AGRICULTURE: MODALITIES ON AGRICULTURE

Draft Possible Modalities on Agriculture

> Cover letter from the Chairman of the Committee on Agriculture, Special Session to the Chairman of the Trade Negotiations Committee
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JOB(06)/199 “Includes 29 June corrections from JOB(06)/199/Corr.1”
29 June 2006
 

I. DEFINITIONS (1)

• Year in relation to the implementation period and to the specific commitments of a Member refers to the calendar, financial or marketing year specified in the draft Schedules to be submitted pursuant to the modalities.

• The base period for supporting data is [1995] to [2000] unless otherwise stated [and [1999] to [2001] for product-specific AMS caps].

• The implementation period is [2008] to [ ] unless otherwise stated and [2008] to [ ] for developing country Members unless otherwise stated.

• Total value of agricultural production is defined as the gross value of all agricultural production of basic products at farm gate prices. The value of production of a basic agricultural product is the gross value of production of that basic product at farm gate prices.

• Product coverage is as in Annex 1 of the Agreement on Agriculture with any appropriate changes arising from HS2002 applying mutatis mutandis.
  
  Note: Members' draft Schedules should be based on HS2002 nomenclature to the extent possible and disaggregated at the HS 6-digit level as a minimum. In the alternative, Members should clearly indicate the version of the Harmonized System being used (E.g. HS96).
   

• Tropical products and products of particular importance to the diversification of production from the growing of illicit narcotic crops (hereinafter referred to as tropical and diversification products) are defined as those products listed in Annex F to this document.

• Cotton is defined as HS headings 52.01 to 52.03: raw cotton, waste and cotton carded or combed.

• A recently acceded Member is a Member of the WTO that acceded [under Article 12 of the Marrakesh Agreement Establishing the World Trade Organization].

• “Non-product-specific support” means domestic support [provided in favour of agricultural producers in general] [available generally to agricultural producers and not support that is effectively only in favour of a few or specific commodities].

• “Overall Trade-Distorting Domestic Support” means the sum of (i) the Final Bound Total AMS plus (ii) permitted de minimis level expressed in monetary terms plus (iii) the Blue Box level, and which is:

  (i) with respect to support provided during the base period (i.e. the “Base Overall Trade-Distorting Domestic Support”) and the maximum support permitted to be provided during any year of the implementation period or thereafter (i.e. the “Annual” and “Final Bound Overall Trade-Distorting Domestic Support Commitment Levels”) as specified in Section [ ], Part [ ] of a Member's Schedule; and

  (ii) with respect to the level of support actually provided during any year of the implementation period and thereafter (i.e. the “Current Overall Trade-Distorting Domestic Support”, calculated in accordance with the provisions of this Agreement and with the constituent data and methodology used in the tables of supporting material incorporated by reference in Part [ ] of the Member's Schedule.

II. MARKET ACCESS

A. TIERED FORMULA FOR TARIFF REDUCTIONS

1. Basis for reductions

1. Subject to the provisions set out in sections B to H below, customs duties shall be reduced in equal annual instalments from bound duty levels (2)using the tiered formula in paragraphs 2.3 and 2.4 below.

2. In order to place bound non-ad valorem tariffs in the appropriate band of the tiered formula, Members shall follow the methodology to calculate ad valorem equivalents (AVEs), along with associated provisions, set out in Annex A.

2. Tiered Formula

3. Members shall reduce bound duties in accordance with the following tiered formula:

(a) Where the bound duty or ad valorem equivalent is greater than 0 and less than or equal to [20-30] the reduction shall be [20-65] per cent;

(b) Where the bound duty or ad valorem equivalent is greater than [20-30] per cent and less than or equal to [40-60] per cent, the reduction shall be [30-75] per cent;

(c) Where the bound duty or ad valorem equivalent is greater than [40-60] per cent and less than or equal to [60-90] per cent, the reduction shall be [35-85] per cent]; and

(d) Where the bound duty or ad valorem equivalent is greater than [60-90] per cent, the reduction shall be [42-90] per cent [except for those Members with more than [ ] per cent of tariff lines in the top tier who shall make a reduction of [ ] per cent].

[The average reduction in bound duties by developed country Members shall in any case be [at least [ ] per cent [with additional tariff reductions beyond those otherwise required for any particular band, if necessary, to achieve this objective]].]

4. Developing country Members shall reduce bound duties in accordance with the following tiered formula:

(a) Where the bound duty or ad valorem equivalent is greater than 0 and less than or equal to [20-50] per cent, the reduction shall be [15-slightly less than 65] per cent;

(b) Where the bound duty or ad valorem equivalent is greater than [20-50] per cent and less than or equal to [40-100] per cent, the reduction shall be [20-slightly less than 75] per cent;

(c) Where the bound duty or ad valorem equivalent is greater than [40-100] per cent and less than or equal to [60-150] per cent, the reduction shall be [25-slightly less than 85] per cent; and

(d) Where the bound duty or ad valorem equivalent is greater than [60-150] per cent, the reduction shall be [30-slightly less than 90] per cent. [The maximum average reduction in bound duties any developing country Member shall be required to undertake is [ ] per cent. Should the above formula imply an average reduction of more than [ ] per cent for a developing country Member, that developing country Member shall have the flexibility to apply lesser reductions, at its discretion, so that the average reduction is no more than [ ] per cent.]

5. [Developing country Members with ceiling bindings and homogeneous low bindings:

(a) shall be subject to the overall average reduction only;

(b) shall have the right to distribute their tariff lines across the lower tiers of the formula on the basis of their own assessment of sensitivities; and

(c) irrespective of the thresholds for the tiers to be agreed, shall not be required to undertake the level of cuts required in the highest tiers.]
  

