Chairperson’s questions for post-Hong Kong talks

Under each heading, the document first cites any agreement that has already been reached so far, in particular in the July-August 2004 Agreed Framework and the December 2005 Hong Kong Ministerial Declaration, leading to the actual questions (here reproduced in colour).

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Chairperson Crawford Falconer’s cover note

Please find attached to this fax a non exhaustive set of questions on the various issues under discussion in the negotiations. These questions are not meant to be read as definitive or final, some could be amended, some deleted and it may be necessary to add new ones. These questions are meant to be an aid to, and not the object of, discussion. In considering these questions, it might also be useful if delegations could bear in mind the distinction between those issues which Ministers will have to decide and the preparatory and technical work we must do to prepare the ground for such Ministerial decisions.

I think it would be useful (or at least I feel the following really needs to be said even if it is felt not to be useful) to make three observations at this point.

First this process is not about these questions. It needs to be about answers, or, about how we can find a way of increasing our chances of getting to the answers. I do hope that we will not come to this meeting expecting to spend time debating whether the questions have been formulated with unsurpassed forensic skill. I can freely confess right now: they haven’t been. But I don’t think they are so far off the point that they are other than what they should be: a heuristic device to help us work on convergence. As I said in the course of the last agriculture week, I really don’t think anyone is in any doubt about where the problems are in these negotiations. If you don’t like these questions, throw them away and focus on what you, as delegations, know needs to be settled. That is clearly what we have to do.

Second, what this list of questions will, I hope, underline is that we have a huge amount of work to do. This is not meant to contribute to paralysis by analysis. On the contrary. What I hope it will show more clearly is that we cannot do everything at once. In formulating the questions attached, I have tried to respect the reality that we have an obligation to deal with all that constitutes modalities by the end of April. And it was clear from the informal consultations that Members wanted the waterfront covered. So I have endeavoured to do so. But, now that it has been done, it is, I feel, time to reflect on some realities.

And top of the list has to be, do we have time to answer each and every question here (and the others that I our you could certainly add) next week? Clearly no. But, in a purely formal sense, we can do that. But if the name of the game becomes a ritual running through of each and every question with each and every delegation giving its ritual reply, we will do nothing of any real value to our process next week. I should be clear about what I mean by that: it is of course the right of Members to do that, and, if that is the will of Members as to how we should proceed, I will absolutely respect that. But I feel it needs to be said that it is my sense as Chair that if we are to achieve what we say we want to achieve by April, we cannot afford to take the time next week to treat this is a purely formal exercise. We will have to accept that we need to start in depth somewhere rather than everywhere. To start everywhere guarantees that we end nowhere. Of course, we have to cover all the issues, but precisely in order to do that, we have to get on with some things.

Third, there can be no escaping the reality that to have any chance of achieving the task we have set ourselves we have to be able to record progress along the way. The only way to swallow the elephant is to do so slice by slice. So, in crude terms, we will need to come out of next week with something that represents progress over where we have come in. These questions will help, I hope, to register that. If they are still on the table next week with nothing that represents progress in the answers, you can all draw your own conclusions about how much bigger the slice will have to be in March.

Indeed , I think I need to go a bit further. As I see it, it is impossible to avoid the conclusion that we diminish our chances of success considerably if we are not in a position to have at least some readiness to try what I would call “without prejudice working hypothesis approaches” coming out of this meeting. Not full-blown “solutions” — although that would be the most desirable outcome, if we can achieve it of course. But, that miracle aside, if we do not have that working hypothesis starting point or something like that on at least some issues prior to our March Meeting, all you will have is the prospect of a re-run of this Meeting. I do hope that you as Members will come to the Meeting with that orientation. If so, I do believe there are areas in this list of questions where, even next week, we have the capacity to materially advance and get something more concrete on the table prior to the March Meeting. That, I hope, will be our objective.

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9 February 2006

Agriculture Negotiations
Non Exhaustive List of Questions

I. DOMESTIC SUPPORT back to top

A. Overall Cut

1. Agreed Framework (Annex A of WT/L/579)

7. The overall base level of all trade-distorting domestic support, as measured by the Final Bound Total AMS plus permitted de minimis level and the level agreed in paragraph 8 below for Blue Box payments, will be reduced according to a tiered formula. Under this formula, Members having higher levels of trade-distorting domestic support will make greater overall reductions in order to achieve a harmonizing result. As the first instalment of the overall cut, in the first year and throughout the implementation period, the sum of all trade-distorting support will not exceed 80 per cent of the sum of Final Bound Total AMS plus permitted de minimis plus the Blue Box at the level determined in paragraph 15.

