  g  on  the  conservation  of  exhaustible  natural  resources)  set  out 
respectively in Articles XII, XIX and XX of GATT. 

4   The percentage of agricultural products subject to bound duties increased from 18% prior to the Agreement to close on 100% by the 

end of 2000. 

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Concentration of the use of the special safeguard clause among a small core of Members 
and  products  has  elicited  similar  comments  together  with  frequent  criticisms  of  tariff 
peaks  and  tariff  escalation  –  which  curb  the  development  of  the  processing  and  export 
industries of other countries – the complexity of import regimes, the restrictive effect of 
non-tariff measures and the actual methods by which tariff reductions are implemented. 

WTO agricultural negotiations 

- 

- 
- 

As regards tariff rate quotas and the safeguard clause, the Secretariat’s background papers show that: 
- 

37  countries  offer  market  access  opportunities  at  low  rates  of  duty  for  a  specific  quantity  of  imported 
products and that the 1371 tariff rate quotas notified cover certain types of product in particular, including 
fruit and vegetables, meat products, grains and milk products which account respectively for 26, 18, 16 and 
13% of quota totals; 
the  breakdown  between  countries  is  also  uneven:  Norway  (232),  Iceland  (90)  and  the  European 
Communities (87) are among the group notifying the most in contrast to Australia (2) and New Zealand (3); 
average quota fill was between 50 and 66% between 1995 and 1999; 
38  Members  have  reserved  the  right  in  their  Schedules  to  use  the  special  safeguard  clause for designated 
products  but  this  mechanism  has  been  used  by  only  four  to  six  Members,  in  different  years:  the  EC,  the 
Republic  of  Korea,  the  USA,  Japan,  Poland,  Hungary and Switzerland for price-based measures covering 
milk products (27% of cases), livestock and livestock products (26%), sugar (16%) and coffee (14%); the 
EC,  Japan,  the  USA,  the Republic of Korea, Poland and the Slovak Republic for volume-based measures 
covering  fruit  and  vegetables  (57%  of  cases),  livestock  and  livestock  products  (23%)  and  milk  products 
(11%). 

1.2.2. Export competition  

The  export  subsidies  as  listed  in Article 9(1) of the Agreement are subject to controls. The 
general rule under this control is that new export subsidies are prohibited (when no subsidy 
has been granted during the base period) and that existing subsidies are to be reduced (Annex 
2,  Table  1:  Exempt  subsidies).  Article  10  of  the  Agreement  also  sets  out  disciplines 
regulating  the  provision  of  food  aid  and  the  use  of  export  credits  which  are  intended  to 
prevent  any  circumvention  of  the  commitments  specified  in  Part  IV  of  each  Member’s 
Schedule.  

The value of export subsidies and the volume of exports concerned must be reduced, in equal annual tranches 
over a six-year period, by 36% and 21% respectively with respect to the average level of the 1986-1990 base 
period,  although  more  flexible  provisions  are  set  out  for  the  LDCs  and  developing  countries  (see  Special  and 
differential treatment) and in certain circumstances.  

Export  subsidies  cover  a  very  wide  range  of  products,  including  the  wheat,  bovine  meat, 
coarse grain, milk product and sugar markets in the developed countries and rice, vegetables 
and sugar in the developing countries concerned.  

•  Only a very small number of Members (25 of the WTO’s 140 Members), in particular the 
European Communities (EC), use them (see Annex 2, Table 2: Summary of EU data on 
export subsidies). 

•  They are also being replaced in some countries by other forms of subsidy (such as export 
credits, export credit guarantees or insurance programmes) for which commitments have 
yet to be bound in relation to the terms of internationally agreed disciplines.  

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1.2.3. Domestic support  

The  provisions  on  domestic  support  lay  the  foundations  for  controls  of  aid  that  limit  some 
domestic subsidies likely to distort production and trade in agricultural products.  

The measures concerned are subject to a 20% reduction over six years (see Special and differential treatment). 
The relevant commitments, which are included in Part IV of each Member’s Schedule, and, therefore, the real 
level  of  support  are  monitored  using  an  indicator  of  the  monetary  value  of  aid,  i.e.  the  ‘total  aggregate 
measurement  of  support’  (Total  AMS)  defined  in  Article  1(a)  and  (h)  of  the  Agreement  on  Agriculture  and 
using a calculation method specified in its Annexes 3 and 4. Thirty of the WTO’s 140 current Members have 
included Total AMS reduction commitments in Part IV of their Schedules.  

The Agreement differentiates between various types of support measures chiefly on the basis of their effects on 
trade  and  their  exemption  or  non-exemption  from  reduction  commitments;  the  green  box,  the  blue  box, 
exempted measures for developing countries, measures below the de minimis threshold, the amber box (Annex 
2, Table 3: Domestic support measure boxes). The first four types of measure, provided that they satisfy certain 
conditions,  are  exempt  from  reduction  commitments.  The  last  measure  in  most  cases  covers  price  support 
measures; it is taken into account in the Total AMS. 

As  in  the  case  of  market  access,  the  results  of  the  provisions  of  the  Agreement  have  been 
perceived in different ways. 

•  As the total aggregate measurement of support had to be reduced globally, some sensitive 
sectors, such as rice in Japan, sugar in the EU and the USA and milk products in most of 
the  Member  countries  of  the  Organization  for  Economic  Cooperation  and  Development 
(OECD) have escaped the reform. 

••••  The calculation methods used have also played a part in lessening the real impact of the 

promised reductions. It has for instance been pointed out that: 
- 

the  AMS  was  calculated  on  the  basis  of  the levels of support  granted between 1986 
and  1988,  when  the  international  prices  of  agricultural  products  were  relatively  low 
and levels of support for farmers were high; 
the  reference  support  levels  included  blue  box  aid  which  is,  however,  exempt  from 
reduction and therefore excluded from the current AMS; 

- 

with  the  result  that  the  domestic  support  levels  notified  for  the  1995-1998  period  were 
substantially lower than the commitment levels specified (Annex 2, Table 4: Comparison 
of the Total AMS commitments specified and notified by the EC and the United States). 

•  Analysis  of  support  overall  shows  a  wide  range  of  situations  depending  on  agricultural 
structures and substantial differences in levels of aid in different countries. Although the 
level of support, and in particular market price support, fell in the OECD, the aggregate 
data  continue  to  mask  very  different  situations  in  terms  both  of  the  size  and  the  actual 
value  of  the  reduction:  over  the  last  ten  years,  the  producer  support  estimate  (PSE), 
expressed as a percentage of the value of agricultural production, fell in practice from 41 
to  33%,  but  the  lowest  rate  is  close  to  zero  while  the  highest  rate  is  close  to  70% 
(Annex 2,  Table  5:  Proportion  of  total  domestic  support  for  which  green  box  measures 
account in some developed countries; Table 6: Producer support estimate (PSE): level and 
composition in the main OECD countries). 

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•  Many delegations question shortcomings in the current provisions on aid boxes in terms 
of  their  precision,  inclusiveness  and  structure  as  well  as  a  lack  of  adequate  definitions, 
appropriate criteria and sufficient assessment of the effects of exempted aid on trade. The 
lack of a cap on support has also been called into question especially as exemption from 
reduction commitments has made some measures much more attractive. The expansion of 
green box measures to the detriment of non-exempt aid is leading some Members to ask 
whether they actually have no or only minimal effects on production and trade. 

Data analysed by the WTO Secretariat also show that: 
- 

exempted domestic support breaks down on average as follows: 
.  40% in the form of ‘general services’ measures; 
.  35% in the form of ‘public stockholding for food security purposes and domestic food aid’ measures; 
.  24% in the form of ‘direct payments’; 
.  and 1% in the form of ‘other measures’; 
three Members, the USA, Japan and the EC, make most use of this and alone notify over 80% of aid in this 
category; 
the proportion of total domestic support accounted for by green box aid varies greatly in different countries 
(Annex  2,  Table  5:  Proportion  of  total  domestic  support  accounted  for  by  green  box  measures  in  some 
developed countries). 

- 

- 

1.2.4. Special and differential treatment for developing countries  

In order to take full account of the needs and situations of poor countries, the Agreement sets 
out  special and differential treatment for  developing countries as regards  commitments (see 
Annex  2,  Table  7:  Special  and  differential  treatment  for  developing  countries).  In  practice, 
this takes the form of: 
- 
- 
- 
- 

reduced constraints in terms of reductions or implementation periods; 
the exemption of the LDCs from reduction commitments; 
specific provisions on food security; 
a significant improvement of access opportunities and criteria for agricultural products of 
particular  interest  to  these  countries,  including  the  liberalisation  of  trade  in  tropical 
agricultural products.  

Bearing  in  mind  the  risks  that  the  process  of  reform  of  trade  in  agricultural  products  could 
entail for poor countries heavily dependent on imports of food products, Ministers agreed to 
establish various mechanisms to remedy such risks which are set out in a special Ministerial 
Decision on ‘Measures Concerning the Possible Negative Effects of the Reform Programme 
on Least-Developed and Net Food-Importing Developing Countries’. This Decision sets out 
the  objectives   and certain  measures concerning the provision of food aid and development 
aid  as  well  as  the  possible  assistance  that  the  International  Monetary  Fund  and  the  World 
Bank could provide as regards the short-term financing of imports of food products.  

Ten  Members5,  including  the  EC  and  the  USA,  have  taken  measures under this Ministerial 
Decision: 
- 

the  EC  channelled  a  budget  of  ECU  1  billion  (representing  over  3  million  tonnes)  into 
food aid – given wholly in gift form – in 1995, ECU 413 million in 1996 and ECU 409.5 
million in 1997; 

5

   Argentina, Australia, Canada, the European Communities, Japan, New Zealand, Norway, South Africa, Switzerland and the USA – 

Secretariat Background Paper G/AG/NG/S/4. 

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the USA notified that it had provided, chiefly in gift form, 1.3 million tonnes of food aid 
from 1 July 1995 to 30 June 1996 and 1.1, 1.3 and 2.2 million tonnes respectively in the 
following three periods. 

WTO agricultural negotiations 

1.2.5. The due restraint clause  

The due restraint (or peace)  clause is contained  in  Article 13  of  the  Agreement. Applicable 
for a period of nine years (i.e. up to 2003), it regulates the application of the provisions of the 
other  WTO  Agreements  to  agricultural  subsidies  from  the  point  of  view  of  grounds  for 
actions:  overall,  it  exempts  support  measures  implemented  under  the  reform  from  actions 
before the WTO and its Dispute Settlement Body (DSB). 

In  particular  it  exempts  green  box  domestic  support  measures  from  countervailing  duty  actions  based  on  the 
provisions on subsidies or on non-violation nullification or impairment of tariff concessions set out in GATT. It 
also recommends that Members exercise due restraint in initiating countervailing duty investigations in respect 
of  other  domestic  support  measures  complying  with the provisions on domestic support commitments (Article 
13(b,  i)).  It  also  exempts  such  measures  from  other  actions  based  on  the  nullification  or  impairment  of  tariff 
concessions (Article 13(b, ii and iii)) when the support granted for a specific commodity is not in excess of that 
decided during the 1992 marketing year.  

Similar  provisions  protect  export  subsidies  complying  with  the  provisions  of  the  Agreement  on  Agriculture 
(recommendation of due restraint in relation to the implementation of countervailing duties and exemption from 
actions based on the provisions of GATT or the Subsidies Agreement). 

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2. WHAT STAGE HAVE THE NEGOTIATIONS REACHED? 

2.1. Common challenges  

Only measured progress has so far been made in the negotiations. This wait-and-see approach 
has  been  shaped  by  various  factors,  among  which  the  most  important  are  the  EU’s  wish  to 
launch a broad negotiating round, the waiting game played to some extent by the Americans 
until  the  result  of  the  Presidential  elections  in  November  2000  was  known,  mistrust  on  the 
part of the developing countries which are taking a very defensive stance, the existence of a 
whole  range  of  trade  disputes  and,  not  least,  the  lack  of  an  agreed  conclusion  date.  These 
talks, in which negotiating positions continue to be very entrenched, have nevertheless been 
given some coherence by a number of common denominators. 

To the extent that the abolition of border duties has now been achieved overall, in particular 
as  a  result  of  the  GATT  system,  Members  are  looking  less  for  a  new reduction of  customs 
duties  than  for  the  abolition  of  the  large  number  of  high  duties  and  non-tariff  barriers  that 
continue to exist and to highlight new concerns, depending on their own interests. Agriculture 
is no exception to this trend, for two main reasons. 

The  first  undoubtedly  has  to  do  with  the  slow  progress  that  has  been  made  with  trade 
liberalisation  in  the  agricultural  sector.  Although  covered  by  GATT,  agricultural  products 
have  long  benefited,  in  comparison  with  industrial  products,  from  official  or  merely 
informally accepted exceptions (the prohibition of export subsidies or quantitative restrictions 
for  instance).  As  the  issue  of  agriculture’s  inclusion  has  long  soured  negotiations,  the 
agricultural sector was excluded overall from multilateral trade rules until the last negotiating 
round.  It  has  only  been  included,  moreover,  in  a  partial  way  as  long,  comprehensive  and 
sectoral  talks  have  led  to  reforms,  felt  by  some  to  be  too  moderate,  taking  the  form  of  a 
specific agreement exempting trade in  agricultural products from the common GATT rules. 
Fervent supporters of free trade would now like to remedy this situation.  

The  second  reason  has  to  do  with  the  enlargement  of  the  scope  of  agriculture  negotiations. 
These  now  go  beyond  the  traditional  discussions  of  market  access,  domestic  support  and 
export  competition  as  a  result  of  new  concerns  of  world  importance  that  more  intense 
globalisation  is  tending  to  place  in  the  foreground.  Globalisation  is  an  inevitable,  multi-
dimensional  and  multi-sectoral  development  that  has  gradually  made  states  and  economic 
actors more dependent on world markets, and has meant that priority is now being attached to 
new issues, or if these issues are not new, has modified their position among the international 
community’s  priorities.  The  new  outlook  that  globalisation  requires  in  areas  such  as  the 
treatment  of  food  security,  the  environment,  health,  social  standards,  competition  and  the 
right  to  defend  specific  cultural  and  traditional  values  makes  an  extension  of  the  scope  of 
action  of  regulations  inevitable.  Agriculture,  which  is  the  lynchpin  of  the  economic  and 
cultural  life  of  many  Member  Countries,  is  obviously  very  much  in  the  foreground,  in  a 
context where unilateral trade action is becoming increasingly ineffective.  

The  developed  countries  in  particular  have  much  to  gain  from  a  further  liberalisation  of 
agricultural  trade.  The  process  by  which  this  can  be  achieved  has  yet  to  be  decided.  The

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control  of  agricultural  policies  has,  for  this  purpose,  to  be  balanced  against  the  appropriate 
inclusion  of  concerns  that  are  not  strictly  trade-related.  Finding  this  balance  is  one  of  the 
challenges of the current negotiations.  

WTO agricultural negotiations 

2.2. The forces involved 

At  the  last  Ministerial  Conference,  the  working  party  on  agriculture  responsible  for 
negotiations  in  this  field  highlighted  two  fundamental  conceptions  of  agricultural  trade. 
According to the first, agricultural products should be  treated and disciplined in exactly the 
same  way  as  industrial  products.  According  to  the  second,  diametrically  opposed,  concept, 
this  trade  has  a  specific  nature  and  account  must  be  taken  of  the  multifunctional  nature  of 
agriculture. This far-reaching divergence of views is fuelling discussions and helping to forge 
opposition groups and alliances, whose geometry varies depending on the interests involved, 
the  main  focal  points  of  which  are  the  ‘Friends  of  Multifunctionality’  (led  by  the  EC),  the 
‘anti-subsidy’ front (led by the Cairns Group and the USA), and the developing world.  

2.2.1. How important is trade in agriculture?  

Trade  in agricultural products totalled  USD 553  billion  in 1998.  Although there has been a 
downward  trend  for  some  years,  agriculture  accounts,  in  terms  of  exports  and  imports,  for 
10.5% of world trade. It also accounts for a significant proportion of the economic activity of 
a  large  number  of  countries  where  it  plays  a  paramount  role  in  agricultural  output  and 
employment.  Finally,  it  is  crucial  from  the  point  of  view  of  world  food  security  in  that  it 
makes it possible to prevent, or even to remedy, food shortages. The Table in Annex 3 gives 
an overview of the main players in agricultural trade. 

2.2.2. Positions and alliances 

The protagonists leading talks in the agricultural field are more or less the same as those in 
the  previous  round.  There  is  now,  however,  more  of  a  challenge  to  the  industrialised 
countries’ monopoly on the negotiations. The developing countries are trying to play a more 
active part in the talks, especially as the failure of the Seattle Ministerial Conference that they 
had precipitated has given them the opportunity to do so. Less marginalised, the latter could, 
if they maintain a united front,  play  a  key  part  in  the success  of the negotiations. Divisions 
between  the  parties  have  also  become  more  finely  shaded.  While  countries’  interests  differ 
depending  on  whether  they  are  net  importers  or  net  exporters  of  agri-food  products,  the 
former being more in favour of liberalising trade than the latter, and depending on whether or 
not agriculture is subject to government intervention policies, countries are forging alliances 
on a case-by-case basis in relation to particular issues and their impact.  

The  last  agriculture  negotiations  during  the  Uruguay  Round  proved  particularly  difficult 
largely  as  a  result  of  the  trade  stand-off  between  the  USA  and  the  European  Communities. 
Not  enough  progress  has  been  made  in  the  current  negotiations  to  be  able  to  pinpoint  the 
extent  of  reconciliation  and  rapprochement.  Negotiations  limited  solely  to  agriculture  make 
the alliance game different. Some aspects, however, undoubtedly call to mind the scenario of 
previous negotiations: the lack of agreement about the negotiating timetable and the problems 
that finding a consensus about the actual purpose of the negotiations have already raised may 
well mean that they are difficult  to get  off the ground and, lastly, the speed with which the 
United States submitted a comprehensive strategy proposal. 