B. [TARIFF CAP

6. If, after the application of the tiered formula, a bound duty should be greater than [75-100] per cent, it shall be reduced to that level. [Non-ad valorem bound duties shall be reduced by the amount required to bring the ad valorem equivalent to this maximum level]. For developing country Members, the maximum bound duty shall be [150] per cent.]
  

C. SENSITIVE PRODUCTS

1. Designation

7. [Each [developed] country Member shall have the right to designate up to [1-15] per cent of [dutiable] tariff lines as “Sensitive Products”. [Developing country Members shall have the right to designate up to [50 per cent more than the absolute number of tariff lines designated by the developed country having the highest number of such tariff lines] [ ] per cent of [dutiable] tariff lines] as “Sensitive Products”].

8. Designation of such status shall be indicated by the symbol “SePs” in Column [ ] of Table 1, Section 1 of the Member's draft Schedule. Each such product shall be subject to a combination of a reduction in bound duties and an expansion of tariff quota for the product concerned or a proportionate increase if the product is one of a number in a single bound tariff quota [unless a current bound quota for the Sensitive Product concerned does not exist, in which case a Member [may] [shall] apply the provisions under paragraph 3.10(b)(iii) below].

2. Treatment — Tariff Cut

9. Bound duties on products designated as Sensitive shall be reduced by no less than [20-70] per cent of the reduction that would otherwise have been required by the tiered formula. Developing country Members shall have the right to reduce bound duties on products designated as Sensitive by no less than [ ] per cent of the reduction that would otherwise have been required by the tiered formula. [Sensitive Products will not be subject to the tariff cap under paragraph B.6.]

3. Tariff Quota Expansion

10. The basis for expansion of tariff quotas shall be [domestic consumption expressed in terms of physical units] [current bound tariff quota volumes] [current imports [in the years [ ] to [ ]] of the product concerned].

(a) Subject to the provisions set out in (b) below, expansion of the tariff quota for a Sensitive Product shall be on a most-favoured-nation basis.

[Bound tariff quotas shall be increased based on a minimum of [6] per cent of domestic consumption or, for developing country Members, less than [4] per cent of domestic consumption. For developing country Members, domestic consumption shall not include self-consumption of subsistence production. Developing country Members with bound quotas established as a result of Article XXVIII negotiations or accession commitments shall be able to use as a base for tariff quota expansion the lesser of the bound tariff quota so established or less than [4] per cent of domestic consumption. The formula for expansion shall be as follows: [ ] ]

[Bound tariff quotas shall be increased by the following formula

]
[Bound tariff quotas shall be increased by the following formula

 

]
[Bound tariff quotas shall be increased by the following formula

]

(b) In cases where:

(i) [the existing bound tariff quota represents:
  

- more than [30] per cent of domestic consumption the expansion in the tariff quota under (a) above shall be adjusted by a factor of [0.2]];

  

- more than [10] per cent but less than or equal to [30] per cent of domestic consumption the tariff quota under (a) above shall be adjusted by a factor of [0.33];
  
- more than [5] per cent but less than or equal to [10] per cent of domestic consumption the tariff quota under (a) above shall be adjusted by a factor of [1];
  
- more than [2.5] per cent but less than or equal to [5] per cent of domestic consumption the tariff quota under (a) above shall be adjusted by a factor of [2];
  
- less than or equal to [2.5] per cent of domestic consumption the tariff quota under (a) above shall be adjusted by a factor of [3];
  
- an exceptionally high percentage of domestic consumption the additional tariff quota commitment will be adjusted further in Schedules negotiations in an equitable manner.]

  
(ii) [current imports] [the existing bound tariff quota] represent[s] less than [ ] per cent of domestic consumption, the expansion in the tariff quota under (a) above shall be adjusted by [ ]];

  
(iii) there is no existing final bound tariff quota commitment for a Sensitive Product the Member concerned [may choose to] [shall not] create a new tariff quota, [provided that the tariff cut for the Sensitive Product shall be achieved in a shorter implementation period. Alternatively, a Member may opt for a longer implementation period for the full tariff cut required by the tiered formula.] [Developing country Members shall have the right to apply a lower reduction in bound duties than would otherwise have been required under the tiered formula over the implementation period, or a reduction in bound duties of up to [55] per cent of that required by the tiered formula over a shorter implementation period, or the reduction required by the tiered formula over a longer implementation period or [ ]].
 

D. OTHER ISSUES

1. Tariff escalation

11. [Should, after application of the tiered formula for tariff reductions, the bound duty on a processed agricultural product be greater than the bound duty on the primary product, the bound duty for the processed agriculture product shall be reduced by applying a factor of [1.3] compared to the reduction which would otherwise have been required under the tiered formula or by reducing to the rate applicable to the unprocessed product, whichever is the lesser.

12. The list of primary products and their processed forms is yet to be determined, and will be elaborated taking into account the provisional and illustrative elements in the proposals cited in Annex B.]

13. [Members shall implement an additional tariff cut of [ ] per cent on a list of tariff lines of special interest to developing country Members for which:

(a) tariff escalation is clearly identified and its calculation takes into account all the raw materials processed into the end product;
(b) tariff escalation is substantial; and
(c) trade flows in the raw material are significant.]

14. [When the bound duty on a processed agricultural product is greater than that of the relevant primary product, and:

(a) if the tariff lines for both products are in the same tier (except for the highest tier), the bound duty for the processed tariff lines shall be reduced by the cut rate that would otherwise be applied for the tier immediately above, as long as the tariff rate on the processed product will not fall below the tariff rate for the primary products.