8. The following parameters will guide the further negotiation of this tiered formula:

• This commitment will apply as a minimum overall commitment. It will not be applied as a ceiling on reductions of overall trade-distorting domestic support, should the separate and complementary formulae to be developed for Total AMS, de minimis and Blue Box payments imply, when taken together, a deeper cut in overall trade-distorting domestic support for an individual Member.

• The base for measuring the Blue Box component will be the higher of existing Blue Box payments during a recent representative period to be agreed and the cap established in paragraph 15 below.

2. The Hong Kong Ministerial Declaration (WT/MIN(05)/DEC)

4. 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... 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.

3. Questions

Paragraph 8 of the Chairman’s report to the TNC (Annex A of WT/MIN(05)/DEC) noted the considerable potential convergence that exists on domestic support. It went on to set out the possible thresholds for the tiered approach and the cuts in each band.

(i) On the basis of the Hong Kong Ministerial Declaration would the following thresholds be acceptable?

(ii) Can we find a basis for further convergence on what should be the cuts be in each band? For information the following range of reductions were noted in the Report by the Chairman of the Special Session of the Committee on Agriculture to the TNC (Chairman’s Report).

(iii) How can we respond to the direction to achieve “effective cuts in trade-distorting support consistent with the Framework”?.
  

B. De minimis

1. Agreed Framework

11. Reductions in de minimis will be negotiated taking into account the principle of special and differential treatment. Developing countries that allocate almost all de minimis support for subsistence and resource-poor farmers will be exempt.

12. Members may make greater than formula reductions in order to achieve the required level of cut in overall trade-distorting domestic support.

2. Hong Kong Ministerial Declaration

5. ... 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.... Developing country Members with no AMS commitments will be exempt from reductions in de minimis and the overall cut in trade-distorting domestic support.

3. Questions

Paragraph 8 of the Chairman’s Report to the TNC noted that there is a zone of engagement for cuts between 50% and 80% for developed countries.

(i) How do we advance further convergence on the reduction in de minimis for developed countries?

(ii) For developing countries with AMS commitments and not covered by the exclusion in paragraph 11 of the Framework, should there be cuts and if so by how much?
  

C. Final Bound Total Aggregate Measurement of Support

1. Agreed Framework

9. To achieve reductions with a harmonizing effect:

• Final Bound Total AMS will be reduced substantially, using a tiered approach.

• Members having higher Total AMS will make greater reductions.

• To prevent circumvention of the objective of the Agreement through transfers of unchanged domestic support between different support categories, product-specific AMSs will be capped at their respective average levels according to a methodology to be agreed.

• Substantial reductions in Final Bound Total AMS will result in reductions of some product-specific support.

10. Members may make greater than formula reductions in order to achieve the required level of cut in overall trade-distorting domestic support.

2. Hong Kong Ministerial Declaration

5. ...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.

3. Questions

Paragraph 8 of the Chairman’s report to the TNC noted the convergence on the thresholds for the tiered approach and the placement of developing countries in the bottom band which was consolidated at the Hong Kong Ministerial Conference. It also noted that there was some convergence on the level of reductions.

(i) On the basis of the Hong Kong Ministerial Declaration can we not settle the differences over the $12-15 billion for the thresholds between Bands 1 and 2 with all developing countries in the bottom band?

(ii) How can we further promote convergence on the cuts in each band?

(iii) More concretely, what should be the additional effort in AMS reduction by developed country Members in the lower bands with higher relative levels of Final Bound Total AMS?

(iv) What should be the base period for product-specific AMS caps? Certain proposals are on the table. Can we develop a working hypotheses for advancing this issue?
  

D. Blue Box

1. Agreed Framework

13. Members recognize the role of the Blue Box in promoting agricultural reforms. In this light, Article 6.5 will be reviewed so that Members may have recourse to the following measures:

• Direct payments under production-limiting programmes if:
  - such payments are based on fixed and unchanging areas and yields; or
  - such payments are made on 85% or less of a fixed and unchanging base level of production; or
  - livestock payments are made on a fixed and unchanging number of head.

