Agreement on Agriculture

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XII. Article 11 

A. Text of Article 11

Article 11: Incorporated Products

    In no case may the per-unit subsidy paid on an incorporated agricultural primary product exceed the per-unit export subsidy that would be payable on exports of the primary product as such.

B. Interpretation and Application of Article 11

No jurisprudence or decision of a competent WTO body.

 

Part VI

 

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XIII. Article 12 

A. Text of Article 12

Article 12: Disciplines on Export Prohibitions and Restrictions

1.   Where any Member institutes any new export prohibition or restriction on foodstuffs in accordance with paragraph 2(a) of Article XI of GATT 1994, the Member shall observe the following provisions:

 

(a)   the Member instituting the export prohibition or restriction shall give due consideration to the effects of such prohibition or restriction on importing Members’ food security;

 

(b)   before any Member institutes an export prohibition or restriction, it shall give notice in writing, as far in advance as practicable, to the Committee on Agriculture comprising such information as the nature and the duration of such measure, and shall consult, upon request, with any other Member having a substantial interest as an importer with respect to any matter related to the measure in question. The Member instituting such export prohibition or restriction shall provide, upon request, such a Member with necessary information.

 

2.   The provisions of this Article shall not apply to any developing country Member, unless the measure is taken by a developing country Member which is a net-food exporter of the specific foodstuff concerned.

B. Interpretation and Application of Article 12

1. Notification requirements

132.   With respect to notification requirements concerning export prohibitions and restrictions, see paragraphs 173–177 below.

 

Part VII

 

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XIV. Article 13 

A. Text of Article 13

Article 13: Due restraint

     During the implementation period, notwithstanding the provisions of GATT 1994 and the Agreement on Subsidies and Countervailing Measures (referred to in this Article as the “Subsidies Agreement”):

 

(a)   domestic support measures that conform fully to the provisions of Annex 2 to this Agreement shall be:

 

(i)   non-actionable subsidies for purposes of countervailing duties(4);

 

(footnote original) 4 “Countervailing duties” where referred to in this Article are those covered by Article VI of GATT 1994 and Part V of the Agreement on Subsidies and Countervailing Measures.

(ii)   exempt from actions based on Article XVI of GATT 1994 and Part III of the Subsidies Agreement; and

 

(iii)   exempt from actions based on non-violation nullification or impairment of the benefits of tariff concessions accruing to another Member under Article II of GATT 1994, in the sense of paragraph 1(b) of Article XXIII of GATT 1994;

 

(b)   domestic support measures that conform fully to the provisions of Article 6 of this Agreement including direct payments that conform to the requirements of paragraph 5 thereof, as reflected in each Member’s Schedule, as well as domestic support within de minimis levels and in conformity with paragraph 2 of Article 6, shall be:

 

(i)   exempt from the imposition of countervailing duties unless a determination of injury or threat thereof is made in accordance with Article VI of GATT 1994 and Part V of the Subsidies Agreement, and due restraint shall be shown in initiating any countervailing duty investigations;

 

(ii)   exempt from actions based on paragraph 1 of Article XVI of GATT 1994 or Articles 5 and 6 of the Subsidies Agreement, provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year; and

 

(iii)   exempt from actions based on non-violation nullification or impairment of the benefits of tariff concessions accruing to another Member under Article II of GATT 1994, in the sense of paragraph 1(b) of Article XXIII of GATT 1994, provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year;

 

(c)   export subsidies that conform fully to the provisions of Part V of this Agreement, as reflected in each Member’s Schedule, shall be:

 

(i)   subject to countervailing duties only upon a determination of injury or threat thereof based on volume, effect on prices, or consequent impact in accordance with Article VI of GATT 1994 and Part V of the Subsidies Agreement, and due restraint shall be shown in initiating any countervailing duty investigations; and

 

(ii)   exempt from actions based on Article XVI of GATT 1994 or Articles 3, 5 and 6 of the Subsidies Agreement.

B. Interpretation and Application of Article 13

1. General

133.   In US — Upland Cotton, in which the Panel was established during the “implementation period”, the Panel explained the structure of Article 13 (the “Peace Clause”) as follows:

“Article 13 sets out certain conditions in the chapeaux of paragraphs (a) and (b) and an additional condition in the proviso in subparagraphs (ii) and (iii) of paragraph (b).

 

Paragraph (a) covers domestic support measures that conform fully to the provisions of Annex 2 of the Agreement on Agriculture, that is, so-called ‘green box’ measures, which are not subject to reduction commitments. Paragraph (b) covers domestic support measures that conform fully to the provisions of Article 6, which covers domestic support subject to reduction commitments, and domestic support not subject to reduction commitments in terms of the criteria set out in that article. The chapeau of paragraph (b) confirms that these are so-called ‘amber box’, ‘blue box’, ‘de minimis’ and ‘S&D box’ domestic support measures.

 

Paragraph (b) does not cover domestic support measures not subject to reduction in terms of the criteria in Annex 2 and maintained in conformity therewith in accordance with Article 7.1. These are measures that satisfy Paragraph (a). The parties agree that these measures are excluded from paragraph (b). We will therefore refer to measures covered by paragraph (b) as ‘non-green box measures’.

 

Measures that do not conform fully to the provisions of Annex 2 of the Agreement on Agriculture do not satisfy Paragraph (a). Therefore, they are subject to reduction commitments, unless they are exempt on the basis of other criteria set forth in Article 6. In either case, they must conform fully to the provisions of Article 6 and, hence, are subject to paragraph (b).

 

The conditions that apply to green box measures are set out in the chapeau of paragraph (a). The conditions that apply to non-green box measures are set out in the chapeau of paragraph (b), subject to an additional condition in the proviso in subparagraphs (ii) and (iii) that ‘such measures do not grant support to a specific commodity in excess of that decided in the 1992 marketing year’. Each of these two groups of conditions provides exemptions from actions based on certain provisions, including paragraph 1 of Article XVI of the GATT 1994 and Articles 5 and 6 of the SCM Agreement⁽¹⁹⁸⁾ … Domestic support measures that satisfy either of the groups of conditions fall outside the scope of the obligations in these provisions of Article XVI of the GATT 1994 and Part III of the SCM Agreement.”⁽¹⁹⁹⁾

2. Paragraph (a)

134.   In US — Upland Cotton, the Appellate Body, like the Panel, began its analysis under Article 13 under paragraph (a) first, noting that:

“[D]omestic support that conforms fully to the provisions of Annex 2 — that is ‘green box’ support, which is exempt from the domestic support reduction obligations of the Agreement on Agriculture — is also exempt, during the implementation period, from actions based on Article XVI of GATT 1994 and the actionable subsidies provisions of Part III of the SCM Agreement.”⁽²⁰⁰⁾

3. Paragraph (b)

(a) Subparagraph (i)

(i) Order of analysis

135.   The dispute on Mexico — Olive Oil concerned, inter alia, an EC claim that by initiating a countervailing duty investigation on imports of an agricultural product (olive oil) on the basis of an allegation that subsidized imports were materially retarding establishment of a domestic industry in Mexico, Mexico had breached Articles 13(b)(i) and 21 of the Agreement on Agriculture. The Panel set out the order of analysis for such claims:

“There are three legal elements in Article 13(b)(i). First, the chapeau of paragraph (b) provides that the obligations and exemptions set forth in the succeeding subparagraphs only apply to ‘domestic support measures’ which conform fully to the provisions of Article 6 of the Agreement on Agriculture. Second, subparagraph (i) exempts such products from the imposition of countervailing duties, unless a determination of injury or threat thereof is made in accordance with Part V of the SCM Agreement. Third, subparagraph (i) also requires that ‘due restraint shall be shown in initiating any countervailing duty investigations’ in relation to those measures.”⁽²⁰¹⁾

(ii) “injury or threat thereof”

136.   In Mexico — Olive Oil, the Panel interpreted the reference in Article 13(b)(i) to “injury or threat thereof”, in relation to the EC’s claim that “injury or threat” did not include “material retardation of establishment”:

“We note that the first clause of Article 13(b)(i) refers inter alia to ‘injury or threat thereof … in accordance with … Part V of the Subsidies Agreement.’ The paragraph does not refer to ‘material injury’, but rather to ‘injury’. ‘Injury’, in turn, is defined in footnote 45 of the SCM Agreement as ‘material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry’. (emphasis added) In other words, the definition of the term ‘injury’ for purposes of the SCM Agreement encompasses the concept of material retardation. We therefore do not find that the first clause of subparagraph (i) prohibits the imposition of duties on the basis of a determination of material retardation as opposed to determinations of material injury or threat of material injury.”⁽²⁰²⁾

(iii) “due restraint”

137.   In Mexico — Olive Oil, the Panel also examined and rejected, as a factual matter, an EC claim that Mexico acted inconsistently with Article 13(b)(i) by failing to show “due restraint” and initiating the countervailing duty investigation at issue:

“The term ‘due restraint’ has not been interpreted by panels or the Appellate Body to date. To assist in determining the ordinary meaning of the terms ‘due’ and ‘restraint’, we look first to dictionary definitions. Black’s Law Dictionary defines ‘due’ as ‘just, proper, regular, and reasonable.’ The definition in Webster’s New Encyclopedic Dictionary is similar, referring to ‘appropriate’, ‘adequate’ and ‘regular’. The New Shorter Oxford English Dictionary defines ‘restraint’ as ‘(self-) control; the ability to restrain oneself; reserve; absence of excess or extravagance.’ The review of the French and Spanish texts, which are equally authentic,⁽²⁰³⁾ suggests similar interpretations. In the French version the relevant term to be interpreted is the word ‘modération’. The dictionary Le Grand Robert de la langue francçaise defines ‘modération’ as ‘circonspection, pondération, reserve’ and ‘retenue’, which shows that all of these words express reserve, caution and balancing. Regarding the Spanish terms ‘debida moderación’, the Diccionario de la lengua española provides for the word ‘debida’ the definition ‘como corresponde o es licito’ and ‘a causa de, en virtud de’. ‘Moderación’ is defined as ‘cordura, sensatez, templanza en las palabras o acciones’. Therefore, considered on the basis of all three authentic texts of Article 13(b)(i) the ordinary meaning of ‘due restraint’ is ‘a proper, regular, and reasonable demonstration of self-control, caution, prudence and reserve’.

 

We consider this definition to be consistent with the context of Article 13 as a whole, as well as with the object and purpose of the provision, which is to provide a ‘peace clause’, during the implementation period, for Members taking actions permitted under the SCM Agreement against subsidies that are provided consistent with the provisions of the Agreement on Agriculture.“⁽²⁰⁴⁾

(iv) Scope

138.   The dispute in Brazil — Coconut concerned Brazil’s imposition of a countervailing duty on desiccated coconut from the Philippines. The Philippines claimed inter alia that even if its programmes constituted subsidies, these programmes fully complied with the developing country and de minimis exemptions under Article 6, and were thus exempt from countervailing duties unless there were an injury determination consistent with GATT Article VI and the SCM Agreement. The Panel referred to footnote 4 to Article 13, which provides that “‘Countervailing duties’ where referred to in this Article are those covered by Article VI of GATT 1994 and Part V of the Agreement on Subsidies and Countervailing Measures”. The Panel, having concluded that the measures at issue were outside the scope of Article VI of GATT 1994 and of the SCM Agreement, concluded that “Article 13 of the Agreement on Agriculture does not apply to this dispute.”⁽²⁰⁵⁾

(b) Subparagraph (ii)

(i) “exempt from actions”

139.   In a ruling not challenged on appeal, the Panel in US — Upland Cotton interpreted the phrase “exempt from actions” in Article 13 as meaning, on the one hand, that serious prejudice actions could not be invoked against measures that complied with the relevant conditions set out in the Agreement on Agriculture but, on the other hand, that a Member could still institute WTO dispute settlement proceedings where it considered that those measures did not satisfy all the relevant conditions:

“[T]he Panel considers that the ordinary meaning of the terms read in their context and in light of the object and purpose of the treaty, indicates that ‘exempt from actions’ means that dispute settlement actions based on the listed provisions shall not be invoked with respect to measures that satisfy the conditions in Article 13. However, that does not preclude multilateral dispute settlement based on the listed provisions where a Member considers that benefits accruing under covered agreements are being impaired by a measure taken by another Member that does not satisfy the relevant conditions set forth in Article 13. The issue of whether a measure satisfies the relevant conditions is an issue of substance in a dispute.”⁽²⁰⁶⁾

(ii) “grant”

140.   In US — Upland Cotton, the Appellate Body rejected arguments that the conditions set out in Article 13(b)(ii) could not be based on factors such as producers’ decisions that are beyond the control of a government, because the terms “grant” and “decided” must be given distinct meanings:

“We note that the verbs ‘grant’ and ‘decided’ have distinct meanings. We agree with the observation of the Panel that ‘“[d]ecided” refers to what the government determines, but “grant” refers to what its measures provide.’ In Article 13(b)(ii), each of these words has been chosen to govern one side of the comparison required by that proviso. In the light of the distinct meanings of these words, and the distinct roles they play in the context of Article 13(b)(ii), we reject the idea that the word ‘grant’, which is applicable to implementation period support, must be read to mean the same thing as ‘decided’, which is applicable to the 1992 benchmark level of support.