(b) if they both belong to the highest tier, the bound duty for the processed tariff lines shall be subject to an additional reduction of [ ] per cent compared to the reduction which would have been otherwise required under the tiered formula, as long as the tariff rate on the processed product will not fall below the tariff rate for the primary products.]

2. Commodities

15. [In the event that adverse effects of tariff escalation were not to be eliminated via the tiered formula for reductions in bound duties and such specific measures on tariff escalation as are provided for, Members shall engage with commodity dependent producing country Members to ensure satisfactory solutions.]

16. [Provision shall be made for suitable procedures for negotiations on the elimination of non-tariff measures affecting trade in commodities.]

3. Tariff simplification

17. [All bound duties on agricultural products shall be expressed as simple ad valorem [or specific] duties.] [While reductions in bound duties shall be made on the basis of existing bound duties in whatever form they are currently expressed, highly complex forms of bound duties, such as complex matrix tariffs [or compound tariffs] shall be simplified.] [Members undertaking such simplification shall supply supporting data with their draft Schedules that demonstrates that the simplified bound duty is representative of the original complex duty.]

4. Tariff quotas

(a) Bound in-quota duties

18. [Bound in-quota duties rates shall be [eliminated] [reduced by [ ] percent].]

(b) Tariff quota administration

19. The administration of bound tariff quotas shall be subject to the disciplines [to be developed taking into account the provisional and illustrative proposals cited in Annex C].

5. Special Agricultural Safeguard

20. [Article 5 of the Agreement on Agriculture shall expire [for developed country Members] [at the [beginning] [end] of the implementation period] [at the end of the reform process].] [Members shall have the right to apply the Special Safeguard Provisions of Article 5 of the Agreement on Agriculture. Members shall reduce the number of tariff lines eligible for the SSG under the Uruguay Round Agreement on Agriculture by [ ] per cent.]
  

E. SPECIAL AND DIFFERENTIAL TREATMENT

1. Special Products

(a) Selection

21. Each developing country Member shall have the right to self-designate [at least 20 per cent of] [up to 5] tariff lines in the Member's Schedule as “Special Products”] [until the end of the implementation period]. Such tariff lines shall be designated by the symbol “SP” in column [ ] of Table 1 of Section 1 of its draft Schedule.

22. [Designation shall be guided by the indicators listed in Annex D which are based on the criteria of food security, livelihood security and/or rural development needs of individual developing country Members.] [To be a candidate for designation as a “Special Product” [a product must be produced domestically or be a close substitute of products produced domestically] [, [ ] per cent of domestic consumption of the product must be met through domestic production; or the product must represent more than [ ] per cent of agriculture GDP; or the product must contribute at least [ ] per cent of the total nutritional value (dietary and calorific requirement) of the population].]

23. [A tariff line shall not be designated as a “Special Product” if: [developing country Members export more than [ ] per cent of world exports of that product; or more than [ ] of imports by the Member concerned are imported from other developing country Members;] [the developing country Member concerned is a net exporter; or if the developing country Member concerned exports the product on a most-favoured-nation basis;] [the product is eligible for the Special Safeguard Mechanism].]

24. [Any product accordingly designated and notified as SP, whether in its natural unprocessed form or in its processed forms, shall be presumed to meet at least one of the indicators given in Annex D, either at the national or regional level, in the developing country Member concerned. A product in any of its processed forms shall be deemed to be eligible for designation as SP if the product in its natural unprocessed form is designated as SP. The right to self-designate any product as SP shall not be questioned at any stage of the negotiating processes, including the processes for verification of the Schedules of Members.] [To show compliance with the criteria, each developing country designating a product as “SP” shall, [upon request] demonstrate, using appropriate indicators how the product concerned meets the criteria of food security, livelihood security and rural development.]

(b) Treatment

25. [No product designated as a Special Product shall be subject to [a cap on the bound duty under paragraph B.6] [or to] [any new tariff quota commitment].]

26. [Notwithstanding paragraphs 1 and 2 of Article 4 of the Agreement on Agriculture, in respect of the total tariff lines covering agricultural products, at the duty level, designated as SP by a developing country Member based on the guidance provided by the indicators listed in Annex [X], the following treatment on bound import tariff rates shall apply:

(a) At least [50] per cent of the aforementioned tariff lines will not be subject to any tariff reduction commitment; Provided that, if any developing country Member is characterised by special circumstances (3), an additional [15] per cent of the aforementioned tariff lines will not be subject to any tariff reduction commitment;

(b) [25] per cent other than those categorised in subparagraph (a) above, of the aforementioned tariff lines will be subject to a reduction of [5] per cent; and

(c) Each residual tariff line, other than those categorised in subparagraphs (a) and (b) above, of the aforementioned tariff lines will be subject to a reduction of not more than [10] per cent..]

27. [Products designated as “Special Products” shall be subject to a reduction in bound duties of [ ] per cent of the reduction that would otherwise have been applicable under the tiered formula for reductions in bound duties or, in the case where a cap in the bound duty would otherwise have been applied, the cap shall be [ ] per cent higher than would otherwise have been the case.]

28. [“Special Products” [currently subject to bound tariff quotas] shall be subject to tariff quota expansion of [ ] per cent.]

2. Special Safeguard Mechanism

(a) Selection

29. Each developing [and least-developed] country Member [shall have access to a Special Safeguard Mechanism for all agricultural products] [shall have the right to designate up to [ ] [per cent of] tariff lines [at the HS 6-digit level] as “SSM” in column [ ] in Part I, Section I of its Schedule] [may designate as “SSM”  in its Schedule those products which have undertaken tariff reductions greater than [ ] per cent [which result in a reduction in the bound duty to less than then current applied duty] ]. [Products designated as “Special Products”  may not be designated as “SSM” .]