Or

• Direct payments that do not require production if:
  - such payments are based on fixed and unchanging bases and yields; or
  - livestock payments made on a fixed and unchanging number of head; and
  - such payments are made on 85% or less of a fixed and unchanging base level of production.

14. The above criteria, along with additional criteria will be negotiated. Any such criteria will ensure that Blue Box payments are less trade-distorting than AMS measures, it being understood that:

• Any new criteria would need to take account of the balance of WTO rights and obligations.

• Any new criteria to be agreed will not have the perverse effect of undoing ongoing reforms.

15. Blue Box support will not exceed 5% of a Member’s average total value of agricultural production during an historical period. The historical period will be established in the negotiations. This ceiling will apply to any actual or potential Blue Box user from the beginning of the implementation period. In cases where a Member has placed an exceptionally large percentage of its trade-distorting support in the Blue Box, some flexibility will be provided on a basis to be agreed to ensure that such a Member is not called upon to make a wholly disproportionate cut.

2. Questions

Paragraph 9 of the Chairman’s Report to the TNC noted that there was significant convergence on moving beyond (i.e. further constraining) Blue Box programme payments envisaged in the July 2004 Framework. However, the technique for achieving this remains to be determined. One proposal was to shrink the current 5% ceiling to 2.5%. Another proposal rejected this in favour of additional criteria disciplining the so-called “new” Blue Box only. Others favoured a combination of both, including additional disciplines on the “old” Blue Box. On this basis the following questions might be considered

(i) Should the Blue Box be constrained by:

a. shrinking the current ceiling from 5% of the value of production;
b. by additional criteria disciplining the “new” and/or “old” Blue Box; or
c. by a combination of both reductions and new disciplines?

(ii) If it were agreed that there should be new criteria in addition to those in paragraph 13 of the Agreed Framework what should they be?

(iii) If it were agreed that the current ceiling should be shrunk, by how much?

(iv) Blue Box support is not to exceed 5% of a Member’s average total value of agricultural production during an historical period:

a. what is the base period; and
b. can we accept that the “value of production” is the gross value of all agriculture production of basic agriculture products at farm gate prices.

(v) What should be the flexibility provided to Members that have placed an exceptionally large percentage of trade-distorting support in the Blue Box?
  

E. Green Box

1. Agreed Framework

16. Green Box criteria will be reviewed and clarified with a view to ensuring that Green Box measures have no, or at most minimal, trade-distorting effects or effects on production. Such a review and clarification will need to ensure that the basic concepts, principles and effectiveness of the Green Box remain and take due account of non-trade concerns. The improved obligations for monitoring and surveillance of all new disciplines foreshadowed in paragraph 48 below will be particularly important with respect to the Green Box.

2. Hong Kong Ministerial Declaration

5. ... 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.

3. Questions

Paragraph 10 of the Chairman’s report to the TNC noted that some Members firmly rejected anything that departed from the existing disciplines while, on the other side, there was an enduring sense that more could be done to review the Green Box without undermining ongoing reform. Beyond that, there was some tangible openness to finding appropriate ways to ensure that the Green Box was more “development friendly”, i.e. better tailored to meet the realities of developing country agriculture, but in a way that respected the fundamental requirement of at most minimal trade distortion.

(i) Without prejudice to substantive positions, can the relevant sections of the G-20 proposal of 2 June 2005 be used as a starting point for considering programmes of developing country Members that cause not more then minimal trade-distortion?

(ii) What, if any, other criteria need to be added and/or amended to ensure that Green Box measures have no, or at most minimal, trade-distorting effects or effects on production?

  

II. EXPORT COMPETITION back to top

A. Export subsidies

1. Agreed Framework

18. The following will be eliminated by the end date to be agreed:... Export subsidies as scheduled....

2. Hong Kong Ministerial Declaration

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.

3. Questions

(i) What should be the timetable for this so that a substantial part is realized by the end of the first half of the implementation period?
(ii) How will export credits, export credit guarantees or insurance programmes with repayments periods beyond 180 days be eliminated so as to ensure progressive and parallel elimination?
  