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The European Communities 

The  European  Communities  have  continued  to  stress  that  they  would  prefer  a  global 
negotiating round. 

•  Extension  of the agenda would give them a greater margin of manoeuvre to negotiate a 
balanced agreement, as the EC stressed in a document submitted on 12 October 2000 to 
the WTO General Council. This point of view is shared by a number of countries such as 
Japan  and  the  Republic  of  Korea  which  acknowledge  that  it  is  difficult  to  pursue  the 
process of agricultural reform without incorporating it in a broader negotiating round.  

•  The  EC  also  stress  that  the  issue  of  agricultural  trade  cannot  be  resolved  solely  by 
revising  the  Agreement  on  Agriculture  as  key  problems  for  the  sector  depend  on 
negotiations  which  go  beyond  its  framework.  They  consider  for  instance  that  the 
precautionary principle set out in the SPS Agreement6 needs to be examined in order to 
find an appropriate solution to the hormone problem, that the TBT Agreement needs to be 
overhauled so that adequate regulation of the use of transgenics, biological products and 
animal welfare can be included in it and that certain provisions of the TRIPS Agreement, 
felt to be too restrictive, on geographical indications for wines and spirits (Articles 23 and 
24), products linked to the territory and rights in respect of biodiversity (Article 27.3.b)7 
need to be improved.  

•  The  EC,  as  the  second  exporter  of  agricultural  products  and  the  leading  exporter  of 
processed food commodities, are keen to improve the operation of trade. They are calling, 
in  this  respect,  for  a  multilateral  trade  system  that  is  better  organised  and  further 
liberalised  in  order  to  find  a  solution  to  the  growing  globalisation  of  economic  and 
agricultural activities. A further goal is to establish a fair trading system – able to provide 
major  gains  for  the  world  economy,  play  an  efficient  part  in  sustainable  development, 
ensure better integration of developing countries and a more equitable distribution of the 
benefits  of  liberalised  trade  –  which  would  be  both  more  market-oriented  and  better 
geared  to  non-trade  concerns.  It  is  for  this  reason  that,  if  there  is  to  be  further 
liberalisation, it can be envisaged only within the framework of the agricultural exception 
under  which  trading  rules  separate  from  those  applied  to  the  industrial  sector  are 
maintained because of the particular place that this sector occupies in the identity of every 
nation  and  the  notion  of  agriculture  as  a  provider  of  public  goods  (better  environment, 
biological diversity, vital rural economy, etc.) that the EC defend.  

6   Under the SPS Agreement all WTO Members can set the level of sanitary protection that they deem appropriate with the threefold 
proviso  that  the  acceptable  level  is  defined  in  a  consistent  way  for  the  various  products,  that  there  is  no  discrimination  between 
national  and  foreign  products  and  that  the  measures  taken  to  protect  the  health  and  well-being  of  the  population  are  scientifically 
justified. The main problem that application of this Agreement raises lies in the lack of a clear answer in cases where the current state 
of scientific knowledge makes it difficult to assess risks. Where pertinent scientific evidence is inadequate, the Agreement explicitly 
authorises provisional measures under the precautionary principle, although the relationship between multilateral trade rules and the 
application of this principle needs to be further clarified. 

7   The TRIPS Agreement on trade-related aspects of intellectual property rights also has a part to play in the control of genetic resources 
in particular though property rights to seeds. In the area of biodiversity, discussions of the Agreement often founder on the question of 
the  rights  that  Member  should  accord  to  micro-organisms  and  plant  varieties,  whose  forms  have  yet  to  be  clarified  (patents  or  an 
alternative sui generis system). Under the Agreement it has up to now been possible for States to rule that plants and animals other 
than micro-organisms and essentially biological processes for obtaining plants or animals are not patentable provided, however, that 
they  find  ways  of  protecting  them.  The  developing  countries  which  would  like  to  exclude  biodiversity  from  the  legal  scope  of  the 
Agreement oppose the developed countries which reject this approach and are calling by contrast for a strengthening of the relative 
provisions. 

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•  As  far  as  agriculture  is  concerned,  the  EC  are  in  favour  of  reducing  export  aid  and 
subsidies. They have nevertheless laid down conditions: aid required for the furtherance 
of the Agenda 2000 reform process must be maintained, account must be taken of aid that 
would  help  agriculture  better  to  respond  to  the  expectations  of  society  and  all  forms  of 
distortion  of  export  competition  must  be  dismantled.  Franz  Fischler,  the  European 
Commissioner  for  Agriculture  and  Fisheries,  has  said  that  the  EU  will take a ‘firm,  but 
constructive’  stance  in  order  to  find  a  fair  balance  between  further  liberalisation  of 
agriculture,  the  inclusion  of  non-trade  concerns, already recognised by Article 20  of  the 
Uruguay  Round  Agreement  on  Agriculture,  and  the  defence  of  the  European  model  to 
which the last Agenda 2000 reform of the CAP gave substance.  

This reform which, according to the Conclusions of the Berlin European Council of 24 and 25 May 1999, is 
intended  to  ensure  that  agriculture  is  ‘multifunctional,  sustainable,  competitive  and  spread  throughout 
Europe,  including  regions  with  specific  problems,  that  it  is  capable  of  maintaining  the  countryside, 
conserving  nature  and  making  a  key  contribution  to  the  vitality  of  rural  life,  and  that  it  responds  to 
consumer  concerns  and  demands  as  regards  food  quality  and  safety,  environmental  protection  and  the 
safeguarding of animal welfare’, in practice laid the foundations for this model’s viable existence. Based on 
EU negotiation, it highlights the multifunctional role of agriculture in order to stress that this activity does 
not just produce commercial consumer goods but provides society with a whole range of services, in terms 
of conserving the environment and preserving rural areas, that must be protected by the public authorities. 

•  The EC are also taking the opportunity offered by the new negotiations to make the WTO 
fully aware of the process of enlargement that is under way in respect of the countries of 
Central  and  Eastern  Europe  in  order  to  prevent  new  constraints  from  being  imposed  on 
agriculture in the enlarged Community.  

To convince their partners, the EC are stressing the far-reaching changes that have been made 
to agricultural policy over the last ten years and in particular the change of direction from a 
price  support  system  to  a  system  of  income  support  combined  with  production  restrictions 
leading,  according  to  the  Agriculture  Commissioner,  to  far  fewer  distortions  of  trade.  In 
support of this, the Communities point to the price reductions that have been made, partially 
offset  by  support  independent  from  the  yields  obtained,  the  substantial  reduction  of  market 
support  measures  and  the  no  less  significant  drop  in  export  refunds8.  To  improve  the 
participation of the developing countries in world trade, the European Communities have also 
revived the notion of further liberalisation of market access for essentially all products from 
the  LDCs.  Under  this  initiative,  generally  known  as  ‘Everything  but  Arms’,  European 
markets have been opened up since March 2001 to all exports from the 48 LDCs on a duty-
free basis and without restrictions on quantity9. A number of countries, including Japan, Chile 
and  New  Zealand,  support  this  initiative  and  have  introduced  significant  market  access 
improvement  measures.  The  European  Commissioner  for  External  Trade, Pascal  Lamy,  has 
gone out of his way to rally other countries to the cause. His diary has been full of visits to 
countries  that  are  more  cautious  (including  the  USA  in  February  2000;  Brazil  and  India  in 
March;  Senegal  and  South  Africa  in  June;  Uruguay,  Chile  and  Argentina  in  September; 
South-East  Asia  in  October;  Africa  in November; the Republic of Korea in February  2001; 
Egypt in March, etc.) but would like to place trade with the EU on a more dynamic footing 

8 

According to the European Commission, market support measures, which accounted for 91% of total support in 1992, will have fallen 
to 21% in 2006, while export refunds, accounting for 25% of CAP expenditure in 1992, currently account for no more than 9% of this 
expenditure. 

9   With the exception of arms and subject to phased liberalisation, during transitional periods, for three sensitive products: rice, bananas 

and sugar. 

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through  improved  bilateral  cooperation  such  as  Mercosur,  Chile,  the  Andean  Pact10,  the 
Association  of  South-East  Asian  Nations  (ASEAN)  and  the  African,  Caribbean  and  Pacific 
(ACP) countries.  

Despite all these efforts to offer explanations and gestures of goodwill, the EU continues to 
be isolated and the main target of criticism. There seem at this stage to be two reasons for this 
situation, which is very redolent of the events of the Uruguay Round negotiations: a lack of 
credibility and a strategic approach that is not innovative enough. As in the previous Round, 
the  EC  are  taking  a  largely  defensive  stance  in  an  attempt  to  protect  and  preserve  the  aid 
system (in particular those blue-box measures that are indispensable if the current reform of 
the  CAP  is  to  be  successfully  pursued)  and  the  Community  preference  (maintaining  the 
special  safeguard  clause  in  cases  of  serious  crisis).  European  discourse  invoking  the  fair 
compensation  that  is  the  due  of  the  whole  range  of  functions  that  agriculture  fulfils  and 
defending  the  importance  of  cultural  identity  is not without attraction.  These arguments  are 
not convincing enough on their own, however, especially for those developing countries that 
are  agricultural  product  exporters  which  all  too  readily  pick  up  on  the  inconsistencies 
between Community discourse and policy on export subsidies which place their products at 
an unfair disadvantage, the limits of the current reform as regards the re-orientation of public 
support and inconsistencies with the priorities of Community development policy. In the area 
of  export  subsidies,  the  EU  is  facing  a  genuine  united  front  that  it  is  trying  to  counter  by 
proposing  that  all  forms  of  distortion  of  export  competition  should  be  dismantled  and  by 
censuring  American,  New  Zealand  and  Canadian  practices  involving  the  use  of  indirect 
public support (advantageous export credits for purchasers, food gifts linked to purchases or 
State trading companies with an export monopoly) to keep prices artificially low. 

the  main 

leaders  of 

The  EC  have  nevertheless  become  one  of 
the  Friends  of 
Multifunctionality, alongside Japan, the Republic of Korea, Norway and Switzerland. These 
countries,  rallying  to  defend  the  various  roles  that  agriculture  plays  in  preserving  the 
countryside,  employment  and  the  environment11,  are  at  odds  with  the  Cairns  Group 
(especially  New  Zealand,  Australia,  South  Africa  and  Argentina)  and  the  United  States  in 
particular.  These  countries  consider  that  the  concept  is  artificial  and  designed  merely  to 
justify the continuation of high levels of support. They also stress that: 
- 
the concept of multifunctionality is not specific to agriculture; 
-  while  countries  may  have  non-trade  concerns,  these  concerns,  however  legitimate  they 

may be, must not take priority over the objective of the reform; 

-  national support and protection policies do not just run counter to national objectives of 

multifunctionality but may also have repercussions on other countries. 

The Cairns Group 

The  Cairns  Group  is  made  up  of  18  developed  and  developing  agricultural  exporting 
countries  (Argentina,  Australia,  Bolivia,  Brazil,  Canada,  Chile,  Colombia,  Costa  Rica,  Fiji, 
Guatemala,  Indonesia,  Malaysia,  New  Zealand,  Paraguay,  Philippines,  South  Africa, 
Thailand, Uruguay) that joined forces to defend agricultural trade liberalisation. Set up on 3 
August  1986,  just  prior  to  the  Punta  del  Este  Ministerial  Conference,  the  Group  had  14 
members during previous negotiating rounds.  

10   Bolivia, Colombia, Ecuador, Peru and Venezuela. 

11   Submission on ‘Non-trade concerns’ G/AG/NG/W/36/rev.1. 

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•  These  countries,  where  public  support  is  negligible  and  agricultural  exports  are  not 
subsidised,  are  calling  for  the  abolition  of  export  subsidies.  Threatening  to  challenge 
agricultural  subsidy  programmes  when  the  peace  clause  expires  unless  considerable 
progress has been made in the negotiations by that time, they are, together with the USA, 
the  EC’s  fiercest  opponents.  The  Group  argues  that  these  subsidies  distort  trade  by 
making their own products less competitive in world markets and by creating artificially 
high prices for consumers in some domestic markets.  

•  The  Group  also  rejects  the  notion  of  the  multifunctional  nature  of  agriculture  on  the 
grounds that trade in agricultural products must be covered by the same disciplines as for 
other products.  

The Cairns Group has therefore joined forces with the United States and Japan in particular to 
censure  the  EU’s  export  subsidies  which  it  considers  to  be  prejudicial  to  the  capacities  of 
developing  countries.  It  has  managed  to  rally  the  Members  of  the  Asia-Pacific  Economic 
Cooperation Forum (i.e. 21 countries), Mexico and a number of other developing countries to 
its cause. It also shares the American objective of reducing and reforming domestic support. 
Its shared interests with the USA go no further than this, however, as the Group challenges 
the American export credit programmes which it considers to be disguised subsidies.  

During previous negotiations, the Group presented a united front throughout the whole of the 
first  phase  of  negotiations  but,  following  internal  differences,  gradually  lost  cohesion. 
Launching the offensive at an early stage, the Group submitted three proposals on the pillars 
of  the  reform  for  the  Sessions  in  June,  September  and  November  2000.  Although  it  is 
impossible to predict how solid the alliance will be in the forthcoming negotiations, it should 
be noted that Canada has already distanced itself from the submission on market access and 
has submitted its own negotiating proposal on this issue.  

While Canada has often led the offensive against the EC and the USA, censuring the record 
levels of US agricultural  subsidies,  it has not been free from criticism itself. The last WTO 
report on trade policy, which praises Canada’s improved transparency and openness to trade, 
is  nevertheless  critical  of  the  failure  to  put  an  end  to  major  trade  barriers.  In  the  agri-food 
industry  in  particular,  these  continuing  barriers  take  the  form  of  high  duties  on  sensitive 
products, quantitative restrictions and sanitary and phytosanitary concerns12. 

Other  countries  of  the  Group  often  support  Canada’s  criticisms.  Brazil,  for  instance,  has 
insistently demanded the abolition of the Community system of agricultural subsidies, has not 
been  very  receptive  to  the  notion  of  the  multifunctional  nature  of  agriculture  and  clumsily 
handled  negotiations  on  the  association  and  trade liberalisation  agreements between the EC 
and  the  South  American  Common  Market  (Mercosur)  of  which  it  is  part.  Very  keen  to 
strengthen its position as an agricultural exporter (agriculture already accounting for 34% of 
its exports), Brazil is also critical of the European market access problems encountered by its 
products, such as sugar, beef, fruit and poultry, soluble coffee and soya oil, that are subject to 
high customs duties. To step up support for its views in the area of food security, it has joined 
forces  with  its  Mercosur  partners  (Argentina,  Paraguay,  Uruguay,  Chile  and  Bolivia)  and 
Costa Rica to draw up targeted proposals in this area. 

12   The report points out in particular that the duties applied to products subject to tariff rate quotas, which are in excess of 300% in the 
dairy and poultry industries, are de facto quantitative restrictions and that sanitary and phytosanitary concerns mean that imports of 
meat are coming at present from only four countries. 

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The United States 

Its  major  power  and  capacity  for  trade  sanctions  make  the  United  States  one  of  the  most 
influential actors in the WTO. Its points of view, which are very different from those of the 
EU,  and  not  just  on  agricultural  issues,  have  been  presented  in  three  negotiating  proposals 
which  have  a  reforming  bent:  the  long-term  reform  of  agricultural  trade,  the  reform  of 
domestic support and the reform of tariff rate quotas.  

•  Having  taken  the  lead  in  decoupling  agricultural  support  (following  the  replacement  of 
the  old  system  of  ‘deficiency  payments’13  by  a  mechanism  of  fixed  direct  support 
decoupled from production volumes and prices), the United States is opposing the EU and 
proposing the abolition of  blue-box aid for which it no longer has any use. The USA is 
also threatening to increase its own subsidies substantially and has decided, if there is no 
new agreement, not to extend the peace clause.  

This strategy has been condemned, in particular by the EC, which are critical of the extent of 
the  support  measures  that  the  USA  has  recently  made  available  for  farmers14.  This  support 
increases  direct  payments  from  the  Federal  Administration  to  close  on  USD  16  000  per 
farmer, i.e. three times the amount of Community support.  

The  repeated  payment  of  additional  subsidies  that  are  felt  by  the  American  authorities  to 
come  within  the  green  box,  makes  any  discourse  about  the  need  for  a  global  reduction  of 
support for the agricultural sector less credible. It also raises questions as to whether domestic 
support has actually been reduced in the USA and, as a result, whether it has complied with 
its  Uruguay  Round  commitments.  These  questions  are  being  fuelled  by  the  rumours 
surrounding  the  preparations  for  the  new  Farm  Bill  which  is  to  replace  the  Federal  bill  on 
agricultural improvement and reform (the 1966 Fair Act), whose outcome must be decided by 
2002.  According  to  these  rumours,  a  new  system  of  ‘market-coupled’  subsidies  is  being 
planned for 2002. President Clinton was himself keen to explain that one of the purposes of 
the overhaul of the income support programme was better to target family concerns by taking 
account of losses of revenue in respect of current production and not just large enterprises on 
the basis of their past  production. A  policy  of this type is undoubtedly a cause for concern. 
Some might see the beginnings of a return to the coupling of support at a time when the EU is 
in the midst of its own reform. 

Like  the  EC,  the  United  States  forges  alliances  of  convenience  that  the  recent  changes  of 
direction  in  its  agricultural  policy  and  in  particular  the  repeated  award  of  ad  hoc  subsidies 
could call into question. The USA relies in particular on the support of the Cairns Group for 
further liberalisation of the agricultural sector and to gain recognition for the reforms that it is 
proposing.  It  is  also  trying  to  ally  itself  with  the  developing  countries  by  highlighting  the 
repercussions of the CAP and Community agricultural subsidies on their economies. 

