Committee discusses unfilled quotas, export credit

Whether unfilled tariff quotas are the result of trade obstacles and how to deal with export credits, were among the subjects discussed in the regular session (i.e. not negotiations) WTO Agriculture Committee on 14 November 2000.

Among the issues generating lengthier discussion were:

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Unfilled quotas: questions about notifications  

This meeting reviewed 39 notifications. As usual, most questions were about details, reflecting bilateral or technical interests, and in many cases they were seeking clarification.

One group of notifications generated discussions that have more general implications. These were the documents in which governments told fellow WTO members how much they had imported in the relevant years under their commitments on tariff rate quotas and other quotas. Up for discussion at this meeting were notifications from Colombia (G/AG/N/COL/21), Japan (G/AG/N/JPN/58) and Norway (G/AG/N/NOR/27).

As in previous meetings, the discussion on this subject reflected more general concerns that some member governments have expressed about the possibility that trade can be affected by the way the quotas are administered. Several countries asked why quotas, in one case for a range of products, were unfilled. These included skimmed milk powder, various whey products, butter and butteroil, and groundnuts.

The reply was that the quotas were not filled because of market conditions. Among the reasons stated were fewer babies and children and increased breast-feeding (for milk products), a decline in livestock (some whey products used as feed), oversupply of domestic production (butter and butteroil), and consumers’ diversifying diets combined with competition from other types of nuts (groundnuts). The replying country also repeated that it was conforming fully with its commitments and with WTO agreements.

The questioning countries said that they doubted whether market conditions were the cause when for a single country so many quotas were unfilled. They expressed concern about the way the quotas are administered including monopolies given to state-owned importers. Some suggested the importing country should remove these barriers in order to test whether the low import volumes really are caused by market conditions.
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Export credits: implementation, negotiations and the OECD  

Background: Government-supported export credits are seen as a way of circumventing export subsidy commitments because interest rates and repayment terms can be easier than under normal commercial conditions. In addition to discussions in the Agriculture Committee, the question is also part of broader discussions on “implementation” in the General Council.

Article 10.2 of the Agriculture Agreement says “Members undertake to work toward the development of internationally agreed disciplines to govern the provision of export credits, export credit guarantees or insurance programmes and, after agreement on such disciplines, to provide export credits, export credit guarantees or insurance programmes only in conformity therewith.”

Negotiations on an OECD understanding on agricultural export credits, which includes Argentina as well as OECD members, were taking place in Paris at the same time as the WTO Agriculture Committee’s meeting. The current deadline in the OECD for agreement is by the end of this year.

The discussion: Mercosur circulated a copy of its 16 May 2000 proposal on export credit disciplines for the regional agreement, the Free Trade Area of the Americas (FTAA). Brazil, speaking on the group’s behalf, said the group is not submitting this document as a proposal for the WTO, simply sharing information. However, Brazil did highlight three points:

(1) the text is general, and not tailored to specific products, countries or regions, but it attempts a better definition export credits for agricultural products, and it tries to define “official resources” so that they can be monitored even when they are offered under “market terms”.

(2) the terms and conditions are compatible with international practices for agricultural products and are not biased towards countries with large surplus resources

(3) there is no derogation for “special market circumstances” or “matching practices” — “a highly questionable practice very common in the OECD for industrial products,” Brazil said.

Malaysia, Columbia, Chile, Thailand, Egypt, and Brazil said that they supported the OECD talks but stressed that the outcome cannot be forced on WTO members. They, together with the EU, Canada, New Zealand, Australia, Mexico and Hungary said they consider WTO disciplines on export credit to be part of implementing the present agreement and the Uruguay Round — “and not at all an early harvest of the new WTO negotiations on agriculture,” the EU said.

Japan agreed that this is an implementation issue in the WTO, but said it is realistic to wait and see the outcome in the OECD and then discuss the subject further in the WTO agriculture negotiations.

The US expressed hope that this “difficult” subject can be settled soon.

Mauritius and Egypt stressed the need to take the concerns of least-developed countries and net food-importing developing countries into account.

Presiding, committee vice-chairperson Yoichi Suzuki said he would report back to the General Council for its 7–8 December 2000 meeting with a summary of these discussions.

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Least-developed and net food-importing developing countries  

The Secretariat has circulated a revised report on the latest situation related to the Marrakesh decision on the possible negative effect of the agriculture reform programme on least-developed and net food-importing developing countries G/AG/W/42/Rev.3 (still restricted for the time being). Additional information was provided by several observers organizations including the World Bank, IMF, OECD, FAO and International Grains Council.

Egypt, Sri Lanka, Jamaica, Barbados, Trinidad and Tobago, Cuba and Mauritius said the decision has been ineffective and several called for more specific commitments to deal with problems. They, the EU and Switzerland expressed concern about figures that show that food aid has increased at times when world food prices are low and declined when prices have risen. This shows that aid has also been used to offload surpluses and not to deal with emergencies, they said.

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Other business  

Chile, supported by New Zealand and Mexico, expressed concern about new US legislation (the Agriculture Appropriations Act for fiscal 2001) which includes the creation of a marketing board for avocado, including a possible levy (25 cents per pound) on sales in the US. These countries said the new board could present an additional barrier to trade and questioned whether it would serve the interests of all avocado suppliers.

The US said regulations to implement the provision are still being drafted and welcomed comments from supplying countries.

The next meeting is scheduled for 27–28 March 2001.
NOTE: This summary has been written by the WTO Secretariat to help public understanding about developments in the Agriculture Committee. Unlike the meeting’s minutes, it is not an official record.

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