B. Export credits, export credit guarantees or insurance programmes with repayments periods of 180 days and below

1. Agreed Framework

18. The following will be eliminated..: ... Terms and conditions relating to export credits, export credit guarantees or insurance programmes with repayment periods of 180 days and below which are not in accordance with disciplines to be agreed” are to be eliminated. “These disciplines will cover, inter alia, payment of interest, minimum interest rates, minimum premium requirements, and other elements which can constitute subsidies or otherwise distort trade.

24. Members will ensure that the disciplines on export credits, export credit guarantees or insurance programs to be agreed will make appropriate provision for differential treatment in favour of least-developed and net food-importing developing countries as provided for in paragraph 4 of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. Improved obligations for monitoring and surveillance of all new disciplines as foreshadowed in paragraph 48 will be critically important in this regard. Provisions to be agreed in this respect must not undermine the commitments undertaken by Members under the obligations in paragraph 18 above.

2. Hong Kong Ministerial Declaration

6. ....We agree that such programmes [export credits, export credit guarantees or insurance programmes with repayment periods of 180 days and below] 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....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.

3. Questions

Paragraph 12 and footnote 5 of the Chairman’s report noted that there had been some convergence on some elements of disciplines on export credits but that a number of critical issues remained, including: possible exemptions to the 180 day rule; if pure cover only should be allowed or if direct financing was also allowed; the principle of self-financing; disciplines regarding special circumstances; and special and differential treatment. Paragraph 16 noted that work on criteria and consultation procedures to govern ad hoc temporary financing arrangements relating to exports to developing countries in exceptional circumstances was not much developed.

(i) What is the period that would satisfy the criteria that export credit programmes will be self-financing, reflect market consistency and not effectively circumvent real commercially-orientated discipline?

(ii) What other disciplines are necessary to cover, inter alia:

a. payment of interest;
b. minimum interest rates;
c. minimum premium requirements; and
d. other elements which can constitute subsidies or otherwise distort trade?

(iii) What appropriate provisions should be provided in favour of least-developed and net food-importing developing countries as provided for in paragraph 4 of the Marrakesh Decision?

(iv) What, if any, elements of special and differential treatment should be provided for export credits extended by developing countries?

(v) How should disciplines be structured to ensure progressive parallelism with elimination of direct export subsidies?
  

C. Exporting State Trading Enterprises

1. Agreed Framework:

“18. The following will be eliminated...: ... Trade distorting practices with respect to exporting STEs including eliminating export subsidies provided to or by them, government financing, and the underwriting of losses. The issue of the future use of monopoly powers will be subject to further negotiation.

“25. STEs in developing country Members which enjoy special privileges to preserve domestic consumer price stability and to ensure food security will receive special consideration for maintaining monopoly status.”

2. Hong Kong Ministerial Declaration:

6. ....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.

3. Questions

Paragraph 13 of the Chairman’s Report to the TNC noted the convergence on rules to address trade-distorting practices identified in the Framework, although noting major differences regarding the scope of practices to be covered by the new disciplines. Paragraph 15 noted that the monopoly status of state trading enterprises in developing countries needed more clarity. To some extent at least, the issue of monopoly powers has been advanced by the Hong Kong Ministerial Declaration.

(i) How should an exporting state trading enterprise be defined?

(ii) Is the list of practices subject to disciplines and/or elimination to be exhaustive or indicative?

(iii) What are the more concrete disciplines to be applied so as to eliminate trade-distorting practices in exporting STEs where the following are involved:

a. export subsidies provided to or by exporting STEs;
b. government financing;
c. underwriting of losses?

(iv) What concrete disciplines are capable of ensuring also that the future use of monopoly powers cannot circumvent the direct disciplines referred to above? What other disciplines, if any, are to be negotiated in respect of monopoly powers?

(v) What precisely, if any, are other “trade distorting practices” at issue in these negotiations as regards STEs?

(vi) What does “special consideration” for maintaining monopoly status mean when it is to be applied to developing country Members’ STEs? How are the criteria of preservation of domestic consumer price stability and ensuring food security to be made operational under this paragraph?

(vii) How should disciplines be phased in to ensure progressive parallelism with the elimination of direct export subsidies?
  

D. Food Aid

1. Agreed Framework

18. The following will be eliminated..:...Provision of food aid that is not in conformity with operationally effective disciplines to be agreed. The objective of such disciplines will be to prevent commercial displacement. The role of international organizations as regards the provision of food aid by Members, including related humanitarian and developmental issues, will be addressed in the negotiations. The question of providing food aid exclusively in fully grant form will also be addressed in the negotiations.