 

Moreover, we do not accept that unpredictability of producer decisions under planting flexibility rules, per se, could modify the specific requirements set out in the proviso to Article 13(b)(ii). What is relevant for the comparison is the support that the measure actually grants during the implementation period. Indeed, we agree with Brazil that a certain degree of unpredictability in the volume of the payments flowing to particular commodities is inherent in many of the support measures disciplined by the Agreement on Agriculture, including measures granting support to a specific commodity. The existence of such unpredictability cannot be a ground to alter the basis of comparison under the proviso to Article 13(b)(ii) from what is actually ‘grant[ed]’ in the implementation period to what is only ‘decided’.”⁽²⁰⁷⁾

(iii) “provided that such measures do not grant support to a specific commodity”

141.   In US — Upland Cotton the Appellate Body examined this condition in Article 13(b)(ii) in relation to US measures that the parties agreed granted support to a commodity, upland cotton. The question was whether cotton was a “specific commodity” and what linkage was required between the support and the commodity. The Appellate Body upheld the Panel’s approach that found that “such measures … grant[ing] support to a specific commodity” include but are not limited to “non-green box measures that clearly or explicitly define a commodity as one to which they bestow or offer support”:⁽²⁰⁸⁾

“The key element, however, is the significance of the qualifying word ‘specific’ in this phrase. The Panel described the ordinary meaning of the term ‘specific’ as ‘clearly or explicitly defined; precise; exact; definite’ and as ‘specially or peculiarly pertaining to a particular thing or person, or a class of these; peculiar (to)’. In our view, the term ‘specific’ in the phrase ‘support to a specific commodity’ means the ‘commodity’ must be clearly identifiable. The use of term [sic] ‘to’ connecting ‘support’ with ‘a specific commodity’ means that support must ‘specially pertain’ to a particular commodity in the sense of being conferred on that commodity. In addition, the terms ‘such measures … grant’ indicates that a discernible link must exist between ‘such measures’ and the particular commodity to which support is granted. Thus, it is not sufficient that a commodity happens to benefit from support, or that support ends up flowing to that commodity by mere coincidence. Rather, the phrase ‘such measures’ granting ‘support to a specific commodity’ implies a discernible link between the support-conferring measure and the particular commodity to which support is granted.”⁽²⁰⁹⁾

142.   In US — Upland Cotton the Appellate Body rejected the argument that the phrase “support to a specific commodity” should be limited only to “product-specific support”. First, it noted that the drafters chose a different phrase from those used elsewhere in the Agreement on Agriculture, and second, it noted that the scope of domestic support measures that may grant “support to a specific commodity” includes all non-green box domestic support measures identified in the chapeau of Article 13(b), which are the following:

“Measures covered by Article 6 include both product-specific and non-product-specific amber box support subject to reduction commitments. In addition, measures covered by the chapeau also include product-specific and non-product-specific support within de minimis levels. They further include blue box support provided in accordance with Article 6.5, as well as development box support, provided according to the provisions of Article 6.2, for both of which the distinction between product-specific and non-product specific support for purposes of the AMS calculation has little practical relevance. Like the Panel, we believe that the use of the term ‘such measures’ in the proviso to Article 13(b)(ii) indicates that all such measures identified in the chapeau of Article 13(b) may qualify as granting ‘support to a specific commodity’ and are eligible to be included in the analysis. By contrast, under the United States’ argument, domestic support measures listed in the chapeau (with the exception of product-specific amber box support) could not be ‘support to a specific commodity’ even if they confer support on a specific commodity and there is a discernible link between the measure and that commodity.”⁽²¹⁰⁾

143.   In US — Upland Cotton the Appellate Body found a discernible link between certain domestic support programmes and the “specific commodity” of upland cotton due to the factual relationship between production of that commodity and payment recipients, as well as references to upland cotton in the legislative provisions establishing and governing the operation of the programmes:

“We observe, however, that the Panel acknowledged that a producer with upland cotton base acres may plant any crop other than the excluded fruits, vegetables, and wild rice, but it found that there was ‘a strongly positive relationship between those recipients who hold upland cotton base acres and those who continue to plant upland cotton, despite their entitlement to plant other crops’. The Panel further observed that data provided by the United States showed that ‘a very large proportion of farms with upland cotton base acres continue to plant upland cotton in the year of payment’, and that ‘the overwhelming majority of farms enrolled in the programmes which plant upland cotton also hold upland cotton base’.

…

[T]he Panel highlighted several factors revealing a close nexus between payments with respect to historic upland cotton base acres under the production flexibility contract, market loss assistance, direct payment and counter-cyclical payment measures, and the continued production of upland cotton on an equivalent number of physical acres at present. The Panel noted that payments under each programme were based on ‘very specific eligibility criteria’, primarily the production of upland cotton in a historical base period. The Panel also observed that, in the case of each of the measures, a particular payment rate was specified for upland cotton. Yield calculations were also specific to upland cotton and related to historical upland cotton yields per acre. In the case of market loss assistance payments, payments were specifically designed to compensate for low prices for upland cotton. In the case of counter-cyclical payments, the payment rate for upland cotton is directly linked to the market price of upland cotton in the year of payment. In our view, these characteristics and operational factors of the measures in question demonstrate a link between payments made with respect to historic upland cotton base acres and the continued production of upland cotton.”⁽²¹¹⁾

144.   In a finding not challenged on appeal, the Panel in US — Upland Cotton sought guidance in the guidelines for calculating Aggregate Measure of Support (AMS) set out in Annex 3 to calculate the support granted or decided under Article 13(b)(ii). Ultimately, in the circumstances of the dispute, it was not necessary for the Panel to choose between price gap or budgetary outlay methodologies to calculate direct payments dependent on a price gap:

“Nevertheless, the drafters of the Agreement on Agriculture evidently considered that the AMS reflected basic principles of the measurement of support. In the Panel’s view, AMS methodology can be used to measure both the MY 1992 benchmark and implementation period support under Article 13(b)(ii), subject to two modifications dictated by the treaty text: (1) the AMS methodology should be applied to the corpus of implementation period support measures subject to Article 13(b), to the extent relevant, and not just to support subject to reduction commitments; and (2) it is not appropriate to calculate an AMS on a product-specific basis for a basic agricultural product and total non-product-specific support separately. Therefore, the Panel will apply the principles of AMS methodology to measure the MY 1992 benchmark and implementation period support, subject to these two modifications, for the purposes of Article 13(b)(ii).

…

The AMS expresses support in monetary terms. It measures subsidies, including both budgetary outlays and revenue foregone by governments or their agents. Nonexempt direct payments dependent on a price gap can be measured in terms of a ‘price gap methodology’, which filters out the effect of fluctuations in market prices, or in terms of budgetary outlays. Non-exempt direct payments based on factors other than price must be measured in terms of budgetary outlays. Where calculation of the market price support and other components of AMS is not practicable, an EMS shall be calculated, which also involves multiplying prices by quantities of eligible production or budgetary outlays. There is no reason why these basic principles of measurement of support under the Agreement on Agriculture would be inappropriate to measure implementation period support under Article 13(b)(ii).”⁽²¹²⁾

(iv) “that decided during the 1992 marketing year”

145.   The Panel in US — Upland Cotton was called upon to construe the meaning of the phrase “that decided during the 1992 marketing year” to establish the benchmark for the comparison of support requirement set forth in Article 13(b)(ii) of the Agreement on Agriculture. The Panel noted that the word “decided” stood in contrast to the word “grant” used in the same sentence and considered that, in context, this required the Panel to examine what decisions had been taken by the United States during the course of the 1992 marketing year concerning support for upland cotton, irrespective of when the support was actually granted as a result of those decisions:

“The period ‘during the 1992 marketing year’ is a very specific limitation on the establishment of the benchmark which the Panel is obliged to apply. The Panel must examine what decisions were made by the United States during the 1992 marketing year concerning support for upland cotton, and at no other time. The time at which support was granted as a result of those decisions is not addressed in the text. Decisions taken during the 1992 marketing year could have related to support granted in the same marketing year or in a later marketing year or in several marketing years. The text does not preclude any of these possibilities.”⁽²¹³⁾

146.   The Panel on US — Upland Cotton did not find any particular policy decisions taken by the United States during the 1992 marketing year that added up to a measure of support. Instead, the only decisions on support for upland cotton taken by the United States during the 1992 marketing year were those to effectuate payments pursuant to programmes that provided support to upland cotton:⁽²¹⁴⁾

“The only other decisions on support for upland cotton in the United States during the 1992 marketing year were decisions to make particular payments under programmes to support upland cotton. Each of those was a ‘determination’ of a recipient’s entitlement to a payment, in a particular amount, according to the programme and payment conditions, and hence a ‘decision’ on ‘support’ taken ‘during the 1992 marketing year’. Those determinations involved consideration by the United States government of its obligations or authority to make payments, and matters such as eligibility criteria, compliance with acreage conditions, relevant rates and prices, and volume of upland cotton harvested and used, as set out in the applicable laws and regulations. There is no evidence that payments determined by these decisions involved substantial delays from the time these decisions were taken such that they were made in a different marketing year from that in which the payments were made. The sum of these decisions represents an amount of support that can be compared meaningfully with implementation period support and which can be measured according to the same methodology. In the Panel’s view, this is the correct measure of the MY 1992 benchmark in this dispute.”⁽²¹⁵⁾

147.   The Panel on US — Upland Cotton also found that two 1992 EC regulations reforming the Common Agricultural Policy, which the condition in Article 13 (b)(ii) may have been designed to protect, provided no assistance in interpreting the phrase “support decided in the 1992 marketing year” because they were “done” on the day before the beginning of the 1992 marketing year:

“The two EC regulations submitted to the Panel show that they were both ‘done’ on 30 June 1992. This appears to mean that the decisions to adopt those regulations were taken on that day, although they entered into force the following day. Both define the marketing year for the relevant products as beginning on 1 July and ending on 30 June of the following year⁽²¹⁶⁾ so that, for those products and the European Communities, the 1992 marketing year did not begin until 1 July 1992. Therefore, on their own terms, neither regulation appears to have been decided ‘during the 1992 marketing year’ and, as such, they do not assist the Panel in its interpretation in this particular dispute.”⁽²¹⁷⁾

(c) Relationship with Annex 3 to the Agreement on Agriculture

148.   Regarding the criteria for calculation of Aggregate Measurement of Support, see the material below concerning Annex 3.

4. Paragraph (c)

149.   The Panel in US — Upland Cotton examined various export subsidies for agricultural products for compliance with the substantive provisions of Part V of the Agreement on Agriculture. It observed that this examination was also determinative of compliance with paragraph (c) of Article 13:

“The conditions set out in the chapeau of Article 13(c) of the Agreement on Agriculture refer to compliance with particular substantive provisions in Part V of the Agreement on Agriculture (which includes Articles 8 through 11, as well as, by reference, Article 3.3, of that Agreement) and export subsidy reduction commitments in each Member’s Schedule.

….

Our examination of the export subsidy claims of Brazil under the Agreement on Agriculture will, in the first instance, determine the merits of Brazil’s claims under the export subsidy provisions of the Agreement on Agriculture. Where substantive compliance with the provisions of Part V and fulfilment of Article 13(c) of the Agreement on Agriculture are both squarely before us, these findings will also be determinative for the purposes of the examination of consistency with Part V of the Agreement on Agriculture called for under Article 13(c)(ii) of the Agreement on Agriculture.⁽²¹⁸⁾ Should we find a violation of the export subsidy provisions in Part V of the Agreement on Agriculture, we may then conduct an examination, as necessary and appropriate for the resolution of this dispute, under Articles 3.1(a) and 3.2 of the SCM Agreement and/or Article XVI of the GATT 1994.”⁽²¹⁹⁾

 

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XV. Article 14  

A. Text of Article 14

Article 14: Sanitary and Phytosanitary Measures

     Members agree to give effect to the Agreement on the Application of Sanitary and Phytosanitary Measures.

B. Interpretation and Application of Article 14

No jurisprudence or decision of a competent WTO body.

 

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XVI. Article 15  

A. Text of Article 15

Article 15: Special and Differential Treatment

1.   In keeping with the recognition that differential and more favourable treatment for developing country Members is an integral part of the negotiation, special and differential treatment in respect of commitments shall be provided as set out in the relevant provisions of this Agreement and embodied in the Schedules of concessions and commitments.

 

2.   Developing country Members shall have the flexibility to implement reduction commitments over a period of up to 10 years. Least-developed country Members shall not be required to undertake reduction commitments.