13   Under  the  ‘deficiency  payment’  system  for  which  certain  products,  and  farmers  who  applied  for  it,  were  eligible,  the  majority  of 
support for agriculture was financed from the budget by offsetting the difference between a market price or loan rate fixed in advance 
for each year and a target price corresponding to the income level desirable for farmers set every year by the American Agriculture 
Department. Together with a land-freeze programme, the system offered farmers two types of advantage: 
- 

on the one hand, advance payment of the harvest amount in the form of a loan set at the level of the loan rate as a counterpart for 
the delivery of the harvest to a public intervention agency; 
on the other hand, a deficiency payment in respect of the quantities covered by the contract and up to certain thresholds. 
14   The grant, in June 2000, of USD 7.1 billion of direct additional support, supplementing the USD 8.2 billion spread over five years for 
crop insurance and a new supplement of USD 23 billion in the form of direct and production-related subsidies set out in the American 
bill on agricultural expenditure for 2001. 

- 

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The developing countries 

Long on the fringes of the decision-making process, the attitude of the developing countries 
towards their developed trading partners has been one of overall mistrust. 

•  As  recent  trade  liberalisation  has  proved  more  constraining  than  expected  and  has  not 
provided  them  with  the  gains  for  which  they  had hoped,  they are not at all  keen  on  the 
idea of a new comprehensive negotiating round, especially as they would have no control 
over its agenda. They are not systematically opposed to the  re-launch of the negotiating 
process,  however,  because  it  would  provide  them  with  more  of  an  opportunity  to  put 
forward  the  demands  and  concerns  that  they  consider  to  be  important,  such  as  the 
extension  of  transitional  periods  and  the  amendment  of  some  existing  rules.  Many 
developing  countries  are  also  opposed  to  the  inclusion  of  any  new  item  in  the  WTO’s 
built-in agenda until an agreement taking account of the imbalances in the WTO’s current 
rules and provisions is reached. Their view is that there should be a moratorium on any 
new  negotiations  until  there  is  due  compliance  with  the  procedures  and  criteria  for 
transparency,  publicity  and  participation  ensuring  results  that  appropriately  balance  the 
interests of all the Member countries.  

All the implications of the agriculture negotiations are of particular concern to the developing 
countries.  This  sector  is  in  practice  a  source  of  employment  for  50%  to  80%  of  their 
population,  in  comparison  with  only  5%  to  10%  in  the  developed  countries.  They  do  not 
therefore see agriculture in the same way as the developed countries. This explains why they 
are  so  critical  of  the  agricultural  support  policies  and  subsidies  that  some  industrialised 
countries have implemented.  

•  The developing countries are in particular critical of the destabilising effects of the CAP 

on local production, regional integration and the consumption model.  

•  They  also  complain  that  the  Agreement  on  Agriculture  places  them  in  a  disadvantaged 
position  by  depriving  them  of  the  right  to  implement  subsidies  and  by  forcing  them  to 
reduce  protection  of  their  products  when  they  cannot  see  any  concomitant  reduction  of 
import barriers in the developed countries.  

•  They also question problems of access to international and European markets and the lack 
of consistency of some objectives of the CAP and common market organisations with the 
development objectives that are being put forward. They are supported in this respect by a 
recent  OECD  study15  which  shows  that  the  emerging  economies  and  the  countries  in 
transition  have  been  hit  by  the  continuing  protection  of  agricultural  trade  in  the 
industrialised  countries  (lack  of  gains  in  terms  of  agricultural  market  shares,  downward 
trend  in  agricultural  support,  which  was  already  lower  than  the  average  for  the  OECD 
countries, at a time when support in industrialised countries was increasing).  

• 

Increasingly  concerned  to  preserve  their  agricultural  production,  they  are  demanding 
greater freedom of action in respect of agricultural policies geared towards development. 
Keen to protect food security and rural employment, they are looking to increase green-
box agricultural subsidies.  

15   OECD report on ‘Agricultural Policies in Emerging and Transition Economies: 2000’. 

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Japan 

The  recent  economic  and  financial  crisis  has  led  Japan  to  introduce  a  number  of  structural 
reforms  and  to  take  measures  to  stimulate  competition  and  further  to  liberalise  the  foreign 
trade  system.  Measures  likely  to  have  a  major  distorting  effect  on  competition  are  still  in 
existence,  however,  in  the  agricultural  sector  where  import  tariff  duties  are  still  high  and 
complex methods are used to administer tariff rate quotas. OECD data also show an overall 
level of support for agriculture that is above average, despite the introduction of a reform that 
moves away from a price support to an income support system.  

• 

• 

In agriculture, Japan’s alliances  differ  depending  on  the  issues  involved.  Japan  supports 
the European Communities in defending the multifunctional nature of agriculture which it 
promoted itself in July 1999 in its own agricultural legislation. The multifunctional nature 
of agriculture is in practice one of the four principles of the new fundamental law on food 
products,  agriculture  and  rural  areas,  on  a  par  with  the  stable  procurement  of  food 
commodities,  the  sustainable  development  of  agriculture  and  the  development  of  rural 
areas.  

Japan  is  aligned,  however,  with  the  American  and  Cairns  Group  proposals  criticising 
Community export subsidies. 

2.2.5. Current disputes  

Many  disputes  are  souring  trade  relations.  Some  have  already  been  brought  before  the 
WTO’s  Dispute Settlement Body (DSB)  and rulings  have  been  given. Others are latent and 
ready to boil over. These disputes, giving rise to considerable tensions, highlight far-reaching 
disagreements  between  countries,  for  instance  between  Europe  and the United States in  the 
area  of  sanitary  issues.  There  is  little  doubt  that  they  will  have  a  major  impact  on  the 
renegotiation  of  the  agreements  concerned  and  on  the  review  of  the  operation  of  the 
Understanding  on  Rules  and  Procedures  Governing  the  Settlement  of  Disputes.  An 
examination  of  pending  cases  connected  directly  or  indirectly  with  agriculture  or  the 
Agreement on Agriculture shows that eight of the 13 cases involve complaints brought by the 
United States. 

Two of these concern the EC: bananas and hormone-treated meat. The EC have brought two 
major complaints against the United States, the first in relation to Sections 301 to 310 of the 
American  bill  of  1974,  and  the  second  in  relation  to  the  tax  treatment  of  foreign  sales 
corporations, and have also requested consultations, in June 2000, on the use by the United 
States  of  rotating  sanctions  against  countries  that  do  not  comply  with  WTO  decisions.  A 
summary of the state of play of these disputes is given in Annex 4.  

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3. KEY STRATEGIES IN THE PROPOSALS 

By the end of March 2001, when the deadline set by the WTO’s Committee on Agriculture 
for  the  submission  of  proposals  expired,  110  governments  had  submitted  negotiating 
proposals, technical submissions and documents in the agricultural field. The 48 documents 
in question cover six main issues: 
- market access; 
- domestic support; 
- export competition; 
- special and differential treatment for developing countries; 
- non-trade concerns; 
- the restraint clause. 

3.1. Market access  

This  issue  is  addressed  in  27  comprehensive  or  specific  proposals.  Focusing  on  customs 
tariffs, tariff rate quotas, competition policy, the safeguard clause and the terms of special and 
differential treatment for developing countries, they highlight major differences of opinion as 
to the extent of the reform and the methods by which it is to be pursued.  

3.1.1. Customs tariffs 

In  the  area  of  customs  tariffs,  the  European  Communities  are  among  the  few  Members  to 
defend  the  status  quo  as  regards  tariff  liberalisation,  i.e.  an  overall  average  reduction  of 
bound tariffs together with a minimum reduction per tariff line, using the same methods as in 
the Uruguay  Round. They should, however, be able to rely on Switzerland, the Republic of 
Korea,  Japan,  Poland  and  Turkey.  Switzerland  is  arguing  a  fairly  similar  case  and  has 
proposed a progressive reduction of customs duties (taking account of non-trade concerns and 
special and differential treatment for developing countries) based on product-by-product and 
case-by-case  tariff  negotiation.  For  their  part,  Japan  and  the  Republic  of  Korea  have  also 
demonstrated that they are keen to defend a flexible approach to tariff protection.  

The other Members or groups of Members (United States, Cairns Group, Canada, Grouping 
of 11 Developing Countries16, ASEAN, Caribbean Community – CARICOM, India, Turkey) 
have  in  contrast  proposed  substantial  reductions  of  each  tariff  line  to  tackle  disparities  in 
tariff  levels,  which  they  would  like  to  reduce,  and  tariff  peaks  and  escalation,  which  they 
would  like  to  eliminate.  Several  methods  have  been  put  forward:  the  introduction  of 
reductions from applied rates (United States), caps on tariff bindings (India) and a maximum 
bound rate coupled with a minimum total reduction per tariff line (Canada).  

There  are  differences  of  opinion  nevertheless  as  to  the  pace  of  the  proposed  reductions,  in 
particular between the United States, which is arguing for progressive annual reductions, and 
other countries (Cairns Group, India, Morocco) which are arguing in contrast for rapid tariff 
dismantling and a substantial reduction of tariffs during the first year of implementation. 

16   Cuba, Dominican Republic, El Salvador, Honduras, India, Kenya, Nigeria, Pakistan, Sri Lanka, Uganda  and Zimbabwe. 

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India is arguing, moreover, that the tariff reduction commitments of the developing countries 
must be conditional  upon the actual reduction  of the developed countries’ tariffs within the 
three pillars of the reform. 

Apart  from  the  European  Communities,  which  have  not  dealt  with  this  aspect  specifically, 
everyone  agrees  that  tariff  systems  must  be  simplified  and  made  more  transparent,  putting 
forward  a  range  of  methods,  albeit  with  a  marked  preference  for  bound  ad  valorem  duties 
(United  States,  Cairns  Group,  Grouping  of  Developing  Countries,  Caricom,  Turkey).  To 
make  trade  preferences  more  stable,  transparent  and  predictable,  the  Caricom  countries  are 
also proposing the binding of preferential regimes and arrangements within the framework of 
the  Agreement  on  Agriculture,  the  extension  of  negotiations  to  non-tariff  measures  and  the 
introduction of a mechanism for the regular review of actual market access opportunities. 

3.1.2. Tariff rate quotas 

In  the  case  of  tariff  rate  quotas,  all  Members  agree  that  the  relevant  rules  need  to  be 
strengthened  in  order  to  improve  disciplines  and  general  methods  of  administration,  which 
should be simpler, more transparent and less restrictive.  

Some Members, however, have reservations in this area: 
- 

Japan is arguing that the tariff rate quota administration methods used should be based on 
specific national circumstances that are shaped by the characteristics of products and their 
methods of distribution;  
the Republic of Korea is supporting a flexible approach to tariff rate quota administration, 
provided that administration methods are transparent; 

- 

-  Norway  is  arguing  that  account  should  be  taken  of  the  sensitive  nature  of  domestic 
production of staple agricultural products when deciding on methods for minimum access 
quotas. 

As  regards  the  principle  of  the  quota  itself,  there  are  differences  of  opinion  between  the 
countries of the Cairns Group, apart from Canada, which are arguing for an increase in quotas 
by  volume  (with  a  substantial  initial  effort),  Canada,  which  is  envisaging  their  conditional 
preservation17,  and  the  United  States,  India  and  Turkey,  which  have  put  forward  radical 
proposals for their abolition.  
In addition to the progressive and complete abolition of tariff rate quotas, the United States is 
advocating, during the transitional phase needed for this, the modulation of within-quota rates 
depending  on  actual  quota  fill  (based  on  a  mechanism  triggering  quantitative  reduction  in 
cases of quota under-fill).  

17   Canada  sets  four  preconditions  for  the  preservation  of  quotas:  eliminating  within-quota  tariffs,  increasing  the  size  of  quotas  to  a 
common minimum threshold set by product and expressed as a percentage of the consumption of this product during a recent period, 
guaranteeing equal access to products and, lastly, setting over-quota customs duties depending on the extent of liberalisation of tariff 
rate quotas. 

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3.1.3. Competition policy  

A number of Members have examined the issue of competition policy, from various different 
points of view: 

- 

- 

the  EC  are  keen  to  defend  the  formulation  of  appropriate  provisions  ensuring  fair 
competition for high-quality products (protection against usurpation of names, protection 
of geographical indications or designations or origin and regulations on labelling); 

according  to  the  United  States,  the  stress  should  be  on  the  abolition  of  the  exclusive 
import  rights  of  importing  State-trading  enterprises  and  the  adoption  of  new  WTO 
provisions to ensure that their operations are more transparent. Other countries have put 
forward  similar  arguments  in  an  attempt  to  extend  the  scope  of  regulated  activities  to 
cover  the  activities  of  non-governmental  organisations  and  marketing  agencies  which 
have  import  and  export  monopoly  rights,  or  even,  in  the  case  of  Nigeria  and  Mexico, 
those of multinational companies; 

- 

Japan, in contrast, is arguing for the preservation of State import trading as a system that 
stabilises the food product supply. 

3.1.4. The special safeguard clause 

The  European  Union,  Japan,  Norway  and  Switzerland  are  the  only  developed  country 
Members  explicitly  arguing  for  the  preservation  of  the  special  safeguard  clause.  Their 
proposal  is  supported  by  the  ASEAN  countries  and  the  Republic  of  Korea.  Most  of  them 
have, however, introduced fine shading: 
-  

the introduction of a similar mechanism, accompanied by special conditions, for seasonal 
or perishable agricultural products (Japan, Republic of Korea); 
amended  provisions,  in  particular  as  regards  the  reference  period  and  the  additional 
customs duty system, in the special clause based on prices (Switzerland); 
extension  of  the  right  to  implement  the  special  safeguard  clause  to  all  developing 
countries that do not as yet possess this right (Norway). 

- 

- 

These views run counter, however, to the preferences of other WTO Members: the Grouping 
of  11  Developing  Countries  which,  with  the  Cairns  Group,  is  demanding  that  this  clause 
should be reserved solely for them, and the United States (supported by Poland, Turkey and 
Egypt) which is calling for its abolition.  

India,  which is in favour of preserving the clause only  for the  developing  countries since it 
shares  their  concern  to  guarantee  food  and  subsistence  security,  is  proposing  a  separate 
safeguard mechanism for its  peers which  is  more  in  keeping with their situation. Similar to 
the  special  safeguard  clause,  this  mechanism  would  make  it  possible,  in  specific 
circumstances and in cases of abruptly increasing imports or falling prices, to impose quantity 
restrictions,  irrespective  of  tariffication,  for  all  products  deemed  sensitive.  India  has  also 
indicated that it would like to abolish the special treatment set out in Section A of Annex 5 of 
the Agreement. 

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3.1.5. Special and differential treatment for developing countries 

Most  countries  accept  the  validity  of  the  principle  of  special  and  differential  treatment  for 
developing countries as regards market access. Their objectives in this area are often similar: 
substantial  improvement  of  the  access  opportunities  and  criteria  for  these  countries’  
products. There are, however, slight differences of opinion as to the extent of this treatment: 

- 

- 

the European Communities, supported by Norway, are committed to providing duty-free 
access for essentially all products from the LDCs. They also propose that the developed 
countries  and  the  wealthiest  developing  countries  should  provide  significant  trade 
preferences to the developing countries, in particular to the least-developed; 

the  Cairns  Group  is  calling  for  more  rapid  and  substantial  tariff  reductions  and  the 
abolition  of  duties  on  local  agricultural  products.  It  is  also  arguing  that  rules  for 
administering tariff rate quotas offering them better export opportunities should be drawn 
up and that only the developing countries should be entitled to use the special safeguard 
clause. 

The  other  proposals  from  the  developed  countries  are  less  radical  and  not  as  detailed  as 
regards  the  measures  envisaged;  the  US  proposals,  for  instance,  merely  mention  that  the 
interests  of  the  developing  countries,  and  in  particular  the  interests  of  the LDCs,  should  be 
taken  into  account  in  the  implementation  of  tariff  reductions  and  Japan,  which  defends  the 
principle  of  flexible  rules  and  disciplines  in  this  field  in  order  better  to  guarantee  the  food 
security of these countries. 

Most of the developing countries, in particular India, Turkey, Egypt, the Republic of Korea, 
the ASEAN countries and the smallest developing countries18 agree that preferential market 
access agreements should be maintained. Some consider that various other methods should be 
made available: 

-  maintaining appropriate levels of tariff binding, depending on the trade distortions that can 
be  attributed  to  the  developed  countries,  and  the  ability  to  raise  the  level  of  low  tariff 
binding which it has not been possible to rationalise during prior negotiations (India); 

-  special consideration for some products (sensitive, essential for food security or linked to 
non-trade  concerns)  with  the  right,  in  certain  circumstances,  to  adjust  the  related  tariff  
binding  (India  and  Egypt)  or  to  provide  greater  flexibility  as  regards  the  reduction  of 
border  protection  measures  either  through  an  alleviation  of  reduction  commitments 
(Republic of Korea) or through exclusion from these commitments (Egypt); 

-  other provisions such as the binding of non-reciprocal preferential rates of duty, exemption 
from the obligation to ensure minimum market access, the allocation of minimum access 
to the small island developing states, flexibility for countries which set up and implement 
regional trade arrangements and preservation of the special safeguard clause.  

18  

Including Swaziland, Mauritius and the coalition of small island developing states (Dominica, Jamaica, Mauritius, St Kitts and Nevis, 
St Lucia, St Vincent and the Grenadines and Trinidad and  Tobago). 