24. Members will ensure that the disciplines on export credits, export credit guarantees or insurance programs to be agreed will make appropriate provision for differential treatment in favour of least-developed and net food-importing developing countries as provided for in paragraph 4 of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. Improved obligations for monitoring and surveillance of all new disciplines as foreshadowed in paragraph 48 will be critically important in this regard. Provisions to be agreed in this respect must not undermine the commitments undertaken by Members under the obligations in paragraph 18 above.

2. Hong Kong Ministerial Declaration

6. .... 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....

3. Questions

Paragraph 14 of the Chairman’s Report to the TNC noted the consensus that commercial displacement is to be eliminated. The Hong Kong Ministerial Declaration has clarified that a “safe box” for bona fide food aid is to be provided for dealing with emergency situations but there does not seem yet to be any common understanding where emergency food aid ends and other food aid begins. The issue of what type of food aid is to be permitted in non emergency situations is also still unclear.

(i) The World Food Programme defines an emergency situation as follows:
“ Food aid provided in response to humanitarian crisis or natural/climatic disasters, and based on an assessment of needs.
“ For WFP, emergencies are defined as urgent situations in which there is clear evidence that an event or series of events has occurred which causes human suffering or imminently threatens human lives or livelihoods and which the government concerned has not the means to remedy; and it is a demonstrably abnormal event or series of events which produces dislocation in the life of a community on an exceptional scale.
The event or series of events may comprise one or a combination of the following:

a) sudden calamities such as earthquakes, floods and locust infestations;
b) human-made emergencies resulting in an influx of refugees or in the suffering of otherwise affected populations;
c) food scarcity owing to slow-onset events such as drought, crop failures, pests, and diseases that result in an erosion of communities’ and vulnerable populations’ capacity to meet their food needs;
d) severe food access or availability conditions resulting from sudden economic shocks, market failure, or economic collapse—and that result in an erosion of communities’ and vulnerable populations’ capacity to meet their food needs; and
e) a complex emergency for which the Government of the affected country or the Secretary-General of the United Nations has requested the support of WFP.” (see JOB(05)/178)
Is this definition either an acceptable bases for elaborating operational disciplines or, at least, a starting point for further elaboration? If the latter, how is it to be elaborated?

(ii) What does the concept of the “safe box” amount to operationally, once a definition of “emergency situation” has been arrived at? More specifically how is it to operate functionally? As self-determination respecting the definition but subject to post-hoc discipline? Or as an a priori discipline involving some external authorisation? Some variant of, or none of, the above?

(iii) To ensure elimination of commercial displacement, what effective disciplines are needed on:

a. in-kind food aid;
b. monetization;
c. re-exports?

(iv) Is this an exhaustive or indicative list of practices on which disciplines are needed so that there can be no loop-hole for continuing export subsidization?

(v) How should disciplines be phased to ensure progressive parallelism with elimination of direct export subsidies?

(vi) What other separate and concrete measures are to be required to meet the Hong Kong Ministerial Declaration as regards least-developed and net food-importing developing countries?

  

III. MARKET ACCESS back to top

A. Tiered Formula

1. Agreed Framework

28. To ensure that a single approach for developed and developing country Members meets all the objectives of the Doha mandate, tariff reductions will be made through a tiered formula that takes into account their different tariff structures.

29. To ensure that such a formula will lead to substantial trade expansion, the following principles will guide its further negotiation:

• Tariff reductions will be made from bound rates. Substantial overall tariff reductions will be achieved as a final result from negotiations.

• Each Member (other than LDCs) will make a contribution. Operationally effective special and differential provisions for developing country Members will be an integral part of all elements.

• Progressivity in tariff reductions will be achieved through deeper cuts in higher tariffs with flexibilities for sensitive products. Substantial improvements in market access will be achieved for all products.

30. The number of bands, the thresholds for defining the bands and the type of tariff reduction in each band remain under negotiation. The role of a tariff cap in a tiered formula with distinct treatment for sensitive products will be further evaluated.

2. Hong Kong Ministerial Declaration

7. ... 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.