(b) Trigger and Remedy

30. The quantity and price triggers under which the Special Safeguard Mechanism may be invoked and the additional duties that may be charged are set out in Annex E.

3. Fullest liberalization of trade in tropical and diversification products

31. [Tropical and diversification products are those listed in Annex F.] [A list of tropical products shall be established on the basis of the indicative list of the Uruguay Round and shall not include products produced in significant quantities in non-tropical countries. For Members identified as operating the diversification of production from the growing of illicit narcotic crops, a list of products of particular importance for diversification shall be established.]

32. [Developed country Members shall reduce bound duties on tropical and diversification products

(a) [by the reduction applicable under paragraph A.2.3(d) above;
(b) where such products are subject to tariff escalation, an additional reduction in bound duties of 10 percentage points; and
(c) [any bound in-quota duty shall be eliminated.]

33. [Members shall reduce bound duties on tropical products according to the following modalities:

(a) [ ] per cent of tropical product tariff lines shall be reduced to [0];
(b) [ ] per cent of tropical product tariff lines shall be reduced by the reduction foreseen for the tier immediately above the one for the product in question in the tiered formula;
(c) bound duties on other tropical products shall be reduced by the reduction applicable under the tiered formula.

34. For diversification products, importing Members shall designate [ ] per cent of the tariff lines on the above list and provide preferential access to the Members concerned for as long as an effective diversification programme is in place.]

35. [No tropical or diversification product listed in Annex F may be designated as a Sensitive Product by a developed country Member.] [Tropical and diversification products may be declared as Sensitive Products or as Special Products and be treated as such.]

4. Preference erosion

36. In recognition of the importance of long-standing preferences, preference erosion [associated with the products and markets listed in Annex G] shall be addressed by:

(a) [[the preference granting Member] applying a lesser reduction of [ ] percent of the appropriate reduction under the tiered formula;] [and] [or]
(b) [[the preference granting Member] wherever relevant, eliminating any bound in-quota duty] [and] [or]
(c) [[the preference granting Member] implementing the tariff reduction over an additional period of [ ] years [with the first year of the implementation deferred by [ ] years]]; [and] [or]
(d) [[the preference granting Member,] to the extent technically feasible, maintaining the preference margin]; [and] [or]
(e) [[the preference granting Member] providing improved market access opportunities for non-preference-receiving products which are also of vital export interest to preference receiving Members, to the extent possible]; [and] [or]
(f) [[the preference granting Member] taking fully into account the issue of preference erosion in designating Sensitive Products].

37. [[Preference granting Member] [Members] shall provide targeted technical assistance, including additional financial and capacity building assistance, to help address supply-side constraints and to promote the diversification of existing production in the territories of preference receiving Members.]
  

F. RECENTLY ACCEDED MEMBERS

38. [The implementation period for [developing] recently acceded Members shall be [2011] to [three years after the end of the implementation period for other [developing country] Members ].] [To the extent that the implementation period of commitments undertaken in acceding to the WTO overlaps with the implementation period of commitments undertaken in association with these modalities, the start of implementation of commitments undertaken in association with these modalities shall begin [immediately] [[ ] years] after the end of implementation of accession commitments.]

39. [Recently acceded Members may reduce bound duties by [ ] per cent of the reduction that would otherwise have been required by tiered formula] [and bound duties below [10] per cent in a [developing] recently acceded Member shall be exempt from reduction].

40. [Developing] [R][r]ecently acceded Members shall have the following additional flexibility on the selection and treatment of Special Products: [ ]. And on sensitive products the following additional flexibility [ ].]

41. [Small low-income, recently acceded Members with economies in transition shall not be required to undertake reductions in bound duties and shall have access to all instruments available to other Members at the same level of development under Market Access.]

  
G. LEAST-DEVELOPED COUNTRIES

42. Least-developed country Members shall have full access to all special and differential treatment provision and shall not be required to undertake reduction commitments.

43. Developed-country Members shall, and developing-country Members declaring themselves in a position to do so should (4):

(a) Provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period in a manner that ensures stability, security and predictability.
(b) Members facing difficulties at this time to provide market access as set out above shall provide duty-free and quota-free market access for at least 97 per cent of products originating from LDCs, defined at the tariff line level, by 2008 or no later than the start of the implementation period. In addition, these Members shall take steps to progressively achieve compliance with the obligations set out above, taking into account the impact on other developing country Members at similar levels of development, and, as appropriate, by incrementally building on the initial list of covered products.
(c) Developing-country Members shall be permitted to phase in their commitments and shall enjoy appropriate flexibility in coverage.
(d) Ensure that preferential rules of origin applicable to imports from LDCs are transparent and simple, and contribute to facilitating market access.

[By the time Members submit their comprehensive draft schedules of concessions, developed-country Members shall, and developing-country Members declaring themselves in a position to do so should:
  

- inform the WTO of the products that are currently covered under duty free and quota free market access for LDCs;
  
- notify the internal procedures by which they will implement the Decision; and
  
- provide an indication of the possible time frame within which they intend to fully implement the Decision as agreed.]

  
H. COTTON

44. Developed country Members [and developing country Members [in a position to do so]] shall give duty and quota free access for cotton exports from least-developed country Members from the commencement of the implementation period.

45. [Developing country Members that are not in a position to give duty- and quota-free access for cotton exports from least-developed country Members undertake to facilitate imports of cotton from the least-developed country Members from the commencement of the implementation period.]

46. [Developed country Members [shall] [should] grant duty- and quota-free access for cotton exports from [least-developed] [developing] country Members from the commencement of the implementation period.]