B. Interpretation and Application of Article 15

150.   The Decision on Implementation-related Issues and Concerns, adopted by the Doha Ministerial Conference, included a recommendation that urged Members “to exercise restraint in challenging measures notified under the green box by developing countries to promote rural development and adequately address food security concerns”.⁽²²⁰⁾

151.   Regarding notification obligations for developing countries, see paragraph 177 below.

152.   As regards the green box, see the material under Annex 2 below.

 

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XVII. Article 16  

A. Text of Article 16

Article 16: Least-Developed and Net Food-Importing Developing Countries

1.   Developed country Members shall take such action as is provided for within the framework of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries.⁽²²¹⁾

 

2.   The Committee on Agriculture shall monitor, as appropriate, the follow-up to this Decision.

B. Interpretation and Application of Article 16

1. Article 16.1

(a) Text of the Decision

153.   The text of the Decision and materials on its interpretation appear below at the end of this Chapter.

(b) Recommendations of the Singapore Ministerial Conference

154.   In the light of the Committee’s discussions on the follow-up to the Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries (NFIDC Decision), the Committee on Agriculture submitted the following recommendations for consideration by the Singapore Ministerial Conference, which were approved by Ministers:

“(i)   that, in anticipation of the expiry of the current Food Aid Convention in June 1998 and in preparation for the renegotiation of the Food Aid Convention, action be initiated in 1997 within the framework of the Food Aid Convention, under arrangements for participation by all interested countries and by relevant international organizations as appropriate, to develop recommendations with a view towards establishing a level of food aid commitments, covering as wide a range of donors and donable foodstuffs as possible, which is sufficient to meet the legitimate needs of developing countries during the reform programme. These recommendations should include guidelines to ensure that an increasing proportion of food aid is provided to least-developed and net food-importing developing countries in fully grant form and/or on appropriate concessional terms in line with Article IV of the current Food Aid Convention, as well as means to improve the effectiveness and positive impact of food aid;⁽²²²⁾

 

(ii)   that developed country WTO Members continue to give full consideration in the context of their aid programmes to requests for the provision of technical and financial assistance to least-developed and net food-importing developing countries to improve their agricultural productivity and infrastructure;

 

(iii)   that the provisions of paragraph 4 of the Marrakesh Ministerial Decision, whereby Ministers agreed to ensure that any agreement relating to agricultural export credits makes appropriate provision for differential treatment in favour of least-developed and net food-importing developing countries, be taken fully into account in the agreement to be negotiated on agricultural export credits;

 

(iv)   that WTO Members, in their individual capacity as members of relevant international financial institutions, take appropriate steps to encourage the institutions concerned, through their respective governing bodies, to further consider the scope for establishing new facilities or enhancing existing facilities for developing countries experiencing Uruguay Round-related difficulties in financing normal levels of commercial imports of basic foodstuffs.”⁽²²³⁾

(c) Recommendations approved at the Doha Ministerial Conference

155.   In advance of the Doha Ministerial Meeting, the Committee reported on its work on implementation related issues and made the following recommendations. Concerning food aid, the Committee recommended:

“(a)   that early action be taken within the framework of the Food Aid Convention 1999 (which unless extended, with or without a decision regarding its renegotiation, would expire on 30 June 2002) and of the UN World Food Programme by donors of food aid to review their food aid contributions with a view to better identifying and meeting the food aid needs of least-developed and WTO net food-importing developing countries;

 

“(b)   WTO Members which are donors of food aid shall, within the framework of their food aid policies, statutes, programmes and commitments, take appropriate measures aimed at ensuring: (i) that to the maximum extent possible their levels of food aid to developing countries are maintained during periods in which trends in world market prices of basic foodstuffs have been increasing; and (ii) that all food aid to least developed countries is provided in fully grant form and, to the maximum extent possible, to WTO net food-importing developing countries as well.”⁽²²⁴⁾

156.   Concerning technical and financial assistance in the context of aid programmes to improve agricultural productivity and infrastructure, the Committee recommended:

“(a)   that developed country WTO Members should continue to give full and favourable consideration in the context of their aid programmes to requests for the provision of technical and financial assistance by least-developed and net food-importing developing countries to improve their agricultural productivity and infrastructure;

 

(b)   that, in support of the priority accorded by least-developed and net food-importing developing countries to the development of their agricultural productivity and infrastructure, the WTO General Council call upon relevant international development organisations, including the World Bank, the FAO, IFAD, the UNDP and the Regional Development Banks to enhance their provision of, and access to, technical and financial assistance to least-developed and net food-importing developing countries, on terms and conditions conducive to the better use of such facilities and resources, in order to improve agricultural productivity and infrastructure in these countries under existing facilities and programmes, as well as under such facilities and programmes as may be introduced.”⁽²²⁵⁾

157.   Concerning financing difficulties for commercial imports of basic foodstuffs, the Committee recommended:

“(a)   that the provisions of paragraph 4 of the Marrakesh Ministerial Decision, which provide for differential treatment in favour of least-developed and WTO net food-importing developing countries, shall be taken fully into account in any agreement to be negotiated on disciplines on agricultural export credits pursuant to Article 10.2 of the Agreement on Agriculture;

 

(b)   that an inter-agency panel of financial and commodity experts be established, with the requested participation of the World Bank, the IMF, the FAO, the International Grains Council and the UNCTAD, to explore ways and means for improving access by least-developed and WTO net food-importing developing countries to multilateral programmes and facilities to assist with short term difficulties in financing normal levels of commercial imports of basic foodstuffs, as well as the concept and feasibility of the proposal for the establishment of a revolving fund in G/AG/W/49 and Add.1 and Corr.1. The detailed terms of reference, drawing on the Marrakesh NFIDC Decision, should be submitted by the Vice-Chairman of the WTO Committee on Agriculture, following consultations with Members, to the General Council for approval by not later than 31 December 2001. The inter-agency panel shall submit its recommendations to the General Council by not later than 30 June 2002.”

158.   The Ministerial Conference took note of these recommendations.⁽²²⁶⁾ An Inter-Agency Panel on Short-Term Difficulties in Financing Normal Levels of Commercial Imports of Basic Foodstuffs was established and the General Council approved terms of reference for its work.⁽²²⁷⁾ The Panel submitted its report on 28 June 2002.⁽²²⁸⁾

(d) List of least-developed and net food-importing developing countries

159.   At its meeting of 21 November 1995, the Committee on Agriculture adopted a decision on establishment of a WTO list of net food-importing developing countries eligible as beneficiaries in respect of measures provided for in the NFIDC Decision.

160.   The decision to establish this list was taken on the understanding that

“‘[B]eing listed would not as such confer automatic benefits since, under the mechanisms covered by the Marrakesh Ministerial Decision, donors and the institutions concerned would have a role to play.’⁽²²⁹⁾ The agreed criteria provided that the following countries would be eligible for the list:

 

‘a)   Least developed countries as recognized by the Economic and Social Council of the United Nations.

 

b)   Any developing country Member of the WTO which was a net importer of basic foodstuffs in any three years of the most recent five-year period for which data are available and which notifies the Committee of its decision to be listed as a Net Food-Importing Developing Country for the purpose of the decision.’”⁽²³⁰⁾

161.   As of 30 September 2011, the most recent list includes the least-developed countries as recognized by ECOSOC, plus 29 other countries.⁽²³¹⁾

162.   See also Section XXIX below.

2. Article 16.2

(a) General

163.   The annual monitoring exercise on the follow-up to the NFIDC Decision as a whole has been undertaken at each November meeting of the Committee on Agriculture, on the basis of Table NF:1 notifications by donor Members as well as contributions by the observer organizations, contributions by Members and observer organizations, and a background note by the Secretariat summarizing information on the implementation of the NFIDC Decision.⁽²³²⁾

(b) Notification requirements

164.   For notification requirements and formats concerning the follow-up to the NFIDC Decision, see paragraphs 173–177 below.

(c) Opportunities for consultation

165.   Paragraph 18 of the Organization of Work and Working Procedures of the Committee on Agriculture⁽²³³⁾ states:

“There shall be an opportunity at any regular meeting of the Committee to raise any matter relating to the Decision on Measures concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries.”⁽²³⁴⁾

(d) Effectiveness

166.   At its meeting on 15 December 2000, the General Council decided that:

“The Committee on Agriculture shall examine possible means of improving the effectiveness of the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries and report to the General Council at the second regular meeting of the Council in 2001.⁽²³⁵⁾”

167.   Pursuant to this mandate, the Committee on Agriculture submitted seven recommendations that were adopted by the Doha Ministerial Conference.⁽²³⁶⁾ The recommendations concerned: (i) food aid; (ii) technical and financial assistance in the context of aid programmes to improve agricultural productivity and infrastructure; (iii) financing normal levels of commercial imports of basic foodstuffs; and (iv) review of follow-up. See also Section XXIX below.

168.   Between 2003 and 2006, the Committee on Agriculture also considered, at each of its regular meetings, a proposal by the African Group calling for developed-country Members to, inter alia, contribute to a revolving fund for normal levels of food imports.⁽²³⁷⁾ In September 2004, the Committee on Agriculture decided to revert to this matter on the basis of the recommendation contained in its report to the General Council on Implementation-Related Issues.⁽²³⁸⁾ Informal consultations specifically dedicated to that proposal were also held in May 2005 and again in February 2006, as part of the discussions on implementation-related issues. The outcome of such consultations is reflected in the Committee’s follow-up report to the General Council.⁽²³⁹⁾ Further to a request by the Committee on Agriculture in 2008, the Secretariat prepared a compendium of documents that are directly or indirectly relevant to the implementation-related issues under its purview, and that have been circulated since the last report to the General Council in June 2006. The Compendium is regularly updated and circulated to Members.⁽²⁴⁰⁾

 

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XVIII. Article 17  

A. Text of Article 17

Article 17: Committee on Agriculture:

A Committee on Agriculture is hereby established.

B. Interpretation and Application of Article 17

1. Committee on Agriculture

(a) Terms of reference

169.   At its meeting on 31 January 1995 the General Council adopted the following terms of reference for the Committee on Agriculture:

“The Committee shall oversee the implementation of the Agreement on Agriculture. The Committee shall afford Members the opportunity of consulting on any matter relating to the implementation of the provisions of the Agreement.”⁽²⁴¹⁾

(b) Rules of procedure

170.   At its meeting of 22 May 1996, the Council for Trade in Goods adopted the rules of procedure for the Committee on Agriculture.⁽²⁴²⁾

(c) Activities

171.   The Committee reports annually on its activities to the Council for Trade in Goods.⁽²⁴³⁾

 

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XIX. Article 18  

A. Text of Article 18

Article 18: Review of the Implementation of Commitments

1.   Progress in the implementation of commitments negotiated under the Uruguay Round reform programme shall be reviewed by the Committee on Agriculture.

 

2.   The review process shall be undertaken on the basis of notifications submitted by Members in relation to such matters and at such intervals as shall be determined, as well as on the basis of such documentation as the Secretariat may be requested to prepare in order to facilitate the review process.

 

3.   In addition to the notifications to be submitted under paragraph 2, any new domestic support measure, or modification of an existing measure, for which exemption from reduction is claimed shall be notified promptly. This notification shall contain details of the new or modified measure and its conformity with the agreed criteria as set out either in Article 6 or in Annex 2.

 

4.   In the review process Members shall give due consideration to the influence of excessive rates of inflation on the ability of any Member to abide by its domestic support commitments.

 

5.   Members agree to consult annually in the Committee on Agriculture with respect to their participation in the normal growth of world trade in agricultural products within the framework of the commitments on export subsidies under this Agreement.

 

6.   The review process shall provide an opportunity for Members to raise any matter relevant to the implementation of commitments under the reform programme as set out in this Agreement.

 

7.   Any Member may bring to the attention of the Committee on Agriculture any measure which it considers ought to have been notified by another Member.

B. Interpretation and Application of Article 18

1. Article 18.2

(a) Review procedure

(i) General

172.   At its first meeting on 27–28 March 1995, the Committee on Agriculture adopted the Organization of Work and Working Procedures.⁽²⁴⁴⁾ The Committee decided, inter alia, that:

“The Committee shall meet at regular intervals to review progress in the implementation of the Uruguay Round reform programme under Article 18:1 and 2 of the Agreement (the ‘review process’) and generally to carry out such other tasks as are provided for in the Agreement or which may be required to be dealt with.”⁽²⁴⁵⁾

(b) Notification and transparency

(i) General

173.   At its meeting on 8 June 1995, the Committee on Agriculture adopted a document setting out the requirements and formats for notifications under Article 18:2 and other relevant provisions of the Agreement on Agriculture.⁽²⁴⁶⁾ These requirements cover five areas: market access⁽²⁴⁷⁾, domestic support⁽²⁴⁸⁾, export subsidies⁽²⁴⁹⁾, export prohibitions and restrictions⁽²⁵⁰⁾, and the follow-up to the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries.⁽²⁵¹⁾ In 1995, the Committee also adopted a list of “significant exporters” for the purposes of the Table ES:2 notification requirement. Those Members with no export subsidy reduction commitments but having “significant exporter” status are required to notify annually their total export volumes in respect of the products identified on the list.⁽²⁵²⁾

174.   Since 2009, the Secretariat has issued a document, updated before every regular Committee meeting, showing the status of Members’ compliance with notification obligations, circulated as an unrestricted document.⁽²⁵³⁾

(ii) Information systems on agriculture notifications

175.   In 2011, in response to Members’ requests for improved access to notification-related information, the Secretariat launched the development of an Agriculture Information Management System (Ag-IMS), to allow users to search and analyse (i) notifications submitted by Members in line with Committee procedures and formats; (ii) agriculture-related notified information; and (iii) questions raised and responses provided in the context of the Review Process carried out by the Committee on Agriculture.