3. Questions

The Chairman’s report to the TNC noted that there was considerable convergence on a linear-based approach for cuts within bands although some Members still held positions that were even more divergent. In addition, major gaps were yet to be bridged on the size of tariff cuts although somewhat greater convergence existed on the thresholds. Also to be agreed was the application of a tariff cap and, if it were to be agreed, its size.

(i) How can we further converge on what the thresholds for the four tariff bands are to be?

(ii) How can we further converge on what the reductions in each band are to be?

(iii) How can we further convergence on what the thresholds and reductions for developing countries are to be?
(iv) How can we advance to resolve the question of whether there is to be a tariff cap and, if so, what should it be for developed and developing countries?
  

B. Sensitive Products

1. Agreed Framework

Selection

31. Without undermining the overall objective of the tiered approach, Members may designate an appropriate number, to be negotiated, of tariff lines to be treated as sensitive, taking account of existing commitments for these products.

Treatment

32. The principle of ‘substantial improvement’ will apply to each product.

33. ‘Substantial improvement’ will be achieved through combinations of tariff quota commitments and tariff reductions applying to each product. However, balance in this negotiation will be found only if the final negotiated result also reflects the sensitivity of the product concerned.

34. Some MFN-based tariff quota expansion will be required for all such products. A base for such an expansion will be established, taking account of coherent and equitable criteria to be developed in the negotiations. In order not to undermine the objective of the tiered approach, for all such products, MFN based tariff quota expansion will be provided under specific rules to be negotiated taking into account deviations from the tariff formula.

2. Hong Kong Ministerial Declaration

7. ... We recognize the need to agree on treatment of sensitive products, taking into account all the elements involved....

3. Questions

The Chairman’s report to the TNC noted that proposals extended from as little as 1% to as much as 15% of tariff lines and the fundamental divergence over the basic approach to treatment needed to be resolved.

(i) How can we get further convergence over what the appropriate number of tariff lines to be treated as sensitive should be?

(ii) ‘Substantial improvement’ in market access is to be achieved through combinations of tariff quota commitments and tariff reductions. Is there a relationship, and if there is what is it, between:

a. The tariff reduction that would normally be applied through the formula and the reduction in tariffs required for sensitive products?
b. The increase in the tariff quota and the difference between the tariff reduction required by the formula and that applied to a particular sensitive product?

(iii) How can we get further convergence over the basis on which quotas are to be increased: pro rata based on current quotas with a benchmark based on domestic consumption; based only on domestic consumption; or based on current levels of imports? How is the requirement to take “into account deviations from the tariff formula” to be operationalised?

(iv) In cases where a tariff line is designated as sensitive and is not currently subject to tariff quota commitments in a Member’s Schedule would it be a practical way to proceed for the moment to focus on whether the needs of Members can be met via the working hypotheses of greater flexibility to be applied through lower tariff reductions, longer implementation periods or a combination of the two? This would be, of course, without prejudice to the other options that have been on table.
  

C. Other Elements

1. Agreed Framework

35. Other elements that will give the flexibility required to reach a final balanced result include reduction or elimination of in-quota tariff rates, and operationally effective improvements in tariff quota administration for existing tariff quotas so as to enable Members, and particularly developing country Members, to fully benefit from the market access opportunities under tariff rate quotas.

36. Tariff escalation will be addressed through a formula to be agreed.

37. The issue of tariff simplification remains under negotiation.

38. The question of the special agricultural safeguard (SSG) remains under negotiation.

2. Questions

The Chairman’s report to the TNC noted that there had been no further material convergence on these issues.

(i) How are we to reach convergence on the reduction or elimination of in-quota tariff rates?

(ii) Can Attachment 1 of TN/AG/W/1/Rev.1 be used as a working basis for negotiating detailed rules on tariff quota administration?

(iii) What should be the formula to address tariff escalation?

(iv) What more specifically needs to be addressed in respect of “tariff simplification”?

(v) Should the current special agricultural safeguard be continued? If not, how and when will this be effected? If so, what should be its scope and application?
  

D. Special Products

1. Agreed Framework

41. Developing country Members will have the flexibility to designate an appropriate number of products as Special Products, based on criteria of food security, livelihood security and rural development needs. These products will be eligible for more flexible treatment. The criteria and treatment of these products will be further specified during the negotiation phase and will recognize the fundamental importance of Special Products to developing countries.