  
I. [SMALL, VULNERABLE ECONOMIES

47. Members with economies that, in the period [1999] to [2004], had an average share of [(a) world merchandise trade of no more than [0.16] per cent,] [(b) world trade in non-agricultural products of no more than [0.10] per cent] [and] [(c) world trade in agricultural products of no more than [0.40] per cent] shall have the right to reduce bound duties by [ ] less than those that would otherwise have been required under paragraph 4 above.

48. Any Member meeting the criteria in paragraph 47 shall have the right to self-designate at least [ ] per cent of tariff lines as Special Products based on criteria of food security, livelihood security and rural development needs. Such Members shall not be required to undertake reductions in bound duties, increase bound tariff quotas or be subject to a tariff cap] on these products.]

49. [Developed country] Members shall provide enhanced improvements in market access for products of export interest to Members with small, vulnerable economies.]

J. MONITORING AND SURVEILLANCE

III. DOMESTIC SUPPORT

A. FINAL BOUND TOTAL AMS: A TIERED FORMULA

1. Tiered reduction formula

(a) Reductions in Final Bound Total AMS

50. The Final Bound Total AMS shall be reduced in accordance with the following tiered formula:

(a) Where the Final Bound Total AMS is greater than US$25 billion, or the equivalent in the monetary terms in which the binding is expressed, the reduction shall be [70-83] per cent;
(b) Where the Final Bound Total AMS is greater than US$15 billion and less than or equal to US$25 billion, or the equivalents in the monetary terms in which the binding is expressed, the reduction shall be [60-70] per cent;
(c) Where the Final Bound Total AMS is less than or equal to US$15 billion, or the equivalent in the monetary terms in which the binding is expressed, the rate of reduction shall be [37-60] per cent.

51. Developed country Members with high relative levels of Final Bound Total AMS [of at least [40] per cent of the total value of agricultural production] shall undertake an additional reduction [equal to at least half of the difference between the reduction rate specified in their tier and the reduction rate specified in the higher tier].

(b) Implementation period and staging

52. The reductions in Final Bound Total AMS shall be implemented according to the following schedule [ ].

(c) Special and differential treatment

53. The reduction in Final Bound Total AMS applicable to developing country Members with Final Bound Total AMS commitments shall be [two thirds] of the reduction applicable under (a)50(c) above. The reductions in Final Bound Total AMS shall be implemented according to the following schedule [ ]. [Net food-importing developing country Members shall be exempt from reductions in Final Bound Total AMS.]

54. Developing country Members shall have continued access to the provisions of Article 6.2 of the Agreement on Agriculture.
(d) Other

55. [As provided for under Article 18.4 of the Agreement on Agriculture, those cases where [exchange rate fluctuations] [and inflation rates] have caused extraordinary situations shall be dealt with separately and on a pragmatic case-by-case basis.]
  

B. PRODUCT-SPECIFIC AMS CAPS

1. Product-specific AMS caps

56. Product-specific AMS limits shall be set out in the Schedule of the Member concerned.

57. Article 6.3 of the Agreement on Agriculture shall be amended to reflect the modalities with respect to product-specific AMS caps by the addition of the following:

Ad Article 6.3:

A Member shall not exceed the product-specific AMS limits specified in its Schedule.

58. The product-specific AMS limits specified in each Member's Schedule shall be the average applied levels of such support provided during the base period [1995 to 2000] [1999 to 2001].

59. [In cases where a product-specific AMS during the base period was below the de minimis level the Current AMS for such products shall not exceed [the de minimis level] [[ ] per cent of the value of production of that product] and the limit for such products shall be denoted accordingly in the Schedule.] [In cases where product specific AMS exceeded de minimis after the base period the product specific limit shall not exceed [ ].]

60. Product-specific AMS caps shall be implemented [according to the following schedule [ ]].

2. Special and differential treatment

61. [In the case of developing country Members, the Current AMS for individual products shall not exceed the respective levels established by one of the following methods:

(a) the average applied levels during the base period [1995 to 2000] or [1995 to 2004], as may be selected by the Member concerned; or
(b) [twice] the Member's product-specific de minimis level; or
(c) [20] per cent of the Annual Bound Total AMS in any year.]
  

C. de minimis

1. Reductions

62. The de minimis levels pursuant to Article 6.4(a) of the Agreement on Agriculture shall be reduced by [50] [80] [] per cent [or by such an amount as would be required to adjust to the rate of cut of Overall Trade-Distorting Domestic Support if that is greater]. The new de minimis levels shall [become effective from the beginning of the implementation period] [be phased in through equal annual instalments over the implementation period].

2. Special and differential treatment

63. Developing country Members:

(a) that allocate almost all de minimis support for subsistence and resource-poor farmers;
(b) with no AMS commitments[.] [; and]
(c) [net food-importing developing country Members.]
shall be exempt from reductions in de minimis.

64. For other developing country Members, the de minimis levels pursuant to Article 6.4(b) of the Agreement on Agriculture shall be reduced by [ ] per cent [or by such an amount as would be required to adjust to the rate of cut of Overall Trade-Distorting Domestic Support if that is greater]. For these Members, the new de minimis levels shall [be phased in over a period[ ]].

  
D. BLUE BOX

1. Basic criteria

65. Subject to the additional criteria set out below Article 6.5 shall be amended as follows:

Article 6.5

The value of the following direct payments shall be excluded from a Member's calculation of its Current Total AMS:

(a) Direct payments under production-limiting programmes if:

(i) such payments are based on fixed and unchanging areas and yields; or
(ii) such payments are made on 85 per cent or less of a fixed and unchanging base level of production; or
(iii) livestock payments are made on a fixed and unchanging number of head.