176.   The datasets on information notified by way of Table MA:2, MA:5, DS:1 and ES:1 formats have been regularly updated and made publicly available on the WTO website, together with a comprehensive compilation of ad hoc recourse to volume- and price-based safeguards notified since 1995, including details on trigger volumes, trigger prices, and cross-references to individual notifications.⁽²⁵⁴⁾

(iii) Developing countries

177.   In the context of the General Council’s consideration of implementation-related issues and concerns, the General Council decided, inter alia:⁽²⁵⁵⁾

“‘Members shall ensure that their tariff rate quotas regimes (TRQs) are administered in a transparent, equitable and non-discriminatory manner. In the context, they shall ensure that the notifications they provide to the Committee on Agriculture contain all the relevant information including details on guidelines and procedures on the allotment of TRQs. Members administering TRQs shall submit addenda to their notifications to the Committee on Agriculture (Table MA:1) by the time of the second regular meeting of the Committee in 2001.’ The understanding was that this decision should not place undue new burdens on developing countries (WT/GC/M/62, paragraph 14, refers).”⁽²⁵⁶⁾

178.   The Committee has reviewed its implementation of this General Council Decision, at each of its meetings, based on Table MA:1 notifications. This review has been undertaken on the basis that Members are able to raise any matters relating to these Addenda or relating to the administration of particular tariff quotas in the course of the Committee’s regular review process.

2. Article 18.5

(a) Annual consultations: Members’ participation in the normal growth of world agricultural trade

179.   According to the Committee’s Organization of Work and Working Procedures⁽²⁵⁷⁾, these consultations are to be undertaken at the November meetings of the Committee.⁽²⁵⁸⁾ In practice, these annual consultations have been based on annually updated statistical background notes provided by the Secretariat.⁽²⁵⁹⁾

3. Article 18.6

180.   In respect of the review process envisaged under Article 18:6, the Organization of Work and Working Procedures of the Committee⁽²⁶⁰⁾ states, inter alia:

“A Member raising a matter relevant to the implementation commitments under Article 18:6, may request the Member to which the matter in question relates, through the Chairperson of the Committee, to provide in writing specific information, or an explanation of the relevant facts or circumstances, regarding the matter that has been raised. The role of the Chairperson shall be to ensure that there are reasonable grounds for the request and that as far as possible duplication and unduly burdensome requests are avoided. The information or explanation thus requested should normally be provided to the Committee by the Member to which the request is addressed within 30 days.”⁽²⁶¹⁾

(a) Article 18.7: counter notifications

181.   The Committee’s Organization of Work and Working Procedures⁽²⁶²⁾ states, inter alia, that “counter notifications, shall be considered by the Committee at the earliest opportunity.”⁽²⁶³⁾ As of 30 September 2011, there had not been any counter-notifications under Article 18.7.

 

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XX. Article 19  

A. Text of Article 19

Article 19: Consultation and Dispute Settlement

     The provisions of Articles XXII and XXIII of GATT 1994, as elaborated and applied by the Dispute Settlement Understanding, shall apply to consultations and the settlement of disputes under this Agreement.

B. Interpretation and Application of Article 19

1. Articles of the Agreement on Agriculture invoked in panel and Appellate Body proceedings

182.   For a table listing all panel and Appellate Body proceedings in which articles of the Agreement on Agriculture have been invoked, see the table of “Articles of the Covered Agreements Invoked in Panel and Appellate Body Proceedings” in the Chapter on the DSU.

 

Part XII

 

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XXI. Article 20  

A. Text of Article 20

Article 20: Continuation of the Reform Process

     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)   the experience to that date from implementing the reduction commitments;

 

(b)   the effects of the reduction commitments on world trade in agriculture;

 

(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

 

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

B. Interpretation and Application of Article 20

1. Decision of the Singapore Ministerial Conference

183.   The Singapore Ministerial Conference decided as follows:

“Bearing in mind that an important aspect of WTO activities is a continuous overseeing of the implementation of various agreements, a periodic examination and updating of the WTO Work Programme is a key to enable the WTO to fulfil its objectives. In this context, we endorse the reports of the various WTO bodies. A major share of the Work Programme stems from the WTO Agreement and decisions adopted at Marrakesh. As part of these Agreements and decisions we agreed to a number of provisions calling for future negotiations on Agriculture, …. We agree to a process of analysis and exchange of information, where provided for in the conclusions and recommendations of the relevant WTO bodies, on the Built-in Agenda issues, to allow Members to better understand the issues involved and identify their interests before undertaking the agreed negotiations and reviews. We agree that: the time frames established in the Agreements will be respected in each case.” ⁽²⁶⁴⁾

2. Decision to launch negotiations on agriculture

184.   At its meeting of 7 and 8 February 2000, the General Council decided to launch a new negotiating round on agriculture, stating as follows:

“[U]nder Article 20 of the Agreement on Agriculture, Members had agreed that negotiations for continuing the reform process would be initiated one year before the end of the implementation period, i.e. 1 January 2000. […] However, a number of procedural matters remained to be settled before the work could start in practice. In this regard, and in the light of wide and intensive consultations with and among Members on the structure of the negotiations, [the Chairman] proposed that the negotiations be conducted in the Committee on Agriculture meeting in Special Sessions. Progress in the negotiations would be reported directly to the General Council on a regular basis.”⁽²⁶⁵⁾

3. “What further commitments are necessary …”

185.   At its Fourth Ministerial Conference in Doha, Members agreed that the negotiations mandate contained in Article 20 of the Agreement on Agriculture would be further elaborated, stating as follows⁽²⁶⁶⁾:

“13.   We recognize the work already undertaken in the negotiations initiated in early 2000 under Article 20 of the Agreement on Agriculture, including the large number of negotiating proposals submitted on behalf of a total of 121 Members. We recall the long-term objective referred to in the Agreement to establish a fair and market-oriented trading system through a programme of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in world agricultural markets. We reconfirm our commitment to this programme. Building on the work carried out to date and without prejudging the outcome of the negotiations we commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the Schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development. We take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture.

 

14.   Modalities for the further commitments, including provisions for special and differential treatment, shall be established no later than 31 March 2003. Participants shall submit their comprehensive draft Schedules based on these modalities no later than the date of the Fifth Session of the Ministerial Conference. The negotiations, including with respect to rules and disciplines and related legal texts, shall be concluded as part and at the date of conclusion of the negotiating agenda as a whole.”

186.   In accordance with the above decision, a first draft of modalities for further commitments was prepared and circulated by the Chairman of the Special Session of the Committee on Agriculture on his own responsibility.⁽²⁶⁷⁾ Based on the work carried out during a series of formal and informal Special Sessions of the Committee and related technical consultations, a second version was circulated on 18 March 2003.⁽²⁶⁸⁾

187.   On 1 August 2004, the General Council adopted the following Doha Work Programme⁽²⁶⁹⁾, specifying further, inter alia, the framework within which the agriculture negotiations would be conducted :

“1.   The General Council reaffirms the Ministerial Declarations and Decisions adopted at Doha and the full commitment of all Members to give effect to them. The Council emphasizes Members’ resolve to complete the Doha Work Programme fully and to conclude successfully the negotiations launched at Doha. Taking into account the Ministerial Statement adopted at Cancún on 14 September 2003, and the statements by the Council Chairman and the Director-General at the Council meeting of 15–16 December 2003, the Council takes note of the report by the Chairman of the Trade Negotiations Committee (TNC) and agrees to take action as follows:

 

a.   Agriculture: the General Council adopts the framework set out in Annex A to this document.

 

b.   Cotton: the General Council reaffirms the importance of the Sectoral Initiative on Cotton and takes note of the parameters set out in Annex A within which the trade-related aspects of this issue will be pursued in the agriculture negotiations. The General Council also attaches importance to the development aspects of the Cotton Initiative and wishes to stress the complementarity between the trade and development aspects. […].”

188.   On 18 December 2005, Ministers in Hong Kong, China reaffirmed the Declarations and Decisions they adopted at Doha, as well as the Decision adopted by the General Council on 1 August 2004, and their full commitment to give effect to them:

“1.   […] We renew our resolve to complete the Doha Work Programme fully and to conclude the negotiations launched at Doha successfully in 2006 […].

 

3.   In pursuance of these objectives, we agree as follows:

 

4.   We reaffirm our commitment to the mandate on agriculture as set out in paragraph 13 of the Doha Ministerial Declaration and to the Framework adopted by the General Council on 1 August 2004. We take note of the report by the Chairman of the Special Session on his own responsibility (TN/AG/21, […]).We welcome the progress made by the Special Session of the Committee on Agriculture since 2004 and recorded therein.

 

5.   On domestic support, there will be three bands for reductions in Final Bound Total AMS and in the overall cut in trade-distorting domestic support, with higher linear cuts in higher bands. In both cases, the Member with the highest level of permitted support will be in the top band, the two Members with the second and third highest levels of support will be in the middle band and all other Members, including all developing country Members, will be in the bottom band. In addition, developed country Members in the lower bands with high relative levels of Final Bound Total AMS will make an additional effort in AMS reduction. We also note that there has been some convergence concerning the reductions in Final Bound Total AMS, the overall cut in trade-distorting domestic support and in both product-specific and non product-specific de minimis limits. Disciplines will be developed to achieve effective cuts in trade-distorting domestic support consistent with the Framework. The overall reduction in trade-distorting domestic support will still need to be made even if the sum of the reductions in Final Bound Total AMS, de minimis and Blue Box payments would otherwise be less than that overall reduction. Developing country Members with no AMS commitments will be exempt from reductions in de minimis and the overall cut in trade-distorting domestic support. Green Box criteria will be reviewed in line with paragraph 16 of the Framework, inter alia, to ensure that programmes of developing country Members that cause not more than minimal trade-distortion are effectively covered.

 

6.   We agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013. This will be achieved in a progressive and parallel manner, to be specified in the modalities, so that a substantial part is realized by the end of the first half of the implementation period. We note emerging convergence on some elements of disciplines with respect to export credits, export credit guarantees or insurance programmes with repayment periods of 180 days and below. We agree that such programmes should be self-financing, reflecting market consistency, and that the period should be of a sufficiently short duration so as not to effectively circumvent real commercially-oriented discipline. As a means of ensuring that trade-distorting practices of STEs are eliminated, disciplines relating to exporting STEs will extend to the future use of monopoly powers so that such powers cannot be exercised in any way that would circumvent the direct disciplines on STEs on export subsidies, government financing and the underwriting of losses. On food aid, we reconfirm our commitment to maintain an adequate level and to take into account the interests of food aid recipient countries. To this end, a ‘safe box’ for bona fide food aid will be provided to ensure that there is no unintended impediment to dealing with emergency situations. Beyond that, we will ensure elimination of commercial displacement. To this end, we will agree effective disciplines on in-kind food aid, monetization and re-exports so that there can be no loop-hole for continuing export subsidization. The disciplines on export credits, export credit guarantees or insurance programmes, exporting state trading enterprises and food aid will be completed by 30 April 2006 as part of the modalities, including appropriate provision in favour of least-developed and net food-importing developing countries as provided for in paragraph 4 of the Marrakesh Decision. The date above for the elimination of all forms of export subsidies, together with the agreed progressivity and parallelism, will be confirmed only upon the completion of the modalities. 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.

 

7.   On market access, we note the progress made on ad valorem equivalents. We adopt four bands for structuring tariff cuts, recognizing that we need now to agree on the relevant thresholds — including those applicable for developing country Members. We recognize the need to agree on treatment of sensitive products, taking into account all the elements involved. We also note that there have been some recent movements on the designation and treatment of Special Products and elements of the Special Safeguard Mechanism. Developing country Members will have the flexibility to self-designate an appropriate number of tariff lines as Special Products guided by indicators based on the criteria of food security, livelihood security and rural development. Developing country Members will also have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers, with precise arrangements to be further defined. Special Products and the Special Safeguard Mechanism shall be an integral part of the modalities and the outcome of negotiations in agriculture.

 

8.   On other elements of special and differential treatment, we note in particular the consensus that exists in the Framework on several issues in all three pillars of domestic support, export competition and market access and that some progress has been made on other special and differential treatment issues.

 

9.   We reaffirm that nothing we have agreed here compromises the agreement already reflected in the Framework on other issues including tropical products and products of particular importance to the diversification of production from the growing of illicit narcotic crops, long-standing preferences and preference erosion.

 

10.   However, we recognize that much remains to be done in order to establish modalities and to conclude the negotiations. Therefore, we agree to intensify work on all outstanding issues to fulfil the Doha objectives, in particular, we are resolved to establish modalities no later than 30 April 2006 and to submit comprehensive draft Schedules based on these modalities no later than 31 July 2006.

 

11.   We recall the mandate given by the Members in the Decision adopted by the General Council on 1 August 2004 to address cotton ambitiously, expeditiously and specifically, within the agriculture negotiations in relation to all trade-distorting policies affecting the sector in all three pillars of market access, domestic support and export competition, as specified in the Doha text and the July 2004 Framework text. We note the work already undertaken in the Sub-Committee on Cotton and the proposals made with regard to this matter. Without prejudice to Members’ current WTO rights and obligations, including those flowing from actions taken by the Dispute Settlement Body, we reaffirm our commitment to ensure having an explicit decision on cotton within the agriculture negotiations and through the Sub-Committee on Cotton ambitiously, expeditiously and specifically as follows:

• All forms of export subsidies for cotton will be eliminated by developed countries in 2006.
   
• On market access, developed countries will give duty and quota free access for cotton exports from least-developed countries (LDCs) from the commencement of the implementation period.
   
• Members agree that the objective is that, as an outcome for the negotiations, trade distorting domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed and that it should be implemented over a shorter period of time than generally applicable. We commit ourselves to give priority in the negotiations to reach such an outcome.