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3.1.6. Other proposals  

Some Members have submitted more specific proposals. These include: 

- 

- 

- 

- 

the  United  States  which  would  like  to  tackle  the  problem  of  genetically  modified 
organisms  through  targeted  disciplines  improving  the  transparency,  predictability  and 
implementation of procedures for trade in new-technology products; 

the  Grouping  of  11  Developing  Countries  which  would  like  to  tackle the problems  that 
the SPS Agreement raises for them, and Mauritius which is demanding that application 
of this Agreement should be more flexible for the developing countries19, the provision of 
appropriate  technologies  and  measures  to  facilitate  participation  by  these  countries  in 
international standards organisations; 

the  United  States  and  Canada  which  support  the  principle  of  an  extension  of  sectoral 
liberalisation; 

the countries  with  transition economies  which  are calling for specific provisions on 
flexibility,  in  the  context  of  future  tariff  reduction  and  commitments  relative  to  market 
access,  exempting  them  from  additional  reduction  commitments  for  low  tariffs  and 
allowing them to make selective reduction commitments. 

3.2. Export competition 

The pillar of the reform programme relating to export competition has been addressed more 
or  less  comprehesively  by  the  main  Members.  Although  proposals  are  more  particularly 
concerned  with  export  subsidies,  other  aspects  of  competition  have  been  brought  to  the 
negotiating  table,  including  export  credits,  State-trading  enterprises,  food  aid,  competition 
policy and methods of special and differential treatment in this field for developing countries. 

3.2.1. Export subsidies 

Members  which  have  submitted  proposals  on  export  competition  have  all  put  forward 
recommendations  in  respect  of  export  subsidies,  with  the  one  exception  of  the  European 
Communities.  

•  The EC have in practice geared their negotiating strategy to the extension of WTO rules 
and disciplines to all forms of export subsidy, and in particular officially supported export 
credits, as a precondition for negotiation.  

•  This has placed them in a difficult position, however, as the EC are facing the united front 
of  other  Members  calling  for  their  abolition  (United  States,  Cairns  Group,  Japan, 
ASEAN, etc.), with varying degrees of commitment to its achievement: 
-  progressive  reduction  of  annual  commitment  levels  over  a  specified  period  until  they 

are completely abolished by value and by volume (United States); 

19   So as not to be in a position, when a country is not able to conduct detailed risk assessments, where it is not able to refuse, on the 

pretext of trade concerns, the entry of a product into its territory. 

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-  progressive  elimination  together  with  a  substantial  reduction  commitment  during  the 
first  years  of  implementation  and  a  strengthening  of  the  anti-circumvention  rules  in 
order to  prevent  the use of other unfair forms of export competition measures (Cairns 
Group); 

-  average reduction by value and by volume coupled with the binding of the unit value of 

subsidies, with a progressive reduction (Japan); 

-  immediately  and  together  with  an  unconditional  prohibition  on  their  use  by  the 

developed countries (ASEAN). 

•  The  EC’s  demand  that  the  focus  should  not  just  be  on  export  subsidies,  but  also  on  the 
reduction  or  even  abolition  of  other  types  of  measures  that  have  distorting  effects,  has 
nevertheless  been  echoed  by  other  Members  (Mercosur  and  associated  countries,  Japan, 
Norway, India, Turkey, Switzerland, Egypt and Poland). 

More  marginally,  other  WTO  partners  are  in  contrast  worried  at  any  strengthening  of  the 
disciplines  on  export  competition.  This  is  clearly  evident  from  the  Mauritian  negotiating 
proposal  which  highlights  the  positive  impact  of  export  competition  measures.  As  well  as 
preserving the exemptions set out in Article 9.4 of the Agreement on Agriculture, Mauritius 
is  calling  for  the  implementation  of  measures  compensating  for  any  strengthening  of  the 
disciplines in the field of export competition for the net food-importing developing countries. 

3.2.2. Export credits  

The main Members or  groups of Members that have addressed this issue, i.e. the European 
Communities,  the  United  States,  Japan,  ASEAN,  Mercosur  (in  conjunction  with  Bolivia, 
Chile, Costa Rica and Guatemala), India and Malaysia, Mauritius and Turkey, agree that the 
use of export credits should be disciplined.  

• 

In  contrast  to  the  EC,  however,  which  argue  that  rules  should  be  drawn  up  following  a 
more  detailed  examination  of  their  role,  forms  of  use  and  impact  on  trade  and  that  the 
future  OECD  arrangement  should  be  integrated  into  the  re-negotiated  Agreement  on 
Agriculture,  the  United  States  would  like  to  abide  solely  by  the  OECD  negotiations,  in 
accordance with Article 10.2 of the Agreement on Agriculture.  

•  Mercosur and the countries associated with its proposal stress that a clear approach needs 
to  be  taken  in  order  to  cover  and  govern  all  forms  of  export  credit  and  to  prevent  any 
circumvention  of  export  subsidy  commitments.  Account  also  needs  to  be  taken,  in  this 
approach, of the needs of developing countries, in practice by providing them with special 
and differential treatment (ASEAN, Mauritius, Japan).  

3.2.3. State-trading enterprises 

Only  the  United  States,  the  European  Communities,  Japan  and  the  Republic  of  Korea  have 
submitted recommendations on state-trading enterprises. Sharing a concern to ensure that the 
operation of these organisations is more transparent, they propose the adoption of clearer and 
stronger disciplines including: 
-  

the  abolition  of  the  exclusive  export  rights  and  official  support  or  balancing  subsidies 
(state funds or guarantees) to which some exporting state-trading enterprises are entitled 
(United States); 
the prohibition of unfair trading practices (cross-subsidisation, price pooling, etc.) which 
facilitate their intermediation (EC); 

- 

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- 

- 

the introduction of  a notification system that is mandatory (EC)  and complete, covering 
planned  or  past  activities,  coupled  with  strengthened  obligations  as  regards  exports 
(Japan); 
a  system  to  prevent  the  circumvention  of  export  competition  reduction  commitments 
(Republic of Korea). 

Mauritius, however, has cautioned the other Members against any measures in this field that 
are too strict. Bearing in mind that intervention by state-trading enterprises may be useful in 
small  markets,  Mauritius  merely  proposes  a  moderate  and  prudent  strengthening  of  the 
relevant  disciplines20.  Other  small  states  have  submitted  similar  sectoral  demands,  such  as 
Mali for cotton.  

3.2.4. Food aid  

Pointing to the lack of adequate WTO provisions to prevent abuses of food aid, the European 
Communities would like the negotiations to cover the forms that this type of aid should take 
so that the relevant rules can be revised and strengthened. They stress in particular that food 
aid should be given fully in grant form and in a way that does not damage local production. 
Their recommendations in this field include devising a code of good conduct and drawing up 
concrete  provisions  (including,  among  other  things,  the  definition  of  the  types  of  operation 
covered,  a  list  of  recipients  and  a  mandatory  notification  mechanism).  Several  countries 
(including Switzerland, Mercosur and India) support the EC.  

Less concerned with reform in this area, the United States has merely reiterated that it is in 
favour  of  this  system  and  that  the  disciplines  set  out  in  Article  10.4  of  the  Agreement  on 
Agriculture should be maintained.  

3.2.5. Export restrictions  

In order to place the world supply on a more secure footing and make access to commodities 
more secure, several Members (United States, Cairns Group, Japan, Switzerland) consider, as 
regards competition policy, that the disciplines on export restrictions (quantitative restrictions 
and  export  taxes)  need  to  be  strengthened.  Their  aim  is  to  improve  the  rules  on  export 
restrictions through: 
- 

the  provisions  of  Article  12.1  of  the  Agreement  on  Agriculture  and  special  and 
differential treatment for developing countries (Cairns Group); 

-  more restrictive measures including the prohibition or even the abolition of certain export 

- 
- 

taxes (United States, Republic of Korea); 
the zero-binding of all export customs duties for all non-LDC members (Switzerland); 
a  more  specific  system  (Japan).  This  would  include  the  tariffication  of  all  export 
restrictions, the limitation of export taxes together with exemption quotas, clarification of 
the  disciplines  on  emergency  measures  to  restrict  exports  and  lastly  stricter  application 
conditions. 

3.2.6. Special and differential treatment for developing countries 

The  Cairns  Group,  the  ASEAN  countries,  the  Republic  of  Korea,  India,  the  Mercosur 
countries,  Bolivia,  Chile,  Costa  Rica,  Guatemala,  Morocco  and  Mauritius  argue  that  a 
differential system should be introduced in the field of export competition. This system could 
take the practical form of: 

20   To be envisaged within the framework of Article XVII of GATT 1994 (State-trading enterprises). 

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- 
- 

- 

- 

longer implementation deadlines (Cairns Group); 
the extension of the exemption from export subsidy reduction set out in Article 9.4 of the 
Agreement on Agriculture until all export subsidies are actually eliminated and prohibited 
(Cairns  Group,  ASEAN)  and  the  extension  of  its  scope  of  application  (Republic  of 
Korea); 
reduction  commitments  that  are  lighter  (Republic  of  Korea)  or  suspended  for  some 
sensitive products of small island developing states (Mauritius); 
the  implementation  of  special  instruments,  that  are  easy  to  apply,  to  prevent  dumping 
practices  (Morocco)  or  even  the  provision  of  minimum  interest  rates  and  longer 
repayment  terms  for  the  LDCs  and  net  food-importing  countries  (Mercosur  and  the 
countries associated with its specific proposal). 

3.3. Domestic support  

The 22 proposals dealing with domestic support agree in principle that a framework is needed 
for support and agree, overall, that a new reduction is needed. They differ, however, as to the 
methods, size and scope of the reductions to be imposed. 

3.3.1. The extent and method of the reform 

•  As with their position on market access, the European Communities have no wish to call 
into question  the approach agreed at  the Uruguay Round as regards the classification of 
support  measures  and  their  treatment.  The  EC  will  negotiate  a  new  reduction  of  non-
exempt  support  only  if  the  blue  and  green  boxes  are  kept.  They  also  propose  to  apply 
specific disciplines to amber box subsidies which boost export performance.  

• 

Japan, the Republic of Korea, Poland, Norway and Switzerland also argue that the current 
framework  of  rules  and  disciplines  on  domestic  support  should  be  maintained  and  in 
particular  that  the  benefits  and  utility  of  blue-box  measures  should  be  preserved  and 
recognised. These countries stress that: 
-  the  level  of  the  AMS  should  be  calculated  in  a  realistic  way  –  which  rules  out  any 

negotiation of a fixed percentage of total agricultural production (Japan); 

-  only  AMS  measures  accorded  to  export  production  should  be  subject  to  new 
reductions, while domestic support for agricultural production for the domestic market 
should be subject to less strict commitments (Norway); 

-  a  certain  level  of  support  should  be  permitted,  even  if  the  measures  in  question 
influence  production  and  trade,  with  the  result  that  the  reduction  of  the  level  of 
domestic  support  can  only  be  gradual,  on  an  aggregate  basis  and  of  a  scope  that  is 
acceptable to each country (Republic of Korea); 

- 

-  each  Member  should  have  the  right  to  institute  and  maintain  blue-box  payments  and 
should have a degree of flexibility as regards the scope and pace of its AMS reduction 
(Poland); 
it  would  be  preferable,  prior  to  any  new  reduction  of  market-distorting  amber-box 
measures, to reach agreement on the definitions of and instruments applicable to green- 
and  blue-box  domestic  support,  so  that  better  account  can  be  taken  of  non-trade 
concerns, the multifunctional nature of agriculture and special and differential treatment 
(Switzerland). 

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•  The United States have in contrast chosen radically to simplify the disciplines on domestic 
support. They propose to restructure support measures into two boxes, ‘exempt’ and ‘non-
exempt’,  and  to  make  the  non-exempt  support  of  each  Member  subject,  over  a  specific 
period,  to  annual  and  progressive  reductions  up  to  a  specified  percentage  (identical  for 
everyone) of the value of total agricultural production. 

•  The Cairns Group, ASEAN and the Grouping of 11 Developing Countries21 would like to 
go  further.  They  are  arguing  not  just  for  the  elimination  of  disparities  between  support 
levels but also for the complete abolition of production and trade-distorting support (AMS 
and blue box). Some countries are calling for a cap on total support, whether this is limited 
or not to the developed countries: 
-  Canada, for instance, is proposing that a global limit on all types of support should be 
negotiated, together with substantial reductions of amber- and blue-box support, using a 
formula  and  parameters  (period,  degree  of  aggregation  or  disaggregation)  to  be 
decided; 
the  Grouping  of  11  Developing  Countries  is  calling  for  all  aid  boxes  to  be  collapsed 
into a single box called ‘general subsidies’ and for controls of this support linked to the 
level of subsidies22. 

- 

• 

India has chosen to distance itself, arguing for a ceiling on non-exempt domestic support, 
a significant reduction of support in general and the recognition of a ‘food security’ box 
for  developing  countries  as  a  supplement  to  the  measures  already  exempted  under  the 
Agreement  on  Agriculture.  In  addition  to  a  revision  of  the  scope  and  methods  of 
reduction of the AMS (so that it includes measures that have up to now been exempt and 
is returned to a maximum period of three years for the developed countries and five years 
for the developing countries up to the current de minimis level), India is envisaging a cap 
on product-specific support that it is proposing to set at twice the relative de minimis level 
and the adoption of notification methods that take better account of the impact of inflation 
and exchange rate fluctuations. 

3.3.2. Exempt domestic support 

Most of the proposals examined call for a review of green-box criteria, although for different 
purposes. 

•  The  EC,  Japan  and  the  Republic  of  Korea  would  like  to  extend  the  scheme  to  other 
measures  so  that  better  account  can  be  taken  of non-trade concerns (EC) and the actual 
production situation (Japan) and the multifunctional nature of agriculture can be correctly 
reflected (Republic of Korea). 

•  The  other  countries  are  not  in  favour  of  this  proposal  and  are  in  contrast  arguing  for 

exemptions limited: 
- 

to targeted and transparent support measures that have the least possible repercussions 
on the other Members, in particular the developing countries, on the basis both of the 
current  provisions  of  the  Agreement  on  Agriculture  (food  security  and  the 
environment)  and  new  objectives  that  take  account  of  non-trade  concerns  (United 
States); 

21   Cuba, Dominican Republic, El Salvador, Haiti, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka, Uganda and Zimbabwe. 
22   Exemption above a minimum support level that could be set at 10% of production, possibility of action against the developed countries 
for support that is more than 5% higher than this minimum level coupled with protection for the developing countries under the due 
restraint clause, prohibition of any support more than 15% higher than this minimum level with the proviso of special provisions for 
developing countries. 

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-  provided that the exempted measures do not have trade-distorting effects or that their 
effects  are  zero  or  at  most  minimal  (Cairns  Group)  and  that  the  disputed  provisions 
(such  as  direct  payments  to  producers,  decoupled  income  support  and  State 
participation in income guarantee/support programmes) are abolished (India). 

•  The  developing  countries  are  also  calling  for  better  account  to  be  taken  of  the  special 
circumstances (Morocco) and needs of developing countries in the areas of food security 
(ASEAN,  India),  poverty  alleviation,  rural  development,  rural  employment  and 
agricultural diversification (India). 

In opposition  to countries  that  support  the  preservation of the de  minimis threshold (United 
States, Cairns Group and the Republic of Korea), a number of Members are keen, some more 
than others, to call it into question and are proposing:  
- 

its  reduction  solely  for  the  developed  countries  (EC  and  Morocco)  or  its  abolition  for 
these countries (ASEAN); 
an increase in its level, but only for the developing countries (Grouping of 11 Developing 
Countries23). 

- 

3.3.3. Special and differential treatment for developing countries 

Many proposals have been submitted on the content and form of the special and differential 
treatment that could be accorded to the developing countries under the forthcoming reform of 
the domestic support pillar. They take a strengthening of the exemption of domestic support 
programmes  that  are  geared  towards  these  countries’  development  aims  and  needs  as  their 
starting point. 

•  The  United  States  is  proposing,  for  instance,  to  exempt  support  measures  based  on 
supplementary  criteria  and  considered  essential  for  the  achievement  of  the  development 
and food security objectives of developing countries and LDCs. 

•  The Cairns Group is calling for the implementation of provisions that are more concrete, 
more in keeping with the concerns of development countries and suitably flexible. These 
measures could be based on the existing green-box rules covering the needs of developing 
countries,  supplemented  by  specific  measures  and  differential  commitments  for  these 
countries.  In  order  to  support  their  agricultural,  rural  development  or  food  security 
programmes,  the  Group  is  also  very  keen  to  intensify  technical  assistance  and 
international cooperation programmes. 

•  Several other Members have also stressed that developing countries need to be provided 

with greater flexibility. This would enable them to: 

-   have specific support boxes (a ‘development’ box covering objectives in keeping with 
their circumstances – Grouping of 11 Developing Countries24, or a ‘food security’ box 
- India); 
address concerns linked to the vitality of rural areas and food security (EC); 

- 
-  promote programmes for agricultural development or diversification (ASEAN, India), 
poverty alleviation (India) or intended to satisfy their own consumption needs (Japan). 

23   Cuba, Dominican Republic, El Salvador, Haiti, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka, Uganda and Zimbabwe. 
24   Cuba, Dominican Republic, El Salvador, Haiti, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka, Uganda and Zimbabwe. 

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Reduction  commitment  exemption  measures  could  be  linked  to  the  revision  of  the  de 
minimis box, the introduction of a due restraint clause solely for the developing countries, 
better controls of the criteria for and methods of supply of food aid and an intensification 
of  all  forms  of  assistance  by  the  developed  countries.  The  ASEAN  countries  are  also 
calling  for  a  clear  demarcation  between  domestic  measures  that  lead  to  overproduction 
and  fuel  exports  and  those  geared  towards  the  food  security  problems  of  developing 
countries.  