Or

(b) Direct payments that do not require production if:

(i) such payments are based on fixed and unchanging bases and yields; or
(ii) livestock payments made on a fixed and unchanging number of head; and
(iii) such payments are made on 85 per cent or less of a fixed and unchanging base level of production.

2. Additional criteria

(a) Blue Box cap

66. In addition to the criteria set out in paragraph 1.65 a Member shall not provide support under Article 6.5 in excess of the amount as determined below. This will be expressed consistently in the value-specific commitments set out in that Member's Schedule.

67. The maximum permitted value of support under Article 6.5 shall not exceed [2.5] per cent of the average total value of agricultural production during the base period. This limit will [apply from the commencement of the implementation period] [be reduced to [ ] per cent in accordance with the following schedule [ ]] [be phased in, starting from 5 per cent of the value of production in the first year of implementation, according to the following schedule [ ] ].

68. In cases where a Member has placed an exceptionally large percentage of its trade-distorting support [greater than [40] per cent during the base period] in the Blue Box, [the percentage reduction in that support under Article 6.5 will equal the percentage reduction that the Member concerned will make in the Final Bound Total AMS] [the limit under Article 6.5 shall be [ ] percent of the average total value of agricultural production].

(b) Other criteria

69. [The value of support provided to an individual product under Article 6.5(a) shall not exceed the average value of support provided to it during the period [ ]. [Members using such payments shall demonstrate through notification that the production of the individual product in receipt of such payments has not increased in relation to the period when the application of such payments was decided.]]

70. [The value of support provided to an individual product under Article 6.5(b) shall:

(a) not exceed [ ] per cent of the value of the overall Blue Box cap; [and
(b) not exceed [ ] per cent of the value of production of the product concerned in the period [ ].]]

71. [Direct payments under Article 6.5(b) that are based on compensating for a differential between prices actually received as compared to a price benchmark [shall use a historical or specified reference period] [and] [shall not compensate for more than [ ] per cent of the differential in prices.] ]

72. [An increase in Blue Box support for any individual product beyond the limitations determined under this Article shall be permissible where that amount does not exceed [[ ] per cent of] a corresponding reduction in Current AMS support for the product(s) concerned.] [Where there was no Current AMS support in the base period [ ] to [ ] for a particular product, an increase in Blue Box support is permissible for that product where the support concerned does not exceed [ ] percent of value of production and the overall Blue Box cap is still respected.]

73. [Where more than [ ] per cent of the total value of agricultural production is derived from [ ] basic agricultural products, the Member concerned shall have the flexibility to [ ].]

3. Special and differential treatment

74. For developing country Members, the maximum permitted level for the value of support under Article 6.5 shall not exceed [5] cent of the average total value of agricultural production in the [base] period [from [ ] to [ ]].

4. Transparency Requirements

75. [Members using direct payments under Article 6.5, shall for the products receiving such payments, notify:

(a) All parameters referring to any existing or additional criteria, at the time when the programmes were established;
(b) As from the first implementation year of the Doha Development Agenda, all those parameters, such as base period, production levels, area planted, number of head, and other parameters [to be completed] shall be notified at product-specific level.

76. No Blue Box payments shall be used until all notifications obligations above are complied with timely and accurately.]

77. Transparency of the Blue Box measures shall be increased through improved notification requirements.

  
E. OVERALL REDUCTION OF TRADE-DISTORTING DOMESTIC SUPPORT: A TIERED FORMULA

1. Base level

78. The Base Overall Trade-Distorting Domestic Support shall be the sum of (i) the Final Bound Total AMS plus (ii) permitted de minimis level expressed in monetary terms plus (iii) the Blue Box level expressed in monetary terms where;

(a) the “Final Bound AMS” is the “Final Bound Commitment Level” as defined in Article 1(h) of the Agreement on Agriculture;
(b) for the purpose of this base level for reductions in Overall Trade-Distorting Domestic Support, the permitted de minimis level is the annual average of the sum of a Member's:

(i) product-specific de minimis levels [for those products where the average value of product-specific AMS support in the base period did not exceed the de minimis level] [for those products that did not receive AMS support in any year of the base period]; and
(ii) non-product-specific de minimis levels in the base period [, for those years for which non-product-specific AMS support was provided, the non-product-specific de minimis level shall be deemed to be zero];
as specified in Article 6.4 of the current Agreement on Agriculture [or the Protocol of Accession of the Member concerned], expressed in monetary terms, during the base period; and

(c) for the purpose of this base level of reductions in Overall Trade-Distorting Domestic Support, the Blue Box level is the higher of existing average Blue Box payments during the base period and 5 per cent of the average total value of agricultural production during the base period.

2. Tiered reduction formula

79. The base level of Overall Trade-Distorting Domestic Support shall be reduced in accordance with the following tiered formula:

(a) Where the base level of Overall Trade-Distorting Domestic Support is greater than US$60 billion, or the equivalent in the monetary terms in which the binding is expressed, the reduction shall be [70-80] per cent;
(b) Where the base level of Overall Trade-Distorting Domestic Support is greater than US$10 billion and less than or equal to US$60 billion, or the equivalents in the monetary terms in which the binding is expressed, the reduction shall be [53-75] per cent;
(c) Where the base level of Overall Trade-Distorting Domestic Support is less than or equal to US$10 billion, or the equivalent in the monetary terms in which the binding is expressed, the rate of reduction shall be [31-70] per cent.

3. Implementation period and staging

80. As the first instalment of the overall reduction, in the first year and throughout the implementation period, the sum of all trade-distorting support shall not exceed 80 per cent of the base level of Overall Trade-Distorting Domestic Support. As for the second and subsequent years of implementation, the remaining reductions shall be implemented according to the following schedule [ ].

4. Special and differential treatment

81. Developing country [, and recently acceded] Members with no AMS Commitments shall not be required to make commitments on reductions in Overall Trade-Distorting Domestic Support. [In addition, net food-importing developing country Members shall also be exempt from commitments to reduce Overall Trade-Distorting Domestic Support.]

82. For [other] developing country Members [with AMS commitments], the applicable reduction for Overall Trade-Distorting Domestic Support shall be [two thirds] [[ ] per cent] of the relevant rate specified in paragraph 2.79(c) above.

83. As the first instalment of the overall cut, in the first year and throughout the implementation period, the sum of all trade-distorting support shall not exceed 80 per cent of the base level of Overall Trade-Distorting Domestic Support. As for the second and subsequent years of implementation, the remaining reductions shall be implemented according to the following schedule [ ].

5. Other

84. Commitments relating to reductions in Overall Trade-Distorting Domestic Support shall apply as a minimum overall commitment. If necessary, a Member shall be required to make additional commitments on reductions or limits in Section A (Final Bound Total AMS), Section C (de minimis) and/or Section D (Blue Box) in order to achieve the appropriate reduction in Overall Trade-Distorting Domestic Support.

  
F. GREEN BOX

85. Annex 2 of the Agreement on Agriculture shall be amended as set out in Annex H of this document.

  
G. COTTON

1. Reductions in Support for Cotton Production

86. Trade-distorting domestic support for cotton shall be reduced by [ ] per cent more than the reduction in Final Bound Total AMS [or Overall Trade-Distorting Domestic Support whichever is the greater] and set out in Part [ ] of each Member's Schedule.

87. [AMS support for cotton shall be [eliminated] [reduced according to the following formula]

Rc = Specific reduction applicable to cotton as a percentage
Rg = General reduction in AMS as a percentage

88. This will be applied to the base value of support calculated as the arithmetic average of the amounts notified by Members for cotton in supporting tables DS:4 from 1995 to 2000.]

89. [The ceiling on Blue Box subsidies for cotton shall be [5 per cent of total Blue Box ceiling] [one-third of [the ceiling on the Blue Box for agriculture as a whole] [the production value for cotton] [the amount that would be otherwise determined respectively through application of paragraph D.2(b)69 above and the “double trigger” approach specified in paragraph D.2(b)70(a) and (b) above.]]

2. Implementation

90. The reductions for trade-distorting domestic support on cotton shall be implemented over a period [which is one third of the implementation period] [according to the following schedule [ ]].

3. Special and Differential Treatment

91. [Developing country Members shall have the following rates of reduction for trade-distorting domestic support for cotton [ ] [, provided that the rate of reduction is no less than two thirds of that specified in paragraph 1.86 above.]]

92. [The relevant Blue Box cap for developing country Members [which are net producers and exporters of cotton] shall be [ ]. The relevant Blue Box cap for cotton for developing country Members shall be [ ].]

93. [Developing country Members shall implement their reduction commitments for cotton over a period of up to [ ] years.]

  
H. RECENTLY ACCEDED MEMBERS

94. [The implementation period for [developing] recently acceded Members shall be [2011] to [three years after the end of the implementation period for other [developing country] Members.]] [To the extent that the implementation period of commitments undertaken in acceding to the WTO overlaps with the implementation period of commitments undertaken in association with these modalities, the start of implementation of commitments undertaken in association with these modalities shall begin [immediately] [[ ] years] after the end of implementation of accession commitments.]

95. [Small, low-income, recently acceded Members with economies in transition shall not be required to undertake reductions in Final Bound Total AMS [and] [or] de minimis level.]

96. [In the case of such Members, investment subsidies and input subsidies generally available to agriculture, interest subsidies to reduce the costs of financing as well as grants to cover debt repayment shall be exempted from domestic support AMS commitments.]
  

I. MONITORING AND SURVEILLANCE

97. Procedures and notification requirements and formats shall be improved to ensure transparency and enhance monitoring of domestic support measures. Details to be developed in the context of horizontal modalities for monitoring and surveillance.

IV. EXPORT COMPETITION

A. GENERAL PROVISIONS ON EXPORT COMPETITION

98. Nothing in the modalities on export competition can be construed to give any Member the right to provide, directly or indirectly, support to exports of agricultural products in excess of the commitments set out in Members' Schedules or in conflict with the terms of Article 8 of this Agreement. Furthermore, nothing can be construed to imply any change to the obligations and rights under Article 10.1 or to diminish in any way existing obligations under other provisions of the Agreement on Agriculture or other WTO Agreements.

99. The following provisions will give effect to the detailed modalities ensuring parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect pursuant to the July 2004 Agreed Framework and the Hong Kong Ministerial Declaration.

  
B. EXPORT SUBSIDY COMMITMENTS

100. Developed country Members shall eliminate their export subsidies by the end of 2013. This will be on the basis of annual budgetary outlay commitments being reduced by [ ] percent [and quantity commitments being reduced by [ ] percent] in each year commencing 2008 to 2013, such that a substantial part of the elimination of export subsidy commitments is achieved by 2010, the mid-point of implementation for developed country Members.

101. Developing country Members shall eliminate their export subsidies by the end of [ ]. This will be on the basis of annual budgetary outlay commitments being reduced by [ ] percent [and quantity commitments being reduced by [ ] percent] in each year commencing 2008 to [ ] such that a substantial part of the elimination of export subsidy commitments is achieved by [ ], the mid-point of implementation for developing country Members.

102. In accordance with the Hong Kong Ministerial Declaration, developing country Members will continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture for five years after the end-date for elimination of all forms of export subsidies.