12.   With regard to the development assistance aspects of cotton, we welcome the Consultative Framework process initiated by the Director-General to implement the decisions on these aspects pursuant to paragraph 1.b of the Decision adopted by the General Council on 1 August 2004. […].”⁽²⁷⁰⁾

189.   Based on the work carried out in the Special Session of the Committee on Agriculture since the Fifth Ministerial Conference, the Chairman has tabled on his own responsibility a number of draft modalities texts reflecting progress achieved so far.⁽²⁷¹⁾

 

Part XIII

 

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XXII. Article 21  

A. Text of Article 21

Article 21: Final Provisions

1.   The provisions of GATT 1994 and of other Multilateral Trade Agreements in Annex 1A to the WTO Agreement shall apply subject to the provisions of this Agreement.

 

2.   The Annexes to this Agreement are hereby made an integral part of this Agreement.

B. Interpretation and Application of Article 21

1. Relationship between the Agreement and Schedule concessions and commitments

190.   In EC — Bananas III, the Panel rejected the EC argument that the discriminatory TRQ provided for in the Banana Framework Agreement in the EC’s Uruguay Round Schedule, as an agricultural market access commitment under Article 4.1, would prevail over the EC’s obligations under GATT Article XIII, by operation of Article 21.1.⁽²⁷²⁾ The Appellate Body agreed with the Panel, stating:

“The preamble of the Agreement on Agriculture states that it establishes ‘a basis for initiating a process of reform of trade in agriculture’ and that this reform process ‘should be initiated through the negotiation of commitments on support and protection and through the establishment of strengthened and more operationally effective GATT rules and disciplines’. The relationship between the provisions of the GATT 1994 and of the Agreement on Agriculture is set out in Article 21.1 of the Agreement on Agriculture: [quoted]

…

Therefore, the provisions of the GATT 1994, including Article XIII, apply to market access commitments concerning agricultural products, except to the extent that the Agreement on Agriculture contains specific provisions dealing specifically with the same matter.

…

… [W]e do not see anything in Article 4.1 to suggest that market access concessions and commitments made as a result of the Uruguay Round negotiations on agriculture can be inconsistent with the provisions of Article XIII of the GATT 1994. There is nothing in Articles 4.1 or 4.2, or in any other article of the Agreement on Agriculture, that deals specifically with the allocation of tariff quotas on agricultural products. If the negotiators had intended to permit Members to act inconsistently with Article XIII of the GATT 1994, they would have said so explicitly.”⁽²⁷³⁾

191.   In EC — Export Subsidies on Sugar, the EC argued that the terms of a footnote to the EC Schedule excluded certain exports from the scope of the EC reduction commitments. The Appellate Body disagreed, and found arguendo that the commitment in question was inconsistent with Articles 3.3 and 9.1 of the Agreement on Agriculture. The Appellate Body then examined and rejected a further EC argument that this claimed commitment limiting subsidization could prevail over the provisions of the Agreement on Agriculture:

“[W]e find no provision under the Agreement on Agriculture that authorizes Members to depart, in their Schedules, from their obligations under that Agreement. Indeed … Article 8 requires that, in providing export subsidies, Members must comply with the provisions of both the Agreement on Agriculture and the export subsidy commitments specified in their Schedules. This is possible only if the commitments in the Schedules are in conformity with the provisions of the Agreement on Agriculture. Thus, we see no basis for the European Communities’ assertion that it could depart from the obligations under the Agreement on Agriculture through the claimed commitment provided in Footnote 1.

 

In any event, we note that Article 21 of the Agreement on Agriculture provides that: ‘[t]he provisions of [the] GATT 1994 and of other Multilateral Trade Agreements in Annex 1A to the WTO Agreement shall apply subject to the provisions of this Agreement.’ In other words, Members explicitly recognized that there may be conflicts between the Agreement on Agriculture and the GATT 1994, and explicitly provided, through Article 21, that the Agreement on Agriculture would prevail to the extent of such conflicts. Similarly, the General interpretative note to Annex 1A to the WTO Agreement states that, ‘[i]n the event of conflict between a provision of the [GATT 1994] and a provision of another agreement in Annex 1A …, the provision of the other agreement shall prevail to the extent of the conflict.’ The Agreement on Agriculture is contained in Annex 1A to the WTO Agreement.

 

As we noted above, Footnote 1, being part of the European Communities’ Schedule, is an integral part of the GATT 1994 by virtue of Article 3.1 of the Agreement on Agriculture. Therefore, pursuant to Article 21 of the Agreement on Agriculture, the provisions of the Agreement on Agriculture prevail over Footnote 1. We, therefore, do not agree with the European Communities that ‘there is no hierarchy between the export subsidy commitments in a Member’s schedule and the Agreement on Agriculture.”⁽²⁷⁴⁾

2. Relationship between the Agreement and the SCM Agreement

192.   See also the references to the Agreement on Agriculture in various articles of the SCM Agreement: SCM Article 3.1 (“Except as provided in the Agreement on Agriculture”), SCM Article 5 (“This Article does not apply to subsidies maintained on agricultural products as provided in Article 13 of the Agreement on Agriculture”), SCM Article 6.9 (“This Article does not apply to subsidies maintained on agricultural products as provided in Article 13 of the Agreement on Agriculture”). SCM Article 7.1 (“Except as provided in Article 13 of the Agreement on Agriculture”) and SCM Article 10 (“Countervailing duties may only be imposed pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement and the Agreement on Agriculture”).

193.   In US — Upland Cotton, the Panel described three situations in which Article 21.1 could apply so that the Agreement on Agriculture would prevail over the prohibition on import substitution subsidies in Article 3.1 (b) of the SCM Agreement; the Panel found that none of these situations applied in that dispute. The Appellate Body agreed:

“We agree that Article 21.1 could apply in the three situations described by the Panel, namely:

 

… where, for example, the domestic support provisions of the Agreement on Agriculture would prevail in the event that an explicit carve-out or exemption from the disciplines in Article 3.1(b) of the SCM Agreement existed in the text of the Agreement on Agriculture. Another situation would be where it would be impossible for a Member to comply with its domestic support obligations under the Agreement on Agriculture and the Article 3.1(b) prohibition simultaneously. Another situation might be where there is an explicit authorization in the text of the Agreement on Agriculture that would authorize a measure that, in the absence of such an express authorization, would be prohibited by Article 3.1(b) of the SCM Agreement.”⁽²⁷⁵⁾

194.   In US — Upland Cotton the Appellate Body, citing its report in EC — Bananas III, considered that Article 21.1 could also apply where the Agreement on Agriculture contained “specific provisions dealing specifically with the same matter” as the provision of another multilateral trade agreement in Annex 1A cited by the United States, namely Article 3.1(b) of the SCM Agreement:

“The key issue before us is whether the Agreement on Agriculture contains “specific provisions dealing specifically with the same matter” as Article 3.1(b) of the SCM Agreement, that is, subsidies contingent upon the use of domestic over imported goods.”⁽²⁷⁶⁾

 

However, the Appellate Body found that neither paragraph 7 of Annex 3 nor Article 6.3 of the Agreement on Agriculture dealt specifically with import substitution subsidies and, thus, that Article 21.1 did not apply.⁽²⁷⁷⁾

 

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XXIII. Annex 1  

195.   Annex 1 is addressed together with Article 2 of this Chapter.

 

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XXIV. Annex 2  

A. Text of Annex 2

Annex 2: Domestic Support: The Basis for Exemption from the Reduction Commitments

1.   Domestic support measures for which exemption from the reduction commitments is claimed shall meet the fundamental requirement that they have no, or at most minimal, trade-distorting effects or effects on production. Accordingly, all measures for which exemption is claimed shall conform to the following basic criteria:

 

(a)   the support in question shall be provided through a publicly-funded government programme (including government revenue foregone) not involving transfers from consumers; and,

 

(b)   the support in question shall not have the effect of providing price support to producers;

 

plus policy-specific criteria and conditions as set out below.

 

Government Service Programmes

 

2.   General services

 

     Policies in this category involve expenditures (or revenue foregone) in relation to programmes which provide services or benefits to agriculture or the rural community. They shall not involve direct payments to producers or processors. Such programmes, which include but are not restricted to the following list, shall meet the general criteria in paragraph 1 above and policy-specific conditions where set out below:

 

(a)   research, including general research, research in connection with environmental programmes, and research programmes relating to particular products;

 

(b)   pest and disease control, including general and product-specific pest and disease control measures, such as early-warning systems, quarantine and eradication;

 

(c)   training services, including both general and specialist training facilities;

 

(d)   extension and advisory services, including the provision of means to facilitate the transfer of information and the results of research to producers and consumers;

 

(e)   inspection services, including general inspection services and the inspection of particular products for health, safety, grading or standardization purposes;

 

(f)   marketing and promotion services, including market information, advice and promotion relating to particular products but excluding expenditure for unspecified purposes that could be used by sellers to reduce their selling price or confer a direct economic benefit to purchasers; and

 

(g)   infrastructural services, including: electricity reticulation, roads and other means of transport, market and port facilities, water supply facilities, dams and drainage schemes, and infrastructural works associated with environmental programmes. In all cases the expenditure shall be directed to the provision or construction of capital works only, and shall exclude the subsidized provision of on-farm facilities other than for the reticulation of generally available public utilities. It shall not include subsidies to inputs or operating costs, or preferential user charges.

 

3.   Public stockholding for food security purposes(5)

 

(footnote original) 5 For the purposes of paragraph 3 of this Annex, governmental stockholding programmes for food security purposes in developing countries whose operation is transparent and conducted in accordance with officially published objective criteria or guidelines shall be considered to be in conformity with the provisions of this paragraph, including programmes under which stocks of foodstuffs for food security purposes are acquired and released at administered prices, provided that the difference between the acquisition price and the external reference price is accounted for in the AMS.

     Expenditures (or revenue foregone) in relation to the accumulation and holding of stocks of products which form an integral part of a food security programme identified in national legislation. This may include government aid to private storage of products as part of such a programme.

 

The volume and accumulation of such stocks shall correspond to predetermined targets related solely to food security. The process of stock accumulation and disposal shall be financially transparent. Food purchases by the government shall be made at current market prices and sales from food security stocks shall be made at no less than the current domestic market price for the product and quality in question.

 

4.   Domestic food aid(6)

 

(footnote original) 5 & 6 For the purposes of paragraphs 3 and 4 of this Annex, the provision of foodstuffs at subsidized prices with the objective of meeting food requirements of urban and rural poor in developing countries on a regular basis at reasonable prices shall be considered to be in conformity with the provisions of this paragraph.

     Expenditures (or revenue foregone) in relation to the provision of domestic food aid to sections of the population in need.

 

Eligibility to receive the food aid shall be subject to clearly-defined criteria related to nutritional objectives. Such aid shall be in the form of direct provision of food to those concerned or the provision of means to allow eligible recipients to buy food either at market or at subsidized prices. Food purchases by the government shall be made at current market prices and the financing and administration of the aid shall be transparent.

 

5.   Direct payments to producers

 

     Support provided through direct payments (or revenue foregone, including payments in kind) to producers for which exemption from reduction commitments is claimed shall meet the basic criteria set out in paragraph 1 above, plus specific criteria applying to individual types of direct payment as set out in paragraphs 6 through 13 below. Where exemption from reduction is claimed for any existing or new type of direct payment other than those specified in paragraphs 6 through 13, it shall conform to criteria (b) through (e) in paragraph 6, in addition to the general criteria set out in paragraph 1.

 

6.   Decoupled income support

 

(a)   Eligibility for such payments shall be determined by clearly-defined criteria such as income, status as a producer or landowner, factor use or production level in a defined and fixed base period.

 

(b)   The amount of such payments in any given year shall not be related to, or based on, the type or volume of production (including livestock units) undertaken by the producer in any year after the base period.

 

(c)   The amount of such payments in any given year shall not be related to, or based on, the prices, domestic or international, applying to any production undertaken in any year after the base period.

 

(d)   The amount of such payments in any given year shall not be related to, or based on, the factors of production employed in any year after the base period.

 

(e)   No production shall be required in order to receive such payments.

 

7.   Government financial participation in income insurance and income safety-net programmes

 

(a)   Eligibility for such payments shall be determined by an income loss, taking into account only income derived from agriculture, which exceeds 30 per cent of average gross income or the equivalent in net income terms (excluding any payments from the same or similar schemes) in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and the lowest entry. Any producer meeting this condition shall be eligible to receive the payments.

 

(b)   The amount of such payments shall compensate for less than 70 per cent of the producer’s income loss in the year the producer becomes eligible to receive this assistance.

 

(c)   The amount of any such payments shall relate solely to income; it shall not relate to the type or volume of production (including livestock units) undertaken by the producer; or to the prices, domestic or international, applying to such production; or to the factors of production employed.

 

(d)   Where a producer receives in the same year payments under this paragraph and under paragraph 8 (relief from natural disasters), the total of such payments shall be less than 100 per cent of the producer’s total loss.

 

8.   Payments (made either directly or by way of government financial participation in crop insurance schemes) for relief from natural disasters

 

(a)   Eligibility for such payments shall arise only following a formal recognition by government authorities that a natural or like disaster (including disease outbreaks, pest infestations, nuclear accidents, and war on the territory of the Member concerned) has occurred or is occurring; and shall be determined by a production loss which exceeds 30 per cent of the average of production in the preceding three-year period or a three-year average based on the preceding five-year period, excluding the highest and the lowest entry.