• 

In addition to the developing countries, the countries with transition economies are asking 
for exemption from  the  reduction commitments decided in the area of domestic support 
and for an increase in the threshold of the de minimis box. Poland has specifically asked 
for authorisation to implement appropriate measures to mitigate the effects of the fall in 
profitability likely to result from the implementation of the Agreement. 

As can be seen from the various proposals discussed above, WTO Members agree that a more 
satisfactory  and  more  practical  system  of  special  and  differential  treatment  would  be 
reasonable  and  useful.  This  agreement  is  nevertheless  fragile  as  some  Members  could  be 
tempted,  along  the  lines  of  the  ‘Friends  of  Multifunctionality’,  to  broaden  the  debate  by 
endeavouring  to  defend  the  very  principle  of  the  right  of  countries  to  pursue  rural 
development  policies  in  which  agriculture  has  a  key  role  to  play  and  to  make  provision,  in 
WTO rules, for enough flexibility for all countries that have decided to see them through.  

3.4. Special and differential treatment for developing countries  

Two  groups  of  Members,  the  Grouping  of  11  Developing  Countries25  and  ASEAN,  have 
submitted proposals  to the WTO dealing  specifically  with  special  and  differential treatment 
for  developing  countries.  The  content  and  methods  of  strengthened  special  and  differential 
treatment  are  often  covered,  moreover,  by  other  Members’  thematic  and  comprehensive 
proposals. 

3.4.1. The broad lines  

The various proposals highlight the importance of an appropriate, flexible and comprehensive 
system  for  developing  countries,  that  takes  a  flexible  approach  to  the  implementation  of 
exemptions from reduction commitments, and for differential treatment. Some Members are 
also calling for targeted contributions by the developed countries, as a token of efficiency and 
credibility, and for a review of the Ministerial Decision on Measures Concerning the Possible 
Negative  Effects  of  the  Reform  Programme  on  Least-Developed  and  Net  Food-Importing 
Developing Countries in order to ensure that it can be effectively implemented. 

Motivated chiefly by the concern to preserve food security in these countries, this flexibility 
could take the form of granting them more autonomy as regards methods of action (ASEAN) 
and more flexibility as regards their implementation (EC, Poland, Japan). A similar approach 
could be taken to measures to address other concerns linked to the vitality of rural areas and 
poverty (EC) and to rural employment (Republic of Korea).  

25   Cuba, Dominican Republic, El Salvador, Haiti, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka, Uganda and Zimbabwe. 

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Exemption from reduction commitments would cover: 
-   direct or indirect support measures which are an integral part of development (ASEAN), 
food  security,  poverty  alleviation,  rural  development,  rural  employment  and  agricultural 
diversification programmes (India) or programmes which are intended to step up national 
production or purchases of food products for public stockholding (Nigeria); 
some types of export subsidies (ASEAN, India, Japan, Republic of Korea) or some forms 
of export competition or State trading (Japan); 
the most sensitive products (Mauritius); 

- 
-  natural disasters (Small Island Developing States). 

- 

Differential treatment would give the developing countries some exclusive rights including: 
the  use  of  the  special  safeguard  clause  (Grouping  of  11  Developing  Countries),  the 
- 
extension of the right to its use to all developing countries that do not already possess this 
right (Norway) and, in all cases, the right to a mechanism which is similar (Caricom) or 
specific (India);  

- 

-  duty-free  access  for  essentially  all  products  of  the  LDCs  and  non-reciprocal  trade 
preferences (EC, Norway, Small Island Developing States, Swaziland), revised principles 
of a general preference system incorporated in the Agreement on Agriculture (ASEAN); 
the maintenance of exempt support measures for the developing countries (Cairns Group, 
Turkey,  Nigeria),  or  their  extension  (Norway,  India,  United  States),  or  the  creation  of 
boxes  for  specific  support  measures  such  as  a  ‘development’  box  covering  objectives 
specific  to  developing  countries  (Grouping  of  11  Developing  Countries)  or  a  ‘food 
security’ box based on instruments appropriate for this purpose (India); 
the preservation for these countries of the de minimis box (ASEAN), or the raising of its 
threshold  (Grouping  of  11  Developing  Countries,  Small  Island  Developing  States, 
Norway); 
longer implementation periods in the area of export competition (Cairns Group); 
an  intensification  of  assistance  from  the  developed  countries  (EC,  United  States,  Small 
Island  Developing  States,  Republic  of  Korea,  Norway,  Egypt)  in  particular  as  regards 
anti-dumping  and  countervailing  duties  (Caricom)  and  the  strengthening  of  bilateral  or 
multilateral  food  aid  programmes  through  an  international  food  stockholding  system 
(Japan); 

- 
- 

- 

-  use  of  the  peace  clause  for  a  minimum  period  of  10  years,  coupled  with  limited 

implementation thereafter (India). 

The developing countries point out that these special measures cannot be placed on a concrete 
footing unless there is an effective contribution from the developed countries. This could 
take the form of: 
-  more  restrictive  commitments  (higher,  more  drastic  or  faster  reductions  of  support  or 

protection for sectors or products of interest to developing countries); 

-  waiving  of  a  certain  number  of  prerogatives  (such  as  the  peace  clause,  the  special 

safeguard clause, etc.). 

Particular cases  

Some Members do not just support the principle of special and differential treatment but are 
also  calling  for  special  provisions  in  keeping  with  their  situation.  Swaziland,  for  instance, 
considers that the need for special and differential treatment specific to the most vulnerable 
developing countries should be recognised. In addition to maintaining, for a sufficiently long 
period, the preferential market access agreements from which small developing countries 

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WTO agricultural negotiations 

benefit  (in  particular  market  access  at  guaranteed  prices  for  sensitive  products),  Swaziland 
stresses  that  small  developing  countries  should  be  entitled  to  protect  their  local  production 
against imports likely to threaten the existence of local industry and that safeguard measures 
should be retained for that purpose.  

The  negotiating  proposal  from  the  Small  Island  Developing  States  takes  the  same  line,  i.e. 
obtaining  special  provisions  that  take  account  of  their  structural  weaknesses  and  the  efforts 
that  some  of  them  have  made  in  the  area  of  trade  liberalisation,  with  two  main  concerns: 
better protection from the points of view of security of access and food security.  

3.5. Non-trade concerns 

The  issue  of  non-trade  concerns  is  addressed  in  at  least  ten  submissions,  including  the 
submission on non-trade concerns from the ‘Friends of Multifunctionality’. 

The multifunctional nature of agriculture 

Support  for  the  multifunctional  nature  of  agriculture  has  two  objectives.  First,  to  maintain 
special  treatment  for  this  sector  in  the  WTO.  Second,  to  provide  reasonable  flexible 
multilateral  trade  rules  allowing  the  various  countries,  on  the  basis  of  their  respective 
situations, to implement policies and measures that satisfactorily address non-trade concerns 
(in the areas of rural development and food security in particular, and from the environmental 
and cultural point of view) while ensuring, however, that there is minimal trade distortion. 

•  The European Communities propose, in this area, that targeted and transparent measures 
that  are  no  more  than  minimally  trade-distorting  should  be  accommodated  in  the 
Agreement  in  order  to  protect  the  environment  and  promote  the  sustainable  vitality  of 
rural  areas  and  poverty  alleviation.  They  are  supported  by  Norway,  Japan  (which 
considers that the reform process cannot be pursued unless the co-existence of the various 
types  of  agriculture  is  respected)  and  Switzerland.  Switzerland  has  nevertheless  pointed 
out  that  the  rules  and  disciplines  of  the  Agriculture  Agreement  need  to  be clarified and 
appropriate instruments developed.  

•  This  call  for  clarification  has  also  been  echoed  by  a  number  of  developing  countries 
(Swaziland, Mauritius, Morocco) which would like to protect their interests by ensuring 
that the Agreement takes better account of their non-trade concerns and better pinpoints 
the  impact  of  the  non-trade  concerns  of  the  developed  countries  on  their  agriculture. 
Having  decided,  in  the  absence  of  concrete  measures  (such  as  Morocco’s  proposal  to 
create  a  world  fund  fed  by  the  developed  countries  for  the  purposes  of  financing 
multifunctionality  measures),  not  to  give  any  ground  in  this  area,  they  are  prepared  to 
reject  all  measures  in  support  of  the  multifunctionality  of  agriculture  of  the  developed 
countries.  India  has  warned  its  partners  that  the  non-trade  concerns  at  issue,  food  and 
subsistence  security and the  development of genuine  food autonomy being at the top of 
the list, are not at all the same as those being put forward by some developed countries 
under the pretext of the multifunctionality of agriculture. India considers that the latter are 
intended  rather  to  perpetuate  trade-distorting  subsidies  and  place  them  on  a  legitimate 
footing. 

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Product quality  

Aspects relating to product quality have been addressed by the EC, Japan, Republic of Korea, 
Switzerland and the Caricom countries. 

•  The  European  Communities  argue  in  this  area  that  the  legal  protection  of  products 
(geographical indications and designations of origin) should be stepped up. They call for 
effective protection against usurpation of names in the food and beverages sector and for 
effective  market  access  that  enshrines  the  right  to  use  the  name  to  which  a  product  is 
entitled. They also propose that the use of precautionary principle should be recognised, 
after  clarifying  the  way  in  which  it  is  applied,  in  order  to  respond  to  consumers’ 
legitimate concerns about food safety and  to satisfy their  need for better information on 
production  and  processing  (in  particular  through  appropriate  regulation  of  labelling 
systems and protection against usurpation and deception). 

•  Switzerland  and  Caricom  are  also  arguing  for  the  extension  of  the  provisions  on 
geographical  indications.  Switzerland  is calling in  particular for close coordination with 
other  WTO  bodies  addressing  this  issue  (TRIPS).  Switzerland  feels  that  a  similar 
approach  should  be  taken  to  labelling  (TBT),  food  safety  (SPS),  the  environment  and 
other international organisations or bilateral instruments.  

• 

Japan has stressed that better account needs to be taken of concerns connected with food 
safety. It is proposing, for this purpose, a review of the provisions of the SPS Agreement 
to  establish  whether  or  not  they  are  adequate,  an  improvement  of  inspection  and 
quarantine  measures,  the  establishment  of  a  system  of  information  through  appropriate 
labelling of imported and exported products and the adoption of appropriate international 
rules  within  the  CODEX  as  regards  the  labelling  of  genetically  modified  organisms 
(GMOs). It is supported on this issue by the Republic of Korea. In a concern to provide 
better  consumer  protection,  the  Republic  of  Korea  is  recommending  the  adoption  of 
provisions on food quality and safety and on the potential risks of GMOs to human health 
and  the  environment,  taking  due  account  of  the  need  for  consumer  precaution  and 
information.  

Animal welfare  

The  European  Communities  are  the  only  WTO  Member  to  submit  a  specific  proposal  on 
animal welfare. In an attempt to gain recognition for this concern in multilateral trade rules, 
the EC are proposing: 
- 
- 
- 

the development of multilateral agreements on animal welfare; 
the introduction of appropriate (compulsory or voluntary) labelling; 
an  examination  to  establish  whether  or  not  compensation  of  the  additional  costs  that 
would be involved can be exempted from reduction commitments. 

3.6. The due restraint clause  

Ten proposals address the issue of the due restraint clause. Some are in favour of keeping it, 
while others argue for its revision or even abolition. 

•  The  EU  is  very  keen  to  keep  the  due  restraint  clause.  It  is  supported  by  Norway, 
Switzerland and Mauritius, which is calling for the extension of its scope of application. 

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WTO agricultural negotiations 

•  The grouping of developing countries composed of Cuba, Dominican Republic, Honduras, 
Pakistan, Haiti, Nicaragua, Kenya, Uganda, Zimbabwe, Sri Lanka and El Salvador argues 
that this mechanism should be kept, but only for the developing countries. 

•  India  has  taken  a  more  aggressive  stance  and  has  called  for  its  immediate  abolition  for 
export subsidies and for the rationalisation of its use for other types of subsidy during the 
transitional period agreed for its abolition. 

•  Other countries (including Canada) have taken a middle line, and are more keen to review 

the methods of application of the clause than to abolish its use completely. 

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WTO agricultural negotiations 

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WTO agricultural negotiations 

4. REACTIONS OF WTO MEMBERS TO THE EC PROPOSALS 

4.1. The general reaction  

A number of statements show the attention that certain Members have paid to the proposals 
put  forward  by  the  EC.  Unsurprisingly,  the  Republic  of  Korea,  Norway  and  the  countries 
with transition economies (some of which are awaiting accession to the EU) have confirmed 
their  support  for  the  main  points  of  view  put  forward.  Members  which  do  not  support  the 
Community line have found the EC comprehensive proposal constructive but too moderate.  

As  the  United  States  has  not  as  yet  submitted  an  official  statement,  most  of  the  comments 
have  come  from  Cairns  Group  countries.  They  can  be  summarised  as  follows:  a  goodwill 
submission  that  nevertheless  paves  the  way  for  a  whole  range  of  disagreements  and  that, 
overall, lacks the drive needed for a substantive reform of agriculture.  

The  desire  to  preserve  the  status  quo  evident  from  the  EC’s  proposals  is  also  criticised  by 
some  ASEAN  countries.  The  latter  complain  in  particular  that  the  EC  submissions  take 
inadequate account of the long-term objective of substantial progressive reductions of support 
and protection  and  that too many aspects that are highly trade-distorting remain unchanged. 
Although they doubt whether the proposals are relevant to the objective of a fair and market-
oriented agricultural  trade  system, these countries are, however, more receptive  to  the  EC’s 
position on special and differential treatment for developing countries.  

India, which also censures the EC’s defensive position, nevertheless supports the objective of 
ensuring  that  all  Members,  and  in  particular  developing  countries,  benefit  fully  from  the 
expansion  of  world  trade.  India,  which  is  in  favour  of  introducing  conditions  to  improve 
developing countries’ access to the markets of the industrialised countries and of preserving 
protection  for  the  most  vulnerable  countries  during  their  necessary  phases  of  adaptation,  is 
awaiting concrete proposals from the EC.  

The  Community  approach  to  the  continuation  of  the  reform  process  has  also  elicited  some 
reactions as to the ways in which non-trade concerns should be taken into account. Different 
points of view are put forward in the statements depending on the way in which each Member 
interprets Article 20 which is the basis for the negotiations. The EC and the countries most in 
favour of the Community proposals share a concern to find a balance between trade and non-
trade  concerns  in  the  reform  process.  Rather  than  limiting  negotiations  to  the  traditional 
‘tripod’  (market  access,  export  competition  and  domestic  support),  they  consider  that  the 
issue  of  multilateral  agricultural  trade  should  be  tackled  from  angles  that  are  not  strictly 
trade-related  in  order  to  fulfil  two  expectations:  the  expectations  of  developing  countries, 
through  proposals  for  the  development  of  special  and  differential  treatment  for  such 
countries,  and  the  expectations  of  society,  through  proposals  that  recognise  its  main 
aspirations. 

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4.2. Reactions to the detailed proposals 

Market access  

In the area of market access, the EC propose: 

- 

- 

- 

tariff reductions according to the Uruguay Round formula (overall average reduction of bound tariffs and a 
minimum reduction per tariff line); 

the definition of a set of rules and disciplines to increase the transparency, the reliability and the security of 
the management of tariff rate quotas in order to optimise their use;  

appropriate  provisions  to  ensure  fair  competition  in  respect  of  high-quality  products  (protection  of 
consumers  against  usurpation  of  names  and  the  right  to  use  geographical  indications  and  designations  of 
origin, by means of regulations on labelling); 

- 

the continuation of the special safeguard clause. 

Comments  by  WTO  Members  on  the  EC’s  proposals  in  this  area  reflect  a  whole  range  of 
opinions.  Particular  criticism  has  been  levelled  at  the  continuation  of  the  Uruguay  Round 
formula. Many countries are disappointed that the EC is taking no account at all of the need 
to  reduce  or  even  eliminate  tariff  peaks  and  tariff  escalation,  in  particular  for  products  of 
interest  to  the  developing  countries.  Others  consider  that  the  continued  use  of  the  previous 
reduction formula would leave certain Members free to make substantial reductions in respect 
of  non-sensitive  products  and  minimal  reductions  in  respect  of  other  products  and  that  it 
would not place enough checks in the way of countries maintaining tariff peaks. 

Most countries agree, however, with the EC’s proposal to improve the rules and disciplines 
on  tariff  rate  quotas.  Some  countries,  for  instance  Argentina,  point  out,  however,  that 
provision  needs  to  be  made  for  their  progressive  elimination.  India’s  view  is  that  a 
clarification of tariff rate quota administration methods, however useful, will not be sufficient 
to  tackle  the  problems  that  developing  countries  are  facing  unless  account  is  taken  of  the 
problems of new or small exporting countries in the negotiations. Other developing countries 
consider  that  reductions  of  in-quota  and  outside-quota  tariff  rates,  a  periodical  increase  in 
tariff volumes and the introduction of quotas that are product-specific, and not for aggregate 
groups of tariff lines, are also indispensable. 

The proposal to keep the special safeguard clause is often countered on the grounds that this 
clause  had  been  accepted  only  as  an  adjunct  to  the  tariffication  process.  As  the  latter  is 
complete, the clause is no longer relevant. There is criticism of what is seen in some cases as 
the  improper  use  of  the  clause  by  the  developed  countries  in  particular.  Some  developing 
countries are calling for an instrument that is better geared to their own concerns, in particular 
food security, and would like to prevent developed countries which still have high levels of 
protection from using this mechanism. The EC’s position is supported, however, by Norway 
and Mauritius. 