2. Hong Kong Ministerial Declaration

7. .... 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. .... Special Products and the Special Safeguard Mechanism shall be an integral part of the modalities and the outcome of negotiations in agriculture.

3. Questions

(i) What is the “appropriate number of tariff lines” that a developing country can self-designate as Special Products guided by indicators based on the criteria of food-security, livelihood security and rural development?

(ii) What is the “more flexible treatment” which these products will be eligible for?

(iii) Will Special Products also have automatic access to the Special Safeguard Mechanism?
  

E. Special Safeguard Mechanism

1. Agreed Framework

42. A Special Safeguard Mechanism (SSM) will be established for use by developing country Members.

2. Hong Kong Ministerial Declaration

7. .... 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 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.

3. Questions

The Chairman’s report to the TNC noted that the SSM should be tailored to the particular circumstances and needs of developing countries. The Hong Kong Ministerial Declaration advanced matters by clarifying that the SSM will be based on import quantity and price triggers. The Chairman’s report also noted that there was some openness to at least consider coverage of products that are likely to undergo significant liberalization effects and/or are already bound at low levels and/or are Special Products. However, there remains a fundamental divergence between those considering all products should be eligible and those opposing such a blanket approach.

(i) What is the coverage of tariff lines that would be eligible for the SSM and should this be based on self-selection, guided by criteria or based on specific criteria and, if so, what are these criteria?

(ii) For the import quantity triggers, what should be the methodology for calculating the trigger including factors such as base period(s), trigger quantities, cases where no or minimal quantities were imported in the base period, etc?

(iii) On what basis should the quantity-based SSM be calculated?

(iv) For the import price triggers, what should be the methodology for calculating the trigger, including base period(s), the degree, if any, of the price fall permitted before the SSM can be triggered, etc?

(v) On what basis should the price-based SSM be calculated?
  

F. Tropical and Diversification Products

1. Agreed Framework

43. Full implementation of the long-standing commitment to achieve the fullest liberalisation of trade in tropical agricultural products and for products of particular importance to the diversification of production from the growing of illicit narcotic crops is overdue and will be addressed effectively in the market access negotiations.

2. Hong Kong Ministerial Declaration

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.....

3. Questions

The Chairman’s report to the TNC noted that proposals have been made on implementing the fullest liberalisation of trade in tropical and diversification products but there remains divergence over the precise interpretation of this section of the Framework.

(i) How are we going to practically define “tropical agricultural products and products of particular importance to the diversification of production from the growing of illicit narcotic crops”?

(ii) How can we reach an operational understanding of what “fullest liberalisation of trade” means and how should this be implemented?
  

G. Preferences

1. Agreed Framework

44. The importance of long-standing preferences is fully recognised. The issue of preference erosion will be addressed. For the further consideration in this regard, paragraph 16 and other relevant provisions of TN/AG/W/1/Rev.1 will be used as a reference.

2. Hong Kong Ministerial Declaration

9. We reaffirm that nothing we have agreed here compromises the agreement already reflected in the Framework on other issues including ..., long-standing preferences and preference erosion.

3. Questions

The Chairman’s report to the TNC noted that the importance of long-standing preferences pursuant to paragraph 44 of the Framework was fully recognised and proposals had been made regarding preference erosion. While there seems not to be inherent difficulty with a role for capacity building there was no convergence of other aspects.

(i) Paragraph 16 of TN/AG/W/1/Rev.1 states that “in implementing their tariff reduction commitments, participants undertake to maintain, to the maximum extent technically feasible, the nominal margins of tariff preferences and other terms and conditions of preferential arrangements they accord to their developing trading partners. As an exception to the modality under paragraph 8 above, tariff reductions affecting long-standing preferences in respect of products which are of vital export importance for developing country beneficiaries of such schemes may be implemented in equal annual instalments over a period of [eight] instead of [five] years by the preference-granting participants concerned, with the first instalment being deferred to the beginning of the [third] year of the implementation period that would otherwise be applicable. The products concerned shall account for at least [20] per cent of the total merchandise exports of any beneficiary concerned on a three-year average out of the most recent five-year period for which data are available. Interested beneficiaries shall notify the Committee on Agriculture, Special Session accordingly and submit the relevant statistics. In addition, any in-quota duties for these products shall be eliminated. The preference-providing Members shall undertake targeted technical assistance programmes and other measures, as appropriate, to support preference-receiving countries in efforts to diversify their economies and exports.”