 

(b)   Payments made following a disaster shall be applied only in respect of losses of income, livestock (including payments in connection with the veterinary treatment of animals), land or other production factors due to the natural disaster in question.

 

(c)   Payments shall compensate for not more than the total cost of replacing such losses and shall not require or specify the type or quantity of future production.

 

(d)   Payments made during a disaster shall not exceed the level required to prevent or alleviate further loss as defined in criterion (b) above.

 

(e)   Where a producer receives in the same year payments under this paragraph and under paragraph 7 (income insurance and income safety–net programmes), the total of such payments shall be less than 100 per cent of the producer’s total loss.

 

9.   Structural adjustment assistance provided through producer retirement programmes

 

(a)   Eligibility for such payments shall be determined by reference to clearly defined criteria in programmes designed to facilitate the retirement of persons engaged in marketable agricultural production, or their movement to nonagricultural activities.

 

(b)   Payments shall be conditional upon the total and permanent retirement of the recipients from marketable agricultural production.

 

10.   Structural adjustment assistance provided through resource retirement programmes

 

(a)   Eligibility for such payments shall be determined by reference to clearly defined criteria in programmes designed to remove land or other resources, including livestock, from marketable agricultural production.

 

(b)   Payments shall be conditional upon the retirement of land from marketable agricultural production for a minimum of three years, and in the case of livestock on its slaughter or definitive permanent disposal.

 

(c)   Payments shall not require or specify any alternative use for such land or other resources which involves the production of marketable agricultural products.

 

(d)   Payments shall not be related to either the type or quantity of production or to the prices, domestic or international, applying to production undertaken using the land or other resources remaining in production.

 

11.   Structural adjustment assistance provided through investment aids

 

(a)   Eligibility for such payments shall be determined by reference to clearly-defined criteria in government programmes designed to assist the financial or physical restructuring of a producer’s operations in response to objectively demonstrated structural disadvantages. Eligibility for such programmes may also be based on a clearly-defined government programme for the reprivatization of agricultural land.

 

(b)   The amount of such payments in any given year shall not be related to, or based on, the type or volume of production (including livestock units) undertaken by the producer in any year after the base period other than as provided for under criterion (e) below.

 

(c)   The amount of such payments in any given year shall not be related to, or based on, the prices, domestic or international, applying to any production undertaken in any year after the base period.

 

(d)   The payments shall be given only for the period of time necessary for the realization of the investment in respect of which they are provided.

 

(e)   The payments shall not mandate or in any way designate the agricultural products to be produced by the recipients except to require them not to produce a particular product.

 

(f)   The payments shall be limited to the amount required to compensate for the structural disadvantage.

 

12.   Payments under environmental programmes

 

(a)   Eligibility for such payments shall be determined as part of a clearly-defined government environmental or conservation programme and be dependent on the fulfilment of specific conditions under the government programme, including conditions related to production methods or inputs.

 

(b)   The amount of payment shall be limited to the extra costs or loss of income involved in complying with the government programme.

 

13.   Payments under regional assistance programmes

 

(a)   Eligibility for such payments shall be limited to producers in disadvantaged regions. Each such region must be a clearly designated contiguous geographical area with a definable economic and administrative identity, considered as disadvantaged on the basis of neutral and objective criteria clearly spelt out in law or regulation and indicating that the region’s difficulties arise out of more than temporary circumstances.

 

(b)   The amount of such payments in any given year shall not be related to, or based on, the type or volume of production (including livestock units) undertaken by the producer in any year after the base period other than to reduce that production.

 

(c)   The amount of such payments in any given year shall not be related to, or based on, the prices, domestic or international, applying to any production undertaken in any year after the base period.

 

(d)   Payments shall be available only to producers in eligible regions, but generally available to all producers within such regions.

 

(e)   Where related to production factors, payments shall be made at a degressive rate above a threshold level of the factor concerned.

 

(f)   The payments shall be limited to the extra costs or loss of income involved in undertaking agricultural production in the prescribed area.

B. Interpretation and Application of Annex 2

1. Paragraph 6 of Annex 2

(a) Subparagraph (b)

196.   In US — Upland Cotton, the Appellate Body upheld the Panel’s finding in relation to Article 13(b)(ii) that payments under two United States domestic support programmes were non-green box measures because they did not fully conform with paragraph 6 (b) of Annex 2 due to a partial exclusion of certain types of production. The programmes imposed no positive obligation to produce particular crops, indeed, they imposed no obligation to produce at all. However, payments under the programmes were reduced or eliminated when the recipients planted any of a list of excluded crops. The Panel and the Appellate Body found that, as a result, the amount of such payments was related to the type of production in years after the base year, inconsistently with paragraph 6(b) of Annex 2:

“The ordinary meaning of the term ‘related to’ in paragraph 6(b) of Annex 2 denotes some degree of relationship or connection between two things, here the amount of payment, on the one hand, and the type or volume of production, on the other. It covers a broader set of connections than ‘based on’, which term is also used to describe the relationship between two things covered by paragraph 6(b). [original footnote omitted] Nothing in the ordinary meaning of the term ‘related to’ suggests that the connections covered by this expression may not encompass connections of either a ‘positive’ nature (including directions or requirements to do something) or a ‘negative’ nature (including prohibitions or requirements not to do something) or a combination of both. As the Panel indicated, the ordinary meaning of the term ‘related to’ conveys ‘a very general notion’. Indeed, the United States agrees that, as far as its ordinary meaning in the abstract is concerned, the term ‘related to’ may be broad enough to capture both positive and negative connections, but argues that the context of paragraph 6(b) requires a more limited interpretation of the term, namely, only as covering a ‘positive’ connection between the ‘amount of … payments’ and the ‘type … of production’. Like the Panel, however, we are of the view that, in the context of paragraph 6(b), the term ‘related to’ covers both positive and negative connections between the amount of payment and the type of production.⁽²⁷⁸⁾

[…]

We agree with the Panel that a partial exclusion of some crops from payments has the potential to channel production towards the production of crops that remain eligible for payments. In contrast to a total production ban, the channelling of production that may follow from a partial exclusion of some crops from payments will have positive production effects as regards crops eligible for payments. The extent of this will depend on the scope of the exclusion. We note in this regard that the Panel found, as a matter of fact, that planting flexibility limitations at issue in this case ‘significantly constrain production choices available to PFC and DP payment recipients and effectively eliminate a significant proportion of them’. The fact that farmers may continue to receive payments if they produce nothing at all does not detract from this assessment because, according to the Panel, it is not the option preferred by the ‘overwhelming majority’ of farmers, who continue to produce some type of permitted crop. In the light of these findings by the Panel, we are unable to agree with the United States’ argument that the planting flexibility limitations only negatively affect the production of crops that are excluded.”⁽²⁷⁹⁾

197.   In US — Upland Cotton, the Appellate Body rejected arguments that the terms “amount of such payments” and “undertaken” as used in paragraph 6 (b) of Annex 2 could not refer to crops not eligible for payment or to crops not planted:

“In our view, the concepts of ‘type or volume of production … undertaken by the producer’ and the ‘amount of … payments’ are linked in paragraph 6(b) by the requirement that one ‘not be related to’ the other. This requires a consideration of the relationship between the type or volume of production and the amount of payment under a programme after the base period. A programme that disallows payments when certain crops are produced relates the amount of the payment to the type of production undertaken. The flexibility to produce and receive payment for certain crops covered by a programme, combined with the reduction or elimination of such payments when excluded crops are produced, creates a link with the type of production undertaken contrary to paragraph 6 (b). This is so because the opportunity for farmers to receive payments for producing covered crops, while less or no such payments are made to farmers who produce excluded crops, provides an incentive to switch from producing excluded crops to producing crops eligible for payments.”⁽²⁸⁰⁾

(b) Subparagraph (e)

198.   In US — Upland Cotton, the Appellate Body confirmed that subparagraph (e) served a distinct purpose from subparagraph (b) within paragraph 6:

“In our view, however, paragraph 6(e) continues to serve a purpose distinct from that of paragraph 6(b). It highlights a different aspect of decoupling income support. In prohibiting Members from making green-box measures contingent on production, paragraph 6(e) implies that Members are allowed, in principle, to require no production at all. Accordingly, payments conditioned on a total ban on any production may qualify as decoupled income support under paragraph 6(e). Even assuming that payments contingent on a total production ban could be seen to relate the amount of the payment to the volume of production within the meaning of paragraph 6(b) — the volume of production being nil — giving meaning and effect to both paragraphs 6(b) and 6(e) suggests a reading of paragraph 6(b) that would not disallow a total ban on any production.”

(c) Relationship with other Articles

(i) Paragraph 11 of Annex 2

199.   In US — Upland Cotton, the Appellate Body gave considerable weight in its interpretation of paragraph 6(b) of Annex 2 to the context provided by paragraph 11 of Annex 2, which indicated that the ordinary meaning of the terms used in paragraph 6(b) did not authorize a negative requirement not to produce a particular product:

“We find further support for our interpretation of paragraph 6(b) in the context provided by paragraph 11 of Annex 2, entitled ‘Structural adjustment assistance provided through investment aids’. Several of the subparagraphs of paragraph 11 are phrased in similar terms to those of paragraph 6. Indeed, like paragraph 6(b), paragraph 11(b) requires that the ‘amount of … payments … shall not be related to … the type or volume of production … undertaken by the producer in any year after the base period.’ However, unlike paragraph 6(b), paragraph 11(b) ends with the phrase ‘other than as provided for under criterion (e) below’. Criterion 11(e) specifically envisages that ‘payments shall not mandate or in any way designate the agricultural products to be produced by the recipients except to require them not to produce a particular product’.

 

We note that the exception provided by paragraph 11(e) and the link to paragraph 11(e) in paragraph 11(b) explicitly authorize the type of ‘negative’ requirements not to produce that the United States argues is implicitly permitted by the terms of paragraph 6(b). In the light of the similarity of the language chosen in paragraphs 6(b) and 11(b), like the Panel, we attach significance to the fact that the drafters saw as necessary an explicit authorization of negative requirements not to produce under paragraph 11(b). In our view, this indicates that the ordinary meaning of the terms in paragraph 11(b) would otherwise exclude an interpretation allowing such negative requirements. The use of identical language in paragraphs 6(b) and 11(b), except for the reference in paragraph 11(b) to paragraph 11(e), suggests that the meaning of the terms in paragraph 6(b) must be the same as in paragraph 11(b). Accordingly, a comparison of these provisions confirms that the terms of paragraph 6(b) encompass both positive as well as negative connections between the amount of payments under a programme and the type of production undertaken.”⁽²⁸¹⁾

 

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XXV. Annex 3  

A. Text of Annex 3

Annex 3: Domestic Support: Calculation of Aggregate Measurement of Support

1.   Subject to the provisions of Article 6, an Aggregate Measurement of Support (AMS) shall be calculated on a product-specific basis for each basic agricultural product receiving market price support, non-exempt direct payments, or any other subsidy not exempted from the reduction commitment (“other non-exempt policies”). Support which is non-product specific shall be totalled into one non-product-specific AMS in total monetary terms.

 

2.   Subsidies under paragraph 1 shall include both budgetary outlays and revenue foregone by governments or their agents.

 

3.   Support at both the national and sub-national level shall be included.

 

4.   Specific agricultural levies or fees paid by producers shall be deducted from the AMS.

 

5.   The AMS calculated as outlined below for the base period shall constitute the base level for the implementation of the reduction commitment on domestic support.

 

6.   For each basic agricultural product, a specific AMS shall be established, expressed in total monetary value terms.

 

7.   The AMS shall be calculated as close as practicable to the point of first sale of the basic agricultural product concerned. Measures directed at agricultural processors shall be included to the extent that such measures benefit the producers of the basic agricultural products.

 

8.   Market price support: market price support shall be calculated using the gap between a fixed external reference price and the applied administered price multiplied by the quantity of production eligible to receive the applied administered price. Budgetary payments made to maintain this gap, such as buying-in or storage costs, shall not be included in the AMS.

 

9.   The fixed external reference price shall be based on the years 1986 to 1988 and shall generally be the average f.o.b. unit value for the basic agricultural product concerned in a net exporting country and the average c.i.f. unit value for the basic agricultural product concerned in a net importing country in the base period. The fixed reference price may be adjusted for quality differences as necessary.

 

10.   Non-exempt direct payments: non-exempt direct payments which are dependent on a price gap shall be calculated either using the gap between the fixed reference price and the applied administered price multiplied by the quantity of production eligible to receive the administered price, or using budgetary outlays.

 

11.   The fixed reference price shall be based on the years 1986 to 1988 and shall generally be the actual price used for determining payment rates.

 

12.   Non-exempt direct payments which are based on factors other than price shall be measured using budgetary outlays.

 

13.   Other non-exempt measures, including input subsidies and other measures such as marketing-cost reduction measures: the value of such measures shall be measured using government budgetary outlays or, where the use of budgetary outlays does not reflect the full extent of the subsidy concerned, the basis for calculating the subsidy shall be the gap between the price of the subsidized good or service and a representative market price for a similar good or service multiplied by the quantity of the good or service.

B. Interpretation and Application of Annex 3

1. General

200.   In Korea — Various Measures on Beef, the Panel and the Appellate Body addressed Korea’s argument that its method for calculation of domestic support was justifiable because it was based upon “the constituent data and methodology used in the tables of supporting material incorporated by reference in Part IV of the Member’s Schedule”, although it was not consistent with the methodology set out in Annex 3 to the Agreement on Agriculture. See paragraphs 6–8 above.