In  the  area  of  quality,  several  countries,  including  Argentina,  Malaysia  and  Thailand  of  the 
Cairns Group, consider that issues relating to geographical indications or labelling should not 
be  included  among  the  issues  covered  by  these  negotiations.  They  refer  the  EC  to  the 
discussions  underway  in  the  TRIPS  Council  as  regards  geographical  indications  and  to  the 
provisions of the TBT Agreement as regards labelling. These countries consider that these 

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PE 307.890 

 
 
 
 
 
 
 
 
 
 
 
 
 
issues should not mask the genuine challenges raised by trade negotiations on market access: 
the  problems  of  tariff  peaks,  escalation  and  disparity,  and  non-tariff  measures,  should  be 
tackled as a priority. Mauritius, Sri Lanka and the countries with transition economies do not 
share this view and are as keen as the EC to address these issues in the current negotiations. 

WTO agricultural negotiations 

Export competition 

In the area of export competition, the EC propose: 

-  

- 

-  

the  extension  of  WTO  rules  and  disciplines  to  all  forms  of  export  subsidies,  and  in  particular  officially 
supported export credits, as a precondition for the negotiation of new export subsidy reductions; 

the revision and strengthening of the rules applicable to food aid; 

the prohibition of unfair trade practices by State-trading enterprises. 

Most countries are not in agreement with the Community line. They chiefly dispute the EC’s 
precondition  for  the  negotiation  of  new  export  subsidy  reductions  which  they  consider 
unacceptable.  

The EU should not use the fact that there are other forms of unfair competition as a pretext 
not to put an end  to the  practice of export subsidies which are considered to have the most 
damaging  and  the  most obvious effects  on developing  countries.  Linking  the negotiation of 
export subsidy reduction commitments to reduction commitments for other types of subsidy 
would  obviously  hold  up  the  negotiating  process  and  lead  to  circumventions  of  existing 
commitments.  

These  countries  nevertheless  agree  that  disciplines  should  be  developed  for  other  forms  of 
export  subsidy  and  that  the  undertaking  set  out  in  Article  10.2  of  the  Agreement  on 
Agriculture  and  in  the  Ministerial  Decision  on  Measures  Concerning  the  Possible  Negative 
Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing 
Countries,  which  has  yet  to  be  implemented,  should  be  placed  on  a  practical  footing.  They 
also favour the introduction of strict rules to prevent abuses of food aid and to ensure that it is 
more  in  keeping  with  the  needs  of  developing  countries.  The  Philippines  consider  in 
particular that no form of export support should be prejudicial to local food production or the 
marketing capacities of recipient countries. If rules need to be developed, they must include 
special  and  differential  treatment  for  the  net-food  importing  developing  countries  and  the 
LDCs.  

The  main  thrust  of  the  principal  WTO  Members  is  therefore  to  ensure  continued  efforts  to 
reduce and then eliminate export subsidies and effectively to subject export credits to WTO 
negotiated  disciplines.  The  fact,  however,  that  the  EC  wish  to  treat  the  effects  of  export 
subsidies  and export credits on an equal footing  should  not detract  from  discussions on the 
elimination of export subsidies or prevent disciplines for export credits from being drawn up.  

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Domestic support 

In the area of domestic support, the EC propose: 

- 

- 

- 

- 

to  keep  the  current  framework  of  provisions  on  domestic  support  and  to  negotiate  new  reductions  in 
support provided that the concepts of the ‘blue’ and ‘green’ boxes continue; 

a  further  reduction  in  the  Total  AMS  starting  from  the  final  bound  commitment  level,  by  a  further 
strengthening  of  the  rules  concerning  non-product-specific  domestic  support  and  by  a  reduction  of  the 
‘de minimis’ clause for developed countries; 

a specific discipline to be applied to the various ‘amber’ box subsidies which boost export performance 
by providing compensation for variations in market prices; 

a review of the criteria to be met by ‘green box’ measures to ensure minimal trade distortion while at the 
same time ensuring appropriate coverage of measures which meet important societal goals. 

Many of the statements from WTO Members are critical of the EC’s proposals on domestic 
support. In particular, they take issue with the fact that: 

- 

- 

- 

the EC would like to keep the current framework of provisions on domestic support when 
it  needs  a  complete  overhaul  and,  consequently,  that  the  EC  are  making  no  attempt  to 
remedy  the  major  imbalances  inherent  in  the  obligations  and  commitments  of  the 
Agreement on Agriculture or to propose further efforts to achieve a substantial reduction 
of support by the developed countries. The EC, which is proposing a review of the green 
box criteria, is criticised in this respect for its lack of concern to prevent improper uses of 
some  related  measures  and  for  its  attempt,  in  contrast,  to  extend  this  box  somewhat 
improperly under the pretext that certain non-trade concerns need to be included in it; 

the EC are specifying new conditions while demanding the preservation of the concept of 
the blue  and  green  boxes solely in order to preserve a compromise box – accepted on a 
transitional basis – causing major trade distortions and which, moreover, concerns only a 
small number of countries; 

the  EC  are  putting  forward  proposals  that  do  not  place  any  real  constraints  on  the 
developed countries or, according to India, that are nonsensical, especially as regards the 
reduction  of  the  de  minimis  threshold  for  these  countries  since  most  of  the  support  in 
question is already exempt from this discipline. 

In  the  face  of  this  united  front  of  criticism,  only  Norway,  Poland  and  Japan  have  clearly 
supported the EC proposal and stressed the importance of keeping the blue box to ensure that 
the  process  of  agricultural  reform  continues  in  the  direction  set  out  in  the  Agreement  on 
Agriculture. Most of the other Members are critical, however, of the EC’s lack of arguments 
to justify keeping  the blue box and,  at  the very  least,  its  exemption  from precise limits and 
stricter conditions making it possible to ensure that the measures that it covers are compatible 
with the reform process.  

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Special and differential treatment for developing countries 

WTO agricultural negotiations 

In the area of special and differential treatment for developing countries, the EC propose: 

-  

- 

- 

- 

a commitment to provide duty-free access to essentially all products from the LDCs, including agricultural 
products; 

that  the  developed  and  the  wealthiest  developing  countries  provide  significant  trade  preferences  to 
developing countries, and in particular the LDCs, and that an examination is undertaken on ways to ensure 
that these trade preferences are rendered stable and predictable, in order to create the appropriate conditions 
for investment in, and development of, the agricultural and agri-food sectors in developing countries; 

that these countries are provided with enough flexibility to address concerns connected with the vitality of 
rural  areas  and  food  security  (exemption,  where  appropriate,  from  reduction  commitments  or of domestic 
support measures which help to address these concerns, revision of the de minimis clause for these countries 
and a strengthened framework for food aid supply conditions and methods); 
an intensification by the developed countries of all forms of assistance. 

Most  of  the  developing  countries  have  welcomed  new  commitments  in  their  favour  in  the 
area of market access, as these proposals may help better to integrate them into international 
trade by taking account of their adjustment problems and the high priority that they attach to 
food  security  and  rural  development.  They  are  also  attracted by  the  provision of  significant 
trade preferences and by the examination of ways of ensuring that these preferences are stable 
and  predictable  in  order  to  create  the  appropriate  conditions  for  investment  in,  and 
development  of,  their  agricultural  and  agri-food  sectors.  Sri  Lanka  and  Mauritius  have  also 
pointed  out  that  the  key  here  is  to  implement  conditions  that  improve  the  access  of 
developing  countries  to  agricultural  product  markets  so  that  they  can  benefit  fully  from  the 
expansion of world trade, while accepting that it may be necessary to retain protection for the 
most vulnerable developing countries to allow them adequate time for adaptation. The Cairns 
Group  has  also  indicated  in  its  proposals  that  it  would  like  to  support  more  substantial 
improvements in market access for products of interest to the developing countries.  

The support of some countries, although receptive to these proposals, has been less clear-cut. 
It  is  felt,  for  instance,  that  the  need  to  make  preferences  stable  and  predictable  in  order  to 
create the appropriate conditions for investment in, and development of, the agricultural and 
agri-food  sectors  of  the  developing  countries  should  be  met  only  within  the  framework  of 
principles of non-discrimination and non-reciprocity (Philippines). Preferences should be free 
from  implementation  conditions  (Indonesia)  and  should  be  bound  (Sri  Lanka).  The 
Community  proposals,  felt  to  be  overly  geared  towards  the  provision  of  trade  preferences, 
should not impose obligations on the wealthiest developing countries (Dominican Republic, 
Honduras, Cuba, El Salvador and Philippines) since it is the task of the developed countries 
to  eliminate  trade-distorting  measures  through  significant  tariff reductions and the abolition 
of subsidies. Others also argue that trade preferences for the LDCs could worsen the access of 
all the developing countries to the developed countries’ markets and that, rather than creating 
new  categories  of  recipient  countries  not  recognised  by  the  WTO,  care  should  be  taken  to 
ensure  that  the  advantages  offered  to  some  countries  do  not  run  counter  to  the  interests  of 
others.  

The  EC’s  proposals  in  the  area  of  domestic  support  have  been  welcomed,  especially  those 
advocating  the  exemption  from  reduction  commitments  of  domestic  support  measures 
promoting, within the framework of poverty alleviation, the sustainable vitality of rural areas 

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and  food  security  concerns.  Recipients  consider,  however,  that  the  flexibility  needed  to 
address these concerns can be provided only within the context of comprehensive special and 
differential treatment and not just within the framework of the green box.  

As regards technical assistance for the developing countries, reactions to the EC’s proposal to 
intensify  this  kind  of  aid  have  been  positive.  Some  potential  recipient  countries  stress, 
however, that the provisions of WTO agreements must be placed on an effective footing and 
that  the  provision  of  affordable  access  to  technology  is  becoming  one  of  the  main  factors 
involved. Aid should also play its part in ensuring that genuine benefits can be gained from 
the opening up of the markets in question, in particular aid under the Community ‘Everything 
but Arms’ initiative as, without adequate technical resources, the developing, and especially 
the poorest, countries will not be able to meet the standards and regulations that the EC are 
imposing, in particular in the health and phytosanitary fields. 

Non-trade concerns 

In the field of non-trade concerns, the EC propose: 

-  

the accommodation in the Agreement on Agriculture of targeted and transparent measures, implemented in 
no  more  than  minimally  trade-distorting  ways,  to  protect  the  environment  and  promote  the  sustainable 
vitality of rural areas and poverty alleviation; 

-  clarification  of  the  application  of  the  precautionary  principle  and  appropriate  regulation  by  the  WTO  of 
labelling  schemes  in  order  to  satisfy  consumers’  legitimate  concerns  about  food  safety  and  their  need  for 
better information on production and processing; 

- 

to take account of efforts to improve animal welfare (through multilateral agreements, appropriate labelling 
rules or reduction exemptions, provided that certain conditions are met) and the recognition of compensation 
to cover the additional costs required to address this concern. 

Like the submission on non-trade concerns, submitted by 41 States, which was discussed at 
length  at  the  fourth  Special  Session  of  the  Committee  on  Agriculture  on  15-17  November 
2000, the EC’s proposals to integrate non-trade concerns into the reform process have elicited 
many reactions relating to both the approach and the content of the proposals. 

The Cairns Group countries reject attempts to find a balance between non-trade concerns and 
trade  concerns  in  the  negotiations.  According  to  the  terms  of  the  Agreement,  non-trade 
concerns  simply  need  to  be  taken  into  account,  in  the  same  way  as  special  and  differential 
treatment for developing countries, in order to achieve the objective of establishing a fair and 
market-oriented agricultural trading system. While these countries are nevertheless receptive  
to  the  prudent  way  in  which  the  EC  has  phrased  these  proposals,  they  point  out  that  the 
discussions are likely to become much more challenging when the time comes to specify the 
notion of methods that are no more than minimally trade-distorting.  

The existence of legitimate non-trade concerns, in fields such as environmental sustainability, 
food security, rural development and product health safety, is of concern to all countries. The 
principle  is  recognised,  moreover,  in  Article  20  of  the  Agreement  on  Agriculture.  The 
problem is therefore less one of agreeing the principle than of agreeing:  

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WTO agricultural negotiations 
the  scope  of  the  non-trade  concerns  that  could  be  recognised  in  the  Agreement  on 
Agriculture26; 
the place they should be given in this Agreement; and in particular, 

- 
-  how  the  policies  implemented  can  be  made  compatible  with  the  process  of  multilateral 

trade liberalisation.  

One of the initial areas of discord in the statements on the EC’s proposals is the appropriate 
forum for the discussion of certain non-trade concerns. Some Members retort that some non-
trade  concerns  such  as  health  safety,  labelling  rules  and  methods  of  protection  of 
geographical indications are covered by other agreements and should not be brought into the 
current  agriculture negotiations. The same comment  has been made  by the United States as 
regards  the  clarification  of  the  precautionary  principle  from  the  point  of  view  of  its 
environmental or health components. 

The  EC’s  proposal  on  food  quality  has  therefore  received  a  tepid  welcome.  Argentina 
considers that it is unrealistic since priority needs to be given to abolishing export subsidies, 
price  subsidies  and  tariffs  if  fair  competition  and  consumers’  freedom  of  choice  is  to  be 
defended. Australia has pointed out that WTO agreements already contain solid mechanisms 
for addressing this question. An overly regulatory approach attempting to protect consumers 
from practices intended to mislead them and against the usurpation and imitation of names or 
products could, according to Australia, have effects that run counter to the objectives that are 
being  sought,  by  limiting  competition  and  ultimately  by  restricting  information  and 
consumers’ freedom of choice.  

Other countries are more in favour of the EC’s proposals, especially the preservation of the 
special  nature  of  high-quality  foodstuffs,  but  would  like  to  remedy  some  aspects  that  are 
unclear or inadequately covered. These in particular include: 
-   finding an appropriate way of taking account of consumers’ views when these are not in 

the interests of another country; 

-  drawing  up  disciplines  for  all  unfair  competition  practices,  i.e.  not  just  including  the 
usurpation of names but also the risk of eviction of products of non-traditional origin from 
some markets and the aggressive action of some transnational companies in the foodstuffs 
industry; 
the  ways  in  which  developing  countries  can  be  brought  into  this  regulatory  or  standard-
setting process. 

- 

Although  some  developing  countries  are  very  aware  of  the  important  role  that  non-trade 
concerns plays in the successful development or even survival of their agriculture, they refuse 
to  believe  that  their  non-trade  concerns  are  on  a  par  with  those  of  the developed  countries. 
They  consider  that  the  concerns  shaped  by  the  characteristics  of  their  agriculture  are  not 
comparable  with  those that the EC would  in particular  like to  include under the  heading  of 
multifunctionality:  although  every  Member  has  its  own  specific  agricultural  features,  the 
features of developing countries are different and justify the need for more flexible ways of 
addressing  them.  They  consider  that,  in  contrast,  most  of  the  developed  countries  have 
targeted policies to take them into account and that the green box or the provisions of other 
agreements provide them with enough resources to do so.  

26   In addition to food security and the need to protect the environment cited in the Agreement’s preamble. 

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The proposal on animal welfare has undoubtedly been met with the most reservations and the 
most  surprise  and  incomprehension.  Considered  to  lie  outside  the  scope  of  the  agriculture 
negotiations and to reveal a specifically European problem, it is seen by many countries as a 
new kind of protectionism that would restrict access to the markets of the developed countries 
and  as  a  very  suspect  attempt  to  increase  domestic  support.  The  developing  countries  in 
particular  object  that  the  products  of  poor  countries  would  no  longer  be  competitive  as  a 
result of the increased costs that this kind of regulation would impose. Offering compensation 
to  producers  as  a  counterpart  to  higher  standards  would  ultimately  entail  the  exclusion  of 
some  stockbreeding  systems  in  which  the  standards  could  not  be  applied  or  would  be 
unfamiliar.  

Reactions  to  the  EC’s  proposals  in  this  field  have  therefore  reaffirmed  the  differences  of 
opinion between Members who are ‘Friends of Multifunctionality’ and other Members. The 
limits  that  the  EC  are  proposing  to  impose  on  these  measures  (they  must  be  well  targeted, 
transparent  and  implemented  in  minimally  trade-distorting  ways)  have  been  welcomed,  but 
are,  while  details  of  the  instruments  to  be  used  are  still  lacking,  precautions  that  are  still 
inadequate.  The  EC’s  comprehensive  proposal  intentionally  took  a  middle  line  in  order  to 
rally  the  developing  countries.  The  problem  is  that  these  countries  are  not  a  homogeneous 
group. Many, supporting the proposals of Cairns Group or India, still have reservations about 
the line that the EC is taking. Their support for non-trade concerns is shaped by their desire 
better  to  justify  the  special  and  differential  treatment  that  they  are  expecting  from  the 
Agreement  on  Agriculture  and  to  address  the  non-trade  concerns  that  they  consider  to  be 
important  on  the  basis  of  the  context  of  their  agriculture  and  their  economic  and  social 
priorities.  

The due restraint clause 

As regards the due restraint clause, the EC propose: 
- 

that it should be kept. 

There  is  no  real  consensus,  even  within  the  Cairns  Group,  as  to  whether  the  due  restraint 
clause should be preserved or abolished. Negotiation of this provision will probably depend, 
more than on any other factor, on the overall content of the Agreement. 

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CONCLUSION 

The first phase of the negotiations, which, according to negotiators and WTO representatives, 
was  very  satisfactory,  was  brought  to  a  close  at  the  March  2001  Session.  While  the  work 
programme  was  accepted  without  too  much  problem,  the  new  negotiations  were  launched 
without  any  real  consensus  as  to  their  actual  duration.  The  report  of  the  Committee  on 
Agriculture to the WTO General Council took pains to remain evasive and merely set dates 
within  the  programme  for  six  Special  Sessions  (May,  July,  September  and  December  2001 
and  February  and  March  2002)  with  the  final  Session  taking  the  form  of  an  initial  stock-
taking of the progress of the negotiations.  