  
C. EXPORT CREDITS, EXPORT CREDIT GUARANTEES OR INSURANCE PROGRAMMES

103. Export credit, export credit guarantees or insurance programmes shall comply with the detailed disciplines set out in Annex I.

104. [Export financing support, which does not conform with the provisions of paragraph 3.4 of Annex I, or which is provided in circumstances as may otherwise be allowable under Article 9 of this Agreement, constitute export subsidies for the purposes of this Agreement and are therefore [subject to specific export financing elimination commitments contained in Members' Schedules] [to be prohibited by [ ] for developed country Members and [ ] for developing country Members] [to be eliminated within the binding levels of Members' export subsidies elimination Schedules.]

105. [The disciplines set out in Annex I, shall apply from the first day of the implementation period of the Doha Round for developed country Members [and from [ ] for developing country Members] [.] [and the maximum repayment term of 180 days shall be phased in according to the following schedule [ ].]

106. [Over the respective implementation periods for developed and developing country Members, the scope of permitted export financing instruments shall be reduced to only pure risk cover comprising export credit insurance or reinsurance and export credit guarantees according to the following schedule [ ].]
  

D. AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES

107. Agricultural exporting state trading enterprises shall comply with the detailed disciplines set out in Annex J.

108. Members shall,

(a) eliminate by [ ] [the end of 2013] for developed country Members, and by [ ] [the end of [ ]] for developing country Members, [in accordance with the following timetable [to be developed]] [in parallel with the elimination of export subsidies]:

(i) those export subsidies, defined by Article 1(e) of the Agreement on Agriculture, which are currently provided to or by an agricultural exporting state trading enterprise, consistent with Members export subsidy commitments and the provisions of Article 9.4 of the Agreement on Agriculture;
(ii) government financing of exporting state trading enterprises, [including, inter alia], preferential access to capital or other special privileges with respect to government financing or re-financing facilities, borrowing, lending or government guarantees for commercial borrowing or lending, at below market rates; and
(iii) government underwriting of losses, either directly or indirectly, [including, inter alia] losses or reimbursement of the costs or write-downs or write-offs of debts owed [to, or] by export state trading enterprises on their export sales.

(b) [[prohibit] [phase-out] by [ ] [the end of 2013] [in parallel with the elimination of export subsidies] the use of monopoly powers for such enterprises, after which Members shall not restrict the right of any interested entity to export, or to purchase for export, agricultural products.]

109. The provisions of paragraph 108(b) for developing country Members shall be subject to the provisions contained in paragraph 3.4(a) and (b) of Annex J.

  
E. INTERNATIONAL FOOD AID

110. International food aid shall comply with the detailed disciplines set out in Annex K.

111. [In-kind food aid [provided in situations other than those defined in paragraphs 2.4 and 2.6 of Annex K] shall be [phased out by the end of 2013 for developed country Members and by end [ ] for developing country Members] [in accordance with the following timetable [ ]] [in parallel with the elimination of export subsidies].]

112. [The monetisation of in-kind food aid shall be phased out by the end of 2013 for developed country Members and by end [ ] for developing country Members [in accordance with the following timetable [ ]] [in parallel with the elimination of export subsidies] [.] [except where it is necessary to fund activities that are directly related to the delivery of food aid to the recipient or for the procurement of agricultural inputs.]

  
F. COTTON

113. All forms of export subsidies for cotton shall be eliminated by developed countries in 2006 [and developed countries concerned shall provide information on measures they have taken to implement this [and their schedules of commitments shall be modified with effect from 31 December 2006.].]

114. [All forms of export subsidies for cotton shall be eliminated by developing country Members in 2007 [and developing country Members concerned shall provide information on measures they have taken to implement this] [and their schedules of commitments shall be modified with effect from 31 December 2007].]

115. [The extent to which disciplines and commitments for the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect for export credits, agricultural exporting state trading enterprises and international food aid, apply to cotton and their scheduling shall be specified in the lists of commitments.]

V. EXPORT PROHIBITIONS AND RESTRICTIONS

A. ARTICLE 12.1

116. [Article 12.1 of the Agreement on Agriculture shall be amended to include the measures set out in Annex L.]

VI. COMMODITY ARRANGEMENTS

A. UNDERSTANDING ON THE PROVISIONS OF ARTICLES XX(H) AND XXXVIII OF GATT 1994

117. [An Understanding on the provisions of Articles XX(h) and XXXVIII of GATT 1994 is set out in Annex M.]

VII. [OTHER ISSUES]

A. [SECTORAL INITIATIVES]

B. [GEOGRAPHICAL INDICATIONS]

C. [DIFFERENTIAL EXPORT TAXES

118. The differential element of export taxes shall be eliminated by the end date for implementation.]

__________

Footnotes

1.   In general the definitions would remain as set out in Article 1 of the Agreement on Agriculture but some changes are needed in order to reflect the new commitments which Members will make, the new implementation period(s) and other factors. back to text
2.  That is, all out-of-quota duties. In-quota tariffs shall be subject to commitments under paragraph 18. back to text
3.   Special circumstances refer to situations where a developing country Member:
(a) had bound at least [25%] of its total tariff lines at a maximum import duty of [80%] at the start of the implementation period;
(b) had undertaken ceiling binding commitments under the Uruguay Round;
(c) has predominantly low income or resource poor producers; or
(d) has any other structural difficulties in its agriculture sector. back to text
4.  The text of this paragraph is the “Decision on Measures in Favour of Least-Developed Countries” in Annex F of the Hong Kong Ministerial Declaration (WT/MIN(05)/DEC). back to text

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See also:
> Cover letter from the Chairman of the Committee on Agriculture, Special Session to the Chairman of the Trade Negotiations Committee
> Annexes