To what extent can the long-standing preferences and preference erosion be addressed based on this paragraph and, without prejudice to delegations’ positions, can we use this as a technical starting point for further negotiations?

  

IV. RECENTLY ACCEDED MEMBERS back to top

1. Agreed Framework

47. The particular concerns of recently acceded Members will be effectively addressed through specific flexibility provisions.

2. Hong Kong Ministerial Declaration

58. We recognize the special situation of recently-acceded Members who have undertaken extensive market access commitments at the time of accession. This situation will be taken into account in the negotiations.

3. Questions

Para 22 of the Chairman’s report to the TNC noted that proposals had been made and discussed but no specific flexibility provisions had commanded consensus.

(i) Who are the “recently-acceded Members”?

(ii) What specific flexibility provisions are needed to effectively address the particular concerns of recently-acceded Members?

(iii) What, if any, additional flexibility might be provided for sub-groups within the recently acceded Members, such as the small low-income countries with economies in transition (TN/AG/GEN/10 and Corr.1).

  

V. COTTON back to top

1. Agreed Framework

4. The General Council recognizes the importance of cotton for a certain number of countries and its vital importance for developing countries, especially LDCs. It will be addressed ambitiously, expeditiously, and specifically, within the agriculture negotiations. The provisions of this framework provide a basis for this approach, as does the sectoral initiative on cotton. The Special Session of the Committee on Agriculture shall ensure appropriate prioritization of the cotton issue independently from other sectoral initiatives. A subcommittee on cotton will meet periodically and report to the Special Session of the Committee on Agriculture to review progress. Work shall encompass 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 this Framework text.

5. Coherence between trade and development aspects of the cotton issue will be pursued as set out in paragraph 1.b of the text to which this Framework is annexed.

2. Hong Kong Ministerial Declaration

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.

3. Questions

(i) What concretely would a “more ambitious” reduction in trade-distorting domestic subsidies for cotton production be in order to satisfy the criteria that the reduction be more ambitious than the general formula?

(ii) How, as a practical matter, can we meet the Hong Kong direction to give priority to reaching this outcome and, as regards implementation, achieve it over a shorter period of time?

(iii) How will this relate precisely to the general approaches under consideration in relation to AMS, de minimis and Blue Box.

  

VI. MONITORING AND SURVEILLANCE back to top

1. Agreed Framework

48. Article 18 of the Agreement on Agriculture will be amended with a view to enhancing monitoring so as to effectively ensure full transparency, including through timely and complete notifications with respect to the commitments in market access, domestic support and export competition. The particular concerns of developing countries in this regard will be addressed.

2. Questions

Para 23 of the Chairman’s report to the TNC noted that a proposal had been made but there was no material advance.

(i) Can the G-20 proposal of 19 October 2005 be used as a basis for further negotiations on enhancing monitoring?

  

VII. OTHER ISSUES back to top

A. Paragraph 49 Issues

1. Agreed Framework

49. Issues of interest but not agreed: sectoral initiatives, differential export taxes, GIs.

2. Questions

Para 24 of the Chairman’s Report to the TNC noted that these remain of interest but are not agreed.

(i) Are we in a position to materially advance from the present situation where the issues have the status of “interest” only?
  

B. Export Prohibitions and Restrictions

1. Agreed Framework

50. Disciplines on export prohibitions and restrictions in Article 12.1 of the Agreement on Agriculture will be strengthened.

2. Questions

Para 25 of the Chairman’s report to the TNC noted that this point has not advanced although proposals have been made.

(i) How should, concretely, Article 12.1 of the Agreement on Agriculture be strengthened?
  

C. Small and Vulnerable Economies and commodity dependent developing and least-developed countries

1. Questions

Paragraph 26 of the Chairman’s Report to the TNC noted the case that had been made for small and vulnerable economies. Paragraph 27 noted the openness to the particular concerns of commodity-dependant developing and least-developed countries and the support for the view that modalities should eventually be capable of addressing effectively key areas for them.

(i) How, in concrete and practical terms, are the concerns of small and vulnerable economies and commodity-dependant developing and least-developed countries to be specifically addressed in modalities?