Although they agree that the scope and nature of their work will be as set out in Article 20 
and the negotiating proposals submitted, Members are expecting that the detailed discussions 
of all the issues and reform options that have been proposed27 will be more challenging and 
some – led by the EC – would prefer such discussions to take place in the wider framework 
of a global negotiating round. 

More  than  one  year  on  from  the  initial  negotiations,  the  European  Trade  Commissioner, 
Pascal Lamy, is still as keen to open a new round of multilateral negotiations. To make this 
approach more palatable and muster support for his belief that ‘a global challenge requires a 
global response’, the European Trade Commissioner took the initiative at the end of 2000 to 
restate the EU’s position, in particular targeting the LDCs which had yet to be convinced of 
the benefits that a new round would have for them. He would also, in view of the strength of 
resistance  from  these  countries,  be  willing  to  envisage  a  more  flexible  mandate  which,  by 
leaving  out  the  more  controversial  issues  (including  social  standards,  environmental 
standards,  investment  rules  and  control  of  competition),  would  make  the  EU’s  overall 
position more acceptable to the developing countries and could provide the trigger needed for 
the launch of a new round. 

Other WTO Members (including the Cairns Group, the developing countries and in particular 
India and Pakistan) are still opposed, however, to any attempt to try to make the outcome of 
the  current  agriculture  negotiations  subject  to  the  launch  of  a  broader  cycle.  The  timetable, 
and  in  particular  the  WTO’s  desire  to  ensure  the  success,  of  the  forthcoming  Ministerial 
Conference  could  well  frustrate  their  plans.  As  the  WTO  Director  General,  Mike  Moore, 
agrees, the negotiations are progressing normally as matters stand at present and, as hard as 
the  negotiators  are  working,  it  is  hardly  reasonable  to  envisage  obtaining  optimum  results 
without relating them to a broader agenda. It seems likely, in view of the differing stances on 
and perceptions of the reform process, that the agriculture negotiations will become harder-
hitting  and  take  more  time  and  therefore  that  the  timetable  of  these  sectoral  negotiations 
could  well  be  disrupted  by  the  timetable  of  a  new  negotiating  round  if  such  a  round  is 
actually  decided  on  at  the  next  WTO Ministerial Conference scheduled for 9-13 November 
2001 in Doha in Qatar.  

27   Starting with tariff rate quota administration, tariffs, the amber box, export subsidies, export credits, State-trading enterprises, export 

restrictions, food security, food product health safety and rural development. 

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WTO agricultural negotiations 

52

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ANNEX 1  

Negotiating proposals 
Cairns Group  

Sessions 
06/00  
09/00 

Subject 
Export competition 
Domestic support  

WTO agricultural negotiations 

Cairns  Group  (excluding  Canada  which  submitted 
its own proposal) 
Canada 

Cuba,  Dominican  Republic,  El  Salvador,  Haiti, 
Honduras,  Kenya,  Nicaragua,  Pakistan,  Sri Lanka, 
Uganda and Zimbabwe 
United States 

EC 

and  Uruguay 

Barbados,  Burundi,  Cyprus,  Czech  Republic, 
European  Communities,  Dominica,  Estonia,  Fiji, 
Iceland,  Israel,  Japan,  Republic  of  Korea,  Latvia, 
Liechtenstein,  Malta,  Mauritania,  Mauritius, 
Mongolia,  Norway,  Poland,  Romania,  St  Lucia, 
Slovak  Republic,  Slovenia,  Switzerland  and 
Trinidad and Tobago 
Cuba, Dominican Republic, El Salvador, Honduras, 
India, Kenya, Nigeria, Pakistan, Sri Lanka, Uganda 
and Zimbabwe 
Argentina,  Brazil,  Paraguay 
(MERCOSUR), Chile, Bolivia and Costa Rica  
Argentina,  Brazil,  Paraguay 
(MERCOSUR), Chile and Colombia 
Argentina,  Brazil,  Paraguay 
and  Uruguay 
(MERCOSUR),  Bolivia,  Chile,  Costa  Rica, 
Guatemala, India, Malaysia  
Bulgaria,  Croatia,  Czech  Republic,  Estonia, 
Georgia,  Hungary,  Kyrgyz  Republic,  Latvia, 
Lithuania, Slovak Republic and Slovenia 
Albania,  Bulgaria,  Croatia,  Czech  Republic, 
Georgia,  Hungary,  Kyrgyz  Republic,  Latvia, 
Lithuania,  Mongolia,  Slovak  Republic 
and 
Slovenia  
Cambodia, 
ASEAN 
Indonesia,  Lao  People’s  Democratic  Republic, 
Malaysia,  Myanmar,  Philippines,  Singapore, 
Thailand, Vietnam) 
Argentina 

(Brunei  Darussalam, 

and  Uruguay 

Japan 
Switzerland 
Swaziland 

Mauritius 
Dominica, Jamaica, Mauritius, St Kitts and Nevis, 
St  Lucia,  St  Vincent  and  the  Grenadines  and 
Trinidad and Tobago 
Republic of Korea  
Mali 

Caricom  (Dominica,  Jamaica,  Mauritius,  St  Kitts 
and Nevis, St Lucia, St Vincent and the Grenadines 
and Trinidad and Tobago) 
Norway  
India 
Poland 

Morocco  
Turkey  
Egypt 

12/00 
11/00 

06/00 
12/00 
06/00 

06/00 

11/00 
06/00 

09/00 
12/00 
09/00 
11/00 

Export restrictions and taxes 
Market access  

Market access  
Domestic support  
Special and differential treatment and a development 
box  
Green box/Annex 2 subsidies  
Note  on  domestic  support  reform  and  proposal  on 
comprehensive long-term agricultural trade reform  
Note on domestic support reform  
Tariff rate quota reform  
The  blue  box  and  other  support  measures 
agriculture  
Food  quality: 
opportunities  
Animal welfare and trade in agriculture  
Export competition  
Comprehensive negotiating proposal  
Note on non-trade concerns  

improvement  of  market  access 

to 

Reference 
G/AG/NG/W/11 
G/AG/NG/W/35 

G/AG/NG/W/93 
G/AG/NG/W/54 

G/AG/NG/W/12 
G/AG/NG/W/92 
G/AG/NG/W/13 

G/AG/NG/W/14 
G/AG/NG/W/15 

G/AG/NG/W/16 
G/AG/NG/W/58 
G/AG/NG/W/17 

G/AG/NG/W/18 

G/AG/NG/W/19 
G/AG/NG/W/34 
G/AG/NG/W/90 
G/AG/NG/W/36 
G/AG/NG/W/36/Rev.
1 

09/00 

Market access  

G/AG/NG/W/37 

09/00 

01/01 

03.01 

Discussion paper on export subsidies – food security 
or food dependency? 
State-trading enterprises 

G/AG/NG/W/38 

G/AG/NG/W/104 

Export credits for agricultural products  

G/AG/NG/W/139 

11/00 

Market access  

G/AG/NG/W/57 

11/00 

11/00 

11/00 

12/00 
12/00 
12/00 

12/00 
12/00 

01/01 
01/01 

01/01 

01/01 
01/01 
01/01 

02/01 
02/01 
02/01 

Domestic 
transition economies  

support  –  additional 

flexibility 

for 

G/AG/NG/W/56 

Special  and  differential  treatment  for  developing 
countries in world agricultural trade  

G/AG/NG/W/55 

submission  on 

legitimate  non-trade 

Technical 
concerns 
Negotiating proposal  
WTO: agriculture negotiations 
Market access under special and differential treatment 
for small developing countries  
Negotiating proposal  
Proposals by small island developing states  

Proposal for WTO agriculture negotiations  
Mali’s  proposals 
negotiations  
Market access  

future 

the 

for 

agriculture 

G/AG/NG/W/88 

G/AG/NG/W/91 
G/AG/NG/W/94 
G/AG/NG/W/95 

G/AG/NG/W/96 
G/AG/NG/W/97 

G/AG/NG/W/98 
G/AG/NG/W/99 

G/AG/NG/W/100 

Negotiating proposal 
Negotiations on the Agreement on Agriculture  
WTO  negotiations  pursuing  the  reform  programme 
for the agricultural sector  
Comprehensive proposal  
Comprehensive proposal 
Comprehensive proposal 

G/AG/NG/W/101 
G/AG/NG/W/102 
G/AG/NG/W/103 

G/AG/NG/W/105 
G/AG/NG/W/106 
G/AG/NG/W/107 

53

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Nigeria 
Congo 
Kenya 
Senegal 
Mexico 
Jordan 
Croatia 
African Group  
Namibia 

02/01 
03.01 
03.01 
03.01 
03.01 
03.01 
03.01 
03.01 
03.01 

WTO agricultural negotiations 

Comprehensive proposal 
Comprehensive proposal 
Comprehensive proposal 
Comprehensive proposal 
Comprehensive proposal 
Comprehensive proposal 
Submission 
Comprehensive proposal 
Market access, domestic support, export competition, 
and non-trade concerns 

G/AG/NG/W/130 
G/AG/NG/W/135 
G/AG/NG/W/136 
G/AG/NG/W/137 
G/AG/NG/W/138 
G/AG/NG/W/140 
G/AG/NG/W/141 
G/AG/NG/W/142 
G/AG/NG/W/143 

ANNEX 2 

Table 1: Exempt subsidies  

1.  subsidies  covered  by  product-specific  reduction  commitments  not  in  excess  of  the  levels 
specified in the Schedule of the WTO Member concerned. 
2.  budgetary  outlays  for  subsidies  or  subsidised  export  quantities  in  excess  of  the  levels 
specified in the Schedule but which are covered by the provision on prior flexibility set out in 
Article 9-2. 
3.  subsidies  in  accordance  with  the  provision  on  special  and  differential  treatment  for 
developing countries set out in Article 9-4 . 
4.  subsidies  not  subject  to  reduction  commitments  in  accordance  with  the  anti-circumvention 
provisions of Article 10. 

Source: Agreement on Agriculture 

Table 2: Summary of EU data on export subsidies 

(in ECU millions) 
Commitments  
- Base                               13 274 
- Final                                8 496 
Refunds by value  
                                         Notified        Ceiling 
- 1995-1996                      4 885            11 033 
- 1997-1998                      4 361            10 030 
- 1998-1999                      5 336              8 633 

Source: European Commission  

(as %) 
Composition  
- beef and veal 
- wheat 
- butter 
- coarse grains 
- other milk products 
Average fill rate - 1998  
- by value 
- by volume 

69 
91 

19 
17 
13 
13 
10 

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Table 3: Domestic support measure boxes 

Boxes 

Measures 

Green 

Blue 

Developing 
countries 

De minimis 

Amber 

Reduction 
commitments 
No 

With no, or at most minimal, trade-distorting effects or effects on production 
These measures are exempt from reduction commitments provided that they satisfy the basic criteria set out in Article 1 of 
Annex 2 (provision of support through a publicly-funded government programme not involving transfers from consumers, 
no provision of price support to producers). Annex 2 specifies the various government policies concerned: general services 
(Article  2),  public  stockholding  for  food  security  purposes  (Article  3),  domestic  food  aid  (Article  4).  It  also  imposes 
specific additional criteria, that vary depending on the policies in question, which have to be respected if direct payments 
to producers are not to be subject to reduction (Article 5), set out in Article 6 for decoupled income support and Articles 7 
to 13 for other instruments. 
Measures involving direct payments to producers under production-limiting programmes 
(Article 6.5) which satisfy one of the following criteria:  
1) they are based on fixed area and yields; 2) they are made on 85% or less of the base 
level  of  production;  3)  they  are  calculated  on  a  fixed  number  of  head  (in  the  case  of 
livestock). 
This box is an exception to the general rule and in practice covers compensatory aids under the 1992 CAP reform and the 
direct income supports (deficiency payments) used by the US as well as other kinds of deficiency payments; the box is not 
included in the calculation of the AMS for the Member concerned. 
Support  measures  by  government  authorities  to  promote  agricultural  and  rural 
development in developing countries.  
Other  kinds  of  support  accounting  for  only  a  small  proportion  (set  at  5%28)  of  the 
production  value  of  specific  products  or,  in  the  case  of  non-product-specific  domestic 
support, of the total value of agricultural production. 
Measures  not  covered  by  other  boxes  and  entailing  the  most  substantial  distortions  of 
competition.  

Yes 

No 

No 

No 

Source: Agreement on Agriculture 

Table  4:  Comparison  of  the  Total  AMS  commitments  specified  and  notified  by  the  EC  and  the  United 
States 

Year 

EC (in ECU billions) 
Total 
commitments 

AMS 

Current 
AMS 

1995 
1996 
1997 
1998 
1999 
Source: WTO; (1) not available. 

78.67 
76.37 
74.07 
71.76 
69.46 

50.03 
51.00 
50.19 
46.68 
- 

Total 

Total 

Current 
AMS 

United States (in USD billions) 
Total 
AMS 
commitments 
23.08 
22.28 
21.50 
20.70 
19.90 

     6.21 
     5.90 
   6.2 
10.4 
   - (1) 

Table  5:  Proportion  of  total  domestic  support  accounted  for  by  green  box  measures  in  some  developed 
countries 
As % and in USD 
billions 

1996 
De minimis 

Green box  

Blue box  

All boxes 

Current Total 
AMS 

Members 
EC  
United States  
Japan  
Canada  
Source: WTO 

% 
23 
88 
46 
53 

Amount  % 
23 
0 
0 
0 

26.6 
51.8 
25.0 
  1.5 

Amount  % 
1 
2 
1 
30 

25.8 
0 
0 
0 

Amount  % 
53 
10 
53 
17 

0.9 
1.2 
0.3 
0.9 

Amount  Amount 

 61.3  
  5.9  
29.6 
  0.5 

 114.6 
   58.9 
   54.9 
    2.9 

28 10% for developing countries. 

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Table 5a: Proportion of total domestic support accounted for by green box measures in some developed 
countries  
As % and in USD 
billions 

1998 
De minimis 

Green box 

All boxes 

Blue box 

Current Total 
AMS 

Amount  % 
Members 
1 
EC  
7 
United States  
1 
Japan  
Source: WTO notifications – Eurostat conversion rate 1998 

Amount  % 
24 
0 
1 

% 
22 
77 
78 

21.5 
49.8 
23.0 

22.9 
0 
0.4 

Amount  % 
54 
16 
20 

0.6 
4.7 
0.4 

Amount  Amount 

52.3 
10.4 
5.9 

97.3 
64.9 
29.7 

Table 6: Producer support estimate (PSE): level and composition 

1999 

Member 
(as %) 

Switzerland 
Japan 
EC 
United States  
Canada 
Australia 
New Zealand 
OECD 

  Source: OECD 

PSE as % of revenue 

Market price support as % of PSE  

1986-1988 
74 
65 
46 
26 
34 
 7 
11 
41 

1996-1998 
69 
63 
39 
17 
15 
 6 
 1 
33 

1986-88 

1996-98 

87 
90 
84 
47 
49 
55 
26 
77 

65 
92 
52 
50 
55 
54 
78 
67 

Table 7: Special and differential treatment for developing countries 

Reduction 
commitments  
Implementation 
Market access  

Non-exempt 
domestic support  
Exempt 
support  
Export subsidies 

domestic 

LDCs 

Developing countries 

Developed countries  

Exemption  

10-year period (1995-2004) 
24%  reduction  of  customs  duties 
(and 10% per tariff line) 

13.3% reduction 

10% de minimis limit and exemption 
of the developing countries box  
24% by value and 14% by volume  
Exemption of certain types of aid  
(Article 9.4) 

reduction 

5-year period (1995-2000) 
36%  reduction  of  customs  duties  (and 
15%  per  tariff  line).  Additional  and 
for  products  of 
faster 
particular 
developing 
countries  (including  43%  for  tropical 
products).  
20% reduction  

interest 

to 

5% de minimis limit 

36% by value and 21% by volume  

Source: Agreement on Agriculture  

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ANNEX 3 – Trading importance 

WTO agricultural negotiations 

Country (in USD billions) 
United States 
Exports 
Imports 

Comments  

68.8 
62.4 

Although the American share of world exports has fallen (from 17.1% in 1980 
to  12.6%  in  1998),  the  US  continues  to  be  the  leading  world  exporter  of 
agricultural products. 

It is also the leading world importer. 

Although  its  share  of  world  imports  has  improved  (from  10.6  %  in  1980  to 
8.4% in 1998) this has not made it possible to offset the downturn in exports. 

Its  agricultural  deficit  with  the  Cairns  Group  has  risen  slightly,  largely  as  a 
result of increasing imports from Canada. 

Lastly,  the  USA  is  the  largest  importer  of  agricultural  products  from  the 
developing countries. No particular dynamics are evident in trade with any of 
the  three  sub-groups  of  developing  countries  (ACP  countries,  non-ACP 
African countries and non-ACP and non-Cairns countries in the Americas). 

EU 
Exports 
Imports 

62.1 
77.6 

The EU is the second world exporter. 

Its  shares  of  exports  (7.6%  in  1998)  and  imports  (11.1%  in  1998)  in  world 
agricultural  trade  are  stable,  although  the  more  substantial  downturn  in 
imports has allowed the EU to improve its net trading position. 

Agricultural imports into the EU-15 from the United States and exports from 
the  EU-15  to  the  United  States  have  shown  similar  growth.  The  EU 
nevertheless had a negative trade balance with the United States between 1991 
and 1997. 

The EU-15’s deficit with the Cairns Group has continued to grow as a result 
of a substantial upturn in imports. Within this group, the EU-15 has increased 
imports  from  Mercosur  (South  American  Common  Market),  Australia  and 
New Zealand. 

EU trade with the ACP countries (Africa, Caribbean, Pacific Rim) has grown 
in a very dynamic way. 

Stable  shares  of  exports  and  imports  in  world  agricultural  trade,  accounting 
for 5% and 2% respectively. 