201.   With respect to the application of the AMS methodology as the basis of the measurement of support for the purposes of the comparison of support under Article 13(b)(ii) of the so-called “Peace Clause”, see paragraph 144.

2. Paragraph 7

202.   With respect to the issue of whether paragraph 7 of Annex 3 of the Agreement on Agriculture is a specific provision dealing specifically with the same matter as Article 3.1(b) of the SCM Agreement and in particular, whether Article 3.1(b) of the SCM Agreement applies to agricultural products, see Article 3.1(b) of the Chapter on the SCM Agreement.

3. Paragraph 8

203.   In Korea — Various Measures on Beef, the Appellate Body agreed with the Panel that in determining its market price support for beef, Korea had used the quantity of cattle actually purchased, in contravention of paragraph 8 of Annex 3. The Appellate Body stated:

“We share the Panel’s view that the words ‘production eligible to receive the applied administered price’ in paragraph 8 of Annex 3 have a different meaning in ordinary usage from ‘production actually purchased‘. The ordinary meaning of ‘eligible’ is ‘fit or entitled to be chosen’. ⁽²⁸²⁾ Thus, ‘production eligible’ refers to production that is ‘fit or entitled’ to be purchased rather than production that was actually purchased. In establishing its programme for future market price support, a government is able to define and to limit ‘eligible’ production. Production actually purchased may often be less than eligible production.”⁽²⁸³⁾

 

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XXVI. Annex 4  

A. Text of Annex 4

Annex 4: Domestic Support: Calculation of Equivalent Measurement of Support

1.   Subject to the provisions of Article 6, equivalent measurements of support shall be calculated in respect of all basic agricultural products where market price support as defined in Annex 3 exists but for which calculation of this component of the AMS is not practicable. For such products the base level for implementation of the domestic support reduction commitments shall consist of a market price support component expressed in terms of equivalent measurements of support under paragraph 2 below, as well as any non-exempt direct payments and other non-exempt support, which shall be evaluated as provided for under paragraph 3 below. Support at both national and sub-national level shall be included.

 

2.   The equivalent measurements of support provided for in paragraph 1 shall be calculated on a product-specific basis for all basic agricultural products as close as practicable to the point of first sale receiving market price support and for which the calculation of the market price support component of the AMS is not practicable. For those basic agricultural products, equivalent measurements of market price support shall be made using the applied administered price and the quantity of production eligible to receive that price or, where this is not practicable, on budgetary outlays used to maintain the producer price.

 

3.   Where basic agricultural products falling under paragraph 1 are the subject of non-exempt direct payments or any other product-specific subsidy not exempted from the reduction commitment, the basis for equivalent measurements of support concerning these measures shall be calculations as for the corresponding AMS components (specified in paragraphs 10 through 13 of Annex 3).

 

4.   Equivalent measurements of support shall be calculated on the amount of subsidy as close as practicable to the point of first sale of the basic agricultural product concerned. Measures directed at agricultural processors shall be included to the extent that such measures benefit the producers of the basic agricultural products. Specific agricultural levies or fees paid by producers shall reduce the equivalent measurements of support by a corresponding amount.

B. Interpretation and Application of Annex 4

No jurisprudence or decision of a competent WTO body.

 

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XXVII. Annex 5  

A. Text of Annex 5

Annex 5: Special Treatment with Respect to Paragraph 2 of Article 4

Section A

1.   The provisions of paragraph 2 of Article 4 shall not apply with effect from the entry into force of the WTO Agreement to any primary agricultural product and its worked and/or prepared products (“designated products”) in respect of which the following conditions are complied with (hereinafter referred to as “special treatment”):

 

(a)   imports of the designated products comprised less than 3 per cent of corresponding domestic consumption in the base period 1986–1988 (“the base period”);

 

(b)   no export subsidies have been provided since the beginning of the base period for the designated products;

 

(c)   effective production-restricting measures are applied to the primary agricultural product;

 

(d)   such products are designated with the symbol “ST Annex 5” in Section I-B of Part I of a Member’s Schedule annexed to the Marrakesh Protocol, as being subject to special treatment reflecting factors of non-trade concerns, such as food security and environmental protection; and

 

(e)   minimum access opportunities in respect of the designated products correspond, as specified in Section I-B of Part I of the Schedule of the Member concerned, to 4 per cent of base period domestic consumption of the designated products from the beginning of the first year of the implementation period and, thereafter, are increased by 0.8 per cent of corresponding domestic consumption in the base period per year for the remainder of the implementation period.

 

2.   At the beginning of any year of the implementation period a Member may cease to apply special treatment in respect of the designated products by complying with the provisions of paragraph 6. In such a case, the Member concerned shall maintain the minimum access opportunities already in effect at such time and increase the minimum access opportunities by 0.4 per cent of corresponding domestic consumption in the base period per year for the remainder of the implementation period. Thereafter, the level of minimum access opportunities resulting from this formula in the final year of the implementation period shall be maintained in the Schedule of the Member concerned.

 

3.   Any negotiation on the question of whether there can be a continuation of the special treatment as set out in paragraph 1 after the end of the implementation period shall be completed within the time-frame of the implementation period itself as a part of the negotiations set out in Article 20 of this Agreement, taking into account the factors of non-trade concerns.

 

4.   If it is agreed as a result of the negotiation referred to in paragraph 3 that a Member may continue to apply the special treatment, such Member shall confer additional and acceptable concessions as determined in that negotiation.

 

5.   Where the special treatment is not to be continued at the end of the implementation period, the Member concerned shall implement the provisions of paragraph 6. In such a case, after the end of the implementation period the minimum access opportunities for the designated products shall be maintained at the level of 8 per cent of corresponding domestic consumption in the base period in the Schedule of the Member concerned.

 

6.   Border measures other than ordinary customs duties maintained in respect of the designated products shall become subject to the provisions of paragraph 2 of Article 4 with effect from the beginning of the year in which the special treatment ceases to apply. Such products shall be subject to ordinary customs duties, which shall be bound in the Schedule of the Member concerned and applied, from the beginning of the year in which special treatment ceases and thereafter, at such rates as would have been applicable had a reduction of at least 15 per cent been implemented over the implementation period in equal annual instalments. These duties shall be established on the basis of tariff equivalents to be calculated in accordance with the guidelines prescribed in the attachment hereto.

Section B

7.   The provisions of paragraph 2 of Article 4 shall also not apply with effect from the entry into force of the WTO Agreement to a primary agricultural product that is the predominant staple in the traditional diet of a developing country Member and in respect of which the following conditions, in addition to those specified in paragraph 1(a) through 1(d), as they apply to the products concerned, are complied with:

 

(a)   minimum access opportunities in respect of the products concerned, as specified in Section I-B of Part I of the Schedule of the developing country Member concerned, correspond to 1 per cent of base period domestic consumption of the products concerned from the beginning of the first year of the implementation period and are increased in equal annual instalments to 2 per cent of corresponding domestic consumption in the base period at the beginning of the fifth year of the implementation period. From the beginning of the sixth year of the implementation period, minimum access opportunities in respect of the products concerned correspond to 2 per cent of corresponding domestic consumption in the base period and are increased in equal annual instalments to 4 per cent of corresponding domestic consumption in the base period until the beginning of the 10th year. Thereafter, the level of minimum access opportunities resulting from this formula in the 10th year shall be maintained in the Schedule of the developing country Member concerned;

 

(b)   appropriate market access opportunities have been provided for in other products under this Agreement.

 

8.   Any negotiation on the question of whether there can be a continuation of the special treatment as set out in paragraph 7 after the end of the 10th year following the beginning of the implementation period shall be initiated and completed within the time-frame of the 10th year itself following the beginning of the implementation period.

 

9.   If it is agreed as a result of the negotiation referred to in paragraph 8 that a Member may continue to apply the special treatment, such Member shall confer additional and acceptable concessions as determined in that negotiation.

 

10.   In the event that special treatment under paragraph 7 is not to be continued beyond the 10th year following the beginning of the implementation period, the products concerned shall be subject to ordinary customs duties, established on the basis of a tariff equivalent to be calculated in accordance with the guidelines prescribed in the attachment hereto, which shall be bound in the Schedule of the Member concerned. In other respects, the provisions of paragraph 6 shall apply as modified by the relevant special and differential treatment accorded to developing country Members under this Agreement.

Attachment to Annex 5: Guidelines for the Calculation of Tariff Equivalents for the Specific Purpose Specified in Paragraphs 6 and 10 of this Annex

1.   The calculation of the tariff equivalents, whether expressed as ad valorem or specific rates, shall be made using the actual difference between internal and external prices in a transparent manner. Data used shall be for the years 1986 to 1988. Tariff equivalents:

 

(a)   shall primarily be established at the four-digit level of the HS;

 

(b)   shall be established at the six-digit or a more detailed level of the HS wherever appropriate;

 

(c)   shall generally be established for worked and/or prepared products by multiplying the specific tariff equivalent(s) for the primary agricultural product(s) by the proportion(s) in value terms or in physical terms as appropriate of the primary agricultural product(s) in the worked and/or prepared products, and take account, where necessary, of any additional elements currently providing protection to industry.

 

2.   External prices shall be, in general, actual average c.i.f. unit values for the importing country. Where average c.i.f. unit values are not available or appropriate, external prices shall be either:

 

(a)   appropriate average c.i.f. unit values of a near country; or

 

(b)   estimated from average f.o.b. unit values of (an) appropriate major exporter(s) adjusted by adding an estimate of insurance, freight and other relevant costs to the importing country.

 

3.   The external prices shall generally be converted to domestic currencies using the annual average market exchange rate for the same period as the price data.

 

4.   The internal price shall generally be a representative wholesale price ruling in the domestic market or an estimate of that price where adequate data is not available.

 

5.   The initial tariff equivalents may be adjusted, where necessary, to take account of differences in quality or variety using an appropriate coefficient.

 

6.   Where a tariff equivalent resulting from these guidelines is negative or lower than the current bound rate, the initial tariff equivalent may be established at the current bound rate or on the basis of national offers for that product.

 

7.   Where an adjustment is made to the level of a tariff equivalent which would have resulted from the above guidelines, the Member concerned shall afford, on request, full opportunities for consultation with a view to negotiating appropriate solutions.

B. Interpretation and Application of Annex 5

1. Exemptions from Article 4.2 by virtue of Annex 5

204.   The Uruguay Round Schedule XXXVIII of Japan applied special treatment in accordance with Section A of Annex 5, in respect of certain rice, and certain food products worked or prepared from rice. On 21 December 1998, Japan communicated a draft of modifications to Schedule XXXVIII (in accordance with the GATT 1947 Decision of 26 March 1980 on Procedures for Modification and Rectification of Schedules of Tariff Concessions⁽²⁸⁴⁾) so as to cease applying special treatment, with the proposed tariff equivalents calculated in accordance with the guidelines in the Attachment to Annex 5.⁽²⁸⁵⁾ This draft was approved on 7 November 2000.⁽²⁸⁶⁾

205.   The Uruguay Round Schedule LX of Korea applied special treatment in accordance with Section B of Annex 5, in respect of certain rice and certain food products worked or prepared from rice. On 20 January 2004, Korea notified that it wished to enter into negotiations on the question of whether there could be a continuation of the special treatment set out in paragraph 7 of Annex 5.⁽²⁸⁷⁾ On 30 December 2004, Korea submitted a draft containing modifications of Schedule LX, in accordance with the Decision of 26 March 1980, with a view to extending special treatment of the designated products for an additional 10 years until 2014.⁽²⁸⁸⁾ This draft was approved on 7 April 2005.⁽²⁸⁹⁾ The multilateral review provided for in the modifications was conducted in 2009 by the Committee on Agriculture.⁽²⁹⁰⁾

206.   The Uruguay Round Schedule LXXV of the Philippines applied special treatment in accordance with Section B of Annex 5, in respect of certain rice. On 20 January 2004, the Philippines notified that it wished to enter into negotiations on continuation of the special treatment set out in paragraph 7 of Annex 5.⁽²⁹¹⁾ The Philippines communicated a draft containing modifications of Schedule LXXV on 8 July 2005 and 27 September 2006, in accordance with the Decision of 26 March 1980, with a view to extending special treatment for seven years, until 30 June 2012.⁽²⁹²⁾ The draft was approved effective 27 December 2006.⁽²⁹³⁾

207.   The accession Schedule CLIII of Chinese Taipei applied special treatment in accordance with Section A of Annex 5, in respect of certain rice and certain products worked or prepared from rice. On 30 September 2002, Chinese Taipei communicated a draft of modifications to Schedule CLIII so as to cease applying special treatment, with an explanation of calculation of tariff equivalents.⁽²⁹⁴⁾ The draft was approved effective 22 June 2007.⁽²⁹⁵⁾

2. Price gap methodology for calculating tariff equivalents provided for in the Attachment to Annex 5

208.   In connection with a waiver decision of 14 November 2001 for the EC–ACP Partnership Agreement, the European Communities agreed to reform its banana regime so as to replace its then WTO-inconsistent measures with a tariff-only regime for banana imports. In 2005, the European Communities proposed plan to implement a tariff-only regime, and pursuant to procedures provided in the waiver decision, eight banana-exporting countries requested arbitration regarding whether the envisaged rebinding of the EC tariff would result in at least maintaining total market access for MFN banana suppliers, taking into account all EC WTO market-access commitments relating to bananas. The Arbitrator found:

“The European Communities has used the price gap methodology that was used in the Uruguay Round agriculture negotiations for the conversion of non-tariff measures to tariff equivalents. Using the correct prices, this methodology would produce an estimate of the tariff equivalent that, all other things being equal, would confer the same level of protection to domestic producers as the border measures being replaced by the tariff equivalent. Correctly applied, the price gap methodology would be broadly neutral in its effects on domestic producers and on total imports. Thus the price gap methodology would accurately reflect the level of protection accorded to domestic or EC growers from foreign competitors. However, the standard price gap formula does not take into account how the competitive relationship may change between imports from different sources, i.e., MFN and preferential banana suppliers.”⁽²⁹⁶⁾

209.   The EC later made a revised proposal, also calculated using the price gap methodology. In a second arbitration concerning this revised proposal, the Arbitrator again considered that “the price gap guidelines in the Attachment to Annex 5 of the Agreement on Agriculture provide guidance as to how such a price gap calculation should be performed.” The Arbitrator considered whether the data the EC used in calculating the internal and external prices for bananas were consistent with the terms of in paragraph 2 of the Attachment.⁽²⁹⁷⁾

210.   The Attachment to Annex 5, together with Annex 5, has also been utilized as context in interpreting Article 4.2; see above at paragraph 45.