Stable share: 3.4% in 1998 
Increasing share: 2.7% in 1980 to 3.3% in 1998 
Falling share: 2.4% in 1980 to 1.9% in 1998. 
Falling share: 2.1% in 1980 to 1.2% in 1998. 

Canada 
Exports 
Imports 
Other main exporting countries 
Brazil         Exports 
Australia    Exports 
Argentina  Exports 
Thailand    Exports 

30.02 
13.99 

17.07 
14.97 
13.51 
11.46 

Source: WTO and European Commission  

57

PE 307.890 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 4 – Current disputes – state of play  

WTO agricultural negotiations 

Current disputes  
EU  –  Complaint  by 
the  USA,  Mexico, 
Ecuador,  Honduras 
and 
Guatemala  
(WT/DS/27) 

Subject 
Community 
of  banana 
licences  

regime 
import 

Agreement involved  
GATT  (Article  XIII) 
and  TRIPS  (Articles 
II 
XVII) 
Agreements 

and 

DSB’s 

the  EC 

taken  by 
the 

Stage reached in dispute  
The DSB’s panel ruled in 1999 that the 
measures 
to 
implement 
initial 
recommendations,  under  which  the 
regime applied by the Communities to 
the  import,  sale  and  distribution  of 
bananas  were 
be 
inconsistent  with  GATT  1994  and 
TRIPS,  were  inconsistent  with  WTO 
rules.  

deemed 

to 

EU – Complaint by 
the USA 
(WT/DS26) and 
Canada (WT/DS48) 

EU  prohibition  on 
imports  of  hormone-
treated meat  

SPS Agreement 

The  DSB  ruled  that  this  prohibition 
was 
the  SPS 
Agreement. 

inconsistent  with 

to 

submitted 

Situation 
The  disputed  regime  is  still  being 
applied  as  agreement  has  yet  to  be 
reached  on  the  Commission’s  new 
proposal 
the  DSB 
meeting in November 1999.  
The  United  States  and  Ecuador  have 
been authorised by the WTO to apply 
trade  sanctions  of  USD  191.4  and 
201.6  million  respectively  by  way  of 
compensation.  On  11  April  2001, 
agreement  was,  however,  reached  by 
the  USA  and  the  EC  bringing  the 
dispute  to  a  close.  This  agreement  is 
based  on  the  implementation  of  a 
licensing  system  (awarded  on  the 
basis  of  historic  data)  up  to  2006 
followed 
tariff 
a 
thereafter.  
The EU wanted to maintain the 
prohibition of hormone-treated meat 
on grounds of economic, agricultural 
and food safety imperatives. It is 
negotiating ways of replacing 
American sanctions by European 
compensation in the form of extended 
concessions in respect of non-
hormone-treated meat imports. The 
level of loss as a result of cancellation 
suffered by the United States has been 
estimated at USD 116.8 million and 
that of Canada at CAD 11.3 million. 
the 
Following  mutual  agreement, 
disputed quantitative restrictions were 
to be abolished by 1 April 2001. 

customs 

by 

on 
of 

Quantitative 
restrictions 
importation 
products 
implemented 
pursuant  to  Article 
XVIII-B  of  GATT 
(balance-of- 
payments). 
Measures  relating  to 
reduced-price 
supplies  of  milk  to 
processing  concerns 
operating 
as 
exporters  and  access 
criteria  in  respect  of 
the  tariff  rate  quota 
for imports of milk.  

Sections  301  to  310 
of  the  1974  Trade 
Act 
(American 
legislation  allowing 
unilateral  retaliatory 
trade measures) 

India – Complaint by 
the USA (WT/DS90) 

Canada  –  Complaint 
by the USA and New 
Zealand  (WT/DS103 
and 113). 
Third 
parties: 
Australia and Japan  

– 
the 

States 
United 
Complaint  by 
European 
Communities 
(WT/DS152).  Third 
parties: 
Brazil, 
Cameroon,  Canada, 
Colombia,  Republic 
of  Korea,  Costa 
Rica, 
Cuba, 
Dominica,  Ecuador, 
Hong  Kong,  China, 
Israel, 
India, 
Jamaica, 
Japan, 
Dominican Republic, 
St 
and 
Lucia 
Thailand. 

GATT  Agreement 
and  Agreement  on 
Agriculture  (Article 
4.2). 

On  22  September  1999,  the  DSB 
adopted  a  report,  as  amended  by  the 
Appellate  Body,  confirming  that  the 
inconsistent  with 
restrictions  were 
GATT  rules  and, 
the  case  of 
agricultural products, with Article 4.2   

in 

GATT Agreement  
on 
Agreement 
Agriculture  (Articles 
9.1 et 10.1)  
Agreement 
Import 
Procedures  

on 
Licensing 

Understanding 
Rules 
Procedures 
Governing 
Settlement 
Disputes  
WTO Agreement 

on 
and 

the 
of 

The  parties  have  reached  agreement 
and Canada agreed to comply with the 
DSB’s 
and 
decisions  by  31  December  2000  at 
latest. 

recommendations 

The  European  Union  and  the  United 
States  decided  not  to  appeal  against 
the WTO panel ruling. 

as 

regards 

adopted 

on  Agriculture 

The  DSB 
on 
report 
27 October 1999 clarified the nature of 
these  measures 
the 
provisions  of  Article  9.1  on  export 
subsidies.  The  measures  in  question 
were  not  direct  subsidies  within  the 
the 
meaning  of  Article  9.1a)  of 
but 
Agreement 
‘payments  on 
the  export  of  an 
agricultural product financed by virtue 
of  governmental  action’  according  to 
Article 9.1c). 
In  the  report  of  the  special  panel, 
adopted  by  the  DSB  on  27  January 
2000,  the  disputed  aspects  of  the 
sections  in  question  were  not  deemed 
to  be  inconsistent  with  the  United 
States’  WTO  obligations  with 
the 
proviso  that  the  commitments  of  the 
United  States 
government  were 
maintained.  

58

PE 307.890 

 
WTO agricultural negotiations 

Current disputes  
Japan  –  Complaint 
by  the  United  States 
(WT/DS76) 

Subject 
Measures  relating  to 
agricultural products  

Agreement involved  
SPS 
Agreement 
(Articles 2.2; 5.1 and 
7) 

States 
United 
Complaint  by 
European 
Communities 
(WT/DS108)  

– 
the 

treatment  of 
sales 

Tax 
‘foreign 
corporations’ 

on 

on 
and 

Agreement 
Subsidies 
Agreement 
Safeguards 
Countervailing 
Measures (SCM)  
Agreement 
on 
Agriculture  (Articles 
3.3 and 8) 

Republic  of  Korea  – 
Complaint  by 
the 
United 
States 
(WT/DS161/1). 
Third 
parties: 
Australia,  Canada, 
New Zealand. 

GATT  Agreement 
(Articles  II,  III,  XI 
and XII) 
on 
Agreement 
Agriculture  (Articles 
3, 4, 6 and 7) 
Agreement 
Import 
Procedures 

on 
Licensing 

Restrictions 
of 
imports  of  bovine 
meat 
(regulations 
under which supplies 
of bovine meat in the 
Livestock Producers’ 
Marketing 
Organisation 
wholesale market are 
stores 
to 
limited 
specialising 
in 
imported  beef  and 
bearing 
special 
a 
sign)  

TRIPS  Agreement 
(Articles 3,16, 24, 63 
and 65). 

Subsidies Agreement 
SCM Agreement  
Agreement 
Agriculture 

on 

GATT Agreement 

European 
Communities 
Complaint  by 
United 
(WT/DS174/1) 

– 
the 
States 

States 

United 
Complaint 
Canada 
(WT/DS167/1) 

– 
by 

of 
and 

Protection 
trademarks 
geographical 
indications 
for 
agricultural  products 
foodstuffs 
and 
(EC) 
(Regulation 
2081/92) 
Countervailing  duty 
investigation 
the 
initiated 
in 
United  States 
respect  of  live  cattle 
from Canada 

by 

European 
– 
Communities 
Submission  on  19 
October  2000  of  a 
for  WTO 
request 
consultations 
by 
Brazil  –  Ecuador 
the 
to 
party 
consultations. 

applied 
Measures 
EC’s 
the 
under 
system 
generalised 
preferences 
of 
scheme 
affecting 
imports  of  soluble 
coffee from Brazil 

from 

dispute 

report  of 

the 
rules 

Stage reached in dispute  
The  DSB  report  was  adopted  on  19 
March  1999.  It  ruled  that  Japan’s 
imposition  of  varietal  testing  of  some 
types of fruit (entailing a prohibition of 
imports  of 
some  parasite  host 
products)  was  incompatible  with  the 
SPS Agreement. 
tax 
concerns 
This 
exemptions  and  special 
for 
administrative  price-fixing  contained 
in  the  regime  applied  by  the  United 
states  to  ‘foreign  sales  corporations’ 
(FSCs)  under  Articles  921  to  927  of 
the  United  States’  Internal  Revenue 
Code,  which  the  EC  consider  to  be 
export  subsidies 
inconsistent  with 
commitments under the Agreement on 
Agriculture.  On  20  March  2000,  the 
the 
the 
DSB  adopted 
Appellate  Body  and  the  special  panel 
which  rules  that  these  subsidies  are 
inconsistent with the cited Articles and 
in  particular  with 
the  obligations 
the  Agreement  on 
arising 
Agriculture. 
The  panel  report,  distributed  on  31 
July 2000, confirmed that: 
-  the  restrictions  on  imported  beef 
contravened  Article  III-4  of  GATT 
1994  and  could  not  be  justified  by 
Article XX d) of GATT 1994; 
-  some  more  stringent  record-keeping 
requirements 
of 
imported  meat  and  other  regulations 
on  the  import  and  distribution of beef 
were  in  violation  of  the  respective 
provisions  of  Articles  III.4  and  XI.1 
of  GATT  1994  and  Article  4.2  of  the 
Agreement on Agriculture; 
- 
incorrectly  calculated  domestic 
support  in  excess  of  the  de  minimis 
level  had  not  been  included  in  the 
Total  AMS  contrary  to  the  provisions 
of  Article  7.2.a)  of  the  Agreement  on 
Agriculture; 
-  the  total  level    of  support  exceeded 
the commitment levels specified in the 
Republic of Korea’s Schedule contrary 
to Article 3.2 of that Agreement. 
Lack  of  protection  of  trademarks  and 
geographical indications. 

purchasers 

for 

Canada  contends  that  the  initiation  of 
this  investigation  is  inconsistent  with 
US  obligations  under  the  Subsidies 
Agreement  and  under  the  Agreement 
on  Agriculture  and  that  the  measures 
in question are not subsidies within the 
meaning of the SCM Agreement.  
Consultations  between 
the  parties 
under way. The dispute relates, on the 
one  hand,  to  the  progressive  abolition 
of  preferential  treatment  and,  on  the 
other  hand,  to  the  special  scheme  for 
countries  conducting  a  campaign  to 
combat  drugs.  According  to  Brazil, 
this dual system has an adverse impact 
on  imports  of  soluble  coffee  into 
Europe  and  is  inconsistent  with  the 
EU’s  obligations  under  the  Enabling 
Clause. 

Situation 
Discussions  are  under  way  between 
the parties as regards a new quarantine 
method  as  Japan  considers  that  the 
introduction of the parasite in question 
has to be prevented. 

the  DSB’s 
In  accordance  with 
recommendations, the President of the 
United States signed, on 15 November 
2000,  a  US  Congress  Act  called  the 
2000  FSC  Repeal  and  Extraterritorial 
Income  Exclusion  Act  (the  ‘FSC 
Repeal  Act’).  The  EC  consider  that 
in 
these  provisions  are  still  not 
accordance 
DSB’s 
with 
recommendations and decisions. It has 
therefore  asked  the  DSB  to  authorise 
an 
countervailing  measures 
amount  of  USD  4  billion  per  annum. 
scheduled 
This 
for 
discussion  at 
the  DSB’s  Special 
Session on 28 November 2000. 

issue  was 

the 

for 

The Republic of Korea gave notice of 
its  intention  to  appeal  in  September 
2000. 

Pending 

Pending 

Pending 

United 

States 

–  Legislation  (Africa- Understanding 

on  Consultations  between 

the  parties 

59

PE 307.890 

 
Current disputes  
Submission  in  June 
2000 of a request for 
WTO  consultations 
by the EU 

Subject 
Trade 
Caribbean 
introducing 
Bill) 
sanctions 
rotating 
countries 
against 
failing 
to  comply 
with decisions of the 
DSB. 

Agreement involved  
Rules 
and 
Procedures 
Governing 
Settlement 
Disputes  
WTO Agreement  

the 
of 

Source: WTO 

Stage reached in dispute  
under way. 

WTO agricultural negotiations 

Situation 

60

PE 307.890 

WTO agricultural negotiations 

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The  Uruguay  Round  Agreement  on  Agriculture:  the  policy  concerns  of  emerging  and  transition  economies, 
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63

PE 307.890 

 
 
 
 
 
 
 
 
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Other documents available in the same series: 

AGRI 135 

THE  WORLD  TRADE  ORGANISATION  NEGOTIATIONS  IN  THE  FIELD  OF 
AGRICULTURE AND FOOD: THE STRATEGIC POSITIONS OF THE UNITED STATES 
AND CHINA 
May 2001 - EN 

AGRI 135 AXX 

THE  WORLD  TRADE  ORGANISATION  NEGOTIATIONS  IN  THE  FIELD  OF 
AGRICULTURE AND FOOD: THE STRATEGIC POSITIONS OF THE UNITED STATES 
AND CHINE 
September 2001 - Multilingual abridged edition 

AGRI 134 

THE FUTURE OF YOUNG FARMERS IN THE EUROPEAN UNION 
April 2000 - EN 

AGRI 134 AXX 

THE FUTURE OF YOUNG FARMERS IN THE EUROPEAN UNION 
April 2000 - Multilingual abridged edition 

AGRI 132 

CREATING PARTNERSHIPS FOR PRE-ACCESSION 
December 1999 - EN 

AGRI 132 XX 

CREATING PARTNERSHIPS FOR PRE-ACCESSION 
December 1999 - Multilingual abridged edition 

AGRI 131 

EL PROCESO DE ASOCIACIÓN INTERREGIONAL DE LA UNION EUROPEA CON EL 
MERCOSUR  Y  CHILE  Y  SU  IMPACTO  EN  EL  SECTOR  AGROALIMENTARION  DE 
LA UE 
October 1999 - ES  

AGRI 131 AXX 

EL PROCESO DE ASOCIACIÓN INTERREGIONAL DE LA UNION EUROPEA CON EL 
MERCOSUR  Y  CHILE  Y  SU  IMPACTO  EN  EL  SECTOR  AGROALIMENTARION  DE 
LA UE 
May 2000 - DE/EN/ES/FR 

AGRI 118 

GLOSSAIRE  DE  LA  POLITIQUE  AGRICOLE  COMMUNE  ET  DE  LA  RÉFORME  DE 
L'AGENDA 2000 
June 1999 - FR/EN 

AGRI 116 

LA  MODULATION  DES  AIDES  À  L'AGRICULTURE  DANS  LE  CADRE  DE  LA 
RÉFORME DE LA POLITIQUE AGRICOLE COMMUNE (AGENDA 2000) 
October 1999 - FR 

AGRI 115/REV 

THE  EUROPEAN  UNION  AND  THE  WORLD  TRADE  ORGANISATION  DISPUTE 
SETTLEMENT PROCEDURE AS APPLIED TO AGRICULTURE 
January 2000 - EN 

64

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WTO agricultural negotiations 

AGRI 114 

NACHHALTIGE  LÄNDLICHE  ENTWICKLUNG.  AUSGANGSLAGE,  MASSNAHMEN 
UND EMPFEHLUNGEN FÜR DIE 5. ERWEITERUNG DER EUROPÄISCHEN UNION 
May 1999 - DE 

AGRI 111/A 

VERS  UNE  POLITIQUE  EUROPÉENNE  POUR  LES  ZONES  DE  MONTAGNE  - 
PROBLÈMES, IMPACT DES MESURES ET ADAPTATIONS NÈCESSAIRES 
June 1998 - FR  

AGRI 109 

Part  3  of  the  study  "EUROPE  ET  LA  FORÊT":  LES  DONNÉES  FORESTIÈRES  DE 
L'UNION  EUROPÉENNE  À  QUINZE  ET  MONOGRAPHIES  SUR  L'AUTRICHE,  LA 
FINLANDE ET LA SUÈDE 
June 1997 - EN 

AGRI 106 

EL  DESARROLLO  RURAL:  POLÍTICAS  APLICADAS,  SITUACIÓN  ACTUAL  DEL 
DEBATE Y PERSPECTIVAS DEL FUTURO A NIVEL EUROPEO 
November 1998 - ES 

AGRI 105 

L'AGRICULTURE ET LE PASSAGE À LA MONNAIE UNIQUE 
December 1997 - FR 

AGRI 103 

VERS  UNE  POLITIQUE  EUROPÉENNE  INTÉGRÉE  EN  FAVEUR  DES  ZONES 
HUMIDES 
November 1998 - FR 

AGRI 102A 

RÉFORME DE L'ORGANISATION COMMUNE DE MARCHÉ DANS LE SECTEUR DU 
TABAC 
December 1997 - FR 

The complete DG-IV publications list can be found in the Publications Catalogue which is available 
on the Internet (www.Europarl.eu.int) or upon request to: 

EUROPEAN PARLIAMENT 
PUBLICATIONS SERVICE 
DIRECTORATE-GENERAL FOR RESEARCH 
L-2929 LUXEMBOURG 
Fax: +352.4300.27722 
E-mail: dg4-publications@europarl.eu.int 

65

PE 307.890