 

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XXVIII. Relationship with other WTO Agreements 

A. SCM Agreement

211.   The Appellate Body, in Canada — Dairy and US — FSC, referred to the SCM Agreement, in defining the term “subsidy” under the Agreement on Agriculture. See paragraph 11 above.⁽²⁹⁸⁾

212.   Also, the Appellate Body, in US — FSC, referred to the SCM Agreement, in interpreting the concept of export contingency under the Agreement on Agriculture. See paragraph 14 above.⁽²⁹⁹⁾

 

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XXIX. Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries (The “NFIDC Decision”) 

A. Text of the Decision

1.   Ministers recognize that the progressive implementation of the results of the Uruguay Round as a whole will generate increasing opportunities for trade expansion and economic growth to the benefit of all participants.

 

2.   Ministers recognize that during the reform programme leading to greater liberalization of trade in agriculture least-developed and net food-importing developing countries may experience negative effects in terms of the availability of adequate supplies of basic foodstuffs from external sources on reasonable terms and conditions, including short-term difficulties in financing normal levels of commercial imports of basic foodstuffs.

 

3.   Ministers accordingly agree to establish appropriate mechanisms to ensure that the implementation of the results of the Uruguay Round on trade in agriculture does not adversely affect the availability of food aid at a level which is sufficient to continue to provide assistance in meeting the food needs of developing countries, especially least-developed and net food-importing developing countries. To this end Ministers agree:

 

(i)   to review the level of food aid established periodically by the Committee on Food Aid under the Food Aid Convention 1986 and to initiate negotiations in the appropriate forum to establish a level of food aid commitments sufficient to meet the legitimate needs of developing countries during the reform programme;

 

(ii)   to adopt guidelines to ensure that an increasing proportion of basic foodstuffs is provided to least-developed and net food-importing developing countries in fully grant form and/or on appropriate concessional terms in line with Article IV of the Food Aid Convention 1986;

 

(iii)   to give full consideration in the context of their aid programmes to requests for the provision of technical and financial assistance to least-developed and net food-importing developing countries to improve their agricultural productivity and infrastructure.

 

4.   Ministers further agree to ensure that any agreement relating to agricultural export credits makes appropriate provision for differential treatment in favour of least-developed and net food-importing developing countries.

 

5.   Ministers recognize that as a result of the Uruguay Round certain developing countries may experience short-term difficulties in financing normal levels of commercial imports and that these countries may be eligible to draw on the resources of international financial institutions under existing facilities, or such facilities as may be established, in the context of adjustment programmes, in order to address such financing difficulties. In this regard Ministers take note of paragraph 37 of the report of the Director-General to the CONTRACTING PARTIES to GATT 1947 on his consultations with the Managing Director of the International Monetary Fund and the President of the World Bank (MTN.GNG/NG14/W/35).

 

6.   The provisions of this Decision will be subject to regular review by the Ministerial Conference, and the follow-up to this Decision shall be monitored, as appropriate, by the Committee on Agriculture.

B. Interpretation and Application of the Decision

1. General

213.  A Secretariat background note, G/AG/W/42/Rev.13 dated 15 October 2010, describes the implementation of the NFIDC Decision. Following a brief introduction on the follow-up process undertaken by the Committee on Agriculture, the note sets out the substantive provisions of the Decision and provides information regarding their implementation.

214.  See also above under Article 10.4 and Article 16.1.

2. Paragraph 3

(a) Paragraphs 3(i) and (ii)

215.  In accordance with the mandate in paragraphs 3 (i) and (ii), the Doha Ministerial Conference adopted the following recommendations, submitted by the Committee on Agriculture⁽³⁰⁰⁾:

“(a)  That early action be taken within the framework of the Food Aid Convention 1999 (which unless extended, with or without a decision regarding its renegotiation, would expire on 30 June 2002) and of the UN World Food Programme by donors of food aid to review their food aid contributions with a view to better identifying and meeting the food aid needs of least-developed and WTO net food-importing developing countries;

 

(b)  WTO Members which are donors of food aid shall, within the framework of their food aid policies, statues, programmes and commitments, take appropriate measures aimed at ensuring: (i) that to the maximum extent possible their levels of food aid to developing countries are maintained during periods in which trends in world market prices of basic foodstuffs have been increasing; and (ii) that all food aid to least developed countries is provided in fully grant form and, to the maximum extent possible to WTO net food-importing developing countries as well.”⁽³⁰¹⁾

(i) Extension of the Food Aid Convention

216.  With regard to the recommendation in paragraph (a) above, which noted that the Food Aid Convention, 1999, was due to expire on 30 June 2002, the meeting of the Food Aid Committee (FAC) in December 2002, agreed in principle to a two-year extension of the Convention from 1 July 2003. At its December 2004 session, the Food Aid Committee concluded that the relationship between the review process in the Food Aid Committee and negotiations underway in the WTO was such that conclusive recommendations should await the outcome of the WTO negotiations. In these circumstances, the Food Aid Convention 1999 was extended on an annual basis. In December 2010, the Food Aid Committee agreed to begin the formal process of renegotiating the Convention.⁽³⁰²⁾ The Food Aid Convention was further extended until 30 June 2012 pending a final outcome.

(b) Paragraph 3(iii)

217.  Two recommendations on Technical and Financial Assistance in the Context of Aid Programmes to Improve Agricultural Productivity and Infrastructure, adopted at the Doha Ministerial Conference, respond to the mandate of paragraph 3(iii):

“(a)  … developed country WTO Members should continue to give full and favourable consideration in the context of their aid programmes to requests for the provision of technical and financial assistance by least-developed and net food-importing developing countries to improve their agricultural productivity and infrastructure;

 

(b)  … in support of the priority accorded by least-developed and net food-importing developing countries to the development of their agricultural productivity and infrastructure, the WTO General Council call upon relevant international developed organisations, including the World Bank, the FAO, IFAD, the UNDP and the Regional Development Banks to enhance their provision of, and access to, technical and financial assistance to least-developed and net food-importing developing countries, n terms and conditions conducive to the better use of such facilities and resources, in order to improve agricultural productivity and infrastructure in these countries under existing facilities and programmes, as well as under such facilities and programmes as may be introduced.”⁽³⁰³⁾

3. Paragraph 4

218.  In relation to paragraph 4, the Doha Ministerial Conference adopted the following recommendation concerning the NFIDC Decision:

“(a)  that the provision of paragraph 4 of the Marrakesh Ministerial Decision, which provide for differential treatment in favour of least-developed and WTO net food-importing developing countries, shall be taken fully into account in any agreement to be negotiated on disciplines on agricultural export credits pursuant to Article 10.2 of the Agreement on Agriculture;”⁽³⁰⁴⁾

4. Paragraph 5

(a) The Inter-Agency Panel

219.  In relation to paragraph 5 and in order to counter the difficulties in financing normal levels of commercial imports of basic foodstuff faced by certain developing countries, Members at the Doha Ministerial Conference adopted the recommendation, submitted by the Committee on Agriculture, to establish an Inter-Agency Panel on Short-Term Difficulties in Financing Normal Levels of Commercial Imports of Basic Foodstuffs (“Inter-Agency Panel”):

“(b)  That an inter-agency panel of financial and commodity experts be established, with the requested participation of the ‘World Bank, the IMF, the FAO, the International Grains Council and the UNCTAD, to explore ways and means for improving access by least-developed and WTO net food-importing developing countries to multilateral programmes and facilities to assist with short term difficulties in financing normal levels of commercial imports of basic foodstuffs, as well as the concept and feasibility of the proposal for the establishment of a revolving fund in G/AG/W/49 and Add.1 and Corr.1. The detailed terms of reference, drawing on the Marrakesh NFIDC Decision, should be submitted by the Vice-Chairman of the WTO Committee on Agriculture, following consultations with Members, to the General Council for approval by not later than 31 December 2001. The inter-agency panel shall submit its recommendation to the General Council by not later than 30 June 2002.”⁽³⁰⁵⁾

220.  In accordance with the recommendations adopted by the Doha Ministerial Conference, the General Council at its meeting on 19 and 20 December 2001 adopted the following terms of reference for the Inter- Agency Panel within the framework of the NFIDC Decision:⁽³⁰⁶⁾

“1.  To examine the terms and conditions of existing facilities of the international financial institutions (namely: IMF and the World Bank) to which the least-developed and WTO net food-importing developing countries could have recourse in order to address short-term difficulties in financing normal levels of commercial imports of basic foodstuffs, principally cereals, rice, basic dairy products, pulses, vegetable oils and sugar, during periods of rising world prices for such basic foodstuffs, including, as appropriate, other relevant sources of concessional financing; this examination shall take into account, inter alia, such submissions as may be submitted to the Panel by least-developed and WTO net food-importing developing countries, donors and the relevant international financial institutions, by no later than end-March 2002;

 

2.  To examine the concept and feasibility of the proposal for the establishment of a revolving fund in documents G/AG/W/49 and Add.1 and Corr.1, together with any further elaboration of those proposals as may be submitted to the Panel by the sponsoring Members concerned before the end of March 2002;

 

3.  In the light of its review and examination under paragraphs (1) and (2) above and having regard to the Marrakesh NFIDC Decision, to make such recommendations for the consideration of the WTO General Council as the Panel considers appropriate regarding: ways and means for improving access by least-developed and WTO net food-importing developing countries to multilateral programmes and facilities to assist with short-term difficulties in financing normal levels of commercial imports of basic foodstuffs;

 

4.  In carrying out its task the Panel may consult with such bodies or institutions as it considers appropriate;

 

5.  The Panel shall submit its report and recommendations to the WTO General Council by no later than 30 June 2002.”⁽³⁰⁷⁾

221.  The Inter-Agency Panel submitted its report to the General Council on 28 June 2002.⁽³⁰⁸⁾ In its Report, the Inter-Agency Panel made four recommendations: “[C]oncerning ways and means for improving access by LDCs and NFIDCs to multilateral programme and facilities to assist with short-term difficulties in financing normal levels of commercial imports of basic foodstuffs:

(a)  that in the context of the impending review of the CFF of the IMF, consideration be given by member governments to

 

(i)   extending the product coverage of the facility to cover all basic foodstuffs,

 

(ii)   clarifying access in the context of an existing arrangement with the IMF,

 

(iii)   providing a greater degree of automaticity without requiring an IMF — supported programme,

 

(iv)   reviewing the procedures and timeliness of disbursements, as well as encouraging governments to come forward with purchase requests;

 

(b)  that in the light of the limited potential usefulness of an ex-post revolving fund to support food imports in time of need, the feasibility of an ex-ante financing mechanism aimed at food importers be explored;

 

(c)  that the terms of reference of the Diagnostic Trade Integration Studies to be undertaking in the context of the Integrated Framework include, as appropriate and if requested by the beneficiary country, the items of

 

(i)  food security implications of trade development strategies,

 

(ii)  availability of, and access to, adequate financing, in particular by the private sector, to support food imports;

 

(d)  that strategies of commodity price risk management from the perspective of developing country food importers be addressed by the Commodity Price Risk Management Group of the World Bank.”⁽³⁰⁹⁾

222.  At its meeting on 15 October 2002 the General Council approved these four recommendations, with the amendments proposed by the Committee on Agriculture:

“[W]ith regard to the recommendations in Paragraphs 168 (a), (c) and (d), that the General Council authorize him, as Chairman [of the General Council], to write to the IMF, World Bank and the Integrated Framework Agencies requesting them to review the Panel report as it related to the issue within their competence. Finally, with regard to the recommendation in Paragraph 168 (b), he proposed that the General Council approve to the recommendation of the Committee on Agriculture that the question on feasibility of an ex-ante financing mechanism aimed at food importers be pursued by Committee, on the understanding that a proposal regarding the establishment of an ex-ante financing mechanism would be submitted by the WTO net food-importing developing countries, and follow-up report concerning the discussion of the proposal be submitted to the General Council following the regular meeting of the Committee in November.”⁽³¹⁰⁾

 

Footnotes: